NEW YORK: The Interpublic Group of Companies is preparing to restate financial results dating back to 1997, after uncovering $68.5 million in charges that had not been properly reported.
The charges relate to the way IPG's McCann-Erickson advertising network had reported inter-company sales in Europe, and IPG will now review its accounting procedures and financial staff in its European operations.
The news came as IPG, which also owns Weber Shandwick Worldwide, said profits for the second quarter turned out lower than anticipated. It reported an operating profit of $238.5 million, a drop of 1.3% from $241.7 million for the same period in 2001.
The operating margin dropped from 16.1% to 14.8% for the quarter.
In a statement, IPG said that the charges did not have any effect on the company's cash position, with CEO John Dooner saying, "The restating will have no impact on the company's operating performance going forward."
Shares in IPG closed down 5.23% on the New York Stock Exchange on Tuesday night at $15.78, before the restatement announcement. In after-hours trading, shares hit a low of $14.30, before rebounding to $15.79.
Overall revenue for the most recent quarter, which ended June 30, was down by 8.4% to $1.61 billion.