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<SEC-DOCUMENT>0000950123-07-011926.txt : 20070824
<SEC-HEADER>0000950123-07-011926.hdr.sgml : 20070824
<ACCEPTANCE-DATETIME>20070824150053
ACCESSION NUMBER:		0000950123-07-011926
CONFORMED SUBMISSION TYPE:	DFAN14A
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20070824
DATE AS OF CHANGE:		20070824
EFFECTIVENESS DATE:		20070824

SUBJECT COMPANY:	

	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:		DFAN14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-06089
		FILM NUMBER:		071078181

	BUSINESS ADDRESS:	
		STREET 1:		ONE H&R BLOCK WAY
		CITY:			KANSAS CITY
		STATE:			MO
		ZIP:			64105
		BUSINESS PHONE:		8168543000

	MAIL ADDRESS:	
		STREET 1:		ONE H&R BLOCK WAY
		CITY:			KANSAS CITY
		STATE:			MO
		ZIP:			64105

FILED BY:		

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Breeden Capital Management LLC
		CENTRAL INDEX KEY:			0001376259
		IRS NUMBER:				113765220
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		DFAN14A

	BUSINESS ADDRESS:	
		STREET 1:		100 NORTHFIELD STREET
		CITY:			GREENWICH
		STATE:			CT
		ZIP:			06830
		BUSINESS PHONE:		203-618-0065

	MAIL ADDRESS:	
		STREET 1:		100 NORTHFIELD STREET
		CITY:			GREENWICH
		STATE:			CT
		ZIP:			06830
</SEC-HEADER>
<DOCUMENT>
<TYPE>DFAN14A
<SEQUENCE>1
<FILENAME>y38543d2dfan14a.htm
<DESCRIPTION>DEFINITIVE ADDITIONAL MATERIALS
<TEXT>
<HTML>
<HEAD>
<TITLE>DFAN14A</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<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: 14pt; margin-top: 6pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>SCHEDULE 14A</B>
</DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 12pt"><B>Proxy Statement Pursuant to Section&nbsp;14(a) of the Securities<BR>
Exchange Act of 1934 (Amendment No.&nbsp;&nbsp;)</B></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Filed by the Registrant <FONT face="wingdings" size="2">&#111;</FONT><BR>
Filed by a Party other than the Registrant <FONT face="wingdings" size="2">&#254;</FONT>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 0pt">Check the appropriate box:

</DIV>

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

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Preliminary Proxy Statement</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Confidential, For Use of the Commission Only (as permitted by Rule&nbsp;14a-6(e)(2))</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Definitive Proxy Statement</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#254;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Definitive Additional Materials</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Soliciting Material Pursuant to Rule 14a-12</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 6pt">&nbsp;</DIV>

<DIV align="center" style="font-size: 24pt">
<B>H &#038; R BLOCK, INC.</B></DIV>
<DIV align="center" style="font-size: 10pt"><DIV style="border-bottom: 0px solid #000000; font-size: 1px">&nbsp;</DIV>
(Name of Registrant as Specified In Its Charter)</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt">&nbsp;</DIV>

<DIV align="center">

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
</DIV>
<DIV align="center" style="font-size: 10pt"><DIV style="border-bottom: 0px solid #000000; font-size: 1px">&nbsp;</DIV>
<B>Breeden Capital Management LLC<BR>
Breeden Partners, L.P.<BR>
Breeden Partners (California) L.P.<BR>
Breeden Partners Holdco Ltd.<BR>
Richard C. Breeden<BR>
Robert A. Gerard<BR>
L. Edward Shaw, Jr.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Payment of Filing Fee (Check the appropriate box):

</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: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#254;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>No fee required.</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Fee computed on table below per Exchange Act Rules&nbsp;14a-6(i)(4) and 0-11.</TD>
</TR>

</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: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(1)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Title of each class of securities to which transaction applies:</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(2)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Aggregate number of securities to which transaction applies:</TD>
</TR>


<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(3)</TD>
<TD width="1%">&nbsp;</TD>
<TD>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):</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(4)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Proposed maximum aggregate value of transaction:</TD>
</TR>


<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(5)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Total fee paid:</TD>
</TR>

</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: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Fee paid previously with preliminary materials.</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>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.</TD>
</TR>

</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: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(1)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Amount Previously Paid:</TD>
</TR>


<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(2)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Form, Schedule or Registration Statement No.:</TD>
</TR>


