<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A AMENDMENT NO. 1
(Mark
One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the Transition period from to
COMMISSION FILE NO. 1-5029
TRUE NORTHCOMMUNICATIONS INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-1088161
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
101 EAST ERIE STREET, CHICAGO, ILLINOIS 60611-2897
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
REGISTRANT'S TELEPHONE NUMBER: (312) 425-6500
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
REGISTERED
Common stock, par value New York Stock Exchange
33 1/3 cents per share
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES [X] NO [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference or included in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]
The aggregate market value of Common Stock, 33 1/3 cents par value, held by
non-affiliates of the Registrant, as of March 24, 1997 was $366,955,418.
There were 24,757,710 shares of Registrant's 33 1/3 cents per share par
value Common Stock outstanding as of March 24, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to shareholders for the year
ended December 31, 1996 are incorporated by reference into Parts I and II of
this report.
Portions of the Registrant's Proxy Statement relating to its annual meeting
of shareholders scheduled to be held on May 21, 1997 are incorporated by
reference into Part III.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
Registrant hereby amends Item 14 of its 1996 Annual Report on Form 10-K to
include the audited financial statements of Publicis Communication, a 50% or
less owned foreign affiliate of Registrant.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Item 14(a)--List of Financial Statements.................................. 5
Report of Independent Public Accountants on Supplemental Note........... 6
Item 14(a)(1)--Supplemental Note to Consolidated Financial Statements:
A.Valuation Accounts.................................................... 7
Item 14(a)(2)--Schedules
Are not submitted because they are not required or because the required
information is included in the financial statements or notes thereto.
Item 14(a)(3)--Index of Exhibits
The index of exhibits immediately precedes the exhibits filed with the
Securities and Exchange Commission.
Exhibits 10.1 through 10.16 included in this index are the management
contracts and compensatory plans or arrangements required to be filed
as exhibits hereto pursuant to the requirements of Item 601 of
Regulation S-X.
Item 14(b)--Reports on Form 8-K
</TABLE>
Registrant filed the following reports on Form 8-K during the fourth quarter
of 1996 and the first quarter of 1997:
<TABLE>
<CAPTION>
DATE OF REPORT DESCRIPTION OF REPORTABLE EVENT
-------------- -------------------------------
<C> <S>
February 14, 1997 Under Item 5, Registrant reported that the Compensation
Committee of its Board of Directors, comprised solely of
outside Board members, negotiated and executed severance
agreements with John B. Balousek and Craig R. Wiggins,
former officers and members of Registrant's Board of
Directors.
</TABLE>
4
<PAGE>
FORM 10-K--ITEM 14(A)
TRUE NORTH COMMUNICATIONS INC. AND SUBSIDIARIES LIST OF FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of the Registrant and the
Independent Public Accountant's Report covering these financial statements,
appearing in the Registrant's 1996 Annual Report on pages 8 through 23 are
incorporated herein by reference in Item 8:
Consolidated Balance Sheets--December 31, 1995 and 1996
Consolidated Statements of Income--Years ended December 31, 1994, 1995 and
1996
Consolidated Statements of Stockholders' Equity--Years ended December 31,
1994, 1995 and 1996
Consolidated Statements of Cash Flows--Years ended December 31, 1994, 1995
and 1996
Notes to Consolidated Financial Statements--December 31, 1996
Report of Independent Public Accountants
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions, or are inapplicable, or the information called for
therein is included elsewhere in the financial statements or related notes
thereto contained in or incorporated by reference into this Report.
Accordingly, such schedules have been omitted.
Publicis Communication owns 51% of Publicis.FCB BV and 80% of Publicis
Conseil. Accordingly, the consolidated financial statements of Publicis
Communication and Subsidiaries include the results of operations and financial
position of Publicis.FCB BV and Publicis Conseil.
These financial statements have been prepared and audited based upon
accounting and auditing standards and practices acceptable for external
financial reporting purposes in France. These practices and standards can vary
from U.S. accounting practice. Following is a reconciliation prepared by
Registrant of reported net income to net income which would be reported under
U.S. generally accepted accounting principles (amounts in thousands):
<TABLE>
<CAPTION>
--------------------------------
1994 1995 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income as shown in financial statements (1) $12,782 $32,070 $37,044
- ------------------------------------------------------------------------------------------------------
Amortization of goodwill (2) (5,623) (6,803) (7,330)
- ------------------------------------------------------------------------------------------------------
Italian restructuring reserves not acceptable under U.S. GAAP (3) 5,756 (6,017) 4,987
- ------------------------------------------------------------------------------------------------------
Tax credit included in income not acceptable under U.S. GAAP (4) (2,445) (2,540) (3,115)
- ------------------------------------------------------------------------------------------------------
$10,470 $16,710 $31,586
--------------------------------
</TABLE>
Notes:
1. Net income as reported was computed using the average exchange rates for the
year.
