(Adds details, executive comment)
NEW YORK, Nov 19 (Reuters) - Interpublic Group of Cos , the world's No. 2 advertising company, said on Tuesday the Securities and Exchange Commission is conducting an informal inquiry into its $181.3 million earnings restatement.
The company also released the full details of its third-quarter results after providing only perfunctory earnings and revenues data last week. Interpublic, home to agencies like McCann-Erickson and clients such as General Motors Corp. and Coca-Cola Co. , took a five-day extension to finalize the effects of the restatement.
After a costly investigation that included several law and accounting firms, Interpublic said it has determined that $101 million in intercompany charges at McCann, mostly in Europe, were improperly expensed. The remainder of the restatement came from understated liabilities and other items at various Interpublic units.
The company said its third-quarter profit totaled $7.5 million, or 2 cents per share, compared with a loss of $481.1 million or $1.30 per share in the year-earlier period. The year-ago loss was due to large charges for restructuring and impairment of goodwill.
The third-quarter profit fell well short of the 8 cents per share that Interpublic gave as guidance last month, and that Wall Street expected.
"Results for the third quarter are unacceptable," Chief Financial Officer Sean Orr said in a statement.
The company said it no longer expects to meet its previous earnings target of 85 to 90 cents per share for the full year, due to its "poor third-quarter performance, an uncertain revenue outlook" and higher operating costs at McCann. Analysts on average expected 80 cents for the year, according to research firm Thomson First Call.
Interpublic's third-quarter revenues fell to $1.50 billion from $1.62 billion a year ago. Domestic revenue fell 7.2 percent to $851.7 million, and international revenue fell 7.6 percent to $650.5 million.
The company's organic revenue growth, which excludes the effects of recent acquisitions, fell 5.2 percent. Interpublic's net new business wins, which includes newly won accounts and increased spending from existing clients, totaled $730.2 million.
Interpublic said it is assessing strategic alternatives for its troubled Octagon Motor Sports unit, which includes several racetracks and runs the British Formula One Grand Prix. The unit posted a loss of 6 cents per share in the third quarter, and Interpublic expects it to show a 15 cent to 20 cent per share loss for the full year.