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<SEC-DOCUMENT>0000950137-05-010246.txt : 20050815
<SEC-HEADER>0000950137-05-010246.hdr.sgml : 20050815
<ACCEPTANCE-DATETIME>20050815113137
ACCESSION NUMBER:		0000950137-05-010246
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20050907
FILED AS OF DATE:		20050815
DATE AS OF CHANGE:		20050815
EFFECTIVENESS DATE:		20050815

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			H&R BLOCK INC
		CENTRAL INDEX KEY:			0000012659
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-PERSONAL SERVICES [7200]
		IRS NUMBER:				440607856
		STATE OF INCORPORATION:			MO
		FISCAL YEAR END:			0430

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-06089
		FILM NUMBER:		051024273

	BUSINESS ADDRESS:	
		STREET 1:		4400 MAIN ST
		CITY:			KANSAS CITY
		STATE:			MO
		ZIP:			64111
		BUSINESS PHONE:		8167536900

	MAIL ADDRESS:	
		STREET 1:		4410 MAIN STREET
		CITY:			KANSAS CITY
		STATE:			MO
		ZIP:			64111
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>c96814ddef14a.htm
<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>def14a</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="70%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="13%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="15%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="3" nowrap align="center"><FONT size="2">OMB APPROVAL</FONT></TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="3" nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
OMB Number:
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="top"><FONT size="2">3235-0059</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Expires:
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>

<TD nowrap align="right" valign="top"><FONT size="2">January&nbsp;31, 2008</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="2" nowrap align="left" valign="top"><FONT size="2">Estimated average burden<br>hours per

response</FONT></TD>

        <TD align="right" valign="bottom"><FONT size="2">14.</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><font size="2"><B>UNITED STATES<BR>SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549</B>
</font>

<P align="center"><FONT size="2"><B>SCHEDULE 14A</B>
</FONT>


<P align="center"><FONT size="2">Proxy Statement Pursuant to Section 14(a) of the Securities<BR>
Exchange Act of 1934 (Amendment No.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;)
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>



<!-- TO GET A CHECK BOX, USE &#254 -->

<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">Filed by the Registrant
&nbsp;&nbsp;<FONT face="wingdings">&#120;</FONT></FONT></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">Filed by a Party other than the Registrant &nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT></FONT></TD>
</TR>
<TR><TD>&nbsp;</TD></TR>



<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">Check the appropriate box:</FONT></TD>
</TR>
</TABLE>
<p>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>

<TD><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Preliminary Proxy Statement</FONT></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>

<TD><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;
<B>Confidential, for Use of the Commission Only (as permitted by
Rule&nbsp;14a-6(e)(2))</B></FONT></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>

<TD><FONT size="2"><FONT face="wingdings">&#120;</FONT>&nbsp;&nbsp; Definitive Proxy Statement</FONT></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Definitive Additional Materials</FONT></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>

<TD><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;
Soliciting Material Pursuant to &#167;240.14a-12</FONT></TD>
</TR>
</TABLE>
<P>

<DIV align="center"><FONT size="5">H&#38;R BLOCK, INC.<HR size="1"></FONT>
<DIV align="center"><FONT size="2">(Name of Registrant as Specified In Its Charter)
</FONT></DIV></DIV>



<DIV>&nbsp;<HR size="1">
<DIV align="center"><FONT size="2">(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
</FONT></DIV></DIV>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of Filing Fee (Check the appropriate box):
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>

<TD><FONT size="2"><FONT face="wingdings">&#120;</FONT>&nbsp;&nbsp; No fee required.</FONT></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>

<TD><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;
Fee computed on table below per Exchange Act Rules&nbsp;14a-6(i)(1)
and 0-11.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1)&nbsp;Title of each class of securities to which transaction applies:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2)&nbsp;Aggregate number of securities to which transaction applies:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3)&nbsp;Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule&nbsp;0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4)&nbsp;Proposed maximum aggregate value of transaction:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5)&nbsp;Total fee paid:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Fee paid previously with preliminary materials.</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Check box if any part of the fee is offset as provided by Exchange Act
Rule&nbsp;0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1)&nbsp;Amount Previously Paid:</FONT></TD>
</TR>
</TABLE>
<HR size="1">


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2)&nbsp;Form, Schedule or Registration Statement No.:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3)&nbsp;Filing Party:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4)&nbsp;Date Filed:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<p>
<center>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="20%"></TD>
        <TD width="80%"></TD>
</TR>
<TR valign="top">
        <TD valign="bottom"><font size="2">SEC 1913 (11-01)</font></TD>
        <TD><font size="2"><b>Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number.</b></font></TD>
</TR>
</TABLE>
</center>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<IMG src="c96814dc9681477.gif" alt="(H&#38;R BLOCK LOGO)">
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <B><FONT size="2"> 4400 Main Street</FONT></B></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <B><FONT size="2">Kansas City, Missouri 64111</FONT></B></TD>
</TR>

</TABLE>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="center">
<B><FONT size="2">NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS</FONT></B>

<DIV align="center">
<B><FONT size="2">TO BE HELD SEPTEMBER 7, 2005</FONT></B>
</DIV>

<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<FONT size="2">The annual meeting of shareholders of H&#38;R
Block, Inc., a Missouri corporation (the &#147;Company&#148;),
will be held in the H&#38;R Block City Stage Theater at Union
Station located at 30 West Pershing (corner of Pershing and Main
Street), Kansas City, Missouri, on Wednesday, September&nbsp;7,
2005 at 9:00 a.m., Kansas City time (CDT). Shareholders
attending the meeting are asked to park in The Yards Parking Lot
located on the west side of Union Station. The meeting will be
held for the following purposes:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="3%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">1.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The election of four Class&nbsp;I directors
    (nominees are Thomas M. Bloch, Mark A. Ernst, David Baker Lewis
    and Tom D. Seip) to serve until the 2008 annual meeting and
    until their successors are elected and qualified (See page 3);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">2.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The approval of the H&#38;R Block Executive
    Performance Plan, as amended (See page 10);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">3.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The ratification of the appointment of KPMG LLP
    as the Company&#146;s independent accountants for the fiscal
    year ending April&nbsp;30, 2006 (See page 12); and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">4.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The transaction of any other business as may
    properly come before the meeting or any adjournments thereof.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">The Board of Directors has fixed the close of
business on July&nbsp;5, 2005 as the record date for determining
shareholders of the Company entitled to notice of and to vote at
the meeting.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">By Order of the Board of Directors
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">BRET G. WILSON
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Secretary
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<FONT size="2">Kansas City, Missouri
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">August&nbsp;12, 2005
</FONT>
</DIV>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
proxy for the annual meeting is enclosed. Even though you may
plan to attend the meeting in person, please promptly vote by
telephone or Internet or by completing the enclosed proxy card
and returning it in the enclosed postage-paid envelope.
Telephone and Internet voting information is provided on the
proxy card. If you are present at the meeting and desire to vote
in person, your vote by proxy will not be used.
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="right">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="center">
<HR size="1" width="100%" align="center" noshade>
</DIV>

<DIV align="left">
<B><FONT size="2" color="#7FBA00">H&#38;R BLOCK, INC.</FONT></B>
</DIV>

<DIV align="left">
<B><FONT size="2" color="#7FBA00">PROXY STATEMENT</FONT></B>
</DIV>

<DIV align="left">
<B><FONT size="2" color="#7FBA00">FOR THE 2005 ANNUAL MEETING OF
SHAREHOLDERS</FONT></B>
</DIV>

<!-- link1 "<FONT size="2">QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING</FONT>" -->

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2">QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
AND VOTING</FONT></B>

<DIV align="left">
<FONT size="2">The Board of Directors (the &#147;Board of
Directors&#148; or &#147;Board&#148;) of H&#38;R Block, Inc., a
Missouri corporation (&#147;H&#38;R Block&#148; or the
&#147;Company&#148;) solicits the enclosed proxy for use at the
annual meeting of shareholders of the Company to be held at
9:00&nbsp;a.m. (CDT), on Wednesday, September&nbsp;7, 2005 in
the H&#38;R Block City Stage Theater at Union Station located at
30&nbsp;West Pershing (corner of Pershing and Main Street),
Kansas City, Missouri. This Proxy Statement contains information
about the matters to be voted on at the meeting and the voting
process, as well as information about our directors and
executive&nbsp;officers.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2" color="#7FBA00">WHY DID I RECEIVE THIS PROXY
STATEMENT?</FONT></B>

<DIV align="left">
<FONT size="2">The Board of Directors is soliciting your proxy
to vote at the annual meeting because you are a shareholder at
the close of business on July&nbsp;5, 2005, the record date, and
are entitled to vote at the meeting. This proxy statement, the
proxy card and Annual Report to Shareholders for the fiscal year
ended April&nbsp;30, 2005 are being made available to
shareholders beginning on or about August&nbsp;12, 2005. This
proxy statement summarizes the information you need to know to
vote at the annual meeting. You do not need to attend the annual
meeting to vote your&nbsp;shares.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2" color="#7FBA00">WHAT AM I VOTING ON?</FONT></B>

<DIV align="left">
<FONT size="2">You are voting on three items of business at the
annual&nbsp;meeting:
</FONT>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="2%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The election of four Class&nbsp;I directors
    (nominees are Thomas&nbsp;M. Bloch, Mark&nbsp;A. Ernst, David
    Baker Lewis and Tom&nbsp;D. Seip) to serve until the 2008 annual
    meeting and until their successors are elected
    and&nbsp;qualified;
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The approval of the H&#38;R Block Executive
    Performance Plan, as amended;&nbsp;and
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The ratification of KPMG LLP as independent
    accountants for the fiscal year ending April&nbsp;30,&nbsp;2006.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2" color="#7FBA00">WHO IS ENTITLED TO
VOTE?</FONT></B>

<DIV align="left">
<FONT size="2">Shareholders of record as of the close of
business on July&nbsp;5, 2005 are entitled to vote at the annual
meeting. Each share of H&#38;R Block Common Stock is entitled to
one&nbsp;vote.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2" color="#7FBA00">WHAT ARE THE VOTING
RECOMMENDATIONS OF THE BOARD OF DIRECTORS?</FONT></B>

<DIV align="left">
<FONT size="2">Our Board of Directors recommends that you vote
your shares &#147;FOR&#148; each of the Class&nbsp;I nominees
named in this proxy standing for election to the Board,
&#147;FOR&#148; the approval of the H&#38;R Block Executive
Performance Plan, as amended and &#147;FOR&#148; the
ratification of KPMG LLP as our independent&nbsp;accountants.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2" color="#7FBA00">HOW DO I VOTE?</FONT></B>

<DIV align="left">
<FONT size="2">If you are a shareholder of record, there are
four ways to vote:
</FONT>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="2%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">by toll-free telephone at 1-800-435-6710 and
    following the instructions on the proxy&nbsp;card;
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">by Internet at http://www.eproxy.com/hrb/ and
    following the instructions on the proxy&nbsp;card;
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">by completing and mailing your proxy
    card;&nbsp;and
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">by written ballot at the annual&nbsp;meeting.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">If you vote by Internet or telephone, your vote
must be received before 11:59&nbsp;p.m. (ET)&nbsp;on the day
before the annual meeting. Your shares will be voted as you
indicate. If you do not indicate your voting preferences, the
appointed proxies (Louis&nbsp;W. Smith, Rayford
Wilkins,&nbsp;Jr., and Henry&nbsp;F. Frigon) will vote your
shares FOR items&nbsp;1, 2 and&nbsp;3. If your shares are owned
in joint names, all joint owners must vote by the same method
and if joint owners vote by mail, all of the joint owners must
sign the proxy&nbsp;card.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">If your shares are held in a brokerage account in
your broker&#146;s name (this is called street name), you should
follow the voting directions provided by your broker or nominee.
You may complete and mail a voting instruction card to your
broker or nominee or, in most cases, submit voting instructions
by telephone or the Internet to your broker or nominee. If you
provide specific voting instructions by mail, telephone, or the
Internet, your broker or nominee should vote your shares as you
have&nbsp;directed.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">We will pass out written ballots to anyone who
wants to vote at the annual meeting. If you hold your shares in
street name, you must request a legal proxy from your broker or
other nominee to vote at the annual meeting. It is important
that your shares are represented at the meeting, whether or not
you attend the meeting in person. To make sure that your shares
are represented, we urge you to vote as soon as possible by
Internet, telephone or mail by following the instructions in
this proxy&nbsp;statement.
</FONT>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="93%"></TD>
    <TD width="7%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 1</FONT></B></TD>
</TR>

</TABLE>

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<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="left">
<B><FONT size="2" color="#7FBA00">WHAT IS THE DIFFERENCE BETWEEN
HOLDING SHARES AS A SHAREHOLDER OF RECORD AND AS A BENEFICIAL
OWNER?</FONT></B>

<DIV align="left">
<FONT size="2">If your shares are registered directly in your
name with the Company&#146;s transfer agent, Mellon Investor
Services LLC (&#147;Mellon Investor Services&#148;) you are
considered, with respect to those shares, the &#147;shareholder
of record.&#148; The proxy statement, annual report and proxy
card have been made available directly to shareholders of record
by the&nbsp;Company.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">If your shares are held in a stock brokerage
account or by a bank or other nominee, you are considered the
&#147;beneficial owner&#148; of shares held in street name. The
proxy materials should be forwarded to you by your broker, bank
or nominee who is considered, with respect to those shares, the
shareholder of record. As the beneficial holder, you have the
right to direct your broker, bank or nominee how to vote and are
also invited to attend the annual meeting. However, since you
are not a shareholder of record, you may not vote these shares
in person at the annual meeting unless you bring with you a
legal proxy from the shareholder of record. Your broker or
nominee has enclosed a voting instruction card for you to use in
directing the broker, bank or other nominee how to vote
your&nbsp;shares.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2" color="#7FBA00">WHAT ARE BROKER NON-VOTES AND
HOW ARE THEY&nbsp;COUNTED?</FONT></B>

<DIV align="left">
<FONT size="2">Broker non-votes occur when nominees, such as
brokers and banks holding shares on behalf of the beneficial
owners, are prohibited from exercising discretionary voting
authority for beneficial owners who have not provided voting
instructions at least ten days before the annual meeting date.
If no instructions are given within that time frame, the
nominees may vote those shares on matters deemed
&#147;routine&#148; by the New York Stock Exchange. On
non-routine matters, nominees cannot vote without instructions
from the beneficial owner, resulting in so-called &#147;broker
non-votes.&#148; Broker non-votes are not counted for the
purposes of determining the number of shares present in person
or represented by proxy on a voting&nbsp;matter.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2" color="#7FBA00">CAN I CHANGE MY
VOTE?</FONT></B>

<DIV align="left">
<FONT size="2">If you are a shareholder of record, you may
revoke your proxy at any time before it is voted at the annual
meeting&nbsp;by:
</FONT>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="2%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">sending written notice of revocation to the
    Secretary of the&nbsp;Company;
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">submitting a new, proper proxy by telephone,
    Internet or paper ballot, after the date of the revoked
    proxy;&nbsp;or
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">attending the annual meeting and voting
    in&nbsp;person.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">If you are a beneficial owner of shares, you may
submit new voting instructions by contacting your broker, bank
or other nominee. You may also vote in person at the annual
meeting if you obtain legal proxy as described&nbsp;above.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2" color="#7FBA00">WHAT VOTE IS REQUIRED TO
APPROVE EACH PROPOSAL?</FONT></B>

<DIV align="left">
<FONT size="2">For all matters to be voted upon at the annual
meeting, the affirmative vote of a majority of shares present in
person or represented by proxy, and entitled to vote on the
matter, is necessary for election or&nbsp;approval.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2" color="#7FBA00">DO SHAREHOLDERS HAVE
CUMULATIVE VOTING RIGHTS WITH RESPECT TO THE ELECTION
OF&nbsp;DIRECTORS?</FONT></B>

<DIV align="left">
<FONT size="2">No.&nbsp;Shareholders do not have cumulative
voting rights with respect to the election of&nbsp;directors.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2" color="#7FBA00">WHAT CONSTITUTES A
QUORUM?</FONT></B>

<DIV align="left">
<FONT size="2">As of the record date 167,247,961 shares of the
Company&#146;s Common Stock were issued and outstanding. A
majority of the outstanding shares entitled to vote at the
annual meeting, represented in person or by proxy, shall
constitute a quorum. Shares represented by a proxy that directs
that the shares abstain from voting or that a vote be withheld
on a matter shall be deemed to be represented at the annual
meeting for quorum purposes. Shares represented by proxy as to
which no voting instructions are given as to matters to be voted
upon shall be deemed to be represented at the annual meeting for
quorum purposes. The Board of Directors of the Company declared
a two-for-one stock split effective August&nbsp;22, 2005 for
shareholders of record as of August&nbsp;1, 2005. Because the
effective date of the split is after the record date of the
annual meeting of shareholders, the number of shares reported on
the accompanying proxy and entitled to vote at the meeting is
the pre-split number and such number is not adjusted to reflect
the August&nbsp;22, 2005 stock&nbsp;split.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2" color="#7FBA00">WHO WILL COUNT THE
VOTE?</FONT></B>

<DIV align="left">
<FONT size="2">Representatives of Mellon Investor Services, the
Company&#146;s transfer agent, will count the vote and serve as
the inspectors of&nbsp;election.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2" color="#7FBA00">WHAT DOES IT MEAN IF I RECEIVE
MORE THAN ONE PROXY&nbsp;CARD?</FONT></B>

<DIV align="left">
<FONT size="2">It means your shares are held in more than one
account. You should vote all your proxy shares. To provide
better shareholder service, we encourage you to have all your
shares registered in the same name and address. You may do this
by contacting our transfer agent, Mellon Investor Services,
at&nbsp;1-888-213-0964.
</FONT>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 2</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

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<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="right">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="left">
<B><FONT size="2" color="#7FBA00">CAN I ACCESS THE PROXY
STATEMENT AND ANNUAL REPORT ON THE INTERNET INSTEAD OF RECEIVING
PAPER&nbsp;COPIES?</FONT></B>

<DIV align="left">
<FONT size="2">This proxy statement and 2005 Annual Report are
located on the Company&#146;s website. Most shareholders can
access future proxy statements and annual reports on the
Internet instead of receiving paper copies in the mail. If you
are a shareholder of record, you can choose this option by
marking the appropriate box on your proxy card or by following
the instructions if you vote by telephone or the Internet. If
you choose to access future proxy statements and annual reports
on the Internet, you will receive a proxy card in the mail next
year with instructions containing the Internet address for those
materials. Your choice will remain in effect until you advise
us&nbsp;otherwise.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">If you are a beneficial owner, please refer to
the information provided by your broker, bank or nominee for
instructions on how to access future proxy statements and annual
reports on the&nbsp;Internet.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2" color="#7FBA00">HOW MUCH DID THIS PROXY
SOLICITATION COST?</FONT></B>

<DIV align="left">
<FONT size="2">The Company has retained Mellon Investor Services
to assist in the solicitation of proxies on behalf of the Board
of Directors for a fee of $9,500 plus reimbursement of
reasonable expenses. Further, brokers and other custodians,
nominees and fiduciaries will be requested to forward soliciting
material to their principals and the Company will reimburse them
for the expense of doing&nbsp;so.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2" color="#7FBA00">WHAT IS THE COMPANY&#146;S WEB
ADDRESS?</FONT></B>

