FCB TO RESTRUCTURE KRUPP/TAYLOR OPERATION
FCB TO RESTRUCTURE KRUPP/TAYLOR OPERATION CHICAGO, Dec. 6 /PRNewswire/ -- Foote, Cone & Belding
Communications, Inc. (NYSE: FCB) announced that its board of directors today approved a plan to restructure Krupp/TaylorUSA, its Los Angeles- based direct marketing operation, and to recognize anticipated losses to sublet excess office space.
Financial results at Krupp/Taylor, a direct marketing and direct mail subsidiary of FCB, have been disappointing as revenues have fallen short of expectations. FCB has completed an extensive review of all aspects of the Krupp/Taylor operation. This evaluation indicated the need to significantly reduce costs, which FCB has aggressively pursued, and to refocus Krupp/Taylor's sales and marketing efforts. In addition, there is an opportunity to take advantage of operating synergies between Krupp/Taylor and FCB/Los Angeles. As a result of the restructuring efforts, FCB will record a fourth quarter charge related to the write-off of Krupp/Taylor goodwill, anticipated losses from subleasing excess space, as well as severance and other costs of the restructuring. The final amount of these charges is currently being determined, but is expected to be in the area of $27 million on an after-tax basis. Approximately $16 million of this amount is due to the write-off of the remaining goodwill balance from the Krupp/Taylor acquisition. Bruce Mason, FCB chairman & CEO, explained, "We remain fully committed to direct marketing in general and to Krupp/Taylor in particular. These changes will position Krupp/Taylor to be a more effective and cost-efficient provider of direct marketing services to current and future clients. We will in no way reduce the quality or level of service to our Krupp/Taylor clients." FCB also announced that it will take a fourth quarter charge for anticipated losses on subleasing excess office space in New York. The excess space is the result of sublessees' premature terminations of previously executed sublease agreements at FCB's New York operations. Additionally, FCB adjusted accruals for future benefits payable to retired employees, primarily in the New York operations. The costs of New York lease accruals and adjustments to deferred compensation accruals will be roughly $9 million. The total impact of these charges is expected to be approximately $36 million or about $3.40 per share. For the nine months ended Sept. 30, 1991, FCB reported net income of $10.1 million or $.96 per share. In commenting on the financial implications of the write-downs, Terry Ashwill, FCB chief financial officer, said "These charges are certainly significant; however, none of these will require incremental cash commitments, nor reduce cash flow, nor impact our dividends to shareholders. All other FCB operations are financially sound and their health and vitality are unaffected by this accounting event." Foote, Cone & Belding ranks as the seventh largest worldwide advertising company and the third largest agency in the U.S. Its network includes 176 offices in 40 countries, with worldwide billings, including Publicis-FCB European operations, totaling more than $5 billion. -0- 12/6/91 /CONTACT: Terry Ashwill, 312-751-7002, or Gina Greer, 312-751-3520, both of Foote, Cone & Belding Communications/ (FCB) CO: Foote, Cone & Belding Communications, Inc.; Krupp/TaylorUSA ST: Illinois, California IN: ADV SU: SH -- NY049 -- 0163 12/06/91 14:19 EST
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|Date:||Dec 6, 1991|
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