-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PRbTA/+t/6zDLD761ZaGpDTFJzLYuSY4CBBxay9mwXYaFqtTRxnHmj5cVGH2k+Za HrkBWi9j/08+RmtaQwYcwg== /in/edgar/work/0000950123-00-010579/0000950123-00-010579.txt : 20001115 0000950123-00-010579.hdr.sgml : 20001115 ACCESSION NUMBER: 0000950123-00-010579 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREY GLOBAL GROUP INC CENTRAL INDEX KEY: 0000043952 STANDARD INDUSTRIAL CLASSIFICATION: [7311 ] IRS NUMBER: 130802840 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-07898 FILM NUMBER: 765727 BUSINESS ADDRESS: STREET 1: 777 THIRD AVE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2125462000 MAIL ADDRESS: STREET 1: 777 THIRD AVE STREET 2: 777 THIRD AVE CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: GREY ADVERTISING INC /DE/ DATE OF NAME CHANGE: 19920703 10-Q 1 y42563e10-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 September 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 October 31, 2000, the total number of shares outstanding of Registrant's Common Stock, par value $0.01 per share ("Common Stock"), was 1,026,775 and of Registrant's Limited Duration Class B Common Stock, par value $0.01 per share ("Class B Common Stock"), was 226,226. 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
SEPTEMBER 30, DECEMBER 31, (in thousands, except share and per share data) 2000 1999 - ----------------------------------------------- (UNAUDITED) (A) ----------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 129,282 $ 306,556 Marketable securities 5,002 5,581 Accounts receivable 1,001,979 940,612 Expenditures billable to clients 50,467 51,991 Other current assets 105,928 93,207 ----------------------------------------------- Total current assets 1,292,658 1,397,947 Investments in and advances to nonconsolidated affiliated companies 17,485 17,961 Fixed assets-at cost, less accumulated depreciation of $171,718 in 2000 and $158,370 in 1999 147,004 126,939 Marketable securities 17,274 22,429 Intangibles-net of accumulated amortization of $51,493 in 2000 and $42,818 in 1999 174,411 157,115 Other assets-including loans to executive officers of $5,247 in 2000 and 1999 111,033 86,863 ----------------------------------------------- Total assets $ 1,759,865 $ 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)
SEPTEMBER 30, DECEMBER 31, (in thousands, except share and per share data) 2000 1999 - ----------------------------------------------- (UNAUDITED) (A) ----------------------------------------------- LIABILITIES AND COMMON STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,125,450 $ 1,161,508 Notes payable to banks 78,132 68,500 Accrued expenses and other 180,574 208,254 Income taxes payable 17,556 16,572 ----------------------------------------------- Total current liabilities 1,401,712 1,454,834 Other liabilities, including deferred compensation of $51,741 in 2000 and $44,160 in 1999 77,195 75,260 Long-term debt 78,025 78,025 Minority interest 21,378 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 10,048 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 1,234,898 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 255,723 shares in 2000 and 261,224 shares in 1999 3 261 Paid-in additional capital 42,724 39,763 Retained earnings 203,254 191,042 Accumulated other comprehensive loss: Cumulative translation adjustment (26,312) (15,462) Unrealized loss on marketable securities (3,369) (141) ----------------------------------------------- Total accumulated other comprehensive loss (29,681) (15,603) ----------------------------------------------- Loans to officer used to purchase Common Stock and Limited Duration Class B Common Stock (4,726) (4,726) ----------------------------------------------- 211,586 211,966 Less-cost of 211,249 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 40,079 40,601 ----------------------------------------------- Total common stockholders' equity 171,507 171,365 ----------------------------------------------- Total liabilities and common stockholders' equity $ 1,759,865 $ 1,809,254 ===============================================
See accompanying notes to condensed consolidated financial statements. 4 5 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED (in thousands, except share and per share data) SEPTEMBER 30, SEPTEMBER 30, - ----------------------------------------------- 2000 1999 2000 1999 ---------------------------------------------------------------------------- Commissions and fees $ 301,825 $ 262,048 $ 896,908 $ 750,908 Expenses: Salaries and employee related expenses 196,352 171,099 581,029 499,179 Office and general expenses 92,002 81,661 276,577 238,913 ---------------------------------------------------------------------------- 288,354 252,760 857,606 738,092 ---------------------------------------------------------------------------- 13,471 9,288 39,302 12,816 Other (loss) income-net (1,232) 778 1,181 2,086 ---------------------------------------------------------------------------- Income of consolidated companies before taxes on income 12,239 10,066 40,483 14,902 Provision for taxes on income 6,403 5,254 21,235 14,254 ---------------------------------------------------------------------------- Income of