H&R BLOCK INC - 10-K Annual Report

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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended: April 30, 1994

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to ________

Commission File Number: 1-6089

H&R BLOCK, INC.
(Exact name of registrant as specified in its charter)

Missouri 44-0607856
(State or other jurisdiction of (I.R.S. Employer Identifi-
incorporation or organization) cation Number)

4410 Main Street, Kansas City, Missouri 64111
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (816) 753-6900

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange
Title of each class on which registered
Common Stock, without par value New York Stock Exchange
Pacific Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, without par value
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the voting stock held by non-
affiliates of the registrant, computed by reference to the price
at which the stock was sold on June 1, 1994, was $4,252,270,128.

Number of shares of registrant's Common Stock, without par value,
outstanding on June 1, 1994: 106,546,354.

DOCUMENTS INCORPORATED BY REFERENCE

Certain specified portions of the registrant's annual report to
security holders for the fiscal year ended April 30, 1994, are
incorporated herein by reference in response to Part I, Item 1,
and Part II, Items 5 through 8, inclusive, and certain specified
portions of the registrant's definitive proxy statement to be
filed within 120 days after April 30, 1994, are incorporated
herein by reference in response to Part III, Items 10 through 13,
inclusive.

PART I

ITEM 1. BUSINESS.

GENERAL DEVELOPMENT OF BUSINESS

H&R Block, Inc. is a diversified services corporation that
was organized in 1955 under the laws of the State of Missouri
(the "Company"). It is the parent corporation in a two-tier
holding company structure as a result of a corporate
restructuring effected in March 1993. The second-tier holding
company is H&R Block Group, Inc., a Delaware corporation and the
direct owner of all of the shares of the Company's primary
operating subsidiary corporations. Such primary operating
subsidiaries consist of H&R Block Tax Services, Inc., CompuServe
Incorporated and Block Financial Corporation. Developments
within each of these segments of the Company during fiscal year
1994 are described in the section below entitled "Description of
Business."

During the year ended April 30, 1994, the Company was not
involved in any bankruptcy, receivership or similar proceedings
or any material reclassifications, mergers or consolidations and,
except for the disposition of all of the stock of Interim
Services Inc., the Company did not acquire or dispose of any
material amount of assets otherwise than in the ordinary course
of business.

In November 1993, the Company acquired MECA Software, Inc.
("MECA"), a Delaware corporation involved in developing,
publishing and marketing personal productivity software products
designed to assist individuals in managing personal finances and
in preparing their income tax returns, for $45,384,000 in cash.
On November 15, 1993, the Company, through Block Acquisition
Corporation ("BAC"), an indirect wholly-owned subsidiary of the
Company, completed a $6.625 per share cash tender offer for all
of the outstanding shares of common stock, par value $.01 per
share, of MECA. The tender offer commenced on October 18, 1993,
pursuant to the terms of an Agreement and Plan of Merger dated as
of October 12, 1993 (the "Merger Agreement"). A total of
4,469,391 shares of MECA stock, representing approximately 96% of
MECA's outstanding shares, were properly tendered by MECA
shareholders pursuant to the tender offer, and were purchased by
BAC. The remaining MECA shares were acquired by the Company on

November 24, 1993, when, pursuant to the terms of the Merger
Agreement, BAC was merged into MECA. In connection with the MECA
transaction, the Company also acquired all rights to certain
software code and editorial content marketed by MECA and thereby
eliminated a significant portion of MECA's royalty obligations.
MECA is a wholly-owned subsidiary of H&R Block Group, Inc.

Among the products marketed by MECA are TaxCut (trademark),
a top-rated personal income tax return preparation software
developed by Legal Knowledge Systems, Inc., a subsidiary of
MECA, and Managing Your Money (trademark), computer software
designed to assist individuals in managing personal finances.
TaxCut is expected to provide the Company with products designed
to address the market for taxpayers who prepare their own tax
returns, while Managing Your Money is expected to complement the
financial services offered by Block Financial Corporation and the
on-line information services offered by CompuServe Incorporated.

On January 27, 1994, the Company (through its wholly-owned
subsidiary, H&R Block Group, Inc.) sold its 100% interest in its
indirect wholly-owned subsidiary, Interim Services Inc., through
an initial public offering of 10,000,000 shares of common stock,
par value $.01 per share, at an initial public offering price of
$20.00 per share. The initial public offering was conducted in
accordance with the terms of underwriting agreements among the
Company, H&R Block Group, Inc., Interim Services Inc. and the
underwriters. The closing of the transactions among the parties
to the underwriting agreements occurred on February 3, 1994.

The initial public offering price was negotiated among the
Company and representatives of the underwriters. Among the
factors considered in determining the initial public offering
price, in addition to prevailing market conditions, were
Interim's historical performance, estimates of the business
potential and earnings prospects of Interim, an assessment of
Interim's management and the consideration of the above factors
in relation to market valuation of companies in related
businesses.

The Company received cash proceeds from the sale of Interim
stock of $188,500,000 (which represents the initial public
offering price of $200,000,000, less an underwriting discount of
$11,500,000), as well as $30,000,000 from the retirement of a
term loan to Interim, for net proceeds from the transaction of
$218,500,000. The Company recorded a net gain on the sale of
stock of $27,265,000.

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

The information required by Item 101(b) of Regulation S-K
relating to financial information about industry segments is
contained in the Notes to the Consolidated Financial Statements
in the Company's annual report to security holders for the fiscal
year ended April 30, 1994, and is hereby incorporated by
reference.

NUMBER OF EMPLOYEES

The Company, including its subsidiaries, has approximately
3,400 regular full-time employees. The highest number of persons
employed by the Company during the fiscal year ended April 30,
1994, including seasonal employees, was approximately 82,800.

DESCRIPTION OF BUSINESS

H&R BLOCK TAX SERVICES, INC. ("TAX SERVICES")

GENERALLY. The income tax return preparation and related
services segment continues to be the Company's largest business
segment. Such services are provided to the public through a
system of offices operated by Tax Services or by others to whom
Tax Services has granted franchises. References in this Section
to "Tax Services" include H&R Block Tax Services, Inc., and its
subsidiaries involved in the income tax return preparation
business, and references in this Section to "H&R Block" include
both Tax Services and its franchisees.

Tax Services provides income tax return preparation services
and electronic filing services worldwide and refund discounting
services in Canada. In addition, H&R Block's Executive Tax
Service provides income tax return preparation services generally
to taxpayers with more complicated returns. H&R Block served
18,107,000 taxpayers worldwide during fiscal year 1994, a decrease
from the 18,182,800 taxpayers served in fiscal year 1993. "Taxpayers
served" includes taxpayers for whom H&R Block prepared income tax
returns as well as taxpayers for whom Block provided only electronic
filing services.

H&R Block also markets its knowledge of how to prepare income
tax returns through its income tax training schools. These
schools teach taxpayers how to prepare their own income tax
returns, as well as provide Tax Services with a source of trained
income tax return preparers. During the 1994 fiscal year,
133,458 students enrolled in H&R Block's basic and advanced
income tax courses, compared to 133,268 students during fiscal
year 1993.

TAX RETURN PREPARATION. During the 1994 income tax filing
season (January 3 through April 30), H&R Block offices prepared
approximately 15,181,000 individual United States and Canadian
income tax returns. About 13,037,000 of these returns were
United States returns, constituting 12.2% of an Internal Revenue
Service estimate of total U.S. individual income tax returns
filed during that time period. Tax Services prepared
approximately 2,144,000 Canadian returns filed with Revenue
Canada during the 1994 income tax filing season, a decrease from
the 2,225,000 Canadian returns prepared in the previous year.
H&R Block also prepares U.S. income tax returns in other
countries and Australian tax returns in Australia. The returns
prepared at offices in countries outside of the United States and
Canada constituted 2.5% of the total returns prepared by H&R

Block in the last fiscal year. The following table shows the
approximate number of income tax returns prepared at H&R Block
offices in the United States and Canada during the last five tax
filing seasons:

Tax Season Ended April 30
(in thousands)

1990 1991 1992 1993 1994

Returns prepared
(U.S. and Canada) 13,318 14,589 15,179 15,189 15,181

During the tax season, most H&R Block offices are open from
9:00 a.m. to 9:00 p.m. weekdays and from 9:00 a.m. to 5:00 p.m.
Saturdays and Sundays. Office hours are often extended during
peak periods. Most tax preparation business is transacted on a
cash basis. The procedures of Tax Services have been developed
so that a customer's tax return is prepared in his or her
presence, in most instances in less than one hour, on the basis
of information furnished by the customer. In all Company-owned
offices and most franchised offices, tax returns are prepared
with the assistance of a computer. After the customer's return
has been initially prepared, he or she is advised of the amount
of his or her tax due or refund. The return, however, is
retained and reviewed for theoretical accuracy. After completion
of this review and after copies of the return have been made, the
return is presented to the customer for signature and filing.
These post-preparation procedures must be modified somewhat for
customers who desire to have their returns electronically filed
(see "Electronic Filing," below). If an H&R Block preparer makes
an error in the preparation of a customer's tax return that
results in the assessment of any interest or penalties on addi-
tional taxes due, while H&R Block does not assume the liability
for the additional taxes, it guarantees payment of the interest
and penalties.

EXECUTIVE TAX SERVICE. In addition to its regular offices,
H&R Block offers tax return preparation services at Executive Tax
Service offices in the United States and Canada. Appealing to
taxpayers with more complicated returns, Executive Tax Service
stresses the convenience of appointments, year-round tax service
from the same preparer and private office interviews. The number
of Executive Tax Service offices increased from 458 in fiscal
year 1993 to 515 in 1994. In fiscal 1994, the number of
Executive Tax Service clients increased to 513,726, compared to
432,497 in 1993 and 329,349 in 1992. Tax Services plans to
continue to expand the Executive Tax Service segment of its tax
return preparation business.

ELECTRONIC FILING. Tax Services and its participating
franchisees offer to taxpayers a service consisting of the
electronic filing of individual income tax returns. Electronic
filing reduces the amount of time required for a taxpayer to
receive a federal tax refund and provides assurance to the client
that the return, as filed with the Internal Revenue Service, is
mathematically accurate. If the customer desires, he or she may

have his or her refund deposited by the Treasury Department
directly into his or her account at a financial institution
designated by the customer. Tax Services and its franchisees
filed approximately 7,559,000 tax returns electronically in 1994,
compared to 7,302,000 in fiscal 1993 and 6,778,000 in fiscal
1992. In some areas of the United States in 1994, Tax Services
offered the electronic filing service at no charge to those
clients for whom H&R Block prepared the tax return.

For U.S. returns, H&R Block offers a refund anticipation loan
service in conjunction with its electronic filing service. In
cooperation with selected national banking institutions,
electronic filing customers who meet certain eligibility criteria
are offered the opportunity to apply for loans from the banks in
amounts based upon the customers' anticipated federal income tax
refunds. Under this program, income tax return information is
simultaneously transmitted by H&R Block to the Internal Revenue
Service and the lending bank. Within a few days after the date
of filing, a check in the amount of the loan, less a transaction
fee (retained by the bank), is received by the refund
anticipation loan customer. The Internal Revenue Service then
deposits the participating customer's actual federal income tax
refund into a designated account at the bank in order for the
loan to be repaid. H&R Block's tax return preparation fee and
electronic filing fee may be withheld from the loan proceeds and
paid by the bank to Tax Services or the franchisee involved.
Approximately 5,554,000 refund anticipation loans were processed
in 1994 by H&R Block, compared to 5,662,000 in 1993.

