Block spent $240 million in cash and assumed about $50 million in pension obligations when it purchased RSM McGladrey on Aug. 2, 1999. In the repurchase, Block will finance about $65 million of the purchase price and will also record an after-tax charge of about $53 million for its first quarter ended July 31.
The RSM McGladrey operations had been a weak performer for Block over the past two years. Revenue for the unit was $829.8 million for the year ended April 30, down from $860.3 million the prior year and $898.8 million for fiscal 2009. Over the same two years, operating income dropped to just over $49 million from $96.1 million. Factors in the decease included a $15 million impairment write down of goodwill in 2010.
The relationship had also been strained when M&P sought to end its joint operating arrangement with Block, but last year came to terms for a contract.