First Quarter FY2004 Earnings August 26, 2003

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First Quarter FY2004 EarningsAugust 26, 2003
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Safe Harbor Statement

• Various comments we may make about future
  expectations, guidance, targets, estimates,
  assumptions, plans and prospects for the company
  constitute forward-looking statements within the
  meaning of the federal securities laws and are
  based on current information and expectations.
  These statements speak only as of today. Actual
  results may differ materially from those
  indicated by these forward-looking statements as
  a result of various important factors, including
  those discussed in our first quarter press
  release and in HR Blocks reports on Form 10-K,
  Form 10-Q, and Form 8-K, which are on file with
  the SEC.

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First Quarter 2004 Financial Summary

• ( in millions)
• 1Q 04 1Q 03 Chg
• Revenue 495 431 15
• Net Income (Loss) 11 (10) n/a
• Diluted EPS 0.06 (0.05) n/a

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U.S. Tax Operations

• ( in millions) Better 1Q 04 1Q 03
  (Worse)

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International Tax Operations

• ( in millions) Better 1Q 04 1Q 03
  (Worse)

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Investment Services

• ( in millions) Better Better 1Q 04 4Q
  03 (Worse) 1Q 03 (Worse)

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Investment Services
Operational Highlights

• ( in millions)
• 1Q 04 4Q 03 Chg 1Q 03 Chg
• Trading Volume 363,053 244,843 48 374,250 (3)
• Transaction-based revenue 29.0 19.5 48.2 30
  .5 (4.9)
• Net interest revenue 7.9 6.9 15.6 9.5 (16.7)
• End margin balances 517 486 6 651 (21)
• Revenue from packaged and fee- based
  products 12.5 10.9 15.1 9.3 33.7

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Mortgage Operations

• ( in millions) Better Better 1Q 04
  4Q 03 (Worse) 1Q 03 (Worse)

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Mortgage Operations

• ( in billions) 1Q 04 4Q 03 Chg 1Q 03 Chg
• Option One Servicing Portfolio 34 31 9 27 2
  7
• Loan Production 5.3 4.8 11 3.4 57
• Net gain on sale 4.4 4.4 4.9
• Weighted average interest rate 7.5 7.8 8.8
  

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Mortgage Operations
Cash Percentage of Recorded Gain-on-sale
11
Mortgage Operations
12
Mortgage Operations
Delinquency Rates
31 Days Plus
Reflects loans 12-month seasoned and beyond
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Business Services

• ( in millions) Better 1Q 04 1Q 03
  (Worse)

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Key Balance Sheet Items

• ( in millions) July 31, 2003 April 30, 2003
• Cash and cash equivalents 675 875
• Restricted Cash 528 438
• Receivables 309 403
• Residual Interests in Securitizations 291 264
• Shares Outstanding 179 million 180 million

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FY 2004 Guidance

• Increase
• GAAP EPS Growth 13 18