<DIV align="left">
<FONT size="2">The Company&#146;s home page is www.hrblock.com.
The Company&#146;s filings with the Securities and Exchange
Commission are available free of charge via a link from
this&nbsp;address.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2" color="#7FBA00">WILL ANY OTHER MATTERS BE
VOTED ON?</FONT></B>

<DIV align="left">
<FONT size="2">As of the date of this proxy statement, our
management knows of no other matter that will be presented for
consideration at the meeting other than those matters discussed
in this proxy statement. If any other matters properly come
before the meeting and call for a vote of the shareholders,
validly executed proxies in the enclosed form will be voted in
accordance with the recommendation of the Board
of&nbsp;Directors.
</FONT>
</DIV>

<!-- link1 "<FONT size="2">ITEM 1 ON FORM OF PROXY</FONT>" -->

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2">ITEM 1 ON FORM OF PROXY</FONT></B>

<P align="left">
<B><FONT size="2">ELECTION OF DIRECTORS&nbsp;...</FONT></B>

<DIV align="left">
<FONT size="2">The Company&#146;s Articles of Incorporation and
Bylaws provide that the number of directors to constitute the
Board of Directors shall not be fewer than nine nor more than
15, with the exact number to be fixed by a resolution adopted by
the affirmative vote of a majority of the entire Board.
Effective October&nbsp;18, 2004, the Board fixed the number of
directors to constitute the Board of Directors at ten. The
Articles of Incorporation and Bylaws provide that the Board of
Directors shall be divided into three classes: Class&nbsp;I,
Class&nbsp;II and Class&nbsp;III, with each class to consist, as
nearly as possible, of one-third of the members of the Board.
There are currently four Class&nbsp;I directors, three
Class&nbsp;II directors and three Class&nbsp;III directors. The
term of office of one class of directors expires at each annual
meeting of shareholders. Directors elected at an annual meeting
of shareholders to succeed those whose terms expire are
identified as being of the same class as those directors they
succeed and are elected for a term to expire at the third annual
meeting of shareholders after their&nbsp;election.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">At the annual meeting of shareholders to be held
on September&nbsp;7, 2005, four Class&nbsp;I directors will be
elected to hold office for three years and until their
successors are elected and shall have qualified. Thomas&nbsp;M.
Bloch, Mark&nbsp;A. Ernst, David Baker Lewis and Tom&nbsp;D.
Seip have been nominated for election as Class&nbsp;I directors
of the Company. The shares voted by proxy will be voted for the
election of all four nominees unless authority to do so is
withheld as provided in the form of proxy. All nominees are
currently Class&nbsp;I directors of the Company and have
consented to serve if elected. The Board of Directors has no
reason to believe that any of the nominees will be unable to
accept the office of director. If such contingency should arise,
it is the intention of the proxies to vote for such person or
persons as the Board of Directors may&nbsp;recommend.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The nominees for election as Class&nbsp;I
directors, the current Class&nbsp;II directors and the current
Class&nbsp;III directors are listed below. G.&nbsp;Kenneth Baum,
Henry&nbsp;F. Frigon and Roger&nbsp;W. Hale serve as
Class&nbsp;II directors with terms scheduled to expire at the
annual meeting of shareholders in 2006. Mr.&nbsp;Baum will
retire as a director at the 2005 annual meeting of shareholders
pursuant to the Board&#146;s retirement policy. Donna&nbsp;R.
Ecton, Louis&nbsp;W. Smith and Rayford Wilkins,&nbsp;Jr. serve
as Class&nbsp;III directors with terms scheduled to expire at
the annual meeting of shareholders in 2007. The number of shares
of Common Stock beneficially owned by each director is listed
under the heading &#147;Security Ownership of Directors and
Management&#148; on page&nbsp;23 of this proxy&nbsp;statement.
</FONT>
</DIV>

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</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 3</FONT></B></TD>
</TR>

</TABLE>

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<DIV align="left">

</DIV>

<DIV align="left">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="left">
<B><FONT size="2">NOMINEES FOR ELECTION AT THIS MEETING TO A
TERM EXPIRING IN 2008 (CLASS&nbsp;I DIRECTORS):</FONT></B>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="24%"></TD>
    <TD width="1%"></TD>
    <TD width="75%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2" color="#7FBA00">Thomas M.
    Bloch</FONT><FONT size="2"> <BR>
     </FONT></B><FONT size="2">Director since 2000 <BR>
     Age&nbsp;51
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Mr.&nbsp;Bloch has served since January 2000 as
    Vice Chairman of the University Academy, an urban college
    preparatory charter school that he co-founded in Kansas City,
    Missouri and as an educator with the University Academy since
    August 2000. Mr.&nbsp;Bloch served as an educator with
    St.&nbsp;Francis Xavier School from October 1995 until August
    2000. Prior to changing careers, Mr.&nbsp;Bloch had a 19-year
    career with the H&#38;R Block organization, resigning as
    President and Chief Executive Officer of the Company in 1995.
    Mr.&nbsp;Bloch graduated from Claremont McKenna College in
    Claremont, California in 1976. He is a member of the Finance
    Committee of the Board of&nbsp;Directors.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="24%"></TD>
    <TD width="1%"></TD>
    <TD width="75%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2" color="#7FBA00">Mark A.
    Ernst</FONT><FONT size="2"> <BR>
     </FONT></B><FONT size="2">Director since 1999 <BR>
     Age&nbsp;47
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Mr.&nbsp;Ernst has served as Chairman of the
    Board of the Company since September 2002, Chief Executive
    Officer of the Company since January 2001 and as President of
    the Company since September 1999. He served as Chief Operating
    Officer of the Company from September 1998 through December 2000
    and as Executive Vice President of the Company from September
    1998 until September 1999. Prior to joining the Company,
    Mr.&nbsp;Ernst served as Senior Vice President, Third Party and
    International Distribution and Senior Vice President, Workplace
    Financial Services of American Express Company, a diversified
    financial services company, Minneapolis, Minnesota, from July
    1997 through June 1998 and November 1995 through July 1997,
    respectively. Mr.&nbsp;Ernst is also a director of Great Plains
    Energy, Inc. and Knight-Ridder, Inc. He received a Master of
    Business Administration with an emphasis in finance and
    economics from the University of Chicago and an undergraduate
    degree in accounting and finance from Drake University. He is a
    Certified Public Accountant. Mr.&nbsp;Ernst is a member of the
    Finance and Executive Committees of the Board of&nbsp;Directors.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="24%"></TD>
    <TD width="1%"></TD>
    <TD width="75%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2" color="#7FBA00">David Baker
    Lewis</FONT><FONT size="2"> <BR>
     </FONT></B><FONT size="2">Director since 2004 <BR>
     Age&nbsp;54
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Mr.&nbsp;Lewis is Chairman, President and Chief
    Executive Officer of Lewis&nbsp;&#38; Munday, a Detroit-based
    law firm with offices in Washington, D.C. and Seattle. He is
    also a director of The Kroger Company and Lewis&nbsp;&#38;
    Thompson Agency, Inc. Mr.&nbsp;Lewis has served on the Board of
    Directors of Conrail, Inc., LG&#38;E Energy Corp., M.A. Hanna,
    TRW, Inc., and Comerica, Inc. He received a Bachelor of Arts
    degree from Oakland University, a Master of Business
    Administration from the University of Chicago and a Juris Doctor
    from the University of Michigan School of Law. Mr.&nbsp;Lewis is
    a member of the Audit Committee of the Board of&nbsp;Directors.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="24%"></TD>
    <TD width="1%"></TD>
    <TD width="75%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2" color="#7FBA00">Tom D.
    Seip</FONT><FONT size="2"> <BR>
     </FONT></B><FONT size="2">Director since 2001 <BR>
     Age&nbsp;55
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Mr.&nbsp;Seip currently serves as managing
    partner of Seip Investments LP and the managing member of Too
    Much Stuff LLC and Ridgefield Farm LLC, private investment
    vehicles. He served as the President, Chief Executive Officer
    and director of Westaff, Inc., Walnut Creek, California, a
    temporary staffing services company, from May 2001 until January
    2002. Mr.&nbsp;Seip was employed by Charles Schwab &#38; Co.,
    Inc., San Francisco, California, from January 1983 until June
    1998 in various positions, including Chief Executive Officer of
    Charles Schwab Investment Management, Inc. from 1997 until June
    1998 and Executive Vice President&nbsp;&#150; Retail Brokerage
    from 1994 until 1997. Mr.&nbsp;Seip is also a trustee of the
    Neuberger Berman Mutual Funds, New York. He received a Bachelor
    of Arts degree from Pennsylvania State University and
    participated in the Doctoral Program in Developmental Psychology
    at the University of Michigan. Mr.&nbsp;Seip is a member of the
    Compensation and Governance and Nominating Committees of the
    Board of&nbsp;Directors.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 4</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

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<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="right">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="left">
<B><FONT size="2">CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN
2006 (CLASS&nbsp;II DIRECTORS):</FONT></B>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="24%"></TD>
    <TD width="1%"></TD>
    <TD width="75%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2" color="#7FBA00">G. Kenneth
    Baum</FONT><FONT size="2"> <BR>
     </FONT></B><FONT size="2">Director since 1961 <BR>
     Age&nbsp;75
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Mr.&nbsp;Baum has served as the Chairman of
    George K. Baum Group, Inc., an investment company, Kansas City,
    Missouri, since April 1994. Mr.&nbsp;Baum joined the firm of
    George&nbsp;K. Baum&nbsp;&#38; Company, a regional investment
    banking firm, in 1952 and was President of that organization
    from 1957 until 1982 when he was elected to Chairman of the
    Board, serving in that capacity until April 1994. Mr.&nbsp;Baum
    graduated from Carleton College, Northfield, Minnesota in 1952
    with a Bachelor of Arts degree in history. He currently serves
    as a director of Interstate Bakeries Corporation. Mr.&nbsp;Baum
    is Chairman of the Governance and Nominating Committee of the
    Board of Directors and is a member of the Executive and Finance
    Committees. Mr.&nbsp;Baum will retire as a director at the 2005
    annual meeting of shareholders pursuant to the Board&#146;s
    retirement&nbsp;policy.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="24%"></TD>
    <TD width="1%"></TD>
    <TD width="75%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2" color="#7FBA00">Henry F.
    Frigon</FONT><FONT size="2"> <BR>
     </FONT></B><FONT size="2">Director since 1992 <BR>
     Age&nbsp;70
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Mr.&nbsp;Frigon currently serves as the Vice
    Chairman of the Board of CARSTAR, Inc., Overland Park, Kansas,
    and served as Chairman of the Board of CARSTAR from 1998 to May
    2005. He served as Chief Executive Officer of CARSTAR, Inc. from
    July 1998 until February 2001. Mr.&nbsp;Frigon retired from
    Hallmark Cards, Inc., Kansas City, Missouri in 1994 where he
    served as Executive Vice President, Corporate Development &#38;
    Strategy, and Chief Financial Officer, as well as being a member
    of its Board of Directors from 1990 until December 1994. Prior
    to joining Hallmark, Mr.&nbsp;Frigon served as the President and
    Chief Executive Officer of BATUS, Inc., where he was responsible
    for the company&#146;s extensive U.S. holdings in retailing,
    financial services, tobacco and paper. His previous business
    experience covers a variety of operating, management and board
    positions with companies such as Masco Corporation, General
    Housewares, General Foods Corporation and Chase Manhattan Bank.
    Mr.&nbsp;Frigon received a bachelor&#146;s degree in engineering
    from Tufts University in 1957 and a Master of Business
    Administration from New York University in 1961. He also
    attended Wharton Graduate School at the University of
    Pennsylvania and completed the Advanced Management Program at
    Harvard Business School. Mr. Frigon is also a director of
    Buckeye Technologies, Inc., Dimon, Inc., Packaging Corporation
    of America, Sypris Solutions, Inc. and Tuesday Morning
    Corporation. Mr.&nbsp;Frigon is Chairman of the Finance
    Committee of the Board of Directors and a member of the Audit,
    Compensation and Executive&nbsp;Committees.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="24%"></TD>
    <TD width="1%"></TD>
    <TD width="75%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2" color="#7FBA00">Roger W.
    Hale</FONT><FONT size="2"> <BR>
     </FONT></B><FONT size="2">Director since 1991 <BR>
     Age&nbsp;62
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Mr.&nbsp;Hale served as Chairman and Chief
    Executive Officer of LG&#38;E Energy Corporation, a diversified
    energy services company headquartered in Louisville, Kentucky,
    from August 1990 until retiring in April 2001. Prior to joining
    LG&#38;E, he was Executive Vice President of BellSouth
    Corporation, a communications services company in Atlanta,
    Georgia. From 1966 to 1986, Mr.&nbsp;Hale held several executive
    positions with AT&#38;T Co., a communications services company,
    including Vice President, Southern Region from 1983 to 1986. He
    received a Bachelor of Arts degree from the University of
    Maryland in 1965 and a Master of Science in Management from the
    Massachusetts Institute of Technology, Sloan School of
    Management in 1979. Mr.&nbsp;Hale is also a director of Ashland,
    Inc., where he serves as Chairman of the Audit Committee and is
    a member of the Public Policy and Environmental Committees. He
    has served as the Presiding Director of the Board of Directors
    since September&nbsp;8, 2004 and is Chairman of the Executive
    Committee of Board of Directors and a member of the Audit,
    Compensation and Governance and Nominating&nbsp;Committees.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="93%"></TD>
    <TD width="7%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 5</FONT></B></TD>
</TR>

</TABLE>

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<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="left">
<B><FONT size="2">CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN
2007 (CLASS&nbsp;III DIRECTORS):</FONT></B>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

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    <TD width="24%"></TD>
    <TD width="1%"></TD>
    <TD width="75%"></TD>
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<TR>
    <TD valign="top">
    <B><FONT size="2" color="#7FBA00">Donna R.
    Ecton</FONT><FONT size="2"> <BR>
     </FONT></B><FONT size="2">Director since 1993 <BR>
     Age&nbsp;58
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Ms.&nbsp;Ecton is currently the Chairman and
    Chief Executive Officer of EEI Inc., a management consulting
    firm located in Paradise Valley, Arizona that she founded in
    1998. Prior to forming EEI Inc., Ms.&nbsp;Ecton served as the
    Chief Operating Officer of PETsMART, Inc., Phoenix, Arizona, a
    retail supplier of products and services for pets, from December
    1996 until May 1998 and on the Board of Directors of PETsMART,
    Inc., from 1994 until 1998. Prior to PETsMART, Ms.&nbsp;Ecton
    was Chairman, President and Chief Executive Officer of Business
    Mail Express, Inc., a privately held expedited printing and
    mailing business, and before that she served as President and
    Chief Executive Officer of Van Houten North America, Inc. and
    Andes Candies, Inc., a privately held international
    confectionary company. Ms.&nbsp;Ecton&#146;s previous business
    experience covers a variety of management positions with
    companies such as Nutri/ System, Inc., Campbell Soup Company,
    Citibank, N.A. and Chemical Bank. She received a Bachelor of
    Arts in Economics from Wellesley College (Durant Scholar) in
    1969 and a Master of Business Administration from the Harvard
    Graduate School of Business Administration in 1971.
    Ms.&nbsp;Ecton is Chairman of the Compensation Committee of the
    Board of Directors and a member of the Executive, Finance and
    Governance and Nominating Committees.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="24%"></TD>
    <TD width="1%"></TD>
    <TD width="75%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2" color="#7FBA00">Louis W.
    Smith</FONT><FONT size="2"> <BR>
     </FONT></B><FONT size="2">Director since 1998 <BR>
     Age&nbsp;62
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Mr.&nbsp;Smith served as President and Chief
    Executive Officer of the Ewing Marion Kauffman Foundation, a
    charitable foundation, Kansas City, Missouri, from July 1997
    until April 2002 and President and Chief Operating Officer of
    the Ewing Marion Kauffman Foundation from June 1995 to July
    1997. He also served on the Board of Directors of such
    Foundation from January 1991 through September 2002. Prior to
    joining the Foundation, Mr.&nbsp;Smith had a 29-year career with
    AlliedSignal, Inc. (now Honeywell International), a diversified
    technology and manufacturing company, retiring as President of
    the Kansas City Division in 1995. Mr.&nbsp;Smith also serves on
    the Board of Directors of Sprint Corporation. He holds a
    bachelor&#146;s degree in electrical engineering from the
    University of Missouri-Rolla and a Master of Business
    Administration from the Executive Fellows Program at Rockhurst
    University. Mr.&nbsp;Smith is Chairman of the Audit Committee of
    the Board of Directors and is a member of the Compensation and
    Executive Committees.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="24%"></TD>
    <TD width="1%"></TD>
    <TD width="75%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2" color="#7FBA00">Rayford Wilkins,
    Jr.</FONT><FONT size="2"> <BR>
     </FONT></B><FONT size="2">Director since 2000 <BR>
     Age&nbsp;53
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Mr.&nbsp;Wilkins has served as Group President,
    SBC Communications, Inc., San Antonio, Texas, a diversified
    telecommunications company and wireless communications provider,
    since May 2002. Previously he served as President and Chief
    Executive Officer of Pacific Bell Telephone Company and Nevada
    Bell Telephone Company, San Ramon, California, from September
    2000 until April 2002 and as President of SBC Business
    Communications Services, San Antonio, Texas, from October 1999
    through September 2000. Mr.&nbsp;Wilkins served as President and
    CEO of Southwestern Bell Telephone Co., San Antonio, Texas, from
    July 1999 until October 1999. He served as President of Business
    Communications Services, Pacific Bell Telephone Company, San
    Ramon, California, from August 1997 until July 1999. He also
    served as Vice President and General Manager of Southwestern
    Bell Telephone Co., Kansas City, Missouri, from August 1993
    until August 1997. He earned a bachelor&#146;s degree in
    business administration from the University of Texas in Austin
    in 1974 and attended the University of Pittsburgh&#146;s
    Management Program for Executives in October 1987.
    Mr.&nbsp;Wilkins is a member of the Audit, Finance and
    Governance and Nominating Committees of the Board of Directors.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 6</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

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<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="right">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="left">
<B><FONT size="2">ADDITIONAL INFORMATION CONCERNING THE BOARD OF
DIRECTORS</FONT></B>

