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FOR IMMEDIATE RELEASE
Contact: Kathryn Woods, True North 212-727-5582
TRUE NORTH FINALIZES DAIMLERCHRYSLER
TRANSITION AGREEMENT
MANAGEMENT COMFORTABLE WITH 2001 OUTLOOK DESPITE Q4 CHARGE
CHICAGO January 4, 2001 - True North Communications Inc. (NYSE: TNO) announced
today that the company recently reached an agreement with DaimlerChrysler
Corporation and Omnicom's PentaMark Worldwide Inc. subsidiary regarding the
transition of True North's portion of the Chrysler Group advertising account,
which was shifted following a review concluded in November.
As a result of the agreement, which facilitates the quick transition of the
account, True North has agreed to terminate its existing client contract
effective January 1, 2001. DaimlerChrysler has agreed to make payments in 2001
to True North of approximately $13 million for its assistance in the account
transition and other obligations and to compensate for income that would have
been earned if the former contract had stayed in effect through the contractual
notice period (May 3, 2001). In addition, True North will be compensated by
DaimlerChrysler for a portion of its severance and other exit costs, and Omnicom
and its PentaMark unit will assume various lease obligations and acquire certain
fixed assets formerly used by True North to service the Chrysler account.
True North said that, while these agreements were helpful, they would not
completely offset the costs associated with winding down the service to
Chrysler. The company said that it would take a Q4 restructuring charge in the
range of $17 million - $20 million or between $0.19 - $0.23 per share, according
to Kevin Smith, True North's Chief Financial Officer.
Smith added that the Q4 charge was solely related to the resolution of the
Chrysler account shift. He noted that True North's management remains
comfortable with consensus estimates for 2001, assuming other corporate plans
related to Modem Media stay on track.
David Bell, Chairman and CEO of True North, commented, "We've sought to balance
a swift and non-contentious account transition and our shareholder interests so
that we can move ahead. With the transition agreement in place, we are now
focused on the year ahead. And, given the strong momentum of our agency brands,
we're comfortable with the outlook for 2001."
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,
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marketing services. In addition, True North has strong set of brands including
Bozell Group, New America Strategies Group, R/GA Interactive, Temerlin McClain,
Tierney Communications and TN Media. True North also has a stake in the
expanding German-based advertising agency, Springer & Jacoby. 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 or divestitures, 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.
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