<PAGE>
[TRUE NORTH LOGO]
NEWS
Date: July 26, 2000
Contact: Kevin Smith: 312/425-6546
Kathryn Woods: 212/727-5582
FOR IMMEDIATE RELEASE
TRUE NORTH REPORTS HIGHER SECOND QUARTER PROFITABILITY
CHICAGO --True North Communications Inc. (NYSE: TNO)
- Q2 NET INCOME INCREASED 29% ON HIGHER ORGANIC GROWTH AND OPERATING MARGIN.
INCLUDING MODEM MEDIA ON AN EQUITY BASIS FOR BOTH PERIODS:
- Organic growth was 9.3% compared with 3.9% a year ago.
- Operating margin rose to 15.0% from 11.4%; TNO remains on track to meet
its 12% goal
- Staff cost ratio decreased to 59.0% vs. 61.4%, while other general cost
ratio fell to 26.0% vs. 27.2%.
- Q2 NET NEW BUSINESS WINS MORE THAN TRIPLED TO $537 MILLION IN EQUIVALENT
ANNUALIZED BILLINGS VS. THE SAME QUARTER A YEAR AGO. Early Compaq and
Boeing global account wins were followed by global wins from Avaya (a
Lucent spin-off) and Bristol-Myers Squibb, plus an Archer Daniels Midland
global assignment awarded to several True North agencies.
SECOND QUARTER AND 6-MONTH 2000 HIGHLIGHTS
-- RESULTS INCLUDE MODEM MEDIA ON AN EQUITY BASIS FOR ALL PERIODS
(Amounts in thousands, except per share data and percentages)
<TABLE>
<CAPTION>
------------------------------------- ---------------------------- ---------- ------------------------------- ----------
SECOND QUARTER ENDED % SIX MONTHS ENDED %
6/30/00 6/30/99 Change 6/30/00 6/30/99 Change
------------------------------------- -------------- ------------- ---------- --------------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenue $ 375,090 $ 339,609 10% $ 706,140 $ 630,672 12%
Operating Income $ 56,149 $ 38,748 45% $ 75,735 $ 50,442 50%
Net Income $ 27,090 $ 21,034 29% $ 37,250 $ 25,907(1) 44%
EPS - Diluted $ 0.54 $ 0.43 26% $ 0.74 $ 0.53 40%
Avg. Shs. Outstanding - Diluted 50,621 48,871 4% 50,535 48,235 5%
Operating Margin 15.0% 11.4% 10.7% 8.0%
------------------------------------- -------------- ------------- ---------- --------------- --------------- ----------
</TABLE>
NOTE: Results in all periods include Modem Media on an equity basis for
comparability.
Modem Media was deconsolidated in the second quarter of 2000.
(1) 1999 excludes $4,070 pre-tax gain ($2,300 after-tax or $.05 per diluted
share) on the sale of DoubleClick securities
===============================================================================
"WE'RE PLEASED THAT TRUE NORTH'S STRENGTH CONTINUED IN THE SECOND QUARTER, WITH
9.3% ORGANIC GROWTH AGAINST OUR 8% GOAL FOR THE YEAR AND SIGNIFICANT IMPROVEMENT
ON THE COST SIDE. THESE RESULTS KEEP US ON TRACK TO MEET OUR GOALS FOR 2000.
FROM A NEW BUSINESS STANDPOINT, THE SECOND QUARTER WAS A WATERSHED FOR TRUE
NORTH, WITH A NUMBER OF MAJOR GLOBAL WINS AS WELL AS COLLABORATIVE ASSIGNMENTS
THAT ENCOMPASSED MULTIPLE AGENCIES ACROSS TRUE NORTH. AND, WHILE THE SECOND
QUARTER NEW BUSINESS TOTAL WAS EXTRAORDINARY AND UNUSUAL, IT REFLECTS THE
POSITIVE MOMENTUM BUILDING THROUGHOUT TRUE NORTH."
