SEC Filing | H&R Block®

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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended: April 30, 1994

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to ________

Commission File Number: 1-6089

H&R BLOCK, INC.
(Exact name of registrant as specified in its charter)

Missouri 44-0607856
(State or other jurisdiction of (I.R.S. Employer Identifi-
incorporation or organization) cation Number)

4410 Main Street, Kansas City, Missouri 64111
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (816) 753-6900

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange
Title of each class on which registered
Common Stock, without par value New York Stock Exchange
Pacific Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, without par value
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the voting stock held by non-
affiliates of the registrant, computed by reference to the price
at which the stock was sold on June 1, 1994, was $4,252,270,128.

Number of shares of registrant's Common Stock, without par value,
outstanding on June 1, 1994: 106,546,354.

DOCUMENTS INCORPORATED BY REFERENCE

Certain specified portions of the registrant's annual report to
security holders for the fiscal year ended April 30, 1994, are
incorporated herein by reference in response to Part I, Item 1,
and Part II, Items 5 through 8, inclusive, and certain specified
portions of the registrant's definitive proxy statement to be
filed within 120 days after April 30, 1994, are incorporated
herein by reference in response to Part III, Items 10 through 13,
inclusive.

PART I

ITEM 1. BUSINESS.

GENERAL DEVELOPMENT OF BUSINESS

H&R Block, Inc. is a diversified services corporation that
was organized in 1955 under the laws of the State of Missouri
(the "Company"). It is the parent corporation in a two-tier
holding company structure as a result of a corporate
restructuring effected in March 1993. The second-tier holding
company is H&R Block Group, Inc., a Delaware corporation and the
direct owner of all of the shares of the Company's primary
operating subsidiary corporations. Such primary operating
subsidiaries consist of H&R Block Tax Services, Inc., CompuServe
Incorporated and Block Financial Corporation. Developments
within each of these segments of the Company during fiscal year
1994 are described in the section below entitled "Description of
Business."

During the year ended April 30, 1994, the Company was not
involved in any bankruptcy, receivership or similar proceedings
or any material reclassifications, mergers or consolidations and,
except for the disposition of all of the stock of Interim
Services Inc., the Company did not acquire or dispose of any
material amount of assets otherwise than in the ordinary course
of business.

In November 1993, the Company acquired MECA Software, Inc.
("MECA"), a Delaware corporation involved in developing,
publishing and marketing personal productivity software products
designed to assist individuals in managing personal finances and
in preparing their income tax returns, for $45,384,000 in cash.
On November 15, 1993, the Company, through Block Acquisition
Corporation ("BAC"), an indirect wholly-owned subsidiary of the
Company, completed a $6.625 per share cash tender offer for all
of the outstanding shares of common stock, par value $.01 per
share, of MECA. The tender offer commenced on October 18, 1993,
pursuant to the terms of an Agreement and Plan of Merger dated as
of October 12, 1993 (the "Merger Agreement"). A total of
4,469,391 shares of MECA stock, representing approximately 96% of
MECA's outstanding shares, were properly tendered by MECA
shareholders pursuant to the tender offer, and were purchased by
BAC. The remaining MECA shares were acquired by the Company on

November 24, 1993, when, pursuant to the terms of the Merger
Agreement, BAC was merged into MECA. In connection with the MECA
transaction, the Company also acquired all rights to certain
software code and editorial content marketed by MECA and thereby
eliminated a significant portion of MECA's royalty obligations.
MECA is a wholly-owned subsidiary of H&R Block Group, Inc.

Among the products marketed by MECA are TaxCut (trademark),
a top-rated personal income tax return preparation software
developed by Legal Knowledge Systems, Inc., a subsidiary of
MECA, and Managing Your Money (trademark), computer software
designed to assist individuals in managing personal finances.
TaxCut is expected to provide the Company with products designed
to address the market for taxpayers who prepare their own tax
returns, while Managing Your Money is expected to complement the
financial services offered by Block Financial Corporation and the
on-line information services offered by CompuServe Incorporated.

On January 27, 1994, the Company (through its wholly-owned
subsidiary, H&R Block Group, Inc.) sold its 100% interest in its
indirect wholly-owned subsidiary, Interim Services Inc., through
an initial public offering of 10,000,000 shares of common stock,
par value $.01 per share, at an initial public offering price of
$20.00 per share. The initial public offering was conducted in
accordance with the terms of underwriting agreements among the
Company, H&R Block Group, Inc., Interim Services Inc. and the
underwriters. The closing of the transactions among the parties
to the underwriting agreements occurred on February 3, 1994.

The initial public offering price was negotiated among the
Company and representatives of the underwriters. Among the
factors considered in determining the initial public offering
price, in addition to prevailing market conditions, were
Interim's historical performance, estimates of the business
potential and earnings prospects of Interim, an assessment of
Interim's management and the consideration of the above factors
in relation to market valuation of companies in related
businesses.

The Company received cash proceeds from the sale of Interim
stock of $188,500,000 (which represents the initial public
offering price of $200,000,000, less an underwriting discount of
$11,500,000), as well as $30,000,000 from the retirement of a
term loan to Interim, for net proceeds from the transaction of
$218,500,000. The Company recorded a net gain on the sale of
stock of $27,265,000.

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

The information required by Item 101(b) of Regulation S-K
relating to financial information about industry segments is
contained in the Notes to the Consolidated Financial Statements
in the Company's annual report to security holders for the fiscal
year ended April 30, 1994, and is hereby incorporated by
reference.

NUMBER OF EMPLOYEES

The Company, including its subsidiaries, has approximately
3,400 regular full-time employees. The highest number of persons
employed by the Company during the fiscal year ended April 30,
1994, including seasonal employees, was approximately 82,800.

DESCRIPTION OF BUSINESS

H&R BLOCK TAX SERVICES, INC. ("TAX SERVICES")

GENERALLY. The income tax return preparation and related
services segment continues to be the Company's largest business
segment. Such services are provided to the public through a
system of offices operated by Tax Services or by others to whom
Tax Services has granted franchises. References in this Section
to "Tax Services" include H&R Block Tax Services, Inc., and its
subsidiaries involved in the income tax return preparation
business, and references in this Section to "H&R Block" include
both Tax Services and its franchisees.

Tax Services provides income tax return preparation services
and electronic filing services worldwide and refund discounting
services in Canada. In addition, H&R Block's Executive Tax
Service provides income tax return preparation services generally
to taxpayers with more complicated returns. H&R Block served
18,107,000 taxpayers worldwide during fiscal year 1994, a decrease
from the 18,182,800 taxpayers served in fiscal year 1993. "Taxpayers
served" includes taxpayers for whom H&R Block prepared income tax
returns as well as taxpayers for whom Block provided only electronic
filing services.

H&R Block also markets its knowledge of how to prepare income
tax returns through its income tax training schools. These
schools teach taxpayers how to prepare their own income tax
returns, as well as provide Tax Services with a source of trained
income tax return preparers. During the 1994 fiscal year,
133,458 students enrolled in H&R Block's basic and advanced
income tax courses, compared to 133,268 students during fiscal
year 1993.

TAX RETURN PREPARATION. During the 1994 income tax filing
season (January 3 through April 30), H&R Block offices prepared
approximately 15,181,000 individual United States and Canadian
income tax returns. About 13,037,000 of these returns were
United States returns, constituting 12.2% of an Internal Revenue
Service estimate of total U.S. individual income tax returns
filed during that time period. Tax Services prepared
approximately 2,144,000 Canadian returns filed with Revenue
Canada during the 1994 income tax filing season, a decrease from
the 2,225,000 Canadian returns prepared in the previous year.
H&R Block also prepares U.S. income tax returns in other
countries and Australian tax returns in Australia. The returns
prepared at offices in countries outside of the United States and
Canada constituted 2.5% of the total returns prepared by H&R

Block in the last fiscal year. The following table shows the
approximate number of income tax returns prepared at H&R Block
offices in the United States and Canada during the last five tax
filing seasons:

Tax Season Ended April 30
(in thousands)

1990 1991 1992 1993 1994

Returns prepared
(U.S. and Canada) 13,318 14,589 15,179 15,189 15,181

During the tax season, most H&R Block offices are open from
9:00 a.m. to 9:00 p.m. weekdays and from 9:00 a.m. to 5:00 p.m.
Saturdays and Sundays. Office hours are often extended during
peak periods. Most tax preparation business is transacted on a
cash basis. The procedures of Tax Services have been developed
so that a customer's tax return is prepared in his or her
presence, in most instances in less than one hour, on the basis
of information furnished by the customer. In all Company-owned
offices and most franchised offices, tax returns are prepared
with the assistance of a computer. After the customer's return
has been initially prepared, he or she is advised of the amount
of his or her tax due or refund. The return, however, is
retained and reviewed for theoretical accuracy. After completion
of this review and after copies of the return have been made, the
return is presented to the customer for signature and filing.
These post-preparation procedures must be modified somewhat for
customers who desire to have their returns electronically filed
(see "Electronic Filing," below). If an H&R Block preparer makes
an error in the preparation of a customer's tax return that
results in the assessment of any interest or penalties on addi-
tional taxes due, while H&R Block does not assume the liability
for the additional taxes, it guarantees payment of the interest
and penalties.

EXECUTIVE TAX SERVICE. In addition to its regular offices,
H&R Block offers tax return preparation services at Executive Tax
Service offices in the United States and Canada. Appealing to
taxpayers with more complicated returns, Executive Tax Service
stresses the convenience of appointments, year-round tax service
from the same preparer and private office interviews. The number
of Executive Tax Service offices increased from 458 in fiscal
year 1993 to 515 in 1994. In fiscal 1994, the number of
Executive Tax Service clients increased to 513,726, compared to
432,497 in 1993 and 329,349 in 1992. Tax Services plans to
continue to expand the Executive Tax Service segment of its tax
return preparation business.

ELECTRONIC FILING. Tax Services and its participating
franchisees offer to taxpayers a service consisting of the
electronic filing of individual income tax returns. Electronic
filing reduces the amount of time required for a taxpayer to
receive a federal tax refund and provides assurance to the client
that the return, as filed with the Internal Revenue Service, is
mathematically accurate. If the customer desires, he or she may

have his or her refund deposited by the Treasury Department
directly into his or her account at a financial institution
designated by the customer. Tax Services and its franchisees
filed approximately 7,559,000 tax returns electronically in 1994,
compared to 7,302,000 in fiscal 1993 and 6,778,000 in fiscal
1992. In some areas of the United States in 1994, Tax Services
offered the electronic filing service at no charge to those
clients for whom H&R Block prepared the tax return.

For U.S. returns, H&R Block offers a refund anticipation loan
service in conjunction with its electronic filing service. In
cooperation with selected national banking institutions,
electronic filing customers who meet certain eligibility criteria
are offered the opportunity to apply for loans from the banks in
amounts based upon the customers' anticipated federal income tax
refunds. Under this program, income tax return information is
simultaneously transmitted by H&R Block to the Internal Revenue
Service and the lending bank. Within a few days after the date
of filing, a check in the amount of the loan, less a transaction
fee (retained by the bank), is received by the refund
anticipation loan customer. The Internal Revenue Service then
deposits the participating customer's actual federal income tax
refund into a designated account at the bank in order for the
loan to be repaid. H&R Block's tax return preparation fee and
electronic filing fee may be withheld from the loan proceeds and
paid by the bank to Tax Services or the franchisee involved.
Approximately 5,554,000 refund anticipation loans were processed
in 1994 by H&R Block, compared to 5,662,000 in 1993.

In 1994, H&R Block offered a service to transmit state income
tax returns to state tax authorities in 18 states and plans to
continue to expand this program as more states make this filing
alternative available to their taxpayers. H&R Block also offered
the electronic filing of U.S. income tax returns at offices
located in Europe and the electronic filing of Australian and
Canadian income tax returns at its offices in Australia and
Canada, respectively.

CASH BACK. In Canada, the Company and its franchisees offer
a refund discount ("Cash Back") program to their customers. The
procedures which H&R Block must follow in conducting the program
are specified by Canadian law. In accordance with current
Canadian regulations, if a customer's tax return indicates that
such customer is entitled to a tax refund, a check is issued by
H&R Block to the customer for an amount which is equal to the sum
of (1) 85% of that portion of the anticipated refund which is
less than or equal to $300 and (2) 95% of that portion of the
refund in excess of $300. The customer assigns to H&R Block the
full amount of the tax refund to be issued by Revenue Canada.
The refund check is then sent by Revenue Canada directly to H&R
Block and deposited by H&R Block in its bank account. In
accordance with the law, the discount is deemed to include both
the tax return preparation fee and the fee for tax refund
discounting. This program is financed by short-term borrowing.
The number of returns discounted under the Cash Back program
decreased from 871,592 in fiscal year 1993 to 663,951 in fiscal

year 1994. A decrease in 1994 was anticipated by the Company due
to changes in procedures for the distribution of welfare payments
in Canada.

OWNED AND FRANCHISED OFFICES. Most H&R Block offices are
similar in appearance and usually contain the same type of
furniture and equipment, in accordance with the specifications of
Tax Services. Free-standing offices are generally located in
business and shopping centers of large metropolitan areas and in
the central business areas of smaller communities. All offices
are open during the tax season. During the balance of the year
only a limited number of offices are open, but through telephone
listings, H&R Block personnel are available to provide service to
customers throughout the entire year.

In fiscal year 1994, H&R Block also operated 895 offices in
department stores, including 731 offices in Sears, Roebuck & Co.
stores operated as "Sears Income Tax Service by H&R Block."
During the 1994 tax season, the Sears facilities constituted
approximately 7.6% of the tax office locations of H&R Block. In
1994, the Sears locations were operated under a license agreement
that expires on December 31, 1994. A new license agreement is
currently being negotiated and the Company has every reason to
believe that Tax Services' contractual relationship with Sears
will continue. Tax Services believes its relations with Sears to
be excellent and that both parties to the license arrangement
view the operations thereunder to date as satisfactory.

On April 15, 1994, there were 9,577 H&R Block offices in
operation principally in all 50 states, the District of Columbia,
Canada, Australia and Europe, compared to 9,511 offices in opera-
tion on April 15, 1993. Of the 9,577 offices, 4,537 were owned
and operated by Tax Services and 5,040 were owned and operated by
independent franchisees. Of such franchised offices, 3,460 were
owned and operated by "satellite" franchisees of Tax Services
(described below), 907 were owned and operated by "major" fran-
chisees (described below) and 673 were owned and operated by
satellite franchisees of major franchisees. From time to time,
the Company has acquired the operations of existing franchisees
and Tax Services will continue to do so if future conditions
warrant such acquisitions and satisfactory terms can be
negotiated.

Two types of franchises have principally been granted by the
tax services segment of the Company. "Major" franchisees entered
into agreements with the Company (primarily in the Company's
early years) covering larger cities and counties and providing
for the payment of franchise royalties based upon a percentage of
gross revenues of their offices. Under the agreements, the
Company granted to each franchisee the right to the use of the
name "H&R Block" and provided a Policy and Procedure Manual and
other supervisory services. Tax Services offers to sell
furniture, signs, advertising materials, office equipment and
supplies to major franchisees. Each major franchisee selects and
trains the employees for his or her office or offices. Since
March 1993, HRB Royalty, Inc., a Delaware corporation and a
wholly-owned subsidiary of Tax Services, has served as the
franchisor under the major franchise agreements.

In smaller localities, Tax Services grants what it terms
"satellite" franchises. A satellite franchisee receives from Tax
Services signs, designated equipment, specialized forms, local
advertising, initial training, and supervisory services and,
consequently, pays the Company a higher percentage of his or her
gross tax return preparation and related service revenues as a
franchise royalty than do major franchisees. Substantially all
of the satellite franchises of Tax Services are located in cities
with populations of 15,000 or less. Some major franchisees also
grant satellite franchises in their respective areas.

It has always been the policy of the Company to grant tax
return preparation franchises to qualified persons without an
initial franchise fee; however, the policy of Tax Services is to
require a deposit to secure compliance with franchise contracts.
The deposit fund as of April 30, 1994, amounted to $2,378,000.

SEASONALITY OF BUSINESS. Since most of the customers of Tax
Services file their tax returns during the period from January
through April of each year, substantially all of Tax Services'
revenues from income tax return preparation, related services and
franchise royalties are received during this period. As a
result, Tax Services operates at a loss through the first nine
months of its fiscal year. Historically, such losses primarily
reflect payroll of year-round personnel, training of income tax
preparers, rental and furnishing of tax offices, and other costs
and expenses relating to preparation for the following tax
season.

SERVICE MARKS AND TRADEMARKS. HRB Royalty, Inc., a Delaware
corporation and a wholly-owned subsidiary of Tax Services, owns
the following service marks registered on the principal register
of the United States Patent Office:

H&R Block in Two Distinct Designs
The Income Tax People
H&R Block Income Tax and Design
Income Tax Saver
Executive (when used in connection with the
preparation of income tax returns for others)
Rapid Refund H&R Block and Design

Tax Services has a license to use the trade names and service
marks of HRB Royalty, Inc., in the conduct of the business of Tax
Services.

In addition, HRB Royalty, Inc., owns the following
unregistered service marks and trademarks:

America's Largest Tax Service
Nation's Largest Tax Service

COMPETITIVE CONDITIONS. The tax return preparation and
electronic filing business is highly competitive. Tax Services
considers its primary source of tax return preparation
competition to be the individual who prepares his own tax return.

In addition, there are substantial numbers of tax return prepara-
tion firms. Many of these firms and many firms not otherwise in
the tax return preparation business are involved in providing
electronic filing and refund anticipation loan services to the
public. Commercial tax return preparers and electronic filers
are highly competitive with regard to price, service and
reputation for quality. Tax Services believes that in terms of
the number of offices and tax returns prepared it is the largest
tax return preparation firm in the United States. Tax Services
also believes that in terms of the number of offices and tax
returns electronically filed in fiscal year 1994, it is the
largest provider of electronic filing services in the United
States.

COMPUSERVE INCORPORATED ("COMPUSERVE")

GENERALLY. CompuServe, the Company's information services
and computer communications subsidiary based in Columbus, Ohio,
operates through three divisions - Information Services, Network
Services and Support Services. CompuServe became a wholly-owned
subsidiary of the Company in May 1980 and is presently a wholly-
owned subsidiary of H&R Block Group, Inc. From its origins as a
computer time-sharing firm, CompuServe has become a leading
provider of computer-based information and communications
services to businesses and individual owners of personal
computers. CompuServe's highly sophisticated and efficient
telecommunications network links CompuServe subscribers and
system users to each other, to CompuServe's central computer
facilities or to other computer centers and data bases
distributed across the country and around the world. As of April
30, 1994, CompuServe's telecommunications network extended to 349
metropolitan local access points in the United States, covering
all major metropolitan areas and many rural locations. Through
the use of supplementary and other networks, CompuServe provides
network coverage in the United States and in approximately 100
foreign countries which have public networks. CompuServe has
also established local dial access points in more than 140 cities
in ten countries.

CompuServe's largest division is its Information Services
Division. The CompuServe Information Service, the online service
for personal computer owners, provides subscribers with access to
data stored on mainframes and networked personal computers.
CompuServe is one of the leading providers of information
services to national and international markets. The total number
of subscribers to CompuServe Information Services increased to
more than 1.8 million personal computer owners worldwide at the
end of fiscal year 1994, compared to approximately 1.3 million at
the end of the previous year. Membership in 1994 grew by more
than 100% in Europe to 100,000 subscribers, helped in part by a
new office in Paris. Among the services accessible through
CompuServe's information system are online shopping services,
stock market brokerage services and airline reservation services.
Customers can also play computer games, conduct research, send
and receive messages and exchange helpful tips about computer use
through special interest bulletin boards called "Forums" simply
by connecting their personal computers to an ordinary telephone
line.

Through its Information Services Division, CompuServe has
also developed a wide range of business services that enable
companies to link their employees with the information needed to
conduct business. The services include electronic mail, internal
corporate information systems for diverse applications, and a
host of business-related databases. Electronic mail and other
communications systems provided by CompuServe allow business
users flexible, two-way access to information in operating areas
such as sales, marketing, investment research and information
management. Through the use of these systems, suppliers and
customers are able to access information easily and securely
through personal computers and computer terminals.

CompuServe's Network Services Division provides value-added
packet data network, frame relay and local area network services
to corporations and many other diverse organizations. The
network offers these organizations an exceptionally fast and
reliable data communications system which can be customized to
meet their particular requirements. The number of clients of the
Network Services Division totalled 586 at the end of fiscal year
1994, an increase from the 484 clients at the end of fiscal year
1993.

One of the many applications for which the CompuServe network
is utilized by its customers relates to point-of-sale
transactions. CompuServe is a leading provider of value-added
telecommunications services for point-of-sale authorization of
credit card purchases. Using the CompuServe network, a merchant
can pass a customer's card through a computer terminal and
determine almost instantly whether the card is valid.

In addition to providing technical support to all other
divisions of CompuServe, the Support Services Division of
CompuServe again in fiscal year 1994 lent its expertise to the
income tax return preparation and related services segment of the
Company in the nationwide operation of H&R Block Tax Services,
Inc.'s electronic filing program. The system developed and
implemented by the Support Services Division ensured fast,
accurate, high-volume transmission and processing of tax return
refund claims. The Support Services Division also developed the
income tax return preparation software used in H&R Block offices
nationwide during fiscal year 1994.

Fiscal year 1994 saw the introduction of CompuServe CD, the
multimedia companion to the CompuServe Information Service that
combines CD-ROM based information, applications, sound, graphics
and video with CompuServe's online services.

Subsequent to the end of fiscal year 1994, CompuServe
disposed of CompuServe Data Technologies, a division that
marketed database management software, and Collier-Jackson, Inc.,
a subsidiary of CompuServe that marketed newspaper management and
financial software.

SERVICE MARKS, TRADEMARKS, PATENTS OR COPYRIGHTS. CompuServe
owns the following service marks registered on the principal
register of the United States Patent Office:

CompuServe
EasyPlex
The Electronic Mall
B+ Protocol
Forum
CB Simulator

In addition, CompuServe owns the following trademarks
registered on the principal register of the United States Patent
Office:

CompuServe Information Manager
InfoPlex
B Protocol
WINCIM
FRAME-Net

CompuServe also owns or claims numerous unregistered service
marks or trademarks.

CompuServe presently holds no patents on its software
programs. CompuServe is licensed by others to use various
software programs and offers such programs to customers on a
surcharge basis.

COMPETITIVE CONDITIONS. The online information and remote
computer services businesses are highly competitive and consist
of a large number of companies. The Company believes that, in
terms of subscriber base, CompuServe is the largest provider of
worldwide online information services. The remote computer
services industry is highly fragmented and no single supplier can
be considered to occupy a dominant position in the industry.
CompuServe's Network Division continues to compete successfully
with competitors who have larger sales and technical
organizations than CompuServe.

BLOCK FINANCIAL CORPORATION ("BFC")

GENERALLY. Block Financial Corporation, a Delaware
corporation and a subsidiary of H&R Block Group, Inc., was
incorporated in May 1992 and such corporation, or a subsidiary
thereof, is involved in investing in refund anticipation loans,
offering H&R Block and CompuServe bank cards, leasing computer
equipment to franchisees of H&R Block Tax Services, Inc. (or one
of its subsidiaries), extending equity lines of credit to such
franchisees, providing business insurance services to H&R Block
Tax Services, Inc., its franchisees and other subsidiaries of the
Company, and, through a captive insurance subsidiary, reinsuring
certain Company risks and providing insurance coverages for
third-party businesses.

BFC is a party to an agreement with Mellon Bank (DE)
National Association ("Mellon") under which BFC purchases
interests in a trust to which certain refund anticipation loans
made by Mellon in the United States are sold. Mellon is one of
the national banking institutions through which such loans are
made to H&R Block electronic filing customers, as described in
the section entitled "H&R Block Tax Services, Inc.," under
"Electronic Filing." During fiscal year 1994, Mellon offered
refund anticipation loans to customers of Tax Services and its
franchisees in an area that included approximately one-half of
the total of company-owned and satellite franchised offices in
the United States. BFC purchased an interest of just under 50%
in all refund anticipation loans made by Mellon during fiscal
year 1994 at those tax offices in the Mellon territory. BFC's
purchases were financed through short-term borrowing. BFC bears
all of the risks associated with its interests in the refund
anticipation loans.

Through Columbus Bank and Trust Company, Columbus, Georgia,
BFC had issued in excess of 45,000 credit cards by the end of
fiscal year 1994. The "H&R Block ValueCard" is designed for
customers of H&R Block Tax Services, Inc., and the CompuServe
Visa Card is designed for customers of CompuServe Incorporated.
The cards currently feature a low annual fee, a market-based
annual percentage rate of interest equivalent to the prime rate,
plus 9.9%, and rebates for the services offered by Tax Services
or CompuServe, as the case may be. BFC plans to introduce a
value-added on-line transaction review service for customers with
a CompuServe Visa Card.

In a program designed to help franchise owners automate
their income tax return preparation operations in an economical
manner, Franchise Partner, Inc., a subsidiary of BFC, offers
direct finance capital leases to franchisees of either H&R Block
Tax Services, Inc., or one of its subsidiary corporations in
order to finance computer equipment. The leases offered are for
terms of 24 or 36 months.

Franchise Partner, Inc., also offers to such franchisees
equity lines of credit which must be used for purposes related to
the operation of the franchise. A franchise equity line of
credit is secured by the franchise itself. The program is
designed to provide franchise owners with lines of credit with
reasonable interest rates in order to better enable the
franchisees to refinance existing business debt, expand or
renovate offices or meet off-season cash flow needs. The minimum
line of credit amount is generally $10,000 and the standard term
for an equity line of credit is five years (with provisions for
automatic extensions of such term). In most states during fiscal
year 1994, draws against a line of credit were charged a variable
monthly interest rate of the prime interest rate, plus one
percent.

At the end of fiscal year 1994, the operations of the
personal finance software (Managing Your Money (copyright))
portion of MECA Software, Inc., were combined with BFC. BFC
intends to expand the market for such software beyond the
consumer market to an integrated system designed to tie financial
service companies to their customers.

COMPETITIVE CONDITIONS. The credit card, computer equipment
leasing, lending and insurance businesses are highly competitive
and consist of a large number of companies. No single supplier
can be considered to occupy a dominant position in any of these
businesses.

ITEM 2. PROPERTIES.

The executive offices of both the Company and H&R Block Tax
Services, Inc., are located at 4410 Main Street, Kansas City,
Missouri, in a three-story building owned by Tax Services which
was constructed in 1963 and expanded in 1965, 1973 and 1981. Tax
Services has acquired property adjacent to such building and an
additional expansion is in the planning stages. Most other
offices of Tax Services (except those in department stores) are
operated in premises held under short-term leases providing fixed
monthly rentals, usually with renewal options.

CompuServe's executive offices are located in an office
complex in Columbus, Ohio, owned by CompuServe. CompuServe also
owns and occupies two other buildings in the Columbus area and
has broken ground on new facilities in the Columbus area
(presently planned for occupancy in the third quarter of fiscal
year 1996). In addition, CompuServe leases office space in three
other buildings in the Columbus area and in a number of other
locations in the United States and Europe. CompuServe owns SC30M
computer systems purchased from Systems Concepts, Inc., and has
assembled several SC-30 and SC-40 processors on-site via an
agreement with such firm. CompuServe also owns central
processors manufactured by Digital Equipment Corporation and
located in its two computer centers. Due to the varying demands
of different computer programs on the capabilities of the com-
puter hardware, it is not possible to define a single measurement
of the hardware capacity.

The executive offices of Block Financial Corporation are
located in leased offices at 4435 Main Street, Kansas City,
Missouri.

ITEM 3. LEGAL PROCEEDINGS.

There are no material legal proceedings pending by or
against the Company or any of its subsidiaries.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to a vote of security holders,
through the solicitation of proxies or otherwise, during the
fourth quarter of the fiscal year ended April 30, 1994.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT.

The executive officers of the Company, each of whom has been
elected to serve at the discretion of the Board of Directors of
the Company, are:

Name and age Office(s)
- - - - ---------------------- ------------------------------
Henry W. Bloch (71) Chairman of the Board since
August 1989; Chief Executive
Officer from 1974 through July
1992; President from 1962
through July 1989; Member of
the Board of Directors since
1955.

Thomas M. Bloch (40) President since August 1989;
Chief Executive Officer since
August 1992; Chief Operating
Officer from August 1989
through July 1992; Executive
Vice President from August
1988 through July 1989; Member
of the Board of Directors
since 1983.

William F. Evans (46) Senior Vice President,
Corporate Operations, since
August 1992. See Note 1.

William P. Anderson (45) Vice President, Corporate
Development, since December
1991; Chief Financial Officer
since August 1992. See Note
2.

Robert L. Arnold (51) Vice President since February
1986; Director of Internal
Audit since 1978.

Ozzie Wenich (51) Vice President, Corporate Con-
troller and Treasurer since
March 1994; Vice President and
Corporate Controller from Sep-
tember 1985 until March 1994.

Note 1: Mr. Evans was Executive Vice President and Chief
Financial Officer of Dun & Bradstreet Software
Services, Inc., Atlanta, Georgia, from 1990 through
July 1992; and Executive Vice President and Chief
Financial Officer of Management Science America, Inc.,
Atlanta, Georgia, from 1988 until 1990.

Note 2: Mr. Anderson was a partner in KPMG Peat Marwick,
accounting firm, from 1984 until December 1991, in
Atlanta, Georgia, serving in various capacities,
including responsibility for the firm's national
corporate finance consulting practice.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS.

The information called for by this item is contained in the
Company's annual report to security holders for the fiscal year
ended April 30, 1994, under the heading "Common Stock Data," and
is hereby incorporated by reference. The Company's Common Stock
is traded principally on the New York Stock Exchange. The
Company's Common Stock is also traded on the Pacific Stock
Exchange. On June 10, 1994, there were 35,485 stockholders of
the Company.

ITEM 6. SELECTED FINANCIAL DATA.

The information called for by this item is contained in the
Company's annual report to security holders for the fiscal year
ended April 30, 1994, under the heading "Selected Financial
Data," and is hereby incorporated by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

The information called for by this item is contained in the
Company's annual report to security holders for the fiscal year
ended April 30, 1994, under the headings "Management's Discussion
and Analysis of Results of Operations" and "Management's
Discussion and Analysis of Liquidity and Capital Resources," and
is hereby incorporated by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The information called for by this item and listed at Item
14(a)1 is contained in the Company's annual report to security
holders for the fiscal year ended April 30, 1994, and is hereby
incorporated by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

There has been no change in the registrant's accountants
during the two most recent fiscal years or any subsequent interim
time period.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

ITEM 11. EXECUTIVE COMPENSATION.

The information called for by this item is contained in the
Company's definitive proxy statement to be filed pursuant to
Regulation 14A not later than 120 days after April 30, 1994, in
the section titled "Compensation of Executive Officers," and is
incorporated herein by reference, except that information
contained in such section under the subtitles "Performance
Graphs" and "Compensation Committee Report" is not incorporated
herein by reference and is not to be deemed "filed" as part of
this filing.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information called for by this item is contained in the
Company's definitive proxy statement to be filed pursuant to
Regulation 14A not later than 120 days after April 30, 1994, in
the section titled "Election of Directors," and in the section
titled "Compensation of Executive Officers," and is incorporated
herein by reference, except that information contained in the
section titled "Compensation of Executive Officers" under the
subtitles "Performance Graphs" and "Compensation Committee
Report" is not incorporated herein by reference and is not deemed
"filed" as part of this filing.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.

(a) 1. FINANCIAL STATEMENTS

The following consolidated financial
statements of H&R Block, Inc., and
Subsidiaries are incorporated by reference
to the Company's annual report to security
holders for the year ended April 30, 1994:

Page

Consolidated Statements of Earnings 19
Consolidated Balance Sheets 20
Consolidated Statements of Cash Flows 21
Notes to Consolidated Financial Statements 22
Quarterly Financial Data 27
Independent Auditors' Report 29

2. FINANCIAL STATEMENT SCHEDULES

Independent Auditors' Report

Schedule I - Marketable Securities - Other Security
Investments

Schedule II - Amounts Receivable from Related Parties
and Underwriters, Promoters and Employees Other
Than Related Parties

Schedule VIII - Valuation and Qualifying Accounts

Schedule IX - Short-Term Borrowings

Schedules not filed herewith are either not
applicable, the information is not material
or the information is set forth in the financial
statements or notes thereto.

3. EXHIBITS

3(a) Restated Articles of Incorporation
of H&R Block, Inc., as amended,
filed as Exhibit 4(a) to the Com-
pany's quarterly report on Form 10-
Q for the quarter ended October 31,
1991, are incorporated herein by
reference.

3(b) Bylaws of H&R Block, Inc., as
amended, filed as Exhibit 4 to the
Company's quarterly report on Form
10-Q for the quarter ended October
31, 1989, are incorporated by
reference.

4(a) Conformed copy of Rights Agreement
dated as of July 14, 1988 between
H&R Block, Inc., and Centerre Trust
Company of St. Louis, filed on
August 9, 1993 as Exhibit 4(c) to
the Company's Registration
Statement on Form S-8 (File No. 33-
67170), is incorporated herein by
reference.

4(b) Form of Certificate of Designation,
Preferences and Rights of
Participating Preferred Stock of
H&R Block, Inc., filed on August 9,
1989 as Exhibit 4(d) to the
Company's Registration Statement on
Form S-8 (File No. 33-30453), is
incorporated by reference.

4(c) Copy of Amendment to Rights
Agreement dated as of May 9, 1990
between H&R Block, Inc., and
Boatmen's Trust Company, filed as
Exhibit 4(c) to the Company's
annual report on Form 10-K for the
fiscal year ended April 30, 1990,
is incorporated herein by
reference.

4(d) Copy of Second Amendment to Rights
Agreement dated September 11, 1991
between H&R Block, Inc., and
Boatmen's Trust Company, filed as
Exhibit 4(b) to the Company's
quarterly report on Form 10-Q for
the quarter ended October 31, 1991,
is incorporated herein by
reference.

10(a) The Company's 1984 Long-Term
Executive Compensation Plan, as
amended (terminated as of September
8, 1993, except with respect to
awards then outstanding
thereunder), filed as Exhibit 28(a)
to the Company's quarterly report
on Form 10-Q for the quarter ended
October 31, 1991, is incorporated
herein by reference.

10(b) The Company's 1993 Long-Term
Executive Compensation Plan, filed
as Exhibit 10 to the Company's
quarterly report on Form 10-Q for
the quarter ended October 31, 1993,
is incorporated herein by
reference.

10(c) The H&R Block Long-Term Performance
Program, as amended.

10(d) The H&R Block Deferred Compensation
Plan for Directors, as amended.

10(e) The H&R Block Deferred Compensation
Plan for Executives, as amended.

10(f) The H&R Block Supplemental Deferred
Compensation Plan for Executives.

10(g) The Amended and Restated H&R Block,
Inc. Retirement Plan for Non-
Employee Directors, filed as
Exhibit 10(e) to the Company's
annual report on Form 10-K for the
fiscal year ended April 30, 1989,
is incorporated herein by
reference.