<DIV align="left">
<B><FONT size="2" color="#7FBA00">BOARD OF DIRECTORS&#146;
MEETINGS AND COMMITTEES&nbsp;...</FONT></B><FONT size="2"> The
Board of Directors is responsible for managing the property and
business affairs of the Company. The Board of Directors reviews
significant developments affecting the Company and acts on
matters requiring Board approval. During the 2005 fiscal year,
the Board of Directors held seven meetings and the standing
Board committees held 20 meetings. Each of the incumbent
directors attended at least 75% of the aggregate of the total
number of meetings of the Board of Directors and of committees
of the Board of which he or she was a member, except for
Mr.&nbsp;Frigon who attended a combined total of 74% of the
meetings and Mr.&nbsp;Seip who attended a combined total of 73%
of the meetings. Mr.&nbsp;Seip&#146;s absences arose primarily
from a scheduling conflict with the March 2005 Board and
committee meetings, during which the Board and two of the
committees on which Mr.&nbsp;Seip serves met. Excluding this one
scheduling conflict, Mr.&nbsp;Seip attended 92% of the aggregate
total number of Board and applicable committee meetings. The
Company has adjusted its schedule of regular Board meetings in
fiscal year 2006 to eliminate this scheduling conflict.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The standing committees of the Board are the
Executive Committee, the Audit Committee, the Compensation
Committee, the Finance Committee and the Governance and
Nominating Committee. The Company&#146;s Corporate Governance
Guidelines, Code of Business Ethics and Conduct, Board of
Director Independence Standards and charters for Audit,
Compensation and Governance and Nominating Committees are
available on the Company&#146;s website at www.hrblock.com under
the tab &#147;Our Company&#148; and then under the heading
&#147;Block Investors&#148; and then under &#147;Corporate
Governance.&#148; These documents are also available in print to
shareholders upon written request to: Corporate Secretary,
H&#38;R&nbsp;Block, Inc., 4400&nbsp;Main St., Kansas City,
Missouri&nbsp;64111. Set forth below is a description of the
duties of each committee and its&nbsp;members.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The <B>Executive Committee,</B> whose members are
Mr.&nbsp;Hale (Chairman), Ms.&nbsp;Ecton and Messrs.&nbsp;Baum,
Ernst, Frigon and Smith, held no meetings during fiscal year
2005. The primary function of the Executive Committee is to
control and manage, between meetings of the Board, the property
and business of the Company in all matters in which exclusive
authority has not been given to the entire Board of Directors or
in which specific direction has not been given by the&nbsp;Board.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The <B>Audit Committee,</B> whose members are
Mr.&nbsp;Smith (Chairman) and Messrs.&nbsp;Frigon, Hale, Lewis
and Wilkins, held 11&nbsp;meetings during the 2005 fiscal year.
All of the members of the Audit Committee are independent under
regulations adopted by the Securities and Exchange Commission,
New York Stock Exchange listing standards and the Board&#146;s
Director Independence Standards. The Board has determined that
each of Mr.&nbsp;Smith, Mr.&nbsp;Frigon, Mr.&nbsp;Hale,
Mr.&nbsp;Lewis and Mr.&nbsp;Wilkins is an audit committee
financial expert, pursuant to the criteria prescribed by the
Securities and Exchange Commission. The Board has also
determined that Mr.&nbsp;Frigon&#146;s service on the audit
committees of more than three public companies has not impaired
and will not impair Mr.&nbsp;Frigon&#146;s ability to
effectively serve on the Audit Committee. The functions of the
Committee are described in the Audit Committee Charter and
include making recommendations to the Board of Directors with
respect to the appointment of the Company&#146;s independent
accountants, evaluating the independence and performance of such
accountants, reviewing the scope of the annual audit, and
reviewing and discussing with management and the independent
accountants the audited financial statements and accounting
principles. See the &#147;Audit Committee Report&#148; beginning
on&nbsp;page&nbsp;12.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The <B>Compensation Committee,</B> whose members
are Ms.&nbsp;Ecton (Chairman) and Messrs.&nbsp;Frigon, Hale,
Seip and Smith, held three meetings during fiscal year 2005. The
functions of the Committee primarily include reviewing the
compensation of the executive officers of the Company and its
subsidiaries, recommending to the Board of Directors the
salaries and any bonus or cash incentive plans for such
executive officers, and administering the Company&#146;s
long-term incentive compensation plans. All of the members of
the Compensation Committee are independent under the New York
Stock Exchange listing standards and the Board&#146;s Director
Independence Standards. See the &#147;Compensation Committee
Report on Executive Compensation&#148; beginning
on&nbsp;page&nbsp;13.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The <B>Finance Committee,</B> whose members are
Mr.&nbsp;Frigon (Chairman), Ms.&nbsp;Ecton and
Messrs.&nbsp;Baum, Bloch, Ernst and Wilkins, held three meetings
during the 2005 fiscal year. The primary duties of the Finance
Committee are to provide advice to management and the Board of
Directors concerning the financial structure of the Company, the
funding of the operations of the Company and its subsidiaries,
and the investment of Company funds.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The <B>Governance and Nominating Committee,</B>
whose members are Mr.&nbsp;Baum (Chairman), Ms.&nbsp;Ecton and
Messrs.&nbsp;Hale, Seip and Wilkins, held three meetings during
the 2005 fiscal year. The Governance and Nominating Committee is
responsible for corporate governance matters, the initiation of
nominations for election as a director of the Company, the
evaluation of the performance of the Board of Directors, and the
determination of
</FONT>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="93%"></TD>
    <TD width="7%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 7</FONT></B></TD>
</TR>

</TABLE>

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<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">compensation of outside directors of the Company.
All of the members of the Governance and Nominating Committee
are independent under the New York Stock Exchange listing
standards and the Board&#146;s Director
Independence&nbsp;Standards.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">DIRECTOR&#146;S
COMPENSATION&nbsp;...</FONT></B><FONT size="2"> Directors,
excluding those who are employed by the Company or its
subsidiaries, received an annual director&#146;s fee of $40,000,
meeting fees of $2,000 for each Board meeting attended,
committee chairman fees of $2,000 for each committee meeting
that they chaired, and meeting fees of $1,200 for each committee
meeting attended in a capacity other than as chairman. In
addition, the chairman of the audit committee receives an annual
committee chairman&#146;s fee of $5,000. Beginning with the
quarterly installment payable on June&nbsp;1, 2005, the Board
approved an increase in the annual retainer for non-employee
directors from $40,000 to $50,000 and the audit committee chair
annual retainer was increased from $5,000 to $7,500. All other
fees paid will remain the&nbsp;same.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">In accordance with the provisions of the H&#38;R
Block Deferred Compensation Plan for Directors, as amended,
eligible non-employee directors may defer receipt of their
retainers and/or meeting fees. Deferrals are placed in an
account maintained by the Company for each director and such
deferrals are fully vested at all times. Gains or losses are
posted to each account in accordance with the participant&#146;s
selection among fixed rate, variable rate and Company Common
Stock investment alternatives. Payment of benefits occurs in
cash upon termination of the participant&#146;s service as a
director or upon his or her death. The account balance is
generally paid out in approximately equal monthly installments
over a 10-year period after the occurrence of the event which
results in the benefit&nbsp;distribution.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Pursuant to the H&#38;R Block Stock Plan for
Non-Employee Directors, eligible non-employee directors have the
opportunity to receive payment of their retainers and/or meeting
fees on a deferred basis in shares of Common Stock of the
Company. The retainers and/or fees are initially paid in the
form of stock units. The stock units in the directors&#146;
accounts are fully vested at all times. Payment of the stock
units must be deferred at least one year after the year such
units are credited and the director shall select the date of
payment, which may be upon termination of service as a director.
The maximum number of shares of Common Stock that may be issued
under the Stock Plan is currently 600,000&nbsp;shares.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The 1989 Stock Option Plan for Outside Directors,
as amended, provides for the grant of stock options to directors
of the Company who are not employees of the Company or any of
its subsidiaries. The Plan specifies that nonqualified stock
options are to be automatically granted to outside directors of
the Company serving as such on June&nbsp;30 of each year in
which the Plan is in effect. Effective June&nbsp;30, 2002, each
stock option granted to an outside director of the Company
pursuant to the Plan is for 4,000&nbsp;shares of the
Company&#146;s Common Stock, and the purchase price per share is
equal to the last reported sale price for the Common Stock on
the New York Stock Exchange on the date of grant. The maximum
number of shares of Common Stock as to which options may be
granted under the Plan is 800,000.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Options for 4,000&nbsp;shares each, with an
option price of $58.35 per share, were granted to Ms.&nbsp;Ecton
and Messrs.&nbsp;Baum, Bloch, Frigon, Hale, Lewis, Seip, Smith
and Wilkins on June&nbsp;30, 2005. The options are fully vested
and immediately exercisable as of date of grant. All outstanding
options expire ten years after the date of&nbsp;grant.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The Company also offers to its non-employee
directors free income tax return preparation services at an
H&#38;R Block office of their choice, a fifty percent discount
on tax preparation services from RSM McGladrey, Inc. and free
business travel insurance in connection with
Company-related&nbsp;travel.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">CORPORATE
GOVERNANCE&nbsp;...</FONT></B><FONT size="2"> Our Board of
Directors operates under duly adopted Corporate Governance
Guidelines (the &#147;Guidelines&#148;) to assist the Board in
exercising its responsibilities. The Guidelines reflect the
Board&#146;s commitment to monitor the effectiveness of policy
and decision-making both at the Board level and management
level, with a view to enhancing shareholder value over the long
term. The Guidelines also assure that the Board will have the
necessary authority and practices in place to review and
evaluate the Company&#146;s business operations as needed and to
make decisions that are independent of the Company&#146;s
management. The Guidelines are not intended to be a static
statement of the Company&#146;s policies, principles and
guidelines, but are subject to continual assessment and
refinement as the Board may determine advisable or necessary in
the view of the best interests of the Company and
its&nbsp;shareholders.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The Guidelines also provide that a non-employee
director may be appointed as the &#147;Presiding Director&#148;
of the Board. The Presiding Director (Roger W. Hale) leads
executive sessions of the non-employee directors at meetings
that are held prior to each regular meeting of the Board. In
addition, the Presiding Director may call executive sessions as
deemed&nbsp;necessary.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">As further described in the Guidelines, the Board
believes that a substantial majority of the Board should consist
of directors who are independent under the New York Stock
Exchange listing standards. As described below, eight of the
Board&#146;s ten directors are independent directors within the
meaning of the Board&#146;s
</FONT>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 8</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

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<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="right">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">Director Independence Standards and the New York
Stock Exchange listing&nbsp;standards.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The New York Stock Exchange listing standards
provide that a director does not qualify as independent unless
the Board affirmatively determines that the director has no
material relationship with the Company. The listing standards
permit the Board to adopt and disclose standards to assist the
Board in making determinations of independence. Accordingly, the
Board has adopted Director Independence Standards (attached as
<I>Appendix&nbsp;A</I> to this proxy statement) to assist the
Board in determining whether a director has a material
relationship with the&nbsp;Company.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">In June 2005, the Board conducted an evaluation
of director independence, based on the Director Independence
Standards and the New York Stock Exchange listing standards. In
connection with this review, the Board evaluated commercial,
charitable, consulting, familial and other relationships with
each director or immediate family members and their related
interest to the Company and its subsidiaries. As a result of
this evaluation, the Board affirmatively determined that
Ms.&nbsp;Ecton and Messrs.&nbsp;Baum, Frigon, Hale, Lewis, Seip,
Smith and Wilkins are independent&nbsp;directors.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Further, all directors, officers and employees of
the Company must act ethically and in accordance with the
policies comprising the H&#38;R&nbsp;Block Code of Business
Ethics and Conduct (the &#147;Code&#148;). The Code includes
guidelines relating to the ethical handling of actual or
potential conflicts of interest, compliance with laws, accurate
financial reporting and procedures for promoting compliance
with, and reporting violations of, the Code. The Company intends
to post any amendments to or waivers of the Code (to the extent
applicable to the Company&#146;s Chief Executive Officer, Chief
Financial Officer or Principal Accounting Officer) on
our&nbsp;website.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">DIRECTOR NOMINATION
PROCESS&nbsp;...</FONT></B><FONT size="2"> The entire Board of
Directors is responsible for nominating members for election to
the Board and for filling vacancies on the Board that may occur
between annual meetings of the shareholders. The Governance and
Nominating Committee is responsible for identifying, screening
and recommending candidates to the entire Board for Board
membership. The Governance and Nominating Committee works with
the Board to determine the appropriate characteristics, skills
and experience for the Board as a whole and its individual
members. In evaluating the suitability of individual Board
members, the Board takes into account many factors such as
general understanding of various business disciplines (e.g.,
marketing, finance, information technology), the Company&#146;s
business environment, educational and professional background,
analytical ability and willingness to devote adequate time to
Board duties. The Board evaluates each individual in the context
of the Board as a whole with the objective of retaining a group
with diverse and relevant experience that can best perpetuate
the Company&#146;s success and represent shareholder interests
through sound&nbsp;judgment.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The Governance and Nominating Committee may seek
the input of the other members of the Board and management in
identifying candidates who are consistent with the criteria
outlined above. In addition, the Governance and Nominating
Committee may use the services of consultants or a search firm.
The Committee will consider recommendations by the
Company&#146;s shareholders of qualified director candidates for
possible nomination by the Board. Shareholders may recommend
qualified director candidates by writing to the Company&#146;s
Corporate Secretary, at our offices at 4400&nbsp;Main Street,
Kansas City, Missouri 64111. Submissions should include
information regarding a candidate&#146;s background,
qualifications, experience, and willingness to serve as a
director. Based on preliminary assessment of a candidate&#146;s
qualifications, the Governance and Nominating Committee may
conduct interviews with the candidate and request additional
information from the candidate. The Committee uses the same
process for evaluating all nominees, including those recommended
by shareholders. In addition, the Company&#146;s bylaws contain
specific conditions under which persons may be nominated
directly by shareholders. The provisions include the condition
that shareholders comply with the advance notice time
requirements outlined in the &#147;Shareholder Proposals and
Nominations&#148; section of this Proxy&nbsp;Statement.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">SHAREHOLDER COMMUNICATIONS
WITH THE BOARD&nbsp;...</FONT></B><FONT size="2"> Shareholders
wishing to communicate with the Board of Directors, the
non-management directors, or with an individual Board member
concerning the Company may do so by writing to the Board, to the
non-management directors, or to the particular Board member, and
mailing to the correspondence to: Office of the Chief Legal
Officer, H&#38;R&nbsp;&nbsp;Block, Inc., 4400&nbsp;Main Street,
Kansas City, Missouri&nbsp;&nbsp;64111. The envelope should
indicate that it contains a shareholder communication. All such
shareholder communications will be forwarded to the director or
directors to whom the communication is&nbsp;addressed.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">DIRECTOR ATTENDANCE AT ANNUAL
MEETINGS&nbsp;...</FONT></B><FONT size="2"> Although the Company
has no specific policy regarding director attendance at its
annual meeting, all directors are encouraged to attend. Board
and Committee meetings are held immediately preceding and
following the annual meeting, with directors attending the
annual meeting. All of the Company&#146;s directors attended
last year&#146;s annual&nbsp;meeting.
</FONT>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="93%"></TD>
    <TD width="7%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 9</FONT></B></TD>
</TR>

</TABLE>

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</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<!-- link1 "<FONT size="2">ITEM 2 ON FORM OF PROXY</FONT>" -->

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2">ITEM 2 ON FORM OF PROXY</FONT></B>

<P align="left">
<B><FONT size="2">APPROVAL OF THE H&#38;R BLOCK EXECUTIVE
PERFORMANCE PLAN, AS AMENDED&nbsp;...</FONT></B>

<DIV align="left">
<B><FONT size="2" color="#7FBA00">INTRODUCTION&nbsp;...</FONT></B><FONT size="2">
The shareholders originally approved the H&#38;R Block Short
Term Incentive Plan (the &#147;Plan&#148;) at the 1996 Annual
Meeting and most recently reapproved the Plan, as amended, at
the 2000 Annual Meeting. The Board recommends amendments to the
Plan to (1)&nbsp;change the name of the Plan from the H&#38;R
Block Short Term Incentive Plan to the H&#38;R Block Executive
Performance Plan; and (2)&nbsp;increase the aggregate amount of
all awards under the Plan to any participant for any Performance
Period from $1,000,000 to $2,000,000.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The Plan allows the Company to include in the
compensation package of an executive officer a bonus component
intended to qualify as performance-based compensation under
Section&nbsp;162(m) of the Internal Revenue Code of 1986, as
amended (&#147;Code&#148;). Section&nbsp;162(m) provides that
compensation in excess of $1&nbsp;million paid for any tax year
to a corporation&#146;s chief executive officer and the four
other highest paid executive officers (&#147;Covered
Employees&#148;) at the end of such year will not be deductible
by the corporation for federal income tax purposes unless
certain conditions are met. Two such conditions are that the
compensation must qualify as &#147;performance-based
compensation&#148; and that the shareholders of the corporation
must approve the material terms of the performance goals under
which such compensation is to be paid. The Plan satisfies
these&nbsp;conditions.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The Board believes that the amendment changing
the name of the Plan will help eliminate any confusion between
the Plan and the Company&#146;s short-term incentive program.
The Board further believes that the increase in the limitation
of awards will allow the Company the flexibility to take full
advantage of the deductibility of executive compensation under
Code Section&nbsp;162(m). The Board believes that the Plan has
enabled, and will enable, the Company and its subsidiaries to
attract and retain highly qualified individuals as executive
officers and to obtain from such officers the best possible
performance to achieve particular business objectives
established for the Company. Accordingly, the Board has approved
the amendments to the Plan and is submitting the Plan, as so
amended, to the shareholders for their&nbsp;approval.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">SUMMARY OF THE PLAN AND
AMENDMENTS&nbsp;...</FONT></B><FONT size="2"> The primary
features of the Plan and the proposed amendments are summarized
below. The summary is qualified in its entirety by reference to
the specific provisions of the Plan, as it is proposed to be
amended, the full text of which is set forth as
<I>Appendix&nbsp;B </I>to this proxy&nbsp;statement.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The Plan is administered by the Committee, which
is composed of &#147;outside directors&#148; within the meaning
of Section&nbsp;162(m) of the Code. The Committee has authority
to determine the terms and conditions of awards granted to
eligible persons under the Plan. Awards under the Plan are in
the form of cash compensation and may be granted only to
employees of the Company or its subsidiaries who are at the
level of Assistant Vice President or a more senior level and who
are selected for participation by the Committee. The Committee
may grant annual performance-based awards with respect to each
fiscal year of the Company, or a portion thereof (a
&#147;Performance Period&#148;). Within 90&nbsp;days after the
beginning of a Performance Period, the Committee establishes
performance goals for the Company and its subsidiaries for the
Performance Period and specific target awards for each
participant selected by the Committee. The Committee specifies
the performance goals applicable to each participant for each
Performance Period, as well as the portion of the target award
to which each performance goal applies. Awards are
nontransferable other than by will or by the laws of descent
and&nbsp;distribution.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The Plan specifies that performance goals
established by the Committee each year must be based on one or
more of the following business criteria: (a)&nbsp;earnings,
(b)&nbsp;revenues, (c)&nbsp;sales of products, services or
accounts, (d)&nbsp;numbers of income tax returns prepared,
(e)&nbsp;margins, (f)&nbsp;earnings per share, (g)&nbsp;return
on equity, (h)&nbsp;return on capital, and (i)&nbsp;total
shareholder return. For any Performance Period, performance
goals may be measured on an absolute basis or relative to
internal goals, or relative to levels attained in fiscal years
prior to the Performance Period. In addition, a participant must
remain in the continuous employ of the Company or one or more of
its subsidiaries through the end of a Performance Period to be
eligible to receive payment of an award. The Plan grants the
Committee discretion to pay in full or on a prorated basis an
award determined in accordance with the Plan to a participant
whose employment terminates during the Performance Period due to
death, disability or&nbsp;retirement.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Following the end of a Performance Period, the
Committee certifies the extent to which each performance goal
has been achieved and then, to arrive at the actual award
payout, determines a performance percentage for each goal to be
multiplied by the portion of the target award to which the goal
relates. The Compensation Committee has the discretion to
establish with respect to each performance target and each
Performance Period a schedule or other objective method
(&#147;Performance Schedule&#148;) of determining the applicable
performance percentage to be used in arriving at the actual award
</FONT>
</DIV>

