DAVID BELL RETIRES FROM CO-CHAIRMAN POST AT INTERPUBLIC
Eligible to Earn $750,000 Annually as Consultant to Company
INTERPUBLIC'S DAVID BELL AND JOHN DOONER TO BE OFF BOARD
SEC Informed They Will Not Be Renominated to Seats
IPG STOCK HITS TWO-YEAR LOW
Plans to Sell $575 Million in New Stock
IPG OFFERS DETAILS BEHIND $550 MILLION RESTATEMENT
'Material Weakness' in Agency Oversight Cited
IPG EARNINGS RESTATEMENT DROPS A HALF-BILLION DOLLARS
Filing Cites Seven Instances of Employee Misconduct
IPG TO RESTATE EARNINGS AGAIN
Reports 'Possible Employee Misconduct' Found
INTERPUBLIC GROUP NAMES NEW CFO
Frank Mergenthaler Was Formerly With Columbia House
SEC WIDENS INVESTIGATION OF IPG
CFO of Embattled Holding Company to Leave
INTERPUBLIC ISSUES UNAUDITED 2004 RESULTS
Operating Loss Estimated at $285 Million; CEO Defends Agencies
CLOUD OVER IPG DARKENS
Possible New Financial Restatements and Extensive 'Material Weaknesses' Revealed
INTERPUBLIC DELAYS RELEASE OF EARNINGS REPORT
Cites 'Items That May Require Adjustments'
IPG NAMES MICHAEL ROTH NEW CEO
David Bell Moves to Co-Chairman
INTERPUBLIC TO SETTLE SHAREHOLDER LAWSUITS
Company Will Pay $115 Million in and Stock
LAWSUIT ALLEGES 'ACCOUNTING MANIPULATIONS' AT INTERPUBLIC
Current and Former Top Executives Named as Defendants
DAVID BELL NAMED INTERPUBLIC CHIEF
John Dooner Steps Down, Will Return to Head McCann-Erickson WorldGroup
INTERPUBLIC STOCK HITS 10-YEAR LOW
Analysts Say New Credit Agreement Less Harsh Than Expected
SEC LAUNCHES FORMAL PROBE OF IPG ACCOUNTING
Focus Includes Five Years of Earnings Statements
In a call with analysts, Chairman-CEO Michael Roth said Nick Cyprus, who was Interpublic's highest-paid employee in 2004 when he was brought in from AT&T to help clean up the company's books, is leaving. He said Mr. Cyprus will be replaced by McCann Worldgroup Controller Christopher Carroll.
No reason for departure
Mr. Roth did not say why Mr. Cyprus is leaving or where he is going, and an Interpublic spokesman declined to comment.
Since 2002, Interpublic has been trying to right bookkeeping issues that emerged following its late-1990s acquisition spree that kicked off an ongoing investigation by the Securities and Exchange Commission. That effort hasn't been helped along by frequent changes in its financial management. When current Chief Financial Officer Frank Mergenthaler joined last year, he became the fourth CFO in as many years.
The news of Mr. Cyprus' departure comes as the company tries to put behind it accounting problems that led to a major earnings restatement in September and just days before a much-awaited investor conference at which Messrs. Roth and Mergenthaler as well as a host of agency executives are expected to give analysts and shareholders greater detail into the company's turnaround progress.
'Disappointing' financial results
Today’s announcement also accompanies what Mr. Roth described as "disappointing financial results." Interpublic today reported full-year 2005 revenue of $6.3 billion, down slightly from the year before. Its net loss narrowed to $289 million from $558 million in 2004. For the fourth quarter of 2005, revenue decreased 1.7% organically to $1.9 billion. It posted a net loss of $34.2 million compared to net income of $125.3 million over the same period in 2004.
The results were generally in line with the expectations of analysts, who by and large remain cautiously optimistic about Interpublic's turnaround hopes.
"While IPG is still a work in process with significant restructuring still to be done, we believe that IPG has significant intrinsic value and should be able to eventually overcome most of its current issues," said JP Morgan Chase analyst Frederick Searby in a research report. "While there are no signs of an imminent turnaround, we believe IPG is putting the pieces in place for an eventual turnaround.”
Investigation costs, loss of clients
Interpublic has been getting hammered by the high costs of its accounting investigation and by client losses that have had "severely negative effects on operating results," according to Mr. Roth.
"There is no doubt that 2005 was a challenging year for our company. The organic revenue decline was marginal and we will continue cycling through a number of client losses during the next two to three quarters," Mr. Roth said. "Our high costs were primarily associated with achieving key priorities of a turnaround. First, fixing weak financial systems and closing the book on historical accounting issues. We also made great strides in attracting top talent and ensuring the right leadership is in place at all of our agencies."