In 1994, H&R Block offered a service to transmit state income
tax returns to state tax authorities in 18 states and plans to
continue to expand this program as more states make this filing
alternative available to their taxpayers. H&R Block also offered
the electronic filing of U.S. income tax returns at offices
located in Europe and the electronic filing of Australian and
Canadian income tax returns at its offices in Australia and
Canada, respectively.

CASH BACK. In Canada, the Company and its franchisees offer
a refund discount ("Cash Back") program to their customers. The
procedures which H&R Block must follow in conducting the program
are specified by Canadian law. In accordance with current
Canadian regulations, if a customer's tax return indicates that
such customer is entitled to a tax refund, a check is issued by
H&R Block to the customer for an amount which is equal to the sum
of (1) 85% of that portion of the anticipated refund which is
less than or equal to $300 and (2) 95% of that portion of the
refund in excess of $300. The customer assigns to H&R Block the
full amount of the tax refund to be issued by Revenue Canada.
The refund check is then sent by Revenue Canada directly to H&R
Block and deposited by H&R Block in its bank account. In
accordance with the law, the discount is deemed to include both
the tax return preparation fee and the fee for tax refund
discounting. This program is financed by short-term borrowing.
The number of returns discounted under the Cash Back program
decreased from 871,592 in fiscal year 1993 to 663,951 in fiscal

year 1994. A decrease in 1994 was anticipated by the Company due
to changes in procedures for the distribution of welfare payments
in Canada.

OWNED AND FRANCHISED OFFICES. Most H&R Block offices are
similar in appearance and usually contain the same type of
furniture and equipment, in accordance with the specifications of
Tax Services. Free-standing offices are generally located in
business and shopping centers of large metropolitan areas and in
the central business areas of smaller communities. All offices
are open during the tax season. During the balance of the year
only a limited number of offices are open, but through telephone
listings, H&R Block personnel are available to provide service to
customers throughout the entire year.

In fiscal year 1994, H&R Block also operated 895 offices in
department stores, including 731 offices in Sears, Roebuck & Co.
stores operated as "Sears Income Tax Service by H&R Block."
During the 1994 tax season, the Sears facilities constituted
approximately 7.6% of the tax office locations of H&R Block. In
1994, the Sears locations were operated under a license agreement
that expires on December 31, 1994. A new license agreement is
currently being negotiated and the Company has every reason to
believe that Tax Services' contractual relationship with Sears
will continue. Tax Services believes its relations with Sears to
be excellent and that both parties to the license arrangement
view the operations thereunder to date as satisfactory.

On April 15, 1994, there were 9,577 H&R Block offices in
operation principally in all 50 states, the District of Columbia,
Canada, Australia and Europe, compared to 9,511 offices in opera-
tion on April 15, 1993. Of the 9,577 offices, 4,537 were owned
and operated by Tax Services and 5,040 were owned and operated by
independent franchisees. Of such franchised offices, 3,460 were
owned and operated by "satellite" franchisees of Tax Services
(described below), 907 were owned and operated by "major" fran-
chisees (described below) and 673 were owned and operated by
satellite franchisees of major franchisees. From time to time,
the Company has acquired the operations of existing franchisees
and Tax Services will continue to do so if future conditions
warrant such acquisitions and satisfactory terms can be
negotiated.

Two types of franchises have principally been granted by the
tax services segment of the Company. "Major" franchisees entered
into agreements with the Company (primarily in the Company's
early years) covering larger cities and counties and providing
for the payment of franchise royalties based upon a percentage of
gross revenues of their offices. Under the agreements, the
Company granted to each franchisee the right to the use of the
name "H&R Block" and provided a Policy and Procedure Manual and
other supervisory services. Tax Services offers to sell
furniture, signs, advertising materials, office equipment and
supplies to major franchisees. Each major franchisee selects and
trains the employees for his or her office or offices. Since
March 1993, HRB Royalty, Inc., a Delaware corporation and a
wholly-owned subsidiary of Tax Services, has served as the
franchisor under the major franchise agreements.

In smaller localities, Tax Services grants what it terms
"satellite" franchises. A satellite franchisee receives from Tax
Services signs, designated equipment, specialized forms, local
advertising, initial training, and supervisory services and,
consequently, pays the Company a higher percentage of his or her
gross tax return preparation and related service revenues as a
franchise royalty than do major franchisees. Substantially all
of the satellite franchises of Tax Services are located in cities
with populations of 15,000 or less. Some major franchisees also
grant satellite franchises in their respective areas.

It has always been the policy of the Company to grant tax
return preparation franchises to qualified persons without an
initial franchise fee; however, the policy of Tax Services is to
require a deposit to secure compliance with franchise contracts.
The deposit fund as of April 30, 1994, amounted to $2,378,000.

SEASONALITY OF BUSINESS. Since most of the customers of Tax
Services file their tax returns during the period from January
through April of each year, substantially all of Tax Services'
revenues from income tax return preparation, related services and
franchise royalties are received during this period. As a
result, Tax Services operates at a loss through the first nine
months of its fiscal year. Historically, such losses primarily
reflect payroll of year-round personnel, training of income tax
preparers, rental and furnishing of tax offices, and other costs
and expenses relating to preparation for the following tax
season.

SERVICE MARKS AND TRADEMARKS. HRB Royalty, Inc., a Delaware
corporation and a wholly-owned subsidiary of Tax Services, owns
the following service marks registered on the principal register
of the United States Patent Office:

H&R Block in Two Distinct Designs
The Income Tax People
H&R Block Income Tax and Design
Income Tax Saver
Executive (when used in connection with the
preparation of income tax returns for others)
Rapid Refund H&R Block and Design

Tax Services has a license to use the trade names and service
marks of HRB Royalty, Inc., in the conduct of the business of Tax
Services.

In addition, HRB Royalty, Inc., owns the following
unregistered service marks and trademarks:

America's Largest Tax Service
Nation's Largest Tax Service

COMPETITIVE CONDITIONS. The tax return preparation and
electronic filing business is highly competitive. Tax Services
considers its primary source of tax return preparation
competition to be the individual who prepares his own tax return.

In addition, there are substantial numbers of tax return prepara-
tion firms. Many of these firms and many firms not otherwise in
the tax return preparation business are involved in providing
electronic filing and refund anticipation loan services to the
public. Commercial tax return preparers and electronic filers
are highly competitive with regard to price, service and
reputation for quality. Tax Services believes that in terms of
the number of offices and tax returns prepared it is the largest
tax return preparation firm in the United States. Tax Services
also believes that in terms of the number of offices and tax
returns electronically filed in fiscal year 1994, it is the
largest provider of electronic filing services in the United
States.

COMPUSERVE INCORPORATED ("COMPUSERVE")

GENERALLY. CompuServe, the Company's information services
and computer communications subsidiary based in Columbus, Ohio,
operates through three divisions - Information Services, Network
Services and Support Services. CompuServe became a wholly-owned
subsidiary of the Company in May 1980 and is presently a wholly-
owned subsidiary of H&R Block Group, Inc. From its origins as a
computer time-sharing firm, CompuServe has become a leading
provider of computer-based information and communications
services to businesses and individual owners of personal
computers. CompuServe's highly sophisticated and efficient
telecommunications network links CompuServe subscribers and
system users to each other, to CompuServe's central computer
facilities or to other computer centers and data bases
distributed across the country and around the world. As of April
30, 1994, CompuServe's telecommunications network extended to 349
metropolitan local access points in the United States, covering
all major metropolitan areas and many rural locations. Through
the use of supplementary and other networks, CompuServe provides
network coverage in the United States and in approximately 100
foreign countries which have public networks. CompuServe has
also established local dial access points in more than 140 cities
in ten countries.

CompuServe's largest division is its Information Services
Division. The CompuServe Information Service, the online service
for personal computer owners, provides subscribers with access to
data stored on mainframes and networked personal computers.
CompuServe is one of the leading providers of information
services to national and international markets. The total number
of subscribers to CompuServe Information Services increased to
more than 1.8 million personal computer owners worldwide at the
end of fiscal year 1994, compared to approximately 1.3 million at
the end of the previous year. Membership in 1994 grew by more
than 100% in Europe to 100,000 subscribers, helped in part by a
new office in Paris. Among the services accessible through
CompuServe's information system are online shopping services,
stock market brokerage services and airline reservation services.
Customers can also play computer games, conduct research, send
and receive messages and exchange helpful tips about computer use
through special interest bulletin boards called "Forums" simply
by connecting their personal computers to an ordinary telephone
line.

Through its Information Services Division, CompuServe has
also developed a wide range of business services that enable
companies to link their employees with the information needed to
conduct business. The services include electronic mail, internal
corporate information systems for diverse applications, and a
host of business-related databases. Electronic mail and other
communications systems provided by CompuServe allow business
users flexible, two-way access to information in operating areas
such as sales, marketing, investment research and information
management. Through the use of these systems, suppliers and
customers are able to access information easily and securely
through personal computers and computer terminals.

CompuServe's Network Services Division provides value-added
packet data network, frame relay and local area network services
to corporations and many other diverse organizations. The
network offers these organizations an exceptionally fast and
reliable data communications system which can be customized to
meet their particular requirements. The number of clients of the
Network Services Division totalled 586 at the end of fiscal year
1994, an increase from the 484 clients at the end of fiscal year
1993.

One of the many applications for which the CompuServe network
is utilized by its customers relates to point-of-sale
transactions. CompuServe is a leading provider of value-added
telecommunications services for point-of-sale authorization of
credit card purchases. Using the CompuServe network, a merchant
can pass a customer's card through a computer terminal and
determine almost instantly whether the card is valid.

In addition to providing technical support to all other
divisions of CompuServe, the Support Services Division of
CompuServe again in fiscal year 1994 lent its expertise to the
income tax return preparation and related services segment of the
Company in the nationwide operation of H&R Block Tax Services,
Inc.'s electronic filing program. The system developed and
implemented by the Support Services Division ensured fast,
accurate, high-volume transmission and processing of tax return
refund claims. The Support Services Division also developed the
income tax return preparation software used in H&R Block offices
nationwide during fiscal year 1994.

Fiscal year 1994 saw the introduction of CompuServe CD, the
multimedia companion to the CompuServe Information Service that
combines CD-ROM based information, applications, sound, graphics
and video with CompuServe's online services.

Subsequent to the end of fiscal year 1994, CompuServe
disposed of CompuServe Data Technologies, a division that
marketed database management software, and Collier-Jackson, Inc.,
a subsidiary of CompuServe that marketed newspaper management and
financial software.

SERVICE MARKS, TRADEMARKS, PATENTS OR COPYRIGHTS. CompuServe
owns the following service marks registered on the principal
register of the United States Patent Office:

CompuServe
EasyPlex
The Electronic Mall
B+ Protocol
Forum
CB Simulator

In addition, CompuServe owns the following trademarks
registered on the principal register of the United States Patent
Office:

CompuServe Information Manager
InfoPlex
B Protocol
WINCIM
FRAME-Net

CompuServe also owns or claims numerous unregistered service
marks or trademarks.

