H&R Block announced its earnings for fiscal 2010 yesterday which included the details for the fka RSM McGladrey. The company's press release basically says that times are tough but RSM had some good reasons for that.
For starters, the small tiff with M&P sort of put a damper on things and a nasty goodwill write-off:
RSM McGladrey reported fiscal 2010 pretax income of $58.7 million, down nearly 39 percent from $96.1 million in the prior year. Revenues declined 4.2 percent to $860.3 million, primarily due to the impact of the overall weak economic environment, which continues to pressure billable rates and hours within the industry. Profitability was negatively impacted by costs associated with previously resolved arbitration proceedings involving McGladrey & Pullen and other costs of litigation totaling $14.5 million in the aggregate, as well as a $15.0 million goodwill impairment charge at our capital markets business unit.
A 39% drop in profits could explain the nationwide layoffs at McGladrey that we reported on earlier this month. It's a good thing they didn't have the ginormous golf cake in this year's numbers, otherwise the results would have been worse.
But if you ignore all that, things were essentially flat and everyone knows that flat is the new up!
Excluding these charges, pretax income would have been approximately $88 million and pretax margin for the segment would have been 10.3 percent, essentially flat with the prior year. The shortfall in revenues was partially mitigated by cost reduction efforts throughout the year. These efforts included headcount reductions to reflect lower client demand, as well as other non-client facing cost reduction initiatives.
OH! There's the layoffs and they're citing "lower client demand." Thoughts on that, anyone?
H&R Block Reports Fiscal 2010 Financial Results [Market Wire]