1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------

FORM 10-Q/A
Amendment Number 1

(Mark One)
[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 31, 2000

[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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
INCORPORATION OR ORGANIZATION)                   IDENTIFICATION NO.)

4400 MAIN STREET
KANSAS CITY, MISSOURI 64111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)

(816) 753-6900
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

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 
---          ---    

The number of shares outstanding of the registrant's Common Stock, without par
value, at September 1, 2000 was 91,524,900 shares.

2

H&R BLOCK, INC.
CONSOLIDATED BALANCE SHEETS
AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS

JULY 31,           APRIL 30,
2000                2000
----                ----
ASSETS                                                                 (UNAUDITED)          (AUDITED)

CURRENT ASSETS
Cash and cash equivalents                                                                      $   219,718          $   379,901
Marketable securities - available-for-sale                                                          20,077               16,966
Marketable securities - trading                                                                     44,359               45,403
Receivables from customers, brokers, dealers and clearing organ-
izations, less allowance for doubtful accounts of $801 and $759                               2,738,536            2,857,379
Receivables, less allowance for doubtful accounts of $45,490
and $49,602                                                                                     342,446              434,722
Prepaid expenses and other current assets                                                          146,529              129,172
-----------          -----------
TOTAL CURRENT ASSETS                                                                          3,511,665            3,863,543

INVESTMENTS AND OTHER ASSETS
Investments in available-for-sale marketable securities                                            227,394              176,395
Excess of cost over fair value of net tangible assets acquired,
net of amortization                                                                           1,071,053            1,095,074
Other                                                                                              312,480              303,672
-----------          -----------
1,610,927            1,575,141
PROPERTY AND EQUIPMENT, at cost less accumulated
depreciation and amortization                                                                      253,109              260,666
-----------          -----------
$ 5,375,701          $ 5,699,350
===========          ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Notes payable                                                                                  $   640,076          $   283,797

Accounts payable to customers, brokers and dealers                                               2,398,795            2,570,200
Accounts payable, accrued expenses and deposits                                                    193,217              222,362
Accrued salaries, wages and payroll taxes                                                           66,910              173,333
Accrued taxes on earnings                                                                          112,482              202,779
Current portion of long-term debt                                                                   70,582               67,978
-----------          -----------
TOTAL CURRENT LIABILITIES                                                                     3,482,062            3,520,449

LONG-TERM DEBT                                                                                         869,931              872,396
OTHER NONCURRENT LIABILITIES                                                                            91,660               87,916
STOCKHOLDERS' EQUITY
Common stock, no par, stated value $.01 per share                                                    1,089                1,089
Additional paid-in capital                                                                         421,601              420,594
Retained earnings                                                                                1,199,273            1,277,324
Accumulated other comprehensive income (loss)                                                      (23,342)             (26,241)
-----------          -----------
1,598,621            1,672,766
Less cost of 17,451,033 and 10,937,683 shares of common stock
in treasury                                                                                     666,573              454,177
-----------          -----------
932,048            1,218,589
-----------          -----------
$ 5,375,701          $ 5,699,350
===========          ===========

See Notes to Consolidated Financial Statements

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H&R BLOCK, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED, AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS

THREE MONTHS ENDED
------------------
JULY 31,
--------
2000                       1999
----                       ----
(Restated)

REVENUES
Service revenues                                                                            $ 231,224                $  73,503
Product revenues                                                                               53,759                   44,192
Royalties                                                                                       1,161                      930
Other                                                                                          17,966                    2,935
---------                ---------
304,110                  121,560
---------                ---------
OPERATING EXPENSES
Employee compensation and benefits                                                            146,540                   75,352
Occupancy and equipment                                                                        60,224                   40,634
Interest                                                                                       63,198                   11,474
Depreciation and amortization                                                                  47,457                   18,400
Marketing and advertising                                                                       9,774                    5,220
Supplies, freight and postage                                                                   7,579                    4,192
Bad debt                                                                                        5,521                    4,188
Other                                                                                          56,511                   24,563
---------                ---------
396,804                  184,023
---------                ---------

Operating loss                                                                                     (92,694)                 (62,463)

OTHER INCOME
Investment income, net                                                                          2,719                    2,651
Other, net                                                                                        (18)                      15
---------                ---------
2,701                    2,666

Loss before income tax benefit                                                                     (89,993)                 (59,797)

Income tax benefit                                                                                 (38,247)                 (22,723)
---------                ---------