CompuServe presently holds no patents on its software
programs. CompuServe is licensed by others to use various
software programs and offers such programs to customers on a
surcharge basis.

COMPETITIVE CONDITIONS. The online information and remote
computer services businesses are highly competitive and consist
of a large number of companies. The Company believes that, in
terms of subscriber base, CompuServe is the largest provider of
worldwide online information services. The remote computer
services industry is highly fragmented and no single supplier can
be considered to occupy a dominant position in the industry.
CompuServe's Network Division continues to compete successfully
with competitors who have larger sales and technical
organizations than CompuServe.

BLOCK FINANCIAL CORPORATION ("BFC")

GENERALLY. Block Financial Corporation, a Delaware
corporation and a subsidiary of H&R Block Group, Inc., was
incorporated in May 1992 and such corporation, or a subsidiary
thereof, is involved in investing in refund anticipation loans,
offering H&R Block and CompuServe bank cards, leasing computer
equipment to franchisees of H&R Block Tax Services, Inc. (or one
of its subsidiaries), extending equity lines of credit to such
franchisees, providing business insurance services to H&R Block
Tax Services, Inc., its franchisees and other subsidiaries of the
Company, and, through a captive insurance subsidiary, reinsuring
certain Company risks and providing insurance coverages for
third-party businesses.

BFC is a party to an agreement with Mellon Bank (DE)
National Association ("Mellon") under which BFC purchases
interests in a trust to which certain refund anticipation loans
made by Mellon in the United States are sold. Mellon is one of
the national banking institutions through which such loans are
made to H&R Block electronic filing customers, as described in
the section entitled "H&R Block Tax Services, Inc.," under
"Electronic Filing." During fiscal year 1994, Mellon offered
refund anticipation loans to customers of Tax Services and its
franchisees in an area that included approximately one-half of
the total of company-owned and satellite franchised offices in
the United States. BFC purchased an interest of just under 50%
in all refund anticipation loans made by Mellon during fiscal
year 1994 at those tax offices in the Mellon territory. BFC's
purchases were financed through short-term borrowing. BFC bears
all of the risks associated with its interests in the refund
anticipation loans.

Through Columbus Bank and Trust Company, Columbus, Georgia,
BFC had issued in excess of 45,000 credit cards by the end of
fiscal year 1994. The "H&R Block ValueCard" is designed for
customers of H&R Block Tax Services, Inc., and the CompuServe
Visa Card is designed for customers of CompuServe Incorporated.
The cards currently feature a low annual fee, a market-based
annual percentage rate of interest equivalent to the prime rate,
plus 9.9%, and rebates for the services offered by Tax Services
or CompuServe, as the case may be. BFC plans to introduce a
value-added on-line transaction review service for customers with
a CompuServe Visa Card.

In a program designed to help franchise owners automate
their income tax return preparation operations in an economical
manner, Franchise Partner, Inc., a subsidiary of BFC, offers
direct finance capital leases to franchisees of either H&R Block
Tax Services, Inc., or one of its subsidiary corporations in
order to finance computer equipment. The leases offered are for
terms of 24 or 36 months.

Franchise Partner, Inc., also offers to such franchisees
equity lines of credit which must be used for purposes related to
the operation of the franchise. A franchise equity line of
credit is secured by the franchise itself. The program is
designed to provide franchise owners with lines of credit with
reasonable interest rates in order to better enable the
franchisees to refinance existing business debt, expand or
renovate offices or meet off-season cash flow needs. The minimum
line of credit amount is generally $10,000 and the standard term
for an equity line of credit is five years (with provisions for
automatic extensions of such term). In most states during fiscal
year 1994, draws against a line of credit were charged a variable
monthly interest rate of the prime interest rate, plus one
percent.

At the end of fiscal year 1994, the operations of the
personal finance software (Managing Your Money (copyright))
portion of MECA Software, Inc., were combined with BFC. BFC
intends to expand the market for such software beyond the
consumer market to an integrated system designed to tie financial
service companies to their customers.

COMPETITIVE CONDITIONS. The credit card, computer equipment
leasing, lending and insurance businesses are highly competitive
and consist of a large number of companies. No single supplier
can be considered to occupy a dominant position in any of these
businesses.

ITEM 2. PROPERTIES.

The executive offices of both the Company and H&R Block Tax
Services, Inc., are located at 4410 Main Street, Kansas City,
Missouri, in a three-story building owned by Tax Services which
was constructed in 1963 and expanded in 1965, 1973 and 1981. Tax
Services has acquired property adjacent to such building and an
additional expansion is in the planning stages. Most other
offices of Tax Services (except those in department stores) are
operated in premises held under short-term leases providing fixed
monthly rentals, usually with renewal options.

CompuServe's executive offices are located in an office
complex in Columbus, Ohio, owned by CompuServe. CompuServe also
owns and occupies two other buildings in the Columbus area and
has broken ground on new facilities in the Columbus area
(presently planned for occupancy in the third quarter of fiscal
year 1996). In addition, CompuServe leases office space in three
other buildings in the Columbus area and in a number of other
locations in the United States and Europe. CompuServe owns SC30M
computer systems purchased from Systems Concepts, Inc., and has
assembled several SC-30 and SC-40 processors on-site via an
agreement with such firm. CompuServe also owns central
processors manufactured by Digital Equipment Corporation and
located in its two computer centers. Due to the varying demands
of different computer programs on the capabilities of the com-
puter hardware, it is not possible to define a single measurement
of the hardware capacity.

The executive offices of Block Financial Corporation are
located in leased offices at 4435 Main Street, Kansas City,
Missouri.

ITEM 3. LEGAL PROCEEDINGS.

There are no material legal proceedings pending by or
against the Company or any of its subsidiaries.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to a vote of security holders,
through the solicitation of proxies or otherwise, during the
fourth quarter of the fiscal year ended April 30, 1994.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT.

The executive officers of the Company, each of whom has been
elected to serve at the discretion of the Board of Directors of
the Company, are:

Name and age Office(s)
- - - - ---------------------- ------------------------------
Henry W. Bloch (71) Chairman of the Board since
August 1989; Chief Executive
Officer from 1974 through July
1992; President from 1962
through July 1989; Member of
the Board of Directors since
1955.

Thomas M. Bloch (40) President since August 1989;
Chief Executive Officer since
August 1992; Chief Operating
Officer from August 1989
through July 1992; Executive
Vice President from August
1988 through July 1989; Member
of the Board of Directors
since 1983.

William F. Evans (46) Senior Vice President,
Corporate Operations, since
August 1992. See Note 1.

William P. Anderson (45) Vice President, Corporate
Development, since December
1991; Chief Financial Officer
since August 1992. See Note
2.

Robert L. Arnold (51) Vice President since February
1986; Director of Internal
Audit since 1978.

Ozzie Wenich (51) Vice President, Corporate Con-
troller and Treasurer since
March 1994; Vice President and
Corporate Controller from Sep-
tember 1985 until March 1994.

Note 1: Mr. Evans was Executive Vice President and Chief
Financial Officer of Dun & Bradstreet Software
Services, Inc., Atlanta, Georgia, from 1990 through
July 1992; and Executive Vice President and Chief
Financial Officer of Management Science America, Inc.,
Atlanta, Georgia, from 1988 until 1990.

Note 2: Mr. Anderson was a partner in KPMG Peat Marwick,
accounting firm, from 1984 until December 1991, in
Atlanta, Georgia, serving in various capacities,
including responsibility for the firm's national
corporate finance consulting practice.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS.

The information called for by this item is contained in the
Company's annual report to security holders for the fiscal year
ended April 30, 1994, under the heading "Common Stock Data," and
is hereby incorporated by reference. The Company's Common Stock
is traded principally on the New York Stock Exchange. The
Company's Common Stock is also traded on the Pacific Stock
Exchange. On June 10, 1994, there were 35,485 stockholders of
the Company.

ITEM 6. SELECTED FINANCIAL DATA.

The information called for by this item is contained in the
Company's annual report to security holders for the fiscal year
ended April 30, 1994, under the heading "Selected Financial
Data," and is hereby incorporated by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

The information called for by this item is contained in the
Company's annual report to security holders for the fiscal year
ended April 30, 1994, under the headings "Management's Discussion
and Analysis of Results of Operations" and "Management's
Discussion and Analysis of Liquidity and Capital Resources," and
is hereby incorporated by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The information called for by this item and listed at Item
14(a)1 is contained in the Company's annual report to security
holders for the fiscal year ended April 30, 1994, and is hereby
incorporated by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

There has been no change in the registrant's accountants
during the two most recent fiscal years or any subsequent interim
time period.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The information called for by this item is contained in the
Company's definitive proxy statement to be filed pursuant to
Regulation 14A not later than 120 days after April 30, 1994, in
the section titled "Election of Directors" and in Item 4a of Part
I of this report, and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION.

The information called for by this item is contained in the
Company's definitive proxy statement to be filed pursuant to
Regulation 14A not later than 120 days after April 30, 1994, in
the section titled "Compensation of Executive Officers," and is
incorporated herein by reference, except that information
contained in such section under the subtitles "Performance
Graphs" and "Compensation Committee Report" is not incorporated
herein by reference and is not to be deemed "filed" as part of
this filing.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.

The information called for by this item is contained in the
Company's definitive proxy statement to be filed pursuant to
Regulation 14A not later than 120 days after April 30, 1994, in
the section titled "Election of Directors" and in the section
titled "Information Regarding Security Holders," and is
incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information called for by this item is contained in the
Company's definitive proxy statement to be filed pursuant to
Regulation 14A not later than 120 days after April 30, 1994, in
the section titled "Election of Directors," and in the section
titled "Compensation of Executive Officers," and is incorporated
herein by reference, except that information contained in the
section titled "Compensation of Executive Officers" under the
subtitles "Performance Graphs" and "Compensation Committee
Report" is not incorporated herein by reference and is not deemed
"filed" as part of this filing.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.

(a) 1. FINANCIAL STATEMENTS

The following consolidated financial
statements of H&R Block, Inc., and
Subsidiaries are incorporated by reference
to the Company's annual report to security
holders for the year ended April 30, 1994:

Page

Consolidated Statements of Earnings 19
Consolidated Balance Sheets 20
Consolidated Statements of Cash Flows 21
Notes to Consolidated Financial Statements 22
Quarterly Financial Data 27
Independent Auditors' Report 29

2. FINANCIAL STATEMENT SCHEDULES

Independent Auditors' Report

Schedule I - Marketable Securities - Other Security
Investments

Schedule II - Amounts Receivable from Related Parties
and Underwriters, Promoters and Employees Other
Than Related Parties

Schedule VIII - Valuation and Qualifying Accounts

Schedule IX - Short-Term Borrowings

Schedules not filed herewith are either not
applicable, the information is not material
or the information is set forth in the financial
statements or notes thereto.

3. EXHIBITS

3(a) Restated Articles of Incorporation
of H&R Block, Inc., as amended,
filed as Exhibit 4(a) to the Com-
pany's quarterly report on Form 10-
Q for the quarter ended October 31,
1991, are incorporated herein by
reference.

3(b) Bylaws of H&R Block, Inc., as
amended, filed as Exhibit 4 to the
Company's quarterly report on Form
10-Q for the quarter ended October
31, 1989, are incorporated by
reference.