10(h) The Company's 1989 Stock Option
Plan for Outside Directors, as
amended, filed as Exhibit 28(b) to
the Company's quarterly report on
Form 10-Q for the quarter ended
October 31, 1991, is incorporated
herein by reference.

11 Statement re Computation of Per
Share Earnings.

13 Those portions of the annual report
to security holders for the fiscal
year ended April 30, 1994 which are
expressly incorporated by reference
in this filing are filed as Exhibit 13
hereto.

21 Subsidiaries of the Company.

23 The consent of Deloitte & Touche,
Certified Public Accountants, is located
immediately after the signature pages
contained in this filing.

(b) Reports on Form 8-K.

The Company did not file any current reports on
Form 8-K during the fourth quarter of the year ended
April 30, 1994.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, there-
unto duly authorized.

H&R BLOCK, INC.

June 22, 1994 By/s/ Thomas M. Bloch
---------------------------
Thomas M. Bloch, President
and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the date indicated.

Signature Title
- - - - ----------------------- -----------------------

/s/ Thomas M. Bloch President, Chief
- - - - ----------------------- Executive Officer and
Thomas M. Bloch Director (principal
executive officer)

/s/ G. Kenneth Baum Director
- - - - -----------------------
G. Kenneth Baum

/s/ Henry W. Bloch Director
- - - - -----------------------
Henry W. Bloch

/s/ Robert E. Davis Director
- - - - -----------------------
Robert E. Davis

/s/ Donna R. Ecton Director
- - - - -----------------------
Donna R. Ecton

/s/ Henry F. Frigon Director
- - - - -----------------------
Henry F. Frigon

/s/ Roger W. Hale Director
- - - - -----------------------
Roger W. Hale

(Signed as to each on June 22, 1994)

Signature Title
- - - - -------------------------- -------------------------

/s/ Marvin L. Rich Director
- - - - --------------------------
Marvin L. Rich

/s/ Frank L. Salizzoni Director
- - - - --------------------------
Frank L. Salizzoni

/s/ Morton I. Sosland Director
- - - - --------------------------
Morton I. Sosland

/s/ William P. Anderson Vice President, Corporate
- - - - -------------------------- Development and Chief
William P. Anderson Financial Officer
(principal financial
officer)

/s/ Ozzie Wenich Vice President, Corporate
- - - - -------------------------- Controller and Treasurer
Ozzie Wenich (principal accounting
officer)

(Signed as to each on June 22, 1994)

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Post-Effective
Amendment No. 4 to Registration Statement No. 33-185 of H&R
Block, Inc. and subsidiaries (relating to shares of Common Stock
issued under the 1984 Long-Term Executive Compensation Plan) on
Form S-8 and Registration Statement No. 33-33889 of H&R Block,
Inc. and subsidiaries (relating to shares of Common Stock
issuable under the 1989 Stock Option Plan for Outside Directors)
on Form S-8 of our reports dated June 21, 1994, appearing in and
incorporated by reference in this Annual Report on Form 10-K of
H&R Block, Inc. and subsidiaries for the year ended April 30,
1994.

/s/Deloitte & Touche

Kansas City, Missouri
July 28, 1994

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
H&R Block, Inc.
Kansas City, Missouri

We have audited the consolidated financial statements of H&R
Block, Inc. and subsidiaries as of April 30, 1994 and 1993 and
for each of the three years in the period ended April 30, 1994,
and have issued our report thereon dated June 21, 1994; such
consolidated financial statements and report are included in your
1994 Annual Report to Stockholders and are incorporated herein by
reference. Our audits also included the financial statement
schedules of H&R Block, Inc. and subsidiaries, listed in Item 14.
These financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such financial
statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present
fairly in all material respects the information set forth
therein.

/s/ Deloitte & Touche

Kansas City, Missouri
June 21, 1994

H&R BLOCK, INC.
AND SUBSIDIARIES

Schedule I - MARKETABLE SECURITIES - OTHER SECURITY INVESTMENTS

APRIL 30, 1994

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

CURRENT ASSETS:
MUNICIPAL BONDS:
Richfield, Minnesota Independent School District
General Obligation Series 1993 B Floating Rate,
Tax Exempt Adjustable Rate Bonds. Rate resets
monthly on the first. 2,000,000 $2,000,000 $2,000,000 $2,000,000

Richfield, Minnesota Independent School District
General Obligation School Building Series 1993 B
Floating Rate, Tax Exempt Adjustable Rate Bonds.
Rate resets monthly on the first. 2,260,000 2,260,000 2,260,000 2,260,000

Puerto Rico Commonwealth, Tax Exempt Adjustable Rate
Bond. Rate resets every 28 days. 1,700,000 1,700,000 1,700,000 1,700,000

McLean County, North Dakota Solid Waste Disposal
Revenues National Rural Utility COOP, Tax Exempt
Adjustable Rate Bonds. Rate resets every 32 days. 3,200,000 3,200,000 3,200,000 3,200,000

Washington State Public Power Supply System #2, Tax
Exempt Adjustable Rate Bonds. Rate resets every 35
days. 1,580,000 1,580,000 1,580,000 1,580,000

Philadelphia Hospital Pennsylvania, Tax Exempt
Adjustable Rate Bonds. Rate resets every 35 days. 2,450,000 2,450,000 2,450,000 2,450,000

Illinois Housing Development Authority, Tax Exempt
Adjustable Rate Bonds. Rate resets every 35 days. 5,000,000 5,000,000 5,000,000 5,000,000

CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Massachusetts Health and Education Facility
Authority for Boston University, Tax Exempt
Adjustable Rate Bonds. Rate resets every 35 days. 6,250,000 6,249,312 6,250,000 6,250,000

Georgia State General Obligation Series A - Private
Placement, Tax Exempt Adjustable Rate Bonds. Rate
resets every 36 days. 3,140,000 3,140,000 3,140,000 3,140,000

Georgia State General Obligation Series A - Private
Placement, Tax Exempt Adjustable Rate Bonds. Rate
resets every 30 days. 4,300,000 4,300,000 4,300,000 4,300,000

California State Housing University Revenues, Tax
Exempt Adjustable Rate Bonds. Rate resets every 30
days. 7,600,000 7,600,000 7,600,000 7,600,000

Fairfax County, Virginia Industrial Development
Authority Revenues, Tax Exempt Adjustable Rate
Bonds. Rate resets every 29 days. 9,000,000 9,000,000 9,000,000 9,000,000

San Francisco, California City and County Sewer
Revenue Float, Tax Exempt Adjustable Rate Bonds.
Rate resets every 28 days. 2,800,000 2,800,000 2,800,000 2,800,000

Los Angeles, California Waste Water System Revenues
1992 B, Tax Exempt Adjustable Rate Bonds. Rate
resets every 34 days. 4,000,000 4,000,000 4,000,000 4,000,000

Pre-Refunded Pooled Private Placement, Tax Exempt
Adjustable Rate Bonds. Rate resets every 35 days. 5,000,000 5,000,000 5,000,000 5,000,000

First California Pre-Refunded, Tax Exempt Adjustable
Rate Bonds. Rate resets every 36 days. 5,000,000 5,000,000 5,000,000 5,000,000

First California Pre-Refunded, Tax Exempt Adjustable
Rate Bonds. Rate resets every 35 days. 1,100,000 1,100,000 1,100,000 1,100,000

Pre-Refunded Pooled Private Placement, Tax Exempt
Adjustable Rate Bonds. Rate resets every 35 days. 3,500,000 3,500,000 3,500,000 3,500,000

CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
New York City Municipal Water Financial Authority
Water and Sewer Systems Revenues, Tax Exempt
Adjustable Rate Bonds. Rate resets every 35 days. 2,000,000 2,000,000 2,000,000 2,000,000

Missouri State Environment Transportation and Energy
Revenue (Union Electric Company), Tax Exempt
Adjustable Rate Bonds. Rate resets every 35 days. 5,000,000 4,999,850 5,000,000 5,000,000

City of Chelsea, Massachusetts Lease Revenues Series
A, Tax Exempt Adjustable Rate Bonds. Rate resets
every 35 days. 5,000,000 5,000,000 5,000,000 5,000,000

Underwood, North Dakota Pollution Control Revenues
(COOP Power Association Project) Series A, Tax
Exempt Adjustable Rate Bonds. Rate resets every 34
days. 5,000,000 5,000,000 5,000,000 5,000,000

Los Angeles, California Waste and Water System
Revenues Series 1992 B, Tax Exempt Adjustable Rate
Bonds. Rate resets every 36 days. 4,000,000 4,000,000 4,000,000 4,000,000

Washington State Housing Financial Single Family
Mortgage Revenues Refunding, Tax Exempt Adjustable
Rate Bonds. Rate resets every 36 days. 2,100,000 2,100,000 2,100,000 2,100,000

Missouri State Environmental Transportation and
Energy Revenues (Union Electric), Tax Exempt
Adjustable Rate Bonds. Rate resets every 36 days. 2,900,000 2,900,000 2,900,000 2,900,000

City of Chelsea, Massachusetts Lease Revenues Series
A, Tax Exempt Adjustable Rate Bonds. Rate resets
every 36 days. 2,000,000 2,000,000 2,000,000 2,000,000

Montana State Health Facility Authority, Tax Exempt
Adjustable Rate Bonds. Rate resets every 35 days. 3,650,000 3,650,000 3,650,000 3,650,000

New York, New York City Municipal Water Financial
Authority Water and Sewer Revenue Fiscal 1989 B,
Tax Exempt Adjustable Rate Bonds. Rate resets
every 36 days. 5,000,000 5,000,000 5,000,000 5,000,000

CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
California State Department of Water Resource, Tax
Exempt Adjustable Rate Bonds. Rate resets every 39
days. 8,700,000 8,700,000 8,700,000 8,700,000

Vermont Student Assistance Corporation Series E, Tax
Exempt Adjustable Rate Bonds. Rate resets every 35
days. 2,300,000 2,300,000 2,300,000 2,300,000

Student Loan Acquisition Authority of Arizona Series
1994 A-2 "AGES", Tax Exempt Adjustable Rate Bonds.
Rate resets every 35 days. 5,000,000 5,000,000 5,000,000 5,000,000

City of Wamego, Kansas (Western Resources Project)
Pollution Control Revenues, Tax Exempt Adjustable
Rate Bonds. Rate resets every 16 days. 5,000,000 4,999,450 4,999,450 4,999,450

Massachusetts Bay Transportation Authority General
Transportation System Series A, Tax Exempt
Adjustable Rate Bonds. Rate resets every 137 days. 1,500,000 1,501,080 1,501,080 1,500,432

New York State Dormitory Authority Revenues for
Cornell University, Tax Exempt Adjustable Rate
Bonds. Rate resets every 35 days. 5,000,000 5,000,000 5,000,000 5,000,000

New York State Urban Development 1994-7, Tax Exempt
Adjustable Rate Bonds. Rate resets every 128 days. 5,000,000 5,000,000 5,000,000 5,000,000

State of Washington General Obligation 1994-15, Tax
Exempt Adjustable Rate Bonds. Rate resets every
118 days. 3,400,000 3,400,000 3,400,000 3,400,000

Oklahoma City, Oklahoma Municipal Improvement
Authority Water System Revenue Bonds Series 1985 A,
Tax Exempt Municipal Bonds. 7.75% Mature May 1,
1994. 500,000 500,000 500,000 500,000

Missouri State Health and Education Facility for John
Knox Village. Letter of Credit at Security
Pacific. 7.375% Mandatory tender May 1, 1994 at
par. 1,000,000 996,250 1,000,250 1,000,000

CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Michigan State Hospital Finance Authority Revenue
Bonds for Henry Ford Hospital, Series 1984-A.
10.50% Callable May 1, 1994 at 102. 660,000 754,941 673,477 660,000

Missouri State Health and Educational Facilities
Authority for John Knox Village Revenue Bond.
7.375% Mandatory put May 1, 1994 at par. 745,000 773,362 745,186 745,000

Tonawanda Town, New York Bond Anticipation Notes.
2.75% Mature May 12, 1994. 2,250,000 2,249,887 2,249,181 2,250,000

Missouri State Health and Education Facility
Authority Revenue Series B, St. Louis University.
6.20% Matures June 1, 1994. 455,000 455,000 456,411 455,000

State of Texas Veterans Land Housing Division 1983
Authority, General Obligation Bond, Series A.
9.00% Callable June 1, 1994. 1,000,000 1,102,520 1,025,000 1,043,600

Minneapolis, Minnesota Water and Sewer Revenues
Series 1992, Tax Exempt Municipal Notes. 4.75%
Callable June 1, 1994 at par. 2,500,000 2,507,525 2,510,623 2,502,508

Fraser, Colorado Industrial Development Revenue
Refunding Series 1993 (Safeway, Inc. Project), Tax
Exempt Adjustable Put Bonds. 2.75% Mandatory put
June 1, 1994. 2,100,000 2,100,000 2,100,000 2,100,000

Tremonton City, Utah Industrial Development Revenue
Refunding Series 1993 (Safeway, Inc. Project), Tax
Exempt Adjustable Put Bonds. 2.75% Mandatory put
June 1, 1994. 1,300,000 1,300,000 1,300,000 1,300,000

South Essex, Massachusetts Sewer District Temporary
Notes General Obligation, Tax Exempt Municipal
Notes. 2.75% Mature June 17, 1994. 5,000,000 4,994,300 4,992,495 4,997,557

California Statewide Community Development Authority
Revenues Pool Series A, Tax Exempt Municipal Notes.
3.25% Mature June 30, 1994. 5,000,000 5,008,600 5,001,400 5,003,440

CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Philadelphia, Pennsylvania School District Tax and
Revenue Anticipation Notes, Tax Exempt Municipal
Notes. 3.625% Mature June 30, 1994. 5,000,000 5,013,650 5,003,250 5,006,825

Philadelphia, Pennsylvania School District Tax and
Revenue Anticipation Notes, Tax Exempt Municipal
Notes. 3.625% Mature June 30, 1994. 2,500,000 2,506,225 2,501,625 2,503,113

California School Cash Reserve Program Authority
Series A, Tax Exempt Municipal Notes. 3.40%
Mature July 5, 1994. 5,000,000 5,007,250 5,002,000 5,004,833

Lake County School District #116, Illinois Tax
Anticipation Warrants (Round Lake), Tax Exempt
Municipal Notes. 4.00% Mature July 19, 1994. 750,000 753,127 753,128 752,085

California State Revenue Anticipation Warrants Series
B, Tax Exempt Municipal Notes. 3.50% Mature July
26, 1994. 3,000,000 3,008,700 3,003,000 3,005,220

California State Revenue Anticipation Warrants Series
B, Tax Exempt Municipal Notes. 3.50% Mature July
26, 1994. 2,500,000 2,507,250 2,502,500 2,504,350

Will County School District #161 (Summit Hill)
Illinois Tax Anticipation Warrants, Tax Exempt
Municipal Notes. 3.49% Mature August 1, 1994. 500,000 500,540 500,540 500,324

Denver, Colorado City and County Airport Revenue
Bonds. 8.375% Callable August 1, 1994 at par. 1,000,000 1,130,490 1,007,030 1,030,495

Texas State General Obligation Bond. 6.50% Matures
August 1, 1994. 1,945,000 1,942,569 1,961,532 1,944,878

Illinois Housing Development Authority Residential
Revenue - Third Party Citibank, Tax Exempt
Adjustable Put Bond. 2.70% Optional put August 1,
1994. 5,000,000 5,001,200 5,002,400 5,000,600

Illinois Housing Development Authority Series C, Tax
Exempt Adjustable Put Bond. 2.70% Mandatory put
August 1, 1994. 3,520,000 3,517,466 3,521,690 3,518,733

CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Elizabeth, New Jersey Bond Anticipation Notes, Tax
Exempt Municipal Notes. 3.60% Mature August 3,
1994. 5,000,000 5,003,700 4,997,225 5,002,775

New Mexico Mortgage Finance Authority Single Family
Mortgage 1988 Series A (Federal Insurance of
Guaranty Asset Loans), Tax Exempt Adjustable Put
Bond. 3.125% Optional put September 1, 1994. 2,360,000 2,360,000 2,384,822 2,360,000

Passaic, New Jersey Tax Anticipation Notes, Tax
Exempt Municipal Notes. 3.75% Mature September
22, 1994. 3,000,000 3,006,570 2,998,764 3,004,380

Massachusetts Bay Transportation Authority General
Obligation Notes Series B, Tax Exempt Municipal
Notes. 3.25% Mature September 30, 1994. 4,600,000 4,612,052 4,602,668 4,607,533

Jersey City, New Jersey Bond Anticipation Notes, Tax
Exempt Municipal Notes. 3.50% Mature September
30, 1994. 5,000,000 5,012,750 4,992,095 5,009,107

Kansas City, Missouri Industrial Development
Authority Hospital Revenue Bond 1984 Series A (St.
Luke's Hospital) (Insured by Industrial Indemnity
Company). 9.40% Matures October 1, 1994. 250,000 249,375 256,938 249,974

Little Blue Valley, Missouri Sewer District Sewer
System Refunding Revenue Bond. 7.80% Matures
October 1, 1994. 500,000 498,750 510,310 499,940

Florida State Municipal Power, Tax Exempt Municipal
Bond. 9.00% Callable October 1, 1994. 1,000,000 1,128,770 1,046,030 1,010,318

Jacksonville, Florida St. John's River Power #1
Electric Authority Revenue Bond, Series 2. 9.00%
Matures October 1, 1994. 1,000,000 1,108,360 1,025,180 1,008,711

City of Dallas, Texas Water Works and Sewer System
Revenue Bond. 9.00% Matures October 1, 1994. 1,550,000 1,714,161 1,589,432 1,563,239

CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Michigan State Building Authority Revenue Detroit
Regional Prison Series I. 7.00% Matures October
1, 1994. 1,000,000 1,019,500 1,017,840 1,001,741

Nevada Housing Division Single Family Mortgage Senior
Revenues Series B, Tax Exempt Adjustable Put Bond.
3.25% Optional put October 1, 1994 at par. 1,315,000 1,314,671 1,330,938 1,314,726

Montana Board of Housing Single Family Mortgage
Revenues Series C, Tax Exempt Adjustable Put Bond.
3.25% Optional put October 1, 1994 at par. 1,795,000 1,794,551 1,794,551 1,794,626

Toledo, Ohio Bond Anticipation Notes, Tax Exempt
Municipal Notes. 3.70% Mature October 13, 1994. 2,360,000 2,362,313 2,357,279 2,361,982

Kane County, Illinois School District #300 Tax
Anticipation Warrants (Dundee/Carpenterville), Tax
Exempt Municipal Notes. 3.98% Mature October 19,
1994. 2,500,000 2,505,550 2,505,550 2,504,625

Orange Township, New Jersey Tax Anticipation Notes,
Tax Exempt Municipal Notes. 3.75% Mature October
28, 1994. 5,000,000 5,002,750 5,002,750 5,002,750

Chicago O'Hare International Airport Revenue Bond
Series B. 10.375% Callable January 1, 1995 at
103. 500,000 587,210 534,735 513,562

Chicago, Illinois Park District Capital Improvement
Unlimited Tax General Obligation Bond. 9.70%
Matures January 1, 1995. 550,000 618,992 569,630 559,199

Florida State Jacksonville Transportation Authority
General Obligation Bond. 9.00% Matures January 1,
1995. 1,000,000 1,092,440 1,032,060 1,012,750

Dallas County, Texas General Obligation Bond. 8.75%
Matures January 10, 1994. 630,000 689,233 650,752 636,219
------------ ------------ ------------

239,057,242 238,257,797 238,091,600
------------ ------------ ------------

CURRENT ASSETS (continued):
REDEEMABLE PREFERRED STOCK:
Muniyield Quality Fund Series A, Tax Exempt Money
Market Preferred Stock 99 4,950,000 4,950,000 4,950,000

Ford Holdings, Inc. Series A, Money Market Preferred
Stock 16 1,600,000 1,600,000 1,600,000

Nuveen California Municipal Opportunity Fund Series
W, Tax Exempt Money Market Preferred Stock 200 5,000,000 5,000,000 5,000,000

Voyager Minnesota Municipal Income Fund II Series A,
Tax Exempt Money Market Preferred Stock 71 3,550,000 3,550,000 3,550,000

Paine Webber Premium Insured Municipal Income Fund C,
Tax Exempt Money Market Preferred Stock 60 3,000,000 3,000,000 3,000,000

Asea Brown Boveri Limited Special Finance Series A,
Money Market Preferred Stock 2 2,000,000 2,000,000 2,000,000

Pacificorp Series A-1, Money Market Preferred Stock 26 2,600,000 2,600,000 2,600,000

Van Kampen Investment Grade Florida, Tax Exempt Money
Market Preferred Stock 86 4,300,000 4,300,000 4,300,000

Seligman Select Municipal Fund Series B, Tax Exempt
Money Market Preferred Stock 50 5,000,000 5,000,000 5,000,000

Van Kampen Merritt Trust Investment Grade Florida,
Tax Exempt Money Market Stock 83 4,150,000 4,150,000 4,150,000

Muniyield Insured Fund Series D, Tax Exempt Money
Market Preferred Stock 160 8,000,000 8,000,000 8,000,000

Nuveen Premium Income Municipal Fund Series A, Tax
Exempt Money Market Preferred Stock 70 7,000,000 7,000,000 7,000,000

Muniyield Quality I Series C, Tax Exempt Money Market
Preferred Stock 100 5,000,000 5,000,000 5,000,000

Voyager Minnesota Municipal Income Fund, Tax Exempt
Money Market Preferred Stock 120 6,000,000 6,000,000 6,000,000

CURRENT ASSETS (continued):
REDEEMABLE PREFERRED STOCK (continued):
Muniyield Quality Fund Series C, Tax Exempt Money
Market Preferred Stock 160 8,000,000 8,000,000 8,000,000

Van Kampen Merritt Ohio Quality Municipal Trust, Tax
Exempt Money Market Preferred Stock 20 1,000,000 1,000,000 1,000,000

Van Kampen Opportunity Trust Series B, Tax Exempt
Money Market Preferred Stock 117 5,850,000 5,850,000 5,850,000

Van Kampen Opportunity Trust Series B, Tax Exempt
Money Market Preferred Stock 100 5,000,000 5,000,000 5,000,000

Voyager Minnesota Municipal Income Fund, Tax Exempt
Money Market Preferred Stock 80 4,000,000 4,000,000 4,000,000

Voyager Minnesota Municipal Income Fund II Series B,
Tax Exempt Money Market Preferred Stock 100 5,000,000 5,000,000 5,000,000

Fiat Corporation Series B, Money Market Preferred
Stock 5 5,000,000 5,000,000 5,000,000

Duke Power Company Series A, Money Market Preferred
Stock 14 1,400,000 1,400,000 1,400,000

Virginia Electric and Power Company, Money Market
Preferred Stock 13 1,300,000 1,300,000 1,300,000

Nuveen Performance Series W, Tax Exempt Money Market
Preferred Stock 200 5,012,300 5,017,500 5,012,300

Nuveen Performance Series W, Tax Exempt Money Market
Preferred Stock 160 4,014,000 4,014,000 4,014,000

ACM Municipal Income Fund Series A, Tax Exempt Money
Market Preferred Stock 50 2,504,961 2,504,961 2,504,961

Nuveen New York Select Quality Series W, Tax Exempt
Money Market Preferred Stock 120 3,006,371 3,006,371 3,006,371

CURRENT ASSETS (continued):
REDEEMABLE PREFERRED STOCK (continued):
Van Kampen Merritt Municipal Trust A, Tax Exempt
Money Market Preferred Stock 100 5,025,500 5,025,500 5,025,500
------------ ------------ ------------
118,263,132 118,268,332 118,263,132
------------ ------------ ------------

OTHER:
Rite Aid Corporation, Commercial Paper 1,300,000 1,296,663 1,296,663 1,296,663

Philadelphia, Pennsylvania Gas Works Revenue Notes
Series A, Tax Exempt Commercial Paper 5,000,000 5,000,000 5,000,000 5,000,000

Emery County, Utah Pollution Control Revenues
(Pacificorp Project) Series 1991, Tax Exempt
Commercial Paper 4,200,000 4,200,000 4,200,000 4,200,000

Municipal Electric Authority Georgia Money Market
Municipal Project 1 Series A, Tax Exempt Commercial
Paper 5,000,000 5,000,000 5,000,000 5,000,000

Sacramento Municipal Utility District Series H, Tax
Exempt Commercial Paper 5,000,000 5,000,000 5,000,000 5,000,000

Maryland Health and Higher Education Pooled Loan on
Progress Revenue Notes (John Hopkins Hospital)
Series C, Tax Exempt Commercial 5,000,000 5,000,000 5,000,000 5,000,000

Brazos River Harbor Navigation District of Brazoria
County, Texas Variable Rate Pollution Control
Revenues (The Dow Chemical Company) Series 1988, Tax
Exempt Commercial Paper 2,500,000 2,500,000 2,500,000 2,500,000

Venengo Industrial Development Authority Resource
Recovery Revenues Series 1993 (Scrubgrass Project),
Tax Exempt Commercial Paper 2,400,000 2,400,000 2,400,000 2,400,000

Wake County, North Carolina Industrial Facility and
Pollution Control for Carolina Power and Light
Project 1990 B, Tax Exempt Commercial Paper 5,000,000 5,000,000 5,000,000 5,000,000

CURRENT ASSETS (continued):
OTHER (continued):
Hoosier City of Sullivan, Indiana National Rural
Utilities Co-op Financial Corporation (Hoosier
Energy Rural Electric Co-op), Tax Exempt Commercial
Paper 3,200,000 3,200,000 3,200,000 3,200,000

Anne Arundel County, Maryland Economic Development
Revenues (Baltimore Gas and Electric) Series 1988,
Tax Exempt Commercial Paper 5,000,000 5,000,000 5,000,000 5,000,000

Sweetwater County, Wyoming Environmental Improvement
Revenue Bonds (Pacific Corporation Project) Series
1990 A, Tax Exempt Commercial Paper 2,200,000 2,200,000 2,200,000 2,200,000

Salt Lake City, Utah Flexible Rate Revenue Bonds
Series 1990, Tax Exempt Commercial Paper 5,000,000 5,000,000 5,000,000 5,000,000

Oklahoma Industries Authority Flexible Rate Hospital
Revenues (Baptist Medical Center of Oklahoma) Series
1990 B, Tax Exempt Commercial Paper 5,000,000 5,000,000 5,000,000 5,000,000

City and County of Denver, Colorado Airport Systems
Revenue Bonds Series 1990 D, Tax Exempt Commercial
Paper 5,000,000 5,000,000 5,000,000 5,000,000

Sarasota County Public Hospital District Sarasota
Memorial Hospital Series B, Tax Exempt Commercial
Paper 5,450,000 5,450,000 5,450,000 5,450,000

City of Petersburg, Indiana Pollution Control Revenues
Series 1991 (Indianapolis Power and Light Project),
Tax Exempt Commercial Paper 4,700,000 4,700,000 4,700,000 4,700,000

City of Maysville, Kentucky Solid Waste Disposal
Revenues Series 1992, Tax Exempt Commercial Paper 1,035,000 1,035,000 1,035,000 1,035,000

Markborough Properties, Inc., Commercial Paper 3,616,500 3,613,679 3,613,643 3,613,679

Honda Canada, Inc., Commercial Paper 2,531,550 2,527,626 2,527,575 2,527,626

Ford Credit Canada, Limited, Commercial Paper 2,531,550 2,524,006 2,523,854 2,524,006

CURRENT ASSETS (continued):
OTHER (continued):
Ford Credit Canada, Limited, Commercial Paper 2,169,900 2,161,394 2,159,796 2,161,394

Confederation Life Insurance Company, Commercial Paper 2,531,550 2,518,234 2,517,977 2,518,234

Confederation Life Insurance Company, Commercial Paper 2,531,550 2,515,829 2,515,551 2,515,829

Confederation Life Insurance Company, Commercial Paper 2,531,550 2,512,614 2,512,135 2,512,614

Confederation Life Insurance Company, Commercial Paper 2,531,550 2,509,855 2,516,910 2,509,855

Confederation Life Insurance Company, Commercial Paper 2,531,550 2,506,412 2,506,209 2,506,412

General Motors Acceptance Corporation Canada,
Commercial Paper 10,849,500 10,686,106 10,685,571 10,686,106

Chrysler Credit Canada, Commercial Paper 10,849,500 10,631,100 10,631,425 10,631,100
------------ ------------ ------------
116,688,518 116,692,309 116,688,518
------------ ------------ ------------
TOTAL CURRENT ASSETS $474,008,892 $473,218,438 $473,043,250
============ ============ ============

NON-CURRENT ASSETS:
MUNICIPAL BONDS:
San Antonio, Texas Sewer Bonds. 8.75% Mature
May 1, 2005. Callable May 1, 1995. 500,000 $538,475 $532,270 $505,742

Arlington, Texas General Obligation Permanent
Improvement Refunding Bonds. 9.25% Mature
May 1, 2005. Callable May 1, 1995 at par. 500,000 551,005 524,605 507,613

Missouri State Health and Education Facility
Authority Revenue Bond, Series A, St. Louis
University. 6.40% Matures June 1, 1995. 500,000 500,000 513,390 500,000

Ocean County, New Jersey Unlimited Tax General
Obligation Bond. 9.60% Matures June 1, 1995.
Noncallable. 740,000 841,965 784,245 761,040

NON-CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
University of Arizona Revenue Bonds, Series A.
9.00% Mature June 1, 1995. 930,000 1,026,952 979,718 950,006

Reading, Pennsylvania General Obligation Bond,
Series A. 9.125% Matures June 15, 2015.
Prerefunded June 15, 1995 at par. 1,000,000 1,129,120 1,054,740 1,024,691

Indianapolis, Indiana Airport Authority Revenue
Bond. 7.00% Matures July 1, 1995. 425,000 429,645 438,141 425,000

Florida State Turnpike Authority Revenue Bond.
7.25% Matures July 1, 1995. Noncallable. 1,000,000 1,028,540 1,036,310 1,006,243

South Carolina State Public Service Authority
Electric Expansion Revenue Refunding Bonds,
Series 1985 A. 8.60% Mature July 1, 1997.
Callable July 1, 1995. 1,000,000 1,094,560 1,078,290 1,041,302

Kansas City, Missouri Metropolitan Community
Colleges Building Corporation Leasehold, Real
Estate and Improvement General Obligation Bonds.
FGIC Insured. 9.375% Mature July 1, 2005.
Callable July 1, 1995 at 101. 2,000,000 2,306,040 2,138,400 2,060,346

Intermountain Power Agency, Utah Power Supply
Revenue Crossover Bond, Series H. 9.00%
Matures July 1, 2019. Callable July 1, 1995 at
101.50. 1,500,000 1,648,605 1,603,515 1,533,023

Texas General Obligation College Student Loan
Bond. 6.60% Matures August 1, 1995.
Noncallable. 1,500,000 1,496,250 1,554,990 1,499,219

Indiana Municipal Bank Bond, Series B. 9.125%
Matures February 1, 2005. Callable
August 1, 1995. 1,000,000 1,104,740 1,086,390 1,018,831

Mesquite, Texas Independent School District
Unlimited Tax Bond. 10.25% Matures
August 15, 1995. 300,000 347,433 322,557 310,780

NON-CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
City of Plano, Texas General Obligation Bonds,
Series 1988 A (FGIC Insured). 10.00% Mature
September 1, 1995. 650,000 756,041 698,691 670,417

Hillsborough County, Florida School District Bond,
Series A. 8.875% Matures September 1, 2002.
Callable September 1, 1995 at 102. 500,000 550,925 540,220 509,817

Harris County, Texas Flood Control District Bond.
8.70% Matures October 1, 1995. 1,000,000 1,174,970 1,070,170 1,028,149

Harris County, Texas Road Improvement General Tax
Obligation Bond. 9.30% Matures October 1,
2001. Callable October 1, 1995 at par. 750,000 836,453 803,302 767,209

Salt Lake County, Utah Water Conservancy District
Revenue Bond, Series A. 9.25% Matures
October 1, 2002. Callable October 1, 1995 at
101. 1,000,000 1,123,020 1,079,820 1,082,285

Columbia, Missouri Water and Electric Revenue
Bond. 9.00% Matures October 1, 2005. Callable
October 1, 1995 at 102 and October 1, 1997 at
par. 2,000,000 2,242,600 2,171,680 2,128,166

Ohio State Public Facilities Commission Higher
Education Facilities Revenue Bond. 8.10%
Matures November 1, 1995. Noncallable. 1,500,000 1,617,690 1,584,930 1,528,171

Dallas-Fort Worth, Texas Airport Bond. 9.125%
Matures November 1, 2015. Callable
November 1, 1995 at par. 1,000,000 1,097,820 1,093,090 1,020,371

Kansas City, Missouri Municipal Assistance
Corporate Revenue Bond. 7.00% Matures
December 1, 1995. 200,000 200,000 208,352 200,000

Cincinnati, Hamilton County, Ohio Urban
Redevelopment Improvement Unlimited Tax
Registered Bond. 6.875% Matures December 1,
1995. Noncallable. 500,000 506,960 522,520 501,740

NON-CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Wheaton, Illinois Revenue Bond, Franciscan Health
Care, Inc. MBIA Insured. 8.50% Matures
December 1, 1997. Callable December 1, 1995 at
par. 745,000 818,017 801,285 778,761

Philadelphia, Pennsylvania Water and Sewer Revenue
Bond, 11th Series, Subseries A. 9.10% Matures
December 1, 2002. Callable December 1, 1995 at
102 and December 1, 1997 at par. 1,000,000 1,137,040 1,092,390 1,033,640

Fort Worth, Texas Water and Sewer Revenue Bond.
9.00% Matures March 1, 1996. Noncallable. 600,000 673,170 647,850 620,317

El Paso, Texas Water and Sewer Revenue Bond.
10.00% Matures March 1, 1996. Noncallable. 1,200,000 1,408,104 1,316,424 1,257,880

Plano, Texas Unlimited Tax General Obligation
Bond. 8.00% Matures March 1, 1996. 1,000,000 1,061,110 1,031,330 1,018,417

University of Arizona Revenue Bonds, Series A.
9.00% Mature June 1, 1996. 1,020,000 1,145,939 1,117,084 1,061,980

Salt Lake County, Utah General Obligation Bond.
8.50% Matures June 15, 1996. Noncallable. 700,000 768,971 760,452 723,450

Washington State Public Power Supply System
Nuclear Project #3 Revenue Refunding Bond,
Series B. 6.70% Matures July 1, 1996. 1,000,000 995,000 1,043,900 1,000,000

Orlando and Orange County, Florida Expressway
Authority Revenue Bond. 6.30% Matures
July 1, 1996. Noncallable. 1,350,000 1,319,153 1,405,743 1,339,447

Tarrant County, Texas General Obligation Limited
Tax Bond. 9.25% Matures July 15, 1996.
Noncallable. 1,000,000 1,119,760 1,105,460 1,042,587

Milwaukee County, Wisconsin General Obligation
Refunding Bond. 8.10% Matures September 1,
1996. 500,000 531,420 517,165 505,237

NON-CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Washington State General Obligation Various
Purpose Bond. 10.00% Matures October 1, 1996.
Noncallable. 1,000,000 1,174,980 1,128,500 1,064,233

