KANSAS CITY, Mo. – H&R Block, Inc. (NYSE: HRB) today reported a net loss from continuing operations for the fiscal first quarter ended July 31, 2009, of $130.6 million, or 39 cents per share compared to a loss of $128.4 million, or 39 cents per share in the first quarter a year ago. Improved pre-season results from Business Services and lower corporate expenses were partially offset by an expected larger loss in Tax Services. The increase in Tax Services expense reflects the anticipated inclusion of additional expense attributable to tax offices acquired as part of last year’s acquisition of the Company’s major Southwest franchise operation, severance costs and the timing of some planned expenses as part of the Company’s preparation for tax season 2010.

“First quarter results were in-line with our expectations and reflected our continuing success in driving out non-value added costs while making the necessary investments to ensure our success in fiscal 2010 and beyond,” said Russ Smyth, president and chief executive officer of H&R Block. “We are focused on efforts to enhance our field-level performance and marketing effectiveness to improve client attraction, retention and satisfaction,” added Smyth.

Fiscal first quarter revenues from continuing operations grew 1.3% over the prior-year period to $275.5 million. Results from discontinued operations improved to a net loss of $3.0 million compared to a net loss of $4.3 million in the first quarter a year ago. Consolidated net loss for the quarter was $133.6 million, or 40 cents per share, essentially flat compared to a loss of $132.7 million, or 41 cents per share a year ago.

The Company changed its segment reporting effective May 1, 2009. Net interest margin and other gains / losses associated with H&R Block Bank’s mortgage portfolio and related assets are now reported in corporate operations. The

remainder of the Bank’s operations is reported in the Tax Services segment. The Bank, through its Emerald suite of products provided to tax clients, primarily supports H&R Block’s tax network in growing its business. In making these changes, the Company eliminated its previous reporting of a Consumer Financial Services segment.

First quarter Tax Services revenues rose 7.7% year-over-year to $88.0 million. Tax preparation fees increased $4.2 million, or 14.2%, primarily due to favorable results in the Company’s Australian tax operations.

The segment reported a pretax loss of $172.0 million compared to $163.7 million a year ago. This primarily reflects a net impact of $7.4 million due to the Southwest franchise acquisition that occurred in the fiscal third quarter of last year, $3.5 million of severance expense, and $2.9 million of incremental expenses for information technology projects to prepare for the upcoming tax season. Expense increases were partially offset by savings achieved through closing underperforming retail office locations and renegotiating leases.

The Company continues to expect that the Tax Services segment will deliver improved margins totaling 100 basis points over the next two fiscal years.

First quarter segment revenues rose 1.7% year-over-year to $177.6 million. Core revenues, primarily tax and consulting, increased $8.3 million, or 5.8%, over the prior-year period. Those gains were partially offset by a decline in capital markets revenues.

The segment’s fiscal first quarter pretax income was $1.3 million compared to a pretax loss of $0.3 million a year ago, reflecting revenue growth and continued cost reduction efforts.

Corporate operations reported a pretax loss of $40.2 million for the first quarter ended July 31, 2009, compared to a loss of $49.0 million in the prior year. The improvement was due to prior-year impairments of residual interests in mortgage loan securitizations and other real estate owned totaling $9.1 million that did not recur. The total allowance for loan loss reserves was $91.7 million at July 31, 2009, compared to $84.1 million at fiscal 2009 year-end.

The Company continues to expect its fiscal 2010 earnings from continuing operations will be in the range of $1.60 to $1.80 per share.

At 8:30 a.m. Eastern time today, the Company will conduct a conference call for analysts and investors. 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 webcast link is http://investor-relations.hrblock.com. A replay of the call will be available beginning at 10:00 a.m. Eastern time Sept. 4, 2009, and continuing until Sept. 18, 2009, by dialing (800) 642-1687 (U.S./Canada) or (706) 645-9291 (international). The replay passcode is 27388973. The webcast will be available for replay at http://investor-relations.hrblock.com.

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 regarding the Company’s ability to attract and retain clients; meet its prepared returns targets; 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; uncertainties regarding the level of share repurchases; and changes in market, economic, political or regulatory conditions. Information concerning these risks and uncertainties is contained in Item 1A of the Company’s 2009 annual report on Form 10-K and in other filings by the Company with the Securities and Exchange Commission.

H&R Block Inc. (NYSE: HRB) is the world’s preeminent tax services provider, having prepared more than 500 million tax returns since 1955. In fiscal 2009, H&R Block had annual revenues of $4.1 billion and prepared more than 24 million tax returns worldwide, utilizing more than 120,000 highly trained tax professionals. The Company provides tax return preparation services in person, online through H&R Block Online, through its TaxCut® software and through other channels. The Company is also one of the leading providers of business services through RSM McGladrey. For more information visit our Online Press Center at www.hrblock.com.