4(a) Conformed copy of Rights Agreement
dated as of July 14, 1988 between
H&R Block, Inc., and Centerre Trust
Company of St. Louis, filed on
August 9, 1993 as Exhibit 4(c) to
the Company's Registration
Statement on Form S-8 (File No. 33-
67170), is incorporated herein by
reference.

4(b) Form of Certificate of Designation,
Preferences and Rights of
Participating Preferred Stock of
H&R Block, Inc., filed on August 9,
1989 as Exhibit 4(d) to the
Company's Registration Statement on
Form S-8 (File No. 33-30453), is
incorporated by reference.

4(c) Copy of Amendment to Rights
Agreement dated as of May 9, 1990
between H&R Block, Inc., and
Boatmen's Trust Company, filed as
Exhibit 4(c) to the Company's
annual report on Form 10-K for the
fiscal year ended April 30, 1990,
is incorporated herein by
reference.

4(d) Copy of Second Amendment to Rights
Agreement dated September 11, 1991
between H&R Block, Inc., and
Boatmen's Trust Company, filed as
Exhibit 4(b) to the Company's
quarterly report on Form 10-Q for
the quarter ended October 31, 1991,
is incorporated herein by
reference.

10(a) The Company's 1984 Long-Term
Executive Compensation Plan, as
amended (terminated as of September
8, 1993, except with respect to
awards then outstanding
thereunder), filed as Exhibit 28(a)
to the Company's quarterly report
on Form 10-Q for the quarter ended
October 31, 1991, is incorporated
herein by reference.

10(b) The Company's 1993 Long-Term
Executive Compensation Plan, filed
as Exhibit 10 to the Company's
quarterly report on Form 10-Q for
the quarter ended October 31, 1993,
is incorporated herein by
reference.

10(c) The H&R Block Long-Term Performance
Program, as amended.

10(d) The H&R Block Deferred Compensation
Plan for Directors, as amended.

10(e) The H&R Block Deferred Compensation
Plan for Executives, as amended.

10(f) The H&R Block Supplemental Deferred
Compensation Plan for Executives.

10(g) The Amended and Restated H&R Block,
Inc. Retirement Plan for Non-
Employee Directors, filed as
Exhibit 10(e) to the Company's
annual report on Form 10-K for the
fiscal year ended April 30, 1989,
is incorporated herein by
reference.

10(h) The Company's 1989 Stock Option
Plan for Outside Directors, as
amended, filed as Exhibit 28(b) to
the Company's quarterly report on
Form 10-Q for the quarter ended
October 31, 1991, is incorporated
herein by reference.

11 Statement re Computation of Per
Share Earnings.

13 Those portions of the annual report
to security holders for the fiscal
year ended April 30, 1994 which are
expressly incorporated by reference
in this filing are filed as Exhibit 13
hereto.

21 Subsidiaries of the Company.

23 The consent of Deloitte & Touche,
Certified Public Accountants, is located
immediately after the signature pages
contained in this filing.

(b) Reports on Form 8-K.

The Company did not file any current reports on
Form 8-K during the fourth quarter of the year ended
April 30, 1994.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, there-
unto duly authorized.

H&R BLOCK, INC.

June 22, 1994 By/s/ Thomas M. Bloch
---------------------------
Thomas M. Bloch, President
and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the date indicated.

Signature Title
- - - - ----------------------- -----------------------

/s/ Thomas M. Bloch President, Chief
- - - - ----------------------- Executive Officer and
Thomas M. Bloch Director (principal
executive officer)

/s/ G. Kenneth Baum Director
- - - - -----------------------
G. Kenneth Baum

/s/ Henry W. Bloch Director
- - - - -----------------------
Henry W. Bloch

/s/ Robert E. Davis Director
- - - - -----------------------
Robert E. Davis

/s/ Donna R. Ecton Director
- - - - -----------------------
Donna R. Ecton

/s/ Henry F. Frigon Director
- - - - -----------------------
Henry F. Frigon

/s/ Roger W. Hale Director
- - - - -----------------------
Roger W. Hale

(Signed as to each on June 22, 1994)

Signature Title
- - - - -------------------------- -------------------------

/s/ Marvin L. Rich Director
- - - - --------------------------
Marvin L. Rich

/s/ Frank L. Salizzoni Director
- - - - --------------------------
Frank L. Salizzoni

/s/ Morton I. Sosland Director
- - - - --------------------------
Morton I. Sosland

/s/ William P. Anderson Vice President, Corporate
- - - - -------------------------- Development and Chief
William P. Anderson Financial Officer
(principal financial
officer)

/s/ Ozzie Wenich Vice President, Corporate
- - - - -------------------------- Controller and Treasurer
Ozzie Wenich (principal accounting
officer)

(Signed as to each on June 22, 1994)

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Post-Effective
Amendment No. 4 to Registration Statement No. 33-185 of H&R
Block, Inc. and subsidiaries (relating to shares of Common Stock
issued under the 1984 Long-Term Executive Compensation Plan) on
Form S-8 and Registration Statement No. 33-33889 of H&R Block,
Inc. and subsidiaries (relating to shares of Common Stock
issuable under the 1989 Stock Option Plan for Outside Directors)
on Form S-8 of our reports dated June 21, 1994, appearing in and
incorporated by reference in this Annual Report on Form 10-K of
H&R Block, Inc. and subsidiaries for the year ended April 30,
1994.

/s/Deloitte & Touche

Kansas City, Missouri
July 28, 1994

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
H&R Block, Inc.
Kansas City, Missouri

We have audited the consolidated financial statements of H&R
Block, Inc. and subsidiaries as of April 30, 1994 and 1993 and
for each of the three years in the period ended April 30, 1994,
and have issued our report thereon dated June 21, 1994; such
consolidated financial statements and report are included in your
1994 Annual Report to Stockholders and are incorporated herein by
reference. Our audits also included the financial statement
schedules of H&R Block, Inc. and subsidiaries, listed in Item 14.
These financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such financial
statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present
fairly in all material respects the information set forth
therein.

/s/ Deloitte & Touche

Kansas City, Missouri
June 21, 1994

H&R BLOCK, INC.
AND SUBSIDIARIES

Schedule I - MARKETABLE SECURITIES - OTHER SECURITY INVESTMENTS

APRIL 30, 1994

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

CURRENT ASSETS:
MUNICIPAL BONDS:
Richfield, Minnesota Independent School District
General Obligation Series 1993 B Floating Rate,
Tax Exempt Adjustable Rate Bonds. Rate resets
monthly on the first. 2,000,000 $2,000,000 $2,000,000 $2,000,000

Richfield, Minnesota Independent School District
General Obligation School Building Series 1993 B
Floating Rate, Tax Exempt Adjustable Rate Bonds.
Rate resets monthly on the first. 2,260,000 2,260,000 2,260,000 2,260,000

Richfield, Minnesota Independent School District
General Obligation School Building Series 1993 B
Floating Rate, Tax Exempt Adjustable Rate Bonds.
Rate resets monthly on the first. 1,315,000 1,315,000 1,315,000 1,315,000

Puerto Rico Commonwealth, Tax Exempt Adjustable Rate
Bond. Rate resets every 28 days. 1,700,000 1,700,000 1,700,000 1,700,000

McLean County, North Dakota Solid Waste Disposal
Revenues National Rural Utility COOP, Tax Exempt
Adjustable Rate Bonds. Rate resets every 32 days. 3,200,000 3,200,000 3,200,000 3,200,000

Washington State Public Power Supply System #2, Tax
Exempt Adjustable Rate Bonds. Rate resets every 35
days. 1,580,000 1,580,000 1,580,000 1,580,000

Philadelphia Hospital Pennsylvania, Tax Exempt
Adjustable Rate Bonds. Rate resets every 35 days. 2,450,000 2,450,000 2,450,000 2,450,000

Illinois Housing Development Authority, Tax Exempt
Adjustable Rate Bonds. Rate resets every 35 days. 5,000,000 5,000,000 5,000,000 5,000,000

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Massachusetts Health and Education Facility
Authority for Boston University, Tax Exempt
Adjustable Rate Bonds. Rate resets every 35 days. 6,250,000 6,249,312 6,250,000 6,250,000

Georgia State General Obligation Series A - Private
Placement, Tax Exempt Adjustable Rate Bonds. Rate
resets every 36 days. 3,140,000 3,140,000 3,140,000 3,140,000

Georgia State General Obligation Series A - Private
Placement, Tax Exempt Adjustable Rate Bonds. Rate
resets every 30 days. 4,300,000 4,300,000 4,300,000 4,300,000

California State Housing University Revenues, Tax
Exempt Adjustable Rate Bonds. Rate resets every 30
days. 7,600,000 7,600,000 7,600,000 7,600,000

Fairfax County, Virginia Industrial Development
Authority Revenues, Tax Exempt Adjustable Rate
Bonds. Rate resets every 29 days. 9,000,000 9,000,000 9,000,000 9,000,000

San Francisco, California City and County Sewer
Revenue Float, Tax Exempt Adjustable Rate Bonds.
Rate resets every 28 days. 2,800,000 2,800,000 2,800,000 2,800,000

Los Angeles, California Waste Water System Revenues
1992 B, Tax Exempt Adjustable Rate Bonds. Rate
resets every 34 days. 4,000,000 4,000,000 4,000,000 4,000,000

Pre-Refunded Pooled Private Placement, Tax Exempt
Adjustable Rate Bonds. Rate resets every 35 days. 5,000,000 5,000,000 5,000,000 5,000,000

First California Pre-Refunded, Tax Exempt Adjustable
Rate Bonds. Rate resets every 36 days. 5,000,000 5,000,000 5,000,000 5,000,000

First California Pre-Refunded, Tax Exempt Adjustable
Rate Bonds. Rate resets every 35 days. 1,100,000 1,100,000 1,100,000 1,100,000

Pre-Refunded Pooled Private Placement, Tax Exempt
Adjustable Rate Bonds. Rate resets every 35 days. 3,500,000 3,500,000 3,500,000 3,500,000

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
New York City Municipal Water Financial Authority
Water and Sewer Systems Revenues, Tax Exempt
Adjustable Rate Bonds. Rate resets every 35 days. 2,000,000 2,000,000 2,000,000 2,000,000

Missouri State Environment Transportation and Energy
Revenue (Union Electric Company), Tax Exempt
Adjustable Rate Bonds. Rate resets every 35 days. 5,000,000 4,999,850 5,000,000 5,000,000

City of Chelsea, Massachusetts Lease Revenues Series
A, Tax Exempt Adjustable Rate Bonds. Rate resets
every 35 days. 5,000,000 5,000,000 5,000,000 5,000,000

Underwood, North Dakota Pollution Control Revenues
(COOP Power Association Project) Series A, Tax
Exempt Adjustable Rate Bonds. Rate resets every 34
days. 5,000,000 5,000,000 5,000,000 5,000,000

Los Angeles, California Waste and Water System
Revenues Series 1992 B, Tax Exempt Adjustable Rate
Bonds. Rate resets every 36 days. 4,000,000 4,000,000 4,000,000 4,000,000