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    <TD width="93%"></TD>
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<TR valign="top">
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 10</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

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</DIV>

<DIV align="left">

</DIV>

<DIV align="right">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">payout. The Committee is required to establish
such Performance Schedule within 90&nbsp;days after the
beginning of the Performance Period. Any Performance Schedule
established by the Committee may not provide for a performance
percentage in excess of&nbsp;200%.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The Plan currently provides that the aggregate
amount of all awards under the Plan to any one participant for
any Performance Period may not exceed $1,000,000. It is proposed
that the Plan be amended to increase this limitation to
$2,000,000. The $1,000,000 limit under the Plan has been in
place since the inception of the Plan. Awards under the Plan are
based on performance criteria established by the Compensation
Committee to preserve federal income tax deductions for
compensation paid to the Company&#146;s Covered Employees. The
Compensation Committee recommended and the Board adopted the
amendment to increase the aggregate amount of Awards payable
under the Plan, subject to shareholder approval, as part of the
Compensation Committee&#146;s aim to provide competitive
compensation that enables the Company to retain key executives
needed to accomplish the Company&#146;s goals. The amendment to
the Plan will enhance the Compensation Committee&#146;s
flexibility to motivate individuals to achieve exceptional
performance for the Company. Payment of awards takes place as
soon as administratively feasible following certification by the
Committee of the extent to which performance goals have been
achieved and the determination of the actual awards&nbsp;payable.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">In the event of a recapitalization,
reorganization, merger, acquisition, divestiture, consolidation,
spin-off, split-off, combination, liquidation, dissolution, sale
of assets, or other similar corporate transaction or event;
changes in applicable tax laws or accounting principles; or any
unusual, extraordinary or nonrecurring events involving the
Company that distort the performance criteria applicable to any
performance goal, the Committee must adjust the calculation of
the performance criteria and the applicable performance goals as
necessary to prevent reduction or enlargement of
participants&#146; awards under the Plan for such Performance
Period attributable to such transaction or event.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The Board of Directors of the Company may at any
time and from time to time alter, amend, suspend or terminate
the Plan in whole or in part, without shareholder approval.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">PLAN BENEFITS UNDER THE
AMENDED PLAN&nbsp;...</FONT></B><FONT size="2">
Performance-based awards granted under the Plan, if any, are
subject to the discretion of the Compensation Committee and to
the achievement of certain performance targets as established by
the Compensation Committee during a Performance Period. Amounts
that may be received by officers of the Company eligible to
participate in the Plan are not presently determinable. The
following chart describes the amounts that the indicated
participants were awarded under the Plan for the fiscal year
ended April&nbsp;30, 2005. Non-employee directors of the Company
are not eligible to participate in the Plan.
</FONT>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="81%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" nowrap><FONT size="1">Name and Principal Position</FONT></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Award</FONT></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="7" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <FONT size="2">Mark A. Ernst,<BR>
    Chairman of the Board, President and<BR>
    Chief Executive Officer
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">217,140</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <FONT size="2">Robert E. Dubrish,<BR>
    President and Chief Executive Officer,<BR>
    Option One Mortgage Corporation
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">142,241</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <FONT size="2">Jeffery W. Yabuki,<BR>
    Executive Vice President and Chief<BR>
    Operating Officer
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80,408</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <FONT size="2">Steven Tait<BR>
    President, RSM McGladrey Business<BR>
    Services, Inc.&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">302,784</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <FONT size="2">Nicholas J. Spaeth<BR>
    Senior Vice President and Chief Legal<BR>
    Officer
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63,168</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">All Executive Officers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">805,741</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="left"><HR size="1" noshade></TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The Board believes that approval of the Plan, as
proposed to be amended, will assist the Company in the manner
specified above and, as a result, will promote the interests of
the Company and its&nbsp;shareholders.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2">THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF
THE H&#38;R BLOCK EXECUTIVE PERFORMANCE PLAN, AS AMENDED, AND
PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED IN THE ABSENCE
OF INSTRUCTIONS TO THE&nbsp;CONTRARY.</FONT></B>
</DIV>

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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 11</FONT></B></TD>
</TR>

</TABLE>

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<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

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<!-- link1 "<FONT size="2">ITEM 3 ON FORM OF PROXY</FONT>" -->

<DIV align="left">

</DIV>

<DIV align="left">
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</DIV>

<P align="left">
<B><FONT size="2">ITEM 3 ON FORM OF PROXY</FONT></B>

<P align="left">
<B><FONT size="2">RATIFICATION OF APPOINTMENT OF INDEPENDENT
ACCOUNTANTS&nbsp;...</FONT></B>

<DIV align="left">
<FONT size="2">The Board of Directors has appointed KPMG LLP as
independent accountants to audit the Company&#146;s financial
statements for the fiscal year ending April&nbsp;30, 2006. A
representative of KPMG LLP is expected to attend the annual
meeting to respond to appropriate questions and will have an
opportunity to make a statement if he or she so desires. For
additional information regarding the Company&#146;s relationship
with KPMG LLP, please refer to the &#147;Audit Committee
Report&#148;&nbsp;below.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2">THE BOARD OF DIRECTORS RECOMMENDS A VOTE
&#147;FOR&#148; THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP,
AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED
IN THE ABSENCE OF INSTRUCTIONS TO THE&nbsp;CONTRARY.</FONT></B>
</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2">AUDIT COMMITTEE REPORT&nbsp;...</FONT></B>

<DIV align="left">
<FONT size="2">The Company&#146;s management is responsible for
the preparation of financial statements in accordance with
generally accepted accounting principles and the financial
reporting process, including the Company&#146;s system of
internal controls. The Company&#146;s independent accountants
are responsible for auditing the Company&#146;s financial
statements and expressing an opinion as to their conformity to
accounting principles generally accepted in the United States.
The Audit Committee of the Board of Directors, composed solely
of independent directors, meets periodically with management,
the independent accountants and the internal auditor to review
matters relating to the Company&#146;s financial statements,
internal audit activities, internal accounting controls and
non-audit services provided by the independent&nbsp;accountants.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The Audit Committee has reviewed and discussed
with management and KPMG LLP (&#147;KPMG&#148;), the
Company&#146;s independent accountants, the Company&#146;s
audited financial statements for the fiscal year ended
April&nbsp;30, 2005. The Audit Committee has also discussed with
KPMG the matters required to be discussed by Statement on
Auditing Standards No.&nbsp;61 relating to communication with
audit committees. In addition, the Audit Committee has received
from KPMG the written disclosures and the letter required by
Independence Standards Board No.&nbsp;1 relating to independence
discussions with audit committees; has discussed with KPMG their
independence from the Company and its management; and has
considered whether KPMG&#146;s provision of non-audit services
to the Company is compatible with maintaining the
auditor&#146;s&nbsp;independence.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Based on the reviews and discussions referred to
above, the Audit Committee recommended to the Board of Directors
of the Company, and the Board has approved, that the
Company&#146;s audited financial statements be included in the
Annual Report on Form&nbsp;10-K for the fiscal year ended
April&nbsp;30, 2005, for filing with the Securities and
Exchange&nbsp;Commission.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">AUDIT COMMITTEE</FONT></B>

<DIV align="left">
<FONT size="2">Louis W. Smith, Chairman
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Roger W. Hale
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Henry F. Frigon
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">David Baker Lewis
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Rayford Wilkins,&nbsp;Jr.
</FONT>
</DIV>

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    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 12</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

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<DIV align="left">

</DIV>

<DIV align="right">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2">AUDIT FEES&nbsp;...</FONT></B>

<DIV align="left">
<FONT size="2">The following table presents fees for
professional services rendered by KPMG LLP for the audit of the
Company&#146;s annual financial statements for the years ended
April&nbsp;30, 2005 and 2004 and fees billed for other services
rendered by KPMG LLP for such&nbsp;years:
</FONT>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="67%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="10" align="right" nowrap><HR size="1" noshade></TD><TD></TD>
</TR>

<TR>
    <TD align="left" nowrap><FONT size="1">Fiscal Year</FONT></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><B><FONT size="1">2005</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">2004</FONT></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="11" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Audit fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><B><FONT size="2">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT size="2">3,536,320</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,346,175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Audit-related fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT size="2">311,672</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">996,759</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Tax fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT size="2">252,186</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">115,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">All other fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT size="2">&#151;</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">345,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="9" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Total fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><B><FONT size="2">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT size="2">4,100,178</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,802,934</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="9" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD colspan="11" align="left"><HR size="1" noshade></TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Audit Fees consist of fees for professional
services rendered for the audit of the Company&#146;s financial
statements and review of financial statements included in the
Company&#146;s quarterly reports and services normally provided
by the independent auditor in connection with statutory and
regulatory filings or engagements.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Audit-Related Fees are fees for assurance and
related services that are reasonably related to the performance
of the audit or review of the Company&#146;s financial
statements or that are traditionally performed by the
independent auditor.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Tax Fees consist of fees for the preparation of
original and amended tax returns, claims for refunds and tax
payment-planning services for tax compliance, tax planning, tax
consultation and tax advice.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">All other fees are fees billed for professional
services that were not the result of an audit or review.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The Audit Committee has adopted policies and
procedures for pre-approving audit and non-audit services
performed by the independent auditor so that the provision of
such services does not impair the auditor&#146;s independence.
Under the Audit Committee&#146;s pre-approval policy, the terms
and fees of the annual audit engagement require specific Audit
Committee approval. Other types of service are eligible for
general pre-approval. Unless a type of service to be provided by
the independent auditor has received general pre-approval, it
will require specific Audit Committee pre-approval. In addition,
any proposed services exceeding pre-approved cost levels will
require specific pre-approval by the Audit Committee.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">General pre-approval granted under the Audit
Committee&#146;s pre-approval policy extends to the fiscal year
next following the date of pre-approval. The Audit Committee
reviews and pre-approves services that the independent auditor
may provide without obtaining specific Audit Committee
pre-approval on an annual basis and revises the list of general
pre-approved services from time to time. In determining whether
to pre-approve audit or non-audit services (regardless of
whether such approval is general or specific pre-approval), the
Audit Committee will consider whether such services are
consistent with the Securities and Exchange Commission&#146;s
rules on auditor independence. The Audit Committee will also
consider whether the independent auditor is best positioned to
provide the most effective and efficient service and whether the
service might enhance the Company&#146;s ability to manage or
control risk or improve audit quality. All such factors will be
considered as a whole and no one factor should necessarily be
determinative. The Audit Committee will also consider the
relationship between fees for audit and non-audit services in
deciding whether to pre-approve any such services. The Audit
Committee may determine for each fiscal year the appropriate
ratio between fees for Audit Services and fees for Audit-Related
Services, Tax Services and All Other Services.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The Audit Committee may delegate pre-approval
authority to one or more of its members. The member or members
to whom such authority is delegated shall report any
pre-approval decisions to the Audit Committee at its next
scheduled meeting.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The Audit Committee has concluded that the
provision of non-audit services provided to the Company by its
independent accountant during the 2005 fiscal year was
compatible with maintaining the independent
accountant&#146;s&nbsp;independence.
</FONT>
</DIV>

<!-- link1 "<FONT size="2">EXECUTIVE COMPENSATION</FONT>" -->

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2">EXECUTIVE COMPENSATION</FONT></B>

<P align="left">
<B><FONT size="2">COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION&nbsp;...</FONT></B>

<DIV align="left">
<FONT size="2">The Compensation Committee is responsible for
reviewing the Company&#146;s executive compensation program and
policies each year and recommending to the non-employee members
of the Board of Directors the compensation of the Company&#146;s
executive officers. The Compensation Committee&#146;s charter
reflects these responsibilities. You can find a copy of the
Compensation Committee charter on the Company&#146;s website at
www.hrblock.com under the tab &#147;Our Company&#148; and then
under the heading &#147;Block Investors&#148; and then under
&#147;Corporate&nbsp;Governance.&#148;
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The Compensation Committee consists solely of
directors who are each (i)&nbsp;independent under the New York
Stock Exchange&#146;s listing standards and the Board&#146;s
Director Independence Standards, (ii)&nbsp;an outside director
for purposes of Section&nbsp;162 (m)&nbsp;of the Internal
Revenue Code, and (iii)&nbsp;a &#147;non-employee
</FONT>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="93%"></TD>
    <TD width="7%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 13</FONT></B></TD>
</TR>

</TABLE>

<!-- PAGEBREAK -->
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">director&#148; pursuant to Rule&nbsp;16b-3 under
federal securities laws. In addition to consisting solely of
independent directors, the Committee retains independent
compensation consultants to assist it in fulfilling
its&nbsp;responsibilities.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The Company continues to be strongly committed to
maximizing shareholder value through consistent growth and
profitability. Superior performance by the executive officers
and management team of the Company and its subsidiary
corporations is essential to reaching that goal. As such, the
Company&#146;s philosophy is to assure that executive
compensation is linked directly to sustained improvements in
individual and corporate performance and increases in total
shareholder&nbsp;return.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">COMPENSATION PROGRAM</FONT></B>

<DIV align="left">
<B><FONT size="2" color="#7FBA00">BASE
SALARY&nbsp;...</FONT></B><FONT size="2"> Base salaries are
determined based on external competitiveness for
similarly-scoped roles in peer companies, internal equity and
the executive&#146;s experience, talents and&nbsp;performance.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">SHORT-TERM INCENTIVE
PROGRAM&nbsp;...</FONT></B><FONT size="2"> The Company&#146;s
short-term incentive program (the &#147;STI Program&#148;)
consists of an objective incentive compensation component based
upon annual financial targets tied to business unit or overall
corporate results (the &#147;Financial STI Component&#148;) and
a discretionary incentive compensation component based on
achieving pre-established individual or strategic objectives
(the &#147;Discretionary STI Component&#148;). A heavier
emphasis for executive officers (80% of targeted incentive
compensation in most cases in fiscal year 2005) is placed upon
the Financial STI Component, which specifically relates
executive pay to Company performance. Under the STI Program, the
Committee reviews and the Board approves financial-performance
goals and individual target bonus&nbsp;awards.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Short-term incentive compensation generally is
paid in cash. Short-term incentive payouts exceeding 150% of the
targeted payouts are paid in restricted stock. Restricted stock
is issued under the Company&#146;s 2003 Long-Term Executive
Compensation Plan and is described in more detail under
&#147;Long-Term Incentive Compensation&#148; below. The amount
of restricted stock awarded is calculated by dividing the cash
value of the applicable incentive compensation by the last
reported closing price for the Company&#146;s stock as of
June&nbsp;30,&nbsp;2005.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2">Financial STI
Component.</FONT></B><FONT size="2"> Payments under the
Financial STI Component are made after the end of a fiscal year
only if the Company (or applicable business unit) has met the
financial-performance goals reviewed by the Committee and
approved by the Board for such fiscal year. The Committee
reviews and the Board approves the payout for an executive
officer and determines the extent to which the requisite
performance targets have been achieved prior to payment of the
Financial STI Component. Fiscal year 2005 performance criteria
under the Financial STI Component consisted of the following:
(i)&nbsp;the degree to which the Company attained targeted
year-over-year growth in diluted earnings per share;
(ii)&nbsp;year-over-year growth in pretax earnings; and
(iii)&nbsp;attainment of year-over-year revenue goals. In
addition, fiscal year 2005 performance criteria included
year-over-year client growth for the U.S. tax services business
segment and year-over-year origination growth for the mortgage
services business segment. Under the Financial STI Component,
participants can earn more or less than the target award (from
0% to 200% of the target award) depending upon how actual
results compare to the pre-established performance&nbsp;targets.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2">Discretionary STI
Component.</FONT></B><FONT size="2"> Payments under the
Discretionary STI Component for fiscal year 2005 were based upon
achievement of strategic and individual performance objectives
that support the Company&#146;s priorities. For most executive
officers, 20% of the executive&#146;s overall targeted
STI&nbsp;Program compensation was based on the Discretionary STI
Component. Actual incentive payouts under the Discretionary
STI&nbsp;Component could be from 0% to 200% of the target award,
depending upon actual performance against
pre-established&nbsp;objectives.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">SHORT-TERM INCENTIVE
COMPENSATION PLAN&nbsp;...</FONT></B><FONT size="2"> In addition
to the STI Program, the Company maintains the H&#38;R Block
Short-Term Incentive Plan, which was approved by the
Company&#146;s shareholders on September&nbsp;13, 2000 (the
&#147;Executive Plan&#148;). To the extent an officer receives
an award under the Executive Plan, such officer does not receive
an award under the Financial Component of the STI Program. The
Executive Plan permits the Company to include a bonus
compensation component in executive officer compensation
intended to qualify as deductible performance-based compensation
under Section&nbsp;162(m) of the Internal Revenue Code. Under
the Executive Plan, the Committee may grant performance-based
awards to certain officers of the Company or its subsidiaries
who are selected by the Committee and approved by the Board,
including the Company&#146;s Chief Executive Officer and its
four other highest paid executive officers at the end of the
applicable tax year. Awards under the Executive Plan are based
on performance targets reviewed each year by the Committee and
approved by the Board. Fiscal year 2005 performance criteria
under the Executive Plan were the same as the fiscal year 2005
performance criteria under the Financial STI&nbsp;Component.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">LONG-TERM INCENTIVE
COMPENSATION&nbsp;...</FONT></B><FONT size="2"> The Company
encourages stock ownership by its executive officers
</FONT>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 14</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

