10-Q 1 e10-q.txt GREY GLOBAL GROUP INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended June 30, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-7898 GREY GLOBAL GROUP INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 13-0802840 ---------------------------------------- -------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 777 Third Avenue, New York, New York 10017 ------------------------------------ ------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 212-546-2000 ------------------
NOT APPLICABLE ------------------ Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --------- --------- As of July 31, 2000, the total number of shares outstanding of Registrant's Common Stock, par value $0.01 per share ("Common Stock"), was 1,011,919 and of Registrant's Limited Duration Class B Common Stock, par value $0.01 per share ("Class B Common Stock"), was 229,096. 2 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES INDEX
PAGE NO. -------- Financial Statements: Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Operations 5 Condensed Consolidated Statements of Cash Flows 6 Notes to Condensed Consolidated Financial Statements 8 Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Other Information 13 Signatures 14 Index to Exhibits 15
2 3 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31, 2000 1999 (in thousands, except share and per share data) (UNAUDITED) (A) ----------------------------------------------- ------------------------- ------------------------- ASSETS Current assets: Cash and cash equivalents $ 140,073 $ 306,556 Marketable securities 4,568 5,581 Accounts receivable 1,043,948 940,612 Expenditures billable to clients 81,191 51,991 Other current assets 114,833 93,207 ------------------------- ------------------------- Total current assets 1,384,613 1,397,947 Investments in and advances to nonconsolidated affiliated companies 17,971 17,961 Fixed assets-at cost, less accumulated depreciation of $168,540 in 2000 and $158,370 in 1999 140,777 126,939 Marketable securities 19,357 22,429 Intangibles-net of accumulated amortization of $50,658 in 2000 and $42,818 in 1999 174,440 157,115 Other assets-including loans to executive officers of $5,247 in 2000 and 1999 101,148 86,863 ------------------------- ------------------------- Total assets $ 1,838,306 $ 1,809,254 ========================= =========================
See accompanying notes to condensed consolidated financial statements. (A) The condensed consolidated balance sheet has been derived from the audited financial statements at that date. 3 4 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
JUNE 30, DECEMBER 31, 2000 1999 (in thousands, except share and per share data) (UNAUDITED) (A) ----------------------------------------------- -------------------- ------------------------- LIABILITIES AND COMMON STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,211,935 $ 1,161,508 Notes payable to banks 74,602 68,500 Accrued expenses and other 185,184 208,254 Income taxes payable 15,233 16,572 -------------------- ------------------------- Total current liabilities 1,486,954 1,454,834 Other liabilities, including deferred compensation of $48,164 in 2000 and $44,160 in 1999 71,808 75,260 Long-term debt 78,025 78,025 Minority interest 20,063 19,620 Redeemable Preferred Stock-at redemption value; par value $0.01 per share in 2000 and $1 per share in 1999; authorized 500,000 shares; issued and outstanding 30,000 shares in 2000 and 1999 101 10,150 Common stockholders' equity: Common Stock- par value $0.01 per share in 2000 and $1 per share in 1999; authorized 50,000,000 shares in 2000 and 10,000,000 shares in 1999; issued 1,234,488 shares in 2000 and 1,228,534 shares in 1999 12 1,229 Limited Duration Class B Common Stock-par value $0.01 per share in 2000 and $1 per share in 1999; authorized 10,000,000 shares in 2000 and 2,000,000 shares in 1999; issued 256,133 shares in 2000 and 261,224 shares in 1999 3 261 Paid-in additional capital 52,095 39,763 Retained earnings 199,360 191,042 Accumulated other comprehensive loss: Cumulative translation adjustment (20,610) (15,462) Unrealized loss on marketable securities (2,783) (141) -------------------- ------------------------- Total accumulated other comprehensive loss (23,393) (15,603) -------------------- ------------------------- Loans to officer used to purchase Common Stock and Limited Duration Class B Common Stock (4,726) (4,726) -------------------- ------------------------- 223,351 211,966 Less-cost of 220,896 and 218,514 shares of Common Stock and 26,937 and 26,937 shares of Limited Duration Class B Common Stock held in treasury in 2000 and 1999, respectively 41,996 40,601 -------------------- ------------------------- Total common stockholders' equity 181,355 171,365 -------------------- ------------------------- Total liabilities and common stockholders' equity $ 1,838,306 $ 1,809,254 ==================== =========================