Washington State Housing Financial Single Family
Mortgage Revenues Refunding, Tax Exempt Adjustable
Rate Bonds. Rate resets every 36 days. 2,100,000 2,100,000 2,100,000 2,100,000

Missouri State Environmental Transportation and
Energy Revenues (Union Electric), Tax Exempt
Adjustable Rate Bonds. Rate resets every 36 days. 2,900,000 2,900,000 2,900,000 2,900,000

City of Chelsea, Massachusetts Lease Revenues Series
A, Tax Exempt Adjustable Rate Bonds. Rate resets
every 36 days. 2,000,000 2,000,000 2,000,000 2,000,000

Montana State Health Facility Authority, Tax Exempt
Adjustable Rate Bonds. Rate resets every 35 days. 3,650,000 3,650,000 3,650,000 3,650,000

New York, New York City Municipal Water Financial
Authority Water and Sewer Revenue Fiscal 1989 B,
Tax Exempt Adjustable Rate Bonds. Rate resets
every 36 days. 5,000,000 5,000,000 5,000,000 5,000,000

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
California State Department of Water Resource, Tax
Exempt Adjustable Rate Bonds. Rate resets every 39
days. 8,700,000 8,700,000 8,700,000 8,700,000

Vermont Student Assistance Corporation Series E, Tax
Exempt Adjustable Rate Bonds. Rate resets every 35
days. 2,300,000 2,300,000 2,300,000 2,300,000

Student Loan Acquisition Authority of Arizona Series
1994 A-2 "AGES", Tax Exempt Adjustable Rate Bonds.
Rate resets every 35 days. 5,000,000 5,000,000 5,000,000 5,000,000

City of Wamego, Kansas (Western Resources Project)
Pollution Control Revenues, Tax Exempt Adjustable
Rate Bonds. Rate resets every 16 days. 5,000,000 4,999,450 4,999,450 4,999,450

Massachusetts Bay Transportation Authority General
Transportation System Series A, Tax Exempt
Adjustable Rate Bonds. Rate resets every 137 days. 1,500,000 1,501,080 1,501,080 1,500,432

New York State Dormitory Authority Revenues for
Cornell University, Tax Exempt Adjustable Rate
Bonds. Rate resets every 35 days. 5,000,000 5,000,000 5,000,000 5,000,000

New York State Urban Development 1994-7, Tax Exempt
Adjustable Rate Bonds. Rate resets every 128 days. 5,000,000 5,000,000 5,000,000 5,000,000

State of Washington General Obligation 1994-15, Tax
Exempt Adjustable Rate Bonds. Rate resets every
118 days. 3,400,000 3,400,000 3,400,000 3,400,000

Oklahoma City, Oklahoma Municipal Improvement
Authority Water System Revenue Bonds Series 1985 A,
Tax Exempt Municipal Bonds. 7.75% Mature May 1,
1994. 500,000 500,000 500,000 500,000

Missouri State Health and Education Facility for John
Knox Village. Letter of Credit at Security
Pacific. 7.375% Mandatory tender May 1, 1994 at
par. 1,000,000 996,250 1,000,250 1,000,000

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Michigan State Hospital Finance Authority Revenue
Bonds for Henry Ford Hospital, Series 1984-A.
10.50% Callable May 1, 1994 at 102. 660,000 754,941 673,477 660,000

Missouri State Health and Educational Facilities
Authority for John Knox Village Revenue Bond.
7.375% Mandatory put May 1, 1994 at par. 745,000 773,362 745,186 745,000

Tonawanda Town, New York Bond Anticipation Notes.
2.75% Mature May 12, 1994. 2,250,000 2,249,887 2,249,181 2,250,000

Missouri State Health and Education Facility
Authority Revenue Series B, St. Louis University.
6.20% Matures June 1, 1994. 455,000 455,000 456,411 455,000

State of Texas Veterans Land Housing Division 1983
Authority, General Obligation Bond, Series A.
9.00% Callable June 1, 1994. 1,000,000 1,102,520 1,025,000 1,043,600

Minneapolis, Minnesota Water and Sewer Revenues
Series 1992, Tax Exempt Municipal Notes. 4.75%
Callable June 1, 1994 at par. 2,500,000 2,507,525 2,510,623 2,502,508

Fraser, Colorado Industrial Development Revenue
Refunding Series 1993 (Safeway, Inc. Project), Tax
Exempt Adjustable Put Bonds. 2.75% Mandatory put
June 1, 1994. 2,100,000 2,100,000 2,100,000 2,100,000

Tremonton City, Utah Industrial Development Revenue
Refunding Series 1993 (Safeway, Inc. Project), Tax
Exempt Adjustable Put Bonds. 2.75% Mandatory put
June 1, 1994. 1,300,000 1,300,000 1,300,000 1,300,000

South Essex, Massachusetts Sewer District Temporary
Notes General Obligation, Tax Exempt Municipal
Notes. 2.75% Mature June 17, 1994. 5,000,000 4,994,300 4,992,495 4,997,557

California Statewide Community Development Authority
Revenues Pool Series A, Tax Exempt Municipal Notes.
3.25% Mature June 30, 1994. 5,000,000 5,008,600 5,001,400 5,003,440

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Philadelphia, Pennsylvania School District Tax and
Revenue Anticipation Notes, Tax Exempt Municipal
Notes. 3.625% Mature June 30, 1994. 5,000,000 5,013,650 5,003,250 5,006,825

Philadelphia, Pennsylvania School District Tax and
Revenue Anticipation Notes, Tax Exempt Municipal
Notes. 3.625% Mature June 30, 1994. 2,500,000 2,506,225 2,501,625 2,503,113

California School Cash Reserve Program Authority
Series A, Tax Exempt Municipal Notes. 3.40%
Mature July 5, 1994. 5,000,000 5,007,250 5,002,000 5,004,833

Lake County School District #116, Illinois Tax
Anticipation Warrants (Round Lake), Tax Exempt
Municipal Notes. 4.00% Mature July 19, 1994. 750,000 753,127 753,128 752,085

California State Revenue Anticipation Warrants Series
B, Tax Exempt Municipal Notes. 3.50% Mature July
26, 1994. 3,000,000 3,008,700 3,003,000 3,005,220

California State Revenue Anticipation Warrants Series
B, Tax Exempt Municipal Notes. 3.50% Mature July
26, 1994. 2,500,000 2,507,250 2,502,500 2,504,350

Will County School District #161 (Summit Hill)
Illinois Tax Anticipation Warrants, Tax Exempt
Municipal Notes. 3.49% Mature August 1, 1994. 500,000 500,540 500,540 500,324

Denver, Colorado City and County Airport Revenue
Bonds. 8.375% Callable August 1, 1994 at par. 1,000,000 1,130,490 1,007,030 1,030,495

Texas State General Obligation Bond. 6.50% Matures
August 1, 1994. 1,945,000 1,942,569 1,961,532 1,944,878

Illinois Housing Development Authority Residential
Revenue - Third Party Citibank, Tax Exempt
Adjustable Put Bond. 2.70% Optional put August 1,
1994. 5,000,000 5,001,200 5,002,400 5,000,600

Illinois Housing Development Authority Series C, Tax
Exempt Adjustable Put Bond. 2.70% Mandatory put
August 1, 1994. 3,520,000 3,517,466 3,521,690 3,518,733

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Elizabeth, New Jersey Bond Anticipation Notes, Tax
Exempt Municipal Notes. 3.60% Mature August 3,
1994. 5,000,000 5,003,700 4,997,225 5,002,775

New Mexico Mortgage Finance Authority Single Family
Mortgage 1988 Series A (Federal Insurance of
Guaranty Asset Loans), Tax Exempt Adjustable Put
Bond. 3.125% Optional put September 1, 1994. 2,360,000 2,360,000 2,384,822 2,360,000

Passaic, New Jersey Tax Anticipation Notes, Tax
Exempt Municipal Notes. 3.75% Mature September
22, 1994. 3,000,000 3,006,570 2,998,764 3,004,380

Massachusetts Bay Transportation Authority General
Obligation Notes Series B, Tax Exempt Municipal
Notes. 3.25% Mature September 30, 1994. 4,600,000 4,612,052 4,602,668 4,607,533

Jersey City, New Jersey Bond Anticipation Notes, Tax
Exempt Municipal Notes. 3.50% Mature September
30, 1994. 5,000,000 5,012,750 4,992,095 5,009,107

Kansas City, Missouri Industrial Development
Authority Hospital Revenue Bond 1984 Series A (St.
Luke's Hospital) (Insured by Industrial Indemnity
Company). 9.40% Matures October 1, 1994. 250,000 249,375 256,938 249,974

Little Blue Valley, Missouri Sewer District Sewer
System Refunding Revenue Bond. 7.80% Matures
October 1, 1994. 500,000 498,750 510,310 499,940

Florida State Municipal Power, Tax Exempt Municipal
Bond. 9.00% Callable October 1, 1994. 1,000,000 1,128,770 1,046,030 1,010,318

Jacksonville, Florida St. John's River Power #1
Electric Authority Revenue Bond, Series 2. 9.00%
Matures October 1, 1994. 1,000,000 1,108,360 1,025,180 1,008,711

City of Dallas, Texas Water Works and Sewer System
Revenue Bond. 9.00% Matures October 1, 1994. 1,550,000 1,714,161 1,589,432 1,563,239

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Michigan State Building Authority Revenue Detroit
Regional Prison Series I. 7.00% Matures October
1, 1994. 1,000,000 1,019,500 1,017,840 1,001,741

Nevada Housing Division Single Family Mortgage Senior
Revenues Series B, Tax Exempt Adjustable Put Bond.
3.25% Optional put October 1, 1994 at par. 1,315,000 1,314,671 1,330,938 1,314,726

Montana Board of Housing Single Family Mortgage
Revenues Series C, Tax Exempt Adjustable Put Bond.
3.25% Optional put October 1, 1994 at par. 1,795,000 1,794,551 1,794,551 1,794,626

Toledo, Ohio Bond Anticipation Notes, Tax Exempt
Municipal Notes. 3.70% Mature October 13, 1994. 2,360,000 2,362,313 2,357,279 2,361,982

Kane County, Illinois School District #300 Tax
Anticipation Warrants (Dundee/Carpenterville), Tax
Exempt Municipal Notes. 3.98% Mature October 19,
1994. 2,500,000 2,505,550 2,505,550 2,504,625

Orange Township, New Jersey Tax Anticipation Notes,
Tax Exempt Municipal Notes. 3.75% Mature October
28, 1994. 5,000,000 5,002,750 5,002,750 5,002,750

Chicago O'Hare International Airport Revenue Bond
Series B. 10.375% Callable January 1, 1995 at
103. 500,000 587,210 534,735 513,562

Chicago, Illinois Park District Capital Improvement
Unlimited Tax General Obligation Bond. 9.70%
Matures January 1, 1995. 550,000 618,992 569,630 559,199

Florida State Jacksonville Transportation Authority
General Obligation Bond. 9.00% Matures January 1,
1995. 1,000,000 1,092,440 1,032,060 1,012,750

Dallas County, Texas General Obligation Bond. 8.75%
Matures January 10, 1994. 630,000 689,233 650,752 636,219
------------ ------------ ------------

