Exhibit 99.1
Unofficial Transcript of November 13, 2002 Conference Call
Operator: I would like to thank you all for holding and
welcome to your conference call with Susan Watson
of the Interpublic Group. Ms. Watson, I turn it
over to you and as a reminder to your
participants, this conference call is being
recorded for transcription and basic conference
replay. Thank you, ma'am, and thank you for using
Sprint.
Susan Watson: Thank you operator. This afternoon, Interpublic
released third quarter revenues and EPS, and
indicated that its previously announced earnings
restatements for the years dating back to 1997
would total $181.3 million. The release is
available on First Call, Bloomberg, Business Wire
and on our Website, www.interpublic.com.
With me today to discuss the announcement are John
Dooner, Chairman and CEO, and Sean Orr,
Interpublic's Chief Financial Officer. A replay of
this call will be available for 24 hours only by
dialing 800-252-6030. International callers should
dial 402-220-2491. The access number for the call
is 14252258. The call will also be archived at our
website for 30 days.
Because of the expanded scope and complexity of
the restatement and the associated auditing
activity, where much of our effort has been
centered, Interpublic has not completed the
process of analyzing the current quarter and year
to date financial statement sufficiently to
provide you with the appropriate details we
typically give you at the end of each quarter. A
full analysis of our third quarter performance
will therefore be released after market on
Tuesday, November 19. We will send out new
conference call details before the close of
business on Friday. Unfortunately, because our
financial statements are not yet complete we will
not be able to entertain any questions at the end
of this briefing. We invite you to join us on
Tuesday for a complete and interactive discussion
of the details of our financial performance. Now
it is my pleasure to introduce John Dooner.
John Dooner: Thank you, Susan. I would like to start by
expressing my disappointment and frustration that
this restatement issue has haunted Interpublic
since we discovered it three months ago. Many
investors have expressed their anger, which is
understandable, and on behalf of Interpublic, I
would like to express our regret to our
shareholders for this turmoil caused by this
episode. I also want to express appreciation to
the many individuals on Interpublic's financial
team who have been diligent and unrelenting in the
way that they have tackled these issues.
While it is very unfortunate that the news
dribbled out over a period of weeks, it was,
however, appropriate for us to be absolutely
thorough in pursuing this process, as well as
informing you along the way. Thankfully, we can
finally put this behind us and now really, really
focus 100 percent of our energy on building our
business. I would like to now turn it over to
Sean, who'll provide some of the details of the
restatement.
Sean Orr: Thank you, John. And I would just like to comment
at the outset that by necessity, my comments are
going to be limited largely to the contents of the
press release, but we will provide much more
detail next Tuesday.
Relative to the restatement, I would like to echo
John's thanks to the many people and professionals
that were involved in the process, which was a
long, expansive, three-month process; which by its
nature was an iterative process. As such, as you
find items, you continue to expand the scope of
your work and repeat that cycle until you are
satisfied that you are complete. We had two
premier law firms involved in the process, two
"Big Four" accounting firms involved in the
process, countless internal resources involving
tens of thousands of man-hours of effort,
involving visits to over 50 countries around the
world. And although the focus of the effort was on
McCann-Erickson and McCann-Erickson in Europe, the
review covered all parts of the company. We are
confident that the process is complete and that
the prior period balance sheet adjustment is
$181.3 million. This adjustment primarily relates
to the years 2001 and prior, and the adjustments
all represent non-cash adjustments that have no
impact on the cash earnings or cash flows of the
company.
The company is now in the process of determining
the proper period in which to record each portion
of the restatement. That work is happening as we
speak. We are availing ourselves, as Susan alluded
to, to the automatic extension of our 10-Q filing
to next Tuesday and we will be filing the 10-K/A
with the restatement as soon thereafter as
possible, but certainly no later than December
5th. On Tuesday we will have a normal full
analysis of our 10-Q filing and our third quarter
results, as well as more details as it relates to
the restatement itself.
One last point on this matter for now is that I do
want to repeat the non-cash nature of these items
and as such we are talking about matters that are
strictly internal to Interpublic from a cost
perspective. These items do not affect client
accounting. They do not affect the quality of the
products or the services that we deliver to our
clients and they do not affect our ability to
pursue new business with new clients, which
continues to be something in which we are highly
competitive.
Relative to actions we are taking as a result of
the findings of this expansive review, you have
already seen and we repeated in the release today,
that we are performing a search for a new Chief
Financial Officer at McCann-Erickson WorldGroup
and are very close to hiring a very highly
qualified individual that we are very excited
about. Hopefully there will be more news on that
as early as Tuesday. We have also asked Joe
Studley, the former Controller of the Interpublic
Group, to act as Controller of the McCann-Erickson
WorldGroup and he is doing so in providing
leadership over the financial reporting function
there.
There are numerous other actions, both personnel
actions and procedural actions, that are taking
place as a consequence of these findings and
review and we will elaborate more fully on those
in the conference call on Tuesday.
Relative to the earnings for the quarter, we did
indicate that the earnings will be two cents for
the quarter, which is six cents short of the lower
end of the 8 to 10 cent range we had previously
announced. The difference is fully accounted for
by unanticipated charges, principally at McCann,
that arose during this comprehensive review, that
needed to be taken in the current period. So these
unanticipated charges do equal at least six cents
and are a result of this thorough review that we
performed in the quarter.
As with all other items that we are discussing
today, and have disclosed in the press release
today, we will discuss them more fully on Tuesday,
at which time, as is our usual practice, we will
be available for questions and answers. We all
look forward to that session and the opportunity
to have an interactive and robust session
discussing these matters and like John, I look
forward to getting this issue behind us so we can
get on with the business of building a better
Interpublic.
Susan Watson: Thank you Sean. Thank you John. Thank you
everybody for joining us. This will conclude our
call.