True North Posts Some Results – Holds Back Others

13 March 2001

Chicago-headquartered ad group True North Communications yesterday posted the first of its financial results, showing healthy operating income.

However, the group, which earlier this month postponed the announcement of its results due to an “accounting matter” [WAMN: 01-Mar-01], has still to post full financial figures for 2000. These will follow when interactive agency Modem Media, in which True North holds a 45% stake, finally publishes its delayed results.

What True North disclosed yesterday was its Q4 operating income excluding exceptional items totalling $84.6 million, a rise of 27%. The company’s chief financial officer Kevin Smith revealed that fourth-quarter earnings per share (omitting items) were a few cents above analysts’ expectations of 91cents. In addition, True North reported Q4 revenues of $441m, up from $399.1m the year before.

Some light was also shed upon the nature of the mysterious “accounting matter” brought before the Securities and Exchange Commission. True North has apparently resolved this by agreeing to restate previous financial results, with the amortization period for intangible assets involved in acquisitions halved from 40 to 20 years.

Smith insisted that this accounting change had no economic effect on True North, but added that it wiped $3.7m from 2000’s Q4 operating income and $14.6m from the full-year total.

True North also stated that it would, as expected, take a pre-tax charge of $17.5m (20 cents per share) following the loss of the $1.5 billion Chrysler account to BBDO Worldwide [WAMN: 06-Nov-00].

The group forecast a 15% rise in earnings per share over 2001 and organic growth of 8%. Smith added that he felt confident about first-quarter estimates, despite the economic downturn. “We have not seen any significant cutbacks in client spending,” he explained. “We are comfortable with consensus estimates for the first quarter.”

However, one thing he would not predict is when True North’s full financial results will be published, as he is unsure when Modem Media will do likewise.

News source: New York Times