Full Year Earnings from Continuing Operations Increase 21 Percent to $1.39 per Share

Fiscal Fourth Quarter Earnings from Continuing Operations Increase 17 Percent to $2.11 per Share

Full Year and Fourth Quarter Loss from Discontinued Operations of $2.33 and $0.45 per Share, Respectively, an Improvement from $2.48 and $2.07 per Share in Prior Year

Full Year Consolidated Net Loss of $0.94 per Share Compared with Net Loss of $1.33 per Share in Prior Year

FY09 Earnings from Continuing Operations Expected to be $1.60 to $1.70 per Share

Dividend Increased by $0.03 per Share on an Annualized Basis

H&R Block Inc. (NYSE:HRB) today reported that fiscal 2008 earnings from continuing operations grew 21 percent to $454.5 million, or $1.39 per share, compared to $374.3 million, or $1.15 per share for the prior year. Full year revenues rose 10 percent to $4.4 billion, primarily reflecting growth in Tax Services. For its fiscal fourth quarter ended April 30, 2008, earnings from continuing operations were $691.1 million, or $2.11 per share, up 17 percent compared with $591.2 million, or $1.81 per share, in the prior-year period. Fourth quarter revenues increased 11 percent to $2.6 billion.

“During fiscal 2008, H&R Block served the tax needs of 23.5 million clients, the highest level in our history. Full year earnings per share from continuing operations exceeded our expectations, and reflect the best tax season for H&R Block since 1999,” said Richard C. Breeden, Chairman of the Board of H&R Block.

“These results also reflect significantly improved margins at our RSM McGladrey unit, one of the nation’s largest providers of tax and other professional services to small and medium sized businesses. We enter FY09 focused on opportunities to improve upon performance in each of our businesses.”

For fiscal 2008, net loss from discontinued operations was $763.1 million, or $2.33 per share, compared to a prior-period net loss of $808.0 million, or $2.48 per share. During the fourth quarter, the net loss from discontinued operations was $147.6 million, or $0.45 per share, compared with a loss of $676.8 million, or $2.07 per share in the prior year. The losses reflect provisions for loan repurchase obligations, impairments of residual interests and expenses related to the Company’s exit from its subprime mortgage business. The Company previously announced the cessation of Option One’s loan origination activities in December 2007, and it sold its mortgage servicing business effective April 30, 2008.

Consolidated net loss for the 12 months ended April 30, 2008 was $308.6 million, or $0.94 per share, compared with a net loss of $433.7 million, or $1.33 per share, for full year fiscal 2007. For the fiscal 2008 fourth quarter, consolidated net earnings were $543.6 million, or $1.66 per share, compared to a consolidated net loss of $85.6 million, or $0.26 per share in the fourth quarter of fiscal 2007.

Outlook

The Company expects fiscal 2009 earnings from continuing operations to be in the range of $1.60 to $1.70 per share. During fiscal 2009, the Company anticipates increasing marketing expenditures and making other investments to continue driving market share growth in core retail tax services, and to enhance market share in online and other digital tax solutions. The Company also has embarked on a program to refresh and upgrade the technology available in retail tax offices.

At the same time, the Company anticipates further steps to enhance margins in its field operations that it believes will yield considerable cost savings or margin improvements over the next three years. This program will include savings in occupancy expense through conversion of some locations from Company-operated full service locations to franchisee-operated Express Tax locations, improved controls on discounting, enhanced managerial efficiency and other steps to enhance margins without impairing customer growth patterns. The Company also anticipates continuing margin growth at its McGladrey unit, with pretax margins increasing to more than 12 percent in FY09. Margin expansion opportunities also exist with both H&R Block Bank and HRBFA.

“We are prudently managing all our businesses for better performance and improved margins,” said Alan Bennett, Interim Chief Executive Officer. “While we are not providing earnings guidance beyond fiscal 2009, we are confident that for the three-year horizon through fiscal 2011, we can realize significant gains in earnings per share through unit growth, greater efficiency in our tax and other operations, and capital deployment, rather than relying solely on annual price increases for growth,” added Bennett.

Dividends

H&R Block’s Board of Directors has voted to increase the annual cash dividend by three cents per share to 60 cents per share, resulting in a quarterly dividend of 15 cents per share beginning with the dividend payable Oct. 1, 2008. This will represent the 11th consecutive year of dividend increases by the Company. The increase of three cents per share in dividends will result in an additional cash payout to shareowners of approximately $10 million per year.

Share Repurchases

The Company’s Board of Directors has reviewed the Company’s record and outlook for financial results and financial condition. The Company had net debt as of April 30, 2008, of $441.2 million, a reduction of $750.5 million or 63 percent since April 30, 2007. However, losses suffered by the Company during the last two years from its discontinued subprime mortgage operations also reduced stockholders’ equity below historic levels. After considering all relevant factors, the board voted to authorize $2 billion of share repurchases during the four-year period FY09 – FY12, although the Company expects to be particularly disciplined in FY09 as it rebuilds its balance sheet. Initial purchases are not anticipated prior to the fourth quarter of fiscal 2009.

The new authorization replaces and increases the prior remaining repurchase authorizations of 22 million shares. This is an authorization only, and there can be no assurance as to the actual volume of share repurchases in any given year, if any, which will depend on results of operations, financial condition and market conditions at any given time.

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 $4.4 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 and certain consumer financial services.

For more information visit, http://investor-relations.hrblock.com/.