Six-month segment revenues were $407.7 million, down 5.6 percent from $431.9 million a year ago. Pretax income for the first six months of fiscal 2009 rose 29.5 percent to $12.8 million compared with income of $9.9 million in the prior-year period.

Consumer Financial Services, now comprised only of H&R Block Bank, reported a fiscal second quarter pretax off-season loss of $18.6 million compared to a pretax loss of $4.4 million in the second quarter a year ago. Higher losses were driven by a $13.3 million increase in current-quarter loan loss reserves as compared with the prior-year period, primarily reflecting ongoing declines in housing values.

For the first six months of fiscal 2009, Bank revenues declined 29 percent to $35.8 million compared with $50.3 million in the prior-year period. The pretax offseason loss of $32.7 million compares with pretax income of $0.4 million a year ago. The increase is primarily due to a $32 million increase in loan losses and reserves.

The Company is reaffirming its fiscal 2009 earnings guidance of $1.60 to $1.70 per share from continuing operations. It is important to note that the Company is only halfway through its fiscal year and it generates nearly all of its earnings in its fiscal fourth quarter. The Company looks forward to sharing more information regarding the tax season as well as longer term plans for accelerated business growth at its Investment Community Conference on Jan. 13.

At 5:00 p.m. EST today, the Company will host a conference call for analysts, institutional investors and shareholders. Richard Breeden, chairman of the board, Russ Smyth, president, Becky Shulman, chief financial officer, and Tim Gokey, president of retail tax services will discuss quarterly results and future expectations, as well as respond to analysts' questions. To access the call, please dial the number below approximately five to 10 minutes prior to the scheduled starting time:

The call also will be webcast in a listen-only format for the media and public. The link to the webcast and a supporting slide presentation can be accessed directly at http://investor-relations.hrblock.com.

A replay of the call will be available beginning at 7:00 p.m. EST December 8, 2008, and continuing until December 22, 2008, by dialing (800) 642-1687 (U.S./Canada) or (706) 645-9291 (international). The conference id is 75298862. The webcast will be available

for replay on the Company's Investor Relations Web site at http://investor-relations.hrblock.com

Forward Looking Statements

This announcement may contain forward-looking statements, which are any statements that are not historical facts. These forward-looking statements, as well as the Company’s guidance, are based upon the Company’s current expectations and there can be no assurance that such expectations will prove to be correct. Because forward-looking statements involve risks and uncertainties and speak only as of the date on which they are made, the Company’s actual results could differ materially from these statements. These risks and uncertainties relate to, among other things, uncertainties and potential contingent liabilities arising from our former mortgage loan origination and servicing business; uncertainties in the residential mortgage market and its impact on loan loss provisions; uncertainties pertaining to the commercial debt market; competitive factors; the Company’s effective income tax rate; litigation; and changes in market, economic, political or regulatory conditions. Information concerning these risks and uncertainties is contained in Item 1A of the Company’s 2008 annual report on Form 10-K and in other filings by the Company with the Securities and Exchange Commission.

About H&R Block

H&R Block Inc. (NYSE: HRB) is the world’s preeminent tax services provider, having served more than 400 million clients since 1955 and generating annual revenues of $4.1 billion in fiscal year 2008. H&R Block provides income tax return preparation and related services and products via a nationwide network of approximately 13,000 Company-owned and franchised offices and through TaxCut® online and software solutions. The Company also provides business services through RSM McGladrey. For more information visit our Online Press Center at www.hrblock.com.

# # #

KEY OPERATING RESULTS

Unaudited, amounts in thousands, except per share data

	Three months ended October 31,
	Revenues				Income (loss)
	2008		2007		2008		2007
Tax Services	$	99,104	$	90,804	($184,565	)	($199,149	)
Business Services		233,045		239,048	13,081		11,781
Consumer Financial Services		16,835		23,122	(18,629	)	(4,409	)
Corporate and Eliminations		2,485		3,718	(37,340	)	(30,046	)
	$	351,469	$	356,692	(227,453	)	(221,823	)
Income tax benefit					(94,292	)	(86,890	)
Net loss from continuing operations					(133,161	)	(134,933	)
Net loss from discontinued operations					(2,713	)	(367,338	)
Net loss					($135,874	)	($502,271	)