Net loss                                                                                         $ (51,746)               $ (37,074)
=========                =========

Weighted average number of common shares outstanding                                                93,261                   97,713
=========                =========

Basic and diluted net loss per share                                                             $    (.55)               $    (.38)
=========                =========

Dividends per share                                                                              $    .275                $     .25
=========                =========

See Notes to Consolidated Financial Statements

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H&R BLOCK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED, AMOUNTS IN THOUSANDS

THREE MONTHS ENDED
------------------
JULY 31,
--------
2000              1999
----              ----

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                    $      (51,746)   $      (37,074)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization                                                    47,457            18,400
Provision for bad debt                                                            5,521             4,188
Accretion of acquisition liabilities                                              3,234             -
Changes in:
Receivables from customers, brokers, dealers and
clearing organizations                                                   118,843             -
Receivables                                                                   32,989          (113,026)
Marketable securities - trading                                                1,044             -
Prepaid expenses and other current assets                                    (17,357)           (7,879)
Accounts payable to customers, brokers and dealers                          (171,405)            -
Accounts payable, accrued expenses and deposits                              (29,145)          (53,353)
Accrued salaries, wages and payroll taxes                                   (106,423)         (137,427)
Accrued taxes on earnings                                                    (90,297)          (40,706)
Other, net                                                                    (3,043)           (1,221)
--------------    --------------
NET CASH USED IN OPERATING ACTIVITIES                                             (260,328)         (368,098)
--------------    --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale securities                                            (536)           (2,967)
Maturities of available-for-sale securities                                          5,602            21,964
Purchases of property and equipment, net                                           (11,529)           (2,682)
Payments made for business acquisitions, net of cash acquired                       (1,036)           (1,509)
Other, net                                                                          (8,018)           (6,880)
--------------    --------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                (15,517)            7,926
--------------    --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of notes payable                                                     (4,536,830)       (8,920,883)
Proceeds from issuance of notes payable                                          4,893,109         9,605,977
Payments on acquisition debt                                                        (2,628)            -
Dividends paid                                                                     (26,305)          (24,436)
Payments to acquire treasury shares                                               (213,107)            -
Proceeds from stock options exercised                                                  231             6,722
Other, net                                                                           1,192               219
--------------    --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                          115,662           667,599
--------------    --------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                  (160,183)          307,427
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD                                   379,901           193,240
--------------    --------------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                                  $      219,718    $      500,667
==============    ==============

SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income taxes paid                                                           $       51,737    $       18,348
Interest paid                                                                       50,897            14,621

See Notes to Consolidated Financial Statements

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H&R BLOCK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited, dollars in thousands, except share data

1.   The Consolidated Balance Sheet as of July 31, 2000, the Consolidated
Statements of Operations for the three months ended July 31, 2000 and 1999,
and the Consolidated Statements of Cash Flows for the three months ended
July 31, 2000 and 1999 have been prepared by the Company, without audit. In
the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows at July 31, 2000 and for all periods
presented have been made.

Interest income and interest expense related to certain mortgage loans in
fiscal year 2001 were previously reported in the Quarterly Report on Form
10-Q for the period ended July 31, 2000 on a gross basis in Other revenues
and Interest expense, respectively. The Company is now reporting in Other
revenues on the Consolidated Statements of Operations the interest income
from such mortgages net of the related interest expense of $16,503 in
accordance with Statement of Financial Accounting Standards No. 125,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities." This restatement has no impact on the net
loss previously reported.

Reclassifications have been made to prior year amounts to conform with the
current year presentation.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These consolidated financial
statements should be read in conjunction with the financial statements and
notes thereto included in the Company's April 30, 2000 Annual Report to
Shareholders.

Operating revenues are seasonal in nature with peak revenues occurring in 
the months of January through April. Thus, the three-month results are not
indicative of results to be expected for the year.

2.   Receivables consist of the following:

July 31,          April 30,
--------          ---------
2000              2000
----              ----
(Unaudited)        (Audited)

Mortgage loans held for sale                                $      158,664    $       163,033
Business services accounts receivable                              118,308            148,109
Participation in refund anticipation loans                          40,296             47,581
Loans to franchisees                                                25,505             24,888
Other                                                               45,163            100,713
--------------    ---------------
387,936            484,324
Allowance for doubtful accounts                                     45,490             49,602
--------------    ---------------
$      342,446    $       434,722
==============    ===============

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3.   The Company files its Federal and state income tax returns on a calendar
year basis. The Consolidated Statements of Operations reflect the effective
tax rates expected to be applicable for the respective full fiscal years.