-- David Bell, Chairman and Chief Executive Officer
===============================================================================
-MORE-
<PAGE>
[TRUE NORTH LOGO]
NEWS
Date: July 26, 2000
Contact: Kevin Smith: 312/425-6546
Kathryn Woods: 212/727-5582
FOR IMMEDIATE RELEASE
TRUE NORTH REPORTS HIGHER SECOND QUARTER PROFITABILITY
CHICAGO--TRUE NORTH COMMUNICATIONS INC. (NYSE: TNO) today reported higher
earnings for the second quarter of 2000 on higher revenue and significantly
improved operating margin. For the second quarter ended June 30, 2000, diluted
earnings per share increased 26% to $0.54 per share from $0.43 per share in
1999's second quarter, as net income rose 29% to $27.1 million compared with
$21.0 million in the year-ago quarter.
Second quarter 2000 revenue from commission and fee income rose 10% to $375.1
million from $339.6 million in last year's second quarter, excluding the
revenues of Modem Media (Nasdaq: MMPT) in last year's comparable quarter. Second
quarter 2000 organic growth increased to 9.3% compared with 3.9% in the year-ago
quarter. As noted previously, beginning with this second quarter 2000 earnings,
Modem Media has been deconsolidated in True North's financial statements and its
results are reported under the equity method. Including Modem Media, last year's
second quarter revenue was $355.7 million.
Operating income rose 45% to $56.1 million, as staff costs as a percentage of
revenues decreased to 59.0% from 61.4% a year ago. In addition, other general
expenses as a percentage of revenues decreased to 26.0% from 27.2% in the
year-ago quarter. With higher revenues, a lower staff cost ratio and a lower
general expense ratio, operating margin increased to 15.0% from 11.4% in last
year's second quarter.
Net new business wins increased to $537 million in equivalent annualized
billings, more than triple the $168 million recorded in the year-ago quarter.
David Bell, True North's Chairman and Chief Executive Officer, commented, "We're
pleased that True North's strength continued in the second quarter with 9.3%
organic growth against our 8% goal for the year and significant improvement on
the cost side. These results keep us on track to meet our goals for 2000."
Added Bell, "From a new business standpoint, the second quarter was a watershed
for True North, with a number of major global wins as well as collaborative
assignments that encompassed multiple agencies across True North. And, while the
second quarter new business total was extraordinary and unusual, it reflects the
positive momentum building throughout True North."
-MORE-
<PAGE>
2/ TRUE NORTH REPORTS HIGHER SECOND QUARTER PROFITABILITY
Kevin Smith, True North's Chief Financial Officer, noted, "We made good progress
in cost control during the second quarter, both in staff cost and general
expense cost ratios. The combination of improved cost management and solid
organic growth led to substantial improvement in operating margin. Collaboration
is also having a positive impact on operating margin, enabling us to more fully
utilize the talents of our people. It's good for our clients and for True
North."
Second quarter EBITDA (earnings before interest, taxes, depreciation and
amortization), excluding Modem Media, was $69.5 million, up 32.1% from $52.6
million in last year's second quarter. Depreciation and amortization totaled
$13.6 million in this year's second quarter, compared with $12.5 million in the
year-ago quarter.
STOCK REPURCHASES
True North's Board of Directors authorized an increase in its previously
announced $30,000,000 stock repurchase program to allow True North to make
systematic repurchases, in open market and privately negotiated transactions, of
an additional $30,000,000 in True North Common Stock. The stock repurchased
under this program would be held as treasury shares for use under the Company's
stock-based benefit programs. True North said that such purchases would be
dependent upon a number of factors, including the price and availability of True
North's shares, general market conditions and the number of shares required for
True North's stock-based benefit programs. The stock repurchase program may be
discontinued at any time.
In the first six months of 2000, True North purchased 163,000 shares at a cost
of $6.7 million. Since the program's inception, True North has purchased 885,618
shares at a cost of $26.8 million. True North has approximately 49.8 million
shares of Common Stock outstanding.
SIX-MONTH 2000 RESULTS
For the six-month period ended June 30, 2000, net income was $37.3 million or
$0.74 per diluted share, compared with net income of $25.9 million or $0.53 per
diluted share in 1999. Six-month 1999 earnings exclude the $4.1 million ($2.3
million after-tax or $0.05 per diluted share) gain on the sale of a portion of
True North's holdings in DoubleClick securities. Six-month 2000 revenues
increased 12% to $706.1 million from $630.7 million in the year-ago period; both
periods exclude the revenues of Modem Media. Including the results of Modem
Media, last year's six-month revenues were $659.1 million.