See accompanying notes to condensed consolidated financial statements. (A) The condensed consolidated balance sheet has been derived from the audited financial statements at that date. 4 5 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED JUNE 30, JUNE 30, (in thousands, except share and per share data) 2000 1999 2000 1999 ----------------------------------------------- -------------------------------------------------------------------------------- Commissions and fees $ 306,375 $ 260,953 $ 595,083 $ 488,860 Expenses: Salaries and employee related expenses 197,273 176,445 384,677 328,080 Office and general expenses 95,079 84,037 184,575 157,252 -------------------------------------------------------------------------------- 292,352 260,482 569,252 485,332 -------------------------------------------------------------------------------- 14,023 471 25,831 3,528 Other income-net 1,262 348 2,413 1,308 -------------------------------------------------------------------------------- Income of consolidated companies before taxes on income 15,285 819 28,244 4,836 Provision for taxes on income 7,921 6,000 14,832 9,000 -------------------------------------------------------------------------------- Income (loss) of consolidated companies 7,364 (5,181) 13,412 (4,164) Minority interest applicable to consolidated companies (2,206) (1,244) (3,564) (2,431) Equity in earnings (losses) of nonconsolidated affiliated companies 567 (204) 1,031 73 -------------------------------------------------------------------------------- Net income (loss) $ 5,725 $ (6,629) $ 10,879 $ (6,522) ================================================================================ Weighted average number of common shares outstanding Basic 1,227,542 1,239,718 1,230,587 1,238,705 Diluted 1,342,343 1,239,718 1,342,460 1,238,705 Earnings (loss) per common share Basic $4.67 ($4.93) $8.78 ($4.73) Diluted $4.29 ($4.93) $8.10 ($4.73) Dividends per common share $1.00 $1.00 $2.00 $2.00 ================================================================================
See accompanying notes to condensed consolidated financial statements. 5 6 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, (in thousands, except share and per share data) 2000 1999 ---------------------------------------------- ---------------------------------------------------- OPERATING ACTIVITIES Net income (loss) $ 10,879 $ (6,522) Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: Depreciation and amortization of fixed assets 18,152 15,893 Amortization of intangibles 5,598 4,960 Deferred compensation 6,008 490 Equity in (earnings) losses of nonconsolidated affiliated companies, net of dividends received of $12 in 2000 and $162 in 1999 (1,019) 89 Loss (gain) from the sale of marketable securities 96 (8) Minority interest applicable to consolidated companies 3,564 2,431 Restricted stock expense 564 262 Deferred income taxes (1,200) 586 Changes in operating assets and liabilities (138,172) (14,345) ---------------------------------------------------- Net cash (used in) provided by operating activities (95,530) 3,836 INVESTING ACTIVITIES Purchases of fixed assets (36,456) (23,494) Trust fund deposits (1,936) (2,054) Decrease (increase) in investments in and advances to nonconsolidated affiliated companies 1,009 (1,635) Purchases of marketable securities (2,741) (379) Proceeds from the sale of marketable securities 1,900 44,603 Purchases of investment securities (14,296) - Increase in intangibles, primarily goodwill (22,923) (15,355) ---------------------------------------------------- Net cash (used in) provided by investing activities (75,443) 1,686
6 7 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, (in thousands, except share and per share data) 2000 1999 ----------------------------------------------- ----------------------------------------------------- FINANCING ACTIVITIES Net proceeds from short-term borrowings 11,579 9,970 Common shares acquired for treasury (1,621) (98) Cash dividends paid on common shares (2,485) (2,491) Cash dividends paid on redeemable Preferred Stock (120) (120) Issuance restricted stock 7 12 Proceeds from exercise of stock options 188 751 ----------------------------------------------------- Net cash provided by financing activities 7,548 8,024 Effect of exchange rate changes on cash (3,058) (7,457) ----------------------------------------------------- (Decrease) Increase in cash and cash equivalents (166,483) 6,089 Cash and cash equivalents at beginning of period 306,556 153,816 ----------------------------------------------------- Cash and cash equivalents at end of period $ 140,073 $ 159,905 =====================================================