2. Certain elements of goodwill are charged directly to equity or income in the
year it arises, or are not otherwise amortized for French financial reporting
purposes. The goodwill amortization expense adjustment was computed using
forty years as the estimated useful life for each of the related goodwill
components.
3. Under French generally accepted accounting principles, general and specific
restructuring actions taken in 1995 up to the date of the audit opinion must
be recorded in the 1994 financial statements. Application of EITF 94-3 to
these financial statements result in this adjustment which under U.S.
generally accepted accounting principles, results in a 1995 charge to
earnings of an equivalent amount (allowing for currency exchange
fluctuations). Of the total amount of this adjustment, $1,273 relates to
management and staff severance actions taken in 1995, $1,637 relates to the
1995 abandonment of excess lease space, $472 relates to the 1995 closure of a
sale promotion agency, and $2,374 relates to legal and other associated
restructuring costs incurred in 1995. During 1996, the restructuring actions
commenced in 1995 were completed. Because the company was able to negotiate
more favorable settlement terms on leases and other actions than previously
anticipated, the final true-up of these restructuring reserves resulted in a
one-time increase in 1996 earnings of $4,987.
4. Under French generally accepted accounting principles, the utilization of tax
credit carryforwards of acquired companies are reflected in earnings. Under
U.S. generally accepted accounting principles, this amount is accounted for
as a reduction of the initial purchase price and related goodwill.
5
<PAGE>
PUBLICIS COMMUNICATION
CONSOLIDATED FINANCIAL
STATEMENTS 31/12/1996
<PAGE>
PUBLICIS COMMUNICATION
31/12/1996
PAGE 1 : Comparative Consolidated Income Statement.
PAGE 2 : Comparative Consolidated Balance Sheet.
PAGES 3/4 : Consolidated Statement of Change in Financial Statements.
PAGES 5/11 : Notes to the Consolidated Financial Statements.
PAGES 12/14 : List of Consolidated Companies.
<PAGE>
PUBLICIS COMMUNICATION GROUP
<TABLE>
<CAPTION>
CONSOLIDATED INCOME STATEMENT
In thousands of French Francs
- --------------------------------------------------------------------------------
YEAR 1995 YEAR 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Billings 18 132 852 19 536 496
Purchases (15 196 560) (16 494 575)
REVENUES 2 936 293
Salaries and Benefits (1 638 275) (1 682 832)
Office and General Expenses (832 111) (863 659)
TOTAL EXPENSES (2 470 386)
OTHER INCOME 17 732
OPERATING PROFIT 483 639
Depreciation (110 724) (114 753)
Provision doubtful debts (16 258) (23 290)
Other provisions (16 033) (20 884)
Interest Income (expense) 14 820 23 772
PROFIT BEFORE TAX 355 445
Exceptional costs 3 043 (5 336)
Profit sharing-statutory (7 263) (8 613)
Income tax (133 111) (128 263)
Profit (equity subsidiaries) 32 747 43 484
NET INCOME 250 861
GROUP SHARE 160 350
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
YEAR 1996 % VAR.95/96
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Billings 7.7%
Purchases
REVENUES 3 041 920 3.6%
Salaries and Benefits 2.7%
Office and General Expenses 3.8%
TOTAL EXPENSES (2 546 491) 3.1%
OTHER INCOME 7 635
OPERATING PROFIT 503 064 4.0%
Depreciation
Provision doubtful debts
Other provisions
Interest Income (expense)
PROFIT BEFORE TAX 367 908 3.5%
Exceptional costs
Profit sharing-statutory
Income tax
Profit (equity subsidiaries)
NET INCOME 269 181 7.3%
GROUP SHARE 189 435 18.1%
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
PUBLICIS COMMUNICATION GROUP
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
(In thousands of FRF)
<S> <C> <C>
- -----------------------------------------------------------------------------
ASSETS 31.12.1995 31.12.1996
- -----------------------------------------------------------------------------
FIXED ASSETS 1 104 147 1 113 867
============ ------------------------
Intangible Assets (gross) 737 923 773 231
Depreciation and Amortization on Intangible Assets (23 005) (90 677)
Tangible Assets (gross) 681 858 737 598
Depreciation and Amortization on Tangible Assets (441 093) (487 647)
------------------------
NET TANGIBLE AND INTANGIBLE ASSETS 955 683 932 505
Investments (non consolidated companies) 23 781 21 975