Operating income rose 50% to $75.7 million for the first six months of 2000. As
a percentage of revenue, staff costs decreased to 61.3% in the first six months
of 2000 from 63.8% in the previous six-month period, while other general
expenses were 28.0% compared with 28.2% in last year's period. Operating margin
rose to 10.7% from 8.0% in the prior six-month period. Net new business more
than tripled to a record $799 million in equivalent annualized billings, up from
$241 million for the first six months of 1999.
KEY GROWTH INITIATIVES - NEW BUSINESS
The second quarter showed strong new business momentum, as agencies across True
North continued to win important assignments from leading marketers. Earlier
this month, Advertising Age International ranked FCB Worldwide second among all
agencies in winning global and pan-regional business during the first half of
2000.
-MORE-
<PAGE>
3/ TRUE NORTH REPORTS HIGHER SECOND QUARTER PROFITABILITY
New business highlights follow.
GLOBAL PROGRESS:
In addition to Compaq and Boeing, early 2nd quarter global wins, True North
agencies continued to win key global accounts:
- The new global Lucent spin-off Avaya selected FCB Worldwide
- Bristol-Myers Squibb consolidated brands Nice `n Easy and Revitalique at
FCB New York and all hair care and hair color brands to FCB internationally
- Archer Daniels Midland awarded its global campaign to FCB Chicago
along with BSMG Worldwide and the Financial Relations Board
- Castrol selected FCB for its pan-European business
- Timberland named FCB to handle its shoes advertising across Asia Pacific
- Mercedes awarded Marketing Drive Worldwide in the U.K. to handle C-Class
promotion
- PPR Interactive, the Pinault, Printemps Redoute digital brand, chose FCB
France to relaunch its Mageos.com web site
MAJOR NEW CLIENTS:
- American Eagle Outfitters assigned its advertising to FCB Southern
California's McElroy:FCB
- IBP (Iowa Beef Processors) awarded FCB Chicago its business
- Exelon, the new Unicom energy company, selected Tierney & Partners and the
Financial Relations Board
- Van Cleef & Arpels selected Avrett Free & Ginsberg,
- The Wood is Good Consortium, the lumber industry group, chose Bozell
Chicago
EXPANDED CLIENT ASSIGNMENTS:
- Hilton Hotels parent Promus named FCB Southern California for media buying
and planning on all brands and awarded the Doubletree creative; TN Media
was chosen to buy all broadcast TV
- Verizon Wireless, the new Bell Atlantic, VodaFone Airtouch and GTE
wireless brand launch was awarded to Bozell New York
- Gatorade continued to expand internationally with FCB, naming FCB/Tapsa in
Spain
- Datek assigned Bozell New York another key brand, Island/ECN
COLLABORATION:
- R/GA Interactive collaborated with Bozell Seattle on Boeing
- BSMG Worldwide collaborated with FCB Chicago to be named agency for INEXTV.com
- BSMG worked with FCB Chicago to gain SC Johnson assignments for Glade and
Pledge brands
- Marketing Drive Chicago worked with Bozell New York to gain Excedrin brand
promotions
- SixtyFootSpider collaborated with Bozell New York to win Jergens interactive
work
- New America Strategies Group agency SiboneyUSA collaborated with FCB New York
to win a Chase Manhattan Bank assignment
-MORE-
<PAGE>
4/ TRUE NORTH REPORTS HIGHER SECOND QUARTER PROFITABILITY
KEY GROWTH INITIATIVES - STRENGTHENING TRUE NORTH GLOBAL OFFERINGS
True North and its agencies undertook a number of growth initiatives in the
second quarter that focused further on building strong global brands. To that
end, True North agencies realigned in several high growth areas -- direct,
database, digital and healthcare:
- FCBWW unveiled a new global brand offering: FCBi. It integrated the
agency's rapidly growing FCB Direct and FCB Digital capabilities worldwide
along with its new database offering - reflecting FCB's vision for the
seamless integration of its services and the central role that customer
relationship management will play in communications.
- FCB also launched its new database services brand, ANALYTICi, providing a
powerful new resource to FCB and other True North companies. The group,
headquartered in New York with offices in London, provides end-to-end
database solutions for customer relationship management.
- True North's healthcare holdings were realigned to create a stronger
competitive offering. FCB Healthcare became the lead healthcare global
agency, better positioning it to serve global pharmaceutical clients; it
also became the dominant West Coast healthcare agency. True North's
interactive healthcare and medical education units were combined. Bozell
Global Healthcare continued as a leading U.S.-based healthcare unit with a
strong, competitive client roster.