4.   Basic and diluted net loss per share is computed using the weighted average
number of shares outstanding during each period. Diluted net loss per share
excludes the impact of common stock options outstanding of 12,620,903 
shares and the conversion of 608 shares of preferred stock to common stock,
as they are antidilutive.  The weighted average shares outstanding for the
first quarter of fiscal 2001 decreased to 93,261,000 from 97,713,000 last
year, due to the purchase of treasury shares by the Company during the
first three months of fiscal 2001.

5.   During the three  months ended July 31, 2000 and 1999, the Company issued
18,150 and 196,043 shares, respectively, pursuant to provisions for 
exercise of stock options under its stock option plans.  During the three
months ended July 31, 2000, the Company acquired 6,531,500 shares of its 
common stock at an aggregate cost of $213,107.

6.   CompuServe Corporation (CompuServe), certain current and former officers
and directors of CompuServe and the Company have been named as defendants
in six lawsuits pending before the state and Federal courts in Columbus,
Ohio. All suits allege similar violations of the Securities Act of 1933
based on assertions of omissions and misstatements of fact in connection
with CompuServe's public filings related to its initial public offering in
April 1996. One state lawsuit also alleges certain oral omissions and
misstatements in connection with such offering. Relief sought in the
lawsuits is unspecified, but includes pleas for rescission and damages. One
Federal lawsuit names the lead underwriters of CompuServe's initial public
offering as additional defendants and as representatives of a defendant
class consisting of all underwriters who participated in such offering. The
Federal suits were consolidated, the defendants filed a motion to dismiss
the consolidated suits, the district court stayed all proceedings pending
the outcome of the state court suits, and the United States Court of
Appeals for the Sixth Circuit affirmed such stay. The four state court
lawsuits also allege violations of various state statutes and common law of
negligent misrepresentation in addition to the 1933 Act claims. The state
lawsuits were consolidated for discovery purposes and defendants filed a
motion for summary judgment covering all four state lawsuits. In July 1998,
the state court certified a plaintiff class of all persons and entities who
purchased shares of common stock of CompuServe between April 18, 1996 and
July 16, 1996 pursuant to the initial public offering or on the open
market, and who were damaged thereby, excluding the named defendants and
their affiliates. The named plaintiffs in three of the state court cases
were designated class representatives.

On July 24, 2000, the class representatives and the defendants in the class
action pending in state court, by their authorized counsel, entered into a 
Stipulation of Settlement, pursuant to which the defendants will pay a 
gross settlement amount of $9,500 in exchange for dismissal of the class
action suit and a release of all claims. The court preliminarily approved
the settlement in August 2000 and notices to the class were mailed and
published. The fairness hearing relating to the settlement is scheduled for
October 2000. Payment of plaintiffs' attorneys' fees and expenses are to be
paid out of the gross settlement fund. The gross settlement fund will be
paid in its entirety by the Company's insurance carrier. Among other

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things, the settlement is subject to certain contingencies relating to the
number of class members that choose to exclude themselves from the
settlement and the final approval of the settlement by the court. The
Stipulation is not an admission of the validity of any claim or any fact
alleged by the plaintiffs and defendants continue to deny any wrongdoing   
and any liability. The Stipulation states that the defendants consider it
desirable to settle to avoid further expense, inconvenience, and delay,
and put to  rest all controversy concerning all claims.

As a part of the sale of its interest in CompuServe, the Company agreed to 
indemnify WorldCom, Inc. and CompuServe against 80.1% of any losses and
expenses incurred by them with respect to these lawsuits. In the opinion
of management, the ultimate resolution of these suits through the agreed
upon settlement or otherwise will not have a material adverse impact on
the Company's consolidated financial position or results of operations.

7.   Summarized financial information for Block Financial Corporation, an
indirect, wholly owned subsidiary of the Company, is presented below.