Investments (equity subsidiaries) 105 016 135 179
Interco loans 4 896 6 948
Other financial assets 37 106 34 312
Provisions on financial assets (22 335) (17 052)
------------------------
NET FINANCIAL ASSETS 148 464 181 362
------------------------
CURRENT ASSETS 4 217 222 4 448 365
============== ------------------------
Work in progress 212 814 214 757
Advance payments made 47 770 61 792
Accounts receivable (net) 1 947 957 2 246 095
Interco receivable 40 351 111 398
Other debtors 1 150 283 893 294
Cash 818 047 921 029
------------------------
------------------------
OTHER CURRENT ASSETS 63 710 52 375
==================== ------------------------
- -----------------------------------------------------------------------------
TOTAL ASSETS 5 385 079 5 614 608
- -----------------------------------------------------------------------------
LIABILITIES & EQUITY 31.12.1995 31.12.1996
- -----------------------------------------------------------------------------
TOTAL EQUITY 1 459 155 1 626 328
============ ------------------------
Equity (before net income), Group Share 872 932 971 478
Net Income, Group Share 160 350 189 435
------------------------
TOTAL EQUITY GROUP SHARE 1 033 282 1 160 913
Equity (before net income), Non-Group Share 335 361 385 670
Net Income, Non-Group Share 90 512 79 746
------------------------
TOTAL EQUITY NON-GROUP SHARE 425 873 465 415
------------------------
PROVISIONS FOR CONTINGENCIES 329 476 283 948
============================ ------------------------
SHORT TERM LIABILITIES 3 535 315 3 636 991
====================== ------------------------
Borrowings (not banks) 123 682 67 364
Banks 494 736 541 135
Advance payments from clients 148 400 173 156
Accounts payable 1 470 605 1 591 849
Interco payable 24 602 52 974
Other creditors 1 273 290 1 210 512
------------------------
OTHER ACCRUALS 61 134 67 341
============== ------------------------
- -----------------------------------------------------------------------------
TOTAL LIABILITIES 5 385 079 5 614 608
- -----------------------------------------------------------------------------
</TABLE>
<PAGE>
PUBLICIS COMMUNICATION GROUP P 1/2
CONSOLIDATED STATEMENT OF CHANGE IN FINANCIAL POSITION
(US GAAP-in thousand FRF)
<TABLE>
<CAPTION>
'000 FRF 1995 1996
SOURCE OF WORKING CAPITAL
- -------------------------
<S> <C> <C>
NET INCOME 250 861 269 181
Depreciation 110 724 114 753
------------------------
Sub-total 361 585 383 934
Equity earnings of affiliates (32 746) (43 483)
Dividends received from affiliates 50 717 16 348
Loan 181 137 0
Other borrowings 0 0
Exchange differences & Others 1 670 362
========================
TOTAL SOURCE 562 363 357 161
APPLICATION OF WORKING CAPITAL
- ------------------------------
Paid out dividends 52 230 74 654
Purchase of interest in affiliated companies 0 0
Investments 120 896 46 103
Increase in other fixed assets 112 169 91 657
========================
TOTAL APPLICATION 285 295 212 414
Increase (decrease) in working capital 277 068 144 747
------- -------
</TABLE>
<PAGE>
PUBLICIS COMMUNICATION GROUP P 2/2
CONSOLIDATED STATEMENT OF CHANGE IN FINANCIAL POSITION
(US GAAP-in thousand FRF)
<TABLE>
<CAPTION>
'000 FRF 1995 1996
Increase (decrease) in current assets
- -------------------------------------
<S> <C> <C>
Cash 268 720 102 982
Accounts receivables (net) (12 999) 273 382
Expenditure billable to clients 18 711 1 943
Other current assets 94 682 (195 777)
------------------------
Sub-total 369 114 182 530
Increase (decrease) in current liabilities
- ------------------------------------------
Provision for contingencies 8 905 (31 320)
Accounts payable 5 195 107 222
Bank borrowings 95 268 46 399
Loans and other borrowings (86 116) (56 318)
Other current liabilities 68 794 (28 200)
------------------------
Sub-total 92 046 37 783
Increase (decrease) in working capital 277 068 144 747
- -------------------------------------- ------- -------
</TABLE>
<PAGE>
PUBLICIS COMMUNICATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF 31/12/1996
I. CONSOLIDATION PRINCIPLES.
------------------------
PUBLICIS COMMUNICATION GROUP'S consolidated financial statements as at
December 31, 1996 have been prepared in accordance with the French
legislation and are in conformity with generally accepted international
accounting principles.