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<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="right">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">by issuing long-term incentive awards tied to the
Company&#146;s Common Stock, such as stock options and
restricted stock. Stock options and restricted stock provide
executives an economic interest in increasing long-term
shareholder value, thereby better aligning their interests with
those of the Company&#146;s shareholders. Under the
Company&#146;s 2003 Long-Term Executive Compensation Plan,
option exercise prices are set at 100% of the fair market value
of the stock on the date of grant and the options expire after
ten years. Options granted to executive officers in fiscal year
2005 become exercisable over a three-year period in one-third
increments. Restrictions on restricted stock granted in fiscal
year 2005 lapse over a three-year period in one-third annual
increments beginning on the first anniversary of the date of
issuance. Prior to the lapse of restrictions, restricted stock
is subject to forfeiture and may not be transferred. In
addition, restricted stock recipients are entitled to
(i)&nbsp;receive any cash&nbsp;dividends payable with respect to
unvested restricted stock and&nbsp;(ii)&nbsp;vote unvested
restricted stock shares at shareholders&nbsp;meetings.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Options are granted, and restricted stock is
awarded, to executives at the Board&#146;s discretion, taking
into account the Committee&#146;s recommendation. Stock options
and restricted stock are granted or awarded on an annual basis
and sometimes as part of an employment offer. The number of
shares subject to any stock option grant or restricted stock
award is based on the executive&#146;s level of responsibility,
prior year&#146;s performance, ability to impact the
Company&#146;s future performance, and awards made to executives
at peer companies. The Compensation Committee believes that
stock options and restricted stock have been effective in
attracting, retaining and rewarding executives and
key&nbsp;&nbsp;employees.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">DEFERRED
COMPENSATION&nbsp;...</FONT></B><FONT size="2"> The Company
offers its executive officers and key employees a deferred
compensation plan designed to enhance financial security upon
retirement. Subject to annual deferral limits, the plan offers
participants the opportunity to defer compensation during the
time of his or her participation in the plan. The Company
contributes to the plan an annual match of 100% of the first 5%
of aggregate salary and bonus deferred to the plan and the
Company&#146;s qualified retirement plans, less any employer
matching contributions made to one of the Company&#146;s
qualified retirement plans. Company contributions vest based on
the number of years of the employee&#146;s plan participation.
Gains or losses are posted to a participant&#146;s account
pursuant to his or her selection of various fixed rate, variable
rate and Company stock investment alternatives. The plan is
unfunded, and benefits are paid following termination of
employment, except in cases of disability or&nbsp;&nbsp;hardship.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">BENEFITS AND
PERQUISITES&nbsp;...</FONT></B><FONT size="2"> The Company also
provides certain benefits to all employees such as matching
contributions to the Company&#146;s qualified retirement plans,
an employee stock purchase plan that permits purchases of the
Company&#146;s Common Stock at a discount, life insurance and
health and welfare benefit programs. Benefits for executives
generally are the same as benefits for all other employees,
except that only executive officers and key employees may
participate in the Company&#146;s Executive Survivor Plan and
Deferred Compensation Plan. The Company&#146;s use of
non-commercial aircraft on a time-share or rental basis is
limited to business travel&nbsp;&nbsp;purposes.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">EXECUTIVE STOCK OWNERSHIP
GUIDELINES&nbsp;...</FONT></B><FONT size="2"> The Company
believes that its executives should have a significant financial
stake in the Company so that their interests are aligned with
those of the shareholders. To that end, the Board of Directors
has adopted stock ownership guidelines that describe the
Board&#146;s expectations that certain executives should own
shares of Company stock with an aggregate value that meets or
exceeds certain specified multiples of the executive&#146;s base
salary. The guidelines provide for an ownership multiple of five
times base salary for the Company&#146;s Chief Executive Officer
and lower ownership multiples for other executives. The Board
has adopted similar stock ownership guidelines regarding stock
ownership by Board members. The Board membership ownership
guidelines provide for non-employee directors to own shares of
Company stock with an aggregate value generally exceeding five
times the annual retainer paid to non-employee&nbsp;directors.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">COMPENSATION OF CHIEF
EXECUTIVE OFFICER&nbsp;...</FONT></B><FONT size="2"> The salary,
short-term incentive compensation and long-term incentive
compensation of the Chief Executive Officer generally are
determined pursuant to the policies described above for all
other executives of the&nbsp;Company.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Mark A. Ernst has served as President and Chief
Executive Officer of the Company since January&nbsp;1, 2001 and
as Chairman of the Board since September&nbsp;11, 2002.
Mr.&nbsp;Ernst is a party to an employment agreement entered
into at the time of his employment in 1998.
Mr.&nbsp;Ernst&#146;s annual base rate of salary was increased
from $772,500 to $825,000, effective July&nbsp;1, 2004. In
addition, the Committee recommended and the Board approved a
target award under the Executive Plan for Mr.&nbsp;Ernst for
fiscal year 2005 of $660,000. The target award under the
Executive Plan constitutes 80% of Mr.&nbsp;Ernst&#146;s overall
short-term incentive compensation target award (&#147;Total STI
Target&#148;) and is tied to the following objective,
performance-based criteria: (i)&nbsp;32% of the
</FONT>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="93%"></TD>
    <TD width="7%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 15</FONT></B></TD>
</TR>

</TABLE>

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<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">Total STI Target was based on year-over-year
growth in overall corporate earnings per share, (ii)&nbsp;8% of
the Total STI Target was based on year-over-year growth in
overall revenue and (iii)&nbsp;40% of the Total STI Target was
tied to individual business unit performance targets. Based upon
the results achieved by the Company, Mr.&nbsp;Ernst earned
incentive compensation under the Executive Plan of $217,140 (32%
of&nbsp;target).
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Under the Discretionary STI Component of the STI
Program a target award of $165,000 (20% of annual base pay) was
established for Mr.&nbsp;Ernst, with an actual payout to be
recommended by the Committee for Board approval based upon
Mr.&nbsp;Ernst&#146;s progress against strategic priorities
reviewed by the Committee and approved by the Board in June
2004. Based on the Committee&#146;s recommendation, the Board
determined that Mr.&nbsp;Ernst earned incentive compensation
under the Discretionary STI Component of $181,500 (110% of
target). All of Mr.&nbsp;Ernst&#146;s short-term incentive
compensation was paid in&nbsp;cash.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Ernst was granted an option to purchase
110,000 shares of Common Stock at an option price of
$46.78&nbsp;per share, the last quoted market price for the
Company&#146;s Common Stock on June&nbsp;30, 2004, the date of
grant. Such option has a term of ten years and vests in
one-third annual increments beginning on the first anniversary
of the date of grant. Mr.&nbsp;Ernst was also awarded 15,000
shares of restricted stock. Restrictions on such restricted
stock lapse over a three-year period in one-third annual
increments beginning June&nbsp;30, 2005.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">REVIEW OF ALL COMPONENTS OF
EXECUTIVE COMPENSATION&nbsp;...</FONT></B><FONT size="2"> During
the course of fiscal year 2005, the Compensation Committee
reviewed all components of compensation for Mr.&nbsp;Ernst and
other highly compensated executive officers. This review
encompassed all forms of compensation and balances in equity,
retirement and non-qualified deferred compensation plans,
including base salary short-term incentive compensation,
long-term incentive awards, and other vested benefit payouts. As
a part of this review process, the Committee also reviewed
executive termination costs for each of these officers.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">TAX
CONSIDERATIONS&nbsp;...</FONT></B><FONT size="2">
Section&nbsp;162(m) of the Internal Revenue Code limits to
$1&nbsp;million the Company&#146;s federal income tax deduction
for compensation paid to any one executive officer named in the
Summary Compensation Table of the Company&#146;s proxy
statement, subject to certain transition rules and exceptions
for specified types of performance-based compensation. The
Company has designed the H&#38;R Block Executive Performance
Plan and a portion of compensation payable under the 2003
Long-Term Executive Compensation Plan so that compensation paid
under these plans would be deductible under 162(m), although
individual exceptions may occur.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The Committee believes that it is in the
Company&#146;s and shareholders&#146; best interests to maximize
tax deductibility when appropriate and consistent with
shareholder interests. The Committee may recommend for Board
approval non-deductible compensation when it believes that such
awards are in the best interest of the shareholders, balancing
tax efficiency with long-term strategic objectives.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">COMPENSATION COMMITTEE</FONT></B>

<DIV align="left">
<FONT size="2">Donna R. Ecton, Chairman
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Henry F. Frigon
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Roger W. Hale
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Tom D. Seip
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Louis W. Smith
</FONT>
</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2">COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION&nbsp;...</FONT></B>

<P align="left">
<FONT size="2">The following non-employee directors serve on the
Compensation Committee of the Board of Directors: Donna&nbsp;R.
Ecton (Chairman), Henry&nbsp;F. Frigon, Roger&nbsp;W. Hale,
Tom&nbsp;D. Seip and Louis&nbsp;W. Smith. No directors on the
Compensation Committee (a)&nbsp;are or have been officers or
employees of the Company or any of its subsidiaries, or
(b)&nbsp;had any relationships requiring disclosure in the
proxy&nbsp;statement.
</FONT>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 16</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="right">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2">SUMMARY COMPENSATION TABLE&nbsp;...</FONT></B>

<P align="left">
<FONT size="2">The following table sets forth for the fiscal
year ended April&nbsp;30, 2005 and for the two previous fiscal
years the annual, long-term and other compensation paid to the
Chief Executive Officer of the Company and to each of the four
highest paid executive officers of the Company (other than the
Chief Executive Officer) who was serving as an executive officer
of the Company at the end of such year. The information provided
with respect to restricted shares and options does not reflect
the two-for-one stock split effective August&nbsp;22, 2005.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="16%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="35"></TD>
</TR>

<TR>
    <TD colspan="35"></TD>
</TR>

<TR>
    <TD colspan="34" align="right" nowrap><HR size="1" noshade></TD><TD></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><FONT size="1">Annual Compensation</FONT></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><FONT size="1">Long-Term Compensation Awards</FONT></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="35"></TD>
</TR>

<TR>
    <TD colspan="35"></TD>
</TR>

<TR>
    <TD colspan="34" align="right" nowrap><HR size="1" noshade></TD><TD></TD>
</TR>

<TR>
    <TD align="left" nowrap><FONT size="1">Name and</FONT></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Other Annual</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Restricted</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Securities</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">LTIP</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">All Other</FONT></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD align="left" nowrap><FONT size="1">Principal</FONT></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Fiscal</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Compensation</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Stock</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Underlying</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Payouts</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Compensation</FONT></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD align="left" nowrap><FONT size="1">Position</FONT></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Year</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Salary ($)</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Bonus ($)</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">($)<SUP>(1)</SUP></FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Award(s)($)<SUP>(2)</SUP></FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Options&nbsp;(#)</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">($)</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">($)<SUP>(3)</SUP></FONT></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="35" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Mark A. Ernst,
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2005</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">816,250</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">394,292</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,509</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">714,975</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">110,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">81,200</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Chairman of the Board,
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">768,750</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">865,447</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,574</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">432,500</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">110,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">90,958</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">President and Chief
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">741,667</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">734,063</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">120,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">60,470</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Executive Officer
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="35" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Robert E. Dubrish,
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2005</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">472,372</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">203,432</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">42</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">309,823</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">85,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">42,572</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">President and Chief
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">450,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">438,681</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">40</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">229,981</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">90,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">66,097</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Executive Officer, Option
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">425,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">414,375</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">40</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">139,511</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">90,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">29,676</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">One Mortgage Corporation
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="35" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Jeffery W. Yabuki,
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2005</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">465,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">143,585</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,033</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">309,823</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">85,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">43,720</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Executive Vice President
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">437,500</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">383,133</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,482</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">216,250</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">90,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">51,290</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">and Chief Operating Officer
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">416,667</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">352,219</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,440</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">90,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">37,268</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="35" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Steven Tait
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2005</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">429,794</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">357,095</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">42</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">238,325</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">35,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">29,642</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">President, RSM McGladrey
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">400,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">217,008</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">272</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">40,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">22,216</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Business Services, Inc.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">33,333</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">321,375</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">50,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">20</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="35" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Nicholas J. Spaeth
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2005</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">400,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">101,533</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">238,325</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">35,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">44,182</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Senior Vice President
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">100,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">300,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,982</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,159,800</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">200,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,921</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">and Chief Legal Officer
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<FONT size="2">NOTES:
</FONT>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">(1)</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">For fiscal year 2005, (a)&nbsp;the $1,509 figure
    represents the dollar value of tax preparation and advice
    provided by the Company to Mr.&nbsp;Ernst; (b)&nbsp;the $42
    figure represents payment by the Company for participation by
    Mr. Dubrish in the Company&#146;s group legal plan; (c)&nbsp;the
    $1,033 figure represents the dollar value of tax preparation and
    advice provided by the Company to Mr.&nbsp;Yabuki; and
    (d)&nbsp;the $42 figure represents payment by the Company for
    participation by Mr.&nbsp;Tait in the Company&#146;s group legal
    plan.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">(2)</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Restricted shares of the Company&#146;s common
    stock granted pursuant to the Company&#146;s Long-Term Executive
    Compensation Plan. The awards shown represent grants of
    restricted shares valued as of the date of the grant. Dividends
    are paid on the restricted shares as when dividends are paid on
    the Company&#146;s Common Stock. The restricted shares vest in
    one-third annual increments beginning one year after the grant
    date.
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="2%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mark&nbsp;A. Ernst&nbsp;&#150; For fiscal year
    2005, 15,000 shares granted on June&nbsp;30, 2004, valued at
    $47.665 per share. As of April&nbsp;30, 2005, Mr.&nbsp;Ernst
    held 22,880 restricted shares with a value of $1,139,653.
    Mr.&nbsp;Ernst received dividends totaling $17,588 on the
    restricted shares during fiscal year 2005.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Robert&nbsp;E. Dubrish&nbsp;&#150; For fiscal
    year 2005, 7,000&nbsp;shares granted on June&nbsp;30, 2004,
    valued at $47.665 per&nbsp;share. As of April&nbsp;30, 2005,
    Mr.&nbsp;Dubrish held 13,258 restricted shares with a value of
    $660,381. Mr.&nbsp;Dubrish received dividends totaling $10,793
    on the restricted shares during fiscal year 2005.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Jeffery&nbsp;W. Yabuki&nbsp;&#150; For fiscal
    year 2005, 8,000&nbsp;shares granted on June&nbsp;30, 2004,
    valued at $47.665 per&nbsp;share. As of April&nbsp;30, 2005,
    Mr.&nbsp;Yabuki held 10,747 restricted shares with a value of
    $535,308. Mr.&nbsp;Yabuki received dividends totaling $ $8,457
    on the restricted shares during fiscal year 2005.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Steven Tait&nbsp;&#150; For fiscal year 2005,
    7,000 shares granted on June&nbsp;30, 2004, valued at $47.665
    per share. As of April&nbsp;30, 2005, Mr.&nbsp;Tait held 7,500
    restricted shares with a value of $373,575. Mr.&nbsp;Tait
    received dividends totaling $7,600 on the restricted shares
    during fiscal year 2005.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Nicholas&nbsp;J. Spaeth&nbsp;&#150; For fiscal
    year 2005, 5,000 shares granted on June&nbsp;30, 2004, valued at
    $47.665 per&nbsp;share. As of April&nbsp;30, 2005,
    Mr.&nbsp;Spaeth held 25,000 restricted shares with a value of
    $1,245,250. Mr.&nbsp;Spaeth received dividends totaling $20,500
    on the restricted shares during fiscal year 2005.
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">(3)</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">For fiscal year 2005, these figures include the
    following: (a)&nbsp;the Company&#146;s matching contributions
    under the Company&#146;s Deferred Compensation Plan for
    Executives (&#147;DCP&#148;) of $72,961 (Mr.&nbsp;Ernst),
    $34,476 (Mr.&nbsp;Dubrish), $31,657 (Mr.&nbsp;Yabuki), $20,975
    (Mr.&nbsp;Tait), and $28,083 (Mr.&nbsp;Spaeth); (b)&nbsp;the
    Company&#146;s matching contributions under the H&#38;R Block
    Retirement Savings Plan (&#147;RSP&#148;) of $5,500
    (Mr.&nbsp;Ernst), $4,994 (Mr.&nbsp;Dubrish), $10,631
    (Mr.&nbsp;Yabuki), $6,089 (Mr.&nbsp;Tait) and $11,083
    (Mr.&nbsp;Spaeth); (c)&nbsp;the insurance premiums paid by the
    Company with respect to term life insurance maintained by the
    Company for the benefit of each of the named executive officers
    of $1,254 (Mr.&nbsp;Ernst), $1,957 (Mr.&nbsp;Dubrish), $714
    (Mr.&nbsp;Yabuki), $673 (Mr.&nbsp;Tait), and $635
    (Mr.&nbsp;Spaeth); and (d)&nbsp;the economic value of the death
    benefit provided by the Company&#146;s Executive Survivor Plan
    (&#147;ESP&#148;) of $1,485 (Mr.&nbsp;Ernst), $1,325
    (Mr.&nbsp;Dubrish), $719 (Mr.&nbsp;Yabuki), $1,905 (Mr. Tait)
    and $4,380 (Mr.&nbsp;Spaeth). The imputed income reported from
    the ESP represents the portion of the premium paid by the
    Company pursuant to the ESP that is attributable to term life
    insurance coverage for the executive officer. The ESP provides
    only an insurance benefit with no cash compensation element to
    the executive officer.
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="93%"></TD>
    <TD width="7%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 17</FONT></B></TD>
</TR>

</TABLE>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2">STOCK OPTION GRANT TABLE&nbsp;...</FONT></B>

<DIV align="left">
<FONT size="2">The following table summarizes options to
purchase the Company&#146;s Common Stock granted during the
fiscal year ended April&nbsp;30, 2005 to the executive officers
named in the Summary Compensation Table (the &#147;Named
Officers&#148;) above. The information provided does not reflect
the two-for-one stock split effective August&nbsp;22, 2005.
</FONT>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="19%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="27"></TD>
</TR>

<TR>
    <TD colspan="27"></TD>
</TR>

<TR>
    <TD colspan="27" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="17"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="17"></TD>
    <TD></TD>
    <TD colspan="6" align="right" nowrap><B><FONT size="1">Potential Realizable Value</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="17"></TD>
    <TD></TD>
    <TD colspan="6" align="right" nowrap><B><FONT size="1">at Assumed Annual Rates</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="6" align="right" nowrap><B><FONT size="1">of Stock Price Appreciation</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Individual Grants</FONT></B></TD>
    <TD></TD>
    <TD colspan="6" align="right" nowrap><B><FONT size="1">for Option Term<SUP>(1)</SUP></FONT></B></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="27"></TD>
</TR>

<TR>
    <TD colspan="27"></TD>
</TR>

<TR>
    <TD colspan="27" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="17"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options Granted</FONT></B></TD>
    <TD></TD>
    <TD colspan="17"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Underlying Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">to Employees in</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="13"></TD>
</TR>

<TR>
    <TD align="center" nowrap><FONT size="1">Name</FONT></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Granted (#)<SUP>(2)</SUP></FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fiscal Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($/Sh)<SUP>(2)</SUP></FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expiration Date</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">5% ($)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">10% ($)</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="27" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Mark A. Ernst
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">110,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.89</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">47.68</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6/30/2014</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,298,427</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">8,358,860</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="27" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Robert E. Dubrish
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">85,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.24</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">47.68</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6/30/2014</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,548,784</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6,459,119</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="27" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Jeffery W. Yabuki
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">85,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.24</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">47.68</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6/30/2014</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,548,784</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6,459,119</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="27" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Steven Tait
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">35,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.92</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">47.68</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6/30/2014</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,049,499</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,659,637</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="27" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Nicholas J. Spaeth
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">35,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.92</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">47.68</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6/30/2014</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,049,499</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,659,637</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="27" align="left"><HR size="1" noshade></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<FONT size="2">NOTES:
</FONT>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">(1)</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The amounts shown as potential realizable values
    on the options identified in the table are based on arbitrarily
    assumed annualized rates of appreciation in the price of the
    Company&#146;s Common Stock of five percent and ten percent over
    the term of the options, as set forth in the rules of the
    Securities and Exchange Commission relating to proxy disclosure.
    Actual gains, if any, on stock option exercises are dependent on
    the future performance of the Common Stock. There can be no
    assurance that the potential realizable values reflected in this
    table will be achieved.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">(2)</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Stock option grants consisted of nonqualified
    stock options, incentive stock options or a combination of the
    two types of options. No stock appreciation rights were granted
    during fiscal year 2005. Options were granted under the 2003
    Long-Term Executive Compensation Plan. The exercise price for
    each option is the fair market value of a share of Common Stock
    on the date of grant. Options granted to the Named Officers
    become exercisable one year after the date of grant, at which
    time they are exercisable on a cumulative basis at a maximum
    annual rate of one-third of the total number of shares subject
    to the option. The stock options generally become fully
    exercisable (a)&nbsp;at any time after the Named Officer reaches
    the age of 65, retires, and more than one year has elapsed since
    the date of grant, or (b)&nbsp;upon a change in control of the
    Company not less than six months after the date of grant. The
    Named Officer must be employed by the Company or one of its
    subsidiary corporations at the time of exercise, except that the
    exercise of the options may take place for limited time periods
    after the termination of employment in the event of death,
    retirement, disability or termination without cause. All options
    expire ten years after the date of grant.
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 18</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="right">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2">OPTION EXERCISES AND FISCAL YEAR-END
VALUES&nbsp;...</FONT></B>