July 31,          April 30,
--------          ---------
2000              2000
----              ----
(Unaudited)        (Audited)

Condensed balance sheets:
Cash and cash equivalents                                              $      118,567    $       256,823
Finance receivables, net                                                    2,927,282          3,054,792
Other assets                                                                1,275,153          1,247,710
--------------    ---------------
Total assets                                                      $    4,321,002    $     4,559,325
==============    ===============

Notes payable                                                          $      640,076    $       283,797
Long-term debt                                                                745,763            745,600
Other liabilities                                                           2,707,100          3,304,740
Stockholder's equity                                                          228,063            225,188
--------------    ---------------
Total liabilities and stockholder's equity                        $    4,321,002    $     4,559,325
==============    ===============

Three months ended
------------------  
July 31,
--------
2000              1999
----              ----

Condensed statements of operations:
Revenues                                                               $      212,327    $        80,718
Earnings before income taxes                                                    6,054             11,741
Net earnings                                                                     (964)             6,291

8.   The Company sells short FNMA mortgage-backed securities to certain
broker-dealer counterparties. The position on certain or all of the fixed
rate mortgages is closed, on standard Public Securities Association (PSA)
settlement dates, when the Company enters into a forward commitment to sell
those mortgages or decides to securitize the mortgages. The effectiveness
of the hedge is measured by a historical and probable future high
correlation of changes in the fair value of the hedging instruments with
changes in the value of the hedged item. If correlation ceases to exist,
hedge accounting is terminated and the gains or losses are 

-6-

8
recorded in revenues. Deferred losses on the FNMA securities hedging
instrument amounted to $956 at July 31, 2000. The contract value and the
market value of this hedging instrument at July 31, 2000 were $50,112 and
$50,235, respectively. There were no forward commitments at July 31,
2000.

9.   The Company's comprehensive income is comprised of net earnings (loss),
foreign currency translation adjustments and the change in the net
unrealized gain or loss on available-for-sale marketable securities. The
components of comprehensive income (loss) during the three months ended
July 31, 2000 and 1999 were: 

Three months ended 
------------------ 
July 31, 
-------- 
2000          1999 
----          ---- 

Net loss                                                        $ (51,746) $ (37,074) 
Change in net unrealized gain (loss) on mkt. securities             4,057        577 
Change in foreign currency translation adjustments                 (1,158)    (1,292) 
---------  ---------
Comprehensive income (loss)                                     $ (48,847) $ (37,789) 
=========  =========

10.  Information concerning the Company's operations by reportable operating
segment for the three months ended July 31, 2000 and 1999 is as follows:

Three months ended 
------------------ 
July 31, 
-------- 
2000          1999 
----          ---- 

Revenues: 
U.S. tax operations                                             $ 11,350   $ 13,075 
International tax operations                                       4,899      4,068
Financial services                                               211,267     79,454 
Business services                                                 76,097     24,179
Unallocated corporate                                                497        784 
--------   --------
$304,110   $121,560 
========   ========

Earnings (loss):
U.S. tax operations                                             $(87,870)  $(71,070)
International tax operations                                      (5,923)    (6,521)
Financial services                                                34,940     18,826
Business services                                                 (3,013)      (188)
Unallocated corporate                                             (4,613)    (3,349)
Interest expense on long-term debt                               (27,288)    (4,438)
--------   --------
(93,767)   (66,740)
Investment income, net                                             2,719      2,651
Intercompany interest                                              1,055      4,292
--------   --------
Loss before income tax benefit                                     $(89,993)  $(59,797)
========   ========