consolidated companies 5,836 4,812 19,248 648 Minority interest applicable to consolidated companies (1,031) (1,262) (4,595) (3,693) Equity in earnings of nonconsolidated affiliated companies 337 1,081 1,368 1,154 ---------------------------------------------------------------------------- Net income (loss) $ 5,142 $ 4,631 $ 16,021 $ (1,891) ============================================================================ Weighted average number of common shares outstanding Basic 1,227,346 1,237,281 1,229,489 1,238,225 Diluted 1,352,909 1,337,006 1,345,967 1,238,225 Earnings (loss) per common share Basic $4.19 $3.68 $12.97 ($1.06) Diluted $3.82 $3.43 $11.92 ($1.06) Dividends per common share $1.00 $1.00 $3.00 $3.00 ============================================================================
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 NINE MONTHS ENDED (in thousands, except share and per share data) SEPTEMBER 30, - ----------------------------------------------- 2000 1999 ---------------------------------------------------- OPERATING ACTIVITIES Net income (loss) $ 16,021 $ (1,891) Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: Depreciation and amortization of fixed assets 28,388 23,835 Amortization of intangibles 8,675 8,274 Deferred compensation 9,138 2,714 Equity in earnings of nonconsolidated affiliated companies, net of dividends received of $93 in 2000 and $630 in 1999 (1,275) (524) Loss from the sale of marketable securities 137 25 Minority interest applicable to consolidated companies 4,595 3,693 Restricted stock expense 915 401 Deferred income taxes (1,800) 878 Changes in operating assets and liabilities (156,767) (30,208) ---------------------------------------------------- Net cash (used in) provided by operating activities (91,973) 7,197 INVESTING ACTIVITIES Purchases of fixed assets (54,636) (38,016) Trust fund deposits (2,738) (2,866) Decrease (increase) in investments in and advances to nonconsolidated affiliated companies 1,751 (2,508) Purchases of marketable securities (2,741) (1,689) Proceeds from the sale of marketable securities 3,938 46,762 Purchases of investment securities (15,573) - Increase in intangibles, primarily goodwill (25,971) (27,107) ---------------------------------------------------- Net cash used in investing activities (95,970) (25,424)
6 7 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)
FOR THE NINE MONTHS ENDED (in thousands, except share and per share data) SEPTEMBER 30, - ----------------------------------------------- 2000 1999 ------------------------------------------------------ FINANCING ACTIVITIES Net proceeds from short-term borrowings 16,116 17,547 Common shares acquired for treasury (2,642) (1,007) Cash dividends paid on common shares (3,733) (3,739) Cash dividends paid on redeemable Preferred Stock (180) (180) Issuance of restricted stock 13 16 Proceeds from exercise of stock options 1,468 751 ------------------------------------------------------ Net cash provided by financing activities 11,042 13,388 Effect of exchange rate changes on cash (373) (1,242) ------------------------------------------------------ Decrease in cash and cash equivalents (177,274) (6,081) Cash and cash equivalents at beginning of period 306,556 153,816 ------------------------------------------------------ Cash and cash equivalents at end of period $ 129,282 $ 147,735 ======================================================
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 September 30, 2000 and for the three and nine months ended September 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 nine months ended September 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 September 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 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) 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 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 NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ---------------------------------------------------------------------------- 2000 1999 2000 1999 ---------------------------------------------------------------------------- BASIC EARNINGS (LOSS) PER ------------------------- COMMON SHARE ------------ WEIGHTED AVERAGE SHARES 1,227,346 1,237,281 1,229,489 1,238,225 ------------------------ ---------------------------------------------------------------------------- Net income (loss) $ 5,142 $ 4,631 $ 16,021 $ (1,891) Effect of dividend requirements and the change in redemption value of redeemable preferred stock (4) (84) (80) 577 ---------------------------------------------------------------------------- NET EARNINGS (LOSS) USED IN COMPUTATION $ 5,138 $ 4,547 $ 15,941 $ (1,314) ---------------------------------------------------------------------------- PER SHARE AMOUNT $4.19 $3.68 $12.97 ($1.06) ============================================================================ DILUTED EARNINGS (LOSS) PER --------------------------- COMMON SHARE ------------ Weighted average shares used in the Basic EPS calculation 1,227,346 1,237,281 1,229,489 1,238,225 Net effect of dilutive stock options and stock incentive plans (2) 74,435 48,597 65,350 (1) - Assumed conversion of 8.5% convertible subordinated debentures 51,128 51,128 51,128 (1) - ---------------------------------------------------------------------------- ADJUSTED WEIGHTED AVERAGE SHARES 1,352,909 1,337,006 1,345,967 1,238,225 ---------------------------------------------------------------------------- Net earnings (loss) used in the Basic EPS calculation $ 5,138 $ 4,547 $15,941 $ (1,314) 8.5% convertible subordinated debentures interest net of income tax effect 35 34 105 (1) - ---------------------------------------------------------------------------- NET EARNINGS (LOSS) USED IN COMPUTATION $ 5,173 $ 4,581 $ 16,046 $ (1,314) ---------------------------------------------------------------------------- PER SHARE AMOUNT $3.82 $3.43 $11.92 ($1.06) ============================================================================