The consolidated financial statements include the accounts of the Company's
wholly owned and majority owned domestic and international subsidiaries.
The subsidiary companies with less than 50% ownership are consolidated on
an equity basis.
The company translates the financial statements of its international
subsidiaries into French Francs using official exchange rates as of
December 31.
II. SUMMARY OF MAJOR ACCOUNTING POLICIES.
------------------------------------
General:
-------
The accounting policies used as at December 31, 1996 are identical to those
used in preparing the consolidated financial statements of the Publicis
Group.
Methods of valuation and presentation of the consolidated financial
statements of the consolidated companies in 1996 are unchanged from those
applied in the previous year with the exception of the norm related to the
evaluation of Retirement Indemnities which was updated (see hereafter
Retirement Indemnities).
Intangible assets:
-----------------
They comprise goodwill on acquisition (differences arising on valuation),
local goodwill, leasehold rights and software.
Acquisition goodwill:
--------------------
Goodwill arising on first time consolidation consist of the difference
between the acquisition cost of shares in consolidated companies and the
Group's share in their net assets restated in accordance with Publicis'
policies and accounting principles at the time of entry in the Group.
These differences are allocated between the goodwill arising on valuation
or on acquisition, according to whether they are, respectively,
identifiable or non-identifiable intangible assets.
<PAGE>
Goodwill arising on valuation is determined on the basis of verifiable,
objective criteria, e.g. market share, trade marks, trade names, clients
lists, brands, revenues and earnings, and are therefore identifiable.
These are not amortized systematically but are subjected to annual review
of their market value on the basis of the parameters used at the time
of their acquisition. A loss provision or depreciation is recorded if their
market value is found to be persistently (more than three years) less than
their acquisition cost.
All acquisition goodwill at the date of this report has been assigned to
valuation differences.
As a result, the consolidated financial statements of Publicis
Communication do not record any differences arising on acquisition. Any
future acquisition goodwill, i.e. unidentifiable intangible assets, would
systematically be amortized over a maximum of 40 years.
Relatively small acquisition goodwill arising on first time consolidation
(generally less than FRF 1 million) is amortized in full the year of its
recognition.
Leasehold rights and local goodwill:
-------------------------------------
These are carried in the balance sheet at their historical acquisition
cost, which consists of their cost at the time of their entry in the
Group's assets.
These items are not amortized, but they are written down when their useful
value is lower than their acquisition cost.
Software:
---------
These comprise software for internal use which are generally amortized
over a period not exceeding three years.
Tangible assets:
----------------
Tangible assets are valued at cost and the depreciation is calculated
according to the most suitable method in order to take into account the
economical criteria. Listed below are the methods most currently used
within the Publicis Communication Group:
Building : 20 years straightline
Leasehold property and improvements : 10 years straightline
Furniture and Equipment : 5-10 years straightline
Motor Vehicles : 4 years straightline
Work in Progress:
-----------------
Work in Progress is valued at the lower of cost and net realisable value.
<PAGE>
Billings:
Publicis Communication's billings mainly consist of sales and advertising
produced and of advertising space.
Media Buying in France:
The Sapin Law, which came into force on March 31, 1993, modified the ground
rules of our business, obliging media buyers to act under an agency contract.
Consequently, media space buying operations conducted by agents (whether
advertising agencies or centralised buying units) on behalf of clients are no
longer recorded in the sales and purchases ledger accounts. Debts and
receivables in respect of these operations are recorded under "Other debtors"
and "Other creditors" in the balance sheet. In order to compare our billings
with figures for previous years, and with those of our international competitors
in our business, the media billings handled by French centralized media buying
units acting under an agency contract are taken in the consolidated billings.
Media buying accounts for less than 10% of our consolidated billings.
Retirement Indemnities:
French Subsidiaries:
In order to take into account the evolution of the labour market and of the
advertising branch particularly, the Publicis norm related to Retirement
Indemnities was updated this year.
Retirement indemnities are now accounted for all employees over 50 years of age
(against 55 previously).
The application of this norm is unchanged: retirement indemnities are shown,
with their related social charges, in the provision for contingencies. The
yearly movements in the provision for the retirement idemnities shown on the
balance sheet are accounted for in the yearly expenses.