<P align="left">
<FONT size="2">The following table summarizes the value realized
on the exercise of options during the fiscal year ended
April&nbsp;30, 2005 and presents the value of unexercised
options as of such date for the Named Officers. The information
provided does not reflect the two-for-one stock split effective
August&nbsp;22, 2005. The value of unexercised in-the-money
options at fiscal year-end is calculated by determining the
difference between the fair market value of the securities
underlying the options at fiscal year-end and the exercise price
of the options multiplied by the number of shares underlying
such option:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="22%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="18%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="15%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="18%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="13"></TD>
</TR>

<TR>
    <TD colspan="13"></TD>
</TR>

<TR>
    <TD colspan="13" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="6"></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">Number of</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="4"></TD>
</TR>

<TR>
    <TD colspan="6"></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">Securities</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="4"></TD>
</TR>

<TR>
    <TD colspan="6"></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">Underlying</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Value of Unexercised</FONT></TD><TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="6"></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">Unexercised Options</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">In-the-Money Options</FONT></TD><TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="6"></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">at FY-End&nbsp;(#)</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">at FY-End&nbsp;($)</FONT></TD><TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="13"></TD>
</TR>

<TR>
    <TD colspan="13"></TD>
</TR>

<TR>
    <TD colspan="13" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">Shares Acquired on</FONT></TD><TD></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">Value</FONT></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">Exercisable (E)/</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Exercisable (E)/</FONT></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD align="left" nowrap><FONT size="1">Name</FONT></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">Exercise&nbsp;(#)</FONT></TD><TD></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">Realized&nbsp;($)</FONT></TD><TD></TD>
    <TD align="right" nowrap><FONT size="1">Unexercisable&nbsp;(U)</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Unexercisable&nbsp;(U)</FONT></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="13" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Mark A. Ernst
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">-0-
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">-0-
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">766,675(E)
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">19,205,987(E</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">323,325(U)
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,963,238(U</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="13" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Robert E. Dubrish
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">80,000
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">2,522,913
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">212,006(E)
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,053,678(E</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">224,994(U)
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,077,430(U</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="13" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Jeffery W. Yabuki
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">-0-
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">-0-
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">270,006(E)
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,761,095(E</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">234,994(U)
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,249,780(U</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="13" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Steven Tait
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">-0-
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">-0-
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">30,000(E)
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">194,466(E</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">95,000(U)
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">452,984(U</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD colspan="13" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Nicholas J. Spaeth
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">-0-
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">-0-
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">66,667(E)
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">-0-(E</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">168,333(U)
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">64,050(U</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD colspan="13" align="left"><HR size="1" noshade></TD>

</TR>

</TABLE>
</CENTER>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="93%"></TD>
    <TD width="7%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 19</FONT></B></TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2">PERFORMANCE GRAPH&nbsp;...</FONT></B>

<P align="left">
<FONT size="2">The graph below sets forth for the five-year
period ended April&nbsp;30, 2005, the cumulative total
shareholder return to the Company&#146;s shareholders, as well
as the cumulative total return of the Standard&nbsp;&#38;
Poor&#146;s 500&nbsp;Stock Index and the cumulative total return
of the Standard&nbsp;&#38; Poor&#146;s Diversified Commercial
Services Index, the published industry index to which the
Company is currently assigned by Standard&nbsp;&#38;
Poor&#146;s. The performance graph assumes that $100 was
invested at the market close on April&nbsp;30, 2000 and that
dividends were reinvested. The data for the graph was furnished
by Research Data Group, Inc.
</FONT>

<DIV align="center">
<IMG src="c96814dc9681401.gif" alt="(LINE GRAPH)">
</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2">CUMULATIVE TOTAL SHAREHOLDER
RETURN&nbsp;...</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="39%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">4/00</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">4/01</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">4/02</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">4/03</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">4/04</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">4/05</FONT></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="27" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">H&#38;R BLOCK, INC
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">135.66</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">201.13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">196.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">233.66</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">262.56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">S&nbsp;&#38; P 500
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87.03</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76.04</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65.92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">81.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86.14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">S&nbsp;&#38; P DIVERSIFIED COMMERCIAL SERVICES
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123.91</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">133.84</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123,27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">178.58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">164.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="27" align="left"><HR size="1" noshade></TD>

</TR>

</TABLE>
</CENTER>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 20</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="right">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2">EQUITY COMPENSATION PLANS&nbsp;...</FONT></B>

<P align="left">
<FONT size="2">The following table provides information about
the Company&#146;s Common Stock that may be issued upon the
exercise of options, warrants and rights under all of the
Company&#146;s existing equity compensation plans as of
April&nbsp;30, 2005. The information provided does not reflect
the two-for-one stock split effective August&nbsp;22, 2005. The
Company currently has four stock-based compensation plans: the
2003 Long-Term Executive Compensation Plan, the 1989 Stock
Option Plan for Outside Directors, the 1999 Stock Option Plan
for Seasonal Employees, and the 2000 Employee Stock Purchase
Plan. The shareholders have approved all of the Company&#146;s
stock-based compensation plans. The shareholders approved the
2003 Plan in September 2002 to replace the 1993 Long-Term
Executive Compensation Plan, effective July&nbsp;1, 2003. The
1993 Plan terminated at that time, except with respect to
outstanding awards thereunder. The shareholders had approved the
1993 Plan in September 1993 to replace the 1984 Long-Term
Executive Compensation Plan, which terminated at that time
except with respect to outstanding options thereunder.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="35%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="21%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="22%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="9"></TD>
</TR>

<TR>
    <TD colspan="9"></TD>
</TR>

<TR>
    <TD colspan="9" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">Number of securities to Be Issued</FONT></TD><TD></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">Weighted-average exercise price of</FONT></TD><TD></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">Number of securities remaining available for</FONT></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">Upon Exercise of Outstanding</FONT></TD><TD></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">outstanding options, warrants</FONT></TD><TD></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">future issuance under equity compensation</FONT></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD align="left" nowrap><FONT size="1">&nbsp;</FONT></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">Options, Warrants and Rights</FONT></TD><TD></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">and&nbsp;rights</FONT></TD><TD></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">plans excluding securities reflected in column (A)</FONT></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD align="left" nowrap><FONT size="1">Plan category</FONT></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">(A)</FONT></TD><TD></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">(B)</FONT></TD><TD></TD>
    <TD></TD>
    <TD align="right" nowrap><FONT size="1">(C)</FONT></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="9"></TD>
</TR>

<TR>
    <TD colspan="9"></TD>
</TR>

<TR>
    <TD colspan="9" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Equity compensation plans approved by security
    holders
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">13,552,000
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">$38.04
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">9,888,179
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Equity compensation plans not approved by
    security holders
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">&#151;
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">&#151;
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">&#151;
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="1">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">13,522,000
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">$38.04
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="1">9,888,179
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2">EMPLOYMENT AGREEMENTS, CHANGE-IN-CONTROL AND
OTHER ARRANGEMENTS&nbsp;...</FONT></B>

<DIV align="left">
<FONT size="2">Mark A. Ernst is subject to an Employment
Agreement with HRB Management, Inc. (&#147;HRB&#148;), an
indirect subsidiary of the Company, dated July&nbsp;16, 1998,
whereby effective September&nbsp;1, 1998, he was employed as the
Executive Vice President and Chief Operating Officer of the
Company. Base salary and incentive bonus compensation are to be
reviewed annually by the Compensation Committee. The Agreement
provides that it may be terminated by either party at any time
for any reason upon 45&nbsp;days&#146; prior written notice, by
HRB for &#147;cause,&#148; and by Mr.&nbsp;Ernst for &#147;good
reason,&#148; in each case as defined in the Agreement. If the
Agreement is terminated by HRB without &#147;cause,&#148; by
Mr.&nbsp;Ernst for &#147;good reason,&#148; or by either party
during the 180-day period following the date of a &#147;change
of control&#148; (as defined in the Agreement) of the Company,
HRB is obligated to continue to pay Mr.&nbsp;Ernst&#146;s salary
(determined as of the termination date) and provide all other
benefits for a period of two years following such termination,
as well as a pro rata portion of the incentive bonus
compensation to which he would have been entitled had he
remained employed through the end of the fiscal year in which
such termination occurs. In addition, all outstanding stock
options become fully vested and are exercisable for the
three-month period following termination, and any restrictions
upon Common Stock awarded Mr.&nbsp;Ernst on the effective date
lapse and such stock becomes fully vested upon the date of
termination.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Robert E. Dubrish is subject to an Employment
Agreement with Option One Mortgage Corporation (&#147;Option
One&#148;), an indirect subsidiary of the Company, dated
February&nbsp;9, 2002, and effective June&nbsp;30, 2001. Base
salary and any incentive bonus compensation are to be reviewed
annually by the Compensation Committee. The Agreement provides
that it may be terminated by either party at any time for any
reason upon 45&nbsp;days&#146; prior written notice. Option One
also has the right to terminate the Agreement without notice
upon the occurrence of certain stated events. If
Mr.&nbsp;Dubrish incurs a &#147;qualifying termination,&#148; as
defined in the H&#38;R Block Severance Plan (the &#147;Severance
Plan&#148;), or if the Agreement is terminated by
Mr.&nbsp;Dubrish within 180&nbsp;days following a &#147;change
of control&#148; (as defined in the Agreement) of the Company,
Option One is obligated to pay to Mr.&nbsp;Dubrish his choice of
the level of severance compensation and benefits as would be
provided under the Severance Plan as such plan exists either on
the effective date of the Agreement or on
Mr.&nbsp;Dubrish&#146;s last day of employment. As of the
effective date, the Severance Plan provides maximum compensation
of 18&nbsp;months of salary and one and one-half times target
payout under the STI Program, with the actual amount based upon
Mr.&nbsp;Dubrish&#146;s salary and target payout, salary grade
and length of service with all subsidiaries of the Company at
the time of his termination, as well as a discretionary payment,
which may be zero. In addition, in such circumstances, Option
One is obligated to provide health,
</FONT>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="93%"></TD>
    <TD width="7%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 21</FONT></B></TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">life and disability insurance benefits for up to
12&nbsp;months following such termination, and all outstanding
stock options that would have vested in the 18-month period
following termination become fully vested and are exercisable
for the three-month period following termination or the
severance period.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Jeffery W. Yabuki is subject to an Employment
Agreement with HRB dated September&nbsp;7, 1999, whereby
effective September&nbsp;7, 1999, he was employed as the
President, H&#38;R Block International. Base salary and
incentive bonus compensation are to be reviewed annually by the
Compensation Committee. The Agreement provides that it may be
terminated by either party at any time for any reason upon
45&nbsp;days&#146; prior written notice, by mutual written
agreement, by HRB for &#147;cause,&#148; and by Mr.&nbsp;Yabuki
for &#147;good reason,&#148; in each case as defined in the
Agreement. If the Agreement is terminated by HRB without
&#147;cause,&#148; by Mr.&nbsp;Yabuki for &#147;good
reason,&#148; or by either party within 180&nbsp;days following
a &#147;change of control&#148; (as defined in the Agreement) of
the Company, HRB is obligated to pay to Mr.&nbsp;Yabuki for the
two-year period following such termination compensation at an
annual rate equal to the sum of the annual rate of base salary
in effect on the date of termination and the aggregate
short-term incentive compensation paid by HRB to him for the
last fiscal year completed prior to the year of termination, and
provide health, life and disability insurance benefits for a
period of two years following such termination. In addition, all
outstanding stock options which would have vested during such
two-year period following termination become fully vested and
are exercisable for the three-month period following
termination, and any restrictions upon stock held by
Mr.&nbsp;Yabuki lapse to the extent such restrictions would have
lapsed during the two-year period following termination.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Steven Tait is subject to an Employment Agreement
with HRB Business Services, Inc. (now RSM McGladrey Business
Services, Inc.) (&#147;RSM&#148;), an indirect subsidiary of the
Company, dated April&nbsp;1, 2003, whereby effective
April&nbsp;1, 2003, he was employed as President of RSM. Base
salary is to be reviewed for adjustment no less than annually.
The Agreement provides that it may be terminated by either party
at any time for any reason upon 45&nbsp;days&#146; prior written
notice. RSM also has the right to terminate the Agreement
without notice upon the occurrence of certain stated events. If
Mr.&nbsp;Tait incurs a &#147;qualifying termination,&#148; as
defined in the Severance Plan, or if the Agreement is terminated
by Mr.&nbsp;Tait within 180&nbsp;days following a &#147;change
of control&#148; (as defined in the Agreement) of the Company,
RSM is obligated to pay to Mr.&nbsp;Tait his choice of the level
of severance compensation and benefits as would be provided
under the Severance Plan as such plan exists either on the
effective date of the Agreement or on Mr.&nbsp;Tait&#146;s last
day of employment. As of the effective date, the Severance Plan
provides maximum compensation of 18&nbsp;months of salary and
one twelfth of the target payout under the STI Program
multiplied by Mr.&nbsp;Tait&#146;s years of service, as well as
a discretionary payment, which may be zero. In addition, in such
circumstances, RSM is obligated to provide medical, dental,
vision, employee assistance, life insurance, cafeteria plan and
accidental death and dismemberment insurance benefits for up to
12&nbsp;months following such termination, and all outstanding
stock options that would have vested in the 18-month period
following termination become fully vested and are exercisable
for the three-month period following termination or the
severance period.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Nicholas&nbsp;J. Spaeth is subject to an
Employment Agreement with HRB dated February&nbsp;2, 2004,
whereby effective February&nbsp;2, 2004, he was employed as the
Senior Vice President, Chief Legal Officer of the Company. The
Agreement provides for an initial base salary at an annual rate
of $400,000; participation in the Company&#146;s Short-Term
Incentive Plan, a $300,000 bonus upon completion of Fiscal Year
2004; 20,000 restricted shares of the Company&#146;s Common
Stock awarded on the effective date; and a stock option to
purchase 200,000 shares of Common Stock granted on the effective
date. Base salary and incentive bonus compensation are to be
reviewed annually by the Compensation Committee. The Agreement
provides that it may be terminated by either party at any time
for any reason upon 45&nbsp;days&#146; prior written notice. HRB
also has the right to terminate the Agreement without notice
upon the occurrence of certain stated events. If Mr.&nbsp;Spaeth
incurs a &#147;qualifying termination,&#148; as defined in the
Severance Plan, or if the Agreement is terminated by
Mr.&nbsp;Spaeth within 180&nbsp;days following a &#147;change of
control&#148; (as defined in the Agreement) of the Company, HRB
is obligated to pay to Mr.&nbsp;Spaeth his choice of the level
of severance compensation and benefits as would be provided
under the Severance Plan as such plan exists either on the
effective date of the Agreement or on Mr.&nbsp;Spaeth&#146;s
last day of employment. As of the effective date, the Severance
Plan provides maximum compensation of 18&nbsp;months of salary
and one twelfth of the target payout under the STI Program
multiplied by Mr.&nbsp;Spaeth&#146;s years of service, as well
as a discretionary payment, which may be zero. In addition, in
such circumstances, HRB is obligated to provide medical, dental,
vision, employee assistance, life insurance, cafeteria plan and
accidental death and dismemberment insurance benefits for up to
12&nbsp;months following such termination, and all outstanding
stock options that would have vested in the 18-month period
following termination become fully vested and are exercisable
for the three-month period following termination or the
severance period.
</FONT>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 22</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="right">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Stock option agreements entered into on or after
June&nbsp;30, 1996 between the Company and the recipients of
stock options granted pursuant to the 1993 Long-Term Executive
Compensation Plan and the 2003 Long-Term Executive Compensation
Plan contain provisions that accelerate the vesting of options
held more than six months in the event of certain changes in
control. For purposes of such agreements, changes in control
include (i)&nbsp;the purchase or other acquisition by a person,
entity or group of persons of beneficial ownership of 20% or
more of the Company&#146;s voting securities, (ii)&nbsp;the
turnover of more than a majority of the directors on the Board
of Directors as a result of a proxy contest or series of
contests, (iii)&nbsp;either approval (for agreements entered
into prior to June&nbsp;30, 2001) by the Company&#146;s
shareholders or completion (for agreements entered into on or
after June&nbsp;30, 2001) of (A)&nbsp;a reorganization or
consolidation such that the shareholders immediately prior to
the reorganization or consolidation do not, immediately after
such reorganization or consolidation, own more than 50% of the
voting securities of the reorganized or consolidated
organization, or (B)&nbsp;the sale of all or substantially all
of the assets of the Company, or (iv)&nbsp;approval by the
Company&#146;s shareholders of a liquidation or dissolution of
the&nbsp;Company.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Brian&nbsp;L. Nygaard, H&#38;R Block,&nbsp;Inc.,
and H&#38;R Block Financial Advisors,&nbsp;Inc.
(&#147;HRBFA&#148;) entered into a Termination Agreement dated
January&nbsp;7, 2005, whereby Mr.&nbsp;Nygaard&#146;s employment
and his Employment Agreement with HRBFA terminated on such date
(the &#147;Termination Date&#148;). Under the Termination
Agreement, HRBFA agreed to (1)&nbsp;pay Mr.&nbsp;Nygaard
$312,000 over a 6-month period beginning on the Termination Date
in semi-monthly equal installments of $26,000, (2)&nbsp;allow
Mr.&nbsp;Nygaard to remain eligible to participate in those
health and welfare plans maintained by the HRBFA offering
medical, dental, vision, employee assistance, flexible spending
account, life insurance and accidental death and dismemberment
insurance benefits during the 6-month period beginning on the
Termination Date, (3)&nbsp;allow Mr.&nbsp;Nygaard to exercise
any outstanding incentive stock options and nonqualified stock
options to purchase shares of the Company&#146;s Common Stock
that were scheduled to vest between the Termination Date and
July&nbsp;6, 2006, (4)&nbsp;terminate all restrictions on any
shares of the Company&#146;s Common Stock awarded to
Mr.&nbsp;Nygaard that would have lapsed absent a termination of
employment in accordance with their terms by reason of time
between Termination Date and July&nbsp;6, 2006, and
(5)&nbsp;arrange for outplacements services to Mr.&nbsp;Nygaard
for the 12-month period beginning on the Termination Date. In
exchange, Mr.&nbsp;Nygaard agreed to, among other things,
release the Company and all its subsidiaries from any and all
claims.
</FONT>
</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2">INFORMATION REGARDING SECURITY
HOLDERS</FONT></B>

<P align="left">
<B><FONT size="2">SECURITY OWNERSHIP OF DIRECTORS AND
MANAGEMENT&nbsp;...</FONT></B>