(1) For the nine months ended September 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 14,894 and 15,239 shares expected to be issued pursuant to the Senior Management Incentive Plan for the three and nine months ended September 30, 2000, respectively, and 11.030 shares expected to be issued pursuant to the Senior Management Incentive Plan for the three months ended September 30, 1999. Due to their anti-dilutive effect, shares expected to be issued pursuant to the Senior Management Incentive Plan for the nine months ended September 30, 1999 were not included in the calculation. 7. During the third quarter of 2000 and 1999, total comprehensive loss amounted to $1,146 and total comprehensive income amounted to $2,683, respectively, and for the nine months ended September 30, 2000 and 1999 total comprehensive income was $1,943 and total comprehensive loss was $8,254, 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 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (in thousands, except share and per share data) 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 (loss) of consolidated companies before taxes on income for the three and nine months ended September 30, 2000 and 1999, and related identifiable assets at September 30, 2000 and December 31, 1999 are summarized below according to geographic region:
FOR THE THREE MONTHS ENDED SEPTEMBER 30, ---------------------------------------------------------------------------------------------- UNITED STATES EUROPE OTHER CONSOLIDATED -------------------- --------------------- --------------------- ---------------------- 2000 1999 2000 1999 2000 1999 2000 1999 -------------------- --------------------- --------------------- ---------------------- Commissions and fees $135,066 $120,163 $125,306 $ 107,278 $ 41,453 $ 34,607 $ 301,825 $ 262,048 -------------------- --------------------- --------------------- ---------------------- Operating profit (loss) 7,080 6,641 5,920 1,642 471 1,005 13,471 9,288 -------------------- --------------------- --------------------- ---------------------- Income (loss) of consolidated companies before taxes on income 7,408 7,651 4,186 1,729 645 686 12,239 10,066 -------------------- --------------------- --------------------- ---------------------- Identifiable assets Investments in and advances to non- consolidated affiliated companies Total assets FOR THE NINE MONTHS ENDED SEPTEMBER 30, ---------------------------------------------------------------------------------------------- UNITED STATES EUROPE OTHER CONSOLIDATED ------------------- --------------------- --------------------- ----------------------- 2000 1999 2000 1999 2000 1999 2000 1999 ------------------- --------------------- --------------------- ----------------------- Commissions and fees $ 400,521 $325,531 $378,042 $341,912 $118,345 $ 83,465 $ 896,908 $ 750,908 ------------------- --------------------- --------------------- ----------------------- Operating profit (loss) 16,961 13,187 19,486 7,438 2,855 (7,809) 39,302 12,816 -------------------- --------------------- --------------------- ---------------------- Income (loss) of consolidated companies before taxes on income 20,591 16,354 16,848 7,447 3,044 (8,899) 40,483 14,902 ------------------- --------------------- --------------------- ----------------------- Identifiable assets 688,443 796,657 793,302 752,662 260,635 241,974 1,742,380 1,791,293 ------------------- --------------------- --------------------- Investments in and advances to non- consolidated affiliated companies 17,485 17,961 ----------------------- Total assets $ 1,759,865 $1,809,254 =======================
10 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (in thousands, except share and per share data) RESULTS OF OPERATIONS Income from commissions and fees ("gross income") increased 15.2% during the third quarter of 2000 and 19.4% during the nine months ended September 30, 2000 when compared to the same periods in 1999. Absent exchange rate fluctuations, gross income increased 19.7% in the three months ended September 30, 2000 and 24.2% in the nine months ended September 30, 2000 when compared to the same periods in 1999. In the third quarters of 2000 and 1999, respectively, 44.8% and 45.9% of consolidated gross income was attributable to domestic operations and 55.2% and 54.1% to international operations. In the third quarter of 2000 and the first nine months of 2000, respectively, gross income