See accompanying notes to condensed consolidated financial statements. 7 8 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data) 1. As permitted by the Securities and Exchange Commission, the accompanying unaudited Consolidated Financial Statements and Notes thereto have been condensed and, therefore, do not contain all disclosures required by generally accepted accounting principles. Reference should be made to the Company's Annual Report on Form 10-K for the year ended December 31, 1999 filed with the Securities and Exchange Commission. 2. The financial statements as of June 30, 2000 and for the three and six months ended June 30, 2000 and 1999 are unaudited. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. 3. The results of operations for the three and six months ended June 30, 2000 are not necessarily indicative of the results to be expected for the full year. 4. The provision for taxes on income results in an effective tax rate that is greater than the Federal statutory rate principally due to state and local income taxes and an effective foreign tax rate in excess of the Federal statutory rate and, in 1999, the non-recognition of tax benefits of certain international net operating losses. 5. As of June 30, 2000 and December 31, 1999, the Company had outstanding 20,000 shares of Series I Preferred Stock, and 5,000 shares each of its Series II and Series III Preferred Stock. The holder of these shares is the Chairman and Chief Executive Officer of the Company. Each share of Preferred Stock is to be redeemed by the Company at a price equal to the book value per share attributable to one share of Common Stock and one share of Class B Common Stock (subject to certain adjustments) upon redemption, less a fixed discount established upon the issuance of the Preferred Stock. The holder of each class of Preferred Stock is entitled to receive cumulative preferential dividends at the annual rate of $.25 per share, and to participate in dividends on one share of the Common Stock and one share of the Class B Common Stock to the extent such dividends exceed the per share preferential dividend. The redemption date for the Series I, Series II and Series III Preferred Stock is fixed at April 7, 2004. 6. The computation of basic earnings per common share is based on the weighted average number of common shares outstanding and, for diluted earnings per common share, is adjusted for the dilutive effect, if any, of the assumed exercise of dilutive stock options, shares issuable pursuant to the Company's Senior Management Incentive Plan and the assumed conversion of the Company's 8 1/2% Convertible Subordinated Debentures. For the purpose of computing basic earnings per common share, the Company's net income is adjusted by dividends paid on the Company's Preferred Stock and by the change in redemption value of the Company's Preferred Stock during the period. For the purpose of computing diluted earnings per common share, net income is also adjusted by the interest savings, net of tax, on the assumed conversion of the Company's 8 1/2% Convertible Subordinated Debentures. Additionally, in computing diluted earnings per common share, the average quarterly market price is used to determine the number of shares which would be assumed to be repurchased. The market price for a share of Class B Common Stock, which is not publicly traded, is deemed to be equal to the market price 8 9 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (in thousands, except share and per share data) of a share of Common Stock, into which a share of Class B Common Stock may be converted at the option of the holder, as of the date such valuation is made. The following table shows the amounts effecting income used in computing earnings per common share ("EPS") and the weighted average number of shares of dilutive potential common stock:
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED JUNE 30, JUNE 30, ---------------------------------------------------------------------- 2000 1999 2000 1999 ---------------------------------------------------------------------- BASIC EARNINGS (LOSS) PER ------------------------- COMMON SHARE ------------ WEIGHTED AVERAGE SHARES 1,227,542 1,239,718 1,230,587 1,238,705 ----------------------- ---------------------------------------------------------------------- Net income (loss) $ 5,725 $ (6,629) $ 10,879 $ (6,522) Effect of dividend requirements and the change in redemption value of redeemable preferred stock 5 521 (77) 661 ---------------------------------------------------------------------- NET EARNINGS (LOSS) USED IN COMPUTATION $ 5,730 $ (6,108) $ 10,802 $ (5,861) ---------------------------------------------------------------------- PER SHARE AMOUNT $4.67 ($4.93) $8.78 ($4.73) ====================================================================== DILUTED EARNINGS (LOSS) PER --------------------------- COMMON