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE INFORMATION CONTAINED IN THIS FORM 10-Q AND THE EXHIBITS HERETO MAY CONTAIN
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934. SUCH
STATEMENTS ARE BASED UPON CURRENT INFORMATION, EXPECTATIONS, ESTIMATES AND
PROJECTIONS REGARDING THE COMPANY, THE INDUSTRIES AND MARKETS IN WHICH THE
COMPANY OPERATES, AND MANAGEMENT'S ASSUMPTIONS AND BELIEFS RELATING THERETO.
WORDS SUCH AS "WILL," "PLAN," "EXPECT," "REMAIN," "INTEND," "ESTIMATE,"
"APPROXIMATE," AND VARIATIONS THEREOF AND SIMILAR EXPRESSIONS ARE INTENDED TO
IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THESE STATEMENTS SPEAK ONLY AS OF THE
DATE ON WHICH THEY ARE MADE, ARE NOT GUARANTEES OF FUTURE PERFORMANCE, AND
INVOLVE CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT ARE DIFFICULT TO
PREDICT. THEREFORE, ACTUAL OUTCOMES AND RESULTS COULD MATERIALLY DIFFER FROM
WHAT IS EXPRESSED, IMPLIED OR FORECAST IN SUCH FORWARD-LOOKING STATEMENTS. SUCH
DIFFERENCES COULD BE CAUSED BY A NUMBER OF FACTORS INCLUDING, BUT NOT LIMITED
TO, THE UNCERTAINTY OF LAWS, LEGISLATION, REGULATIONS, SUPERVISION AND LICENSING
BY FEDERAL, STATE AND LOCAL AUTHORITIES AND THEIR IMPACT ON THE LINES OF
BUSINESS IN WHICH THE COMPANY'S SUBSIDIARIES ARE INVOLVED; UNFORESEEN COMPLIANCE
COSTS; CHANGES IN ECONOMIC, POLITICAL OR REGULATORY ENVIRONMENTS; CHANGES IN
COMPETITION AND THE EFFECTS OF SUCH CHANGES; THE INABILITY TO IMPLEMENT THE
COMPANY'S STRATEGIES; CHANGES IN MANAGEMENT AND MANAGEMENT STRATEGIES; THE
COMPANY'S INABILITY TO SUCCESSFULLY DESIGN, CREATE, MODIFY AND OPERATE ITS
COMPUTER SYSTEMS AND NETWORKS; LITIGATION INVOLVING THE COMPANY; THE INABILITY
OF THE COMPANY TO PURCHASE SHARES OF ITS COMMON STOCK PURSUANT TO THE SHARE
REPURCHASE PROGRAM AND RISKS DESCRIBED FROM TIME TO TIME IN REPORTS AND
REGISTRATION STATEMENTS FILED BY THE COMPANY AND ITS SUBSIDIARIES WITH THE
SECURITIES AND EXCHANGE COMMISSION. READERS SHOULD TAKE THESE FACTORS INTO
ACCOUNT IN EVALUATING ANY SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY
UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY OR REVISE ANY FORWARD-LOOKING
STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

FINANCIAL CONDITION

These comments should be read in conjunction with the Consolidated Balance
Sheets and Consolidated Statements of Cash Flows found on pages 1 and 3,
respectively.

Working capital decreased to $29.6 million at July 31, 2000 from $343.1 million
at April 30, 2000. The working capital ratio at July 31, 2000 is 1.01 to 1,
compared to 1.10 to 1 at April 30, 2000. The decrease in working capital and
the working capital ratio is primarily due to the increase in short-term
borrowings, due to the share repurchase program, dividend payments, the
seasonal nature of the Company's U.S. tax operations segment and, to a lesser
extent, the Business services segment. Tax return preparation occurs almost
entirely in the fourth quarter and has the effect of increasing certain assets
and liabilities during this time.

The Company maintains a seasonal line of credit to support short-term borrowing
facilities in Canada. The credit limit of this line fluctuates according to
the amount of short-term borrowings outstanding during the year. 

-8-

10

In the U.S., the Company incurs short-term borrowings throughout the year to
fund receivables associated with its mortgage loan and other financial services
programs, and seasonal working capital needs. These short-term borrowings in
the U.S. are supported by a $1.89 billion back-up credit facility through
November 2000, subject to renewal.

In April 2000, the Company entered into third party off-balance sheet financing
arrangements and whole-loan sale arrangements for Option One Mortgage
Corporation (Option One). The financing, which is not guaranteed by H&R Block,
freed up excess cash and short-term borrowing capacity, while providing
stability in dealing with the secondary market for mortgage loans.  Management
anticipates that the negative earnings per share impact of the off-balance      
sheet financing will be substantially offset by the share repurchases made
during the first quarter of this year.

At July 31, 2000, short-term borrowings increased to $640.1 million from $283.8
million at April 30, 2000. The Company's capital expenditures, dividend
payments, share repurchase program and normal operating activities during the
first three months were funded through both internally-generated funds and
short-term borrowings. For the three months ended July 31, 2000 and 1999,
interest expense was $63.2 million and $11.5 million, respectively. The increase
in interest expense is due to debt incurred to fund the acquisitions of certain
assets of McGladrey & Pullen, LLP in August 1999 and of OLDE in December 1999.

In March 2000, the Company announced its intention to repurchase up to 12
million shares in the open market. At July 31, 2000, 6.9 million shares had been
repurchased under this plan. The Company plans to continue to purchase its
shares on the open market in accordance with this authorization, subject to
various factors including the price of the stock, availability of excess cash,
the ability to maintain financial flexibility, securities laws restrictions and
other investment opportunities available. However, the Company announced on
August 21, 2000 that the Company does not anticipate being as aggressive in its
share repurchase program for the reminder of the fiscal year.