<P align="left">
<FONT size="2">The following table shows as of June&nbsp;1, 2005
the number of shares of Common Stock beneficially owned by each
director and nominee for election as director, by each of the
Named Officers and by all directors and executive officers as a
group. The number of shares beneficially owned is determined
under rules of the Securities and Exchange Commission. The
information is not necessarily indicative of beneficial
ownership for any other purpose. Under these rules, beneficial
ownership includes any shares as to which the individual has
either sole or shared voting power or investment power and also
any shares that the individual has the right to acquire within
60&nbsp;days through the exercise of any stock option or other
right. Unless otherwise indicated in the footnotes, each person
has sole voting
</FONT>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="93%"></TD>
    <TD width="7%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 23</FONT></B></TD>
</TR>

</TABLE>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">and investment power with respect to shares set
forth in the following table. The information provided does not
reflect the two-for-one stock split effective August&nbsp;22,
2005.
</FONT>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="29%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="12%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD colspan="17" align="center" nowrap><FONT size="1">Number of Shares</FONT></TD>
</TR>

<TR>
    <TD colspan="17"></TD>
</TR>

<TR>
    <TD colspan="16" align="right" nowrap><HR size="1" noshade></TD><TD></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Beneficially</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Share Units and</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Percent</FONT></TD><TD></TD>
</TR>

<TR>
    <TD align="left" nowrap><FONT size="1">Name</FONT></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Owned<SUP>(1)</SUP></FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Share Equivalents<SUP>(2)</SUP></FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Total</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">of Class</FONT></TD><TD></TD>
</TR>

<TR>
    <TD colspan="17" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">G.&nbsp;Kenneth Baum
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">238,267</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,564</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">244,831</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Thomas&nbsp;M. Bloch
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">139,579</FONT></TD>
    <TD align="left" valign="bottom" nowrap><SUP><FONT size="2">(3)</FONT></SUP></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">139,579</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Robert&nbsp;E. Dubrish
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">382,983</FONT></TD>
    <TD align="left" valign="bottom" nowrap><SUP><FONT size="2">(4)</FONT></SUP></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">382,983</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Donna&nbsp;R. Ecton
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48,801</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,596</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51,397</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Mark&nbsp;A. Ernst
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,013,063</FONT></TD>
    <TD align="left" valign="bottom" nowrap><SUP><FONT size="2">(5)</FONT></SUP></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,013,063</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Henry&nbsp;F. Frigon
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,667</FONT></TD>
    <TD align="left" valign="bottom" nowrap><SUP><FONT size="2">(6)</FONT></SUP></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,176</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,843</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Roger&nbsp;W. Hale
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63,012</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,595</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65,607</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">David&nbsp;Baker Lewis
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Tom&nbsp;D. Seip
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,367</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,394</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,761</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Louis&nbsp;W. Smith
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,667</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,399</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42,066</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Nicholas&nbsp;J. Spaeth
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">103,334</FONT></TD>
    <TD align="left" valign="bottom" nowrap><SUP><FONT size="2">(7)</FONT></SUP></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">103,334</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Steven Tait
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,838</FONT></TD>
    <TD align="left" valign="bottom" nowrap><SUP><FONT size="2">(8)</FONT></SUP></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,838</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Rayford Wilkins, Jr
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,667</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,576</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,243</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Jeffery&nbsp;W. Yabuki
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">420,556</FONT></TD>
    <TD align="left" valign="bottom" nowrap><SUP><FONT size="2">(9)</FONT></SUP></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,943</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">423,499</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">All directors and executive officers as a group
    (25 persons)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,897,095</FONT></TD>
    <TD align="left" valign="bottom" nowrap><SUP><FONT size="2">(10)(11)</FONT></SUP></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,967</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,935,063</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.8%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="17" align="left"><HR size="1" noshade></TD>

</TR>

</TABLE>
</CENTER>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">&nbsp;&nbsp;*&nbsp;&nbsp;</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Less than 1%
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">

</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">&nbsp;&nbsp;(1)</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes shares that on June&nbsp;1, 2005 the
    specified person had the right to purchase as of June&nbsp;30,
    2005 pursuant to options granted in connection with the
    Company&#146;s 1989 Stock Option Plan for Outside Directors or
    the Company&#146;s Long-Term Executive Compensation Plans, as
    follows: Mr.&nbsp;Baum, 44,667&nbsp;shares; Mr.&nbsp;Bloch,
    16,667&nbsp;shares; Mr.&nbsp;Dubrish, 301,401 shares; Ms. Ecton,
    40,667&nbsp;shares; Mr.&nbsp;Ernst, 880,004&nbsp;shares;
    Mr.&nbsp;Frigon, 22,667&nbsp;shares; Mr.&nbsp;Hale,
    44,667&nbsp;shares; Mr.&nbsp;Seip, 10,667 shares;
    Mr.&nbsp;Smith, 28,667&nbsp;shares; Mr.&nbsp;Spaeth,
    78,334&nbsp;shares; Mr.&nbsp;Tait, 55,000&nbsp;shares; Mr.
    Wilkins, 16,667&nbsp;shares; and Mr.&nbsp;Yabuki,
    358,337&nbsp;shares.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">&nbsp;&nbsp;(2)</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">These amounts reflect share unit balances in the
    Company&#146;s Deferred Compensation Plan for Directors, the
    Company&#146;s Deferred Compensation Plan for Executives and/or
    the Company&#146;s Stock Plan for Non-Employee Directors. The
    value of the share units mirrors the value of the Company&#146;s
    Common Stock. The share units do not have voting&nbsp;rights.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">&nbsp;&nbsp;(3)</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Bloch has shared voting and shared
    investment power with respect to 63,800 of these shares.
    Mr.&nbsp;Bloch disclaims beneficial ownership of
    5,000&nbsp;shares held by M&#38;H Bloch Partners,&nbsp;LP,
    except to the extent of his partnership interest therein.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">&nbsp;&nbsp;(4)</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 13,258&nbsp;shares of restricted stock
    granted under the Company&#146;s Long-Term Executive
    Compensation Plan.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">&nbsp;&nbsp;(5)</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 22,880&nbsp;shares of restricted stock
    granted under the Company&#146;s Long-Term Executive
    Compensation Plan and 3,390&nbsp;shares held in the
    Company&#146;s Employee Stock Purchase Plan (the
    &#147;ESPP&#148;).
    </FONT></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">&nbsp;&nbsp;(6)</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Frigon has shared voting and shared
    investment power with respect to 4,000 of these shares.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">&nbsp;&nbsp;(7)</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 25,000&nbsp;shares of restricted stock
    granted under the Company&#146;s Long-Term Executive
    Compensation Plan.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">&nbsp;&nbsp;(8)</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 7,500&nbsp;shares of restricted stock
    granted under the Company&#146;s Long-Term Executive
    Compensation Plan.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">&nbsp;&nbsp;(9)</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 10,747&nbsp;shares of restricted stock
    granted under the Company&#146;s Long-Term Executive
    Compensation Plan, 1,469&nbsp;shares held in the ESPP and 1,367
    in the Company&#146;s 401(k) plan.
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">(10)&nbsp;&nbsp;</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes shares held by certain family members of
    such directors and officers or in trusts or custodianships for
    such members (directly or through nominees) in addition to
    2,172,922&nbsp;shares which such directors and officers have the
    right to purchase as of June&nbsp;30, 2005 pursuant to options
    granted in connection with the Company&#146;s stock option plans.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">(11)&nbsp;&nbsp;</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 2,635,695&nbsp;shares held with sole
    voting and investment powers and 261,400 shares held with shared
    voting and investment powers.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 24</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="right">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2">PRINCIPAL SECURITY HOLDERS&nbsp;...</FONT></B>

<P align="left">
<FONT size="2">The following table sets forth the name, address
and share ownership of each person or organization known to the
Company to be the beneficial owner of more than 5% of the
outstanding Common Stock of the Company. The information
provided is based upon Schedule&nbsp;13G filings with the
Securities and Exchange Commission and does not reflect the
two-for-one stock split effective August&nbsp;22, 2005.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="10" align="right" nowrap><HR size="1" noshade></TD><TD></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Percent of</FONT></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Shares</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Common</FONT></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD align="left" nowrap><FONT size="1">Name and Address</FONT></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Beneficially</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Stock</FONT></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD align="left" nowrap><FONT size="1">of Beneficial Owner</FONT></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Owned</FONT></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="right" nowrap><FONT size="1">Outstanding</FONT></TD><TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="11" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Warren E. Buffett,
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">14,350,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">8.7%</FONT></TD>
    <TD align="left" valign="top" nowrap><SUP><FONT size="2">(1)</FONT></SUP></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Berkshire Hathaway Inc.,
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">OBH, Inc., and National
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Indemnity Company
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">1440&nbsp;Kiewit Plaza
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Omaha, Nebraska 68131
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="11"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Harris Associates L.P.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">14,256,435</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">8.66%</FONT></TD>
    <TD align="left" valign="top" nowrap><SUP><FONT size="2">(2)</FONT></SUP></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Harris Associates Inc.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Two North LaSalle Street, Suite&nbsp;500
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Chicago, Illinois 60602-3790
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="11"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Davis Selected Advisers, L.P.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">14,298,071</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">8.67%</FONT></TD>
    <TD align="left" valign="top" nowrap><SUP><FONT size="2">(3)</FONT></SUP></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">2949&nbsp;East Elvira Road, Suite&nbsp;101
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT size="2">Tucson, Arizona 85706
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="11" align="left"><HR size="1" noshade></TD>

</TR>

</TABLE>
</CENTER>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">(1)</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Information as to the number of shares and the
    percent of Common Stock outstanding is as of December&nbsp;31,
    2004 and is furnished in reliance on the last-filed
    Schedule&nbsp;13G of Warren E. Buffett, Berkshire Hathaway Inc.,
    OBH, Inc. and National Indemnity Company filed on
    February&nbsp;14, 2005. The Schedule&nbsp;13G indicates that
    Mr.&nbsp;Buffett, Berkshire Hathaway, Inc., OBH, Inc. and
    National Indemnity Company share voting and dispositive power
    over the shares.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">(2)</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Information as to the number of shares and the
    percent of Common Stock outstanding is as of December&nbsp;31,
    2004 and is furnished in reliance on the Schedule&nbsp;13G of
    Harris Associates L.P., Harris Associates Inc., and Harris
    Associates Investment Trust, 36-4032559 series designated The
    Oakmark Select Fund filed on February&nbsp;11, 2005. The
    Schedule&nbsp;13G indicates that the number of shares
    beneficially owned includes 14,256,435&nbsp;shares with shared
    voting power, 2,967,335&nbsp;shares with sole dispositive power
    and 11,289,100&nbsp;shares with shared dispositive power. The
    Oakmark Select Fund, as series of the Harris Associates
    Investment Trust, owns 8,259,800&nbsp;shares (5.01%).
    </FONT></TD>
</TR>

<TR valign="top">
    <TD><SUP><FONT size="2">(3)</FONT></SUP><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Information as to the number of shares and the
    percent of Common Stock outstanding is as of December&nbsp;31,
    2004 and is furnished in reliance on the Schedule&nbsp;13G of
    Davis Selected Advisers, L.P., filed on March&nbsp;11, 2005.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2">OTHER MATTERS</FONT></B>

<P align="left">
<B><FONT size="2">SECTION&nbsp;16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE&nbsp;...</FONT></B>

<DIV align="left">
<FONT size="2">Section&nbsp;16(a) of the Securities Exchange Act
of 1934 requires the Company&#146;s directors, executive
officers and beneficial owners of more than 10% of any class of
the Company&#146;s equity securities to file reports of
ownership and changes in ownership of the Company&#146;s Common
Stock. To the best of the Company&#146;s knowledge, all required
reports were filed on time and all transactions by the
Company&#146;s directors and executive officers were reported on
time except for failure to timely report on Form&nbsp;4 for Brad
Iversen the disposition of 223&nbsp;shares as the result of the
withholding of stock to pay taxes upon the vesting of Restricted
Shares. This failure to timely report was inadvertent and, as
soon as the oversight was discovered, the transaction was
promptly reported.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">SHAREHOLDER PROPOSALS AND
NOMINATIONS&nbsp;...</FONT></B>

<DIV align="left">
<FONT size="2">For a shareholder proposal to be considered for
inclusion in the Company&#146;s Proxy Statement for the 2006
Annual Meeting pursuant to Rule&nbsp;14a-8 of the Securities and
Exchange Commission, the Company must receive notice at our
offices at 4400&nbsp;Main Street, Kansas City, Missouri 64111,
Attention: Corporate Secretary, on or before March&nbsp;31,
2006. Applicable Securities and Exchange Commission rules and
regulations govern the submission of shareholder proposals and
our consideration of them for inclusion in next year&#146;s
proxy statement and form of proxy.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">Pursuant to the Company&#146;s bylaws, for any
business not included in the proxy statement for the 2006 Annual
Meeting to be brought before the meeting by a shareholder, the
shareholder must give timely written notice of that business to
the Corporate Secretary. To be
</FONT>
</DIV>

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    <TD width="93%"></TD>
    <TD width="7%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 25</FONT></B></TD>
</TR>

</TABLE>

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</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">timely, the notice must be received no later than
June&nbsp;28, 2006 (45&nbsp;days prior to August&nbsp;12, 2006).
The notice must contain the information required by the
Company&#146;s bylaws. Similarly, a shareholder wishing to
submit a director nomination directly at an annual meeting of
shareholders must deliver written notice of the nomination
within the time period described in this paragraph and comply
with the information requirements in our bylaws relating to
shareholder nominations.
</FONT>
</DIV>

<P align="left">
<FONT size="2">A proxy may confer discretionary authority to
vote on any matter at a meeting if we do not receive notice of
the matter within the time frames described above. A copy of the
Company&#146;s bylaws is available on our website at
www.hrblock.com under the tab &#147;Our Company&#148; and then
under the heading &#147;Block Investors&#148; and then
&#147;Corporate Governance,&#148; or upon request to: H&#38;R
Block, Inc., 4400&nbsp;Main Street, Kansas City, Missouri 64111,
Attention: Corporate Secretary. The Chairman of the meeting may
exclude matters that are not properly presented in accordance
with the foregoing requirements.
</FONT>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<FONT size="2">The Board of Directors knows of no other matters
which will be presented at the meeting, but if other matters do
properly come before the meeting, it is intended that the
persons named in the proxy will vote according to their best
judgment.
</FONT>

<P align="left">
<FONT size="2">By Order of the Board of Directors
</FONT>

<DIV align="left">
<FONT size="2">BRET G. WILSON
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Secretary
</FONT>
</DIV>

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    <TD align="center">
    <B><FONT size="2" color="#7FBA00"> 26</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

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<DIV align="left">

</DIV>

<DIV align="right">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>




<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2" color="#7FBA00">APPENDIX A</FONT></B>

<DIV align="left">
<B><FONT size="2" color="#7FBA00">H&#38;R BLOCK, INC. BOARD OF
DIRECTORS INDEPENDENCE STANDARDS</FONT></B>
</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV align="left">
<FONT size="2">Pursuant to New York Stock Exchange listing
standards, no director qualifies as being an independent
director unless the Board of Directors affirmatively determines
that the director has no material relationship with H&#38;R
Block, Inc. or any of its subsidiaries (collectively, the
&#147;Company&#148;), either directly or indirectly as a
partner, shareholder or officer of an organization that has a
relationship with the Company.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The Board of Directors has established the
categorical standards to assist it in determining the
independence of directors. Pursuant to these standards, a
director will not be considered independent if:
</FONT>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="2%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">At any time during the three years immediately
    preceding the date of determination, the director was an
    employee of the Company or any of the director&#146;s immediate
    family was an executive officer of the Company.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">At any time during the three years immediately
    preceding the date of determination, the director (or any of the
    director&#146;s immediate family) received more than $100,000
    per year in direct compensation from the Company other than
    (i)&nbsp;director or committee fees (including fees for service
    on the board of directors of subsidiary or affiliated companies)
    and (ii)&nbsp;pension or other forms of deferred compensation
    for prior service (provided such compensation is not contingent
    in any way on continued service).
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">At any time during the three years immediately
    preceding the date of determination, the director has been
    employed by (or affiliated with) a present or former internal or
    external auditor of the Company that had an auditing
    relationship with the Company during such three year period or
    any of the director&#146;s immediate family members have been so
    affiliated or employed in a professional capacity.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">At any time during the three years immediately
    preceding the date of determination, either the director, or any
    of the director&#146;s immediate family members, has been
    employed as an executive officer of another company for which an
    executive officer of the Company serves on the compensation (or
    equivalent) committee.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">At any time during the three years immediately
    preceding the date of determination, the Company made payments
    to, or received payments from, a company, firm or professional
    entity of which or in which (i)&nbsp;the director is currently
    an executive officer, partner or employee, or owns in excess of
    a 10% equity interest or (ii)&nbsp;the director&#146;s immediate
    family members currently is an executive officer or partner or
    owns in excess of a 10% equity interest; provided that such
    payments are in an amount exceeding the greater of
    $1&nbsp;million or 2% of such other company&#146;s consolidated
    gross revenues for such other company&#146;s most recent full
    fiscal&nbsp;year.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2" color="#7FBA00"><FONT face="times new roman">&#9642;</FONT></FONT><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The director (or any of the director&#146;s
    immediate family) serves as an officer, director or trustee of a
    charitable organization to which the Company gives directly or
    indirectly through its foundation, more than $200,000 or 5% of
    the organization&#146;s total annual charitable receipts during
    its last full fiscal year (whichever is greater).
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">An individual will be considered to be affiliated
with a corporation or other entity if that individual controls,
is controlled by or is under common control with the corporation
or other entity. An &#147;immediate family member&#148; includes
a person&#146;s spouse, parents, children, siblings, mothers in
law, fathers in law and any one (other than domestic employees)
who shares such person&#146;s home.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">The Board of Directors will determine the
independence of any director with a relationship to the Company
that is not covered by the above standards.
</FONT>
</DIV>

<DIV align="right">
<B><FONT size="2" color="#7FBA00">A-1</FONT></B>
</DIV>
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</DIV>

<DIV align="left">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

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<DIV align="center">
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</FONT>
</DIV>

<DIV align="left">
<B><FONT size="2" color="#7FBA00">A-2</FONT></B>
</DIV>
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</DIV>

<DIV align="right">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

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<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2" color="#7FBA00">APPENDIX B</FONT></B>

<DIV align="left">
<B><FONT size="2" color="#7FBA00">H&#38;R BLOCK EXECUTIVE
PERFORMANCE PLAN</FONT></B>
</DIV>

<DIV align="left">
<B><FONT size="2" color="#7FBA00">(AS AMENDED)</FONT></B>
</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2">ARTICLE&nbsp;I. GENERAL</FONT></B>

