-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DPhAVMvaUD1myb9WP232f+WHJXPizvk7SYQO9KQAdaNAyeNJBqfhwGAQg7qZM6a0 z3QhUlUnbC7LX4s6sLJ4UA== 0000912057-00-052210.txt : 20001206 0000912057-00-052210.hdr.sgml : 20001206 ACCESSION NUMBER: 0000912057-00-052210 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001205 ITEM INFORMATION: FILED AS OF DATE: 20001205 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRUE NORTH COMMUNICATIONS INC CENTRAL INDEX KEY: 0000037931 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] IRS NUMBER: 361088162 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-05029 FILM NUMBER: 783333 BUSINESS ADDRESS: STREET 1: 101 E ERIE ST CITY: CHICAGO STATE: IL ZIP: 60611-2897 BUSINESS PHONE: 3124256500 MAIL ADDRESS: STREET 1: 101 E ERIE ST CITY: CHICAGO STATE: IL ZIP: 60611-2897 FORMER COMPANY: FORMER CONFORMED NAME: FOOTE CONE & BELDING COMMUNICATIONS INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: FOOTE CONE & BELDING INC DATE OF NAME CHANGE: 19720824 8-K 1 a2032489z8-k.txt 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): December 5, 2000 True North Communications Inc. - ------------------------------------------------------------------------------- (exact name of registrant as specified in its charter) Delaware 1-5029 36-1088162 - ------------------------------------------------------------------------------- (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 101 East Erie Street, Chicago, Illinois 60611-2897 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (312) 425-6500 - ------------------------------------------------------------------------------- (Not Applicable) - ------------------------------------------------------------------------------- Former name or former address, if changed since last report Item 9. Regulation FD Disclosure On December 5, 2000, the Registrant's Chief Executive Officer and Chief Financial Officer presented an overview of the Registrant at the Credit Suisse First Boston Media Week Conference. The presentation materials used by Registrant's Chief Executive Officer and Chief Financial Officer are hereby submitted for filing. (c) Exhibits: 99.1 Presentation Materials given at the Credit Suisse First Boston Media Conference on December 5, 2000. The materials will also be available on the Registrant's web site (www.truenorth.com) for a limited time. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TRUE NORTH COMMUNICATIONS INC. By /s/ Kevin J. Smith ----------------------------- Kevin J. Smith Chief Financial Officer Dated: December 5, 2000 3 EXHIBIT INDEX Exhibit No. Description - ---------- ------------ 99.1 Presentation Materials given at the Credit Suisse First Boston Media Conference on December 5, 2000. The materials will also be available on the Registrant's web site (www.truenorth.com) for a limited time. 4 EX-99.1 2 a2032489zex-99_1.txt PRESENTATION MATERIALS The Impact of Change [TRUE NORTH LOGO] December 2000 AGENDA I. The Commitments/The Progress II. The Changes since April 1999 III. Signs of Vitality IV. Current Projects V. Strengths Going Forward I. THE COMMITMENTS/ THE PROGRESS #1. PRIORITY: GROWTH - ORGANIC PROGRESS: THROUGH ORGANIC GROWTH AND NET NEW BUSINESS WINS - Organic growth momentum continues to build with seven consecutive quarters of improvement - 1999 net new business wins increased 28% to $640 million in equivalent