For the first application of this new norm, the adjustments in the provision
related to the previous years was charged against equity. The 1996 provision for
retirement indemnities was accounted for under the line "Salaries and
benefits" of the Income Statement.
Consequently, Contingent Liabilities no longer include any retirement
indemnities.
Foreign Subsidiaries:
Retirement indemnities are accrued for in accordance with the laws and
regulations specific to each country.
Income Tax:
All actual and deferred Income Taxes payable are accounted for. Deferred Income
Tax assets or potential fiscal credits are not recognised.
<PAGE>
III) COMMENTS ON THE CONSOLIDATED ACCOUNTS:
-------------------------------------
Companies consolidated:
----------------------
Year 1996 was marked by the following operations:
-in Sweden, 76% stake in GRO&S which became Publicis GRO&S
-in the Netherlands, the acquisition of a 52% stake in BMB by Overad
-in Eastern Europe, various small acquisitions and creations.
Subsidiaries' Contribution in Group activities:
----------------------------------------------
The breakdown of this contribution is as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Billings Net income Group Share (1)
- --------------------------------------------------------------------------------
<S> <C> <C>
France 33% 53%
Europe 58% 25%
USA 8% 22%
--------------------------------------------------
100% 100%
- --------------------------------------------------------------------------------
</TABLE>
(1) Including results of subsidiaries consolidated on an equity basis.
Intangible assets:
-----------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
31/12/1995 Movements 1996 31/12/1996 31/12/1996
------------------------------------------------------------------ ----------
(000 FRF) Gross Acquisitions Disposals Exchange Gross Amortization Net
amount and others amount amount
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Goodwill 671 359 52 341 (20 081) 2 558 706 177 (63 182) 642 995
Acquired Goodwill 30 123 5 756 (1 848) (64) 33 967 (2 172) 31 795
Software & Others 36 441 0 (3 354) 0 33 087 (25 323) 7 764
- ------------------------------------------------------------------------------------------------------------------
TOTAL 737 923 58 097 (25 283) 2 494 773 231 (90 677) 682 554
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Part (FRF 40 million) of the extraordinary provision registered on Italy in
1994 was applied to the depreciation of our Italian goodwill. It is
included in the above mentioned amount of KFRF 63 182.
Tangible assets:
---------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
31/12/1995 Movements 1996 31/12/1996 31/12/1996
----------------------------------------------------------------------------------- ----------
(000 FRF) Gross Acquisitions Disposals Changes in scope Exchange Gross Amortization Net
amount of consolidation and others amount amount
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Land & buildings 40 125 0 0 0 859 40 984 (14 248) 26 736
Others 641 733 117 390 (68 441) (10 477) 16 409 696 614 (473 399) 223 215
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL 681 858 117 390 (68 441) (10 477) 17 268 737 598 (487 647) 249 951
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Companies on an Equity basis:
----------------------------
True North Communications, listed on the New York Stock Exchange is
included in investments on an equity basis for an amount of KFRF 122 057.
Publicis Communication owns 4 658 000 True North Communications shares
(20%) whose stock market value was KUSD 101 894 as at December 31st, 1996
and KUSD 94 325 as at February 28th, 1997.
Variation in stockholders' Equity:
---------------------------------
The variation of the stockholders' equity between December 31st, 1995 and
December 31st, 1996 is as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
(000 FRF) TOTAL Group share Minority share
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Equity 31/12/1995 1 208 293 872 932 335 361
1995 Net Income 250 861 160 350 90 511
---------------------------------------
Theoritical Equity 31/12/1996 (before 1996 Net Income) 1 459 154 1 033 282 425 872
1996 changes:
Dividends distributed (70 637) (44 400) (26 237)
Provision for Retirement Indemnities (25 792) (22 758) (3 034)
Exchange differences 9 619 7 373 2 246
Changes in companies consolidated and others (15 196) (2 019) (13 177)
- -------------------------------------------------------------------------------------------------
Total Net Equity 31/12/1996 (before 1996 Net Income) 1 357 148 971 478 385 670
- -------------------------------------------------------------------------------------------------
</TABLE>
Provision for Retirement Indemnities:
-------------------------------------
Following the change operated in the evaluation of the provision for
Retirement Indemnities, the complementary provision on previous years was
charged against equity. It amounts to FRF 26 million, of which FRF 23
against the Group Share.