239,057,242 238,257,797 238,091,600
------------ ------------ ------------

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

CURRENT ASSETS (continued):
REDEEMABLE PREFERRED STOCK:
Muniyield Quality Fund Series A, Tax Exempt Money
Market Preferred Stock 99 4,950,000 4,950,000 4,950,000

Ford Holdings, Inc. Series A, Money Market Preferred
Stock 16 1,600,000 1,600,000 1,600,000

Nuveen California Municipal Opportunity Fund Series
W, Tax Exempt Money Market Preferred Stock 200 5,000,000 5,000,000 5,000,000

Voyager Minnesota Municipal Income Fund II Series A,
Tax Exempt Money Market Preferred Stock 71 3,550,000 3,550,000 3,550,000

Paine Webber Premium Insured Municipal Income Fund C,
Tax Exempt Money Market Preferred Stock 60 3,000,000 3,000,000 3,000,000

Asea Brown Boveri Limited Special Finance Series A,
Money Market Preferred Stock 2 2,000,000 2,000,000 2,000,000

Pacificorp Series A-1, Money Market Preferred Stock 26 2,600,000 2,600,000 2,600,000

Van Kampen Investment Grade Florida, Tax Exempt Money
Market Preferred Stock 86 4,300,000 4,300,000 4,300,000

Seligman Select Municipal Fund Series B, Tax Exempt
Money Market Preferred Stock 50 5,000,000 5,000,000 5,000,000

Van Kampen Merritt Trust Investment Grade Florida,
Tax Exempt Money Market Stock 83 4,150,000 4,150,000 4,150,000

Muniyield Insured Fund Series D, Tax Exempt Money
Market Preferred Stock 160 8,000,000 8,000,000 8,000,000

Nuveen Premium Income Municipal Fund Series A, Tax
Exempt Money Market Preferred Stock 70 7,000,000 7,000,000 7,000,000

Muniyield Quality I Series C, Tax Exempt Money Market
Preferred Stock 100 5,000,000 5,000,000 5,000,000

Voyager Minnesota Municipal Income Fund, Tax Exempt
Money Market Preferred Stock 120 6,000,000 6,000,000 6,000,000

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

CURRENT ASSETS (continued):
REDEEMABLE PREFERRED STOCK (continued):
Muniyield Quality Fund Series C, Tax Exempt Money
Market Preferred Stock 160 8,000,000 8,000,000 8,000,000

Van Kampen Merritt Ohio Quality Municipal Trust, Tax
Exempt Money Market Preferred Stock 20 1,000,000 1,000,000 1,000,000

Van Kampen Opportunity Trust Series B, Tax Exempt
Money Market Preferred Stock 117 5,850,000 5,850,000 5,850,000

Van Kampen Opportunity Trust Series B, Tax Exempt
Money Market Preferred Stock 100 5,000,000 5,000,000 5,000,000

Voyager Minnesota Municipal Income Fund, Tax Exempt
Money Market Preferred Stock 80 4,000,000 4,000,000 4,000,000

Voyager Minnesota Municipal Income Fund II Series B,
Tax Exempt Money Market Preferred Stock 100 5,000,000 5,000,000 5,000,000

Fiat Corporation Series B, Money Market Preferred
Stock 5 5,000,000 5,000,000 5,000,000

Duke Power Company Series A, Money Market Preferred
Stock 14 1,400,000 1,400,000 1,400,000

Virginia Electric and Power Company, Money Market
Preferred Stock 13 1,300,000 1,300,000 1,300,000

Nuveen Performance Series W, Tax Exempt Money Market
Preferred Stock 200 5,012,300 5,017,500 5,012,300

Nuveen Performance Series W, Tax Exempt Money Market
Preferred Stock 160 4,014,000 4,014,000 4,014,000

ACM Municipal Income Fund Series A, Tax Exempt Money
Market Preferred Stock 50 2,504,961 2,504,961 2,504,961

Nuveen New York Select Quality Series W, Tax Exempt
Money Market Preferred Stock 120 3,006,371 3,006,371 3,006,371

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

CURRENT ASSETS (continued):
REDEEMABLE PREFERRED STOCK (continued):
Van Kampen Merritt Municipal Trust A, Tax Exempt
Money Market Preferred Stock 100 5,025,500 5,025,500 5,025,500
------------ ------------ ------------
118,263,132 118,268,332 118,263,132
------------ ------------ ------------

OTHER:
Rite Aid Corporation, Commercial Paper 1,300,000 1,296,663 1,296,663 1,296,663

Philadelphia, Pennsylvania Gas Works Revenue Notes
Series A, Tax Exempt Commercial Paper 5,000,000 5,000,000 5,000,000 5,000,000

Emery County, Utah Pollution Control Revenues
(Pacificorp Project) Series 1991, Tax Exempt
Commercial Paper 4,200,000 4,200,000 4,200,000 4,200,000

Municipal Electric Authority Georgia Money Market
Municipal Project 1 Series A, Tax Exempt Commercial
Paper 5,000,000 5,000,000 5,000,000 5,000,000

Sacramento Municipal Utility District Series H, Tax
Exempt Commercial Paper 5,000,000 5,000,000 5,000,000 5,000,000

Maryland Health and Higher Education Pooled Loan on
Progress Revenue Notes (John Hopkins Hospital)
Series C, Tax Exempt Commercial 5,000,000 5,000,000 5,000,000 5,000,000

Brazos River Harbor Navigation District of Brazoria
County, Texas Variable Rate Pollution Control
Revenues (The Dow Chemical Company) Series 1988, Tax
Exempt Commercial Paper 2,500,000 2,500,000 2,500,000 2,500,000

Venengo Industrial Development Authority Resource
Recovery Revenues Series 1993 (Scrubgrass Project),
Tax Exempt Commercial Paper 2,400,000 2,400,000 2,400,000 2,400,000

Wake County, North Carolina Industrial Facility and
Pollution Control for Carolina Power and Light
Project 1990 B, Tax Exempt Commercial Paper 5,000,000 5,000,000 5,000,000 5,000,000

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

CURRENT ASSETS (continued):
OTHER (continued):
Hoosier City of Sullivan, Indiana National Rural
Utilities Co-op Financial Corporation (Hoosier
Energy Rural Electric Co-op), Tax Exempt Commercial
Paper 3,200,000 3,200,000 3,200,000 3,200,000

Anne Arundel County, Maryland Economic Development
Revenues (Baltimore Gas and Electric) Series 1988,
Tax Exempt Commercial Paper 5,000,000 5,000,000 5,000,000 5,000,000

Sweetwater County, Wyoming Environmental Improvement
Revenue Bonds (Pacific Corporation Project) Series
1990 A, Tax Exempt Commercial Paper 2,200,000 2,200,000 2,200,000 2,200,000

Salt Lake City, Utah Flexible Rate Revenue Bonds
Series 1990, Tax Exempt Commercial Paper 5,000,000 5,000,000 5,000,000 5,000,000

Oklahoma Industries Authority Flexible Rate Hospital
Revenues (Baptist Medical Center of Oklahoma) Series
1990 B, Tax Exempt Commercial Paper 5,000,000 5,000,000 5,000,000 5,000,000

City and County of Denver, Colorado Airport Systems
Revenue Bonds Series 1990 D, Tax Exempt Commercial
Paper 5,000,000 5,000,000 5,000,000 5,000,000

Sarasota County Public Hospital District Sarasota
Memorial Hospital Series B, Tax Exempt Commercial
Paper 5,450,000 5,450,000 5,450,000 5,450,000

City of Petersburg, Indiana Pollution Control Revenues
Series 1991 (Indianapolis Power and Light Project),
Tax Exempt Commercial Paper 4,700,000 4,700,000 4,700,000 4,700,000

City of Maysville, Kentucky Solid Waste Disposal
Revenues Series 1992, Tax Exempt Commercial Paper 1,035,000 1,035,000 1,035,000 1,035,000

Markborough Properties, Inc., Commercial Paper 3,616,500 3,613,679 3,613,643 3,613,679

Honda Canada, Inc., Commercial Paper 2,531,550 2,527,626 2,527,575 2,527,626

Ford Credit Canada, Limited, Commercial Paper 2,531,550 2,524,006 2,523,854 2,524,006

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

CURRENT ASSETS (continued):
OTHER (continued):
Ford Credit Canada, Limited, Commercial Paper 2,169,900 2,161,394 2,159,796 2,161,394

Confederation Life Insurance Company, Commercial Paper 2,531,550 2,518,234 2,517,977 2,518,234

Confederation Life Insurance Company, Commercial Paper 2,531,550 2,515,829 2,515,551 2,515,829

Confederation Life Insurance Company, Commercial Paper 2,531,550 2,512,614 2,512,135 2,512,614

Confederation Life Insurance Company, Commercial Paper 2,531,550 2,509,855 2,516,910 2,509,855

Confederation Life Insurance Company, Commercial Paper 2,531,550 2,506,412 2,506,209 2,506,412

General Motors Acceptance Corporation Canada,
Commercial Paper 10,849,500 10,686,106 10,685,571 10,686,106

Chrysler Credit Canada, Commercial Paper 10,849,500 10,631,100 10,631,425 10,631,100
------------ ------------ ------------
116,688,518 116,692,309 116,688,518
------------ ------------ ------------
TOTAL CURRENT ASSETS $474,008,892 $473,218,438 $473,043,250
============ ============ ============

NON-CURRENT ASSETS:
MUNICIPAL BONDS:
San Antonio, Texas Sewer Bonds. 8.75% Mature
May 1, 2005. Callable May 1, 1995. 500,000 $538,475 $532,270 $505,742

Arlington, Texas General Obligation Permanent
Improvement Refunding Bonds. 9.25% Mature
May 1, 2005. Callable May 1, 1995 at par. 500,000 551,005 524,605 507,613

Missouri State Health and Education Facility
Authority Revenue Bond, Series A, St. Louis
University. 6.40% Matures June 1, 1995. 500,000 500,000 513,390 500,000

Ocean County, New Jersey Unlimited Tax General
Obligation Bond. 9.60% Matures June 1, 1995.
Noncallable. 740,000 841,965 784,245 761,040

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

NON-CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
University of Arizona Revenue Bonds, Series A.
9.00% Mature June 1, 1995. 930,000 1,026,952 979,718 950,006

Reading, Pennsylvania General Obligation Bond,
Series A. 9.125% Matures June 15, 2015.
Prerefunded June 15, 1995 at par. 1,000,000 1,129,120 1,054,740 1,024,691

Indianapolis, Indiana Airport Authority Revenue
Bond. 7.00% Matures July 1, 1995. 425,000 429,645 438,141 425,000

Florida State Turnpike Authority Revenue Bond.
7.25% Matures July 1, 1995. Noncallable. 1,000,000 1,028,540 1,036,310 1,006,243

South Carolina State Public Service Authority
Electric Expansion Revenue Refunding Bonds,
Series 1985 A. 8.60% Mature July 1, 1997.
Callable July 1, 1995. 1,000,000 1,094,560 1,078,290 1,041,302

Kansas City, Missouri Metropolitan Community
Colleges Building Corporation Leasehold, Real
Estate and Improvement General Obligation Bonds.
FGIC Insured. 9.375% Mature July 1, 2005.
Callable July 1, 1995 at 101. 2,000,000 2,306,040 2,138,400 2,060,346