True North also continued the aggressive expansion of its global non-traditional
brands BSMG Worldwide and Marketing Drive Worldwide through acquisitions and
internal combinations:
- True North acquired several international public relations firms on behalf
of BSMG Worldwide in key markets in Europe and Asia:
GJW - London, Edinburgh, Cardiff, Brussels, Budapest and
Prague.
Lyons Waddell - London
Scotchbrook Communications - Hong Kong, Singapore and Malaysia
- True North strengthened Marketing Drive Worldwide, its global marketing
services brand, by combining FCB Impact's sales promotion agency in Chicago
and San Juan, Puerto Rico under the Marketing Drive banner.
Earlier this month, the company acquired EMP, a promotional event
marketing firm based in Santa Monica, CA., as part of Marketing Drive.
The agreement grew out of shared key client relationships.
-MORE-
<PAGE>
5/ TRUE NORTH REPORTS HIGHER SECOND QUARTER PROFITABILITY
ABOUT TRUE NORTH
True North Communications (NYSE: TNO) is a top global advertising and
communications holding company. It has three major global brands: FCB Worldwide,
advertising; BSMG Worldwide, public relations; and Marketing Drive Worldwide,
marketing services. True North also has strong set of U.S. brands: Bozell Group,
New America Strategies Group, Temerlin McClain, Tierney & Partners and TN Media.
In the digital area, True North's portfolio of brands includes R/GA Interactive,
SixtyFootSpider and Stein Rogan + Partners. Based in Chicago, True North had
1999 revenues of approximately $1.4 billion and annual billings of more than $14
billion.
CAUTIONARY STATEMENT
Certain statements contained in this press release may constitute
"forward-looking statements" within the meaning of Section 21E(i)(1) of the
Securities Exchange Act of 1934. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause True North's
actual results to be materially different from any future results expressed or
implied by these statements. Such factors include the following: general
economic and business conditions, changes in competition, the ability of True
North to continue to improve its cost management, the ability to attract new
clients, the ability of True North to integrate acquisitions or complete future
acquisitions, interest rate fluctuations, dependence upon and availability of
qualified personnel and changes in government regulation. In light of these and
other uncertainties, the forward-looking statements included in this document
should not be regarded as a representation by True North that True North's plans
and objectives will be achieved.
##
(FINANCIAL TABLES FOLLOW)
<PAGE>
TRUE NORTH COMMUNICATIONS INC.
OPERATIONS ANALYSIS
QUARTER ENDED JUNE 30,
<TABLE>
<CAPTION>
2000 1999 2000 OPERATIONS
------------------------------- ------------------------------------ B/(W) 1999 OPERATIONS
DECONSOLIDATE ---------------------
OPERATIONS UNUSUAL EXTERNAL OPERATIONS MODEM EXTERNAL $ %
---------- ------- -------- ---------- ------------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 375,090 $ - $375,090 $ 339,609 $ 16,043 $355,652 $35,481 10.4%
---------- ------- -------- --------- ------------- -------- ---------
Operating Expenses:
Salaries and other employee benefits 221,277 - 221,277 208,421 8,995 217,416 (12,856) -6.2%
Office and general expenses 97,664 - 97,664 92,440 5,820 98,260 (5,224) -5.7%
Restructuring and other charges - - - - - - - n/a
---------- ------- -------- --------- ------------- -------- ---------
Total operating expenses 318,941 - 318,941 300,861 14,815 315,676 (18,080) -6.0%
---------- ------- -------- --------- ------------- -------- ---------
Operating Income 56,149 - 56,149 38,748 1,228 39,976 17,401 44.9%
Other Income (Expense) (3,203) - (3,203) (2,762) 504 (2,258) (441) -16.0%
---------- ------- -------- --------- ------------- -------- ---------
Pretax Income 52,946 - 52,946 35,986 1,732 37,718 16,960 47.1%
Provision for Income Taxes 22,432 - 22,432 15,311 1,101 16,412 (7,121) -46.5%
---------- ------- -------- --------- ------------- -------- ---------
30,514 - 30,514 20,675 631 21,306 9,839 47.6%
Minority Interest Expense (911) - (911) (756) 4 (752) (155) -20.5%
Equity Income (2,513) - (2,513) 1,115 (635) 480 (3,628) -325.4%
---------- ------- -------- --------- ------------- -------- ---------
Net Income $ 27,090 $ - $ 27,090 $ 21,034 $ - $ 21,034 $ 6,056 28.8%
========== ======= ======== ========= ============= ======== =========
Basic Earnings Per Share $ 0.55 $ - $ 0.55 $ 0.45 $ - $ 0.45 $ 0.10 22.2%
========== ======= ======== ========= ============= ======== =========
Dilutive Earnings Per Share $ 0.54 $ - $ 0.54 $ 0.43 $ - $ 0.43 $ 0.11 25.6%
========== ======= ======== ========= ============= ======== =========
Operating Margin 15.0% 15.0% 11.4% 11.2%
Average Shares O/S - Basic 49,401 49,401 47,296 47,296
Average Shares O/S - Diluted 50,621 50,621 48,871 48,871
</TABLE>
<PAGE>
TRUE NORTH COMMUNICATIONS INC.