Net Equity of the Group:
-----------------------
The Net Equity of the Group is as follows (000 FRF):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
Share capital of the mother company 185 000
Reserves of the mother company 428 719
Consolidated reserves 357 759
- --------------------------------------------------------------------------------
Group's Net Equity as of 31/12/1996 971 478
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
Provision for contingencies:
----------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(000 FRF) 31/12/1995 Variation 31/12/1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Pensions-Retirement indemnities 119 538 597 120 135
Provisions for litigations 34 035 (13 265) 20 770
Provisions-General risks 13 588 19 134 32 722
Provisions-Clients risks 34 289 (5 600) 28 689
Extraordinary provision on Italy 59 225 (59 225) 0
Other provisions 68 801 12 831 81 632
- --------------------------------------------------------------------------------
TOTAL 329 476 (45 528) 283 948
- --------------------------------------------------------------------------------
</TABLE>
As already mentioned, KFRF 40 000 of the extraordinary provision on
Italy was affected to the depreciation of the Italian Goodwill.
Consequently it is now shown under the line "depreciation of
intangible assets" of the balance sheet. The remaining amount of this
provision, i.e. KFRF 19 225 is now shown with "Provisions-General
risks".
Income Tax:
-----------
In 1996, Publicis Conseil benefited from an Income Tax saving as a
result of the use of KFRF 44 300 fiscal losses brought by FCAB. As at
December 31st, 1996, KFRF 7 510 ordinary fiscal losses and differed
amortization can be carried forward by Publicis Conseil and KFRF.9 690
by Publicis Communication
Exceptional Costs:
------------------
No exceptional item has to be pointed out.
Consolidated Cash Flow:
-----------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
(000 FRF) 1995 1996 %
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Consolidated Net Income before extraordinary loss 250 861 269 181
Provision for depreciation 110 724 114 753
Cash Flow 361 585 383 934 6%
of which : Group Share 225 065 258 121 15%
- -----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Employees:
----------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
31/12/1995 31/12/1996 % variation 1995/1996
Actual perimeter Constant perimeter
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
France 1 816 1 900 5% 5%
Europe 2 487 2 553 3% 4%
USA 290 278 -4% -4%
- -----------------------------------------------------------------------------------------------
TOTAL 4 593 4 731 3% 4%
- -----------------------------------------------------------------------------------------------
</TABLE>
Contingent Liabilities:
-----------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
(000 FRF) Given Received
- -----------------------------------------------------------------------------------
<S> <C> <C>
Discounted bills not yet matured 3 322
Guarantees 1 704 1 188
Hirer purchase-other lease agreements 5 753
Others 487
- -----------------------------------------------------------------------------------
TOTAL 11 266 1 188
- -----------------------------------------------------------------------------------
</TABLE>
Subsequent Events:
------------------
On February 19, 1997 Publicis and True North have reached an agreement resolving
their deep strategic devergences. Upon completion of this accord, each partner
will have its own network and the cross shareholdings will be limited to both
holdings, Publicis Communication and True North.
Under this agreement, Publicis will transfer to True North four former FCB
agencies operating in Paris, London, Lisbon and Athens and True North will be
given additional shares in Publicis Communication. In return, True North will
transfer its 49% stake in Publicis FCB Europe to Publicis Communication.
True North will then hold 26.5% of Publicis Communication (versus 20.83% at
present) and Publicis Communication will retain its 20% stake in True North.
<PAGE>
LISTE DES SOCIETES CONSOLIDEES AU 31 DECEMBRE 1996
