-----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, CTeSPNJ8okh5uo0x0BLtRaZg+ybv0K4B+KiYwTpTgkCiWVBXhwQ1RX4OHyb/+9Qj NkFzv+W7v1wez6BAXNWMaw== 0000950123-02-010716.txt : 20021113 0000950123-02-010716.hdr.sgml : 20021113 20021113142902 ACCESSION NUMBER: 0000950123-02-010716 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREY GLOBAL GROUP INC CENTRAL INDEX KEY: 0000043952 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] IRS NUMBER: 130802840 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-07898 FILM NUMBER: 02819515 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 y65468e10vq.txt GREY GLOBAL GROUP INC. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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, 2002 [ ] 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 (IRS Employer incorporation or organization) Identification Number) 777 THIRD AVENUE, 10017 NEW YORK, NEW YORK (Zip Code) (Address of principal executive offices)
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, 2002, the total number of shares outstanding of Registrant's Common Stock, par value $0.01 per share ("Common Stock"), was 1,066,872 and of Registrant's Limited Duration Class B Common Stock, par value $0.01 per share ("Class B Common Stock"), was 210,141. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES INDEX
PAGE NO. ---- Financial Statements: Condensed Consolidated Balance Sheets..................... 2 Condensed Consolidated Statements of Operations........... 3 Condensed Consolidated Statements of Cash Flows........... 4 Notes to Condensed Consolidated Financial Statements...... 5 Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 10 Other Information........................................... 14 Signatures.................................................. 15 Index to Exhibits........................................... 18
1 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31, 2002 2001(A) ------------- ------------ (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) ASSETS Current assets: Cash and cash equivalents................................. $ 261,952 $ 276,602 Marketable securities..................................... 970 1,260 Accounts receivable....................................... 1,003,580 950,925 Expenditures billable to clients.......................... 100,057 77,293 Other current assets...................................... 113,985 99,949 ---------- ---------- Total current assets........................................ 1,480,544 1,406,029 Investments in and advances to nonconsolidated affiliated companies................................................. 14,847 14,679 Fixed assets -- at cost, less accumulated depreciation of $201,663 in 2002 and $184,720 in 2001..................... 144,274 155,249 Marketable securities....................................... 6,120 9,861 Intangibles -- net of accumulated amortization of $76,255 in 2002 and 2001............................................. 238,263 211,812 Other assets -- including loans to executive officers of $5,047 in 2002 and $5,247 in 2001......................... 111,045 102,176 ---------- ---------- Total assets................................................ $1,995,093 $1,899,806 ========== ========== LIABILITIES AND COMMON STOCKHOLDERS' EQUITY Current liabilities: Accounts payable.......................................... $1,244,886 $1,165,958 Notes payable to banks.................................... 66,567 80,789 Accrued expenses and other................................ 272,898 226,412 Income taxes payable...................................... 12,842 24,388 ---------- ---------- Total current liabilities................................... 1,597,193 1,497,547 Other liabilities, including deferred compensation of $54,813 in 2002 and $52,856 in 2001....................... 81,646 102,141 Long-term debt.............................................. 128,025 128,025 Minority interest........................................... 20,822 22,153 Redeemable Preferred Stock -- at redemption value; par value $0.01 per share; authorized 500,000 shares; issued and outstanding 30,000 shares in 2002 and 2001................ 8,780 8,180 Common stockholders' equity: Common Stock -- par value $0.01 per share; authorized 50,000,000 shares; issued 1,263,147 shares in 2002 and 1,244,603 shares in 2001................................ 13 12 Limited Duration Class B Common Stock -- par value $0.01 per share; authorized 10,000,000 shares; issued 237,113 shares in 2002 and 248,275 shares in 2001............... 2 2 Paid-in additional capital................................ 51,027 48,784 Retained earnings......................................... 181,648 177,503 Accumulated other comprehensive loss: Cumulative translation adjustment....................... (30,751) (40,216) Unrealized loss on marketable securities................ (1,158) (1,112) ---------- ---------- Total accumulated other comprehensive loss................ (31,909) (41,328) ---------- ---------- Loans to officer used to purchase Common Stock and Limited Duration Class B Common Stock........................... (4,726) (4,726) ---------- ---------- 196,055 180,247 Less -- cost of 196,310 and 202,469 shares of Common Stock and 26,937 shares of Limited Duration Class B Common Stock held in treasury in 2002 and 2001................. 37,428 38,487 ---------- ---------- Total common stockholders' equity........................... 158,627 141,760 ---------- ---------- Total liabilities and common stockholders' equity........... $1,995,093 $1,899,806 ========== ==========