<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(3)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Filing Party:</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(4)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Date Filed:</TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt"><IMG src="y38543d2y3854301.gif" alt="(BREEDEN PARTNERS LOGO)">
</DIV>



<P align="right"><FONT size="2">100 Northfield Street<br>Greenwich,
CT 06830<br>Tel: 203.618.0065<br>Fax: 203.618.0063<br>&nbsp;<br><B>August&nbsp;24, 2007</B>
</FONT>

<P align="left"><FONT size="2"><B>Dear Fellow H&#038;R Block Shareholders:</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The H&#038;R Block Annual Meeting scheduled for Thursday, September&nbsp;6, 2007 is
approaching quickly. We believe you should be aware that the two largest
independent shareholder-advisory firms, Institutional Shareholder Services
(&#147;ISS&#148;) and Glass, Lewis &#038; Co. (&#147;Glass Lewis&#148;), have each recommended a vote
for all three of the Breeden Partners candidates for election to the board. I
attach our press release announcing the ISS recommendation, which includes
excerpts of some of ISS&#146;s key observations. While we have not yet done a
similar release concerning the Glass Lewis report released earlier today, it
also highlights the Company&#146;s weak performance in generating shareholder value
and recommends the election of all three Breeden Partners nominees.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Both of these highly respected independent proxy advisory firms considered
the arguments that the Company has made during this proxy campaign, as well as
the analysis of Breeden Partners in support of change in the membership of the
incumbent board of directors. Both considered the candidates for election on
each of the separate slates. After careful study, both ISS and Glass Lewis
endorsed the election of all three Breeden Partners nominees.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To follow the recommendation of ISS and Glass Lewis, and to help bring a
strong shareholder voice to the H&#038;R Block Boardroom, please vote for our
nominees by voting the <font color="blue"><B>BLUE </B></FONT>proxy card TODAY.
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 70%">Respectfully,

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 70%">
<IMG src="y38543d2y3854305.gif" alt="-s- Richard C. Breeden" > </div>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 70%">Richard C. Breeden<BR>
Breeden Partners, L.P.
</DIV>

<P>
<DIV style="width: 100%; border: 1px solid black; padding: 11px;">

<P align="center"><FONT size="2"><B><U>Time is Short! Please Vote
Your<BR>
Shares Promptly!</U></B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Annual Meeting is scheduled for September&nbsp;6, 2007. <B>Your vote is very
important</B>. Please sign, date and mail the enclosed BLUE proxy card today or
vote by telephone or internet. <B>Please vote every BLUE proxy card </B>that you
receive since each account in which you own shares must be voted separately.
Only your latest dated proxy card counts.
</FONT>
<P align="center"><FONT size="2"><U><B>If you have any
questions</B></U> on how to vote your shares, please contact our proxy
solicitor<BR>MORROW &#038; CO., INC. at (800)&nbsp;662-5200.
</FONT>
</DIV>
<P align="center"><FONT size="2">1</FONT>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P align="left"><FONT size="2">Security holders are advised to read the proxy statement and other documents
related to the solicitation of proxies by Breeden Capital Management, LLC,
Breeden Partners L.P., Breeden Partners (California) L.P., Breeden Partners
Holdco Ltd., Richard C. Breeden, Robert A. Gerard and L. Edward Shaw, Jr. for
use at the 2007 Annual Meeting of shareholders of H&#038;R Block because they
contain (and any subsequent amendments or supplements will contain) important
information. The definitive proxy statement and form of proxy has been mailed
to shareholders of H&#038;R Block and is available at no charge at the Securities
and Exchange Commission&#146;s website at http://www.sec.gov or by contacting Morrow
&#038; Co., Inc. by telephone at (203)&nbsp;658-9400 or by e-mail at
Breedeninfo@morrowco.com.
</FONT>
<P align="left"><FONT size="2">Breeden Partners has not sought or obtained consent from any third party to use
any statements or information indicated herein as having been obtained or
derived from statements made or published by third parties. Any such statements
or information should not be viewed as indicating the support of such third
party for the views expressed herein.
</FONT>


<P align="center"><FONT size="2">2</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="39%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="56%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>For Media:</B><br>Kekst and Company<br>
Victoria Weld<BR>
212-521-4800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<B>For Investors</B>:<BR>Morrow &#038; Co.<BR>
Eric Olson/Mike Verrechia<BR>
203-658-9400</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="right"><FONT size="2"><B><I><U>FOR IMMEDIATE RELEASE</U></I></B>
</FONT>