Milwaukee, Wisconsin Unlimited Tax General
Obligation Bond. 7.20% Matures October 1,
1997. Callable October 1, 1996 at par. 550,000 561,501 579,557 554,169

Oregon State General Obligation Bond. 5.00%
Matures October 15, 1996. Noncallable. 1,000,000 903,410 1,023,900 963,932

Kansas City, Missouri Municipal Assistance
Corporate Leasehold Revenue Capital Improvement
Bond, Series 1990 A. AMBAC Insured. Matures
October 15, 1996. No periodic interest. 1,900,000 1,280,676 1,693,489 1,653,107

Ohio State Public Facilities Commission Higher
Education Facilities Revenue Bond. 8.10%
Matures November 1, 1996. Noncallable. 700,000 751,562 760,116 719,336

Cincinnati, Hamilton County, Ohio Urban
Redevelopment Improvement Unlimited Tax
Registered Bond. 6.875% Matures
December 1, 1996. Noncallable. 500,000 506,380 532,840 502,248

Kansas City, Missouri Water Revenue Bond. 9.25%
Matures December 1, 1996. 690,000 792,534 774,049 728,763

Houston, Texas Water and Sewer System Revenue
Exchange Bond. 7.75% Matures December 1, 1996.
Noncallable. 1,000,000 1,053,220 1,082,850 1,020,368

Monmouth County, New Jersey General Improvement
Utility Bond. 9.25% Matures December 1, 1996.
Noncallable. 920,000 1,050,014 1,033,510 969,759

Birmingham, Jefferson, Alabama Civic Center
Special Tax Revenue Bond, Series 1989 B. 6.80%
Matures January 1, 1997. Noncallable. 1,000,000 1,005,250 1,052,320 1,002,049

Allegheny, Pennsylvania General Obligation Bond.
7.30% Matures February 15, 1997. Noncallable. 1,000,000 1,038,400 1,073,470 1,015,406

NON-CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Massachusetts State Water Resource Authority
Revenue Bond. 6.90% Matures April 1, 1997. 1,015,000 1,015,000 1,076,671 1,015,000

Albuquerque, New Mexico Airport Revenue Bonds.
8.875% Mature July 1, 2007. Callable April 1,
1997 at 101 and April 1, 1999 at par. 1,455,000 1,604,850 1,644,019 1,547,095

Kansas City, Missouri Municipal Assistance
Corporate Leasehold Revenue Capital Improvement
Bond, Series 1990 A. AMBAC Insured. Matures
April 15, 1997. No periodic interest. 1,000,000 648,620 866,700 844,075

Phoenix, Arizona Civic Improvement Bond. 7.75%
Matures July 1, 2002. Callable July 1, 1997 at
102 and July 1, 2000 at par. 1,815,000 1,929,327 2,037,791 1,894,654

Olathe, Kansas Hospital Revenue Bond, Olathe
Hospital Foundation, Inc. Project. 6.90%
Matures September 1, 1997. 350,000 356,111 379,809 352,716

Greater Orlando, Florida Airport Facility Revenue
Bond. 7.30% Matures October 1, 1997.
Noncallable. 1,000,000 1,023,140 1,090,160 1,010,426

Reedy Creek, Florida Utility Revenue Bond. MBIA
Insured. 8.60% Matures October 1, 1999.
Callable October 1, 1997 at 102. 2,000,000 2,227,540 2,276,400 2,145,001

Kansas City, Missouri Municipal Assistance
Corporate Revenue Bond, Series 1987. 7.40%
Matures December 1, 1997. 250,000 250,000 273,160 250,000

Kansas City, Missouri Water Revenue Bond, Series
B. 9.25% Matures December 1, 1997.
Noncallable. 420,000 483,466 485,558 449,344

Dade County, Florida Utility Public Improvement
General Obligation Bond. FGIC Insured. 12.00%
Matures October 1, 1998. Noncallable. 2,000,000 2,654,320 2,577,620 2,385,322

NON-CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Kansas City, Missouri Municipal Assistance
Corporate Leasehold Revenue Capital Improvement
Bond, Series 1990 A. AMBAC Insured. Matures
October 15, 1998. No periodic interest. 1,000,000 586,100 800,520 774,044

Kenosha, Wisconsin General Obligation Promissory
Notes, Series 1991 A. 6.60% Mature December 1,
2000. Callable December 1, 1998 at par. 1,000,000 997,500 1,053,940 998,519

Kane, Cook and Dupage Counties, Illinois School
District #46 Bond, Elgin, Illinois. 8.00%
Matures January 1, 1999. Noncallable. 1,450,000 1,575,048 1,626,538 1,525,298

Frenship, Texas Independent School District Bond.
9.00% Matures February 15, 2005. Callable
February 15, 2000 at par. 1,000,000 1,152,060 1,192,290 1,099,232

Pinckney, Michigan Community Schools, Livingston
and Washtenaw Counties School Building and Site
Unlimited Tax Registered Bond. 8.375% Matures
May 1, 2000. Noncallable. 500,000 563,130 583,795 542,087

Maryland Student Loan Series 1993, Tax Exempt
Municipal Bond, Held by Block Financial
Corporation-Companion Insurance, Limited. 4.00%
Matures July 15, 2000. 1,000,000 995,770 949,160 996,100

Essex County, New Jersey Series A, Tax Exempt
Municipal Bond, Held by Block Financial
Corporation-Companion Insurance, Limited. 4.60%
Matures October 1, 2000. 1,000,000 1,021,490 968,090 1,019,747

Oregon Student Higher Education, Tax Exempt
Municipal Bond, Held by Block Financial
Corporation-Companion Insurance, Limited. 5.70%
Matures October 15, 2000. 1,000,000 1,096,260 1,038,220 1,089,048

Ohio Water Development Authority, Tax Exempt
Municipal Bond, Held By Block Financial
Corporation-Companion Insurance, Limited. 5.40%
Matures December 1, 2000. 1,000,000 1,067,870 1,015,440 1,062,350

NON-CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Jefferson County, Colorado School District Number
R-001 Refunding Series 1993 A. 4.20% Matures
December 15, 2000. 2,300,000 2,278,932 2,180,975 2,280,419

Mecklenberg County, North Carolina, Tax Exempt
Municipal Bond, Held by Block Financial
Corporation-Companion Insurance, Limited. 3.75%
Matures April 1, 2001. 1,000,000 975,210 926,470 976,969

St. Charles County, Missouri Industrial
Development Authority Industrial Revenue
Refunding Bond, Series 1991. Wentzville Project
Guaranteed General Motors. 6.625% Matures
April 1, 2001. Noncallable. 2,000,000 2,000,000 2,070,020 2,000,000

Pinckney, Michigan Community Schools, Livingston
and Washtenaw Counties School Building and Site
Unlimited Tax Registered Bond. 8.3% Matures
May 1, 2001. Noncallable. 500,000 561,510 590,355 543,057

California State Public Works Board Lease Revenues
Series 1993 D Department of Correction
California State Prison. 4.60% Matures June 1,
2001. 1,000,000 996,790 951,080 997,002

Port of Seattle, Washington Refunding Revenue
Series C, Tax Exempt Municipal Bond. 4.30%
Matures July 1, 2001. 1,430,000 1,357,799 1,327,712 1,358,629

Chelan County, Washington Public Utility District
#1, Chelan Hydro Consolidated System Revenue
Bond, Series 1991-A. 7.00% Matures July 1,
2025. Callable July 1, 2001 at par. 1,000,000 1,000,000 1,084,910 1,000,000

Jacksonville Electric, Florida, Tax Exempt
Municipal Bond, Held By Block Financial
Corporation-Companion Insurance, Limited. 5.00%
Matures October 1, 2001. 1,000,000 1,041,830 997,790 1,038,452

Utah Associated Municipal Power System Refunding
Revenues Craig Mona-Transmission Project. 4.55%
Matures December 1, 2001. 695,000 683,366 646,684 684,085

NON-CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Los Angeles County, California Public Works Lease
Revenue Facilities. 4.50% Mature December 1,
2001. 2,200,000 2,167,154 2,095,280 2,168,865

Concord, New Hampshire Refunding. 4.30% Matures
January 15, 2002. 1,120,000 1,112,530 1,048,421 1,112,766

California State Public Works Board Lease Revenue
Series 1993 Department of Corrections - Madera
State Prison. 4.70% Matures June 1, 2002. 2,100,000 2,085,531 1,983,513 2,086,104

Orange County, California Transmission Authority
Revenue Series 1993-C. 5.125% Matures July 1,
2002. 1,680,000 1,671,029 1,663,855 1,671,963

Georgia State Refunding Series 1993 E Unlimited
Tax. 4.50% Matures July 1, 2002. 1,000,000 992,720 955,730 993,410

Denver, Colorado City and County School District
Number 1 Refunding Series 1994 A. 4.50%
Matures December 1, 2002. 1,100,000 1,100,000 1,029,028 1,100,000

Concord, New Hampshire Refunding. 4.40% Matures
January 15, 2003. 1,110,000 1,101,864 1,031,390 1,102,092

California State Public Works Board Lease
Refunding Revenue Series 1993 A Variable
University California. 5.00% Matures June 1,
2003. 1,000,000 996,100 941,350 996,367

Nevada State Refunding Series 1993 B Limited Tax.
4.375% Matures August 1, 2003. 1,535,000 1,508,506 1,396,343 1,509,427

Arlington, Texas Refunding. 5.00% Matures August
15, 2003. 1,000,000 992,140 981,710 992,730

University Delaware Housing and Dining System
Revenue. 5.00% Matures November 1, 2003. 1,000,000 993,600 968,390 994,068

Pennsylvania State Higher Education Facilities
Authority Revenue Philadelphia. 4.70% Matures
December 1, 2003. 915,000 907,808 848,708 908,050

NON-CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Washington Sanitary District Refunding Water
Supply Unlimited Tax. 4.40% Matures June 1,
2004. 1,500,000 1,483,890 1,364,775 1,484,280
------------ ------------ ------------
$ 94,501,331 $ 94,014,390 $ 92,154,040
============ ============ ============

PREFERRED STOCKS:
Texas Utilities Electric Company
Cumulative Preferred Stock Series B 5,200 516,100 384,800 516,100

First Chicago Corporation
Adjustable Dividend Preferred Stock Series B 15,600 994,500 1,409,850 994,500
------------ ------------ ------------
$ 1,510,600 $ 1,794,650 $ 1,510,600
============ ============ ============

COMMON STOCKS:
Commerce Bancshares Common Stock 110,000 1,660,000 3,572,868 1,660,000

First America Bank Common Stock 80,800 1,671,934 3,050,200 1,671,934

First Virginia Banks, Inc. Common Stock 45,287 667,292 1,669,958 667,292

Liberty National Bancorp, Inc. Common Stock 57,350 655,182 1,648,813 655,182

Marshall & Ilsley Corporation Common Stock 176,700 1,667,122 3,666,525 1,667,122

Amoco Corporation Common Stock, Held by Block
Financial Corporation-Companion Insurance,
Limited 1,700 90,840 95,413 90,840

Dupont Common Stock, Held By Block Financial
Corporation-Companion Insurance, Limited 1,600 89,096 91,400 89,096

NON-CURRENT ASSETS (continued):
COMMON STOCKS (continued):
E-Systems, Incorporated Common Stock, Held by
Block Financial Corporation-Companion Insurance,
Limited 2,000 86,870 80,250 86,870

Sprint Common Stock, Held by Block Financial
Corporation-Companion Insurance, Limited 2,500 88,588 91,875 88,588

McGraw Hill Corporation Common Stock, Held by
Block Financial Corporation-Companion Insurance,
Limited 1,400 91,084 91,175 91,084

Sears Roebuck Common Stock, Held by Block
Financial Corporation-Companion Insurance,
Limited 1,900 89,968 89,300 89,968

Sundstrand Corporation Common Stock, Held by Block
Financial Corporation-Companion Insurance,
Limited 1,800 87,354 85,500 87,354

Tenneco Common Stock, Held by Block Financial
Corporation-Companion Insurance, Limited 1,600 87,890 82,000 87,890

Universal Foods Common Stock, Held by Block
Financial Corporation-Companion Insurance,
Limited 2,700 87,912 87,750 87,912

Williams Companies Common Stock, Held by Block
Financial Corporation-Companion Insurance,
Limited 4,000 93,240 103,000 93,240

Mills Corporation Common Stock, Held by Block
Financial Corporation-Companion Insurance,
Limited 4,000 89,740 84,500 89,740

John Deere Common Stock, Held by Block Financial
Corporation-Companion Insurance, Limited 1,000 77,435 76,625 77,435

Xerox Corporation Common Stock, Held by Block
Financial Corporation-Companion Insurance,
Limited 1,000 97,560 98,875 97,560
------------ ------------ ------------
$ 7,479,107 $ 14,766,027 $ 7,479,107
============ ============ ============

NON-CURRENT ASSETS (continued):
OTHER (continued):
Putnam Option Income Trust 36,706 505,795 311,634 505,795

Patriot Premium Dividend Fund
400,000 4,055,000 3,600,000 4,055,000
------------ ------------ ------------
4,560,795 3,911,634 4,560,795
------------ ------------ ------------
TOTAL NON-CURRENT ASSETS: $108,051,833 $114,486,701 $105,704,542
============ ============ ============

H&R BLOCK, INC. AND SUBSIDIARIES

SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES

YEARS ENDED APRIL 30, 1994, 1993 AND 1992

Balance
Deductions at end of period
Balance at ----------------------- ---------------------
beginning of Amounts Amounts Not
Name of debtor period Additions collected written off Current Current
- - - - ------------------------- -------- -------- -------- ----------- -------- --------

Year ended April 30, 1994
Donald W. Ayers - $100,200 - - $100,200 -
Clifford A. Davis - 305,989 - - 305,989 -
Kristine K. Rodgers - 274,030 - - 274,030 -
-------- -------- -------- -------- -------- --------
- $680,219 - - $680,219 -
======== ======== ======== ======== ======== ========

Year ended April 30, 1993
William P. Anderson $450,000 - $450,000 - - -
======== ======== ======== ======== ======== ========

Year ended April 30, 1992
William P. Anderson - $450,000 - - $450,000 -
======== ======== ======== ======== ======== ========

The Promissory Note of Mr. Ayers is dated January 12, 1994, and is
payable ten days after demand, which demand shall not be made earlier
than (a) July 12, 1994, (b) the date of the closing on the sale of his
home, or (c) the date of the termination of his employment. The Note
bears no interest if paid when due and 10% interest per annum
thereafter. It is secured by benefit payments to be made to Mr. Ayers
under the Company's deferred compensation plan.

The Promissory Note of Mr. Davis and his wife is dated February 15,
1994, is payable 30 days after demand, bears no interest if paid when
due and bears 10% interest per annum thereafter. The Note is secured by
a mortgage on certain residential property purchased by the makers of
the Note.

The Promissory Note of Ms. Rodgers and her husband is dated February
26, 1994, is payable 30 days after demand, bears no interest if paid
when due and bears 10% interest per annum thereafter. The Note is
secured by a mortgage on certain residential property purchased by the
makers of the Note.

H&R BLOCK, INC. AND SUBSIDIARIES

SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS

YEARS ENDED APRIL 30, 1994, 1993 AND 1992

Additions
-------------------------
Charged
Balance to Costs Charged Balance
Beginning and to at End
Description of Period Expenses Other Deductions of Period
- - - - ------------------------- --------- ---------- ------- ---------- ---------

Allowance for Doubtful
Accounts-deducted from
accounts receivable in
the balance sheet

1994 $12,000,000 $24,977,000 $ - $24,233,000 $12,744,000
=========== =========== ======== =========== ===========

1993 $ 7,292,000 $13,962,000 $ - $ 9,254,000 $12,000,000
=========== =========== ======== =========== ===========

1992 $ 9,416,000 $12,776,000 $ - $14,900,000 $ 7,292,000
=========== =========== ======== =========== ===========

H&R BLOCK, INC. AND SUBSIDIARIES

SCHEDULE IX - SHORT-TERM BORROWINGS

YEARS ENDED APRIL 30, 1994, 1993, AND 1992

Weighted Maximum Weighted
average amount Average amount average
Category of Balance at interest outstanding outstanding interest rate
borrowing end of period rate during period during period during period
- - - - ----------- ------------- -------- ------------- -------------- -------------

1994
Banks $ - - $825,467,000 $244,620,000 3.3%

1993
Banks $ 37,167,000 4.3% $794,003,000 $261,922,000 4.4%

1992
Banks $101,332,000 7.2% $309,358,000 $146,960,000 7.3%

The average borrowings were determined based on the amounts outstanding
each day.

The weighted average interest rate during the period was computed by
dividing actual interest expense in each year by average short-term
borrowings in each year.

Short-term borrowings outstanding for all years presented were incurred
by the Company's Canadian subsidiary to fund the refund purchase program
during the tax season of each fiscal year (the period) and were payable
in Canadian dollars. Borrowings for 1994 and 1993 also include the
borrowings of Block Financial Corporation. Through the purchases of
interests in a trust to which certain Refund Anticipation Loans (RALs)
made by Mellon Bank (DE) National Association are sold, Block Financial
Corporation purchases an interest of just under 50% in RALs subject to
its agreement with Mellon.


                                                    EXHIBIT 10(c) 

             H&R BLOCK LONG-TERM PERFORMANCE PROGRAM

                   (As Amended Through 6/21/94)

     1. SOURCE OF AWARDS.  The Awards provided for under the H&R
Block Long-Term Performance Program (the "Program") shall be
granted pursuant to the terms of the H&R Block, Inc. 1984 Long-
Term Executive Compensation Plan, as amended (the "1984 Plan"),
or any successor long-term compensation plan adopted by the Board
of Directors of H&R Block, Inc., and approved by the Company's
shareholders.  Any Award under the Program shall be subject to
the provisions of the plan pursuant to which it was granted.  All
capitalized terms used herein shall have the same definitions as
are specified for such terms in the applicable plan.

     2.  OBJECTIVES.  The objectives of the Program are to
provide a meaningful incentive to the senior executives of the
Company, to encourage their continued employment and to vary the
size of Awards made to such senior executives based upon total
shareholder return with respect to the Company's Common Stock.

     3.  AWARDS.  The Awards to be granted under the Program are
Performance Units.  The Compensation Committee shall have sole
and absolute power and discretion to determine (a) the senior
executives of the Company to whom Performance Units are to be
awarded under the Program on any date of grant, and (b) the
number of Performance Units to be awarded to each selected
Recipient on any such date of grant.  Awards of Performance Units
shall be subject to such additional terms and conditions as the
Committee in its sole discretion deems appropriate.

     4.  GRANT OF AWARDS.  Awards of Performance Units may be
granted by the Committee at any time between May 1 and September
15, inclusive, of any year during which the 1984 Plan or any
successor plan thereto (including, but not limited to, the 1993
Long-Term Executive Compensation Plan) remains in effect.  The
Committee shall have the absolute power and discretion to award
no Performance Units in any year.  The Program shall not affect
the authority and power of the Committee to grant Performance
Units or other Awards at any time under the 1984 Plan or any
successor plan thereto other than pursuant to the Program.

     5.  INITIAL VALUE OF PERFORMANCE UNITS.  Each Performance
Unit shall have an initial value of one share of the Company's
Common Stock.

     6.  PERFORMANCE PERIOD.  The Performance Period applicable
to each Performance Unit shall be a period of three (3) years. 
Such Performance Period shall commence on the May 1 immediately
preceding the date of grant in any year (except that, if the date
of grant is May 1, such May 1 shall be the commencement date) and
shall end on the third April 30 following the date of grant.

     7.  PAYMENT AND AMOUNT.  (a) If the criteria for payment of
a Performance Unit set forth below has been achieved, the
Recipient shall be entitled to receive whole shares of Common
Stock after the end of the applicable Performance Period equal to
the actual value of the Performance Unit at such time.  The
Committee shall have authority to modify the criteria for payment
of a Performance Unit during the Performance Period.  The target
value of each Performance Unit at the end of a Performance Period
shall be one share of Common Stock.  At the end of a Performance
Period the actual value of a Performance Unit may be less than,
equal to or greater than the target value of the Performance
Unit, depending upon the degree to which the criteria for payment
of a Performance Unit has been achieved.  

     (b)  The actual value of a Performance Unit at the end of a
Performance Period shall be determined by (i) dividing the
percentage change in the cumulative total shareholder return on
the Company's Common Stock during the Performance Period,
assuming reinvestment of dividends, by the percentage change in
the cumulative total return of the Standard & Poor's 500 Stock
Index during such Performance Period, assuming reinvestment of
dividends, with the quotient constituting the Performance Ratio,
and (ii) applying the Performance Ratio to the following
schedule:


      Performance        Actual Value of Each Performance Unit
         Ratio            As a % of One Share of Common Stock 
     -------------       -------------------------------------
                                
     1.5 and above                 150% (maximum)
     1.0 (target)                  100%
     .85 (floor)                    50%
     Below .85                       0%

The actual value of a Performance Unit will be computed by
interpolation for Performance Ratios between .85 and 1.0 and
between 1.0 and 1.5.  Performance Ratios and actual values shall
be rounded to the third decimal point.

     (c)  Cumulative total shareholder return on the Company's
Common Stock during any Performance Period shall be measured by
dividing (i) the sum of (A) the cumulative amount of dividends
paid during the Performance Period, assuming dividend
reinvestment, and (B) the difference between the Company's share
price at the end and at the beginning of the Performance Period;
by (ii) the share price at the beginning of the Performance
Period.

     (d)  The Company's share price at the beginning of the
Performance Period shall be deemed to be the last-reported sale
price for a share of Common Stock on the New York Stock Exchange
as of the April 30 immediately preceding the date of grant and
the Company's share price at the end of the Performance Period
shall be deemed to be the last-reported sale price for a share of
Common Stock on the New York Stock Exchange as of the April 30
which is the last day of the Performance Period.

     (e)  Payment of Performance Units in whole shares of Common
Stock shall be made as soon as practicable following the
expiration of the applicable Performance Period and determination
by the Committee of the actual value of each Recipient's
Performance Units.  No fractional shares shall be paid in
connection with the payment of Performance Units.  If the
computation of the total number of shares to be paid to a
Recipient for all of such Recipient's Performance Units results
in a number of shares containing a fraction, such number of
shares shall be rounded up to the next highest whole number of
shares.

     (f)  Payment of Performance Units shall not be made at any
time when the delivery of shares of Common Stock would, in the
opinion of counsel for the Company, be in violation of any state
or federal securities laws or any regulation or ruling of the
Securities and Exchange Commission.  If at any time counsel for
the Company shall determine that qualification or registration of
the Common Stock under any state or federal securities law, or
the consent or approval of any governmental regulatory authority,
is necessary or desirable as a condition of the payment of any
Performance Units under the Program, then such payment shall not
be made, in whole or in part, unless and until such
qualification, registration, consent or approval shall have been
effected or obtained free of any conditions such counsel deems
unacceptable.

     8.  TAX WITHHOLDING.  The Company shall have the right to
require the payment (through withholding from the Recipient's
salary, through withholding of an appropriate number of shares at
the time of delivery of shares under the Program, through cash
payment from the Recipient or through another method) of any
federal, state, local or foreign taxes required by law to be
withheld with respect to the payment of Performance Units under
the Program or to take such other action as may be necessary in
the opinion of the Company to satisfy all obligations for
withholding of such taxes.  If Common Stock is used to satisfy
tax withholdings, such Common Stock shall be valued based on the
fair market value of such Common Stock when the tax withholding
is required to be made. 

     9.  FORFEITURES.  Except as provided below, or except as
otherwise determined by the Committee in its sole and absolute
discretion, if a Recipient's employment with the Company is
terminated for any reason prior to the end of a Performance
Period, the Recipient shall forfeit all Performance Units
previously granted to the Recipient with respect to such
Performance Period.  If, prior to the completion of a Performance
Period, a Recipient's employment with the Company is terminated
by reason of the Recipient's death, disability (as determined by
the Committee) or retirement, the Recipient, or in the event of
the Recipient's death, the person or persons to whom the
Recipient's rights pass by the Recipient's will or by the laws of

descent and distribution, shall receive a prorated payment for
such Performance Period based on the Recipient's actual number of
full months of employment with the Company during the Performance
Period.  Any such prorated payment shall be made at the time of
payment of Performance Units to other Recipients who did not
terminate employment during the applicable Performance Period. 
For purposes of the Program, unless the Committee in its sole and
absolute discretion otherwise determines, "retirement" shall
occur only after any time that the Recipient attains the age of
65 and voluntarily terminates his or her employment with the
Company.

     10.  TERMINATION OR AMENDMENT.  The Program may be
terminated at any time by the Committee or the Company's Board of
Directors except as to Performance Units then outstanding
hereunder.  The Program may be amended at any time by the
Committee or the Company's Board of Directors.


                                                    EXHIBIT 10(d)
















                            H&R BLOCK

                   DEFERRED COMPENSATION PLAN 

                          FOR DIRECTORS

                (As Amended Through March 9, 1994)

                        TABLE OF CONTENTS

                            H&R BLOCK
                    DEFERRED COMPENSATION PLAN
                          FOR DIRECTORS

ARTICLE 1      DEFERRED COMPENSATION ACCOUNT  . . . . . . . . . 1

     Section 1.1    Establishment of Account  . . . . . . . . . 1

     Section 1.2    Property of Company . . . . . . . . . . . . 1

ARTICLE 2      DEFINITIONS, GENDER AND NUMBER . . . . . . . . . 1

     Section 2.1    Definitions . . . . . . . . . . . . . . . . 1

     Section 2.2    Gender and Number . . . . . . . . . . . . . 4

ARTICLE 3      PARTICIPATION  . . . . . . . . . . . . . . . . . 4

     Section 3.1    Who May Participate . . . . . . . . . . . . 4

     Section 3.2    Time and Conditions of Participation  . . . 4

     Section 3.3    Termination of Participation  . . . . . . . 4

     Section 3.4    Missing Persons . . . . . . . . . . . . . . 4

     Section 3.5    Relationship to Other Plans . . . . . . . . 4

ARTICLE 4      ENTRIES TO THE ACCOUNT . . . . . . . . . . . . . 5

     Section 4.1    Deferrals . . . . . . . . . . . . . . . . . 5

     Section 4.2    Crediting Rate  . . . . . . . . . . . . . . 5

ARTICLE 5      VESTING  . . . . . . . . . . . . . . . . . . . . 7

ARTICLE 6      DISTRIBUTION OF BENEFITS . . . . . . . . . . . . 7

     Section 6.1    Time of Payment . . . . . . . . . . . . . . 7

     Section 6.2    Form of Benefits Upon Retirement or
                      Attainment of Age 75  . . . . . . . . . . 7

     Section 6.3    Deferral of Payment . . . . . . . . . . . . 8

     Section 6.4    Death Benefits  . . . . . . . . . . . . . . 8

     Section 6.5    Claims Procedure  . . . . . . . . . . . . . 9

     Section 6.6    Alternate Forms of Benefit Distribution .  10

     Section 6.7    Distributions on Plan Termination . . . .  10

ARTICLE 7      FUNDING  . . . . . . . . . . . . . . . . . . .  10

     Section 7.1    Source of Benefits  . . . . . . . . . . .  10

     Section 7.2    No Claim on Specific Assets . . . . . . .  11

ARTICLE 8      ADMINISTRATION AND FINANCES  . . . . . . . . .  11

     Section 8.1    Administration  . . . . . . . . . . . . .  11

     Section 8.2    Powers of the Committee . . . . . . . . .  11

     Section 8.3    Actions of the Committee  . . . . . . . .  11

     Section 8.4    Delegation  . . . . . . . . . . . . . . .  11

     Section 8.5    Reports and Records . . . . . . . . . . .  12

ARTICLE 9      AMENDMENTS AND TERMINATION . . . . . . . . . .  12

     Section 9.1    Amendments  . . . . . . . . . . . . . . .  12

     Section 9.2    Termination . . . . . . . . . . . . . . .  12

ARTICLE 10     MISCELLANEOUS  . . . . . . . . . . . . . . . .  13

     Section 10.1   No Guarantee of Membership  . . . . . . .  13

     Section 10.2   Individual Account Plan . . . . . . . . .  13

     Section 10.3   Release . . . . . . . . . . . . . . . . .  13

     Section 10.4   Notices . . . . . . . . . . . . . . . . .  13

     Section 10.5   Non-Alienation  . . . . . . . . . . . . .  13

     Section 10.6   Tax Liability . . . . . . . . . . . . . .  13

     Section 10.7   Captions  . . . . . . . . . . . . . . . .  14

     Section 10.8   Applicable Law  . . . . . . . . . . . . .  14

SCHEDULE A - ANNUAL ADMINISTRATIVE CHARGES  . . . . . . . . .  15

                            H&R BLOCK

                    DEFERRED COMPENSATION PLAN

                          FOR DIRECTORS


     H&R Block, Inc. (the "Company") hereby establishes,
effective September 1, 1987, a nonqualified deferred compensation
plan for the benefit of specified Directors of the Company, and
of the following affiliates of the Company:  CompuServe
Incorporated, Personnel Pool of America, Inc., Path Management
Industries, Inc. and such other entities as may be designated by
the Company from time to time.  This plan shall be known as the
H&R Block Deferred Compensation Plan for Directors (the "Plan"). 
The Plan is intended to be an unfunded plan maintained primarily
for the purpose of providing deferred compensation for a select
group of management or highly compensated employees as described
in Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee
Retirement Income Security Act of 1974 ("ERISA").

     ARTICLE 1.  DEFERRED COMPENSATION ACCOUNT.

     Section 1.1.  ESTABLISHMENT OF ACCOUNT.  The Company shall
establish an account ("Account") for each Participant which shall
be utilized solely as a device to measure and determine the
amount of deferred director's fees to be paid under the Plan.

     Section 1.2.  PROPERTY OF COMPANY AND PARTICIPATING
AFFILIATES.  Any amounts so set aside for benefits payable under
the Plan are the property of the Company and its participating
affiliates ("Participating Affiliates"), except, and to the
extent, of any assignment of such assets to an irrevocable trust.

     ARTICLE 2.  DEFINITIONS, GENDER, AND NUMBER.

     Section 2.1.  DEFINITIONS.  Whenever used in the Plan, the
following words and phrases shall have the meanings set forth
below unless the context plainly requires a different meaning,
and when a defined meaning is intended, the term is capitalized.

          2.1.1.  "Account" means the device used to measure
     and determine the amount of deferred director's fees to
     be paid to a Participant or Beneficiary under the Plan,
     and may refer to the separate Accounts that represent
     amounts deferred by a Participant under separate
     Permissible Deferral elections.

          2.1.2.  "Affiliates" or "Affiliate" means a group
     of entities, including the Company, which constitutes a
     controlled group of corporations (as defined in section
     414(b) of the Code), a group of trades or businesses

     (whether or not incorporated) under common control (as
     defined in section 414(c) of the Code), and members of
     an affiliated service group (within the meaning of
     section 414(m) of the Code.)

          2.1.3.  "Age" of a Participant means the number of
     whole calendar years that have elapsed since the date
     of the Participant's birth.

          2.1.4.  "Beneficiary" or "Beneficiaries" means the
     persons or trusts designated by a Participant in
     writing pursuant to Section 6.4.4 of the Plan as being
     entitled to receive any benefit payable under the Plan
     by reason of the death of a Participant, or, in the
     absence of such designation, the persons specified in
     Section 6.4.5 of the Plan.

          2.1.5.  "Board" means the Board of Directors of
     the Company as constituted at the relevant time.

          2.1.5a.  "Closing Price" means the closing price
     of the Company's Common Stock on the New York Stock
     Exchange as of the applicable date; provided, however,
     that if no closing price is available for such date,
     "Closing Price" means the closing price of the
     Company's Common Stock as of the next most recent date
     for which a price is available.

          2.1.6.  "Code" means the Internal Revenue Code of
     1986, as amended from time to time and any successor
     statute.  References to a Code section shall be deemed
     to be to that section or to any successor to that
     section.

          2.1.7.  "Committee" means the Compensation
     Committee of the Company's Board.

          2.1.7a.  "Common Stock" means the common stock of
     the Company.

          2.1.8.  "Company" means H&R Block, Inc.

          2.1.8a.  "Deferred Compensation Unit" means a unit
     equal in value to one share of Common Stock and posted
     to a Participant's Account for the purpose of measuring
     the benefits payable under the Plan.

          2.1.9.  "Director" or "Directors" means a Non-
     Employee serving as a member on the Board of Directors
     of a Participating Affiliate.

          2.1.10.  "Director's Fees" of a Director for any
     Plan Year means that individual's total Retainer and
     Meeting Fees for that Plan Year.

          2.1.11.  "Effective Date" means the date on which
     this Plan became effective, i.e., September 1, 1987.
    
          2.1.12.  "Enrollment Period" means the period of
     February 15 through April 15 prior to the Plan Year to
     which a Permissible Deferral election first applies. 
     However, for the first Plan Year, the Enrollment Period
     shall be August 1, 1987 through August 31, 1987.

          2.1.13.  "Non-Employee" means any person who is
     not employed as a common-law employee by an Affiliate.

          2.1.14.  "Participant" means a Non-Employee
     Director who elects to participate in the Plan and who
     is eligible to participate in the Plan.

          2.1.15.  "Participating Affiliate" or
     "Participating Affiliates" means the Company and the
     following indirect subsidiaries of the Company:  HRB
     Management, Inc., H&R Block Tax Services, Inc.,
     CompuServe Incorporated, Block Financial Corporation,
     and MECA Software, Inc., and the U.S. subsidiaries of
     such indirect subsidiaries; and such other entities as
     may be designated as such by the Company from time to
     time.

          2.1.16.  "Permissible Deferral" means a deferral
     in each of the next four (4) consecutive Plan Years of
     an amount or percentage of Director's Fees that is not
     less nor more than one hundred percent (100%) of
     Director's Fees.

          Director's Fees deferrals shall be made in single
     sum deferrals at the time that the Director's Fees
     would otherwise be paid to the Director.  All deferrals
     must be completed by the later of (a) the Plan Year in
     which the Participant attains Age 68 or (b) April 30,
     1991.

          2.1.17.  "Plan" means the "H&R Block Deferred
     Compensation Plan for Directors" as set forth herein
     and as amended or restated from time to time.

          2.1.18.  "Plan Year" means May 1 through April 30,
     except that the first Plan Year shall be from September
     1, 1987 through April 30, 1988.

          2.1.19.  "Smoker" or "Smokers" with respect to any
     Permissible Deferral election means any individual who
     has smoked at least one cigarette with a twelve (12)
     month period ending on the date on which such
     individual makes the Permissible Deferral election.

          2.1.20.  "Standard Form of Benefit" as to any
     Participant means monthly payments for a ten (10) year
     period.

          2.1.21.  "Trust" means the H&R Block Inc.,
     Deferred Compensation Trust Agreement.

     Section 2.2.  Gender and Number.  Except as otherwise
indicated by context, masculine terminology used herein also
includes the feminine and neuter, and terms used in the singular
may also include the plural.

     ARTICLE 3.  PARTICIPATION.