annualized billings; first nine months 2000 doubled vs. year ago #1 PRIORITY: GROWTH - ORGANIC PROGRESS: THROUGH EXPANDING COLLABORATION THROUGH THE BUSINESS UNITS - Over 200 account referrals resulting in new business since April `99 - Set the stage for continuous growth - Infrastructure - Chief Collaboration Officer - 50 Officers throughout TN companies - "Keep the family money" incentive program #1 PRIORITY: GROWTH - ORGANIC PROGRESS: THROUGH ENTREPRENEURSHIP - New America Strategies Group - The first multicultural, holistic agency - Bozell Kamstra - From start-up two years ago to over $300 million; clients include Dow Chemical, Tyco International, Fujitsu global campaign - Database - Created high-end database consultancy - AnalyticI - 35 full-time professionals - FCB-owned/shared by all TN companies #1 PRIORITY: GROWTH - ACQUISITIONS COMMITMENTS: - - Expand position outside the U.S.: emphasis Europe - - Focus on faster growing non-traditional practices: - Public Relations (BSMG) - Sales Promotion (Marketing Drive) - Multicultural and other emerging markets (NASG) #1 PRIORITY: GROWTH - ACQUISITIONS PROGRESS: EXPAND POSITION IN EUROPE FCB WORLDWIDE ------------- - UNITED KINGDOM - Banks Hoggins O'Shea - FRANCE - Acam - GERMANY - Borsch Stengel - PORTUGAL - Edson Athayde Communicacao - SPAIN - Augusta BBT - FINLAND - Kauppamainos Oy - POLAND - Ad Fabrika #1 PRIORITY: GROWTH - ACQUISITIONS PROGRESS: EXPAND POSITION IN EUROPE BSMG WORLDWIDE -------------- - UNITED KINGDOM - GJW - Lyons Waddell - Square Mile Holdings - GERMANY - Management Profile Consulting - APR Wilkens - Pajunk & Scheickhardt ...and - HONG KONG - Scotchbrook Communications #1 PRIORITY: GROWTH - ACQUISITIONS PROGRESS: EXPAND IN FASTER GROWING NON-TRADITIONAL PRACTICES FCBI ---- - The Hacker Group - Data Answers*, UK - Datamidia*, Brazil - Opus Group*, UK NEW AMERICA STRATEGIES GROUP ---------------------------- - Don Coleman - Imada Wong - Montemayor MEDIA ----- - MBS Group*, UK *Outside U.S. #1 PRIORITY: GROWTH - ACQUISITIONS PROGRESS: EXPAND IN FASTER GROWING NON-TRADITIONAL PRACTICES BOZELL GROUP ------------ - Stein Rogan + Partners - SixtyFootSpider - Communications Solutions Division (CSD) of Juntunen Media Group, Digital solutions - Howard, Merrell & Partners MARKETING DRIVE WORLDWIDE ------------------------- - EMP - Luxon Carra - Sierra Communications #1 PRIORITY: GROWTH - ACQUISITIONS SPRINGER & JACOBY ----------------- - Largest independent advertising group in Germany - Number one creative agency FINANCIAL REVIEW SETTING ASIDE THE LOSS OF DAIMLERCHRYSLER, 2000 HAS BEEN A VERY GOOD YEAR FOR TRUE NORTH REVENUE GROWTH REVENUE GROWTH
2000 1999 % INC. ---- ---- ------ 9 MONTH REVENUES 1,087.3* 966.3* 12.5% Organic Revenue Growth 10.1% Net Acquisition Growth 4.2% Currency Impact (1.8)%
* Note: Excludes Modem Media which was deconsolidated effective 4/1/2000 Organic Growth Is Our Number One Priority
1998 1999 Q1 Q2 Q3 Q4 2000 Q1 Q2 Q3 12 11.7 11 10 9 9.2 9.3 8 7 6 6.0 6.6 5 4 3 3.9 2 1 1.3 0 0
Note: Excludes Modem Media in all periods Organic growth has been fueled by: - Net new business - Collaboration NEW BUSINESS NET NEW BUSINESS WINS HAVE BEEN EXTRAORDINARY
1999* 2000* ----- ----- 1st Q $ 73 $ 263 2nd Q 168 537 3rd Q 220 258 ------- ------- Total $ 461 $ 1,058