Basic and diluted loss per share:
Net loss from continuing operations					($0.40	)	($0.42	)
Net loss from discontinued operations					(0.01	)	(1.13	)
Net loss					($0.41	)	($1.55	)

Basic and diluted shares outstanding					329,810		324,694

	Six months ended October 31,
	Revenues				Income (loss)
	2008		2007		2008		2007
Tax Services	$	174,369	$	160,667	($348,488	)	($371,438	)
Business Services		407,696		431,871	12,786		9,875
Consumer Financial Services		35,785		50,303	(32,746	)	433
Corporate and Eliminations		5,528		7,869	(71,975	)	(48,192	)
	$	623,378	$	650,710	(440,423	)	(409,322	)
Income tax benefit					(178,839	)	(162,219	)
Net loss from continuing operations					(261,584	)	(247,103	)
Net loss from discontinued operations					(7,009	)	(557,748	)
Net loss					($268,593	)	($804,851	)

Basic and diluted loss per share:
Net loss from continuing operations					($0.80	)	($0.76	)
Net loss from discontinued operations					(0.02	)	(1.72	)
Net loss					($0.82	)	($2.48	)

Basic and diluted shares outstanding					328,475		324,279

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

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

On August 12, 2008, we announced the signing of a definitive agreement to sell H&R Block Financial Advisors, Inc. (HRBFA) to Ameriprise Financial, Inc. (Ameriprise). Effective November 1, 2008, we sold HRB Financial Corporation, including our securities brokerage business formerly conducted through HRBFA, to Ameriprise. We received cash proceeds of approximately $312 million, plus repayment of net intercompany liabilities of approximately $46 million, subject to post-closing adjustments. We expect to record a gain of less than $10 million as a result of this transaction, which will be reported in our results for the quarter ending January 31, 2009. At October 31, 2008, we met the criteria requiring us to present the results of operations of HRBFA and its direct corporate parent as discontinued operations, and the related assets and liabilities as held for sale in the condensed consolidated financial statements. All periods presented have been reclassified to reflect our discontinued operations.

Discontinued operations also include mortgage businesses historically engaged in the origination of non-prime and prime mortgage loans, the sale and securitization of mortgage loans and residual interests, and the servicing of non-prime loans. During fiscal year 2008, we terminated all origination activities and sold the loan servicing operations. Also included in the prior year are the results of three smaller lines of business previously reported in our Business Services segment.

CONDENSED CONSOLIDATED BALANCE SHEETS

Amounts in thousands, except share data

	October 31,			April 30,
	2008			2008
ASSETS
Current assets:
Cash and cash equivalents	$	693,626		$	664,897
Cash and cash equivalents - restricted		814			7,031
Receivables, net		537,751			534,229
Prepaid expenses and other current assets		387,675			420,738
Assets of discontinued operations, held for sale		1,039,683			987,592
Total current assets		2,659,549			2,614,487

Mortgage loans held for investment, net		811,732			966,301
Property and equipment, net		377,687			363,664
Intangible assets, net		136,542			147,368
Goodwill, net		832,294			831,314
Other assets		606,943			700,291
Total assets	$	5,424,747		$	5,623,425

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Customer banking deposits	$	748,469		$	785,624
Accounts payable, accrued expenses and other current liabilities		636,050			739,887
Accrued salaries, wages and payroll taxes		100,027			365,712
Accrued income taxes		100,857			439,380
Current portion of long-term debt		6,257			7,286
Federal Home Loan Bank borrowings		104,000			129,000
Liabilities of discontinued operations, held for sale		745,419			644,446
Total current liabilities		2,441,079			3,111,335

Long-term debt		1,727,510			1,031,784
Other noncurrent liabilities		423,496			492,488
Total liabilities		4,592,085			4,635,607