     Section 3.1.  WHO MAY PARTICIPATE.  Participation in the
Plan is limited to Directors.

     Section 3.2.  TIME AND CONDITIONS OF PARTICIPATION.  An
eligible Director shall become a Participant only upon (a) the
individual's completion of a Permissible Deferral election for
the succeeding Plan Years during an Enrollment Period, in
accordance with a form established by the Company from time to
time, and (b) compliance with such terms and conditions as the
Committee may from time to time establish for the implementation
of the Plan, including, but not limited to, any condition the
Committee may deem necessary or appropriate for the Company to
meet its obligations under the Plan.

     Section 3.3.  TERMINATION OF PARTICIPATION.  Once a Director
has become a Participant in the Plan, participation shall
continue until the first to occur of (a) payment in full of all
benefits to which the Participant or Beneficiary is entitled
under the Plan, or (b) the occurrence of an event specified in
Section 3.4 which results in loss of benefits.  Except as
otherwise specified in the Plan, the Company may not terminate an
individual's participation in the Plan.

     Section 3.4.  MISSING PERSONS.  If the Company is unable to
locate the Participant or his Beneficiary for purposes of making
a distribution, the amount of a Participant's benefits under this
Plan that would otherwise be considered as non-forfeitable shall
be forfeited effective four (4) years after (a) the last date a
payment of said benefit was made, if at least one such payment
was made, or (b) the first date a payment of said benefit was
directed to be made by the Company pursuant to the terms of the
Plan, if no payments had been made.  If such person is located
after the date of such forfeiture, the benefits for such
Participant or Beneficiary shall not be reinstated hereunder.

     Section 3.5.  RELATIONSHIP TO OTHER PLANS.  Participation in
the Plan shall not preclude participation of the Participant in
any other fringe benefit program or plan sponsored by an
Affiliate for which such Participant would otherwise be eligible.

     ARTICLE 4.  ENTRIES TO THE ACCOUNT.

     Section 4.1.  DEFERRALS.  if the Participant elects the
fixed or variable crediting rate option for measuring the
performance of the Account under Section 4.2, the Company shall
post to the Account of each Participant on the date the
Director's Fees would otherwise be paid the amount of Director's
Fees to be deferred as designated by the Participant's
Permissible Deferral election in effect for that Plan Year.  If
the Participant elects the Common Stock crediting rate option for
measuring the performance of the Account under Section 4.2, (a)
the Company shall post to the Account of such Participant a
number of Deferred Compensation Units equivalent to the amount of
Director's Fees to be deferred as designated by the Participant's
Permissible Deferral election in effect for than Plan Year; (b)
deferrals of Director's Fees (and the corresponding number of
Deferred Compensation Units) shall be posted as of the date the
Director's Fees would otherwise be paid the amount of Director's
Fees to be deferred; and (c) the number of Deferred Compensation
Units posted for each calendar month in which Director's Fees
would otherwise be paid the amount of Director's Fees to be
deferred shall be calculated by dividing:  (i) the dollar amount
deferred during that month; by (ii) the Closing Price on the
first business day of the following calendar month.

     Section 4.2.  CREDITING RATE.  Gains or losses shall be
posted to the Account in accordance with the Participant's
irrevocable election of an investment option which will be a
reference for measuring the performance of the Account.  The
Company intends to measure the performance of the Account in
accordance with the Participant's election but reserves the right
to do otherwise.  The election shall be made concurrently with
the Permissible Deferral election.  The Participant shall elect
one of the following investment options:  (i)  a fixed rate as
described in 4.2.1, (ii) a variable rate as described in 4.2.2,
or (iii) a Common Stock crediting rate as described in 4.2.3.  A
separate irrevocable election shall be made for each Permissible
Deferral election.

          Section 4.2.1.  FIXED RATE.  Except as specified
     in Section 4.2.4, if a Participant elects a fixed rate,
     the interest will be compounded on a daily basis and
     posted to the Participant's Account per each pay period
     at an effective annual yield equal to the rate of ten-
     year United States Treasury notes.  The rate will be
     determined once each Plan Year and will be the rate in
     effect as of April 30 of the year prior to the Plan
     Year to which it applies, as published by Salomon
     Brothers Inc., or any successor thereto, or as
     determined by the Chief Financial Officer of the
     Company.

          Section 4.2.2.  VARIABLE RATE.  Except as
     specified in Section 4.2.4, if a Participant elects a
     variable rate, the Participant's Account will be
     credited or debited as if the Account balance were
     invested in one or more funds selected by the Company
     in the proportions elected by the Participant. 
     Statements will be provided on a quarterly basis. 
     Initially the funds will be from the Pruco Variable
     Appreciable Life Insurance Contracts and include the
     Common Stock Portfolio, the Aggressively Managed
     Flexible Portfolio, the Conservatively Managed Flexible
     Portfolio, the Money Market Portfolio, the Bond
     Portfolio, the High Yield Bond Portfolio and the Real
     Property Account.  Participants may elect to have their
     Accounts treated as if they were invested in one or
     more of the funds selected, provided the election is in
     at least ten percent (10%) increments of the Account. 
     Participants may change their measuring fund elections
     up to four (4) times in any calendar year by giving the
     Committee written notice of such change on a form
     provided by the Company for that purpose.  Upon receipt

     of such notice, the Committee will effect the change
     within two (2) business weeks.  The Participant's
     Account will be reduced by the annual administrative
     charge set forth on Schedule A attached hereto, which
     may be amended from time to time by the Committee.

          Section 4.2.3.  COMMON STOCK CREDITING RATE.  If a
     Participant elects the Common Stock crediting rate, the
     Participant's Account will be valued as if his or her
     Account were invested in shares of Common Stock equal
     to the number of Deferred Compensation Units posted to
     his or her Account.  The value of a Participant's
     Account will vary with the value of the Company's
     Common Stock.  The Participant's Account will be
     credited, as of the applicable dividend payment date,
     with additional Deferred Compensation Units equal in
     value to any dividends declared on the Company's Common
     Stock based on the number of Deferred Compensation
     Units posted to the Participant's Account as of the
     record date with respect to the declaration of such
     dividend.  As of any date of valuation, the value of a
     Participant's Account will be equal to the value (at
     the Closing Price on such date) of the number of shares
     of Common Stock represented by the Deferred
     Compensation Units credited to the Account as of that
     date.

          Section 4.2.4.  CREDITING FOR SMOKERS.  The
     crediting rate under Sections 4.2.1 and 4.2.2 for
     Smokers shall be reduced by four tenths of one percent
     (.4%) annually.  The Committee may, in its discretion,
     waive the reduction required by this Section 4.2.4 for
     an individual classified as a Smoker with respect to a
     Permissible Deferral election if the Committee receives
     a request for such a waiver, on a form provided by the
     Company for that purpose, from such individual which
     certifies that he or she has not smoked a cigarette
     within a twelve (12) month period ending on the date
     such request is submitted.  Such a request may be
     submitted no sooner than twelve (12) months following
     the date on which the Permissible Deferral was made.

     ARTICLE 5.  VESTING.

     Participant deferrals are fully vested immediately.

     ARTICLE 6.  DISTRIBUTION OF BENEFITS.

     Section 6.1.  TIME OF PAYMENT.  Payments of benefits shall
be made by the Company upon the earliest to occur of the
following:

          (a)  the termination, voluntary or involuntary, of
     the Participant as a Director;

          (b)  the Participant's death; or

          (c)  for Participants Age sixty-eight (68) or
     older on the date on which they first become eligible
     to participate in the Plan, Age 75.

Except as otherwise provided, benefit payments shall begin no
later that six (6) months after the occurrence of the event
described in the preceding sentence which results in benefit
distribution.

     Section 6.2.  FORM OF BENEFITS UPON RETIREMENT OR ATTAINMENT
OF AGE 75.  For distributions made for reasons other than the
death of the Participant, payments from the Account shall be made
in accordance with the Standard Form of Benefit.  However, the
Participant in the Plan Year prior to payment of benefits may
petition the Committee for, and the Committee may approve at such
time, one of the following forms of benefit:

          (a)  monthly payment over a five (5) year period;
     or

          (b)  a single distribution.

Except for single distributions, benefit payments shall be a
level amount for each twelve (12) month period calculated using
the balance in the Account at the beginning of the twelve (12)
month period and dividing it by the total periods remaining in
the entire payment period.  The benefit payment shall be adjusted
each subsequent twelve (12) month period to reflect the Account
as of that time.  The Account shall continue to be credited
during the payment period with gains and losses as provided in
Section 4.2.

     Section 6.3.  DEFERRAL OF PAYMENT.  A Participant may elect
at the time of each Permissible Deferral election to defer
commence-ment of the payment of benefits with respect to each
such Permissi-ble Deferral election as follows:

          (a)  for Participants Age 65 or older on the date
     on which they first become eligible to participate in
     the Plan, commencement of benefits may be deferred
     until the earlier of (i) five (5) years from the date
     on which they retire or (ii) Age 75;

          (b)  for all other Participants, commencement of
     benefits may be deferred until the earlier of (i) five
     (5) years from the date on which they retire or (ii)
     Age 70.

Notwithstanding the preceding sentence, if a Participant elects
to defer commencement of benefits pursuant to this Section 6.3,
but dies prior to the date on which benefits would commence under
such election, benefits shall begin no later than six (6) months
after the Participant's death.

     Section 6.4.  DEATH BENEFITS.

          6.4.1.  DEATH AFTER BENEFIT COMMENCEMENT.  In the
     event a Participant dies after commencement of
     benefits, the remaining benefit payments, if any, shall
     be paid to the Participant's Beneficiary in the same
     manner such benefits would have been paid to the
     Participant had the Participant survived.  A
     Beneficiary may petition the Committee for an
     alternative method of payment.  The Account shall be
     credited from the date of the Participant's death at an
     interest rate set by the Chief Financial Officer of the
     Company in his discretion, which shall not be less than
     the rate then payable on Investment Savings Accounts of
     $1,000 or less at Commerce Bank of Kansas City,
     Missouri, N.A., or any successor thereto.

          6.4.2.  DEATH PRIOR TO BENEFIT COMMENCEMENT.  In
     the event a Participant dies prior to the time benefits
     commence, the Company shall pay a pre-retirement death
     benefit to the Participant's Beneficiary equal to the
     Participant's Account as of the date of the
     Participant's death annuitized over a ten-year period
     at an interest rate set by the Chief Financial Officer
     of the Company in his discretion.  The pre-retirement
     death benefit shall be paid monthly for a ten-year
     period.  The Beneficiary may petition the Committee to
     make a single sum distri-bution as an alternative
     method of payment.

          6.4.3.  MARITAL DEDUCTION.  Any benefits which
     become payable under this Article 6 to the surviving
     spouse of a Participant shall be paid in a manner which
     will qualify such benefits for a marital deduction in
     the estate of a deceased Participant under the terms of
     Section 2056 of the Code, and unless specifically
     directed by a Participant to the contrary pursuant to
     an effective beneficiary designation, any portion of a
     Participant's death benefit payable to a surviving
     spouse which remains unpaid at the death of such spouse
     shall be paid to the spouse's estate.

          6.4.4.  DESIGNATION BY PARTICIPANT.  Each Partici-
     pant has the right to designate primary and contingent
     Beneficiaries for death benefits payable under the
     Plan.  Such Beneficiaries may be individuals or trusts
     for the benefit of individuals.  A beneficiary
     designation by a Participant shall be in writing on a
     form acceptable to the Committee and shall only be
     effective upon delivery to the Company.  A beneficiary
     designation may be revoked by a Participant at any time
     by delivering to the Company either written notice of
     revocation or a new beneficiary designation form.  The
     beneficiary designation form last delivered to the
     Company prior to the death of a Participant shall
     control.

          6.4.5.  FAILURE TO DESIGNATE BENEFICIARY.  In the
     event there is no beneficiary designation on file with
     the Company, or all Beneficiaries designated by a
     Participant have predeceased the Participant, the
     benefits payable by reason of the death of the
     Participant shall be paid to the Participant's spouse,
     if living; if the Participant does not leave a
     surviving spouse, to the Participant's issue by right
     of representation; or, if there are no such issue then
     living, to the Participant's estate.  In the event
     there are benefits remaining unpaid at the death of a
     sole Beneficiary and no successor Beneficiary has been
     designated, either by the Partici-pant or the
     Participant's spouse pursuant to 6.4.3, the remaining

     balance of such benefit shall be paid to the deceased
     Beneficiary's estate;  or, if the deceased Beneficiary is
     one of multiple concurrent Beneficiaries, such remaining
     benefits shall be paid proportionally to the surviving
     Beneficiaries.

     Section 6.5.  CLAIMS PROCEDURE.  The Committee shall notify
a Participant in writing within ninety (90) days of the
Participant's written application for benefits of his eligibility
or non-eligi-bility for benefits under the Plan.  If the
Committee determines that a Participant is not eligible for
benefits or full benefits, the notice shall set forth (a) the
specific reasons for such denial, (b) a specific reference to the
provision of the Plan on which the denial is based, (c) a
description of any additional information or material necessary
for the claimant to perfect his claim, and a description of why
it is needed, and (d) an explana-tion of the Plan's claims review
procedure and other appropriate information as to the steps to be
taken if the Participant wishes to have his claim reviewed.  If
the Committee determines that there are special circumstances
requiring additional time to make a decision, the Committee shall
notify the Participant of the special circumstances and the date
by which a decision is expected to be made, and may extend the
time for up to an additional 90-day period.  If a Participant is
determined by the Committee to be not eligible for benefits, or
if the Participant believes that he is entitled to greater or
different benefits, he shall have the opportunity to have his
claim reviewed by the Committee by filing a petition for review
with the Committee within sixty (60) days after receipt by him of
the notice issued by the Committee.  Said petition shall state
the specific reasons the Participant believes he is entitled to
benefits or greater or difference benefits.  Within sixty (60)
days after receipt by the Committee of said petition, the
Committee shall afford the Participant (and his counsel, if any)
an opportunity to present his position t the Committee orally or
in writing, and said Participant (or his counsel) shall have the
right to review the pertinent documents, and the Committee shall
notify the Participant of its decision in writing within said
sixty (60) day period, stating specifically the basis of said
decision written in a manner calculated to be under-stood by the
Participant and the specific provisions of the Plan on which the
decision is based.  If, because of the need for a hear-ing, the
sixty (60) day period is not sufficient, the decision may be
deferred for up to another sixty (60) day period at the election
of the Committee, but notice of this deferral shall be given to
the Participant.

     Section 6.6.  ALTERNATE FORMS OF BENEFIT DISTRIBUTION.  Par-
ticipants, in the Plan Year prior to payment of benefits may
petition the Committee to request methods of benefit distribution
other than those provided pursuant to this Article 6.

     Section 6.7.  DISTRIBUTIONS ON PLAN TERMINATION.  Notwith-
standing anything in this Article 6 to the contrary, if the Plan
is terminated, distributions shall be made in accordance with
Section 9.2.

     ARTICLE 7.  FUNDING

     Section 7.1.  SOURCES OF BENEFITS.  All benefits under the
Plan shall be paid when due by the Company our of its assets of
from an irrevocable trust established by the Company for that
purpose.  The Company may, but shall have no obligations to, make
such advance provision for the payment of such benefit as the
Board may from time to time consider appropriate.

     Section 7.2.  NO CLAIM ON SPECIFIC ASSETS.  No Participant
shall be deemed to have, by virtue of being a Participant in the
.Plan, any claim on any specific assets of the Company such that
the Participant would be subject to income taxation on his
benefits under the Plan prior to distribution and the rights of
Participants and Beneficiaries to benefits to which they are
otherwise entitled under the Plan shall be those of an unsecured
general creditor of the Company.

     ARTICLE 8.  ADMINISTRATION AND FINANCES

     Section 8.1.  ADMINISTRATION.  The Plan shall be
administered by the Committee.  The Company shall bear all
administrative costs of the Plan other than those specifically
charged to a Participant or Beneficiary.

     Section 8.2.  POWERS OF COMMITTEE.  In addition to the other
powers granted under the Plan, the Committee shall have all
powers necessary to administer the Plan, including, without
limitation, powers:

          (a)  to interpret the provisions of the Plan;

          (b)  to establish and revise the method of
     accounting for the Plan and to maintain the Accounts;
     and

          (c)  to establish rules for the administration of
     the Plan and to prescribe any forms required to
     administer the Plan.

Not in limitation, but in amplification of the foregoing and of
the authority conferred upon the Committee in Section 8.1, the
Company specifically intends that the Committee have the greatest
permissible discretion to construe the terms of the Plan and to
determine all questions concerning eligibility, participation and
benefits.  Any such decision made by the Committee is intended to
be subject to the most deferential standard of judicial review. 
Such standard of review is not to be effected by any real or
alleged conflict of interest on the part of the Company or any
member of the Committee.

     Section 9.2.  TERMINATION.  The Company expects the Plan to
be permanent, but necessarily must, and hereby does, reserve the
right to terminate the Plan at any time by written action of the
Board.  In all events, the Plan will be terminated if the
existence of a trust causes a federal court to hold that the Plan
is "funded" for ERISA purposes, as defined in Section 2.02-4 of
the Trust, and appeals from that holding are no longer timely or
have been exhausted, and the trust is therefore terminated with
respect to the Plan.  Upon termination of the Plan, all deferrals
will cease and no future deferrals will be made.  Termination of
the Plan shall not operate to eliminate or reduce benefits of any
retired Participant or the Beneficiary of any deceased
Participant then eligible for benefits or the benefits, if any,
in any active Participant's Account immediately before the
effective date of such termination, and each such Account will be
credited, to the date of distribution of all benefits in such
Account, in accordance with Section 4.2, as it may be amended
from time to time pursuant to Section 9.1.  

     If the Plan shall at any time be terminated, payments from
the Accounts of all Participants and Beneficiaries shall be made
as soon as administratively convenient in the form of monthly
payments over a five (5) year period; however, the Committee in
its sole discretion may pay the benefits in a lump sum. 
Notwithstanding the preceding sentence, if the termination occurs
because the Plan is held to be "funded" as described in the first
paragraph of this Section 9.2, the distribution will be paid in a
lump sum not later than ninety (90) days after such termination.

     ARTICLE 10.  MISCELLANEOUS

     Section 10.1  NO GUARANTEE OF MEMBERSHIP.  Neither the
adoption and maintenance of the Plan nor the execution by the
Company of a Permissible Deferral agreement with any Director
shall be deemed to be a contract between the Company and any
Participant to retain his or her position as a Director.

     Section 10.2.  INDIVIDUAL ACCOUNT PLAN.  If it is determined
that the Plan is not an unfunded plan maintained primarily for a
select group of management or highly compensated employees as
described in Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA,
then the Plan is intended to be an individual account plan (other
than a money purchase plan) as described in Section 301(a)(8) of
ERISA.

     Section 10.3.  RELEASE.  Any payment of benefits to or for
the benefit of a Participant or a Participant's Beneficiaries
that is made in good faith by the Company in accordance with the
Company's interpretation of its obligations hereunder, shall be
in full satisfaction of all claims against the Company for
benefits under this Plan to the extent of such payment.

     Section 10.4.  NOTICES.  Any notice permitted or required
under the Plan shall be in writing and shall be hand delivered or
sent, postage prepaid, certified or registered mail with return
receipt requested, to the principal office of the Company, if to
the Company, or to the address last shown on the records of the
Company, if to a Participant or Beneficiary.  Any such notice
shall be effective as of the date of hand delivery or mailing.

     Section 10.5.  NON-ALIENATION.  No benefit payable at any
time under this Plan shall be subject in any manner to
alienation, sale, transfer, assignment, pledge, levy, attachment,
or encumbrance of any kind.

     Section 10.6.  TAX LIABILITY.  The Company may direct the
trustee of the Trust to withhold from any payment of benefits
under the Plan such amounts as the Company determines are
reasonably necessary to pay any taxes (and interest thereon)
required to be withheld or for which the trustee of the Trust may
become liable under applicable law. The Company may also direct
the trustee of the Trust to forward to the appropriate taxing
authority any amounts required to be paid by the Company or the
Trust under the preceding sentence.  Any amounts withheld
pursuant to this Section 10.6 in excess of the amount of taxes
due (and interest thereon) shall be paid to the Participant or
Beneficiary upon final determination, as determined by the
Company, of such amount.  No interest shall be payable by the
Company to any Participant or Beneficiary by reason of any
amounts withheld pursuant to this Section 10.6.

     Section 10.7.  CAPTIONS.  Article and section headings and
captions are provided for purposes of reference and convenience
only and shall not be relied upon in any way to construe, define,
modify, limit, or extend the scope of any provision of the Plan.

     Section 10.8.  APPLICABLE LAW.  The Plan and all rights
hereunder shall be governed by and construed according to the
laws of the State of Missouri, except to the extent such laws are
preempted by the laws of the United States of America.

            Schedule A - Annual Administrative Charges

                                        Annual Administrative
Portfolio Gross Crediting Rate                  Charge       

     Up to 9.99%                                1.40%
     10.00% to 11.99%                           1.00%
     12.00% and above                           0.00%


                                                    EXHIBIT 10(e)











                            H&R BLOCK

                    DEFERRED COMPENSATION PLAN

                          FOR EXECUTIVES





                [As Amended Through March 9, 1994]


              [Incorporating Amendments 1 through 5]

                        TABLE OF CONTENTS

                           H & R BLOCK
                    DEFERRED COMPENSATION PLAN
                          FOR EXECUTIVES

                                                             Page

ARTICLE 1  DEFERRED COMPENSATION ACCOUNT  . . . . . . . . . .   1
          
     Section 1.1    Establishment of Account  . . . . . . . .   1
     Section 1.2    Property of Company . . . . . . . . . . .   1
     
ARTICLE 2  DEFINITIONS, GENDER, AND NUMBER  . . . . . . . . .   1

     Section 2.1    Definitions . . . . . . . . . . . . . . .   1
     Section 2.2    Gender and Number . . . . . . . . . . . .   6

ARTICLE 3  PARTICIPATION  . . . . . . . . . . . . . . . . . .   6
         
     Section 3.1    Who May Participate . . . . . . . . . . .   6
     Section 3.2    Time and Conditions of Participation  . .   7
     Section 3.3    Termination of Participation  . . . . . .   7
     Section 3.4    Missing Persons . . . . . . . . . . . . .   7
     Section 3.5    Relationship to Other Plans . . . . . . .   7
     
ARTICLE 4  ENTRIES TO THE ACCOUNT . . . . . . . . . . . . . .   8
          
     Section 4.1    Contributions . . . . . . . . . . . . . .   8
     Section 4.2    Crediting Rate  . . . . . . . . . . . . .   9
     Section 4.3    Crediting Rate Upon Retirement, Death,
                    Disability or Termination of Employment
                    with all Affiliates as a Result of a
                    Change of Control . . . . . . . . . . . .  11
     Section 4.4    Crediting Rate Upon Resignation or
                    Discharge . . . . . . . . . . . . . . . .  11

ARTICLE 5  VESTING  . . . . . . . . . . . . . . . . . . . . .  12
          
     Section 5.1    Participant Deferrals and Vesting
                    Schedule for Company Contributions  . . .  12
     Section 5.2    Exceptions to Vesting Schedule  . . . . .  12
     
ARTICLE 6  DISTRIBUTION OF BENEFITS . . . . . . . . . . . . .  13
          
     Section 6.1    Payments After Termination of Employment.  13
     Section 6.2    Form of Benefits Upon Retirement or
                    Disability  . . . . . . . . . . . . . . .  13
     Section 6.3    Form of Benefits Upon Resignation or
                    Discharge . . . . . . . . . . . . . . . .  14
     
     Section 6.4    Amount of Benefit . . . . . . . . . . . .  14
     Section 6.5    Time of Payment . . . . . . . . . . . . .  15
     Section 6.6    Death Benefits  . . . . . . . . . . . . .  16
     Section 6.7    Hardships . . . . . . . . . . . . . . . .  18
     Section 6.8    Claims Procedure  . . . . . . . . . . . .  19
     Section 6.9    Alternate Forms of Benefit Distribution .  20
     Section 6.10   Distributions on Plan Termination . . . .  20
     
ARTICLE 7  FUNDING  . . . . . . . . . . . . . . . . . . . . .  20
          
     Section 7.1    Source of Benefits  . . . . . . . . . . .  20
     Section 7.2    No Claim on Specific Assets . . . . . . .  20
     
ARTICLE 8  ADMINISTRATION AND FINANCES  . . . . . . . . . . .  20
          
     Section 8.1    Administration  . . . . . . . . . . . . .  20
     Section 8.2    Powers of Committee . . . . . . . . . . .  21
     Section 8.3    Actions of the Committee  . . . . . . . .  21
     Section 8.4    Delegation  . . . . . . . . . . . . . . .  21
     Section 8.5    Reports and Records . . . . . . . . . . .  21

     
ARTICLE 9  AMENDMENTS AND TERMINATION . . . . . . . . . . . .  22
          
     Section 9.1    Amendments  . . . . . . . . . . . . . . .  22
     Section 9.2    Termination . . . . . . . . . . . . . . .  22
     Section 9.3    Accelerated Vesting.  . . . . . . . . . .  23
     
ARTICLE 10  ACCELERATED VESTING . . . . . . . . . . . . . . .  23
          
     Section 10.1   Accelerated Vesting . . . . . . . . . . .  23
     Section 10.2   Change in Control . . . . . . . . . . . .  23
     
ARTICLE 11  MISCELLANEOUS . . . . . . . . . . . . . . . . . .  23
          
     Section 11.1   No Guarantee of Employment  . . . . . . .  23
     Section 11.2   Individual Account Plan . . . . . . . . .  23
     Section 11.3   Release . . . . . . . . . . . . . . . . .  24
     Section 11.4   Notices . . . . . . . . . . . . . . . . .  24
     Section 11.5   Non-Alienation  . . . . . . . . . . . . .  24
     Section 11.6   Tax Liability . . . . . . . . . . . . . .  24
     Section 11.7   Captions  . . . . . . . . . . . . . . . .  24
     Section 11.8   Applicable Law  . . . . . . . . . . . . .  24
          
     SCHEDULE A - MINIMUM ANNUAL DEFERRAL . . . . . . . . . .  25
          
     SCHEDULE B - ANNUAL ADMINISTRATIVE CHARGES . . . . . . .  26

                            H&R BLOCK

                    DEFERRED COMPENSATION PLAN

                          FOR EXECUTIVES


     H&R Block, Inc. (the "Company") hereby establishes,
effective August 1, 1987, a nonqualified deferred compensation
plan for the benefit of specified Executives of the Company, and
of the following affiliates of the Company: CompuServe
Incorporated, Personnel Pool of America, Inc., Path Management
Industries, Inc. and such other entities as may be designated by
the Company from time to time.  This plan shall be known as the
H&R Block Deferred Compensation Plan for Executives (the "Plan"). 
The Plan is intended to be an unfunded plan maintained primarily
for the purpose of providing deferred compensation for a select
group of management or highly compensated employees as described
in Sections 201(2), 301 (a)(3) and 401(a)(1) of the Employee
Retirement Income Security Act of 1974 ("ERISA").


             ARTICLE 1  DEFERRED COMPENSATION ACCOUNT

     Section 1.1  Establishment of Account.  The Company shall
establish an account ("Account") for each Participant which shall
be utilized solely as a device to measure and determine the
amount of deferred compensation to be paid under the Plan.

     Section 1.2  Property of Company and Participating
Affiliates.  Any amounts so set aside for benefits payable under
the Plan are the property of the Company and its participating
affiliates ("Participating Affiliates"), except, and to the
extent, of any assignment of such assets to an irrevocable trust.


            ARTICLE 2  DEFINITIONS, GENDER, AND NUMBER

     Section 2.1  Definitions.  Whenever used in the Plan, the
following words and phrases shall have the meanings set forth
below unless the context plainly requires a different meaning,
and when a defined meaning is intended, the term is capitalized.

          2.1.1  "Account" means the device used to measure and
     determine the amount of deferred compensation to be paid to
     a Participant or Beneficiary under the Plan, and may refer
     to the separate Accounts that represent amounts deferred by
     a Participant under separate Permissible Deferral elections
     or by the Company pursuant to Section 4.1.

          2.1.2  "Affiliates" or "Affiliate" means a group of
     entities, including the Company, which constitutes a

     controlled group of corporations (as defined in section
     414(b) of the Code), a group of trades or businesses
     (whether or not incorporated) under common control (as
     defined in section 414(c) of the Code), and members of an
     affiliated service group (within the meaning of section
     414(m) of the Code.)

          2.1.3  "Age" of a Participant means the number of whole
     calendar years that have elapsed since the date of the
     Participant's birth.

          2.1.4  "Annual Deferral Amount" means the amount a
     Participant elects to defer each Plan Year under a
     Permissible Deferral.  The Annual Deferral Amount is equal
     to an amount or percentage of Base Salary that is not less
     than the "minimum annual deferral" determined from Schedule
     A attached hereto (and as it may be amended from time to
     time by the Company) and not greater than the "maximum
     deferral amount" which shall be 35% of the Participant's
     Base Salary.

          2.1.5  "Base Salary" of a Participant for any Plan Year
     means the total annual salary and wages paid by all
     Affiliates to such individual, as determined as of the later
     of July 1, 1987 or the date on which the Participant first
     becomes eligible to participate in the Plan, including any
     amount which would be included in the definition of Base
     Salary, but for the individual's election to defer some of
     his or her salary pursuant to this Plan or some other
     deferred compensation plan established by an Affiliate; but
     excluding any other remuneration paid by Affiliates, such as
     overtime, net commissions, bonuses, stock options,
     distributions of compensation previously deferred,
     restricted stock, allowances for expenses (including moving,
     travel expenses, and automobile allowances), and fringe
     benefits payable in a form other than cash.  In the case of
     an individual who is a participant in a plan sponsored by an
     Affiliate which is described in Section 401(k) of the Code,
     the term Base Salary shall include any amount which would be
     included in the definition of Base Salary, but for the
     individual's election to reduce his salary and have the
     amount of the reduction contributed to the 401(k) plan on
     his behalf.

          2.1.6  "Beneficiary" or "Beneficiaries" means the
     persons or trusts designated by a Participant in writing
     pursuant to Section 6.6.4 of the Plan as being entitled to
     receive any benefit payable under the Plan by reason of the
     death of a Participant, or, in the absence of such
     designation, the persons specified in Section 6.6.5 of the
     Plan.

          2.1.7  "Board" means the Board of Directors of the
     Company as constituted at the relevant time. 

          2.1.8  "Bonus" or "Bonuses" of a Participant for any
     Plan Year means the total remuneration paid under the
     various annual management bonus programs ("annual bonuses")
     by Affiliates to such individual for that Plan Year
     including any amount which would be included in the
     definition of Bonus, but for the individual's election to
     defer some or all of his or her annual bonus pursuant to
     this Plan or some other deferred compensation plan
     established by an Affiliate; but excluding any other
     remuneration paid by Affiliates, such as Base Salary,
     overtime, net commissions, stock options, distributions of
     compensation previously deferred, restricted stock,
     allowances for expenses (including moving, travel expenses,
     and automobile allowances), and fringe benefits payable in a
     form other than cash.

          2.1.8a  "Closing Price" means the closing price of the
     Company's Common Stock on the New York Stock Exchange as of
     the applicable date; provided, however, that if no closing
     price is available for such date, "Closing Price" means the
     closing price of the Company's Common Stock as of the next
     most recent date for which a price is available.

          2.1.9  "Code" means the Internal Revenue Code of 1986,
     as amended from time to time and any successor statute. 
     References to a Code section shall be deemed to be to that
     section or to any successor to that section.

          2.1.10  "Committee" means the Compensation Committee of
     the Company's Board.

          2.1.10a  "Common Stock" means the common stock of the
     Company.

          2.1.11  "Company" means H&R Block, Inc.

          2.1.12  "Company Contribution" or "Company
     Contributions" means the sum of (a) the Company Matching
     Contributions described in Section 4.1.2, and (b) the
     additional Company contributions described in Section 4.1.3.

          2.1.13  "Completed Deferral Cycle" means total
     deferrals made and completed as specified by the Participant
     in his or her Permissible Deferral election either for four
     (4) or eight (8) consecutive Plan Years, if pursuant to
     Section 2.1.23(a), or for four (4), five (5), six (6), seven
     (7) or eight (8) consecutive Plan Years if pursuant to
     Section 2.1.23(b).

          2.1.13a  "Deferred Compensation Unit" means a unit
     equal in value to one share of Common Stock and posted to a
     Partici-pant's Account for the purpose of measuring the
     benefits payable under the Plan.

          2.1.14  "Disabled" or "Disability" with respect to a
     Participant shall have the same definition as in the
     Company's then existing long term group disability insurance
     program.

          2.1.15  "Early Retirement Date" of a Participant means
     the first day of the first calendar month commencing on or
     after the date on which (a) the Participant has reached Age
     55 while in the employ of an Affiliate; (b) the Participant
     has completed at least ten (10) Years of Service; and (c)
     the Participant has a Completed Deferral Cycle.

          2.1.16  "Effective Date" means the date on which this
     Plan became effective, i.e., August 1, 1987.

          2.1.17  "Enrollment Period" for a Plan Year commencing
     on January 1 means the immediate preceding period of October
     1 through December 15.  For the Plan Year for Group A
     Participants commencing May 1, 1990, the "Enrollment Period"
     means the period from February 15, 1990 to April 15, 1990.

          2.1.18  "Executive" means a person with substantial
     responsibility in the management of a Participating
     Affiliate employed on a full-time basis by that
     Participating Affiliate.

          2.1.19  "Hours of Service" means hours of service
     determined in accordance with the provisions of the then
     existing H&R Block, Inc. Employee Profit Sharing Retirement
     Plan.

          2.1.20  "Normal Retirement Date" of a Participant means
     the last day of the calendar month in which the Participant
     reaches the Age of 65 while in the employ of an Affiliate
     and has a Completed Deferral Cycle.

          2.1.21  "Participant" means an Executive who is
     eligible to participate in the Plan and has elected to
     participate in the Plan.

          2.1.22  "Participating Affiliate" or "Participating
     Affiliates" means the Company and the following indirect
     subsidiaries of the Company:  HRB Management, Inc., H&R
     Block Tax Services, Inc., CompuServe Incorporated, Block
     Financial Corporation, and MECA Software, Inc., and the U.S.
     subsidiaries of such indirect subsidiaries; and such other
     entities as may be designated as such by the Company from
     time to time.

          2.1.23  "Permissible Deferral" means one of the
     following options as selected by the Participant:

               (a)  for Participants under Age 55 as of the
          first day of a Plan Year, a deferral in that Plan

          Year and each of the next three (3) or seven (7)
          consecutive Plan Years of an Annual Deferral
          Amount.

               (b)  for Participants Age 55 or older as of
          the first day of a Plan Year, a deferral in that
          Plan Year and each of the next three (3), four
          (4), five (5), six (6), or seven (7) consecutive
          Plan Years of an Annual Deferral Amount.

          The aggregate of all deferrals may not exceed two
     hundred eighty percent (280%) of Base Salary.  All deferrals
     must be completed by the Plan Year in which the Participant
     attains Age 70.