* Note: Excludes Modem Media in all periods NEW BUSINESS SUCCESS DRIVEN BY QUALITY WINS BY FCB - Compaq - Boeing - Avaya - Taco Bell - Major League Baseball - Jell-O COLLABORATION COLLABORATION (CROSS-SELLING) HAS BEEN AN IMPORTANT FACTOR IN OUR GROWTH THIS YEAR - TN Collaboration Czar appointed - Collaboration Director appointed at each business unit - Collaboration Incentive Program - YTD efforts have generated $38.0 million in annualized Revenue EXPENSE RATIOS EXPENSE RATIOS CONTINUE TO IMPROVE DUE TO IMPROVED ORGANIC GROWTH, RESTRUCTURING ACTIVITIES AND COST CONTROL PROGRAMS. YTD Staff Cost Ratio 60.9% Imp of 230 Basis Pts YTD O&G Ratio 27.8% Imp of 40 Basis Pts
WE'RE ON TRACK TO REDUCE STAFF COST RATIO TO BELOW 60% IN 2000. OPERATING MARGIN MARGIN IMPROVEMENT IS A PRIORITY IN 2000 The improvement in organic growth coupled with the expense reductions from our restructuring activity has resulted in a significant margin improvement. YTD Operating Margin 11.3% Imp of 270 Basis Pts. WE'RE ON TRACK TO MEET OR EXCEED OUR GOAL OF A 12%+ OPERATING MARGIN IN 2000. EARNINGS PER SHARE YTD EARNINGS PER SHARE ARE UP SIGNIFICANTLY
9 Mos. 9 Mos. 2000 1999* % Inc ------ ------ ----- Diluted EPS $1.21 $.90 34%
* Note: Excludes Restructuring charge and other unusual items FINANCIAL OUTLOOK EXCLUDING THE IMPACT OF DAIMLERCHRYSLER, THE OUTLOOK REMAINS POSITIVE. - - Other than Dot.Com accounts -- no signs of spending cuts by clients. - - Full-year impact of 2000 new business wins in 2001. - - Momentum continues into the 4th quarter - - Goal for 2001 is 9% organic growth, excluding DaimlerChrysler. DAIMLERCHRYSLER DAIMLERCHRYSLER - Nov. 3rd announcement by DaimlerChrysler -- account consolidated with BBDO. - Decision based on cost savings and size of holding company. - Disappointing but not life threatening. - Transition Plan to be resolved with Chrysler. FINANCIAL IMPACT OF CHRYSLER LOSS - - Annualized Financial Impact: ($140M) Revenue and ($.50) per share - - 2001 Impact ($.22) vs. consensus estimates of $2.41 ASSUMING: - Successful Resolution of Transition Issues with Chrysler - Elimination of a significant portion of Modem losses incurred in 2000. REVENUE MIX
2000F 1997 1998 1999 2000F PRO-FORMA ---- ---- ---- ----- --------- Traditional 73% 72% 69% 66% 62% Marketing 27% 28% 31% 34% 38% Services
All periods exclude MMPT; 1997 and 1998 exclude FRB pooling of interests Non traditional includes interactive, direct, healthcare, public relations, promotions and directory Chrysler revenue includes in all periods except Pro-forma FINANCIAL OBJECTIVES We're on track to meet or exceed our financial objectives for the full year 2000 - EPS growth of 15+% - Organic growth > 8% - Operating margin of 12+% - Staff Cost Ratio < 60% - Tax rate in low 40's - Debt to capital ratio of < 40% II. ELEMENTS OF CHANGE THE ELEMENTS OF CHANGE SINCE APRIL `99 . . . - STRUCTURAL - Realigned assets - Strategic acquisitions - CULTURAL - Created and focused a culture - Significant opportunities for growth REALIGNMENT IMPACT: STRONGER GLOBAL POSITIONING FCB: A NEW GLOBAL POWERHOUSE - #1 agency brand in the U.S., top ten globally - Over $8 billion in billings - New profile: 55% U.S.; 45% International - 200+ offices in 96 countries FCBI: TOP-TEN GLOBAL DIRECT AND INTERACTIVE AGENCY BRAND - $800 million in billings - Well-positioned to take the lead in CRM with its new database capability, AnalyticI REALIGNMENT IMPACT: STRONGER GLOBAL POSITIONING FCB HEALTHCARE: - Unification of healthcare resources for enhanced healthcare marketing worldwide - New operation among top ten and includes: - Xygote Interactive - ProHealth (medical education unit) - 250 employees in 8 cities on four continents REALIGNMENT IMPACT: STRONGER GLOBAL POSITIONING MARKETING DRIVE WORLDWIDE: A SINGLE GLOBAL BRAND OF PREVIOUSLY 14 MARKETING SERVICES COMPANIES - $500 million in equivalent billings - International marketing services capabilities - 23 offices in 16 cities in 9 countries STRATEGIC ACQUISITION IMPACT: Stronger Global Positioning/High-Growth Sector Focus BSMG WORLDWIDE - Revenue growth dramatic, on average quadrupling in size every five years--expected to reach $180 million in 2000 - Geographic reach greatly expanded; one of the largest networks in Europe - Now ranked #7 in the U.S.; #8 Worldwide - Leader in investor relations practice; largest food and beverage practice; rapidly growing technology and healthcare practices REALIGNMENT IMPACT: HIGH-GROWTH SECTOR FOCUS TN DIRECTORY SERVICES - Ranks second in National YP specialist agencies - Wahlstrom winner of more industry awards than any other yellow pages agency - Growing at 3 times industry rate because of adding an internet directory consultancy and execution capability REALIGNMENT/STRATEGIC ACQUISITION IMPACT: High-Growth Sector Focus NEW AMERICA STRATEGIES GROUP - Ethnic populations are growing at seven times the rate of the general market--expected to account for 50% of Americans by 2020 - NASG largest multicultural marketer representing all three major ethnic populations - Acquisition of Don Coleman Advertising and Imada Wong - Major new business wins in 2000, including Salomon Smith Barney, American Airlines, Exelon, BET Holdings III. SIGNS OF VITALITY SIGNS OF VITALITY FCB WORLDWIDE - ------------- [COMPAQ LOGO] [BOEING LOGO] [AT&T LOGO] [AVAYA COMMUNICATION LOGO] [MONSANTO LOGO] [ADM LOGO] [CMGI LOGO] [BRISTOL-MYERS SQUIBB COMPANY LOGO] [TACO BELL LOGO] [KRAFT LOGO] SIGNS OF VITALITY BOZELL GROUP - ------------ - - Datek increased revenue 66% [DATEK ONLINE LOGO] - - Bristol-Myers Squibb revenue up 30% [BRISTOL-MYERS SQUIBB COMPANY LOGO] - - Verizon Wireless revenue +50% [VERIZON LOGO] - - Fujitsu selected Bozell Kamstra as lead agency for global brand communications [FUJITSU LOGO] SIGNS OF VITALITY BSMG WORLDWIDE - -------------- [MICROSOFT LOGO] [BRISTOL-MYERS SQUIBB COMPANY LOGO] [EXELON-sm- LOGO] [ADM LOGO] [SC JOHNSON WAX LOGO] MARKETING DRIVE WORLDWIDE - ------------------------- [GILLETTE LOGO] [MERCEDES-BENZ LOGO] [EXCEDRIN LOGO] IV. CURRENT PROJECTS CURRENT PROJECTS MODEM MEDIA - A strong company with great clients - A financial asset - Options - Dividend - Strategic merger - Buy back CURRENT PROJECTS DAIMLERCHRYSLER - Major loss, but if it had to come, this is the best time in FCB'S history - FCB is continuing their aggressive momentum - Headline global wins - More than $1 billion in net new business this year V. STRENGTHS GOING FORWARD STRENGTHS GOING FORWARD - A $1.5 billion marketing communications holding company ranked #8 worldwide - Clients - TN companies serve more than 30 major global clients, half of whom have long-standing relationships (15+ years) KEY CLIENTS [APPLEBEE'S LOGO] [KRAFT LOGO] [QUAKER-Registered Trademark- LOGO] [AT&T LOGO] [AMAZON.COM LOGO] [SC JOHNSON WAX LOGO] [BDF BEIERSDORF LOGO] [DOCKERS LOGO] [SUNKIST LOGO] [BOEING LOGO] [MERCK LOGO] [TACO BELL LOGO] [BRISTOL-MYERS SQUIBB COMPANY LOGO] [NABISCO LOGO] [TROPICANA LOGO] [CHASE LOGO] [NIKE LOGO] [UNITED STATES POSTAL SERVICE LOGO] [COORS LOGO] [GATORADE LOGO] [WEBTV NETWORK LOGO]