SHARE ------------ Weighted average shares used in the Basic EPS calculation 1,227,542 1,239,718 1,230,587 1,238,705 Net effect of dilutive stock options and stock incentive plans (2) 63,673 - (1) 60,745 - (1) Assumed conversion of 8.5% convertible subordinated debentures 51,128 - (1) 51,128 - (1) ---------------------------------------------------------------------- ADJUSTED WEIGHTED AVERAGE SHARES 1,342,343 1,239,718 1,342,460 1,238,705 ---------------------------------------------------------------------- Net earnings (loss) used in the Basic EPS calculation $ 5,730 $ (6,108) $10,802 $ (5,861) 8.5% convertible subordinated debentures interest net of income tax effect 35 - (1) 71 - (1) ---------------------------------------------------------------------- NET EARNINGS (LOSS) USED IN COMPUTATION $ 5,765 $ (6,108) $ 10,873 $ (5,861) ---------------------------------------------------------------------- PER SHARE AMOUNT $4.29 ($4.93) $8.10 ($4.73) ======================================================================
(1) For the three and six months ended June 30, 1999, the assumed exercise of stock options, issuances under stock incentive plans and the assumed conversion of the 8 1/2% Convertible Subordinated Debentures each had an anti-dilutive effect. As such, these items have been excluded from the diluted EPS calculation for the period. (2) Includes 15,723 and 15,411 shares expected to be issued pursuant to the Senior Management Incentive Plan for the three and six months ended June 30, 2000, respectively. Due to their anti-dilutive effect, shares expected to be issued pursuant to the Senior Management Incentive Plan for the three and six months ended June 30, 1999 were not included in the calculation. 7. During the second quarter of 2000 and 1999, total comprehensive income amounted to $639 and total comprehensive loss amounted to $9,882, respectively and for the six months ended June 30, 2000 and 1999 total comprehensive income was $3,089 and total comprehensive loss was $10,937, respectively. The difference between net income and total comprehensive income is the result of the change in the translated value of the net assets of the Company's international operations due to the change in value of the United States Dollar versus other currencies. 9 10 8. The Company is not engaged in more than one industry segment. The Company evaluates performance by geographic region based on profit or loss before income taxes. Commissions and fees are attributed to the geographic region that generates the billings. Commissions and fees, operating profit, and income of consolidated companies before taxes on income for the three and six months ended June 30, 2000 and 1999, and related identifiable assets at June 30, 2000 and December 31, 1999 are summarized below according to geographic region:
For the Three Months Ended June 30, ------------------------------------------------------------------------------ United States Europe ----------------------------------- ------------------------------------- 2000 1999 2000 1999 ----------------- ----------------- ----------------- ------------------- Commissions and fees $ 137,144 $ 106,251 $ 126,765 $ 128,207 ----------------- ----------------- ----------------- ------------------- Operating profit (loss) 4,203 1,025 5,725 3,738 ----------------- ----------------- ----------------- ------------------- Income (loss) of consolidated companies before taxes on income 5,301 1,605 5,778 3,998 ----------------- ----------------- ----------------- ------------------- Identifiable assets Investments in and advances to non- consolidated affiliated companies Total assets For the Three Months Ended June 30, ------------------------------------- ---------------------------------------- Other Consolidated ------------------------------------- ---------------------------------------- 2000 1999 2000 1999 ----------------- ------------------- -------------------- ------------------- Commissions and fees $ 42,466 $ 26,495 $ 306,375 $ 260,953 ----------------- ------------------- -------------------- ------------------- Operating profit (loss) 4,095 (4,292) 14,023 471 ----------------- ------------------- -------------------- ------------------- Income (loss) of consolidated companies before taxes on income 4,206 (4,784) 15,285 819 ----------------- ------------------- -------------------- ------------------- Identifiable assets Investments in and advances to non- consolidated affiliated companies Total assets