<P align="center"><FONT size="2"><U><B>ISS RECOMMENDS H&#038;R BLOCK
SHAREHOLDERS VOTE IN FAVOR OF<BR>ALL THREE BREEDEN
PARTNERS&#146; NOMINEES</B></U>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">&#151;&#147;The long-term financial and operational performance of the company and the
dissidents&#146; skill sets and track record establish both the need for change and
the dissidents&#146; ability to effect change.&#148;<sup>*</sup>&#151;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">&#151;&#147;&#091;I&#093;t appears that the company has batted below the &#145;Mendoza line&#146; when it
comes to its diversification strategy.&#148;&#151;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">&#151;&#147;We believe that HRB&#146;s performance and strategic decisions tend to indicate
that the board has not adequately overseen management.&#148;&#151;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">&#151;&#147;&#091;W&#093;e recommend shareholders support all three dissident candidates.&#148;&#151;</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Greenwich, CT., August&nbsp;22, 2007. </B>Breeden Capital Management LLC, a Greenwich,
CT., based investment fund manager, today announced that Institutional
Shareholder Services (ISS), an independent proxy advisory firm, has recommended
to its worldwide clients a vote for all three nominees of Breeden Partners to
the board of H&#038;R Block at the Company&#146;s upcoming annual meeting. To follow
ISS&#146;s recommendation, HRB shareholders should vote FOR the Breeden Partner&#146;s
director nominees on the BLUE proxy card and not sign or return H&#038;R Block&#146;s
white proxy card.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Poor
Performance.</U> The ISS report reviews the performance of H&#038;R Block over the
past five years, and finds:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2"><I>&#147;Over the past five years, the company&#146;s
shares have underperformed the
S&#038;P 500 index by 92%. Since June 2004 (the IPO of JTX), HRB has
underperformed its direct competitor by approximately 80%.&#148;</I></FONT></TD>
</TR>

</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2"><I>"&#091;W&#093;e conclude the company has underperformed over the long term, above
and beyond the company&#146;s recent difficulties arising from its mortgage
business.&#148;</I></FONT></TD>
</TR>

</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Failed
Diversification Strategy and Poor Execution.</U> ISS observes that:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2"><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;It does not appear that the company&#146;s strategy of diversification has
resulted in the hoped-for synergies...</I></FONT></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2"></FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2"><I>"&#091;I&#093;t appears that the company has batted below the &#145;Mendoza line&#146; when
it comes to its diversification strategy.&#148;</I></FONT></TD>
</TR>

</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2"><I>&#147;In sum, we conclude that the company has made some key operational
missteps over recent years, which calls into question the adequacy of the
board&#146;s oversight of management and strategy.&#148;</I></FONT></TD>
</TR>

</TABLE>
<P align="left"><FONT size="2"><U>Board
Change is Warranted</U>. ISS reviews the arguments of both sides regarding
the company&#146;s performance and the adequacy of the current board&#146;s oversight,
and finds that there is a need for change.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2"><I>&#147;After evaluating the dissident and incumbent arguments with respect
to the company&#146;s financial and shareholder return performance, strategic
track record and governance profile, we conclude the dissidents have met
their burden of proving that board change is warranted.&#148;</I></FONT></TD>
</TR>

</TABLE>
<P align="left"><FONT size="2"><U>New
Directors to Add Value</U>. ISS reviews the specific candidates of both the
incumbent directors and the three nominees of Breeden Partners. It states:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2"><I>"&#091;O&#093;n balance we conclude that the presence of the three dissidents
on the HRB board would likely prove beneficial to long-term shareholder
value.&#148;</I></FONT></TD>
</TR>