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11

RESULTS OF OPERATIONS

FISCAL 2001 COMPARED TO FISCAL 2000

The analysis that follows should be read in conjunction with the table below and
the Consolidated Statements of Operations found on page 2.

THREE MONTHS ENDED JULY 31, 2000 COMPARED TO
--------------------------------------------
THREE MONTHS ENDED JULY 31, 1999
--------------------------------
(AMOUNTS IN THOUSANDS)

Revenues                          Earnings (loss)
--------------------------------     ------------------------------
2000              1999              2000              1999
----              ----              ----              ----

U.S. tax operations                         $        11,350   $       13,075     $      (87,870)   $     (71,070)

International tax operations                          4,899            4,068             (5,923)          (6,521)

Financial services                                  211,267           79,454             34,940           18,826

Business services                                    76,097           24,179             (3,013)            (188)

Unallocated corporate                                   497              784             (4,613)          (3,349)

Interest expense on acquisition debt                      -                -            (27,288)          (4,438)
---------------   --------------     --------------    -------------

$       304,110   $      121,560            (93,767)         (66,740)
===============   ==============

Investment income, net                                                                    2,719            2,651

Intercompany interest                                                                     1,055            4,292
--------------    -------------

(89,993)         (59,797)

Income tax benefit                                                                      (38,247)         (22,723)
--------------    -------------

Net loss                                                                         $      (51,746)   $     (37,074)
==============    =============

Consolidated revenues for the three months ended July 31, 2000 increased 150.2%
to $304.1 million from $121.6 million reported last year. The increase is
primarily due to revenues from Financial services of $211.3 million, a 165.9%
increase over last year, and Business services, a $51.9 million increase over
the prior year. Both increases are due to the first time inclusion of the
operations of OLDE and RSM McGladrey, Inc. (RSM), respectively, acquired during
fiscal 2000.

The consolidated pretax loss for the first quarter of fiscal 2001 increased to
$90.0 million from $59.8 million in the first quarter of last year. The higher
loss is attributable to increased interest expense on acquisition debt of $22.9
million related to the OLDE and RSM acquisitions, higher acquired intangibles
amortization expense related primarily to the OLDE and RSM acquisitions of $16.7
million and an increase in the U.S. tax operations' pretax loss of $16.8
million. These increased losses were partially offset by Financial services
pretax earnings of $34.9 million, which increased $16.1 million over the first
quarter of last year. 

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12

The Company's performance as measured by earnings before interest (including
interest expense on acquisition debt, investment income and interest allocated
to operating business units), taxes, depreciation and amortization (EBITDA)
improved 56.7% to a negative $19.0 million compared to a negative $43.9 million
in the prior year's first quarter.

The net loss was $51.7 million, or $.55 per share, compared to $37.1 million, or
$.38 per share, for the same period last year. The per share loss this year was
increased by approximately $.03 due to the Company's share repurchase program
that resulted in lower investment income and lower shares outstanding for the
quarter. The effective income tax rate increased from 38% last year to 42.5%
this year as a result of the non-deductible intangible amortization resulting
from the OLDE acquisition, and helped reduce this quarter's net loss.

An analysis of operations by reportable operating segments follows.

U.S. TAX OPERATIONS

Revenues decreased 13.2% to $11.4 million from $13.1 million last year,
resulting primarily from lower tax preparation fees that are attributable to a
decrease in the number of returns prepared.

The pretax loss increased 23.6% to $87.9 million from $71.1 million in the first
quarter of last year due to normal operational increases in rent, depreciation
and amortization and, to a lesser extent, compensation expenses. Contributing to
the increases in rent and depreciation and amortization expenses is an increase
in the amount of tax office space maintained under lease during this year's
off-season. Due to the nature of this segment's business, first quarter
operating results are not indicative of expected results for the entire fiscal
year.

INTERNATIONAL TAX OPERATIONS

Revenues increased 20.4% to $4.9 million compared to $4.1 million in the prior
year's first quarter. The increase is attributable to increases in tax
preparation fees from all areas of International tax operations, including
Canada, United Kingdom and Australia.

The pretax loss decreased 9.2% to $5.9 million from $6.5 million last year. The
decrease is due to improved results over the prior year primarily in Canada and
the United Kingdom related to increased revenues while expenses remained
consistent with last year. Due to the nature of this segment's business, first
quarter operating results are not indicative of expected results for the entire
fiscal year.