<DIV align="left">
<B><FONT size="2" color="#7FBA00">SECTION&nbsp;1.1
PURPOSE&nbsp;...</FONT></B><FONT size="2"> The purpose of the
H&#38;R Block Executive Performance Plan (the &#147;Plan&#148;)
is to attract and retain highly qualified individuals as
executive officers; to obtain from each the best possible
performance in order to achieve particular business objectives
established for H&#38;R Block, Inc. (the &#147;Company&#148;)
and its subsidiaries; and to include in their compensation
package a bonus component intended to qualify as
performance-based compensation under Section&nbsp;162(m) of the
Internal Revenue Code of 1986, as amended (the
&#147;Code&#148;), which compensation would be deductible by the
Company under the&nbsp;Code.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">SECTION&nbsp;1.2
ADMINISTRATION&nbsp;...</FONT></B><FONT size="2"> The Plan shall
be administered by the Compensation Committee of the
Company&#146;s Board of Directors (the &#147;Committee&#148;)
consisting of at least two members, each of whom shall be an
&#147;outside director&#148; within the meaning of
Section&nbsp;162(m) of the Code. The Committee shall adopt such
rules and guidelines as it may deem appropriate in order to
carry out the purpose of the Plan. All questions of
interpretation, administration and application of the Plan shall
be determined by a majority of the members of the Committee then
in office, except that the Committee may authorize any one or
more of its members, or any officer of the Company, to execute
and deliver documents on behalf of the Committee. The
determination of the majority shall be final and binding in all
matters relating to the Plan. The Committee shall have authority
to determine the terms and conditions of the Awards granted to
eligible persons specified in Section&nbsp;1.3 below.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">SECTION&nbsp;1.3
ELIGIBILITY&nbsp;...</FONT></B><FONT size="2"> Awards may be
granted only to employees of the Company or any of its
subsidiaries who are at the level of Assistant Vice President or
at a more senior level and who are selected for participation in
the Plan by the Committee. A qualifying employee so selected
shall be a &#147;Participant&#148; in the&nbsp;Plan.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">ARTICLE&nbsp;II. AWARDS</FONT></B>

<DIV align="left">
<B><FONT size="2" color="#7FBA00">SECTION&nbsp;2.1
AWARDS&nbsp;...</FONT></B><FONT size="2"> The Committee may
grant annual performance-based awards (&#147;Awards&#148;) to
Participants with respect to each fiscal year of the Company, or
a portion thereof (each such fiscal year or a portion thereof to
constitute a &#147;Performance Period&#148;), subject to the
terms and conditions of the Plan. Awards shall be in the form of
cash compensation. Within 90&nbsp;days after the beginning of a
Performance Period, the Committee shall establish
(a)&nbsp;performance goals and objectives (&#147;Performance
Targets&#148;) for the Company and the subsidiaries and
divisions thereof for such Performance Period, (b)&nbsp;target
awards (&#147;Target Awards&#148;) for each Participant, which
shall be a specified dollar amount, and (c)&nbsp;schedules or
other objective methods for determining the applicable
performance percentage (&#147;Performance Percentage&#148;) to
be multiplied by each portion of the Target Award to which a
Performance Target relates in arriving at the actual Award
payout amount pursuant to Section&nbsp;2.4 (&#147;Performance
Schedules&#148;). The Committee shall specify the Performance
Targets applicable to each Participant for each Performance
Period and shall further specify the portion of the Target Award
to which each Performance Target shall apply. In no event shall
a Performance Schedule include a Performance Percentage in
excess of 200%.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">SECTION&nbsp;2.2 PERFORMANCE
TARGETS&nbsp;...</FONT></B><FONT size="2"> Performance Targets
established by the Committee each year shall be based of one or
more of the following business criteria: (a)&nbsp;earnings,
(b)&nbsp;revenues, (c)&nbsp;sales of products, services or
accounts, (d)&nbsp;numbers of income tax returns prepared,
(e)&nbsp;margins, (f)&nbsp;earnings per share, (g)&nbsp;return
on equity, (h)&nbsp;return on capital, and (i)&nbsp;total
shareholder return. For any Performance Period, Performance
Targets may be measured on an absolute basis or relative to
internal goals, or relative to levels attained in fiscal years
prior to the Performance Period.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">SECTION&nbsp;2.3 EMPLOYMENT
REQUIREMENT&nbsp;...</FONT></B><FONT size="2"> To be eligible to
receive payment of an Award, the Participant must have remained
in the continuous employ of the Company or its subsidiaries
through the end of the applicable Performance Period, provided
that, in the event the Participant&#146;s employment terminates
during the Performance Period due to death, disability or
retirement, the Committee may, at its sole discretion, authorize
the Company or the applicable subsidiary to pay in full or on a
prorated basis an Award determined in accordance with
Sections&nbsp;2.4 and 2.5. For purposes of this
Section&nbsp;2.3, (a)&nbsp;&#147;disability&#148; shall be as
defined in the employment practices or
</FONT>
</DIV>

<DIV align="right">
<B><FONT size="2" color="#7FBA00">B-1</FONT></B>
</DIV>
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</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">policies of the applicable subsidiary of the
Company in effect at the time of termination of employment, and
(b)&nbsp;&#147;retirement&#148; shall mean termination of
employment with all subsidiaries of the Company by the
Participant after either attainment of age 65 or attainment of
age 55 and the completion of at least ten (10)&nbsp;years of
employment with the Company or its subsidiaries.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">SECTION&nbsp;2.4 DETERMINATION
OF AWARDS&nbsp;...</FONT></B><FONT size="2"> In the manner
required by Section&nbsp;162(m) of the Code, the Committee
shall, promptly after the date on which the necessary financial
or other information for a particular Performance Period becomes
available, certify the extent to which Performance Targets have
been achieved. Using the Performance Schedules, the Committee
shall determine the Performance Percentage applicable to each
Performance Target and multiply the portion of the Target Award
to which the Performance Target relates by such Performance
Percentage in order to arrive at the actual Award payout for
such&nbsp;portion.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<FONT size="2">At the time Target Awards are determined, the
Committee may specify that the Performance Percentage
attributable to any one or more portions of a Participant&#146;s
Target Award may not exceed the Performance Percentage
attributable to any other portion of the Participant&#146;s
Target Award. In the event such specification is made, actual
Award payouts shall be determined accordingly.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">SECTION&nbsp;2.5 LIMITATIONS
ON AWARDS&nbsp;...</FONT></B><FONT size="2"> The aggregate
amount of all Awards under the Plan to any Participant for any
Performance Period shall not exceed $2,000,000.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">SECTION&nbsp;2.6 PAYMENT OF
AWARDS&nbsp;...</FONT></B><FONT size="2"> Payment of Awards
shall be made by the Company or the applicable employer
subsidiary as soon as administratively practical following the
certification by the Committee of the extent to which the
applicable Performance Targets have been achieved and the
determination of the actual Awards in accordance with
Sections&nbsp;2.4 and 2.5. All Awards under the Plan are subject
to withholding, where applicable, for federal, state and local
taxes.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">SECTION&nbsp;2.7 ADJUSTMENT OF
AWARDS&nbsp;...</FONT></B><FONT size="2"> In the event of the
occurrence during the Performance Period of any
recapitalization, reorganization, merger, acquisition,
divestiture, consolidation, spin-off, split-off, combination,
liquidation, dissolution, sale of assets, other similar
corporate transaction or event, any changes in applicable tax
laws or accounting principles, or any unusual, extraordinary or
nonrecurring events involving the Company which distorts the
performance criteria applicable to any Performance Target, the
Committee shall adjust the calculation of the performance
criteria, and the applicable Performance Targets as is necessary
to prevent reduction or enlargement of Participants&#146; Awards
under the Plan for such Performance Period attributable to such
transaction or event. Such adjustments shall be conclusive and
binding for all&nbsp;purposes.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">ARTICLE&nbsp;III. MISCELLANEOUS</FONT></B>

<DIV align="left">
<B><FONT size="2" color="#7FBA00">SECTION&nbsp;3.1 NO RIGHTS TO
AWARDS OR CONTINUED
EMPLOYMENT&nbsp;...</FONT></B><FONT size="2"> No employee of the
Company or any of its subsidiaries shall have any claim or right
to receive Awards under the Plan. Neither the Plan nor any
action taken under the Plan shall be construed as giving any
employee any right to be retained by the Company or any
subsidiary of the Company.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">SECTION&nbsp;3.2 NO LIMITS ON
OTHER AWARDS AND PLANS&nbsp;...</FONT></B><FONT size="2">
Nothing contained in this Plan shall prohibit the Company or any
of its subsidiaries from establishing other special awards or
incentive compensation plans providing for the payment of
incentive compensation to employees of the Company and its
subsidiaries, including any Participants.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">SECTION&nbsp;3.3 RESTRICTION
ON TRANSFER&nbsp;...</FONT></B><FONT size="2"> The rights of a
Participant with respect to Awards under the Plan shall not be
transferable by the Participant other than by will or the laws
of descent and distribution.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">SECTION&nbsp;3.4 SOURCE OF
PAYMENTS&nbsp;...</FONT></B><FONT size="2"> The Company and its
subsidiaries shall not have any obligation to establish any
separate fund or trust or other segregation of assets to provide
for payments under the Plan. To the extent any person acquires
any rights to receive payments hereunder from the Company or any
of its subsidiaries, such rights shall be no greater than those
of an unsecured creditor.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">SECTION&nbsp;3.5 EFFECTIVE
DATE; TERM; AMENDMENT&nbsp;...</FONT></B><FONT size="2"> The
Plan is effective as of June&nbsp;19, 1996, subject to approval
by the Company&#146;s shareholders at the Company&#146;s 1996
annual meeting of shareholders, and shall remain in effect until
such time as it shall be terminated by the Board of Directors of
the Company. If approval of the Plan meeting the requirements of
Section&nbsp;162(m) of the Code is not obtained at the 1996
annual meeting of shareholders of the Company, then the Plan
shall not be effective and any Award made on or after
June&nbsp;19, 1996, shall be void ab initio. The Board of
Directors may at any time and from time to time alter, amend,
suspend or terminate the Plan in whole or in&nbsp;part.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">SECTION&nbsp;3.6 PROHIBITED OR
UNENFORCEABLE PROVISIONS&nbsp;...</FONT></B><FONT size="2"> Any
provision of the Plan that is prohibited or unenforceable shall
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
of the Plan.
</FONT>
</DIV>

<DIV align="left">
<B><FONT size="2" color="#7FBA00">B-2</FONT></B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P><HR size="5" noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">

</DIV>

<DIV align="right">
<FONT size="2"> H&#38;R BLOCK 2005 Proxy Statement
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">SECTION&nbsp;3.7
SECTION&nbsp;162(M)
PROVISIONS&nbsp;...</FONT></B><FONT size="2"> Any Awards under
the Plan shall be subject to the applicable restrictions imposed
by Code Section&nbsp;162(m) and the Treasury Regulations
promulgated thereunder, notwithstanding any other provisions of
the Plan to the contrary.
</FONT>
</DIV>

<DIV align="left">&nbsp;&nbsp;
<B><FONT size="2" color="#7FBA00">SECTION&nbsp;3.8 GOVERNING
LAW&nbsp;...</FONT></B><FONT size="2"> The Plan and all rights
and Awards hereunder shall be construed in accordance with and
governed by the laws of the State of Missouri.
</FONT>
</DIV>

<DIV align="left">

</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV align="right">
<B><FONT size="2" color="#7FBA00">B-3</FONT></B>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<P><DIV style="position: relative; float: left; width: 80%">
<DIV align="left" style="font-size: 8pt; margin-top: 6pt"><B>IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THIS MEETING, WHETHER OR NOT YOU ATTEND THE
MEETING IN PERSON. TO MAKE SURE THAT YOUR SHARES ARE
REPRESENTED, WE URGE YOU TO VOTE AS SOON AS POSSIBLE BY PROXY BY (A)&nbsp;INTERNET, (B)&nbsp;TELEPHONE, OR
(C)&nbsp;MAIL BY FOLLOWING THE INSTRUCTIONS SET FORTH BELOW.</B>
</DIV>

</DIV>
<DIV style="position: relative; float: right; width: 15%">
<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Please<BR>
Mark Here<BR>
for Address<BR>
Change or<BR>
Comments
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>SEE REVERSE SIDE</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>
<BR clear="all"><BR>
<P><DIV style="position: relative; float: left; width: 48%">
<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">ELECTION OF DIRECTORS.</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">INSTRUCTION: To withhold authority
to vote for
any individual nominee(s),
clearly cross out the name below.<BR>
NOMINEES ARE: FOR <br>
CLASS I DIRECTORS,<br>
01 THOMAS M. BLOCH,<br>
02 MARK A. ERNST,
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>FOR all nominees
listed (except as
marked
to the contrary)</B><BR>
<FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>WITHHOLD
AUTHORITY
to vote for all
nominee(s) listed</B><BR>
<FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">03 DAVID BAKER LEWIS, AND</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">04 TOM D. SEIP</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>
<DIV style="position: relative; float: right; width: 48%">
<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>FOR</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>AGAINST</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>ABSTAIN</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The approval of the H&#038;R Block Executive Performance Plan,
as amended.
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Ratification of the appointment of KPMG LLP as the
Company&#146;s independent accountants for the year ending
April&nbsp;30, 2006.
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>FOR</B><BR>
<FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>AGAINST</B><BR>
<FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>ABSTAIN</B><BR>
<FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 8pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Choose <B>MLink</B><SUP style="font-size: 85%; vertical-align: text-top"><B>SM</B></SUP> for Fast, easy and secure 24/7 online access
to your future proxy materials, investment plan statements,
tax documents and more. Simply log on to <B>Investor ServiceDirect</B><SUP style="font-size: 85%; vertical-align: text-top"><B>&#174;</B></SUP> at
www.melloninvestor.com/isd where step-by-step instructions will prompt you
through enrollment.</TD>
</TR>

</TABLE>
</DIV>
</DIV>
<BR clear="all"><BR>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="40%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="100%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dated<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>2005</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
SIGNATURE</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
SIGNATURE OF SHAREHOLDER(S)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">(Please date and sign exactly as name
appears at the left and return in the
enclosed postage paid envelope. If the
shares are owned in joint names, all joint
owners should sign.)</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><DIV style="border-bottom: 1px dashed #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 9pt"><FONT face="Webdings">&#053;</FONT>&nbsp;<B>FOLD AND DETACH HERE</B>&nbsp;<FONT face="Webdings">&#053;</FONT></DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Vote by Internet or Telephone or Mail<BR>
24 Hours a Day, 7 Days a Week<BR>
Internet and telephone voting is available through 11:59 PM Eastern Time<BR>
the day prior to annual meeting day.<BR>
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner<BR>
as if you marked, signed and returned your proxy card.</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Internet</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>Telephone</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>Mail</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>http://www.proxyvoting.com/hrb</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>1-866-540-5760</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Mark, sign and date</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Use the internet to vote your proxy.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Use any touch-tone telephone to
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">your proxy card and</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Have your proxy card in hand when
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>OR</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">vote your proxy. Have your proxy
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>OR</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">return it in the</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">you access the web site.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">card in hand when you call.
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">enclosed postage-paid
envelope.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>If you vote your proxy by Internet or by telephone,<BR>
you do NOT need to mail back your proxy card.</B>
</DIV>

<P>
<DIV style="width: 100%; border: 1px solid black; padding: 11px;">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please consider consenting to receive future annual reports, proxy
statements and other Company
communications electronically via the Internet by enrolling at www.melloninvestor.com/ISD.
Many of our shareholders
have expressed a desire to receive these communications electronically instead of by mail. By
consenting, the
Company will save the expense associated with distributing paper copies of the materials. If
you consent, you will
receive timely postal notice of the availability of any such communication on the Company&#146;s
website and upon your
written request to the Company you will receive paper copies of such documents. You may wish
to view the 2005
annual meeting materials on the Company&#146;s website at
<U>www.hrblock.com/about/investor/proxy.html</U>
to determine if you would like to receive these materials electronically in the future.
</DIV>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>You can view the Annual Meeting materials on the Internet at<BR>
http://www.hrblock.com/about/investor/proxy.html</B>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>H&#038;R
BLOCK, INC.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS </B>AND WILL BE VOTED AS
SPECIFIED ON THE REVERSE SIDE HEREOF. IF NO SUCH SPECIFICATION IS MADE, IT WILL BE VOTED <B>FOR</B>
EACH OF THE PROPOSALS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The undersigned hereby appoints Louis W. Smith, Rayford Wilkins, Jr. and Henry F. Frigon, and
each of them, the
proxies (acting by a majority, or if only one be present, then that one shall have all of the
powers hereunder), each
with full power of substitution, for and in the name of the undersigned to represent and to vote
all shares of stock of
H&#038;R BLOCK, INC., a Missouri corporation, of the undersigned at the annual meeting of shareholders
of said
corporation to be held in the H&#038;R Block City Stage Theater at Union Station, 30 West Pershing
(corner of Pershing
and Main), Kansas City, Missouri, on Wednesday, September&nbsp;7, 2005, commencing at 9:00 a.m., Kansas
City time
(CDT), and at any adjournment thereof, notice of said meeting and the proxy statement furnished
herewith having
been received by the undersigned and, without limiting the authority hereinabove given, said
proxies or proxy are
expressly authorized to vote in accordance with the undersigned&#146;s direction as to those matters set
forth on the
reverse side hereof and in accordance with their best judgment in connection with the transaction
of such other
business, if any, as may properly come before the meeting.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><I>BE SURE TO SIGN AND DATE THE REVERSE SIDE OF THIS FORM</I>
</DIV>

<P>
<DIV style="width: 100%; border: 1px solid black; padding: 11px;">

<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><B>Address Change/Comments (Mark the corresponding box on the reverse side)</B>
</DIV>
</DIV>

<DIV style="width: 100%; border: 1px solid black; padding: 11px;">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">&nbsp;<BR>
&nbsp;<BR>
&nbsp;
</DIV>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><DIV style="border-bottom: 1px dashed #000000; font-size: 1px">&nbsp;</DIV>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><FONT face="Webdings">&#053;</FONT>&nbsp;<B>FOLD AND DETACH HERE</B>&nbsp;<FONT face="Webdings">&#053;</FONT>
</DIV>


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">August&nbsp;12, 2005
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dear Shareholder:
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The annual meeting of shareholders of H&#038;R Block, Inc. will be held in the H&#038;R Block City Stage
Theater at Union
Station, 30 West Pershing (corner of Pershing and Main), Kansas City,
Missouri, at 9:00 a.m.,
Kansas City time (CDT), on Wednesday, September&nbsp;7, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Please note that the number of shares entitled to be voted at the meeting is the number of
shares held of record as
of the close of business on July&nbsp;5, 2005. It is important that your shares are represented at
this meeting. Whether or
not you plan to attend the meeting in person, please review the enclosed proxy material and
vote by proxy by
promptly (a)&nbsp;calling the number listed on the reverse side, (b)&nbsp;accessing the web site listed
on the reverse side or (c)
completing the proxy form attached above and returning it in the postage paid envelope
provided.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B><I>You
can now access your H&#038;R Block account online.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Access
your H&#038;R Block shareholder/stockholder account online via Investor ServiceDirect<SUP style="font-size: 85%; vertical-align: text-top">&#174;
</SUP>(ISD).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mellon
Investor Services LLC, Transfer Agent for H&#038;R Block, now makes it easy and convenient to get
current information on<BR>
your shareholder account.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="80%">
<!-- Begin Table Head -->
<TR valign="bottom">
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    <TD width="4%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>&#149;</B> View account status
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B> View payment history for dividends</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>&#149;</B> View certificate history
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B> Make address changes</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>&#149;</B> View book-entry information
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B> Obtain a duplicate 1099 tax form</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B> Establish/change your PIN</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B><I>Visit us on the web at http://www.melloninvestor.com<BR>
For Technical Assistance Call 1-877-978-7778 between 9am-7pm<BR>
Monday-Friday Eastern Time</I></B>
</DIV>



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`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