</TABLE>
<P align="left"><FONT size="2"><U>The
&#147;KPMG Issue</U>.&#148; ISS carefully reviewed the arguments of the company&#146;s
management that election of Mr.&nbsp;Breeden or any of Breeden Partners&#146; nominees
could impair the independence of KPMG, the company&#146;s independent auditors. In
a complete rejection of management&#146;s arguments, ISS notes that Mr.&nbsp;Breeden&#146;s
role at KPMG as monitor on behalf of the U.S. Department of Justice &#147;should be
put into perspective.&#148;
</FONT>
<P align="left"><FONT size="2">ISS notes that Mr.&nbsp;Breeden&#146;s role:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2"><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;is related to that firm&#146;s tax practice, not its audit business. KPMG
has not appeared troubled by Breeden&#146;s similar role at other companies.
Moreover, as a former SEC Chairman who over the years became the US
government&#146;s &#145;go to&#146; guy to oversee companies suffering from ethical
turmoil, we believe that Breeden has a hard-earned reputation for
integrity to protect that mitigates against any incentive for him to
misuse his position.&#148;</I></FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2"></FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Noting management&#146;s arguments concerning KPMG, ISS concludes:
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"<I>In the worst case scenario, KPMG could decide to resign as auditor. In
our view, however, any cost or disruption has to be weighed against the
opportunity cost of not changing the board&#146;s composition. We believe
that, in this case, given HRB&#146;s poor long term returns, these concerns
should take second priority.&#148;</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Richard C. Breeden, Chairman and CEO of Breeden Partners, said &#147;We are
pleased that ISS has recommended the election of all three of the Breeden
Partners nominees. To follow this recommendation, VOTE BLUE. &#147;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Breeden also noted, &#147;This recommendation from ISS is a key moment in
this proxy campaign. Rejecting the strident arguments of management, ISS has
concluded that the interests of shareholders will best be served by electing
all of the Breeden Partners&#146; nominees. We hope that this election will begin
the process of transition to a new era for H&#038;R Block.&#148;
</FONT>
<P align="left"><FONT size="2"><U><B>About Breeden Partners,
LP</B></U>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Breeden Partners is a private investment partnership that was formed for
purposes of investing in companies that are underperforming in terms of
earnings and share price. Breeden Partners invests solely in the equity
securities of publicly traded companies headquartered in the United States or
Canada, and it does not use either leverage or derivatives. Breeden Partners&#146;
governing policies also prohibit it from taking a majority equity interest in
any portfolio company.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Breeden Partners seeks to invest in companies with strong cash flows and
underlying asset values where it can be a catalyst for change that will enhance
market value. Breeden Partners seeks to maximize returns by persuading
portfolio companies to adopt new strategies to increase earnings and rates of
return, improve capital allocation, strengthen accountability for performance,
enhance transparency and adopt healthier governance practices, among other
things. Breeden Partners believes that implementing improved management and
governance practices will help portfolio companies achieve higher earnings and
command a higher multiple on such earnings in the marketplace.
</FONT>
<P align="left"><FONT size="2"><U><B>About Breeden Capital Management
LLC</B></U>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Breeden Capital Management is based in Greenwich, Connecticut. Both
Breeden Partners and Breeden Capital Management were founded by Richard C.
Breeden, former Chairman of the U.S. Securities and Exchange Commission. The
firm has a total of more than 20 professionals, and, together with its
affiliates, it has more than $1&nbsp;billion in committed capital under management.
</FONT>
<P align="center"><FONT size="2"></FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS
RELATED TO THE SOLICITATION OF PROXIES BY BREEDEN CAPITAL MANAGEMENT, LLC,
BREEDEN PARTNERS L.P., BREEDEN PARTNERS (CALIFORNIA)&nbsp;L.P., BREEDEN PARTNERS
HOLDCO LTD., RICHARD C. BREEDEN, ROBERT A. GERARD AND L. EDWARD SHAW, JR. FROM
THE SHAREHOLDERS OF H&#038;R BLOCK FOR USE AT THE 2007 ANNUAL MEETING OF
SHAREHOLDERS OF H&#038;R BLOCK BECAUSE THEY CONTAIN (AND ANY SUBSEQUENT AMENDMENTS
OR SUPPLEMENTS WILL CONTAIN) IMPORTANT INFORMATION. THE DEFINITIVE PROXY
STATEMENT AND FORM OF PROXY IS BEING MAILED TO SHAREHOLDERS OF H&#038;R BLOCK AND IS
AVAILABLE AT NO CHARGE AT THE SECURITIES AND EXCHANGE COMMISSION&#146;S WEBSITE AT
HTTP://WWW.SEC.GOV OR BY CONTACTING MORROW &#038; CO., INC. BY TELEPHONE AT (203)
658-9400 OR BY E-MAIL AT BREEDENINFO@MORROWCO.COM.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;* Breeden Partners has not sought or obtained consent from ISS to use any
statements or information indicated herein as having been obtained or derived
from statements made or published by ISS. Any such statements or information
should not be viewed as indicating the support of ISS for the views expressed
herein.
</FONT>

<P align="center"><FONT size="2"></FONT>



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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
