True North Communications Inc.
Highlights
Quarter Ended September 30, 1999

  Please Note:

  • True North’s 1998 results have been restated to include the results of The Financial Relations Board, Inc. (FRB), a Chicago-based investor relations firm acquired in a pooling of interests transaction in February, 1999. Third quarter revenues and operating expenses of FRB for 1998 were approximately $8.4 million. Operating income was breakeven.
UNUSUAL ITEMS:
  • True North’s third quarter comparative results were impacted by the following unusual items (pre-tax):

   

1999

  

1998

Restructuring and other charges

 

$(76.4)

 

$(4.3)

Gains on sales of DoubleClick securities

 

1.1

 

4.4

 

 

 

 

 

Pre-tax

 

$(75.3)

 

$0.1

 

 

 

 

 

After-tax

 

$(49.6)

 

– -

The following highlights exclude the impact of these items.

REVENUES:

  • Revenues increased $53.6 million or 17.7% as follows:

 

Amount

Increase

%

U.S.

$270.4

$47.1

21.1%

International

86.3

6.5

8.2%

 

$356.7

$53.6

17.7%

 

  • Acquisitions accounted for $28.7 million in 1999.
  • Organic growth (excluding the effects of acquisitions and foreign exchange variances) was 8.8%.
SALARIES AND BENEFITS EXPENSES:
  • Salaries and benefits increased $31.7 million or 16.8%, with acquisitions accounting for approximately $17.8 million of the increase.
  • Excluding acquisitions and foreign exchange variances, staff costs increased approximately 7.9 %.
  • As a percent of revenues, salaries and benefits decreased from 62.2% to 61.7%.

OFFICE AND GENERAL EXPENSES:

  • Office and general expenses increased $16.7 million or 19.7% with acquisitions accounting for approximately $8.7 million of the increase.
  • Goodwill amortization increased $0.6 million due to acquisition activity.
  • As a percentage of revenues, office and general expenses increased to 28.4% from 27.9%, including approximately $1.3 million in Y2K costs.

  OPERATING INCOME:

  • Operating income increased 17.4% from $30.0 million in 1998 to $35.3 million in 1999.
  • Operating margin was unchanged at 9.9%.
OTHER INCOME (EXPENSE):
  • Other income (expense) improved by $2.2 million, due primarily from lower net interest expense.
PROVISION FOR TAXES:
  • The effective tax rate was 43.5% in 1999 and 47.2% in 1998.
MINORITY INTEREST EXPENSE:
  • Minority interest expense increased by $0.3 million. This increase is due primarily from better operating results at MM.PT partially offset by lower net income in certain Latin American and European operations.
EQUITY INCOME:
  • Equity income decreased by $0.1 million in 1999 due primarily to the loss of equity pick-up at Publicis ($0.4 million).
SHARES OUSTANDING:
  • Average shares outstanding used in the dilutive calculation increased from 47,734 in 1998 to 49,859 in 1999. Both amounts include 1,201 shares issued in connection with True North’s acquisition of FRB in February, 1999, which was accounted for as a pooling transaction. The increase between periods is primarily due to the issuance of 402 shares in connection with True North’s acquisition of CM Partners in January 1999, the exercise of stock options and issuance of RSA’s and contributions to employee benefit plans.
  • As a result of the net loss for both the third quarter and year-to-date due to the restructuring charge, the actual weighted averaged number of shares used in the diluted earnings per share calculation do not assume the conversion or exercise of securities that would be antidilutive.

Download Operations Analysis Nine Months Ended September 30 spreadsheet

Download Operations Analysis Quarter Ended September 30 spreadsheet