For the Six Months Ended June 30, ------------------------------------------------------------------------------ United States Europe ----------------------------------- ------------------------------------- 2000 1999 2000 1999 ----------------- ----------------- ----------------- ------------------- Commissions and fees $ 265,454 $ 205,368 $ 252,736 $ 234,634 ----------------- ----------------- ----------------- ------------------- Operating profit (loss) 9,881 6,546 13,566 5,796 ----------------- ----------------- ----------------- ------------------- Income (loss) of consolidated companies before taxes on income 13,183 8,703 12,662 5,718 ----------------- ----------------- ----------------- ------------------- Identifiable assets 736,442 796,657 815,360 752,662 ----------------- ----------------- ----------------- ------------------- Investments in and advances to non- consolidated affiliated companies Total assets For the Six Months Ended June 30, ---------------------------------------------------------------------------------- Other Consolidated ----------------------------------- ------------------------------------------ 2000 1999 2000 1999 ----------------- ----------------- ---------------------- ------------------- Commissions and fees $ 76,893 $ 48,858 $ 595,083 $ 488,860 ----------------- ----------------- ---------------------- ------------------- Operating profit (loss) 2,384 (8,814) 25,831 3,528 ----------------- ----------------- ---------------------- ------------------- Income (loss) of consolidated companies before taxes on income 2,399 (9,585) 28,244 4,836 ----------------- ----------------- ---------------------- ------------------- Identifiable assets 268,533 241,974 1,820,335 1,791,293 ----------------- ----------------- Investments in and advances to non- consolidated affiliated companies 17,971 17,961 ---------------------- ------------------- Total assets $ 1,838,306 $ 1,809,254 ====================== ===================
10 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (CONTINUED) (in thousands, except share and per share data) RESULTS OF OPERATIONS Income from commissions and fees ("gross income") increased 17.4% during the second quarter of 2000 and 21.7% during the six months ended June 30, 2000 when compared to the same periods in 1999. Absent exchange rate fluctuations, gross income increased 22.5% in the three months ended June 30, 2000 and 26.7% in the six months ended June 30, 2000 when compared to the same periods in 1999. In the second quarters of 2000 and 1999, respectively, 44.8% and 40.7% of consolidated gross income was attributable to domestic operations and 55.2% and 59.3% to international operations. In the second quarter of 2000 and the first six months of 2000, respectively, gross income from domestic operations increased 29.1% and 29.3% versus the respective prior periods, while gross income from international operations increased 9.4%, (18.0% absent exchange rate fluctuations) for the second quarter of 2000 and 16.3% (24.8% absent exchange rate fluctuations) for the first six months of 2000 when compared to the same periods in 1999. The increase in gross income primarily resulted from the impact of new business and the continued growth of the Company's media and marketing communications operations, and from acquired operations. Salaries and employee related expenses increased 11.8% in the second quarter of 2000 and 17.3% for the first six months of 2000 when compared to the respective prior periods. Office and general expenses increased 13.1% and 17.4% for the three and six months ended June 30, 2000 versus the comparable prior periods. These increases are slightly less but generally in line with the growth in gross income. Inflation did not have a material effect on revenue or expenses during 2000 or 1999. Minority interest applicable to consolidated companies increased by $962 in the second quarter of 2000 and increased by $1,133 for the first six months of 2000 as compared to the respective prior periods. The increase is primarily due to changes in the level of profits of majority-owned companies. Equity in earnings of nonconsolidated affiliated companies increased by $771 in the second quarter of 2000 and increased by $958 for the first six months of 2000 as compared to the respective prior periods. The fluctuations are primarily due to changes in the level of profits of nonconsolidated affiliated companies. The effective tax rate is 51.8% for the second quarter of 2000 and 52.5% for the first six months of 2000. The rates were significantly higher in the comparable periods in 1999 principally because the Company decided it was not prudent to recognize the future tax benefits attributable to net operating losses at certain international subsidiaries. 