EXHIBIT 12(B)
H&R BLOCK, INC.
GUARANTOR
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(AMOUNTS IN THOUSANDS)
1997 1996 1995 1994 1993
------- -------- -------- -------- --------
Pretax income from continuing
operations................................ $38,556(a) $285,294 $219,996(b) $283,184(c) $275,894
------- -------- -------- -------- --------
------- -------- -------- -------- --------
FIXED CHARGES:
Interest expense.......................... 11,661 3,969 4,060 3,798 6,580
Interest portion of net rent
expense(d)............................. 32,265 26,248 23,459 21,218 19,672
------- -------- -------- -------- --------
Total fixed charges......................... 43,926 30,217 27,519 25,016 26,252
------- -------- -------- -------- --------
Earnings before income taxes and fixed
charges................................... $82,482 $315,511 $247,515 $308,200 $302,146
------- -------- -------- -------- --------
------- -------- -------- -------- --------
Ratio of earnings to fixed charges.......... 1.9:1(e) 10.4:1 9.0:1 12.3:1 11.5:1
------- -------- -------- -------- --------
------- -------- -------- -------- --------
- ------------------
(a) Pretax income from continuing operations for the year ended April 30, 1997
includes the minority interest in CompuServe. Earnings for the
year ended April 30, 1997 includes nonrecurring charges of $34,754 related
to CompuServe as disclosed in the Other Expenses note to the Guarantor's
consolidated financial statements for such year. If such charges had not
occurred, the ratio of earnings to fixed charges would have been 2.7:1.
(b) Earnings for the year ended April 30, 1995 included a nonrecurring charge of
$83,508 for purchased research and development related to the acquisition of
SPRY, Inc. as disclosed in the Acquisitions note to the Guarantor's
consolidated financial statements for the year ended April 30, 1997. If such
charges had not occurred, the ratio of earnings to fixed charges would have
been 12.0:1.
(c) Earnings for the year ended April 30, 1994 included a nonrecurring charge of
$25,072 for purchased research and development related to the acquisition of
MECA Software, Inc. as disclosed in the Acquisitions note to the Guarantor's
consolidated financial statements for the year ended April 30, 1996. If such
charges had not occurred, the ratio of earnings to fixed charges would have
been 13.3:1.
(d) One-third of net rent expense is the portion deemed representative of the
interest factor.
(e) The decrease in the ratio of earnings to fixed charges in 1997 is primarily
attributable to the operations of CompuServe, which negatively impacted the
computation by 5.1. Interest expense incurred in connection with the
Company's mortgage loan business also contributed to the decrease.