FINANCIAL SERVICES

Revenues increased 165.9% to $211.3 million from $79.5 million in the same
period last year. The increase is primarily attributable to the first time
inclusion of OLDE, which was acquired December 1, 1999 and contributed revenues
of $128.3 million for the quarter. For the three months ended July 31, 2000,
OLDE's average commission per trade was $63.31 with customer daily average
trades of 10,262. Option One Mortgage Corporation (Option One), which includes
H&R Block Mortgage Corporation, also contributed $75.0 million in revenues for
the quarter, compared to $68.6 million last year. Option One originated and sold
or securitized $1.4 billion 

-11-

13

during the first quarter of fiscal 2001 and $1.4 and $1.3 billion, respectively,
during the prior year.

Financial services' pretax earnings increased 85.6% to $34.9 million compared to
$18.8 million during the first quarter of fiscal 2000. The increase is primarily
due to OLDE, the parent company of H&R Block Financial Advisors (formally, OLDE
Discount Corporation), which contributed earnings of $13.9 million. While
revenues of Option One and the Company's other mortgage operations increased
5.9%, pretax earnings were only slightly improved over the prior year due
primarily to higher compensation and benefits expense which is attributable to
an increase in staffing levels.

BUSINESS SERVICES

Revenues increased 214.7% to $76.1 million from $24.2 million in the first
quarter of last year. The pretax loss increased to $3.0 million from $188
thousand last year, which includes goodwill amortization of $7.0 million and
$1.8 million, respectively. The increase in revenues and pretax loss are
primarily due to the inclusion of RSM which was acquired August 2, 1999. Due to
the nature of this segment's business, revenues are seasonal, while expenses are
relatively fixed throughout the year. Results for the first quarter are not
indicative of the expected results for the entire year.

INVESTMENT INCOME, NET

Net investment income of $2.7 million was consistent with the prior year.

UNALLOCATED CORPORATE AND ADMINISTRATIVE

The unallocated corporate and administrative pretax loss for the first quarter
increased 37.7% to $4.6 million from $3.3 million in the comparable period last
year. The increase is due to higher employee costs and consulting expenses.

-12-

14

PART II - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

a)      Exhibits

10.1*    Amendment to Employment Agreement, dated June 30, 2000,
between HRB Management, Inc. and Mark A. Ernst

(27)     Financial Data Schedule

b)      Reports on Form 8-K

The registrant did not file any reports on Form 8-K during the first quarter of
fiscal 2001.

-------------
* Previously filed.

-13-

15

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Amendment Number 1 to the Quarterly Report on
Form 10-Q to be signed on its behalf by the undersigned thereunto duly 
authorized.

H&R BLOCK, INC.
------------------------------------
(Registrant)

DATE   12/15/00                         BY      /s/ Frank J. Cotroneo
-------------                         ------------------------------------
Frank J. Cotroneo
Senior Vice President and
Chief Financial Officer

DATE   12/15/00                         BY     /s/ Cheryl L. Givens
-------------                         ------------------------------------
Cheryl L. Givens
Vice President and Corporate Controller

-14-

<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND THE CONSOLIDATED STATEMENTS OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                          APR-30-2001
<PERIOD-END>                               JUL-31-2000
<CASH>                                         219,718
<SECURITIES>                                    64,436
<RECEIVABLES>                                3,127,273
<ALLOWANCES>                                    46,291
<INVENTORY>                                          0
<CURRENT-ASSETS>                             3,511,665
<PP                                         253,109<F1>
<DEPRECIATION>                                       0
<TOTAL-ASSETS>                               5,375,701
<CURRENT-LIABILITIES>                        3,482,062
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                         1,089
<OTHER-SE>                                     930,959
<TOTAL-LIABILITY-AND-EQUITY>                 5,375,701
<SALES>                                              0
<TOTAL-REVENUES>                               304,110
<CGS>                                                0
<TOTAL-COSTS>                                  396,804
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                               (89,993)
<INCOME-TAX>                                  (38,247)
<INCOME-CONTINUING>                           (51,746)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                  (51,746)
<EPS-BASIC>                                      (.55)
<EPS-DILUTED>                                    (.55)
<FN>
<F1>PP&E BALANCE IS NET OF ACCUMULATED DEPRECIATION AND AMORTIZATION.
</FN>