11 12 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (CONTINUED) (in thousands, except share and per share data) Net income was $5,725 in the second quarter of 2000 and $10,879 for the first six months of 2000 as compared to net losses of $6,629 and $6,522, respectively, in the comparable prior periods. Basic and diluted earnings per common share for the second quarter of 2000 were $4.67 and $4.29 respectively, and for the first six months of 2000 were $8.78 and $8.10 respectively. The increase in net income is attributable principally to increased gross income at the Company's media and marketing communications operations, and the reduction of operating losses at certain international subsidiaries. Basic and diluted loss per common share for the second quarter of 1999 was $4.93 and for the first six months of 1999 was $4.73. LIQUIDITY AND CAPITAL RESOURCES Working capital decreased by $45,454 to a deficit of $102,341 at June 30, 2000, versus a deficit of $56,887 at December 31, 1999. Cash and cash equivalents decreased by $166,483 from $306,556 to $140,073 at June 30, 2000. The decrease in cash and cash equivalents is attributable to the acquisition of a number of companies, the continued expansion of the Company's media and marketing communications operations internationally and the timing of collections of accounts receivable and billing of expenses to clients versus payments to trade vendors. Domestically, the Company has committed lines of credit totaling $60,000 that it believes adequate. These lines of credit were partially utilized during the three months ended June 30, 2000 and 1999 to secure obligations of selected foreign subsidiaries. There was $19,300 and $20,500 outstanding under these credit lines as of June 30, 2000 and December 31, 1999, respectively. Other lines of credit are available to the Company in foreign countries in connection with short-term borrowings and bank overdrafts used in the normal course of business. There was $55,302 and $48,000 outstanding at June 30, 2000 and December 31, 1999, respectively. FORWARD LOOKING STATEMENTS In connection with the provisions of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"), the Company may include Forward Looking Statements (as defined in the Reform Act) in oral or written public statements issued by or on behalf of the Company. These Forward Looking Statements may include, among other things, plans, objectives, projections, anticipated future economic performance or assumptions and the like that are subject to risks and uncertainties. As such, actual results or outcomes may differ materially from those discussed in the Forward Looking Statements. Important factors which may cause actual results to differ, include but are not limited to the following: the unanticipated loss of a material client or key personnel, delays or reductions in client budgets, shifts in industry rates of compensation, government compliance costs or litigation, unanticipated natural disasters, changes in the general economic conditions that affect interest rates and/or consumer spending both in the U.S. and the international markets in which the Company operates, unanticipated expenses, client preferences which can be affected by competition, the inability to implement upgrades for certain computer programs which are not Year 2000 compliant and the ability to project risk factors which may vary. 12 13 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Reference is made to the Index annexed hereto and made a part hereof. (b) Reports on Form 8-K: At the Annual Meeting of Stockholders of Grey Advertising Inc. (the "Company") held on June 29, 2000, the stockholders of the Company approved amendments to the Restated Certificate of Incorporation of the Company to: (i) change the name of the Company to Grey Global Group Inc., (ii) increase the number of authorized shares of the Company's Common Stock and Limited Duration Class B Common Stock, (iii) decrease the par value per share of the Company's authorized shares and (iv) make certain other related changes. A copy of the Restated Certificate of Incorporation of the Company that was filed with the Secretary of State of the State of Delaware on July 14, 2000. (Incorporated herein by reference to Grey's report on Form 8-K dated July 13, 2000 and filed July 21, 2000) 13 14 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GREY ADVERTISING INC. --------------------- (REGISTRANT) DATE: August 14, 2000 By:/s/ Steven G. Felsher ----------------------------- Steven G. Felsher Executive Vice President - Finance - Worldwide Secretary and Treasurer (Duly Authorized Officer) DATE: August 14, 2000 By:/s/ Lester M. Feintuck ----------------------------- Lester M. Feintuck Senior Vice President - Chief Financial Officer - US Operations Controller (Chief Accounting Officer)
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INDEX TO EXHIBITS Number Assigned to Page Number in Sequential Exhibit (i.e. 601 of Table of Item 601 Exhibits Numbering System Where Regulation S-K) Description of Exhibits Exhibit May be Found --------------- ----------------------- -------------------- 27 Financial Data Schedule 16
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