Financial advice increases our value to clients. We saw clear evidence this year that our long-term strategy has considerable upside potential. We observed that when we meet more of our clients’ needs, their loyalty to H&R Block increases. This loyalty, linked to greater satisfaction with H&R Block overall, translates into longer lasting relationships that benefit shareholders. Our tax clients value the financial advice and services that we provide at tax time.

	"I enjoy helping people avoid financial mistakes. Happy clients tell their friends, which leads to additional clients."
	Lamont Masser | tax professional advisor | Shamokin, Pa. | associate since 1992, franchisee since 1999

We built upon key programs that enhance our tax client relationships:

• Through our “Just For You” program, we began to show 17.1
  million U.S. tax clients actions they could take to build a better financial future for themselves. This expansion of our service helps broaden clients’ perceptions of H&R Block and provides a foundation for us to serve as their financial partner.
• More than 160,000 tax clients opened accounts (including 130,000 IRA accounts) with H&R Block Financial Advisors, Inc. (HRBFA). This year we introduced our Express IRA program nationally.
• More than 43 percent of our retail loan originations for the year
  were for H&R Block tax clients.

We currently have a tax and financial partnership with more than 265,000 clients. Our experience indicates that these clients are more likely to return to H&R Block for tax services than clients who do not have a financial relationship with us. We will continue to build upon this
initial success through our tax professionals across the country.

In fiscal 2002, H&R Block served nearly 21 million tax clients around the world, helping them navigate the intricacies of increasingly complex tax laws. As tax law changes continue, coupled with uncertainty in financial markets, our ability to meet clients’ needs through financial advice and personalized tax service is more relevant than ever. This strategy is a long-term campaign to build client satisfaction and improve client loyalty, which will further enhance the strength and value of the H&R Block brand.

Financial services strengthen our brand. H&R Block has one of the strongest brand names in American business. In fact, consumer research shows that H&R Block enjoys better brand recognition than many of the largest financial services companies. And our client satisfaction consistently ranks higher than that of other financial services companies. This brand strength is a competitive advantage that we are carefully cultivating for future growth. As we expand our portfolio of financial advice and services, we expect to increase the relevance of our brand to a broader range of clients, for a wider range of needs.

Our leadership in tax services puts us in a unique position to give millions of people personalized financial advice that would otherwise be unavailable to them. Our one-to-one relationships with tax clients give us a competitive advantage not available to other financial service companies, which rely on mass-marketed client relationships instead of the personal relationships of H&R Block.

As we move forward to further strengthen the company, the guiding principle that we embrace is simple: the client comes first.

We improve our tax services by continually asking: How can we serve the client better? We add the right financial services by continually asking: What do our clients need? We know we’re giving the right financial advice by continually asking: What’s in our client’s best interest? This approach will lead to changes in our services that will allow us to remain the world’s leading tax services company. And the continuing success of our tax services business enables us to invest in the long-term opportunity to serve as our clients’ tax and financial partner.

Financial results were strong in fiscal 2002. Thanks to
a solid tax season for our U.S. tax business and an outstanding year for our mortgage business, the company achieved record revenues and earnings. Revenues increased 11.3 percent to $3.3 billion. We reported net earnings of $434.4 million and net earnings per diluted share of $2.31.