          In general, deferrals are made from Base Salary. 
     However, if a Participant has elected to make deferrals from
     Base Salary, he or she may use Bonuses to "prepay" Annual
     Deferral Amounts as described below.  Deferrals under this
     section must specify the percentages (stated as integers) or
     dollar amounts of the deferral that are intended to be
     deducted from Base Salary and Bonus, respectively. 
     Deferrals made from Base Salary shall be made in
     installments, as instructed by the Participant and approved
     by the Committee, and shall be applied to the Annual
     Deferral Amount for the Plan Year in which the deferrals are
     made.  Deferrals made from Bonuses shall be made in a single
     sum deferral at the time that the Bonus would otherwise be
     paid to the Participant and shall be applied to Annual
     Deferral Amounts such that the amounts designated to be
     deferred last from Base Salary under a Permissible Deferral
     election are paid first by the deferred Bonus.  For example,
     if a Participant elects a four-year Permissible Deferral,
     Bonuses deferred in year one are applied first towards the
     Annual Deferral Amount for year four and the excess, if any,
     to the annual Deferral Amount for year three, then to year
     two, and so on.  If, in our example, the Participant's Bonus
     deferral in year one was not sufficient to pay the entire
     Annual Deferral Amount for year four, and the Participant
     again elected to defer some or all of a Bonus in year two,
     the amounts deferred would be applied first to any amount
     remaining in the Annual Deferral Amount for year four, and
     any excess would be applied toward the Annual Deferral
     Amount for year three.  Each installment of a deferral shall
     be rounded to the nearest whole dollar amount.  Deferrals
     from Base Salary will be adjusted for any year in which a
     Bonus deferral has prepaid a portion of that year's Annual
     Deferral Amount.  Elections to defer from Bonuses shall be
     made annually during the Enrollment Period prior to the Plan
     Year during which the Bonus would otherwise be paid to the
     Participant.

          2.1.24  "Plan" means the "H&R Block Deferred
     Compensation Plan for Executives" as set forth herein and as
     amended or restated from time to time.

          2.1.25  "Plan Year" means the calendar year (i) for all
     Permissible Deferrals elected by Group B Participants, and
     (ii) for Permissible Deferrals of Group A Participants
     elected to commence January 1, 1991 or later.  For
     Permissible Deferrals of Group A Participants elected to
     commence on or before May 1, 1990, "Plan Year" means the
     twelve month period ending each April 30. 

          2.1.26  "Smoker" or "Smokers" with respect to any
     Permissible Deferral election means any individual who has
     smoked at least one cigarette within a twelve (12) month
     period ending on the date on which such individual makes the
     Permissible Deferral election.

          2.1.27  "Standard Form of Benefit" as to any
     Participant means semimonthly payments for a fifteen (15)
     year period.

          2.1.28  "Trust" means the H&R Block, Inc. Deferred
     Compensation Trust Agreement.

          2.1.29  "Years of Service" means the number of
     consecutive Plan Years (including years prior to the
     Effective Date of this Plan) for which the Participant had
     at least 1,000 Hours of Service.

     Section 2.2  Gender and Number.  Except as otherwise
indicated by context, masculine terminology used herein also
includes the feminine and neuter, and terms used in the singular
may also include the plural.


                     ARTICLE 3  PARTICIPATION

     Section 3.1  Who May Participate.  Participation in the Plan
is limited to Group A and Group B Participants, described as
follows: 

          3.1.1  "Group A Participants" are Executives of the
     Company at Grade 26 and above, or with the title of
     Director, employed at Corporate Headquarters or Tax
     Operations, and Executives of Participating Affiliates,
     other than the Company, at comparable levels as determined
     by the Committee.  

          3.1.2  "Group B Participants" are Executives who do not
     qualify as Group A Participants, but who are designated by
     the Committee as eligible to participate in the Plan.

     Section 3.2  Time and Conditions of Participation. An
eligible Executive shall become a Participant only upon (a) the
individual's completion of a Permissible Deferral election for
the succeeding Plan Year or Plan Years during an Enrollment
Period, in accordance with a form established by the Company from
time to time, and (b) compliance with such terms and conditions
as the Committee may from time to time establish for the
implementation of the Plan, including, but not limited to, any
condition the Committee may deem necessary or appropriate for the
Company to meet its obligations under the Plan.  An individual
may make a Permissible Deferral election for any succeeding Plan
Year or Years during an Enrollment Period provided the total
Permissible Deferral elections do not exceed the limitation set
forth in Section 2.1.23.

     Section 3.3  Termination of Participation.  Once an
individual has become a Participant in the Plan, participation
shall continue until the first to occur of (a) payment in full of
all benefits to which the Participant or Beneficiary is entitled
under the Plan, or (b) the occurrence of an event specified in
Section 3.4 which results in loss of benefits, or (c) for a Group
B Participant, having an Annual Deferral Amount that causes the
Participant's Base Salary and Bonus for the Plan Year, after
reduction for the Annual Deferral Amount, to be less than ninety-
nine percent (99%) of the United States Social Security
Contribution and Benefit Base determined under Section 230 of the
Social Security Act for such Plan Year.  A Group B Participant
whose participation in the Plan is terminated under clause (c) of
the preceding sentence shall be deemed for purposes of all Plan
provisions (including Section 4.4, Section 5.1 and Section 6.3)
to have voluntarily terminated employment with the Company as of
the date the Participant's Plan participation is terminated. 
Such a Participant may then reenter the Plan during the following
Enrollment Period, assuming the Participant continues to be
eligible to participate in the Plan as provided in Section 3.1. 
Except as otherwise specified in the Plan, the Company may not
terminate an individual's participation in the Plan.

     Section 3.4  Missing Persons.  If the Company is unable to
locate the Participant or his Beneficiary for purposes of making
a distribution, the amount of a Participant's benefits under this
Plan that would otherwise be considered as non-forfeitable shall
be forfeited effective four (4) years after (a) the last date a
payment of said benefit was made, if at least one such payment
was made, or (b) the first date a payment of said benefit was
directed to be made by the Company pursuant to the terms of the
Plan, if no payments had been made.  If such person is located
after the date of such forfeiture, the benefits for such
Participant or Beneficiary shall not be reinstated hereunder.

     Section 3.5  Relationship to Other Plans.  Participation in
the Plan shall not preclude participation of the Participant in

any other fringe benefit program or plan sponsored by an
Affiliate for which such Participant would otherwise be eligible.


                ARTICLE 4  ENTRIES TO THE ACCOUNT

     Section 4.1  Contributions.

          Section 4.1.1   Deferrals.  During each Plan Year, if
     the Participant elects the fixed or variable crediting rate
     option for measuring the performance of the Account under
     Section 4.2, the Company shall post to the Account of such
     Participant the amount of Base Salary and Bonuses to be
     deferred as designated by the Participant's Permissible
     Deferral election in effect for that Plan Year.  Deferrals
     from Base Salary shall be posted by pay period and deferrals
     from Bonuses shall be posted annually at the time the Bonus
     would otherwise have been paid to the Participant.

          During each Plan Year, if the Participant elects the
     Common Stock crediting rate option for measuring the perfor-
     mance of the Account under Section 4.2, the Company shall
     post to the Account of such Participant a number of Deferred
     Compensation Units equivalent to the amount of Base Salary
     and Bonuses to be deferred as designated by the
     Participant's Permissible Deferral election in effect for
     that Plan Year.  Deferrals from Base Salary (and the
     corresponding number of Deferred Compensation Units) shall
     be posted by pay period and deferrals from Bonuses (and the
     corresponding number of Deferred Compensation Units) shall
     be posted annually at the time the Bonus would otherwise
     have been paid to the Participant.  The number of Deferred
     Compensation Units posted for each calendar month shall be
     calculated by dividing:  (i) the dollar amount deferred
     during that month; by (ii) the Closing Price on the first
     business day of the following calendar month.

          Section 4.1.2  Company Matching Contributions.  The
     Company shall post Matching Contributions to the Account of
     each participant as follows.  For each $1.00 of Base Salary
     or Bonus deferred pursuant to Section 4.1.1, the Company
     shall post an additional .50 to the Participant's Account,
     provided, however, that the total of all Matching
     Contributions made pursuant to this Section 4.1.2 shall not
     exceed one hundred forty percent (140%) of Base Salary. 
     Matching Contributions shall be posted at the same time as
     the deferrals for which the Matching Contributions are made.

          Section 4.1.3  Additional Company Contributions.  The
     Company shall also post to the Account of each Participant
     once each Plan Year the difference, if any, between (a) the
     amount for that Plan Year which would have been contributed

     on behalf of the Participant to any profit sharing plan
     which is deemed to be a "qualified plan" under the Code if
     the Participant had not made a Permissible Deferral election
     under the Plan; and (b) the amount for that Plan Year
     contributed on behalf of the Participant to such a plan.

          Section 4.1.4  Disability.  During the first 90-day
     period in which a Participant is Disabled, deferrals and
     Company Contributions shall continue to be posted as
     described in Sections 4.1.1, 4.1.2  and 4.1.3.  If a
     Participant continues to be Disabled after such 90-day
     period, deferrals will cease but Company Contributions will
     continue for the balance of the Participant's Permissible
     Deferral period as if the Participant's deferrals had
     continued.  A Participant may resume deferrals upon his or
     her return to work.

          Section 4.1.5  Special 1987 Election.  A Participant
     may elect to adjust his or her salary deferrals so that all
     salary deferrals which would have been made during the first
     Plan Year are made in the calendar year ending December 31,
     1987.  If a Participant makes this election, no deferrals
     from Base Salary or Bonuses will be made for the period
     beginning January 1, 1988 and ending April 30, 1988.

     Section 4.2  Crediting Rate.  Gains or losses shall be
posted to the Account in accordance with the Participant's 
irrevocable election of an investment option which will be a
reference for measuring the performance of the Account, as
modified, if applicable, by Section 4.4.  The Company intends to
measure the performance of the Account in accordance with the
Participant's election but reserves the right to do otherwise. 
The election shall be made concurrently with the Permissible
Deferral election.  The Participant shall elect one of the
following investment options:  (i) a fixed rate as described in
4.2.1, (ii) a variable rate as described in 4.2.2, or (iii) a
Common Stock crediting rate as described in 4.2.3.  A separate
irrevocable election shall be made for each Permissible Deferral
election.

          Section 4.2.1.  Fixed Rate.  Except as specified in
     Section 4.2.4, if a Participant elects a fixed rate, the
     interest will be compounded on a daily basis and posted to
     the Participant's Account per each pay period at an
     effective annual yield equal to the rate of ten-year United
     States Treasury notes.  The rate will be determined once
     each Plan Year and will be the rate in effect as of April 30
     of the year prior to the Plan Year to which it applies, as
     published by Salomon Brothers Inc., or any successor
     thereto, or as determined by the Chief Financial Officer of
     the Company.

          Section 4.2.2  Variable Rate.  Except as specified in
     Section 4.2.4, if a Participant elects a variable rate, the
     Participant's Account will be credited or debited as if the

     Account balance were invested in one or more funds selected
     by the Company in the proportions elected by the
     Participant.  Statements will be provided on a quarterly
     basis.  Initially the funds will be from the Pruco Variable
     Appreciable Life Insurance Contracts and include the Common
     Stock Portfolio, the Aggressively Managed Flexible
     Portfolio, the Conservatively Managed Flexible Portfolio,
     the Money Market Portfolio, the Bond Portfolio, the High
     Yield Bond Portfolio and the Real Property Account.
     Participants may elect to have their Accounts treated as if
     they were invested in one or more of the funds selected,
     provided the election is in at least ten percent (10%)
     increments of the Account.  Participants may change their
     measuring fund elections up to four (4) times in any
     calendar year by giving the Committee written notice of such
     change on a form provided by the Company for that purpose. 
     Upon receipt of such notice, the Committee will effect the
     change within two (2) business weeks.  The Participant's
     Account will be reduced by the annual administrative charge
     set forth on Schedule B attached hereto, which may be
     amended from time to time by the Committee.

          Section 4.2.3.  Common Stock Crediting Rate.  If a
     Participant elects the Common Stock crediting rate, the
     Participant's Account will be valued as if his or her
     Account were invested in shares of Common Stock equal to the
     number of Deferred Compensation Units posted to his or her
     Account.  The value of a Participant's Account will vary
     with the value of the Company's Common Stock.  The 
     Participant's Account will be credited, as of the applicable
     dividend payment date, with additional Deferred Compensation
     Units equal in value to any dividends declared on the
     Company's Common Stock based on the number of Deferred
     Compensation Units posted to the Participant's Account as of
     the record date with respect to the declaration of such
     dividend.  As of any date of valuation, the value of a
     Participant's Account will be equal to the value (at the
     Closing Price on such date) of the number of shares of
     Common Stock represented by the Deferred Compensation Units
     credited to the Account as of that date.

          Section 4.2.4  Crediting for Smokers.  The crediting
     rate under Sections 4.2.1 and 4.2.2 for Smokers shall be
     reduced by four tenths of one percent (.4%) annually.  The
     Committee may, in its discretion, waive the reduction
     required by this Section 4.2.4 for an individual classified
     as a Smoker with respect to a Permissible Deferral election
     if the Committee receives a request for such a waiver, on a
     form provided by the Company for that purpose, from such
     individual which certifies that he or she has not smoked a
     cigarette within a twelve (12) month period ending on the
     date the request is submitted.  Such a request may be
     submitted no sooner than twelve (12) months following the
     date on which the Permissible Deferral election is made.

     Section 4.3  Crediting Rate Upon Retirement, Death,
Disability or Termination of Employment with all Affiliates as a
Result of a Change of Control.  If a Participant terminates
employment at or after Normal Retirement Date or Early Retirement
Date, or is Disabled, gains and losses shall be credited as
described in Section 4.2 to that Participant's Accounts.  If a
Participant dies prior to termination of employment, gains and
losses shall be credited, to date of death, as described in
Section 4.2 to that Participant's Accounts.  If a Participant
terminates employment with all Affiliates before Normal
Retirement Date or Early Retirement Date as a result of a Change
of Control, gains and losses to all of that Participant's
Accounts, regardless of whether or not such Accounts represent
Completed Deferral Cycles, shall be credited as described in
Section 4.2 up to the date of the Change of Control and crediting
for such Accounts after the date of the Change of Control shall
be at an interest rate  set annually by the Chief Financial
Officer of the Company in his discretion, which shall not be less
than the rate then payable on Investment Savings Accounts of
$1,000 or less at Commerce Bank of Kansas City, N.A., Kansas
City, Missouri, or any successor thereto.

     Section 4.4  Crediting Rate Upon Resignation or Discharge.

          Section 4.4.1  Except as described in Section 4.4.2, if
     a Participant terminates employment with all Affiliates
     before Normal Retirement Date or Early Retirement Date for
     reasons other than death, Disability or a Change of Control,
     gains and losses shall be credited as described in Section
     4.2 up to the date of termination of employment to that
     Participant's Accounts that represent Completed Deferral
     Cycles.  Crediting for Accounts that do not represent 
     Completed Deferral Cycles and crediting after the date of
     termination of employment for Accounts that represent
     Completed Deferral Cycles shall be at an interest rate set
     annually by the Chief Financial Officer of the Company in
     his discretion, which shall not be less than the rate then
     payable on Investment Savings Accounts of $1,000 or less at
     Commerce Bank of Kansas City, N.A., Kansas City, Missouri,
     or any successor thereto.

          Section 4.4.2  If a Participant terminates employment
     on or after Age 55 having completed at least ten (10) Years
     of Service, but all Permissible Deferrals do not satisfy a
     Completed Deferral Cycle, the Participant will be deemed to
     have a Completed Deferral Cycle for all Permissible
     Deferrals if the Participant elects either:

               (a)  in compliance with terms and conditions
          as established from time to time by the Committee
          to defer sufficient additional Base Salary and/or
          Bonuses (to be earned prior to termination and
          subsequent to such election) to complete the
          deferral elected under Section 3.2; or

               (b)  to have the such Permissible Deferrals
          constitute a reduced Completed Deferral Cycle,
          provided such Permissible Deferrals satisfy a
          minimum amount, as determined by the Committee.

     A Participant must make the election described in (b) of
     this paragraph no later than thirty (30) days following
     termination of employment.  In the event the Participant
     fails to make either election described in this Section
     4.4.2, his or her Account will be credited in the manner
     described in Section 4.4.1.


                        ARTICLE 5  VESTING

     Section 5.1  Participant Deferrals and Vesting Schedule for
Company Contributions.  Participant deferrals pursuant to Section
4.1.1 are fully vested immediately.  The Participant's interests
in any Company Contributions described in Section 4.1.3 shall
vest according to the vesting schedule contained in the profit
sharing plan to which such Company Contributions relate.  The
Participant's interests in the Company Matching Contributions
under Section 4.1.2 shall vest according to the following
schedule:


                                   Percentage of
                               Company Contributions
     Years of Service                  Vested     
     ----------------              ---------------
                                        
     Less than 2                       None
          2                             20%
          3                             30%
          4                             40%
          5                             50%
          6                             60%  
          7                             70%
          8                             80%
          9                             90%
         10                            100%

For purposes of crediting Years of Service under the Schedule,
Participants will be credited with Years of Service  beginning
with the year in which the Participant began participation in the
Plan.  A Disabled Participant will be credited with any Hours of
Service with which he or she would have been credited but for the
Disability.

     Section 5.2  Exceptions to Vesting Schedule.  Company
Contributions are fully vested upon a Participant's death prior
to termination of employment, and upon a Change of Control as
defined in Section 10.2.  Participants who have attained Age 65
prior to the date on which they first became eligible to
participate in the Plan and who have completed ten (10) Years of

Service are fully vested.  Participants who have attained Age 55
(but are less than Age 65) prior to the date on which they first
became eligible to participate in the Plan and who have completed
ten (10) Years of Service, vest according to the following
formula:

      Years of Service since initial Plan eligibility date
 ---------------------------------------------------------------

   65 minus Participant's Age on initial Plan eligibility date


               ARTICLE 6  DISTRIBUTION OF BENEFITS

     Section 6.1  Payments After Termination of Employment. 
Payment of benefits to a Participant shall be made by the Company
only upon the termination, voluntary or involuntary, of the
Participant's employment with all Affiliates, except where a
Participant is Disabled, or as provided by Section 6.7.

     Section 6.2  Form of Benefits Upon Retirement or Disability. 
Payments from the Account shall be made in accordance with the
Standard Form of Benefit for Participants who terminate
employment on or after Normal Retirement Date or Early Retirement
Date or are Disabled.  However, no less than 13 months prior to
such termination of employment, the Participant may petition the
Committee for, and the Committee may approve at such time, an
optional form of benefit.

          Notwithstanding any other provisions of the Plan, a
Participant who terminates employment on or after Normal
Retirement Date or Early Retirement Date may, at any time before
or after a Change in Control, as defined in Section 10.2, elect
to receive an immediate lump-sum payment of the balance of said
Participant's Account reduced by a penalty, which shall be
forfeited to the Company, in lieu of payments in accordance with
the Standard Form of Benefit or such optional form of benefit as
may have previously been approved by the Committee under this
Section 6.2.  The penalty shall be equal to ten percent (10%) of 
the balance of such Account if the election is made before a
Change in Control and shall be equal to five percent (5%) of the
balance of such Account if the election is made after a Change in
Control.  However, the penalty shall not apply if the Committee
determines, based on advice of counsel or a final determination
or ruling by the Internal Revenue Service or any court of
competent jurisdiction, that by reason of the provisions of this
paragraph any Participant has recognized or will recognize gross
income for federal income tax purposes under this Plan in advance
of payment to the Participant of Plan benefits.  The Company
shall notify all Participants of any such determination by the
Committee and shall thereafter refund all penalties which were
imposed hereunder in connection with any lump-sum payments made
at any time during or after the first year to which the
Committee's determination applies (i.e., the first year for

which, by reasons of the provisions of this paragraph, gross
income under this Plan is recognized for federal income tax
purposes in advance of payment of benefits).  Interest compounded
annually shall be paid by the Company to the Participant (or the
Participant's Beneficiary if the Participant is deceased) on any
such refund from the date of the Company's payment of the lump
sum at an annual rate set at the time of the refund by the Chief
Financial Officer of the Company in his discretion, which rate
shall not be less than the rate then payable on Investment
Savings Accounts of $1,000 or less at Commerce Bank of Kansas
City, N.A., Kansas City, Missouri, or any successor thereto.  The
Committee may also reduce or eliminate the penalty if it
determines that the right to elect an immediate lump-sum payment
under this paragraph, with the reduced penalty or with no
penalty, as the case may be, will not cause any Participant to
recognize gross income for federal income tax purposes under this
Plan in advance of payment to the Participant of Plan benefits.

     Section 6.3  Form of Benefits Upon Resignation or Discharge. 
Upon a Participant's termination of employment with all
Affiliates following a Change of Control, payments from the
account shall be paid in a lump sum within ninety (90) days after
date of the ter-mination of employment.  If a Change of Control
has not occurred, for Participants who terminate employment with
all Affiliates before the Normal Retirement Date or the Early
Retirement Date for reasons other than Disability or death,
payments from the Account shall be in the form of (a) semimonthly
payments over a three (3) year period for all Permissible
Deferrals that satisfy a Completed Deferral Cycle, or (b) a lump
sum for all Permissible Deferrals that do not satisfy a Completed
Deferral Cycle.

     Section 6.4.  Amount of Benefit.  Except for distributions
in the form of a lump sum, benefit payments shall be in the form
of semimonthly cash installments paid during the applicable
payment period.  If the Participant elected the Common Stock
crediting rate option for measuring the performance of the
Account under Section 4.2 and such Participant receives benefits
pursuant to Section 6.3, or if the Participant elected the fixed
or variable crediting rate option for measuring the performance
of the Account under Section 4.2, such installments shall be
computed at the commencement of benefit payments based upon the 
balance in the Account at such time, together with an estimate of
the gains to be credited to the Account during the payment
period.  Such estimated gains shall be calculated using an
assumed interest rate equal to (a) nine percent (9%) per annum if
the Participant elected the fixed rate investment option pursuant
to Section 4.2; (b) five percent (5%) per annum if the
Participant elected the variable rate investment option pursu-ant
to Section 4.2; or (c) the annual interest rate set by the Chief
Financial Officer of the Company in accordance with Section 4.4.1
if the Participant receives benefits pursuant to Section 6.3.  If
the Participant is not receiving benefits pursuant to Section 6.3
and has elected different crediting rates (fixed or variable) for

separate Permissible Deferral elections, the estimated gains
shall be calculated separately for each separate Account
applicable to each such separate Permissible Deferral election.

     If benefit payments are computed in accordance with the
immediately preceding paragraph and, at the end of 12 consecutive
months after the date that benefit payments commence, or at the
end of any subsequent 12-consecutive-month period, the actual
crediting rate for such period is more than the assumed interest
rate, the additional gain resulting from the difference shall be
paid to the Participant in a single payment on or before the next
December 31 following the end of such period.  If, at the end of
any such 12-consecutive-month period, the actual crediting rate
for such period is less than the assumed interest rate, the
amount of the reduced gain resulting from the difference shall be
deducted from succeeding payments due to the Participant in such
manner as the Committee shall determine. 

     If the Participant elected the Common Stock crediting rate
option for measuring the performance of the Account under Section
4.2 and such Participant does not receive benefits pursuant to
Section 6.3, the amount of each installment payment will be level
during each 12-month period of the payment period, but will vary
from year to year.  The amount of each level payment for each 12-
month period will be calculated using the balance in the Account
at the beginning of the 12-month period and dividing it by the
total periods remaining in the entire payment period.  The
benefit pay-ment shall be adjusted each subsequent 12-month
period to reflect the value of the Account as of such time.

     Generally, the Account shall continue to be credited during
the payment period with gains and losses as provided in Section
4.3.  However, if a Participant receives benefits pursuant to
Section 6.3, the Account shall be credited with gains and losses
as provided in Section 4.4.1.  Except as provided otherwise, if a
Participant dies, Section 6.6 shall apply.

     Notwithstanding anything in this Plan to the contrary, the
Committee may, in its sole discretion, increase or reduce any
assumed interest rate set forth in this Section 6.4 and any such
assumed interest rate, as so adjusted, shall be effective for
calculating equal semimonthly installments for Participants whose
benefit payments commence after the date of such adjustment.

     Section 6.5  Time of Payment.  Generally, benefit payments
to a Participant shall begin no later than six (6) months after
termination of employment.  In the case of a Disabled
Participant, benefits shall commence no later than six (6) months
after the Participant's Early Retirement Date.

     A Participant may elect at the time of each Permissible
Deferral election to defer commencement of the payment of

benefits after termination of employment with respect to such
Permissible Deferral election until the earlier of:  (a) five (5)
years after termination of employment; or (b) Age 70.  If the
Participant has made such an election, the Committee upon written
petition of the Participant may begin benefit payments at an
earlier time after termination if it determines that compelling
reasons exist for such earlier payments.

     Section 6.6  Death Benefits.

          6.6.1  Death After Benefit Commencement.  In the event
     a Participant dies after benefit payments have commenced
     (other than payments made pursuant to Section 6.7), the
     remaining benefit payments, if any, shall be paid to the
     Participant's Beneficiary in the same manner such benefits
     would have been paid to the Participant had the Participant
     survived.  A Beneficiary may petition the Committee for an
     alternative method of payment.  If such benefits were
     payable pursuant to Section 6.3, the Account shall continue
     to be credited during the payout period as provided in
     Section 4.4, except that, if such benefits were payable
     because of the Participant's termination of employment with
     all Affiliates following a Change of Control, the Account
     shall continue to be credited as provided in Section 4.3. 
     If such benefits were payable pursuant to Section 6.2, the
     Account shall be credited from the date of the Participant's
     death at a rate set by the Chief Financial Officer of the
     Company in his discretion, which shall not be less than the
     rate then payable on Investment Savings Accounts of $1,000
     or less at Commerce Bank of Kansas City, Missouri, N.A., or
     any successor thereto.  If such benefits were payable
     pursuant to Section 6.2 to a Participant whose employment
     terminated on or after Normal Retirement Date or Early
     Retirement Date, the Participant's Beneficiary may make the
     election to receive an immediate lump-sum payment of the
     balance of said Participant's Account in accordance with the
     provisions of Section 6.2 and all provisions set forth
     therein relating to penalties shall apply to any such
     election.

          In addition, if a Participant dies on or after such
     Participant's Normal Retirement Date or Early Retirement
     Date after having retired, or after benefits have commenced
     because of the Participant's Disability, an annuity shall be
     paid to the Participant's surviving spouse, if any (to whom
     he has been married at least one (1) year prior to the date
     of death).  The annuity shall be for the life of the
     Participant's surviving spouse with each semimonthly payment
     equal to fifty percent (50%) of the average amount which
     would have been payable to the Participant and his or her
     Beneficiary if, on the date benefits commenced, the
     Participant had received the Standard Form of Benefit
     payment.  If the Participant's surviving spouse is more than

     thirty-six (36) months younger than the Participant, the
     survivor life annuity payable to such spouse shall be
     reduced by one-half of one percent (.5%) for each month the
     spouse is more than thirty-six (36) months younger than the
     Participant.  Payment shall commence on the first day of the
     month following the later of (a) the Participant's death,
     (b) the completion of the death benefits under the first
     paragraph of this Section 6.6.1, or (c) fifteen (15) years
     from the date benefits commenced or would have commenced to
     the Participant.

          6.6.2  Death Prior to Benefit Commencement.  In the
     event a Participant dies before benefit payments have
     commenced, the Company shall pay a pre-retirement death
     benefit to the Participant's Beneficiary.  The amount of
     such pre-retirement death benefit is the greater of:

               (a)  the Participant's Account as of the 
          date of the Participant's death annuitized   
          over a ten-year period at an interest rate   
          set by the Chief Financial Officer of the    
          Company in his discretion, which shall not be 
          less than the rate then payable on Investment 
          Savings Accounts of $1,000 or less at        
          Commerce Bank at Kansas City, Missouri, N.A.; 
          or any successor thereto; or

               (b)  an annual benefit of twenty-five per-
          cent (25%) of the total deferrals and Company 
          Contributions made as of the date of the Parti-
          cipant's death.

     The pre-retirement death benefit shall be paid semimonthly
     for a ten-year period.  The Beneficiary may petition the
     Committee for an alternative method of payment.  If the pre-
     retirement death benefit is computed pursuant to 6.6.2(a),
     the Account shall continue to be credited during the payment
     period at an interest rate set by the Chief Financial
     Officer of the Company in his discretion. which shall not be
     less than the rate then payable on Investment Savings
     Accounts of $1,000 or less at Commerce Bank of Kansas City,
     Missouri, N.A., or any successor thereto.  Commencement of
     benefits under this Section 6.6.2 shall begin no later than
     six (6) months following the death of the Participant
     notwithstanding any election which the Participant may have
     made to defer benefits pursuant to Section 6.5.

          6.6.3  Marital Deduction.  Any benefits which become
     payable under this Article 6 to the surviving spouse of a
     Participant shall be paid in a manner which will qualify
     such benefits for a marital deduction in the estate of a
     deceased Participant under the terms of Section 2056 of the
     Code, and unless specifically directed by a Participant to
     the contrary pursuant to an effective beneficiary

     designation, any portion of a Participant's death benefit
     payable to a surviving spouse which remains unpaid at the
     death of such spouse shall be paid to the spouse's estate.

          6.6.4  Designation by Participant.  Each Participant
     has the right to designate primary and contingent
     Beneficiaries for death benefits payable under the Plan. 
     Such Beneficiaries may be individuals or trusts for the
     benefit of individuals.  A beneficiary designation by a
     Participant shall be in writing on a form acceptable to the
     Committee and shall only be effective upon delivery to the
     Company.  A beneficiary designation may be revoked by a
     Participant at any time by delivering to the Company either
     written notice of revocation or a new beneficiary
     designation form.  The beneficiary designation form last
     delivered to the Company prior to the death of a Participant
     shall control.

          6.6.5  Failure to Designate Beneficiary.  In the event
     there is no beneficiary designation on file with the
     Company, or all Beneficiaries designated by a Participant
     have prede-ceased the Participant, the benefits payable by
     reason of the death of the Participant shall be paid to the
     Participant's spouse, if living; if the Participant does not
     leave a surviving spouse, to the Participant's issue by
     right of representation; or, if there are no such issue then
     living, to the Participant's estate.  In the event there are
     benefits remaining unpaid at the death of a sole Beneficiary
     and no successor Beneficiary has been designated, either by
     the Participant or the Participant's spouse pursuant to
     6.6.3, the remaining balance of such benefit shall be paid
     to the deceased Beneficiary's estate; or, if the deceased
     Beneficiary is one of multiple concurrent Beneficiaries,
     such remaining benefits shall be paid proportionally to the
     surviving Beneficiaries.

     Section 6.7  Hardships.  Upon the application of any
Participant, the Committee, in accordance with its uniform, non-
discriminatory policy, may permit such Participant to terminate
future deferrals or to withdraw his total Account.  A Participant
must give a written petition of the termination of his or her
Permissible Deferral election at least thirty (30) days prior to
the next monthly (for Base Salary) or single sum (for Bonuses)
deferral.  A Participant must give a written petition of the
intent to withdraw the Account at least sixty (60) days (or such
shorter time as permitted by the Committee) prior to the date of
with-drawal.  No termination or withdrawal shall be made under
the provisions of this Section except for the purpose of enabling
a Participant to meet immediate needs created by a financial
hard-ship for which the Participant does not have other
reasonably available sources of funds as determined by the
Committee in accordance with uniform rules.  The term financial
hardship shall include the need for funds to:  meet uninsured

medical expenses for the Participant or his dependents, meet a
significant uninsured casualty loss for the Participant or his
dependents, and meet other catastrophes of a "sudden and serious
nature."

     If the Committee permits a termination of a Participant's
Permissible Deferral election, the Participant shall be entitled
to have the deferrals made pursuant to the Permissible Deferral
election constitute a reduced Completed Deferral Cycle, provided
the deferrals satisfy a minimum amount, as determined by the
Committee.  If the deferrals do not satisfy such a minimum
amount, no termination of a Participant's Deferral election will
be allowed without a withdrawal.  The Committee may permit a
withdrawal of any deferrals.  If a withdrawal is permitted, a
Participant's deferrals shall be credited at the lesser of (a)
the amount as described in Section 4.2; or (b) an interest rate
set by the Chief Financial Officer of the Company in his
discretion, which shall not be less than the rate then payable on
Investment Savings Accounts of $1,000 or less at Commerce Bank of
Kansas City, Missouri, N.A., or any successor thereto. 
Withdrawals shall be distributed in the form of a lump sum as
soon as is reasonably convenient.

     If a termination of deferrals or a withdrawal is made under
this Section, the Participant may not enter into a new
Permissible Deferral election for two (2) complete Plan Years
from the date of the termination or withdrawal.

     Section 6.8  Claims Procedure.  The Committee shall notify a
Participant in writing within ninety (90) days of the
Participant's written application for benefits of his eligibility
or non-eligibility for benefits under the Plan.  If the Committee
determines that a Participant is not eligible for benefits or
full benefits, the notice shall set forth (a) the specific
reasons for such denial, (b) a specific reference to the
provision of the Plan on which the denial is based, (c) a
description of any additional information or material necessary
for the claimant to perfect his claim, and a description of why
it is needed, and (d) an explanation of the Plan's claims review
procedure and other appropriate information as to the steps to be
taken if the Participant wishes to have his claim reviewed.  If
the Committee determines that there are special circumstances
requiring additional time to make a decision, the Committee shall
notify the Participant of the special circumstances and the date
by which a decision is expected to be made, and may extend the
time for up to an additional 90-day period.  If a Participant is
determined by the Committee to be not eligible for benefits, or
if the Participant believes that he is entitled to greater or
different benefits, he shall have the opportunity to have his
claim reviewed by the Committee by filing a petition for review
with the Committee within sixty (60) days after receipt by him of

the notice issued by the Committee.  Said petition shall state
the specific reasons the Participant believes he is entitled to
benefits or greater or different benefits.  Within sixty (60)
days after receipt by the Committee of said petition, the
Committee shall afford the Participant (and his counsel, if any)
an opportunity to present his position to the Committee orally or
in writing, and said Participant (or his counsel) shall have the 
right to review the pertinent documents, and the Committee shall
notify the Participant of its decision in writing within said
sixty (60) day period, stating specifically the basis of said
decision written in a manner calculated to be understood by the
Participant and the specific provisions of the Plan on which the
decision is based.  If, because of the need for a hearing, the
sixty (60) day period is not sufficient, the decision may be
deferred for up to another sixty (60) day period at the election
of the Committee, but notice of this deferral shall be given to
the Participant.

     Section 6.9  Alternate Forms of Benefit Distribution. 
Participants shall have the right to petition the Committee to
request methods of benefit distribution other than those provided
to Participants pursuant to this Article 6.

     Section 6.10  Distributions on Plan Termination.  Notwith-
standing anything in this Article 6 to the contrary, if the Plan
is terminated, distributions shall be made in accordance with
Section 9.2.


                        ARTICLE 7  FUNDING

     Section 7.1  Source of Benefits.  All benefits under the
Plan shall be paid when due by the Company out of its assets or
from an irrevocable trust established by the Company for that
purpose.  The Company may, but shall have no obligations to, make
such advance provision for the payment of such benefit as the
Board may from time to time consider appropriate.