A-SOCIETES CONSOLIDEES PAR INTEGRATION GLOBALE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Nom des Societes % Activite Pays Ville
controle
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 - Agences de publicite
PUBLICIS COMMUNICATION 100.00 Financiere France Paris
PUBLICIS CONSEIL 99.61 Publicite France Paris
FCAVB.M.Z. 100.00 Publicite France Paris
Exclamation 100.00 Publicite France Paris
Loeb et Associes 55.00 Publicite France Paris
Mundocom 100.00 Publicite France Paris
Interplans Edition 100.00 Publicite France Paris
Procis 89.40 Publicite France Paris
Publicis Direct 77.04 Publicite France Paris
Directis 77.05 Publicite France Paris
ID3d 69.88 Publicite France Paris
Extension 100.00 Publicite France Paris
Publicis Design 100.00 Publicite France Paris
Motivom 74.50 Publicite France Paris
Media System 99.67 Publicite France Paris
Guillaume Tell 80.00 Publicite France Paris
Verbe 70.00 Publicite France Paris
Publicis Hourra 80.71 Publicite France Lille
Epure 99.67 Publicite France Lille
Publicis Cachemire 66.93 Publicite France Lyon, Clermont-Ferrand
Phreas 99.00 Publicite France Lyon
2eme Communication 51.00 Publicite France Lyon
Publicis Mediterranee 100.00 Publicite France Marseille
Publicis Soleil 50.25 Publicite France Toulouse, Montpellier
Publicis Grand Angle 74.11 Publicite France Brest, Nantes, Rennes
Positif 99.80 Publicite France Brest
Publicis Grand Est/Koufra 63.32 Publicite France Nancy, Dijon, Strasbourg
Publicis Qualigraphie 93.57 Publicite France Rouen, Caen
Reseau Graphic 66.79 Publicite France Rouen
Publicis Atlantique 100.00 Publicite France Bordeaux
Expression 51.00 Publicite France Bordeaux
Racines Grand Centre 66.00 Publicite France Tours
SKT 68.78 Publicite France Paris
Exaudi 99.80 Publicite France Paris
Jacques Schu et Associes 100.00 Publicite France Paris
Hautefeuille Regions 100.00 Publicite France Lyon
Hautefeuille Mediterranee 99.85 Publicite France Nice
Hautefeuille Grenoble 100.00 Publicite France Grenoble
Hautefeuille Besancon 90.00 Publicite France Besancon
O'de Formes 76.00 Publicite France Lyon
O'REP FLB 65.00 Publicite France Lyon
Publicis Alpes 99.85 Publicite France Annecy
Publicis FCB Europe 51.00 Financiere Pays Bas Amsterdam, Paris
Publicis-FCB 100.00 Publicite Autriche Vienne
Publicis-FCB 100.00 Publicite Belgique Bruxelles
Cre-Action - Full Option 53.95 Publicite Belgique Bruxelles
Publicis-FCB Direct 100.00 Publicite Belgique Bruxelles
FCA! BMZ 100.00 Publicite Belgique Bruxelles
Publicis Trzisno Komuniciranje 100.00 Publicite Croatie Zagreb
Publicis-FCB 60.00 Publicite Republique Tcneque Prague
Publicis-FCB 100.00 Publicite Danemark Copenhague
Publicis Torma 60.03 Publicite Finlande Helsinki
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nom des Societes % controle Activite Pays Ville
<S> <C> <C> <C> <C>
FCB 100.00 Publicite France Paris
Groupe Kenya 53.00 Publicite France Paris
Kenya Institutionnel 65.00 Publicite France Paris
Empir 100.00 Publicite France Paris
Empir Media 100.00 Achat d'espaces France Paris
Publicis-FCB Communication 100.00 Financiere Allemagne Dusseldorf
B.M.Z.FCA 64.50 Publicite Allemagne Dusseldorf
More Sales 100.00 Publicite Allemagne Dusseldorf
More Media 90.00 Achat d'espaces Allemagne Dusseldorf
Publicis 100.00 Publicite Allemagne Dusseldorf
Mundocom 100.00 Publicite Allemagne Francfort
Mundo Sales 100.00 Publicite Allemagne Francfort
FCB Hamburg 98.00 Publicite Allemagne Hambourg
Optimedia 100.00 Achat d'espaces Allemagne Dusseldorf
FCB Direct Marketing 90.00 Publicite Allemagne Hambourg
Publicis Vital 90.00 Publicite Allemagne Francfort
B.R.P. 98.00 Publicite Allemagne Dusseldorf
Publicis MCD 74.90 Publicite Allemagne Erlangen, Munich
Contur 100.00 Publicite Allemagne Friedrichsdorf
Contur Identity Design 100.00 Publicite Allemagne Friedrichsdorf
Contec 100.00 Publicite Allemagne Friedrichsdorf
Sisyphos 51.00 Publicite Allemagne Berlin
Publicis Hellas Advertising 100.00 Publicite Grece Athenes
Publicis-FCB Magyarorszag 100.00 Publicite Hongrie Budapest
Publicis-FCB 100.00 Publicite Italie Milan, Rome
FCAI BMZ 100.00 Publicite Italie Milan
Optimedia Italia 100.00 Publicite Italie Milan
Overad 100.00 Financiere Pays-Bas Amsterdam
Publicis-FCB 100.00 Publicite Pays-Bas Amsterdam
