Interpublic Gets Financials in Order

The Interpublic Group of Companies IPG, the giant ad agency owner that's been trying to straighten out an accounting mess, said a restatement going back several years cut shareholders' equity by more than half a billion dollars.

New York-based Interpublic said an internal review found that its previously disclosed weaknesses in accounting controls resulted from its extensive global operations, decentralized structure and poor integration of past acquisitions.

The company's restatement, which affects results for more than five years, lowered holder equity as of Sept. 30, 2004 by about $550 million, including a $514 million reduction to retained earnings.

Along with details on the restatement, the company also released its financial results for the past year and a half.

For the first half of this year, Interpublic lost $139.4 million, or 33 cents a share, compared with a restated loss of $182 million, or 44 cents a share, for the same period in 2004.

First-half revenue rose 1.5% to $2.95 billion.

Interpublic, whose companies include Foote Cone & Belding and McCann Erickson, said it has determined that it lost $558.2 million, or $1.34 a share, on revenue of $6.39 billion in 2004.

The company's progress lifted investors' spirits Friday, and Interpublic's shares rose nearly 7% to $11.95 in premarket trading.

"I've been clear for some time that addressing control issues is our top priority," said Michael I. Roth, Interpublic's chairman and CEO. "The results of the financial review and restatement process demonstrate our commitment to the integrity of our financial statements and to a new level of transparency, in terms of both our disclosure and the way in which we do business."

The major components of the restatement dealt with revenue recognition, acquisition accounting, internal-investigation costs and international compensation arrangements.

Interpublic has said current senior level employees weren't involved with instances in which malfeasance appeared to have occurred. Those cases took place primarily outside the U.S.

The company is now current with its federal financial filing requirements and the rules of its bond indentures. Additionally, Interpublic said it amended the terms of a $450 million, three-year credit line with its bank group.