     Section 7.2  No Claim on Specific Assets.  No Participant
shall be deemed to have, by virtue of being a Participant in the
Plan, any claim on any specific assets of the Company such that
the Participant would be subject to income taxation on his
benefits under the Plan prior to distribution and the rights of
Participants and Beneficiaries to benefits to which they are
otherwise entitled under the Plan shall be those of an unsecured
general creditor of the Company.


              ARTICLE 8  ADMINISTRATION AND FINANCES

     Section 8.1  Administration.  The Plan shall be administered
by the Committee.  The Company shall bear all administrative
costs of the Plan other than those specifically charged to a
Participant or Beneficiary.

     Section 8.2  Powers of Committee.  In addition to the other
powers granted under the Plan, the Committee shall have all
powers necessary to administer the Plan, including, without
limitation, powers:

          (a)  to interpret the provisions of the Plan;

          (b)  to establish and revise the method of
     accounting for the Plan and to maintain the Accounts;
     and  

          (c)  to establish rules for the administration of
     the Plan and to prescribe any forms required to
     administer the Plan.

Not in limitation, but in amplification of the foregoing and of
the authority conferred upon the Committee in Section 8.1, the
Company specifically intends that the Committee have the greatest
permissible discretion to construe the terms of the Plan and to
determine all questions concerning eligibility, participation and
benefits.  Any such decision made by the Committee is intended to
be subject to the most deferential standard of judicial review. 
Such standard of review is not to be effected by any real or
alleged conflict of interest on the part of the Company or any
member of the Committee.

     Section 8.3  Actions of the Committee.  Except as modified
by the Company, all determinations, interpretations, rules, and
decisions of the Committee shall be conclusive and binding upon
all persons having or claiming to have any interest or right
under the Plan.

     Section 8.4  Delegation.  The Committee, or any officer
designated by the Committee, shall have the power to delegate
specific duties and responsibilities to officers or other
employees of the Company or other individuals or entities.  Any
delegation may be rescinded by the Committee at any time.  Each
person or entity to whom a duty or responsibility has been
delegated shall be responsible for the exercise of such duty or
responsibility and shall not be responsible for any act or
failure to act of any other person or entity.

     Section 8.5  Reports and Records.  The Committee and those
to whom the Committee has delegated duties under the Plan shall
keep records of all their proceedings and actions and shall
maintain books of account, records, and other data as shall be
necessary for the proper administration of the Plan and for
compliance with applicable law.

              ARTICLE 9  AMENDMENTS AND TERMINATION

     Section 9.1  Amendments.  The Company, by action of the
Board, may amend the Plan, in whole or in part, at any time and
from time to time.  Any such amendment shall be filed with the
Plan documents.  No amendment, however, may be effective to
eliminate or reduce the benefits of any retired Participant or
the Beneficiary of any deceased Participant then eligible for
benefits or the vested portion of the benefits, if any, in any
active Participant's Account immediately before the effective
date of such amendment, and each such Account will be credited to
the date of such amendment in accordance with Section 4.2,
whether or not such  Account represents a Completed Deferral
Cycle.  Notwithstanding anything in this Section 9.1 to the
contrary, the Committee may, in its discretion, amend the Plan to
reduce the rates set forth in Section 4.2 effective for crediting
of Accounts from the date of any such amendment.  Notwithstanding
anything in this Section 9.1 to the contrary, the Committee may,
in its discretion, amend the Plan to reduce or eliminate the
penalty described in Section 6.2 in accordance with the 
provisions of such Section 6.2, and amend the Plan to increase or
reduce any assumed interest rate set forth in Section 6.4, in
accordance with the provisions of such Section 6.4.

     Section 9.2  Termination.  The Company expects the Plan to
be permanent, but necessarily must, and hereby does, reserve the
right to terminate the Plan at any time by action of the Board. 
In all events, the Plan will be terminated if the existence of a
trust causes a federal court to hold that the Plan is "funded"
for ERISA purposes, as defined in Section 2.02-4 of the Trust and
appeals from that holding are no longer timely or have been
exhausted, and the trust is therefore terminated with respect to
the Plan.  Upon termination of the Plan, all deferrals and
Company Contributions will cease and no future deferrals or
Company Contributions will be made.  Termination of the Plan
shall not operate to eliminate or reduce benefits of any retired
Participant or the Beneficiary of any deceased Participant then
eligible for benefits.  Active Participants shall become vested
in their accrued benefits to the extent and in the manner
provided in Section 9.3 as of the effective date of such
termination and each account of an active Participant shall be
credited, to the date of distribution of all benefits in each
such Account, in accordance with Section 4.2., as it may be
amended from time to time pursuant to Section 9.1, whether or not
it represents a Completed Deferral Cycle.

     If the Plan is terminated, payments from the Accounts of all
Participants and Beneficiaries shall be made as soon as
administratively convenient in the form of monthly payments over
a five (5) year period; however, the Committee in its sole
discretion may pay the benefits in a lump sum.  Notwithstanding
the preceding sentence, if the termination occurs because the
Plan is held to be "funded" as described in the first paragraph

of this Section 9.2, the distribution will be paid in a lump sum
not later than ninety (90) days after such termination.

     Section 9.3  Accelerated Vesting.  Notwithstanding Article
5, upon termination of the Plan a Participant shall vest in
Company Contributions according to the following schedule:


                                   Percentage of Company
     Years of Service              Contributions Vested 
     ----------------                   -----------
                                            
      Less than 1                           None
          1                                  20%
          2                                  40%
          3                                  60%
          4                                  80%
      5 or more                             100%

Years of Service shall be credited in accordance with Section
5.1.


                  ARTICLE 10  ACCELERATED VESTING

     Section 10.1  Accelerated Vesting.  Notwithstanding Article 
5, upon a Change of Control as defined in Section 10.2, a
Participant shall be fully vested in Company Contributions.  

     Section 10.2  Change in Control.  A Change in Control for
any Participant shall occur if there is a Change in Control of
the Company as defined in Section 1.01-2 of the Trust or there is
a Change in Control of a Participating Subsidiary, as defined in
Section 1.01-2 of the Trust, of the Participating Affiliate by
whom the Participant is employed.


                     ARTICLE 11  MISCELLANEOUS

     Section 11.1  No Guarantee of Employment.  Neither the
adoption and maintenance of the Plan nor the execution by the
Company of a Permissible Deferral agreement with any Executive
shall be deemed to be a contract of employment between the
Company and any Participant.  Nothing contained herein shall give
any Participant the right to be retained in the employ of the
Company or to interfere with the right of the Company to
discharge any Participant at any time, nor shall it give the
Company the right to require any Participant to remain in its
employ or to interfere with the Participant's right to terminate
his employment at any time.

     Section 11.2  Individual Account Plan.  If it is determined
that the Plan is not an unfunded deferred compensation plan
maintained primarily for a select group of management or highly
compensated employees as described in Sections 201(2), 301(a)(3)

and 401(a)(1) of ERISA, then the Plan is intended to be an
individual account plan (other than a money purchase plan) as
described in Section 301(a)(8) of ERISA and the vesting schedule
set forth in Article 5 shall be replaced by the vesting schedule
in the then current H&R Block, Inc.  Employee Profit Sharing
Plan.

     Section 11.3  Release.  Any payment of benefits to or for
the benefit of a Participant or a Participant's Beneficiaries
that is made in good faith by the Company in accordance with the
Company's interpretation of its obligations hereunder, shall be
in full satisfaction of all claims against the Company for
benefits under this Plan to the extent of such payment.

     Section 11.4  Notices.  Any notice permitted or required
under the Plan shall be in writing and shall be hand delivered or
sent, postage prepaid, certified or registered mail with return
receipt requested, to the principal office of the Company, if to
the Company, or to the address last shown on the records of the
Company, if to a Participant or Beneficiary.  Any such notice
shall be effective as of the date of hand delivery or mailing.

     Section 11.5  Non-Alienation.  No benefit payable at any
time under this Plan shall be subject in any manner to
alienation, sale, transfer, assignment, pledge, levy, attachment,
or encumbrance of any kind.

     Section 11.6  Tax Liability.  The Company may direct the 
trustee of the Trust to withhold from any payment of benefits
under the Plan such amounts as the Company determines are
reasonably necessary to pay any taxes (and interest thereon)
required to be withheld or for which the trustee of the Trust may
become liable under applicable law. The Company may also direct
the trustee of the Trust to forward to the appropriate taxing
authority any amounts required to be paid by the Company or the
Trust under the preceding sentence.  Any amounts withheld
pursuant to this Section 11.6 in excess of the amount of taxes
due (and interest thereon) shall be paid to the Participant or
Beneficiary upon final determination, as determined by the
Company, of such amount.  No interest shall be payable by the
Company to any Participant or Beneficiary by reason of any
amounts withheld pursuant to this Section 11.6.

     Section 11.7  Captions.  Article and section headings and
captions are provided for purposes of reference and convenience
only and shall not be relied upon in any way to construe, define,
modify, limit, or extend the scope of any provision of the Plan.

     Section 11.8  Applicable Law.  The Plan and all rights
hereunder shall be governed by and construed according to the
laws of the State of Missouri, except to the extent such laws are
preempted by the laws of the United States of America.


               SCHEDULE A - MINIMUM ANNUAL DEFERRAL

                              Fixed
     -----------------------------------------------------
                                   Minimum Annual Deferral
                                         
     All ages                               $3,000


                             Variable
     -----------------------------------------------------
       Age                         Minimum Annual Deferral
                                         
     Up to 40                               $3,000
     41 -  50                                3,900
     51 -  60                                5,500
     60 -  65                                6,400
     66 -  70                                7,300



            SCHEDULE B - ANNUAL ADMINISTRATIVE CHARGES

                                        Annual Administrative
     Portfolio Gross Crediting Rate            Charge        
     ------------------------------     ---------------------
                                            
          Up to 9.99%                          1.40% 
          10.00% to 11.99%                     1.00%
          12.00% and above                     0.00%


                                                    EXHIBIT 10(f)














                            H&R BLOCK

             SUPPLEMENTAL DEFERRED COMPENSATION PLAN

                          FOR EXECUTIVES

                            H&R BLOCK
             SUPPLEMENTAL DEFERRED COMPENSATION PLAN
                          FOR EXECUTIVES

                        TABLE OF CONTENTS

                                                             Page

ARTICLE 1  DEFERRED COMPENSATION ACCOUNT  . . . . . . . . . .   1

     Section 1.1    Establishment of Account  . . . . . . . .   1
     Section 1.2    Property of Company and Participating
                    Affiliates  . . . . . . . . . . . . . . .   1

ARTICLE 2  DEFINITIONS, GENDER, AND NUMBER  . . . . . . . . .   1

     Section 2.1    Definitions . . . . . . . . . . . . . . .   1
     Section 2.2    Gender and Number . . . . . . . . . . . .   6

ARTICLE 3  PARTICIPATION  . . . . . . . . . . . . . . . . . .   6

     Section 3.1    Who May Participate . . . . . . . . . . .   6
     Section 3.2    Time and Conditions of Participation  . .   6
     Section 3.3    Termination of Participation  . . . . . .   6
     Section 3.4    Missing Persons . . . . . . . . . . . . .   6
     Section 3.5    Relationship to Other Plans . . . . . . .   7

ARTICLE 4  ACCOUNTS . . . . . . . . . . . . . . . . . . . . .   7

     Section 4.1    Contributions . . . . . . . . . . . . . .   7
     Section 4.2    Valuation of Accounts . . . . . . . . . .   8
     Section 4.3    Valuation Upon Retirement, Death, Disability
                    or Termination of Employment with all
                    Affiliates as a Result of a Change in
                    Control . . . . . . . . . . . . . . . . .   8
     Section 4.4    Valuation Upon Resignation or Discharge .   8

ARTICLE 5  VESTING  . . . . . . . . . . . . . . . . . . . . .   9

     Section 5.1    Vesting in Participant Deferrals  . . . .   9
     Section 5.2    Vesting in Company Contributions  . . . .   9

ARTICLE 6  DISTRIBUTION OF BENEFITS . . . . . . . . . . . . .   9

     Section 6.1    Payments After Termination of Employment    9
     Section 6.2    Form of Benefits Upon Retirement or
                    Disability  . . . . . . . . . . . . . . .   9
     Section 6.3    Form of Benefits Upon Resignation or
                    Discharge, or Termination of Employment with
                    all Affiliates as a Result of Change in
                    Control . . . . . . . . . . . . . . . . .  10
     Section 6.4    Amount of Benefit . . . . . . . . . . . .  11
     Section 6.5    Time of Payment . . . . . . . . . . . . .  11
     Section 6.6    Death Benefits  . . . . . . . . . . . . .  11
     Section 6.7    Hardships . . . . . . . . . . . . . . . .  13
     Section 6.8    Claims Procedure  . . . . . . . . . . . .  14

     Section 6.9    Alternate Forms of Benefit Distribution .  15
     Section 6.10   Distributions on Plan Termination . . . .  15

ARTICLE 7  FUNDING  . . . . . . . . . . . . . . . . . . . . .  15

     Section 7.1    Source of Benefits  . . . . . . . . . . .  15
     Section 7.2    No Claim on Specific Assets . . . . . . .  15

ARTICLE 8  ADMINISTRATION AND FINANCES  . . . . . . . . . . .  16

     Section 8.1    Administration  . . . . . . . . . . . . .  16
     Section 8.2    Powers of Committee . . . . . . . . . . .  16
     Section 8.3    Actions of the Committee  . . . . . . . .  16
     Section 8.4    Delegation  . . . . . . . . . . . . . . .  16
     Section 8.5    Reports and Records . . . . . . . . . . .  16

ARTICLE 9  AMENDMENTS AND TERMINATION . . . . . . . . . . . .  17

     Section 9.1    Amendments  . . . . . . . . . . . . . . .  17
     Section 9.2    Termination . . . . . . . . . . . . . . .  17

ARTICLE 10  MISCELLANEOUS . . . . . . . . . . . . . . . . . .  18

     Section 10.1   No Guarantee of Employment  . . . . . . .  18
     Section 10.2   Individual Account Plan . . . . . . . . .  18
     Section 10.3   Release . . . . . . . . . . . . . . . . .  18
     Section 10.4   Notices . . . . . . . . . . . . . . . . .  18
     Section 10.5   Non-Alienation  . . . . . . . . . . . . .  18
     Section 10.6   Tax Liability . . . . . . . . . . . . . .  18
     Section 10.7   Captions  . . . . . . . . . . . . . . . .  19
     Section 10.8   Applicable Law  . . . . . . . . . . . . .  19


                            H&R BLOCK

             SUPPLEMENTAL DEFERRED COMPENSATION PLAN

                          FOR EXECUTIVES


     H&R Block, Inc. (the "Company") hereby establishes,
effective May 1, 1994, a nonqualified deferred compensation plan
for the benefit of specified Executives of the Company, and of
the following indirect subsidiaries of the Company: HRB
Management, Inc., H&R Block Tax Services, Inc., CompuServe
Incorporated, Block Financial Corporation, MECA Software, Inc.,
and the U.S. subsidiaries of such indirect subsidiaries; and such
other entities as may be designated by the Company from time to
time.  This plan shall be known as the "H&R Block Supplemental
Deferred Compensation Plan for Executives" (the "Plan").  The
Plan is intended to be an unfunded plan maintained primarily for
the purpose of providing deferred compensation for a select group
of management or highly compensated employees as described in
Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee
Retirement Income Security Act of 1974 ("ERISA").


             ARTICLE 1  DEFERRED COMPENSATION ACCOUNT

     Section 1.1  Establishment of Account.  The Company shall
establish an account ("Account") for each Participant which shall
be utilized solely as a device to measure and determine the
amount of deferred compensation to be paid under the Plan.

     Section 1.2  Property of Company and Participating
Affiliates.  Any amounts so set aside for benefits payable under
the Plan are the property of the Company and its participating
affiliates ("Participating Affiliates"), except, and to the
extent, of any assignment of such assets to an irrevocable trust.


            ARTICLE 2  DEFINITIONS, GENDER, AND NUMBER

     Section 2.1  Definitions.  Whenever used in the Plan, the
following words and phrases shall have the meanings set forth
below unless the context plainly requires a different meaning,
and when a defined meaning is intended, the term is capitalized.

          2.1.1     "Account" means the device established under
     Section 1.1 and used to measure and determine the amount of
     deferred compensation to be paid to a Participant or
     Beneficiary under the Plan, and may refer to the separate
     Accounts that represent amounts deferred by a Participant
     under separate Permissible Deferral elections or by the
     Company pursuant to Section 4.1.

          2.1.2     "Affiliates" or "Affiliate" means a group of
     entities, including the Company, which constitutes a
     controlled group of corporations (as defined in section
     414(b) of the Code), a group of trades or businesses

     (whether or not incorporated) under common control (as
     defined in section 414(c) of the Code), and members of an
     affiliated service group (within the meaning of section
     414(m) of the Code).

          2.1.3     "Age" of a Participant means the number of
     whole calendar years that have elapsed since the date of the
     Participant's birth.

          2.1.4     "Annual Deferral Amount" means the amount a
     Participant elects to defer each Plan Year under a
     Permissible Deferral.  The Annual Deferral Amount is equal
     to an amount or percentage of Base Salary that is not
     greater than 35% of the Participant's Base Salary.

          2.1.5     "Base Salary" of a Participant for any Plan
     Year means the total annual salary and wages paid by all
     Affiliates to such individual, as determined as of the date
     on which the Participant first becomes eligible to
     participate in the Plan, including any amount which would be
     included in the definition of Base Salary, but for the
     individual's election to defer some of his or her salary
     pursuant to this Plan or some other deferred compensation
     plan established by an Affiliate; but excluding any other
     remuneration paid by Affiliates, such as overtime, net
     commissions, bonuses, stock options, distributions of
     compensation previously deferred, restricted stock,
     allowances for expenses (including moving, travel expenses,
     and automobile allowances), and fringe benefits payable in a
     form other than cash.  In the case of an individual who is a
     participant in a plan sponsored by an Affiliate which is
     described in Section 401(k) of the Code, the term Base
     Salary shall include any amount which would be included in
     the definition of Base Salary, but for the individual's
     election to reduce his or her salary and have the amount of
     the reduction contributed to the 401(k) plan on his or her
     behalf.

          2.1.6     "Beneficiary" or "Beneficiaries" means the
     persons or trusts designated by a Participant in writing
     pursuant to Section 6.6.4 of the Plan as being entitled to
     receive any benefit payable under the Plan by reason of the
     death of a Participant, or, in the absence of such
     designation, the persons specified in Section 6.6.5 of the
     Plan.

          2.1.7     "Board" means the Board of Directors of the
     Company as constituted at the relevant time.

          2.1.8     "Bonus" or "Bonuses" of a Participant for any
     Plan Year means the total remuneration paid under the
     various annual management bonus programs ("annual bonuses")
     by Affiliates to such individual for that Plan Year
     including any amount which would be included in the
     definition of Bonus, but for the individual's election to
     defer some or all of his or her annual bonus pursuant to

     this Plan or some other deferred compensation plan
     established by an Affiliate; but excluding any other
     remuneration paid by Affiliates, such as Base Salary,
     overtime, net commissions, stock options, distributions of
     compensation previously deferred, restricted stock,
     allowances for expenses (including moving, travel expenses,
     and automobile allowances), and fringe benefits payable in a
     form other than cash.

          2.1.9     "Change in Control" means a "Change in
     Control" (as defined in Section 1.01-2 of the Trust
     Agreement) of the Participating Affiliate by whom the
     Participant is employed.

          2.1.10    "Closing Price" means the closing price of
     the Company's Common Stock on the New York Stock Exchange as
     of the applicable date; provided, however, that if no
     closing price is available for such date, "Closing Price"
     means the closing price of the Company's Common Stock as of
     the next most recent date for which a price is available.

          2.1.11    "Code" means the Internal Revenue Code of
     1986, as amended from time to time and any successor
     statute.  References to a Code section shall be deemed to be
     to that section or to any successor to that section.

          2.1.12    "Committee" means the Compensation Committee
     of the Company's Board.

          2.1.13    "Common Stock" means the common stock of the
     Company.

          2.1.14    "Company" means H&R Block, Inc., a Missouri
     corporation.

          2.1.15    "Completed Deferral Cycle" means total
     deferrals made and completed as specified by the Participant
     in his or her Permissible Deferral election for four (4),
     five (5), six (6), seven (7) or eight (8) consecutive Plan
     Years.

          2.1.16    "Deferred Compensation Unit" means a unit
     equal in value to one share of Common Stock and posted to a
     Participant's Account for the purpose of measuring the
     benefits payable under the Plan.

          2.1.17    "Disabled" or "Disability" with respect to a
     Participant shall have the same definition as in the
     Company's then existing long term group disability insurance
     program.

          2.1.18    "Early Retirement Date" of a Participant
     means the first day of the first calendar month commencing
     on or after the date on which (a) the Participant has
     reached Age 55 while in the employ of an Affiliate; (b) the
     Participant has completed at least ten (10) Years of
     Service; and (c) the Participant has a Completed Deferral
     Cycle.

          2.1.19    "Effective Date" means the date on which this
     Plan became effective, i.e., May 1, 1994.

          2.1.20    "Enrollment Period" for a Plan Year
     commencing on January 1 means the immediately preceding
     period of October 1 through December 15.  For the Plan Year
     beginning May 1, 1994, "Enrollment Period" means the period
     from April 4 through April 29, 1994.

          2.1.21    "Executive" means a person with substantial
     responsibility in the management of a Participating
     Affiliate employed on a full-time basis by that
     Participating Affiliate.

          2.1.22    "Hours of Service" means hours of service
     determined in accordance with the provisions of the then
     existing H&R Block Profit Sharing Retirement Plan.

          2.1.23    "Normal Retirement Date" of a Participant
     means the last day of the calendar month in which the
     Participant reaches the Age of 65 while in the employ of an
     Affiliate and has a Completed Deferral Cycle.

          2.1.24    "Participant" means an Executive who is
     eligible to participate in the Plan and has elected to
     participate in the Plan.

          2.1.25    "Participating Affiliate" or "Participating
     Affiliates" means the Company and the following indirect
     subsidiaries of the Company:  HRB Management, Inc., H&R
     Block Tax Services, Inc., CompuServe Incorporated, Block
     Financial Corporation, MECA Software, Inc., and the U.S.
     subsidiaries of such indirect subsidiaries; and such other
     entities as may be designated as such by the Company from
     time to time.

          2.1.26    "Permissible Deferral" means, with respect to
     a Plan Year, a deferral in that Plan Year and each of the
     next three (3), four (4), five (5), six (6), or seven (7)
     consecutive Plan Years of an Annual Deferral Amount.  The
     aggregate of all deferrals under this Plan may not exceed
     two hundred eighty percent (280%) of Base Salary.  

          In general, deferrals are made from Base Salary; 
     however, if a Participant has elected to make deferrals from
     Base Salary, he or she may use Bonuses to "prepay" Annual
     Deferral Amounts as described below.  Deferral elections
     must specify the percentages (stated as integers) or dollar
     amounts of the deferral that are intended to be deducted
     from Base Salary and Bonus, respectively.  Deferrals made
     from Base Salary shall be made in installments, as
     instructed by the Participant and approved by the Committee,
     and shall be applied to the Annual Deferral Amount for the
     Plan Year in which the deferrals are made.  Deferrals made
     from Bonuses shall be made in a single sum deferral at the
     time that the Bonus would otherwise be paid to the

     Participant and shall be applied to Annual Deferral Amounts
     such that the amounts designated to be deferred last from
     Base Salary under a Permissible Deferral election are paid
     first by the deferred Bonus.  For example, if a Participant
     elects a four-year Permissible Deferral, Bonuses deferred in
     year one are applied first towards the Annual Deferral
     Amount for year four and the excess, if any, to the annual
     Deferral Amount for year three, then to year two, and so on. 
     If, in our example, the Participant's Bonus deferral in year
     one was not sufficient to pay the entire Annual Deferral
     Amount for year four, and the Participant again elected to
     defer some or all of a Bonus in year two, the amounts
     deferred would be applied first to any amount remaining in
     the Annual Deferral Amount for year four, and any excess
     would be applied toward the Annual Deferral Amount for year
     three.  Each installment of a deferral shall be rounded to
     the nearest whole dollar amount.  Deferrals from Base Salary
     will be adjusted for any year in which a Bonus deferral has
     prepaid a portion of that year's Annual Deferral Amount. 
     Elections to defer from Bonuses shall be made annually
     during the Enrollment Period prior to the Plan Year during
     which the Bonus would otherwise be paid to the Participant.

          2.1.27    "Plan" means the "H&R Block Supplemental
     Deferred Compensation Plan for Executives" as set forth
     herein and as amended or restated from time to time.

          2.1.28    "Plan Year" means the calendar year;
     provided, however, that the initial Plan Year shall begin
     May 1, 1994, and end December 31, 1994.

          2.1.29    "Primary Plan" means the "H&R Block Deferred
     Compensation Plan for Executives" established August 1,
     1987, as such plan may be amended from time to time.  

          2.1.30    "Standard Form of Benefit" as to any
     Participant means semimonthly cash payments for a fifteen
     (15) year period.

          2.1.31    "Trust" means the trust established pursuant
     to the Trust Agreement.

          2.1.32    "Trust Agreement" means the H&R Block, Inc.
     Deferred Compensation Trust Agreement effective December 13,
     1988, as it may be amended from time to time.

          2.1.33    "Years of Service" means the number of
     consecutive Plan Years (including calendar years prior to
     the Effective Date of this Plan) for which the Participant
     had at least 1,000 Hours of Service.

     Section 2.2  Gender and Number.  Except as otherwise
indicated by context, masculine terminology used herein also
includes the feminine and neuter, and terms used in the singular
may also include the plural.

                     ARTICLE 3  PARTICIPATION

     Section 3.1  Who May Participate.  Participation in the Plan
is limited to Executives who are Participants in the Primary Plan
and whose aggregate deferrals under the Primary Plan have been
completed during a prior Plan Year.  

     Section 3.2  Time and Conditions of Participation. An
eligible Executive shall become a Participant only upon (a) the
individual's completion of a Permissible Deferral election for
the succeeding Plan Year or Plan Years during an Enrollment
Period, in accordance with a form established by the Company from
time to time, and (b) compliance with such terms and conditions
as the Committee may from time to time establish for the
implementation of the Plan, including, but not limited to, any
condition the Committee may deem necessary or appropriate for the
Company to meet its obligations under the Plan.  An individual
may make a Permissible Deferral election for any succeeding Plan
Year or Years during an Enrollment Period provided the total
Permissible Deferral elections do not exceed the limitations set
forth in Section 2.1.26. 

     Section 3.3  Termination of Participation.  Once an
individual has become a Participant in the Plan, participation
shall continue until the first to occur of (a) payment in full of
all benefits to which the Participant or Beneficiary is entitled
under the Plan, or (b) the occurrence of an event specified in
Section 3.4 which results in loss of benefits.  Except as
otherwise specified in the Plan, the Company may not terminate an
individual's participation in the Plan.

     Section 3.4  Missing Persons.  If the Company is unable to
locate the Participant or his Beneficiary for purposes of making
a distribution, the amount of a Participant's benefits under this
Plan that would otherwise be considered as non-forfeitable shall
be forfeited effective four (4) years after (a) the last date a
payment of said benefit was made, if at least one such payment
was made, or (b) the first date a payment of said benefit was
directed to be made by the Company pursuant to the terms of the
Plan, if no payments had been made.  If such person is located
after the date of such forfeiture, the benefits for such
Participant or Beneficiary shall not be reinstated hereunder.

     Section 3.5  Relationship to Other Plans.  Participation in
the Plan shall not preclude participation of the Participant in
any other fringe benefit program or plan sponsored by an
Affiliate for which such Participant would otherwise be eligible.


                       ARTICLE 4  ACCOUNTS

     Section 4.1  Contributions.

          Section 4.1.1  Deferrals.  The Company shall post to
     the Account of each Participant a number of Deferred
     Compensation Units equivalent to the amount of Base Salary

     and Bonuses to be deferred as designated by the
     Participant's Permissible Deferral election in effect for
     each Plan Year.  Deferrals from Base Salary (and the
     corresponding number of Deferred Compensation Units) shall
     be posted by pay period, and deferrals from Bonuses (and the
     corresponding number of Deferred Compensation Units) shall
     be posted annually at the time the Bonus would otherwise
     have been paid to the Participant.  The number of Deferred
     Compensation Units posted during each calendar month shall
     be calculated by dividing:  (a) the dollar amount deferred
     during that month; by (b) the Closing Price on the first
     business day of the following calendar month.

          Section 4.1.2  Company Contributions.  The Company
     shall also post to the Account of each Participant once each
     Plan Year the difference, if any, between (a) the amount for
     such Plan Year that would have been contributed on behalf of
     the Participant to any profit sharing plan that is deemed to
     be a "qualified plan" under the Code if the Participant had
     not made a Permissible Deferral election under the Plan; and
     (b) the amount for that Plan Year contributed on behalf of
     the Participant to such a plan.

          Section 4.1.3  Disability.  During the first 90-day
     period in which a Participant is Disabled, deferrals shall
     continue to be posted as described in Section 4.1.1.  If a
     Participant continues to be Disabled after such 90-day
     period, posting of deferrals will be suspended.  A
     Participant may resume deferrals upon his or her return to
     work.

     Section 4.2  Valuation of Accounts.  A Participant's Account
will be valued as if his or her Account were invested in shares
of Common Stock equal to the number of Deferred Compensation
Units posted to his or her Account.  The value of a Participant's
Account will vary with the value of the Company's Common Stock. 
The Participant's Account will be credited, as of the applicable
dividend payment date, with additional Deferred Compensation
Units equal in value to any dividends declared on the Company's
Common Stock based on the number of Deferred Compensation Units
posted to the Participant's Account as of the record date with
respect to the declaration of such dividend.  As of any date of
valuation, the value of a Participant's Account will be equal to
the value (at the Closing Price on such date) of the number of
shares of Common Stock represented by the Deferred Compensation
Units credited to the Account as of that date.

     Section 4.3  Valuation Upon Retirement, Death, Disability or
Termination of Employment with all Affiliates as a Result of a
Change in Control.  If a Participant terminates employment at or
after Normal Retirement Date or Early Retirement Date, or is
Disabled, his or her Account shall be valued as described in
Section 4.2.  If a Participant dies prior to termination of
employment, his or her Account shall be valued as of date of
death, as described in Section 4.2.  If a Participant terminates
employment with all Affiliates before Normal Retirement Date or

Early Retirement Date as a result of a Change in Control, the
Participant's Account, regardless of whether or not such Accounts
represent Completed Deferral Cycles, shall be valued as described
in Section 4.2 up to the date of the Change in Control and
earnings on such Accounts after the date of the Change in Control
shall be credited at an interest rate  set annually by the Chief
Financial Officer of the Company in his discretion, which shall
not be less than the rate then payable on Investment Savings
Accounts of $1,000 or less at Commerce Bank of Kansas City, N.A.,
Kansas City, Missouri, or any successor thereto.

     Section 4.4  Valuation Upon Resignation or Discharge.

          Section 4.4.1  Except as described in Section 4.4.2, if
     a Participant terminates employment with all Affiliates
     before Normal Retirement Date or Early Retirement Date for
     reasons other than death, Disability, or a Change in
     Control, the portion of the Participant's Account that
     represents Completed Deferral Cycles shall be valued as
     described in Section 4.2 up to the date of termination of
     employment.  Earnings after the date of posting for the
     portion of the Account that does not represent Completed
     Deferral Cycles and earnings after the date of termination
     of employment for the portion of the Account that represents
     Completed Deferral Cycles shall be credited at an interest
     rate set annually by the Chief Financial Officer of the
     Company in his discretion, which shall not be less than the
     rate then payable on Investment Savings Accounts of $1,000
     or less at Commerce Bank of Kansas City, N.A., Kansas City,
     Missouri, or any successor thereto.

          Section 4.4.2  If a Participant terminates employment
     on or after Age 55 having completed at least ten (10) Years
     of Service, but all Permissible Deferrals do not satisfy a
     Completed Deferral Cycle, the Participant will be deemed to
     have a Completed Deferral Cycle for all Permissible
     Deferrals if the Participant elects either:

               (a)  in compliance with terms and conditions as
          established from time to time by the Committee to defer
          sufficient additional Base Salary and/or Bonuses (to be
          earned prior to termination and subsequent to such
          election) to complete the Permissible Deferrals elected
          under Section 3.2; or

               (b)  to have the such Permissible Deferrals
          constitute a reduced Completed Deferral Cycle, provided
          such Permissible Deferrals satisfy a minimum amount, as
          determined by the Committee.

          A Participant must make the election described in (b)
     of this paragraph no later than thirty (30) days following
     termination of employment.  In the event the Participant
     fails to make either election described in this Section
     4.4.2, his or her Account will be credited in the manner
     described in Section 4.4.1.

                        ARTICLE 5  VESTING

     Section 5.1  Vesting in Participant Deferrals.  Participant
deferrals pursuant to Section 4.1.1 are fully vested immediately.

     Section 5.2  Vesting in Company Contributions.  A
Participant's interest in any Company contributions described in
Section 4.1.2 shall vest according to the vesting schedule
contained in the profit sharing plan to which such Company
contributions relate.


               ARTICLE 6  DISTRIBUTION OF BENEFITS

     Section 6.1  Payments After Termination of Employment. 
Payment of benefits to a Participant shall be made by the Company
only upon the termination, voluntary or involuntary, of the
Participant's employment with all Affiliates, except where a
Participant is Disabled, or as provided by Section 6.7.

     Section 6.2  Form of Benefits Upon Retirement or Disability. 
Payments from the Account shall be made in accordance with the
Standard Form of Benefit for a Participant who terminates
employment on or after his or her Normal Retirement Date or Early
Retirement Date or are Disabled.  However, no less than 13 months
prior to such termination of employment, the Participant may
petition the Committee for, and the Committee may approve at such
time, an optional form of benefit.

          Notwithstanding any other provisions of the Plan, a
Participant who terminates employment on or after Normal
Retirement Date or Early Retirement Date may, at any time before
or after a Change in Control, elect to receive an immediate lump-
sum cash payment of the value of said Participant's Account
reduced by a penalty, which shall be forfeited to the Company, in
lieu of payments in accordance with the Standard Form of Benefit
or such optional form of benefit as may have previously been
approved by the Committee under this Section 6.2.  The penalty
shall be equal to ten percent (10%) of the value of such Account
if the election is made before a Change in Control and shall be
equal to five percent (5%) of the value of such Account if the
election is made after a Change in Control.  However, the penalty
shall not apply if the Committee determines, based on advice of
counsel or a final determination or filing by the Internal
Revenue Service or any court of competent jurisdiction, that by
reason of the provisions of this paragraph any Participant has
recognized or will recognize gross income for federal income tax
purposes under this Plan in advance of payment to the Participant
of Plan benefits.  The Company shall notify all Participants of
any such determination by the Committee and shall thereafter
refund all penalties which were imposed hereunder in connection
with any lump-sum payments made at any time during or after the
first year to which the Committee's determination applies (i.e.,
the first year for which, by reasons of the provisions of this
paragraph, gross income under this Plan is recognized for federal
income tax purposes in advance of payment of benefits).  Interest

compounded annually shall be paid by the Company to the
Participant (or the Participant's Beneficiary if the Participant
is deceased) on any such refund from the date of the Company's
payment of the lump sum at an annual rate set at the time of the
refund by the Chief Financial Officer of the Company in his
discretion, which rate shall not be less than the rate then
payable on Investment Savings Accounts of $1,000 or less at
Commerce Bank of Kansas City, N.A., Kansas City, Missouri, or any
successor thereto.  The Committee may also reduce or eliminate
the penalty if it determines that the right to elect an immediate
lump-sum payment under this paragraph, with the reduced penalty
or with no penalty, as the case may be, will not cause any
Participant to recognize gross income for federal income tax
purposes under this Plan in advance of payment to the Participant
of Plan benefits.