	Three Months Ended July 31,
	Revenues				Income (loss)
	2009		2008		2009		2008
Tax Services	$	87,963	$	81,700	($171,974	)	($163,657	)
Business Services		177,618		174,651	1,321		(295	)
Corporate and Eliminations		9,924		15,558	(40,220	)	(49,018	)
	$	275,505	$	271,909	(210,873	)	(212,970	)
Income tax benefit					(80,256	)	(84,547	)
Net loss from continuing operations					(130,617	)	(128,423	)
Net loss from discontinued operations					(3,017	)	(4,296	)
Net loss					($133,634	)	($132,719	)

Basic and diluted earnings (loss) per share:
Net loss from continuing operations					($0.39	)	($0.39	)
Net loss from discontinued operations					(0.01	)	(0.02	)
Net loss					($0.40	)	($0.41	)

Basic and diluted shares outstanding					334,533		327,141

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.

Certain reclassifications have been made to prior year amounts to conform to the current year presentation. Effective May 1, 2009, we realigned certain segments of our business to reflect a new management reporting structure. The operations of H&R Block Bank, which were previously reported as the Consumer Financial Services segment, have now been reclassified, with activities that support our retail tax network included in the Tax Services segment, and income and expenses of our static portfolio of mortgage loans held for investment and related assets included in Corporate. These reclassifications had no effect on our total operating expenses, results of operations or stockholders’ equity as previously reported.

	July 31,			April 30,
	2009			2009
ASSETS
Current assets:
Cash and cash equivalents	$	1,006,303		$	1,654,663
Cash and cash equivalents - restricted		46,639			51,656
Receivables, net		379,177			512,814
Prepaid expenses and other current assets		396,027			351,947
Total current assets		1,828,146			2,571,080

Mortgage loans held for investment, net		707,712			744,899
Property and equipment, net		359,408			368,289
Intangible assets, net		379,622			385,998
Goodwill		852,018			850,230
Other assets		418,856			439,226
Total assets	$	4,545,762		$	5,359,722

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Customer banking deposits	$	712,008		$	854,888
Accounts payable, accrued expenses and other current liabilities		648,470			705,945
Accrued salaries, wages and payroll taxes		101,410			259,698
Accrued income taxes		330,145			543,967
Current portion of long-term debt		6,093			8,782
Federal Home Loan Bank borrowings		25,000			25,000
Total current liabilities		1,823,126			2,398,280

Long-term debt		1,032,395			1,032,122
Federal Home Loan Bank borrowings		75,000			75,000
Other noncurrent liabilities		424,527			448,461
Total liabilities		3,355,048			3,953,863

Stockholders’ equity:
Common stock, no par, stated value $.01 per share		4,442			4,442
Additional paid-in capital		824,212			836,477
Accumulated other comprehensive income (loss)		(2,849	)		(11,639	)
Retained earnings		2,437,017			2,671,437
Less treasury shares, at cost		(2,072,108	)		(2,094,858	)
Total stockholders’ equity		1,190,714			1,405,859
Total liabilities and stockholders’ equity	$	4,545,762		$	5,359,722

	Three Months Ended July 31,
	2009			2008
Revenues:
Service revenues	$	247,985		$	240,720
Interest income		12,287			17,847
Product and other revenues		15,233			13,342
		275,505			271,909
Operating expenses:
Cost of revenues		386,450			360,138
Selling, general and administrative		103,217			123,386
		489,667			483,524

Operating loss		(214,162	)		(211,615	)
Other income (expense), net		3,289			(1,355	)

Loss from continuing operations before tax benefit		(210,873	)		(212,970	)
Income tax benefit		(80,256	)		(84,547	)

Net loss from continuing operations		(130,617	)		(128,423	)
Net loss from discontinued operations		(3,017	)		(4,296	)

Net loss		($133,634	)		($132,719	)

Basic and diluted earnings (loss) per share:
Net loss from continuing operations		($0.39	)		($0.39	)
Net loss from discontinued operations		(0.01	)		(0.02	)
Net loss		($0.40	)		($0.41	)

Basic and diluted shares outstanding		334,533			327,141

	Three Months Ended July 31,
	2009		2008

Net cash used in operating activities	($454,577	)	($364,923	)

Cash flows from investing activities:
Principal payments on mortgage loans held for investment, net	19,264		31,619
Purchases of property and equipment	(8,760	)	(14,648	)
Other, net	4,856		(901	)
Net cash provided by investing activities	15,360		16,070

Cash flows from financing activities:
Repayments of Federal Home Loan Bank borrowings	—		(40,000	)
Proceeds from Federal Home Loan Bank borrowings	—		15,000
Customer banking deposits	(143,199	)	(8,795	)
Dividends paid	(50,287	)	(46,790	)
Acquisition of treasury shares	(3,483	)	(4,116	)
Proceeds from issuance of common stock, net	6,651		28,507
Other, net	(25,888	)	(14,387	)
Net cash used in financing activities	(216,206	)	(70,581	)

Effects of exchange rates on cash	7,063		—

Net decrease in cash and cash equivalents	(648,360	)	(419,434	)
Cash and cash equivalents at beginning of the period	1,654,663		664,897
Cash and cash equivalents at end of the period	$1,006,303		$245,463

Supplementary cash flow data:
Income taxes paid	$155,804		$83,111
Interest paid on borrowings	26,168		27,258
Interest paid on deposits	1,318		4,048
Transfers of loans to foreclosed assets	3,797		53,469