M&A

Weaknesses Delay Interpublic Filing

The most significant matters concern acquisitions completed between 1996 and 2001, for which the company may have improperly consolidated the resul...
Stephen TaubMarch 14, 2005

Advertising giant Interpublic Group of Cos. Inc. announced that it will not file its 2004 annual report on time and may need to restate its results. Interpublic attributed the delay to material weaknesses in internal controls, including the documentation and control of the financial-results reporting process, and the time needed to complete management’s report as required by Section 404 of Sarbanes-Oxley.

The most significant matters concern acquisitions completed between 1996 and 2001, for which the company may have improperly consolidated the results of acquired companies, the company disclosed in a regulatory filing.

Interpublic stressed that it is in the early stages of its review. However, the company’s preliminary assessment has concluded that about $145 million in revenue and $25 million of net income may have been improperly recognized from 1996 through 2001.

The company said several other matters may also require it to restate prior results, stressing that it has not yet determined the amounts and periods affected.

“Since assuming my new role, I have been clear that the control environment is our most immediate priority,” said chairman and chief executive officer Michael Roth, in a statement. “The extensive review process we have undertaken is appropriate given the material control weaknesses we face.” Roth stressed that these actions are not related to the performance of the company’s operating units.

Chief financial officer Bob Thompson has held that position only briefly, according to Adweek. His predecessor, Chris Coughlin — who served as CFO and COO from June 2003 until the end of 2004 — left Interpublic to assume the roles of executive vice president and CFO of Tyco International Ltd., effective March 7.

Interpublic is still being investigated by the Securities and Exchange Commission for restatements made in 2002.

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