     Section 6.3  Form of Benefits Upon Resignation or Discharge,
or Termination of Employment with all Affiliates as a Result of
Change in Control.  Upon a Participant's termination of
employment with all Affiliates following a Change in Control,
payments from the Account shall be made in a lump-sum cash
payment within ninety (90) days after date of the termination of
employment.  If a Change in Control has not occurred, for
Participants who terminate employment with all Affiliates before
the Normal Retirement Date or the Early Retirement Date for
reasons other than Disability or death, payments from the Account
shall be in the form of (a) semimonthly cash payments over a
three (3) year period for Permissible Deferrals that satisfy a
Completed Deferral Cycle, or (b) a lump sum for Permissible
Deferrals that do not satisfy a Completed Deferral Cycle.

     Section 6.4  Amount of Benefit.  Except for distributions in
the form of a lump sum, benefit payments shall be in the form of
semimonthly cash installments paid during the applicable payment
period.  The amount of each installment payment will be level
during each 12-month period of the payment period, but will vary
from year to year.

     The amount of each level benefit payment for each 12-month
period will be calculated using the balance in the Account at the
beginning of the 12-month period and dividing it by the total
periods remaining in the entire payment period.  The benefit
payment shall be adjusted each subsequent 12-month period to
reflect the value of the Account as of such time.

     Generally, the Account shall continue to be valued  during
the payment period as provided in Section 4.3; provided, however,
that if a Participant receives benefits pursuant to Section 6.3,
the Account shall be valued as provided in Section 4.4.1.  Except
as provided otherwise, if a Participant dies, Section 6.6 shall
apply.

     Section 6.5  Time of Payment.  Generally, benefit payments
to a Participant shall begin no later than six (6) months after
termination of employment.  In the case of a Disabled
Participant, benefits shall commence no later than six (6) months
after the Participant's Early Retirement Date.

     A Participant may elect at the time of each Permissible
Deferral election to defer commencement of the payment of
benefits after termination of employment with respect to such
Permissible Deferral election until the earlier of:  (a) five (5)
years after termination of employment; or (b) Age 70.  If the
Participant has made such an election, the Committee upon written
petition of the Participant may begin benefit payments at an
earlier time after termination if it determines that compelling
reasons exist for such earlier payments.

     Section 6.6  Death Benefits.

          6.6.1  Death After Benefit Commencement.  In the event
     a Participant dies after benefit payments have commenced
     (other than payments made pursuant to Section 6.7), the
     remaining benefit payments, if any, shall be paid to the
     Participant's Beneficiary in the same manner such benefits
     would have been paid to the Participant had the Participant
     survived.  A Beneficiary may petition the Committee for an
     alternative method of payment.  If such benefits were
     payable pursuant to Section 6.3, the Account shall continue
     to be valued during the payout period as provided in Section
     4.4, except that, if such benefits were payable because of
     the Participant's termination of employment with all
     Affiliates following a Change in Control, the Account shall
     continue to be valued as provided in Section 4.3.  If such
     benefits were payable pursuant to Section 6.2, earnings on
     the Account shall be credited from the date of the
     Participant's death at a rate set by the Chief Financial
     Officer of the Company in his discretion, which shall not be
     less than the rate then payable on Investment Savings
     Accounts of $1,000 or less at Commerce Bank of Kansas City,
     N.A., Kansas City, Missouri, or any successor thereto.  If
     such benefits were payable pursuant to Section 6.2 to a
     Participant whose employment terminated on or after Normal
     Retirement Date or Early Retirement Date, the Participant's
     Beneficiary may make the election to receive an immediate
     lump-sum payment of the balance of said Participant's
     Account in accordance with the provisions of Section 6.2 and
     all provisions set forth therein relating to penalties shall
     apply to any such election.

          6.6.2  Death Prior to Benefit Commencement.  In the
     event a Participant dies before benefit payments have
     commenced, the Company shall pay a pre-retirement death
     benefit to the Participant's Beneficiary.  The amount of
     such pre-retirement death benefit is the Participant's
     Account as of the date of the Participant's death annuitized
     over a ten-year period at an interest rate set by the Chief
     Financial Officer of the Company in his discretion, which
     shall not be less than the rate then payable on Investment
     Savings Accounts of $1,000 or less at Commerce Bank of
     Kansas City, N.A., Kansas City, Missouri, or any successor
     thereto.

     The pre-retirement death benefit shall be paid semimonthly
     for a ten-year period.  The Beneficiary may petition the
     Committee for an alternative method of payment.  If the pre-
     retirement death benefit is computed pursuant to 6.6.2(a),
     earnings on the Account shall continue to be credited during
     the payment period at an interest rate set by the Chief
     Financial Officer of the Company in his discretion. which
     shall not be less than the rate then payable on Investment
     Savings Accounts of $1,000 or less at Commerce Bank of
     Kansas City, N.A., Kansas City, Missouri or any successor
     thereto.  Commencement of benefits under this Section 6.6.2
     shall begin no later than six (6) months following the death
     of the Participant notwithstanding any election which the
     Participant may have made to defer benefits pursuant to
     Section 6.5.

          6.6.3  Marital Deduction.  Any benefits which become
     payable under this Article 6 to the surviving spouse of a
     Participant shall be paid in a manner which will qualify
     such benefits for a marital deduction in the estate of a
     deceased Participant under the terms of Section 2056 of the
     Code, and unless specifically directed by a Participant to
     the contrary pursuant to an effective beneficiary
     designation, any portion of a Participant's death benefit
     payable to a surviving spouse which remains unpaid at the
     death of such spouse shall be paid to the spouse's estate.

          6.6.4  Designation by Participant.  Each Participant
     has the right to designate primary and contingent
     Beneficiaries for death benefits payable under the Plan. 
     Such Beneficiaries may be individuals or trusts for the
     benefit of individuals.  A beneficiary designation by a
     Participant shall be in writing on a form acceptable to the
     Committee and shall only be effective upon delivery to the
     Company.  A beneficiary designation may be revoked by a
     Participant at any time by delivering to the Company either
     written notice of revocation or a new beneficiary
     designation form.  The beneficiary designation form last
     delivered to the Company prior to the death of a Participant
     shall control.

          6.6.5  Failure to Designate Beneficiary.  In the event
     there is no beneficiary designation on file with the
     Company, or all Beneficiaries designated by a Participant
     have predeceased the Participant, the benefits payable by
     reason of the death of the Participant shall be paid to the
     Participant's spouse, if living; if the Participant does not
     leave a surviving spouse, to the Participant's issue by
     right of representation; or, if there are no such issue then
     living, to the Participant's estate.  In the event there are
     benefits remaining unpaid at the death of a sole Beneficiary
     and no successor Beneficiary has been designated, either by
     the Participant or the Participant's spouse pursuant to
     6.6.3, the remaining balance of such benefit shall be paid
     to the deceased Beneficiary's estate; or, if the deceased
     Beneficiary is one of multiple concurrent Beneficiaries,
     such remaining benefits shall be paid proportionally to the
     surviving Beneficiaries.

     Section 6.7  Hardships.  Upon the application of any
Participant, the Committee, in accordance with its uniform, non-
discriminatory policy, may permit such Participant to terminate
future deferrals or to withdraw his total Account.  A Participant
must give a written petition of the termination of his or her
Permissible Deferral election at least thirty (30) days prior to
the next monthly (for Base Salary) or single sum (for Bonuses)
deferral.  A Participant must give a written petition of the
intent to withdraw the Account at least sixty (60) days (or such
shorter time as permitted by the Committee) prior to the date of
withdrawal.  No termination or withdrawal shall be made under the
provisions of this Section except for the purpose of enabling a
Participant to meet immediate needs created by a financial 
hardship for which the Participant does not have other reasonably
available sources of funds as determined by the Committee in
accordance with uniform rules.  The term financial hardship shall
include the need for funds to:  meet uninsured medical expenses
for the Participant or his dependents, meet a significant
uninsured casualty loss for the Participant or his dependents,
and meet other catastrophes of a "sudden and serious nature."

     If the Committee permits a termination of a Participant's
Permissible Deferral election, the Participant shall be entitled
to have the deferrals made pursuant to the Permissible Deferral
election constitute a reduced Completed Deferral Cycle, provided
the deferrals satisfy a minimum amount, as determined by the
Committee.  If the deferrals do not satisfy such a minimum
amount, no termination of a Participant's Deferral election will
be allowed without a withdrawal.  The Committee may permit a
withdrawal of any deferrals.  If a withdrawal is permitted,
earnings on a Participant's deferrals shall be valued at the
lesser of (a) the amount as described in Section 4.2; or (b) an
amount calculated using an interest rate set by the Chief
Financial Officer of the Company in his discretion, which shall
not be less than the rate then payable on Investment Savings
Accounts of $1,000 or less at Commerce Bank of Kansas City, N.A.,
Kansas City, Missouri, or any successor thereto.  Withdrawals
shall be distributed in the form of a lump sum as soon as is
reasonably convenient.

     If a termination of deferrals or a withdrawal is made under
this Section, the Participant may not enter into a new
Permissible Deferral election for two (2) complete Plan Years
from the date of the termination or withdrawal.

     Section 6.8  Claims Procedure.  The Committee shall notify a
Participant in writing within ninety (90) days of the
Participant's written application for benefits of his eligibility
or non-eligibility for benefits under the Plan.  If the Committee
determines that a Participant is not eligible for benefits or
full benefits, the notice shall set forth (a) the specific
reasons for such denial, (b) a specific reference to the
provision of the Plan on which the denial is based, (c) a
description of any additional information or material necessary
for the claimant to perfect his claim, and a description of why
it is needed, and (d) an explanation of the Plan's claims review

procedure and other appropriate information as to the steps to be
taken if the Participant wishes to have his claim reviewed.  If
the Committee determines that there are special circumstances
requiring additional time to make a decision, the Committee shall
notify the Participant of the special circumstances and the date
by which a decision is expected to be made, and may extend the
time for up to an additional 90-day period.  If a Participant is
determined by the Committee to be not eligible for benefits, or
if the Participant believes that he is entitled to greater or
different benefits, he shall have the opportunity to have his
claim reviewed by the Committee by filing a petition for review
with the Committee within sixty (60) days after receipt by him of
the notice issued by the Committee.  Said petition shall state
the specific reasons the Participant believes he is entitled to
benefits or greater or different benefits.  Within sixty (60)
days after receipt by the Committee of said petition, the
Committee shall afford the Participant (and his counsel, if any)
an opportunity to present his position to the Committee orally or
in writing, and said Participant (or his counsel) shall have the
right to review the pertinent documents, and the Committee shall
notify the Participant of its decision in writing within said
sixty (60) day period, stating specifically the basis of said
decision written in a manner calculated to be understood by the
Participant and the specific provisions of the Plan on which the
decision is based.  If, because of the need for a hearing, the
sixty (60) day period is not sufficient, the decision may be
deferred for up to another sixty (60) day period at the election
of the Committee, but notice of this deferral shall be given to
the Participant.

     Section 6.9  Alternate Forms of Benefit Distribution. 
Participants shall have the right to petition the Committee to
request methods of benefit distribution other than those provided
to Participants pursuant to this Article 6.

     Section 6.10  Distributions on Plan Termination. 
Notwithstanding anything in this Article 6 to the contrary, if
the Plan is terminated, distributions shall be made in accordance
with Section 9.2.


                        ARTICLE 7  FUNDING

     Section 7.1  Source of Benefits.  All benefits under the
Plan shall be paid when due by the Company out of its assets or
from an irrevocable trust established by the Company for that
purpose.  The Company may, but shall have no obligations to, make
such advance provision for the payment of such benefit as the
Board may from time to time consider appropriate.

     Section 7.2  No Claim on Specific Assets.  No Participant
shall be deemed to have, by virtue of being a Participant in the
Plan, any claim on any specific assets of the Company such that
the Participant would be subject to income taxation on his
benefits under the Plan prior to distribution and the rights of
Participants and Beneficiaries to benefits to which they are
otherwise entitled under the Plan shall be those of an unsecured
general creditor of the Company.

              ARTICLE 8  ADMINISTRATION AND FINANCES

     Section 8.1  Administration.  The Plan shall be administered
by the Committee.  The Company shall bear all administrative
costs of the Plan other than those specifically charged to a
Participant or Beneficiary.

     Section 8.2  Powers of Committee.  In addition to the other
powers granted under the Plan, the Committee shall have all
powers necessary to administer the Plan, including, without
limitation, powers:

          (a)  to interpret the provisions of the Plan;

          (b)  to establish and revise the method of
     accounting for the Plan and to maintain the Accounts;
     and

          (c)  to establish rules for the administration of
     the Plan and to prescribe any forms required to
     administer the Plan.

Not in limitation, but in amplification of the foregoing and of
the authority conferred upon the Committee in Section 8.1, the
Company specifically intends that the Committee have the greatest
permissible discretion to construe the terms of the Plan and to
determine all questions concerning eligibility, participation,
and benefits.  Any such decision made by the Committee is
intended to be subject to the most deferential standard of
judicial review.  Such standard of review is not to be affected
by any real or alleged conflict of interest on the part of the
Company or any member of the Committee.

     Section 8.3  Actions of the Committee.  Except as modified
by the Company, all determinations, interpretations, rules, and
decisions of the Committee shall be conclusive and binding upon
all persons having or claiming to have any interest or right
under the Plan.

     Section 8.4  Delegation.  The Committee, or any officer
designated by the Committee, shall have the power to delegate
specific duties and responsibilities to officers or other
employees of the Company or other individuals or entities.  Any
delegation may be rescinded by the Committee at any time.  Each
person or entity to whom a duty or responsibility has been
delegated shall be responsible for the exercise of such duty or
responsibility and shall not be responsible for any act or
failure to act of any other person or entity.

     Section 8.5  Reports and Records.  The Committee and those
to whom the Committee has delegated duties under the Plan shall
keep records of all their proceedings and actions and shall
maintain books of account, records, and other data as shall be
necessary for the proper administration of the Plan and for
compliance with applicable law.

              ARTICLE 9  AMENDMENTS AND TERMINATION

     Section 9.1  Amendments.  The Company, by action of the
Board, may amend the Plan, in whole or in part, at any time and
from time to time.  Any such amendment shall be filed with the
Plan documents.  No amendment, however, may be effective to
eliminate or reduce the benefits of any retired Participant or
the Beneficiary of any deceased Participant then eligible for
benefits or the vested portion of the benefits, if any, in any
active Participant's Account immediately before the effective
date of such amendment, and each such Account will be credited to
the date of such amendment in accordance with Section 4.2,
whether or not such  Account represents a Completed Deferral
Cycle.  Notwithstanding anything in this Section 9.1 to the
contrary, the Committee may, in its discretion, amend the Plan to
reduce or eliminate the penalty described in Section 6.2 in
accordance with the provisions of such Section 6.2, and amend the
Plan to increase or reduce any assumed interest rate set forth in
Section 6.4, in accordance with the provisions of such Section
6.4.

     Section 9.2  Termination.  The Company expects the Plan to
be permanent, but necessarily must, and hereby does, reserve the
right to terminate the Plan at any time by written action of the
Board.  In all events, the Plan will be terminated if the
existence of a trust causes a federal court to hold that the Plan
is "funded" for ERISA purposes, as defined in Section 2.02-4 of
the Trust Agreement, and appeals from that holding are no longer
timely or have been exhausted, and the trust is therefore
terminated with respect to the Plan.  Upon termination of the
Plan, all deferrals and Company Contributions will cease and no
future deferrals or Company Contributions will be made. 
Termination of the Plan shall not operate to eliminate or reduce
benefits of any retired Participant or the Beneficiary of any
deceased Participant then eligible for benefits.  Active
Participants shall become vested in their accrued benefits to the
extent and in the manner provided in Article 5 as of the
effective date of such termination and each account of an active
Participant shall be credited, to the date of distribution of all
benefits in each such Account, in accordance with Section 4.2.,
as it may be amended from time to time pursuant to Section 9.1,
whether or not it represents a Completed Deferral Cycle.

     If the Plan is terminated, payments from the Accounts of all
Participants and Beneficiaries shall be made as soon as
administratively convenient in the form of monthly payments over
a five (5) year period; however, the Committee in its sole
discretion may pay the benefits in a lump sum.  Notwithstanding
the preceding sentence, if the termination occurs because the
Plan is held to be "funded" as described in the first paragraph
of this Section 9.2, the distribution will be paid in a lump sum
not later than ninety (90) days after such termination.

                    ARTICLE 10  MISCELLANEOUS

     Section 10.1  No Guarantee of Employment.  Neither the
adoption and maintenance of the Plan nor the execution by the
Company of a Permissible Deferral agreement with any Executive
shall be deemed to be a contract of employment between the
Company and any Participant.  Nothing contained herein shall give
any Participant the right to be retained in the employ of the
Company or to interfere with the right of the Company to
discharge any Participant at any time, nor shall it give the
Company the right to require any Participant to remain in its
employ or to interfere with the Participant's right to terminate
his employment at any time.

     Section 10.2  Individual Account Plan.  If it is determined
that the Plan is not an unfunded deferred compensation plan
maintained primarily for a select group of management or highly
compensated employees as described in Sections 201(2), 301(a)(3)
and 401(a)(1) of ERISA, then the Plan is intended to be an
individual account plan (other than a money purchase plan) as
described in Section 301(a)(8) of ERISA.

     Section 10.3  Release.  Any payment of benefits to or for
the benefit of a Participant or a Participant's Beneficiaries
that is made in good faith by the Company in accordance with the
Company's interpretation of its obligations hereunder, shall be
in full satisfaction of all claims against the Company for
benefits under this Plan to the extent of such payment.

     Section 10.4  Notices.  Any notice permitted or required
under the Plan shall be in writing and shall be hand delivered or
sent, postage prepaid, certified or registered mail with return
receipt requested, to the principal office of the Company, if to
the Company, or to the address last shown on the records of the
Company, if to a Participant or Beneficiary.  Any such notice
shall be effective as of the date of hand delivery or mailing.

     Section 10.5  Non-Alienation.  No benefit payable at any
time under this Plan shall be subject in any manner to
alienation, sale, transfer, assignment, pledge, levy, attachment,
or encumbrance of any kind.

     Section 10.6  Tax Liability.  The Company may direct the
trustee of the Trust to withhold from any payment of benefits
under the Plan such amounts as the Company determines are
reasonably necessary to pay any taxes (and interest thereon)
required to be withheld or for which the trustee of the Trust may
become liable under applicable law. The Company may also direct
the trustee of the Trust to forward to the appropriate taxing
authority any amounts required to be paid by the Company or the
Trust under the preceding sentence.  Any amounts withheld
pursuant to this Section 10.6 in excess of the amount of taxes
due (and interest thereon) shall be paid to the Participant or
Beneficiary upon final determination, as determined by the
Company, of such amount.  No interest shall be payable by the
Company to any Participant or Beneficiary by reason of any
amounts withheld pursuant to this Section 10.6.

     Section 10.7  Captions.  Article and section headings and
captions are provided for purposes of reference and convenience
only and shall not be relied upon in any way to construe, define,
modify, limit, or extend the scope of any provision of the Plan.

     Section 10.8  Applicable Law.  The Plan and all rights
hereunder shall be governed by and construed according to the
laws of the State of Missouri, except to the extent such laws are
preempted by the laws of the United States of America.


                              H&R BLOCK, INC.



Date: April 29, 1994          By/s/ Thomas M. Bloch              
                                ----------------------------
                                   Thomas M. Bloch
                                   Its President and
                                   Chief Executive Officer


                                                                EXHIBIT 11

                                 CALCULATION OF PRIMARY EARNINGS PER SHARE

                                                                          Year Ended April 30,              
                                                       -------------------------------------------------------
                                                           1994                 1993                  1992
                                                       ------------         ------------          ------------
                                                                                         
Net earnings                                           $200,528,000         $180,705,000          $162,253,000
                                                       ============         ============          ============

Average number of shares outstanding - primary:
   Average number of common shares outstanding          105,882,000          106,579,000           107,495,000


   Dilutive effect of stock options after
   application of treasury stock method                     887,000            1,065,000             1,659,000
                                                        -----------          -----------           -----------

Average number of shares outstanding                    106,769,000          107,644,000           109,154,000
                                                        ===========          ===========           ===========


Earnings per share:
   Primary                                                    $1.88                $1.68                 $1.49
                                                              =====                =====                 =====


                                                                   EXHIBIT 11

                              CALCULATION OF FULLY DILUTED EARNINGS PER SHARE

                                                                         Year Ended April 30,               
                                                       -------------------------------------------------------
                                                           1994                 1993                  1992
                                                       ------------         ------------          ------------
                                                                                         
Net earnings                                           $200,528,000         $180,705,000          $162,253,000
                                                       ============         ============          ============

Average number of shares outstanding - fully
   diluted:  Shares used in calculating primary
   earnings per share                                   106,769,000          107,644,000           109,154,000

   Additional effect of stock options after
   application of treasury stock method                     203,000                -                    -
                                                        -----------          -----------           -----------

Average number of shares outstanding                    106,972,000          107,644,000           109,154,000
                                                        ===========          ===========           ===========


Earnings per share:
   Fully diluted                                              $1.87                $1.68                 $1.49
                                                              =====                =====                 =====


                                                                  EXHIBIT 13

                              COMMON STOCK DATA

                                           Stock Price        Cash Dividend
                                       High          Low      Paid per Share
                                      ------       ------     --------------
                                                           
1993 Fiscal Year:
     Quarter ended 7/31/92            34 7/8       30 5/8           .22     
     Quarter ended 10/31/92           38 1/4       32 3/8           .25     
     Quarter ended 1/31/93            40 5/8       37 3/8           .25     
     Quarter ended 4/30/93            42 3/8       33 1/4           .25     

1994 Fiscal Year:
     Quarter ended 7/31/93            37 1/2       31 7/8           .25     
     Quarter ended 10/31/93           41 1/2       35 3/4           .28     
     Quarter ended 1/31/94            44 1/2       37 5/8           .28     
     Quarter ended 4/30/94            48 3/4       41 3/4           .28     

Traded on the New York Stock Exchange; Ticker Symbol: HRB




                                                SELECTED FINANCIAL DATA

                                                                       Year Ended April 30                    
                                               ---------------------------------------------------------------
                                                   1994          1993        1992         1991          1990  
                                               ----------    ----------    --------    ----------     --------
                                                                                                  
FOR THE YEAR:
  Total revenues                               $1,238,677    $1,074,263    $986,109    $  925,262     $820,356
  Net earnings from continuing operations  $  163,995    $  171,017    $153,744    $  131,255     $114,435
  Net earnings                                 $  200,528    $  180,705    $162,253    $  140,108     $123,529
AT YEAR END:
  Total assets                                 $1,074,704    $1,005,834    $962,664    $1,035,781     $941,530
  Cash and marketable securities               $  620,091    $  439,526    $391,386    $  354,916     $342,717
  Long-term debt                                      -             -           -             -       $  4,937
  Stockholders' equity                         $  707,875    $  650,488    $613,713    $  573,589     $503,348
  Shares outstanding                              106,149       106,355     106,598       106,487      105,628
MEASUREMENTS:
  Per share of common stock:
   Net earnings from continuing operations      $1.54         $1.59       $1.41         $1.22        $1.07
   Net earnings                                     $1.88         $1.68       $1.49         $1.31        $1.15
   Cash dividends declared                          $1.09         $ .97       $ .85 1/2     $ .74 1/2    $ .61

  Return on total revenues                          13.2%         15.9%       15.6%         14.2%        13.9%
  Return on beginning stockholders' equity          30.8%         29.4%       28.3%         27.8%        27.7%

1994 includes a charge to earnings of $25,072, or $.24 per share, for purchased research and
development in connection with the acquisition of MECA Software, Inc.  See notes to financial
statements.

Data has been adjusted to give effect to the two-for-one stock split applicable to fiscal year 1991.



MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS

Two significant transactions occurred in fiscal 1994: the sale of the
Company's wholly-owned subsidiary, Interim Services Inc., through an initial
public offering and the acquisition of MECA Software, Inc. The Company's net
earnings for the year include a net gain of $27.3 million, or $.26 per share,
from the sale of Interim and a charge to earnings which is not deductible for
income tax purposes of $25.1 million, or $.24 per share, for purchased
research and development related to the acquisition of MECA Software, Inc.
Interim's results are reflected as discontinued operations, and all amounts
for prior periods have been similarly reported. Interim's operations
contributed $.09 per share up to the date of sale compared to $.09 per share
in 1993 and $.08 per share in 1992.

Consolidated revenues increased 15.3% to a record $1.239 billion, compared to
$1.074 billion in 1993 and $986.1 million in 1992. Consolidated net earnings
increased 11.0% to $200.5 million, compared to $180.7 million in 1993 and
$162.3 million in 1992. Earnings per share increased 11.9% to $1.88 compared
to $1.68 in 1993 and $1.49 in 1992.

Net earnings from continuing operations decreased 4.1% to $164.0 million,
compared to $171.0 million in 1993 and $153.7 million in 1992. Earnings per
share from continuing operations were $1.54 compared to $1.59 in 1993 and
$1.41 in 1992. The decrease in earnings and earnings per share from continuing
operations was due to a nonrecurring charge of $25.1 million, or $.24 per
share, for purchased research and development.

Additional information on each of the Company's operating segments follows:

TAX SERVICES
Revenues increased 3.0% to $755.5 million, compared to $733.4 million in 1993
and $698.3 million in 1992. The increases in revenues in 1994 and 1993 over
the preceding year resulted primarily from increases in tax preparation fees,
electronic filing fees, and franchise royalties. In Canada, discounted return
fees decreased 35.4% as compared to 1993 due to tax law changes which
eliminated many discounted returns. Due to the decline in Canada, the total
number of returns prepared worldwide fell fractionally from the previous year.
Pretax earnings increased 3.9% to $198.7 million, compared to $191.3 million
in 1993 and $183.8 million in 1992. The increase this year as compared to last
year was adversely affected by a significant decrease in Canadian earnings due
to the decline in refunds discounted. Pretax earnings as a percent of revenues
was 26.3% this year, compared to 26.1% in 1993 and 26.3% in 1992. The increase
in margins in 1994 resulted from better control of facility and supply
expenses.

COMPUTER SERVICES
Revenues increased 36.3% to $429.9 million, compared to $315.4 million in 1993
and $280.9 million in 1992. The increase in each year as compared to the
preceding year was due to growth in consumer and network services revenues.
The consumer services customer base rose 46.1% in fiscal 1994. Network
customers increased to 586 from 484 last year.

Pretax earnings increased 38.2% to $102.3 million, compared to $74.0 million
in 1993 and $55.4 million in 1992. The record results were attributable
primarily to the continued strong performances of the Consumer and Network
divisions. The pretax margin was 23.8% this year, compared to 23.5% in 1993
and 19.7% in 1992. The increase in margins in each year over the preceding
year resulted primarily from the exceptional increases in revenues which
outpaced expenses, a significant portion of which are fixed.

FINANCIAL SERVICES
Revenues increased 66.3% to $42.3 million from $25.4 million last year. The
increase resulted from new credit card revenues, greater fees from services
provided to franchises, and the personal finance software revenues of MECA
Software, Inc. from date of acquisition.

Pretax earnings decreased 13.9% to $8.7 million from $10.1 million in 1993.
The decrease was due to losses from the personal finance software business
attributable to development expenses associated with software updates, and
start-up costs associated with credit card operations.

OTHER SERVICES
Results in 1994 represent the operations of the personal tax software business
of MECA Software, Inc. from date of acquisition.

INVESTMENT INCOME
Investment income increased 1.4% to $15.3 million, compared to $15.0 million
in 1993 and $20.1 million in 1992. The increase was due to more funds
available for investment, particularly in the fourth quarter due to the sale
of Interim, although yields were slightly lower than last year. The decrease
in 1993 reflected lower interest rates, partially offset by more funds
available for investment.

CORPORATE & ADMINISTRATIVE EXPENSES
The corporate and administrative pretax loss increased 14.8% to $16.7 million,
compared to $14.6 million in 1993 and $12.5 million in 1992. The increase in
1994 as compared to 1993 resulted primarily from increases in legal and
employee benefits expenses and lower miscellaneous income. The increase in
1993 as compared to 1992 resulted from increases in employee compensation and
benefits.

INCOME TAX EXPENSE
The effective tax rate for continuing operations increased to 42.1%, compared
to 38.0% in 1993 and 37.7% in 1992. The increase in 1994 as compared to 1993
resulted from a one percent increase in the federal income tax rate and the
charge for purchased research and development which is not deductible for
income tax purposes. The increase in 1993 as compared to 1992 was due to a
decrease in tax exempt income.

In August, 1993, the Clinton Administration enacted the Omnibus Budget
Reconciliation Act of 1993. Its provisions increase the federal statutory
income tax rate from 34% to 35% and allow for deduction from taxable income
goodwill amortization arising from certain business acquisitions. This
legislation increased the Company's effective tax rate, but management
anticipates a slight decrease in the long-term as goodwill amortization
related to certain future business acquisitions will be deductible.

EFFECTS OF INFLATION
The effects of inflation on the Company's operations were not significant
during 1994, 1993 or 1992.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF LIQUIDITY AND CAPITAL RESOURCES

The Company's financial position remains strong with cash and marketable
securities of $620.1 million at April 30, 1994, compared to $439.5 million and
$391.4 million at the end of 1993 and 1992, respectively. The significant
increase in cash and marketable securities in 1994 as compared to 1993 is due
to the net proceeds from the sale of Interim of $188.5 million, and from the
repayment of the term loan from Interim of $30.0 million, partially offset by
a reduction in borrowings. Stockholders' equity at April 30, 1994, 1993, and
1992 was $707.9 million, $650.5 million and $613.7 million, respectively.

The Company maintains seasonal lines of credit to support short-term borrowing
facilities in the United States and Canada. The balance of these lines
fluctuates according to the amount of borrowing outstanding during each
respective year. United States borrowings are utilized by Block Financial
Corporation (BFC) to purchase interests in a trust to which certain Refund
Anticipation Loans (RALs) made by Mellon Bank (DE) National Association are
sold. BFC purchased an interest of just under 50% in those RALs subject to its
agreement with Mellon. RALs are loans made by financial institutions that are
expected to be retired by an income tax refund. BFC financed these purchases
through short-term borrowing in the third and fourth quarters of fiscal 1994
and 1993. Canadian borrowings are utilized to purchase refunds due its
clients. The client assigns to the Company the full tax refund to be issued by
Revenue Canada. This program is also financed by short-term borrowing, with
maturities ranging from 30 to 90 days. Net accounts receivable at April 30,
1994 and 1993 include amounts due from Revenue Canada of $28.5 million and
$95.3 million, respectively. Collections occur substantially in the last month
of the fiscal year and the first quarter of the subsequent fiscal year.

The Company also maintains a year-round $100 million line of credit to support
various financial activities conducted by BFC.

The Company has historically generated sufficient funds to provide for the
off-season working capital needs of the Company's largest segment which
experiences losses for the period May through December, capital investments,
and the operating and expansion needs of its subsidiaries, where applicable,
while also enabling the Company to maintain a strong dividend policy and
provide cash for acquisition requirements. Management believes that the

Company will continue to generate sufficient capital internally to finance its
investment program and normal working capital requirements. However, the
Company will continue to use short-term financing in the United States to
finance RAL activity and various other financial activities conducted by BFC
and in Canada to finance the Canadian refund discount program.

In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." This Statement addresses the accounting and
reporting for certain investments in debt and equity securities by requiring
such investments to be classified in held-to-maturity, available-for-sale or
trading categories. It is effective for the Company's financial statements for
the fiscal year beginning May 1, 1994. The Company intends to categorize all
of its marketable securities as available-for-sale. Had the Company adopted
this Statement as of April 30, 1994, stockholders' equity would have increased
by approximately $5.5 million net of taxes, representing the aggregate excess
market value over carrying value for the Company's marketable securities. Net
earnings for the fiscal year ended April 30, 1994 would have been unchanged.

The Company announced in December 1993 its intention to repurchase from time
to time up to 10 million of its shares on the open market. Other than the
possible repurchase of the Company's common stock, there are no material
commitments for capital investments as of April 30, 1994.


CONSOLIDATED STATEMENTS OF EARNINGS
Amounts in thousands, except per share amounts

                                                                                             Year Ended April 30         
                                                                                   --------------------------------------
                                                                                       1994           1993         1992  
                                                                                   ----------     ----------     --------
                                                                                                              
Revenues:
  Service revenues                                                                 $1,118,566     $  956,534     $865,914
  Royalties                                                                            96,766         92,529       90,024
  Investment income                                                                    15,256         15,038       20,089
  Other income                                                                          8,089         10,162       10,082
                                                                                   ----------     ----------     --------
                                                                                    1,238,677      1,074,263      986,109
                                                                                   ----------     ----------     --------
Expenses:
  Employee compensation and benefits                                                  404,367        369,476      359,745
  Occupancy and equipment                                                             242,391        203,350      174,863
  Marketing and advertising                                                            60,783         47,118       44,869
  Supplies, freight and postage                                                        60,182         53,470       62,362
  Other                                                                               162,698        124,955       97,483
  Purchased research and development                                                   25,072            -            -  
                                                                                   ----------     ----------     --------
                                                                                      955,493        798,369      739,322
                                                                                   ----------     ----------     --------

Earnings from continuing operations before taxes                                      283,184        275,894      246,787

Taxes on earnings                                                                     119,189        104,877       93,043

NET EARNINGS FROM CONTINUING OPERATIONS                                               163,995        171,017      153,744

Net earnings from discontinued operations (less applicable taxes of $8,706, 
  $9,688 and $8,964)                                                                    9,268          9,688        8,509

Net gain on sale of discontinued operations (less applicable taxes of $16,711)         27,265            -            -  
                                                                                   ----------     ----------     --------
NET EARNINGS                                                                       $  200,528     $  180,705     $162,253
                                                                                   ==========     ==========     ========

Earnings per share from continuing operations                                           $1.54          $1.59        $1.41
                                                                                        =====          =====        =====

Earnings per share                                                                      $1.88          $1.68        $1.49
                                                                                        =====          =====        =====


See notes to consolidated financial statements.