OPERATIONS ANALYSIS
YEAR ENDED JUNE 30,
<TABLE>
<CAPTION>
2000 1999 2000 OPERATIONS
--------------------------------- ------------------------------------------- B/(W) 1999 OPERATIONS
DECONSOLIDATE DECONSOLIDATE ---------------------
OPERATIONS MODEM EXTERNAL OPERATIONS UNUSUAL MODEM EXTERNAL $ %
---------- ------------- -------- ---------- ------- ------------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 706,140 $ 28,538 $734,678 $ 630,672 $ - $ 28,426 $659,098 $ 75,468 12.0%
---------- ------------- -------- ---------- ------- ------------- -------- ----------
Operating Expenses:
Salaries and other employee
benefits 432,781 17,851 450,632 402,400 - 17,480 419,880 (30,381) -7.5%
Office and general expenses 197,624 13,628 211,252 177,830 - 10,405 188,235 (19,794) -11.1%
Restructuring and other charges - - - - - - - - n/a
---------- ------------- -------- ---------- ------- ------------- -------- ----------
Total operating expenses 630,405 31,479 661,884 580,230 - 27,885 608,115 (50,175) -8.6%
---------- ------------- -------- ---------- ------- ------------- -------- ----------
Operating Income 75,735 (2,941) 72,794 50,442 - 541 50,983 25,293 50.1%
Other Income (Expense) (6,212) 544 (5,668) (5,813) 4,070(a) 841 (902) (399) -6.9%
---------- ------------- -------- ---------- ------- ------------- -------- ----------
Pretax Income 69,523 (2,397) 67,126 44,629 4,070 1,382 50,081 24,894 55.8%
Provision for Income Taxes 27,932 597 28,529 18,745 1,770 1,270 21,785 (9,187) -49.0%
---------- ------------- -------- ---------- ------- ------------- -------- ----------
41,591 (2,994) 38,597 25,884 2,300 112 28,296 15,707 60.7%
Minority Interest Expense (956) 1,569 613 (726) - (53) (779) (230) -31.7%
Equity Income (3,385) 1,425 (1,960) 749 - (59) 690 (4,134) -551.9%
---------- ------------- -------- ---------- ------- ------------- -------- ----------
Net Income $ 37,250 $ - $ 37,250 $ 25,907 $ 2,300 $ - $ 28,207 $ 11,343 43.8%
========== ============= ======== ========== ======= ============= ======== ==========
Basic Earnings Per Share $ 0.76 $ - $ 0.76 $ 0.55 $ 0.05 $ - $ 0.60 $ 0.21 38.2%
========== ============= ======== ========== ======= ============= ======== ==========
Dilutive Earnings Per Share $ 0.74 $ - $ 0.74 $ 0.53 $ 0.05 $ - $ 0.58 $ 0.21 39.6%
========== ============= ======== ========== ======= ============= ======== ==========
Operating Margin 10.7% 9.9% 8.0% 7.7%
Average Shares O/S - Basic 49,170 49,170 46,637 46,637
Average Shares O/S - Diluted 50,535 50,535 48,235 48,235
</TABLE>
(a) REPRESENTS A GAIN ON THE SALE OF DOUBLECLICK SHARES.