Stockholders’ equity:
Common stock, no par, stated value $.01 per share		4,442			4,359
Additional paid-in capital		837,912			695,959
Accumulated other comprehensive income (loss)		(11,236	)		2,486
Retained earnings		2,019,301			2,384,449
Less treasury shares, at cost		(2,017,757	)		(2,099,435	)
Total stockholders’ equity		832,662			987,818
Total liabilities and stockholders’ equity	$	5,424,747		$	5,623,425

CONDENSED CONSOLIDATED INCOME STATEMENTS

Unaudited, amounts in thousands, except per share data

	Three months ended October 31,						Six months ended October 31,
	2008			2007			2008			2007
Revenues:
Service revenues	$	316,337		$	305,401		$	557,057		$	557,674
Other revenues:
Interest income		17,047			26,745			34,894			54,248
Product and other revenues		18,085			24,546			31,427			38,788
		351,469			356,692			623,378			650,710

Operating expenses:
Cost of services		376,153			379,863			699,908			712,073
Cost of other revenues		62,612			57,229			105,177			98,695
Selling, general and administrative		138,036			151,278			255,240			267,083
		576,801			588,370			1,060,325			1,077,851

Operating loss		(225,332	)		(231,678	)		(436,947	)		(427,141	)
Other income (expense), net		(2,121	)		9,855			(3,476	)		17,819

Loss from continuing operations before tax benefit		(227,453	)		(221,823	)		(440,423	)		(409,322	)
Income tax benefit		(94,292	)		(86,890	)		(178,839	)		(162,219	)

Net loss from continuing operations		(133,161	)		(134,933	)		(261,584	)		(247,103	)
Net loss of discontinued operations		(2,713	)		(367,338	)		(7,009	)		(557,748	)

Net loss		($135,874	)		($502,271	)		($268,593	)		($804,851	)

Basic and diluted loss per share:
Net loss from continuing operations		($0.40	)		($0.42	)		($0.80	)		($0.76	)
Net loss from discontinued operations		(0.01	)		(1.13	)		(0.02	)		(1.72	)
Net loss		($0.41	)		($1.55	)		($0.82	)		($2.48	)

Basic and diluted shares outstanding		329,810			324,694			328,475			324,279

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited, amounts in thousands

	Six months ended October 31,
	2008		2007
Cash flows from operating activities:
Net loss	($268,593	)	($804,851	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization	59,314		54,229
Stock-based compensation expense	13,505		15,500
Changes in assets and liabilities of discontinued operations	94,624		294,685
Other changes in working capital, net of acquisitions	(564,781	)	(498,981	)
Net cash used in operating activities	(665,931	)	(939,418	)

Cash flows from investing activities:
Mortgage loans originated or purchased for investment, net	54,501		76,889
Purchases of property and equipment	(58,586	)	(46,200	)
Payments made for business acquisitions, net of cash acquired	(4,709	)	(21,037	)
Investing cash flows provided by (used in) discontinued operations	(48,917	)	8,214
Other, net	8,910		4,865
Net cash provided by (used in) investing activities	(48,801	)	22,731

Cash flows from financing activities:
Repayments of commercial paper	-		(5,125,279	)
Proceeds from issuance of commercial paper	-		4,133,197
Repayments of lines of credit borrowings	(100,000	)	(1,005,000	)
Proceeds from lines of credit borrowings	768,625		2,555,000
Customer banking deposits	(40,595	)	(243,030	)
Dividends paid	(96,555	)	(90,495	)
Purchase of treasury shares	(4,467	)	(5,672	)
Proceeds from exercise of stock options	61,699		13,434
Proceeds from issuance of common stock, net	141,558		-
Financing cash flows provided by discontinued operations	4,783		191,546
Other, net	8,413		(39,230	)
Net cash provided by financing activities	743,461		384,471

Net increase (decrease) in cash and cash equivalents	28,729		(532,216	)
Cash and cash equivalents at beginning of the period	664,897		816,917
Cash and cash equivalents at end of the period	$693,626		$284,701

Supplementary cash flow data:
Income taxes paid (net of income tax refunds received)	$99,910		($52,360	)
Interest paid on borrowings	38,713		73,998
Interest paid on deposits	10,441		28,039