Intermountain Power Agency, Utah Power Supply
Revenue Crossover Bond, Series H. 9.00%
Matures July 1, 2019. Callable July 1, 1995 at
101.50. 1,500,000 1,648,605 1,603,515 1,533,023

Texas General Obligation College Student Loan
Bond. 6.60% Matures August 1, 1995.
Noncallable. 1,500,000 1,496,250 1,554,990 1,499,219

Indiana Municipal Bank Bond, Series B. 9.125%
Matures February 1, 2005. Callable
August 1, 1995. 1,000,000 1,104,740 1,086,390 1,018,831

Mesquite, Texas Independent School District
Unlimited Tax Bond. 10.25% Matures
August 15, 1995. 300,000 347,433 322,557 310,780

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

NON-CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
City of Plano, Texas General Obligation Bonds,
Series 1988 A (FGIC Insured). 10.00% Mature
September 1, 1995. 650,000 756,041 698,691 670,417

Hillsborough County, Florida School District Bond,
Series A. 8.875% Matures September 1, 2002.
Callable September 1, 1995 at 102. 500,000 550,925 540,220 509,817

Harris County, Texas Flood Control District Bond.
8.70% Matures October 1, 1995. 1,000,000 1,174,970 1,070,170 1,028,149

Harris County, Texas Road Improvement General Tax
Obligation Bond. 9.30% Matures October 1,
2001. Callable October 1, 1995 at par. 750,000 836,453 803,302 767,209

Salt Lake County, Utah Water Conservancy District
Revenue Bond, Series A. 9.25% Matures
October 1, 2002. Callable October 1, 1995 at
101. 1,000,000 1,123,020 1,079,820 1,082,285

Columbia, Missouri Water and Electric Revenue
Bond. 9.00% Matures October 1, 2005. Callable
October 1, 1995 at 102 and October 1, 1997 at
par. 2,000,000 2,242,600 2,171,680 2,128,166

Ohio State Public Facilities Commission Higher
Education Facilities Revenue Bond. 8.10%
Matures November 1, 1995. Noncallable. 1,500,000 1,617,690 1,584,930 1,528,171

Dallas-Fort Worth, Texas Airport Bond. 9.125%
Matures November 1, 2015. Callable
November 1, 1995 at par. 1,000,000 1,097,820 1,093,090 1,020,371

Kansas City, Missouri Municipal Assistance
Corporate Revenue Bond. 7.00% Matures
December 1, 1995. 200,000 200,000 208,352 200,000

Cincinnati, Hamilton County, Ohio Urban
Redevelopment Improvement Unlimited Tax
Registered Bond. 6.875% Matures December 1,
1995. Noncallable. 500,000 506,960 522,520 501,740

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

NON-CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Wheaton, Illinois Revenue Bond, Franciscan Health
Care, Inc. MBIA Insured. 8.50% Matures
December 1, 1997. Callable December 1, 1995 at
par. 745,000 818,017 801,285 778,761

Philadelphia, Pennsylvania Water and Sewer Revenue
Bond, 11th Series, Subseries A. 9.10% Matures
December 1, 2002. Callable December 1, 1995 at
102 and December 1, 1997 at par. 1,000,000 1,137,040 1,092,390 1,033,640

Fort Worth, Texas Water and Sewer Revenue Bond.
9.00% Matures March 1, 1996. Noncallable. 600,000 673,170 647,850 620,317

El Paso, Texas Water and Sewer Revenue Bond.
10.00% Matures March 1, 1996. Noncallable. 1,200,000 1,408,104 1,316,424 1,257,880

Plano, Texas Unlimited Tax General Obligation
Bond. 8.00% Matures March 1, 1996. 1,000,000 1,061,110 1,031,330 1,018,417

University of Arizona Revenue Bonds, Series A.
9.00% Mature June 1, 1996. 1,020,000 1,145,939 1,117,084 1,061,980

Salt Lake County, Utah General Obligation Bond.
8.50% Matures June 15, 1996. Noncallable. 700,000 768,971 760,452 723,450

Washington State Public Power Supply System
Nuclear Project #3 Revenue Refunding Bond,
Series B. 6.70% Matures July 1, 1996. 1,000,000 995,000 1,043,900 1,000,000

Orlando and Orange County, Florida Expressway
Authority Revenue Bond. 6.30% Matures
July 1, 1996. Noncallable. 1,350,000 1,319,153 1,405,743 1,339,447

Tarrant County, Texas General Obligation Limited
Tax Bond. 9.25% Matures July 15, 1996.
Noncallable. 1,000,000 1,119,760 1,105,460 1,042,587

Milwaukee County, Wisconsin General Obligation
Refunding Bond. 8.10% Matures September 1,
1996. 500,000 531,420 517,165 505,237

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

NON-CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Washington State General Obligation Various
Purpose Bond. 10.00% Matures October 1, 1996.
Noncallable. 1,000,000 1,174,980 1,128,500 1,064,233

Milwaukee, Wisconsin Unlimited Tax General
Obligation Bond. 7.20% Matures October 1,
1997. Callable October 1, 1996 at par. 550,000 561,501 579,557 554,169

Oregon State General Obligation Bond. 5.00%
Matures October 15, 1996. Noncallable. 1,000,000 903,410 1,023,900 963,932

Kansas City, Missouri Municipal Assistance
Corporate Leasehold Revenue Capital Improvement
Bond, Series 1990 A. AMBAC Insured. Matures
October 15, 1996. No periodic interest. 1,900,000 1,280,676 1,693,489 1,653,107

Ohio State Public Facilities Commission Higher
Education Facilities Revenue Bond. 8.10%
Matures November 1, 1996. Noncallable. 700,000 751,562 760,116 719,336

Cincinnati, Hamilton County, Ohio Urban
Redevelopment Improvement Unlimited Tax
Registered Bond. 6.875% Matures
December 1, 1996. Noncallable. 500,000 506,380 532,840 502,248

Kansas City, Missouri Water Revenue Bond. 9.25%
Matures December 1, 1996. 690,000 792,534 774,049 728,763

Houston, Texas Water and Sewer System Revenue
Exchange Bond. 7.75% Matures December 1, 1996.
Noncallable. 1,000,000 1,053,220 1,082,850 1,020,368

Monmouth County, New Jersey General Improvement
Utility Bond. 9.25% Matures December 1, 1996.
Noncallable. 920,000 1,050,014 1,033,510 969,759

Birmingham, Jefferson, Alabama Civic Center
Special Tax Revenue Bond, Series 1989 B. 6.80%
Matures January 1, 1997. Noncallable. 1,000,000 1,005,250 1,052,320 1,002,049

Allegheny, Pennsylvania General Obligation Bond.
7.30% Matures February 15, 1997. Noncallable. 1,000,000 1,038,400 1,073,470 1,015,406

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

NON-CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Massachusetts State Water Resource Authority
Revenue Bond. 6.90% Matures April 1, 1997. 1,015,000 1,015,000 1,076,671 1,015,000

Albuquerque, New Mexico Airport Revenue Bonds.
8.875% Mature July 1, 2007. Callable April 1,
1997 at 101 and April 1, 1999 at par. 1,455,000 1,604,850 1,644,019 1,547,095

Kansas City, Missouri Municipal Assistance
Corporate Leasehold Revenue Capital Improvement
Bond, Series 1990 A. AMBAC Insured. Matures
April 15, 1997. No periodic interest. 1,000,000 648,620 866,700 844,075

Phoenix, Arizona Civic Improvement Bond. 7.75%
Matures July 1, 2002. Callable July 1, 1997 at
102 and July 1, 2000 at par. 1,815,000 1,929,327 2,037,791 1,894,654

Olathe, Kansas Hospital Revenue Bond, Olathe
Hospital Foundation, Inc. Project. 6.90%
Matures September 1, 1997. 350,000 356,111 379,809 352,716

Greater Orlando, Florida Airport Facility Revenue
Bond. 7.30% Matures October 1, 1997.
Noncallable. 1,000,000 1,023,140 1,090,160 1,010,426

Reedy Creek, Florida Utility Revenue Bond. MBIA
Insured. 8.60% Matures October 1, 1999.
Callable October 1, 1997 at 102. 2,000,000 2,227,540 2,276,400 2,145,001

Kansas City, Missouri Municipal Assistance
Corporate Revenue Bond, Series 1987. 7.40%
Matures December 1, 1997. 250,000 250,000 273,160 250,000

Kansas City, Missouri Water Revenue Bond, Series
B. 9.25% Matures December 1, 1997.
Noncallable. 420,000 483,466 485,558 449,344

Dade County, Florida Utility Public Improvement
General Obligation Bond. FGIC Insured. 12.00%
Matures October 1, 1998. Noncallable. 2,000,000 2,654,320 2,577,620 2,385,322

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

NON-CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Kansas City, Missouri Municipal Assistance
Corporate Leasehold Revenue Capital Improvement
Bond, Series 1990 A. AMBAC Insured. Matures
October 15, 1998. No periodic interest. 1,000,000 586,100 800,520 774,044

Kenosha, Wisconsin General Obligation Promissory
Notes, Series 1991 A. 6.60% Mature December 1,
2000. Callable December 1, 1998 at par. 1,000,000 997,500 1,053,940 998,519

Kane, Cook and Dupage Counties, Illinois School
District #46 Bond, Elgin, Illinois. 8.00%
Matures January 1, 1999. Noncallable. 1,450,000 1,575,048 1,626,538 1,525,298

Frenship, Texas Independent School District Bond.
9.00% Matures February 15, 2005. Callable
February 15, 2000 at par. 1,000,000 1,152,060 1,192,290 1,099,232

Pinckney, Michigan Community Schools, Livingston
and Washtenaw Counties School Building and Site
Unlimited Tax Registered Bond. 8.375% Matures
May 1, 2000. Noncallable. 500,000 563,130 583,795 542,087

Maryland Student Loan Series 1993, Tax Exempt
Municipal Bond, Held by Block Financial
Corporation-Companion Insurance, Limited. 4.00%
Matures July 15, 2000. 1,000,000 995,770 949,160 996,100

Essex County, New Jersey Series A, Tax Exempt
Municipal Bond, Held by Block Financial
Corporation-Companion Insurance, Limited. 4.60%
Matures October 1, 2000. 1,000,000 1,021,490 968,090 1,019,747

Oregon Student Higher Education, Tax Exempt
Municipal Bond, Held by Block Financial
Corporation-Companion Insurance, Limited. 5.70%
Matures October 15, 2000. 1,000,000 1,096,260 1,038,220 1,089,048

Ohio Water Development Authority, Tax Exempt
Municipal Bond, Held By Block Financial
Corporation-Companion Insurance, Limited. 5.40%
Matures December 1, 2000. 1,000,000 1,067,870 1,015,440 1,062,350

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

NON-CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Jefferson County, Colorado School District Number
R-001 Refunding Series 1993 A. 4.20% Matures
December 15, 2000. 2,300,000 2,278,932 2,180,975 2,280,419

Mecklenberg County, North Carolina, Tax Exempt
Municipal Bond, Held by Block Financial
Corporation-Companion Insurance, Limited. 3.75%
Matures April 1, 2001. 1,000,000 975,210 926,470 976,969

St. Charles County, Missouri Industrial
Development Authority Industrial Revenue
Refunding Bond, Series 1991. Wentzville Project
Guaranteed General Motors. 6.625% Matures
April 1, 2001. Noncallable. 2,000,000 2,000,000 2,070,020 2,000,000

