Merging continous date range using T-SQL
Assuming hours are added to table in chronological order. If not, sort them before inserting them!

First we need to relate each record to successive records.
You say that is done by matching their hrs1 &amp; hrs2, and making sure the initial record ends one day before the next starts.
Your sample data only includes two records that are sequential, so I added a third (startdte='1995-01-01') to show this works in such a case.
If we only expected two records to be part of the same sequence, we could just use a join.  But if an indefinite number
may be part of the same sequence, then we must use recursion.  In this case, a CTE.  The first part of the UNION gets the parent records,
and the second part of the UNION gets all children.  To uniquely track which sequence is which, we use the 'chain' field as 
a sort of bread crumb trail.  Finally, we query the root ID (which we tracked as we went along) and the 'chain' field to find the 
first and last record in each sequence.  Then we join it all back to the original data.
Last, we clean up null 'ENDDTE's for full time records.

declare @hours table (
ID int IDENTITY(1,1), -- we need a unique identifier to easily reference each row.
RootID int,
STARTDTE DATETIME,
ENDDTE DATETIME,
hrs1 DECIMAL(6,2),
hrs2 DECIMAL(6,2))

INSERT @hours (STARTDTE,ENDDTE,hrs1,hrs2) VALUES
('25 MAY 1990','30 NOV 1994',18,36),
('01 DEC 1994','31 DEC 1994',18,36),
('1 JAN 1995','1 FEB 1995',18,36),
('01 JAN 2000', NULL,20,36),
('16 JUN 2002','20 APR 2007',18,36),
('10 OCT 2008', NULL,20,36)

;with
hours (chain,recordsInChain,ID, ParentID, RootID,STARTDTE,ENDDTE,hrs1,hrs2) AS (
    select 
        convert(varchar(1000),convert(varchar(10),hc.id)+','), -- This gives us a snapshot of the entire series of records to which this record is related.
        1, hc.ID, hc.ID ,hc.ID, hc.STARTDTE, 
        hc.ENDDTE, 
        hc.hrs1, hc.hrs2
    from 
        @hours hc 
        LEFT OUTER JOIN @hours hp on hc.hrs1=hp.hrs1 and hc.hrs2=hp.hrs2 and hc.STARTDTE = dateadd(dd,1,hp.ENDDTE) -- Record starts on the day after previous record ends.          
    where hp.id is null -- We want root records.  Not records with parents.
    UNION ALL
    select convert(varchar(1000),chain +convert(varchar(10),hc.id)+ ','),recordsInChain +1,  hc.ID, hp.ID ParentID, 
        convert(int,left(hp.chain,charINDEX(',',hp.chain)-1))
        , hp.STARTDTE, hc.ENDDTE, hc.hrs1, hc.hrs2
    from 
        @hours hc 
        INNER JOIN hours hp on (hc.hrs1=hp.hrs1 and hc.hrs2=hp.hrs2 and hc.STARTDTE = dateadd(dd,1,hp.enddte))
        -- We need the end date for fulltime records, but this next line is not allowed in the recursive part of a CTE so we will have to get it later.
        --LEFT OUTER JOIN @hours hFullTime on hc.ENDDTE is null and hFullTime.id = hc.id + 1 and hFullTime.STARTDTE &gt; hc.STARTDTE
)
select hS.startdte,isnull(hE.ENDDTE,hFullTime.STARTDTE-1) enddte,hs.hrs1,hs.hrs2 --,hs.*,hE.*,isnull(hE.ENDDTE,hFullTime.STARTDTE-1)
from
    ( select rootid, max(recordsinchain) recordsInChain from hours  group by rootid ) hRange 
    inner join hours hS on hRange.RootID = hS.ID
    inner join hours hE on hRange.rootID = hE.RootID and hE.recordsInChain=hRange.recordsInChain
    -- Now we will get the end date for full time records, since we couldn't do it in the CTE.
    LEFT OUTER JOIN @hours hFullTime on hE.ENDDTE is null and hFullTime.id = hE.id + 1 and hFullTime.STARTDTE &gt; hE.STARTDTE