Block Loss Widens on Charges
The results reflected after-tax charges of $8 million related to the company's dropping its ExpressTax business, along with increased litigation costs in its Tax Services operation. Revenue rose to $129.2 million, an increase of 8 percent. The company also noted it completed the sale of RSM McGladrey to McGladrey & Pullen on November 30.
CEO Bill Cobb noted the McGladrey sale and the action to drop ExpressTax as an effort to dispose of non-core assets and focus on the tax business. The company said the revenue increase came primarily from its Australian tax business. The earnings announcement did not discuss Block's decision to drop the purchase of the parent company of TaxAct software following a federal judge's issuance of an injunction to block the deal. That came after the quarter closed.
The company will receive about $575 million in the McGladrey deal, including $487 million in cash, a note for $54 million and about $34 million in cash it expects by the end of 2011. M&P assumed most liabilities of RSM, including contingent payments and lease obligations. The sale also triggers $80 million in account distributions to RSM employees who participated in the Block deferred compensation plan.