from domestic operations increased 12.4% and 23.0% versus the respective prior periods, while gross income from international operations increased 17.5%, (25.9% absent exchange rate fluctuations) for the third quarter of 2000 and 16.7% (25.2% absent exchange rate fluctuations) for the first nine months of 2000 when compared to the same periods in 1999. The increase in gross income primarily resulted from the impact of new client assignments, the continued growth of the Company's media and marketing communications operations, and from acquired companies. Salaries and employee related expenses increased 14.8% in the third quarter of 2000 and 16.4% for the first nine months of 2000 when compared to the respective prior periods. Office and general expenses increased 12.7% and 15.8% for the three and nine months ended September 30, 2000 versus the comparable prior periods. These increases are slightly less than the increases in gross income. Inflation did not have a material effect on revenue or expenses during 2000 or 1999. Minority interest applicable to consolidated companies decreased by $231 in the third quarter of 2000 and increased by $902 for the first nine months of 2000 as compared to the respective prior periods. The fluctuations are primarily due to changes in the level of profits of majority-owned companies. Equity in earnings of nonconsolidated affiliated companies decreased by $744 in the third quarter of 2000 and increased by $214 for the first nine 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 52.3% for the third quarter of 2000 and 52.5% for the first nine months of 2000. The rate for the nine months ended September 30, 2000 is significantly lower than for the comparable period in 1999 because the Company decided it was not prudent to recognize the future tax benefits attributable to net operating losses at certain international subsidiaries generated last year. Net income was $5,142 in the third quarter of 2000 and $16,021 for the first nine months of 2000 as compared to net income of $4,631 and a net loss of $1,891, respectively, in the comparable prior periods. Basic and diluted earnings per common share for the third quarter of 2000 were 11 12 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (CONTINUED) (in thousands, except share and per share data) $4.19 and $3.82, respectively, and for the first nine months of 2000 were $12.97 and $11.92. Basic and diluted income per common share was $3.68 and $3.43, respectively, for the third quarter of 1999. Both basic and diluted loss per common share was each $1.06 for the nine months ended September 30, 1999. Net income increased despite the negative impact of the strengthening of the U.S. dollar, lower interest income from cash balances, costs incurred in connection with the Company's continued upgrading of its general advertising agency operations and adverse market conditions affecting a number of the Companies internet businesses. The increased level of profits is, in large measure, attributable to the continued growth and improvement of the Company's specialized marketing communications and international units. LIQUIDITY AND CAPITAL RESOURCES Working capital decreased by $52,167 to a deficit of $109,054 at September 30, 2000, versus a deficit of $56,887 at December 31, 1999. Cash and cash equivalents decreased by $177,274 from $306,556 to $129,282 at September 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 $64,000 that together, with its other sources of funding, it believes adequate. These lines of credit were partially utilized during the three months ended September 30, 2000 and 1999 to secure obligations of selected foreign subsidiaries. There was $30,700 and $20,500 outstanding under these credit lines as of September 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 $47,432 and $48,000 outstanding at September 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: The Company did not file any reports on Form 8K during the quarter ended September 30, 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: November 14, 2000 By:/s/ Steven G. Felsher ----------------------------- Steven G. Felsher Executive Vice President - Finance - Worldwide Secretary and Treasurer (Duly Authorized Officer) DATE: November 14, 2000 By:/s/ Lester M. Feintuck ----------------------------- Lester M. Feintuck Senior Vice President - Chief Financial Officer - US Operations Controller (Chief Accounting Officer) 14 15 INDEX TO EXHIBITS
Page Number in Sequential Number Assigned to Exhibit Table of Item 601 Exhibits Numbering System Where Exhibit (i.e. 601 of Regulation S-K) Description of Exhibits May be Found ---------------------------- ----------------------- ------------ 27 Financial Data Schedule 16
15 EX-27 2 y42563ex27.txt FIANACIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2000 AND THE UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 OF GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-2000 SEP-30-2000 129,282 22,276 1,001,979 0 0 1,292,658 318,722 171,718 1,759,865 1,401,712 78,025 10,048 0 15 171,492 1,759,865 896,908 896,908 0 0 857,606 0 9,500 40,483 21,235 16,021 0 0 0 16,021 12.97 11.92
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