Pinckney, Michigan Community Schools, Livingston
and Washtenaw Counties School Building and Site
Unlimited Tax Registered Bond. 8.3% Matures
May 1, 2001. Noncallable. 500,000 561,510 590,355 543,057

California State Public Works Board Lease Revenues
Series 1993 D Department of Correction
California State Prison. 4.60% Matures June 1,
2001. 1,000,000 996,790 951,080 997,002

Port of Seattle, Washington Refunding Revenue
Series C, Tax Exempt Municipal Bond. 4.30%
Matures July 1, 2001. 1,430,000 1,357,799 1,327,712 1,358,629

Chelan County, Washington Public Utility District
#1, Chelan Hydro Consolidated System Revenue
Bond, Series 1991-A. 7.00% Matures July 1,
2025. Callable July 1, 2001 at par. 1,000,000 1,000,000 1,084,910 1,000,000

Jacksonville Electric, Florida, Tax Exempt
Municipal Bond, Held By Block Financial
Corporation-Companion Insurance, Limited. 5.00%
Matures October 1, 2001. 1,000,000 1,041,830 997,790 1,038,452

Utah Associated Municipal Power System Refunding
Revenues Craig Mona-Transmission Project. 4.55%
Matures December 1, 2001. 695,000 683,366 646,684 684,085

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

NON-CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Los Angeles County, California Public Works Lease
Revenue Facilities. 4.50% Mature December 1,
2001. 2,200,000 2,167,154 2,095,280 2,168,865

Concord, New Hampshire Refunding. 4.30% Matures
January 15, 2002. 1,120,000 1,112,530 1,048,421 1,112,766

California State Public Works Board Lease Revenue
Series 1993 Department of Corrections - Madera
State Prison. 4.70% Matures June 1, 2002. 2,100,000 2,085,531 1,983,513 2,086,104

Orange County, California Transmission Authority
Revenue Series 1993-C. 5.125% Matures July 1,
2002. 1,680,000 1,671,029 1,663,855 1,671,963

Georgia State Refunding Series 1993 E Unlimited
Tax. 4.50% Matures July 1, 2002. 1,000,000 992,720 955,730 993,410

Denver, Colorado City and County School District
Number 1 Refunding Series 1994 A. 4.50%
Matures December 1, 2002. 1,100,000 1,100,000 1,029,028 1,100,000

Concord, New Hampshire Refunding. 4.40% Matures
January 15, 2003. 1,110,000 1,101,864 1,031,390 1,102,092

California State Public Works Board Lease
Refunding Revenue Series 1993 A Variable
University California. 5.00% Matures June 1,
2003. 1,000,000 996,100 941,350 996,367

Nevada State Refunding Series 1993 B Limited Tax.
4.375% Matures August 1, 2003. 1,535,000 1,508,506 1,396,343 1,509,427

Arlington, Texas Refunding. 5.00% Matures August
15, 2003. 1,000,000 992,140 981,710 992,730

University Delaware Housing and Dining System
Revenue. 5.00% Matures November 1, 2003. 1,000,000 993,600 968,390 994,068

Pennsylvania State Higher Education Facilities
Authority Revenue Philadelphia. 4.70% Matures
December 1, 2003. 915,000 907,808 848,708 908,050

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

NON-CURRENT ASSETS (continued):
MUNICIPAL BONDS (continued):
Washington Sanitary District Refunding Water
Supply Unlimited Tax. 4.40% Matures June 1,
2004. 1,500,000 1,483,890 1,364,775 1,484,280
------------ ------------ ------------
$ 94,501,331 $ 94,014,390 $ 92,154,040
============ ============ ============

PREFERRED STOCKS:
Texas Utilities Electric Company
Cumulative Preferred Stock Series B 5,200 516,100 384,800 516,100

First Chicago Corporation
Adjustable Dividend Preferred Stock Series B 15,600 994,500 1,409,850 994,500
------------ ------------ ------------
$ 1,510,600 $ 1,794,650 $ 1,510,600
============ ============ ============

COMMON STOCKS:
Commerce Bancshares Common Stock 110,000 1,660,000 3,572,868 1,660,000

First America Bank Common Stock 80,800 1,671,934 3,050,200 1,671,934

First Virginia Banks, Inc. Common Stock 45,287 667,292 1,669,958 667,292

Liberty National Bancorp, Inc. Common Stock 57,350 655,182 1,648,813 655,182

Marshall & Ilsley Corporation Common Stock 176,700 1,667,122 3,666,525 1,667,122

Amoco Corporation Common Stock, Held by Block
Financial Corporation-Companion Insurance,
Limited 1,700 90,840 95,413 90,840

Dupont Common Stock, Held By Block Financial
Corporation-Companion Insurance, Limited 1,600 89,096 91,400 89,096

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

NON-CURRENT ASSETS (continued):
COMMON STOCKS (continued):
E-Systems, Incorporated Common Stock, Held by
Block Financial Corporation-Companion Insurance,
Limited 2,000 86,870 80,250 86,870

Sprint Common Stock, Held by Block Financial
Corporation-Companion Insurance, Limited 2,500 88,588 91,875 88,588

McGraw Hill Corporation Common Stock, Held by
Block Financial Corporation-Companion Insurance,
Limited 1,400 91,084 91,175 91,084

Sears Roebuck Common Stock, Held by Block
Financial Corporation-Companion Insurance,
Limited 1,900 89,968 89,300 89,968

Sundstrand Corporation Common Stock, Held by Block
Financial Corporation-Companion Insurance,
Limited 1,800 87,354 85,500 87,354

Tenneco Common Stock, Held by Block Financial
Corporation-Companion Insurance, Limited 1,600 87,890 82,000 87,890

Universal Foods Common Stock, Held by Block
Financial Corporation-Companion Insurance,
Limited 2,700 87,912 87,750 87,912

Williams Companies Common Stock, Held by Block
Financial Corporation-Companion Insurance,
Limited 4,000 93,240 103,000 93,240

Mills Corporation Common Stock, Held by Block
Financial Corporation-Companion Insurance,
Limited 4,000 89,740 84,500 89,740

John Deere Common Stock, Held by Block Financial
Corporation-Companion Insurance, Limited 1,000 77,435 76,625 77,435

Xerox Corporation Common Stock, Held by Block
Financial Corporation-Companion Insurance,
Limited 1,000 97,560 98,875 97,560
------------ ------------ ------------
$ 7,479,107 $ 14,766,027 $ 7,479,107
============ ============ ============

Number of
shares or Value based
units/ on current
principal market Amount at
amount of quotations which shown
bonds and Cost of at balance in balance
Name of issuer and title of issue notes Issue sheet date sheet
- - - - ------------------------------------------------------ ------------ ------------ ------------ ------------

NON-CURRENT ASSETS (continued):
OTHER (continued):
Putnam Option Income Trust 36,706 505,795 311,634 505,795

Patriot Premium Dividend Fund
400,000 4,055,000 3,600,000 4,055,000
------------ ------------ ------------
4,560,795 3,911,634 4,560,795
------------ ------------ ------------
TOTAL NON-CURRENT ASSETS: $108,051,833 $114,486,701 $105,704,542
============ ============ ============

H&R BLOCK, INC. AND SUBSIDIARIES

SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES

YEARS ENDED APRIL 30, 1994, 1993 AND 1992

Balance
Deductions at end of period
Balance at ----------------------- ---------------------
beginning of Amounts Amounts Not
Name of debtor period Additions collected written off Current Current
- - - - ------------------------- -------- -------- -------- ----------- -------- --------

Year ended April 30, 1994
Donald W. Ayers - $100,200 - - $100,200 -
Clifford A. Davis - 305,989 - - 305,989 -
Kristine K. Rodgers - 274,030 - - 274,030 -
-------- -------- -------- -------- -------- --------
- $680,219 - - $680,219 -
======== ======== ======== ======== ======== ========

Year ended April 30, 1993
William P. Anderson $450,000 - $450,000 - - -
======== ======== ======== ======== ======== ========

Year ended April 30, 1992
William P. Anderson - $450,000 - - $450,000 -
======== ======== ======== ======== ======== ========

The Promissory Note of Mr. Ayers is dated January 12, 1994, and is
payable ten days after demand, which demand shall not be made earlier
than (a) July 12, 1994, (b) the date of the closing on the sale of his
home, or (c) the date of the termination of his employment. The Note
bears no interest if paid when due and 10% interest per annum
thereafter. It is secured by benefit payments to be made to Mr. Ayers
under the Company's deferred compensation plan.

The Promissory Note of Mr. Davis and his wife is dated February 15,
1994, is payable 30 days after demand, bears no interest if paid when
due and bears 10% interest per annum thereafter. The Note is secured by
a mortgage on certain residential property purchased by the makers of
the Note.

The Promissory Note of Ms. Rodgers and her husband is dated February
26, 1994, is payable 30 days after demand, bears no interest if paid
when due and bears 10% interest per annum thereafter. The Note is
secured by a mortgage on certain residential property purchased by the
makers of the Note.

H&R BLOCK, INC. AND SUBSIDIARIES

SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS

YEARS ENDED APRIL 30, 1994, 1993 AND 1992

Additions
-------------------------
Charged
Balance to Costs Charged Balance
Beginning and to at End
Description of Period Expenses Other Deductions of Period
- - - - ------------------------- --------- ---------- ------- ---------- ---------

Allowance for Doubtful
Accounts-deducted from
accounts receivable in
the balance sheet

1994 $12,000,000 $24,977,000 $ - $24,233,000 $12,744,000
=========== =========== ======== =========== ===========

1993 $ 7,292,000 $13,962,000 $ - $ 9,254,000 $12,000,000
=========== =========== ======== =========== ===========

1992 $ 9,416,000 $12,776,000 $ - $14,900,000 $ 7,292,000
=========== =========== ======== =========== ===========

H&R BLOCK, INC. AND SUBSIDIARIES

SCHEDULE IX - SHORT-TERM BORROWINGS

YEARS ENDED APRIL 30, 1994, 1993, AND 1992

Weighted Maximum Weighted
average amount Average amount average
Category of Balance at interest outstanding outstanding interest rate
borrowing end of period rate during period during period during period
- - - - ----------- ------------- -------- ------------- -------------- -------------

1994
Banks $ - - $825,467,000 $244,620,000 3.3%

1993
Banks $ 37,167,000 4.3% $794,003,000 $261,922,000 4.4%

1992
Banks $101,332,000 7.2% $309,358,000 $146,960,000 7.3%

The average borrowings were determined based on the amounts outstanding
each day.

The weighted average interest rate during the period was computed by
dividing actual interest expense in each year by average short-term
borrowings in each year.

Short-term borrowings outstanding for all years presented were incurred
by the Company's Canadian subsidiary to fund the refund purchase program
during the tax season of each fiscal year (the period) and were payable
in Canadian dollars. Borrowings for 1994 and 1993 also include the
borrowings of Block Financial Corporation. Through the purchases of
interests in a trust to which certain Refund Anticipation Loans (RALs)
made by Mellon Bank (DE) National Association are sold, Block Financial
Corporation purchases an interest of just under 50% in RALs subject to
its agreement with Mellon.