CONSOLIDATED BALANCE SHEETS
Amounts in thousands, except share data

                                                                                    April 30,      April 30,
                                                                                      1994           1993   
                                                                                   ----------     ----------
                                                                                                
ASSETS
CURRENT ASSETS:
  Cash (including certificates of deposit of $23,519 and $36,074)                  $   41,343     $   43,417
  Marketable securities                                                               473,043        291,347
  Receivables, less allowance for doubtful accounts of $12,744 and $12,000            165,858        228,691
  Prepaid expenses                                                                     19,551         26,483
                                                                                   ----------     ----------
    Total current assets                                                              699,795        589,938
                                                                                   ----------     ----------
INVESTMENTS AND OTHER ASSETS:
  Investments in marketable securities                                                105,705        104,762
  Excess of cost over fair value of net tangible assets acquired,
    less accumulated amortization of $43,429 and $36,249                               67,679        125,628
  Other                                                                                36,301         37,120
                                                                                   ----------     ----------
                                                                                      209,685        267,510
Property and Equipment, at cost less accumulated
  depreciation and amortization of $192,481 and $172,444                              165,224        148,386
                                                                                   ----------     ----------
                                                                                   $1,074,704     $1,005,834
                                                                                   ==========     ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Notes payable                                                                    $      -       $   37,167
  Accounts payable, accrued expenses and deposits                                     160,592        132,321
  Accrued salaries, wages and payroll taxes                                            55,195         53,495
  Accrued taxes on earnings                                                           120,425        106,943
                                                                                   ----------     ----------
    Total current liabilities                                                         336,212        329,926

Other Noncurrent Liabilities                                                           30,617         25,420

STOCKHOLDERS' EQUITY:
  Common stock, no par, stated value $.01 per share:
    authorized 200,000,000 shares                                                       1,089          1,089
  Additional paid-in capital                                                           90,552        101,038
  Retained earnings                                                                   719,724        643,757
                                                                                   ----------     ----------
                                                                                      811,365        745,884
  Less cost of common stock in treasury                                               103,490         95,396
                                                                                   ----------     ----------
                                                                                      707,875        650,488
                                                                                   ----------     ----------
                                                                                   $1,074,704     $1,005,834
                                                                                   ==========     ==========

See notes to consolidated financial statements.




CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts in thousands

                                                                                                     Year Ended April 30      
                                                                                             -----------------------------------
                                                                                                1994        1993         1992    
                                                                                             ----------  ----------   ---------- 
                                                                                                                        
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net earnings                                                                               $  200,528  $  180,705   $  162,253 
  Adjustments to reconcile net earnings to net cash provided:
    Depreciation and amortization                                                                57,117      54,698       44,262 
    Provision for deferred taxes on earnings                                                     (2,735)     (2,915)      (2,778)
    Gain on sale of subsidiaries                                                                (27,265)        -           (328)
    Purchased research and development                                                           25,072         -             -   
    Other noncurrent liabilities                                                                  5,197       4,276        4,392 
  Changes in assets and liabilities net of effects of purchase and 
    disposition of subsidiaries:
    Receivables                                                                                   2,284      43,171      114,455 
    Prepaid expenses                                                                               (412)     (4,619)       2,798 
    Net assets of discontinued operations                                                       (17,370)        -            -   
    Accounts payable, accrued expenses and deposits                                              31,000      56,593       13,250 
    Accrued salaries, wages and payroll taxes                                                    14,659      (6,672)      (1,913)
    Accrued taxes on earnings                                                                      (300)     19,278        8,226 
                                                                                             ----------  ----------   ---------- 
     NET CASH PROVIDED BY OPERATING ACTIVITIES                                                  287,775     344,515      344,617 
                                                                                             ----------  ----------   ---------- 
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of marketable securities                                                         (1,522,609) (1,198,102)    (860,260)
  Maturities of marketable securities                                                         1,339,970   1,179,903      800,569 
  Purchases of property and equipment, net                                                      (83,744)    (71,921)     (55,789)
  Excess of cost over fair value of net tangible assets acquired, net of cash acquired          (46,570)    (10,981)     (12,224)
  Proceeds from sale of subsidiaries                                                            188,500         -         14,000 
  Proceeds from term loan to former subsidiary                                                   30,000         -            -   
  Other, net                                                                                    (24,198)    (13,241)      (4,410)
                                                                                             ----------  ----------   ---------- 
     NET CASH USED IN INVESTING ACTIVITIES                                                     (118,651)   (114,342)    (118,114)
                                                                                             ----------  ----------   ---------- 
CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayments of notes payable                                                                (2,435,254) (1,717,226)    (901,698)
  Proceeds from issuance of notes payable                                                     2,398,087   1,653,061      779,495 
  Dividends paid                                                                               (115,451)   (103,462)     (91,842)
  Payments to acquire treasury shares                                                           (68,899)    (94,763)     (86,505)
  Proceeds from stock options exercised                                                          50,319      62,158       55,810 
  Other, net                                                                                        -           -         (4,984)
                                                                                             ----------  ----------   ---------- 
     NET CASH USED IN FINANCING ACTIVITIES                                                     (171,198)   (200,232)    (249,724)
                                                                                             ----------  ----------   ---------- 

  Net increase (decrease) in cash                                                                (2,074)     29,941      (23,221)
  Cash at beginning of the year                                                                  43,417      13,476       36,697 
                                                                                             ----------  ----------   ---------- 
  Cash at end of the year                                                                    $   41,343  $   43,417   $   13,476 
                                                                                             ==========  ==========   ==========


                                                                                                       Year Ended April 30      
                                                                                             ----------------------------------- 
                                                                                                1994        1993         1992    
                                                                                             ----------  ----------   ---------- 
                                                                                                                        
(continued)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Income taxes paid                                                                          $  131,124  $   98,202   $   84,597 
  Interest paid                                                                                   4,169       5,933        5,786 




See notes to consolidated financial statements.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries, all of which are wholly-owned. All material intercompany
transactions and balances have been eliminated.

MARKETABLE SECURITIES
Marketable securities consist of municipal bonds and notes stated at amortized
cost, marketable equity securities stated at the lower of aggregate cost or
market value, and other investments stated at cost. Aggregate net unrealized
loss related to noncurrent marketable equity securities, if applicable, is
included in stockholders' equity. The cost of marketable securities sold is
determined on the specific identification method and realized gains or losses
are reflected in earnings.

In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities."  This Statement addresses the accounting and
reporting for certain investments in debt and equity securities by requiring
such investments to be classified in held-to-maturity, available-for-sale, or
trading categories. It is effective for the Company's financial statements for
the fiscal year beginning May 1, 1994. The Company intends to categorize all
of its marketable securities as available-for-sale. Had the Company adopted
this Statement as of April 30, 1994, stockholders' equity would have increased
by approximately $5.5 million net of taxes, representing the aggregate excess
market value over carrying value for the Company's marketable securities. Net
earnings for the fiscal year ended April 30, 1994 would have been unchanged.

FOREIGN CURRENCY TRANSLATION
Assets and liabilities of the Company's foreign branches and subsidiaries are
translated into U.S. dollars at exchange rates prevailing at the end of the
year.  Revenue and expense transactions are translated at the average of
exchange rates in effect during the period. Translation gains and losses are
recorded directly to stockholders' equity.

EXCESS OF COST OVER FAIR VALUE OF NET TANGIBLE ASSETS ACQUIRED
The excess of cost of purchased subsidiaries, operating offices and franchises
over the fair value of net tangible assets acquired is being amortized over
periods of up to 40 years on a straight-line basis.

DEPRECIATION AND AMORTIZATION
Buildings and equipment are depreciated over the estimated useful lives of the
assets using the straight-line method.  Leasehold improvements are amortized
over the period of the respective lease using the straight-line method.

REVENUE RECOGNITION
Service revenues are recorded in the period in which the service is performed.
The Company records franchise royalties, based upon the contractual
percentages of franchise revenues, in the period in which the franchise
provides the service.

TAXES ON EARNINGS
The Company and its subsidiaries file a consolidated Federal income tax return
on a calendar year basis. Therefore, the current liability for taxes on
earnings recorded in the balance sheet at each year-end consists principally
of taxes on earnings for the period January 1 to April 30 of the respective
year.  Deferred taxes, which are not material, are provided for temporary
differences between financial and tax reporting, which consist principally of
amortization of accounting method changes (for tax purposes), differences
between accrual and cash basis accounting, deferred compensation, and
depreciation.

Prior to May 1, 1993, taxes on earnings were determined under Accounting
Principles Board Opinion Number 11, whereby the income tax provision was
calculated using the deferred method. Effective May 1, 1993, the Company
adopted the provisions of Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes," which provides for the recognition of
deferred tax assets and liabilities for the tax consequences of temporary
differences between the financial statement carrying amounts and the tax bases
of existing assets and liabilities. The cumulative effect of the change in
method as of May 1, 1993 was not material.

EARNINGS PER SHARE
Earnings per share are computed based on the weighted average number of common
and common equivalent shares outstanding during the respective years
(106,769,000 in 1994, 107,644,000 in 1993, and 109,154,000 in 1992). Earnings
per share assuming full dilution have not been shown as there would be no
material dilution.

CONSOLIDATED STATEMENTS OF CASH FLOWS
For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid debt instruments purchased with a maturity of
three months or less to be cash.

DISCLOSURE REGARDING FINANCIAL INSTRUMENTS
For purposes of disclosing the estimated fair value of marketable securities,
the Company uses quoted market prices obtained primarily from published
sources. For all other financial instruments, including certificates of
deposit and notes payable, the carrying value is considered to approximate
fair value due to the relatively short maturity of the respective instruments.

MARKETABLE SECURITIES
The cost, market value and carrying value of marketable securities at April
30, 1994 and 1993 are summarized below:



                                            1994                                  1993              
                             ---------------------------------     ---------------------------------
                                                      Carrying                              Carrying
                               Cost        Market      Value         Cost       Market       Value  
                             --------     --------    --------     --------    --------     --------
                                                                                     
CURRENT:
Municipal bonds and notes    $239,057     $238,258    $238,092     $151,469    $151,142     $150,981
Other short-term investments  234,952      234,960     234,951      140,366     140,346      140,366
                             --------     --------    --------     --------    --------     --------
                              474,009      473,218     473,043      291,835     291,488      291,347
                             --------     --------    --------     --------    --------     --------
NONCURRENT:
Municipal bonds                94,501       94,014      92,154       94,297      97,039       90,952
Preferred stock                 1,511        1,795       1,511        1,921       2,213        1,921
Common stock                    7,479       14,766       7,479        7,334      16,247        7,334
Other long-term investments     4,561        3,912       4,561        4,555       4,594        4,555
                             --------     --------    --------     --------    --------     --------
                              108,052      114,487     105,705      108,107     120,093      104,762
                             --------     --------    --------     --------    --------     --------
                             $582,061     $587,705    $578,748     $399,942    $411,581     $396,109
                             ========     ========    ========     ========    ========     ========

The net unrealized gain on long-term equity securities at April 30, 1994
and 1993 of $7,571 and $9,205, respectively, represents all unrealized
gains. Net realized gains or losses on investments during 1994, 1993 and
1992 were a gain of $307, a loss of $123, and a gain of $2,034,
respectively.

PROPERTY AND EQUIPMENT
A summary of property and equipment follows:


                                                            April 30       
                                                      ---------------------
                                                        1994         1993  
                                                      --------     --------
                                                             
Land                                                  $  6,060     $  5,698
Buildings                                               30,027       33,440
Equipment                                              293,573      254,445
Leasehold improvements                                  28,045       27,247
                                                      --------     --------
                                                       357,705      320,830
Less accumulated depreciation and amortization         192,481      172,444
                                                      --------     --------
                                                      $165,224     $148,386
                                                      ========     ========

Depreciation and amortization expense for 1994, 1993 and 1992 amount
to $52,091, $43,522, and $32,045, respectively.

OTHER NONCURRENT LIABILITIES
The Company has a deferred compensation plan which permits directors and
certain management employees to defer portions of their compensation and earn
interest on the deferred amounts. The salaries, together with Company matching
of deferred salaries, have been accrued, and the only expenses related to this
plan are the Company match and the interest on the deferred amounts, which are
not material to the financial statements. Included in Other Noncurrent
Liabilities is $22,854 at the end of 1994 and $22,192 at the end of 1993 to
reflect the liability under this plan. The Company purchased whole-life
insurance contracts on the related directors and employees to recover
distributions made or to be made under the plan, and has recorded the cash
surrender value of the policies in Other Assets. If all the assumptions
regarding mortality, interest rates, policy dividends, and other
factors are realized, the Company will ultimately realize its full investment
plus a factor for the use of its money.

STOCKHOLDERS' EQUITY
Changes in the components of stockholders' equity during the three years ended
April 30, 1994 are summarized below:


                                               Common stock      Additional                      Treasury stock     
                                          --------------------     paid-in     Retained     ----------------------- 
                                             Shares     Amount     capital     earnings       Shares       Amount   
                                          -----------   ------     -------     --------     ----------    --------- 
                                                                                        
Balances at May 1, 1991                   107,792,080   $1,078     $90,234    $507,278      (1,305,212)  ($  25,001)
Net earnings for the year                         -        -           -       162,253             -            -   
Stock options exercised                     1,058,619       11      26,795         -         1,430,210       29,004 
Unrealized loss on translation                    -        -           -        (3,312)            -            -   
Acquisition of treasury shares                    -        -           -           -        (2,500,000)     (86,505)
Stock issued for acquisition                  122,000      -         3,720         -               -            -   
Cash dividends paid - $.851/2 per share           -        -           -       (91,842)            -            -   
Balances at April 30, 1992                108,972,699    1,089     120,749     574,377      (2,375,002)    ( 82,502)
 
Net earnings for the year                         -        -           -       180,705             -            -   
Stock options exercised                           -        -       (19,711)        -         2,387,407       81,869 
Unrealized loss on translation                    -        -           -        (7,863)            -            -   
Acquisition of treasury shares                    -        -           -           -        (2,629,868)     (94,763)
Cash dividends paid - $.97 per share              -        -           -      (103,462)            -            -   
Balances at April 30, 1993                108,972,699    1,089     101,038     643,757      (2,617,463)     (95,396)

Net earnings for the year                         -        -           -       200,528             -            -   
Stock options exercised                           -        -       (10,486)        -         1,677,674       60,805 
Unrealized loss on translation                    -        -           -        (9,110)            -            -   
Acquisition of treasury shares                    -        -           -           -        (1,883,816)     (68,899)
Cash dividends paid - $1.09 per share             -        -           -      (115,451)            -            -   
Balances at April 30, 1994                108,972,699   $1,089     $90,552    $719,724      (2,823,605)   ($103,490)


STOCK OPTION PLANS

The Company has three stock option plans: the 1993 Long-Term Executive
Compensation Plan, the 1989 Stock Option Plan for Outside Directors, and a
plan for eligible seasonal employees. The 1993 plan was approved by the
shareholders in September 1993 to replace the 1984 Long-Term Executive
Compensation Plan, which terminated at that time except with respect to
outstanding awards thereunder. Under the 1993 and 1989 plans, options may be
granted to selected employees and outside directors to purchase the Company's
common stock for periods not exceeding ten years at a price that is not less
than 100 percent of fair market value on the date of grant.  The options are
exercisable each year starting  one year from the date of grant, or on a
cumulative basis at the annual rate of 33 1/3 percent of the total number of
optional shares.

The plan for eligible seasonal employees, as amended, provided for the
granting of options on June 30, 1994, 1993 and 1992 at the market price on the
date of the grant. The options are exercisable during September in each of the
two years following the calendar year of grant.

Changes during the years ended April 30, 1994, 1993 and 1992 under these plans
were as follows:


                                                     1994             1993           1992   
                                                  ----------       ----------     ---------- 
                                                                       
Options outstanding, beginning of year             3,901,373        4,835,777      4,479,702 
Options granted                                    2,410,317        2,327,340      3,121,632 
Options exercised                                 (1,677,674)      (2,387,407)    (2,488,829)
Options which expired                             (1,095,675)        (874,337)      (276,728)
Options outstanding, end of year                   3,538,341        3,901,373      4,835,777 

Shares exercisable, end of year                    2,807,255        2,958,418      3,669,567 

Shares reserved for future grants, end of year    18,417,233       12,736,987     14,189,990 

Options prices per share:
  Exercised during the year                     $5.515-35.75     $5.515-28.75    $1.77-27.50 
  Outstanding, end of year                      $5.515-44.00    $5.515-35.375   $5.515-33.75  


SHAREHOLDER RIGHTS PLAN
On July 14, 1988, the Company's Board of Directors adopted a shareholder
rights plan to deter coercive or unfair takeover tactics and to prevent a
potential acquiror from gaining control of the Company without offering a fair
price to all of the Company's stockholders. The plan was amended by the Board
of Directors on May 9, 1990 and on September 11, 1991. Under the plan, a
dividend of one right (a "Right") per share was declared and paid on each
share of the Company's Common Stock outstanding on July 25, 1988. As to shares
issued after such date, rights will automatically attach to them after their
issuance.

Under the plan, as amended, registered holders of each Right may purchase from
the Company one two-hundredths of a share of a new class of the Company's
Participating Preferred Stock, without par value, at a price of $60.00,
subject to adjustment, when the Rights become exercisable. They become
exercisable when a person or group of persons acquires 10% or more of the
outstanding shares of the Company's Common Stock without the prior written
approval of the Company's Board of Directors (an "Unapproved Stock
Acquisition"), and after ten business days following the commencement of a
tender offer that would result in an Unapproved Stock Acquisition. If a person
or group of persons makes an Unapproved Stock Acquisition, the registered
holder of each Right then also has the right to purchase for the exercise
price of the Right a number of shares of the Company's Common Stock having a
market value equal to twice the exercise price of the Right. Following an
Unapproved Stock Acquisition, if the Company is involved in a merger, or 50%
or more of the Company's assets or earning power are sold, the registered
holder of each Right has the right to purchase for the exercise price of the
Right a number of shares of the common stock of the acquiring company having a
market value equal to twice the exercise price of the Right.
After an Unapproved Stock Acquisition, but before any person or group of
persons acquires 50% or more of the outstanding shares of the Company's Common
Stock, the Board of Directors may exchange all or part of the then outstanding
and exercisable Rights for Common Stock at an exchange ratio of one share of
Common Stock per Right. Upon any such exchange, the right of any holder to
exercise a Right terminates.

The Company may redeem the Rights at a price of $.005 per Right at any time
prior to an Unapproved Stock Acquisition (and after such time in certain
circumstances). The Rights expire on July 25, 1998, unless extended by the
Board of Directors. Until a Right is exercised, the holder thereof, as such,
has no rights as a stockholder of the Company, including the right to vote or
to receive dividends. The issuance of the Rights alone has no dilutive effect
and does not affect reported earnings per share.

OTHER EXPENSES
Included in other expenses are the following:


                                                                 Year Ended April 30         
                                                      ---------------------------------------
                                                        1994             1993           1992 
                                                      -------          -------        -------
                                                                             
Royalties                                             $39,827          $25,326        $18,006
Bad debts                                              24,977           16,312         11,314
Travel and entertainment                               15,039           10,420          9,931
Taxes and licenses                                     13,285           11,033          9,722
Amortization of goodwill                                5,026            3,115          4,952
Interest                                                3,798            6,580          5,276
Legal and professional                                 14,445            9,486          4,425
Loss on sale of subsidiary                                -                -            2,324


TAXES ON EARNINGS
The components of earnings from continuing operations before taxes
on earnings upon which Federal and foreign income taxes have been
provided are as follows:


                                         Year Ended April 30                  
                                   ------------------------------            
                                      1994       1993       1992 
                                   --------   --------   --------
                                                
United States                      $276,329   $261,981   $231,566
Foreign                               6,855     13,913     15,221
                                   --------   --------   --------
                                   $283,184   $275,894   $246,787
                                   ========   ========   ========

Deferred income tax provisions (benefits) reflect the impact of
temporary differences between amounts of assets and liabilities
for financial reporting purposes and such amounts as measured by
tax laws. The current and deferred components of the  provision
for income taxes from continuing operations is comprised of the
following:



                                                                Year Ended April 30          
                                                   ----------------------------------------- 
                                                      1994             1993           1992   
                                                    --------         --------       -------- 
                                                                                             
Currently payable:
  Federal                                           $ 96,807         $ 80,915        $70,474 
  State                                               22,091           20,736         18,734 
  Foreign                                              3,026            6,141          6,613 
                                                    --------         --------        ------- 
                                                     121,924          107,792         95,821 
                                                    --------         --------        ------- 
Deferred:
  Capitalized research and development                   172              991         (1,473)
  Deferred compensation                               (2,319)          (1,892)          (964)
  Depreciation                                          (335)          (1,565)          (298)
  Inter-company profit upon sale of fixed assets        (257)            (539)           (31)
  Other                                                    4               90            (12)
                                                      (2,735)          (2,915)        (2,778)
                                                    --------         --------        ------- 
                                                    $119,189         $104,877        $93,043 
                                                    ========         ========        ======= 


Provision is not made for possible income taxes payable upon
distribution of unremitted earnings of foreign subsidiaries.
Such unremitted earnings aggregated $71,282 at December 31, 1993.
Management believes that the cost to repatriate these earnings
would not be material.

The following table reconciles the U.S. Federal income tax rate
to the Company's effective tax rate:


                                                                    Year Ended April 30         
                                                          ------------------------------------- 
                                                           1994            1993            1992 
                                                          -----           -----           ----- 
                                                                                 
Statutory rate                                            35.0%           34.0%           34.0% 
Increases (reductions) in income taxes resulting from:
  State income taxes, net of Federal income tax benefit    5.1%            5.0%            5.0% 
  Foreign taxes, net of Federal income tax benefit          .2%             .5%             .6% 
  Purchased research and development                       3.1%              -               -  
  Nontaxable Federal income                                (.9%)          (1.1%)          (1.9%)
  Other                                                    (.4%)           (.4%)             -  
Effective rate                                            42.1%           38.0%           37.7%


ACQUISITIONS
On November 24, 1993, the Company acquired MECA Software, Inc. for $45,384 in
cash. The transaction was accounted for as a purchase and, accordingly, the
consolidated statements of earnings includes MECA's results since the date of
acquisition. The purchase price has been allocated to assets acquired and
liabilities assumed based on their fair value at the date of acquisition. The
excess of the purchase price over the fair value of the net tangible assets
acquired was $55,978, of which $25,072 was allocated to purchased research and
development, $4,900 was allocated to various other intangibles including
technology, software and trademarks, and the remainder was allocated to
goodwill. Goodwill and other intangibles will be amortized on a straight-line
basis over their estimated useful lives of 3 to 15 years. The consolidated
statements of earnings includes a charge for the purchased research and
development which is not deductible for income tax purposes. The fair value of
assets acquired, including intangibles, was $62,004; liabilities assumed were
$16,620. Liabilities assumed in connection with the acquisition were non-cash
items excluded from the consolidated statements of cash flows. Pro forma
results assuming MECA had been acquired as of the beginning of the periods
presented would not be materially different from reported results.
During fiscal 1994, 1993 and 1992, the Company made other acquisitions which
were accounted for as purchases. Their operations, which are not material, are
included in the consolidated statements of earnings.

SALE OF SUBSIDIARIES
On January 27, 1994, the Company completed the sale of its interest in its
wholly-owned subsidiary, Interim Services Inc., through an initial public
offering of 10,000,000 shares at $20 per share. The net proceeds from the sale
and the receipt from the retirement of a term loan to Interim amounted to
$218,500. The Company recorded a net gain on the sale of the stock of $27,265.
Interim's results are reflected as discontinued operations, and all amounts
for prior periods have been similarly reported. The net sales of Interim for
fiscal years 1994, 1993 and 1992 were $399,573, $451,067 and $384,589,
respectively.

On April 17, 1992, the Company sold substantially all of the operating assets
of MicroSolutions, Inc. for $3,100. MicroSolutions was an operating division
of CompuServe and the largest component of its Systems Integration Group. The
pretax loss on the sale of $2,324 is included in other expenses.
On November 7, 1991, the Company sold substantially all of the operating
assets of its wholly-owned subsidiary, Access Technology, Inc., for $14,000 in
cash. The operating results of Access, which were included in the computer
services segment, are reflected in the consolidated statements of earnings
through date of disposition, and the gain on the sale of $2,652 is included in
other income.

COMMITMENTS
Substantially all of the Company's operations are conducted in leased
premises.  Most of the operating leases are for a one-year period with renewal
options of one to three years and provide for fixed monthly rentals. Lease
commitments at April 30, 1994, for fiscal 1995, 1996, 1997, 1998 and 1999
aggregated $54,124, $44,341, $29,126, $16,115, and $5,839, respectively, with
no significant commitments extending beyond that period of time. The Company's
rent expense for the years 1994, 1993 and 1992 aggregated $63,655, $59,016 and
$56,406, respectively.

The Company maintains a year-round $100 million line of credit to support
various financial activities conducted by Block Financial Corporation.


QUARTERLY FINANCIAL DATA (UNAUDITED)

                                             Fiscal 1994 Quarter Ended                  Fiscal 1993 Quarter Ended       
                                    ------------------------------------------   ----------------------------------------
                                    April 30,  Jan. 31,   Oct. 31,   July 31,    April 30, Jan. 31,  Oct. 31,    July 31,
                                      1994       1994       1993       1993        1993      1993      1992        1992  
                                    --------   --------   --------   --------    --------  --------  --------    --------
                                                                                         
Revenues                            $774,716   $229,441   $131,206   $103,314    $698,861  $190,747  $102,223    $82,432 
Continuing operations:
  Earnings (loss) before provision 
    for income taxes (benefits)      316,881    (11,455)    (7,867)   (14,375)    296,327     8,045   (12,024)   (16,454)
  Provision for income taxes
    (benefits)                       122,536      6,479     (3,694)    (6,132)    114,578     2,350    (5,197)    (6,854)
  Net earnings (loss)                194,345    (17,934)    (4,173)    (8,243)    181,749     5,695    (6,827)    (9,600)
Discontinued operations:
  Net earnings                           -        3,225      3,241      2,802       1,491     2,888     2,820      2,489 
  Net gain on sale                       -       27,265        -          -           -         -         -          -  
Net earnings (loss)                  194,345     12,556       (932)    (5,441)    183,240     8,583    (4,007)    (7,111)
Earnings (loss) per share from
  continuing operations                 1.83       (.17)      (.04)      (.08)       1.69       .05      (.06)      (.09)
Earnings (loss) per share               1.82        .12       (.01)      (.05)       1.71       .08      (.04)      (.07)


SEGMENT INFORMATION
The principal business activity of the Company is providing services to the
general public and business community.  It operates in the following industry
segments:

TAX SERVICES
This segment is engaged in providing tax return preparation, filing and
related services to the general public on a fee basis. Revenues are seasonal
in nature and represent fees of company-owned offices and royalties from
franchised offices.

COMPUTER SERVICES
This segment is engaged in providing computer information and networking
services to corporations and individual computer owners via a proprietary data
network and host servers located in Columbus and Dublin, Ohio. It is the
world's largest provider of on-line services and operates the only major
on-line service with worldwide membership and network reach.

FINANCIAL SERVICES
This segment provides and invests primarily in financial products for existing
customers and franchises. Through the purchases of interests in a trust to
which certain Refund Anticipation Loans (RALs) made by Mellon Bank (DE)
National Association are sold, this segment purchases a 50% interest in RALs
subject to its agreement with Mellon. It also provides services to strengthen
the Tax Services franchise network. These services include loans to franchises
and insurance programs. During 1994 it sponsored 45,000 credit cards to
existing Tax Services and CompuServe customers under two co-branding
agreements. In addition, this segment includes those operations of MECA
Software, Inc. which provide personal finance software to the general public.

OTHER
This segment includes those operations of MECA Software, Inc. which provide
personal tax software to the general public.

IDENTIFIABLE ASSETS
Identifiable assets are those assets, including the excess of cost over fair
value of net tangible assets acquired, associated with each segment of the
Company's operations. The remaining assets are classified as corporate assets
and consist primarily of cash, marketable securities and corporate equipment.
Identifiable assets at April 30, 1993 and 1992 do not include the assets of
discontinued operations of $188,008 and $168,974, respectively, which are
included in the consolidated balance sheets for the corresponding years.
Information concerning the Company's operations by industry segment for the
years ended April 30, 1994, 1993 and 1992, is as follows:



                                                           1994         1993           1992   
                                                        ----------   ----------      -------- 
                                                                                  
REVENUES:
Tax services                                            $  755,526   $  733,449      $698,308 
Computer services                                          429,885      315,399       280,852 
Financial services                                          42,270       25,422           -   
Other                                                        8,739          -             -   
                                                        ----------   ----------      -------- 
  Total operating revenues                               1,236,420    1,074,270       979,160 
Investment income                                           15,256       15,038        20,089 
Corporate                                                      186          759           771 
Intersegment sales                                         (13,185)     (15,804)      (13,911)
                                                        ----------   ----------      -------- 
    TOTAL REVENUES                                      $1,238,677   $1,074,263      $986,109 
                                                        ==========   ==========      ======== 
OPERATING PROFIT:
Tax services                                            $  198,719   $  191,288      $183,770 
Computer services                                          102,317       74,039        55,380 
Financial services                                           8,711       10,122           -   
Other                                                            1          -             -   
                                                        ----------   ----------      -------- 
  Total operating profit                                   309,748      275,449       239,150 
Investment income                                           15,256       15,038        20,089 
Purchased research and development                         (25,072)         -             -   
Unallocated corporate and administrative expenses          (16,748)     (14,593)      (12,452)
                                                        ----------   ----------      -------- 
    EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES    $  283,184   $  275,894      $246,787 
                                                        ==========   ==========      ======== 
DEPRECIATION AND AMORTIZATION:
Tax services                                            $   24,899   $   24,858      $ 20,373 
Computer services                                           29,876       21,437        16,308 
Financial services                                           1,147          -             -   
Other                                                        1,130          -             -   
Corporate                                                       65          342           316 
                                                        ----------   ----------      -------- 
    TOTAL DEPRECIATION AND AMORTIZATION                 $   57,117   $   46,637      $ 36,997 
                                                        ==========   ==========      ======== 
IDENTIFIABLE ASSETS:
Tax services                                            $  104,585   $  176,727      $266,081 
Computer services                                          208,469      148,814       127,055 
Financial services                                         118,356          -             -   
Other                                                       16,315       19,682           -   
Corporate                                                  626,979      472,603       400,554 
                                                        ----------   ----------      -------- 
    TOTAL ASSETS                                        $1,074,704   $  817,826      $793,690 
                                                        ==========   ==========      ========


                                                           1994         1993           1992   
                                                        ----------   ----------      -------- 
                                                                             
(continued)
CAPITAL EXPENDITURES:
Tax services                                            $   11,411   $   25,994      $ 29,374 
Computer services                                           73,359       40,903        22,028 
Financial services                                             354          -             -   
Other                                                          261           19           -   
Corporate                                                      126          289           201 
                                                        ----------   ----------      -------- 
    TOTAL CAPITAL EXPENDITURES                          $   85,511   $   67,205      $ 51,603 
                                                        ==========   ==========      ======== 


Prior year amounts have been reclassified to conform to the 1994 presentation.



INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
H&R Block, Inc.
Kansas City, Missouri


We have audited the accompanying consolidated balance sheets of H&R Block,
Inc. and subsidiaries as of April 30, 1994 and 1993, and the related
consolidated statements of earnings and cash flows for each of the three years
in the period ended April 30, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits. 

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of H&R Block, Inc. and subsidiaries
as of April 30, 1994 and 1993, and the results of their operations and their
cash flows for each of the three years in the period ended April 30, 1994 in
conformity with generally accepted accounting principles.



/s/Deloitte & Touche

Kansas City, Missouri
June 21, 1994


                                                       EXHIBIT 21

                 SUBSIDIARIES OF H&R BLOCK, INC.

     The following is a  list of the direct and  indirect subsid-
iaries  of H&R Block, Inc.,  a Missouri corporation.   All active
subsidiaries do business under their corporate names listed below
or close derivatives thereof:

                                             Jurisdiction in
          Name                               which organized

H&R Block Group, Inc....................     Delaware (1)
Block Investment Corporation............     Delaware (1)
HRB Management, Inc.....................     Missouri (2)
H&R Block Tax Services, Inc.............     Missouri (2)
H&R Block Eastern Tax Services, Inc.....     Missouri (3)
H&R Block of Dallas, Inc................     Texas (3)
HRB Partners, Inc.......................     Delaware (4)
H&R Block and Associates, L.P...........     Delaware (5)
HRB Royalty, Inc........................     Delaware (3)
BWA Advertising, Inc....................     Missouri (3) 
H&R Block Canada, Inc...................     Canada (3)
H&R Block (Nova Scotia), Incorporated...     Nova Scotia (6)
H&R Block (Guam), Inc...................     Guam (3)
H&R Block Limited.......................     New South Wales (7)
H&R Block The Income Tax People Limited.     New Zealand (3)
Block Financial Corporation.............     Delaware (2)
Franchise Partner, Inc..................     Nevada (8)
Companion Financial Corporation.........     Utah (8)
Companion Insurance, Ltd................     Bermuda (8)
BFC Investment, Inc.....................     Delaware (2)
MECA Software, Inc......................     Delaware (2)
Legal Knowledge Systems, Inc............     Pennsylvania (9)
Live Free or Die Software, Ltd..........     New Hampshire (9)
Great American Software, Inc............     New Hampshire (10)
Capitol Software, Inc...................     New Hampshire (10)
CompuServe Incorporated.................     Ohio (2)
CompuPlex Incorporated..................     Ohio (11)
CompuServe Systems Integration
  Group Southwest, Inc..................     Texas (11)
CompuServe Canada Limited...............     Canada (11)
CompuServe Consulting Services 
  (UK) Limited..........................     United Kingdom (11)
CompuServe Information Services
  (UK) Limited..........................     United Kingdom (11)
CompuServe Information Services GMBH....     Germany (11)
CompuServe Information Services AG......     Switzerland (11)
CompuServe Information Systems SARL.....     France (11)
CompuServe AB...........................     Sweden (11)
CompuServe Information Services, B.V....     The Netherlands (11)
Access Technology, Inc..................     Massachusetts (12)
PM Industries, Inc......................     Kansas (12)

NOTES TO SUBSIDIARIES OF H&R BLOCK, INC.:

(1)  Wholly-owned subsidiary of H&R Block, Inc.
(2)  Wholly-owned subsidiary of H&R Block Group, Inc.
(3)  Wholly-owned subsidiary of H&R Block Tax Services, Inc.
(4)  Wholly-owned subsidiary of H&R Block of Dallas, Inc.
(5)  Limited partnership in which H&R Block Tax Services, Inc. is
     a 1% general partner and HRB Partners, Inc. is a 99% limited
     partner. 
(6)  Wholly-owned subsidiary of H&R Block Canada, Inc.
(7)  Wholly-owned subsidiary of HRB Royalty, Inc.
(8)  Wholly-owned subsidiary of Block Financial Corporation.
(9)  Wholly-owned subsidiary of MECA Software, Inc.
(10) Wholly-owned subsidiary of Live Free or Die Software, Ltd.
(11) Wholly-owned subsidiary of CompuServe Incorporated.
(12) Wholly-owned subsidiary of HRB Management, Inc.