KEY CLIENTS [BANK OF AMERICA LOGO] [AMERICAN AIRLINES LOGO] [MTV LOGO] [AVAYA COMMUNICATION LOGO] [COMPAQ LOGO] [GLAXO PHARMACEUTICALS LOGO] [GOT MILK?-Registered Trademark- LOGO] [HILTON-TM- LOGO] [KAWASAKI-Registered Trademark- LOGO] [VERIZON LOGO] [NORTEL NETWORKS LOGO] [THE NEW YORK TIMES LOGO] [GTE LOGO] [DATEK ONLINE LOGO] [MUTUAL OF OMAHA COMPANIES LOGO]
TOP 20 CLIENTS (sorted alphabetically)
CLIENT CLIENT SINCE - ------ ------------ American Airlines 1970 AT&T 1988 Bank of America 1998 Beiersdorf 1978 Bristol-Myers 1984 Chase Manhattan 1998 Compaq 2000 Coors 1979 Datek 1999 Glaxo 1988 GTE/Bell Atlantic 1983 Kraft/General Foods 1954 Merck 1974 Nortel 1997 Quaker Oats - Gatorade 1973 RJR Nabisco - Planters 1980 SC Johnson 1963 Subaru 1993 Taco Bell 1997 US Postal Service 1995
REVENUE CONCENTRATION* - ---------------------- Top Account % Total Revenue = 4.9% Top 5 Accounts % Total Revenue = 13.7% Top 10 Accounts % Total Revenue = 21.1% Top 20 Accounts % Total Revenue = 30.9%
* Top client revenue based on 2000 forecasted revenue. Chrysler has been removed and Compaq has been adjusted to approximate a full year fee. Total revenue has been adjusted as well. STRENGTHS GOING FORWARD - BRANDS - GLOBAL - FCB Worldwide - Ranked #1 in billings in the U.S.; top ten globally - BSMG Worldwide - Firmly in the top ten globally; headed for the top five - Marketing Drive Worldwide - Positioned to meet emerging client need STRENGTHS GOING FORWARD - U.S. -- WORLD'S LARGEST MARKET - Bozell Group - Top 25 U.S. consolidated agency brand; $1.6 billion in billings - Bozell Kamstra - one of the largest business branding agencies - AFG - Full-service, growing brand - BGW - Expertise in Retail, Kids, Entertainment - Temerlin McClain - #1 Southwest-based agency; $600 million in billings - Specialists in handling service-driven businesses - New America Strategies Group - Tierney Communications - Based in Philadelphia, recognized by WSJ, NYT, INSIDE PR as "regional powerhouse" - Recent win of $15 million Exelon energy account STRENGTHS GOING FORWARD - COLLABORATION - AN OPPORTUNITY NOT YET FULLY REALIZED - FCB Worldwide - Works with 20% of the Top 200 marketers - Non-Traditional Business Units - Work with 40% of the Top 200 marketers - 200 clients use 2 or more TN companies - 25 clients use 4 or more TN companies R/GA LEGACY - - A creatively-focused interactive services company delivering e-business solutions across all interactive platforms - - An unparalleled body of visual design across film, television, print, CD-ROM, kiosks, and the Web - - One of the world's Most Awarded New Media Creative Agencies - - Signature Accounts - IBM--Narrowband (one of three agencies) - Ericsson--Pervasive (opening in Stockholm) - Reuters--Broadband (opening in London) STRENGTHS GOING FORWARD - TN MEDIA - Unique Media Model - Philosophy: media as a function should be unbundled with a separate P&L - BUT, professionally integrated to the agency's strategic planning process - Offering clients a flexible structure to meet their needs (because there is no single way) - New management; new name soon THANK YOU -----END PRIVACY-ENHANCED MESSAGE-----