Publicis-FCB Eindhoven 100.00 Publicite Pays-Bas Eindhoven
HVR Advertising 100.00 Publicite Pays-Bas La Haye
Mundocom A.A.C. 100.00 Publicite Pays-Bas Amsterdam, Eindhoven
Kern Habbema & Yap 53.00 Publicite Pays-Bas Amsterdam
Bruggenwirth, Mass & Boswinkel 52.00 Publicite Pays-Bas Amsterdam
Overad Property 100.00 Financiere Pays-Bas Amsterdam
Publicis-FCB 100.00 Publicite Norvege Oslo
Publicis-FCB Direct 91.00 Publicite Norvege Oslo
Strategic Marketing 100.00 Publicite Norvege Oslo
Basic 100.00 Publicite Norvege Oslo
Publicis-FCB Reklamebyra 95.00 Publicite Norvege Oslo
Park Reklamebyra 100.00 Publicite Norvege Oslo
Sponsor Marketing 65.00 Publicite Norvege Oslo
Publicis-FCB Polska 70.00 Publicite Pologne Varsovie
FCB Publicidade 83.00 Publicite Portugal Lisbonne
Publicis Publicidade 90.00 Publicite Portugal Lisbonne
BMZ/Park Publicidade 56.44 Publicite Portugal Lisbonne
Comunicar Publicidade e Promocao 90.00 Publicite Portugal Lisbonne
Optimedia Publicidade 93.00 Achat d'espaces Portugal Lisbonne
Publicis-FCB 100.00 Publicite Russie Moscou
Publicis Virgo Komunikacije 60.00 Publicite Slovenie Ljubijana
Publicis-FCB Arge 100.00 Publicite Espagne Madrid, Barcelone
Optimedia 98.00 Achat d'espaces Espagne Madrid
Publicis Etoile 100.00 Publicite Suede Stockholm
Publicis GRO & S 76.00 Publicite Suede Stockholm
Farner Publicis-FCB 90.00 Publicite Suisse Zurich
Bureau d'Etudes Publicitaires BEP 100.00 Publicite Suisse Lausanne
Multi Market Services 100.00 Financiere Grande-Bretagne Londres
Publicis 100.00 Publicite Grande-Bretagne Londres
FCB Advertising 100.00 Publicite Grande-Bretagne Londres
FCB Impact 100.00 Publicite Grande-Bretagne Londres
Mundocom 100.00 Publicite Grande-Bretagne Londres
Optimedia International 100.00 Publicite Grande-Bretagne Londres
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Nom des Societes % Activite Pays Ville
controle
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FCA EUROPE
FCA/BMZ International 100.00 Publicite France Paris
FCA Amsterdam 97.00 Publicite Pays Bas Amsterdam
FCA Walker 77.10 Publicite Pays Bas Amsterdam
FCA Werner & Messelink 60.00 Publicite Pays Bas Amsterdam
FCA London 100.00 Publicite Grande Bretagne Londres
FCA/BMZ CID 100.00 Publicite Espagne Madrid, Barcelone, Seville
WAM 79.76 Publicite France Paris
PUBLICIS BLOOM 96.15 Publicite Estat Unis New York, Dallas
PUBLICIS CENTRE MEDIA 100.00 Achat d'espace France Paris
PUBLICIS CONSULTANTS 100.00 Publicite France Paris
Media Finance 100.00 Publicite France Paris
Idees Dialogue Conseil 100.00 Publicite France Paris
Publicis Consultants Nederland 93.00 Publicite Pays Bas Armsterdam
B-SOCIETES CONSOLIDEES PAR MISE EN EQUIVALENCE
True North Communications 20.00 Publicite Etats-Unis Chicago
Gnomi FCB 40.00 Publicite Grece Athenes
</TABLE>
<PAGE>
[LETTERHEAD OF MAZARS & GUERARD]
We have examined the consolidated balance sheet of PUBLICIS COMMUNICATION and
subsidiaries as of December 31, 1996 and the related consolidated statements of
income, stockholders' equity and changes in financial position for the year in
the period ended December 31, 1996. These statements present a net equity (group
share) of 971.478.000 FF and a net income (group share) of 189.435.000 FF. Our
examination was made in accordance with generally accepted auditing standards
and, accordingly, include such tests of the accounting records and other
auditing procedures that we considered necessary in the circumstances.
In our opinion, the financial statements referred to above present fairly the
financial position of PUBLICIS COMMUNICATION and subsidiaries as of December 31,
1996, and the result of their operations and the changes in their financial
position for the year in the period ended December 31, 1996, in conformity with
generally accepted accounting principles applied on a consistent basis.
Paris, 17th March 1997
/s/ Frederic Allilaire /s/ Jose Marette
Frederic Allilaire Jose Marette
[LETTERHEAD OF MAZARS & GUERARD]
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Date: June 27, 1997
True North Communications Inc.
/s/ John J. Rezich
By: _________________________________
John J. Rezich
Controller (Chief Accounting
Officer)