- --------------- (A) The condensed consolidated balance sheet has been derived from the audited financial statements at that date. See accompanying notes to condensed consolidated financial statements. 2 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS FOR THE NINE MONTHS ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, ----------------------- ------------------------- 2002 2001 2002 2001 ---------- ---------- ----------- ----------- (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) Commissions and fees......................... $ 290,441 $ 295,964 $ 866,104 $ 915,075 Expenses: Salaries and employee related expenses..... 192,037 196,781 575,191 612,954 Office and general expenses................ 89,995 92,538 262,637 280,050 ---------- ---------- ---------- ---------- 282,032 289,319 837,828 893,004 ---------- ---------- ---------- ---------- 8,409 6,645 28,276 22,071 Other expense -- net......................... (2,396) (2,285) (7,259) (4,471) ---------- ---------- ---------- ---------- Income of consolidated companies before taxes on income.................................. 6,013 4,360 21,017 17,600 Provision for taxes on income................ 3,151 2,076 10,278 8,802 ---------- ---------- ---------- ---------- Income of consolidated companies............. 2,862 2,284 10,739 8,798 Minority interest applicable to consolidated companies.................................. (595) (537) (3,246) (4,023) Equity in earnings (losses) of nonconsolidated affiliated companies....... 488 (237) 1,246 (593) ---------- ---------- ---------- ---------- Net income................................... $ 2,755 $ 1,510 $ 8,739 $ 4,182 ========== ========== ========== ========== Weighted average number of common shares outstanding Basic...................................... 1,244,686 1,238,575 1,246,740 1,236,575 Diluted.................................... 1,377,518 1,369,988 1,381,952 1,373,799 Earnings per common share Basic...................................... $ 1.92 $ 1.33 $ 6.38 $ 3.50 Diluted.................................... $ 1.76 $ 1.23 $ 5.84 $ 3.22 Dividends per common share................... $ 1.00 $ 1.00 $ 3.00 $ 3.00 ========== ========== ========== ==========
See accompanying notes to condensed consolidated financial statements. 3 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, ---------------------------- 2002 2001 ----------- ------------ (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) OPERATING ACTIVITIES Net income.................................................. $ 8,739 $ 4,182 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization of fixed assets............. 29,849 32,728 Amortization of intangibles............................... -- 10,708 Deferred compensation..................................... 3,872 5,100 Equity in (loss) earnings of non-consolidated affiliated companies, net of dividends received of $448 in 2002 and $1,343 in 2001..................................... (798) 1,936 Loss from the sale of marketable securities............... 348 1,498 Loss on the write-down of marketable securities........... 648 -- Minority interest applicable to consolidated companies.... 3,246 4,023 Restricted stock expense.................................. 1,935 1,252 Deferred income taxes..................................... (1,713) (3,600) Changes in operating assets and liabilities............... (7,177) (161,537) -------- --------- Net cash provided by (used in) operating activities......... 38,949 (103,710) INVESTING ACTIVITIES Purchases of fixed assets................................... (20,292) (47,630) Trust fund deposits......................................... (2,562) (3,217) Decrease in investments in and advances to nonconsolidated affiliated companies...................................... 630 712 Proceeds from the sale of marketable securities............. 3,224 4,189 Purchases of investment securities.......................... (112) (1,032) Increase in intangibles, primarily goodwill................. (15,451) (10,152) -------- --------- Net cash used in investing activities....................... (34,563) (57,130) FINANCING ACTIVITIES (Repayments of) net proceeds from short-term borrowings..... (19,821) 13,125 Common shares acquired for treasury......................... -- (122) Cash dividends paid on common shares........................ (3,813) (3,765) Cash dividends paid on redeemable Preferred Stock........... (180) (180) Net proceeds from issuance of restricted stock.............. 198 91 Proceeds from exercise of stock options..................... 1,169 505 -------- --------- Net cash (used in) provided by financing activities......... (22,447) 9,654 Effect of exchange rate changes on cash..................... 3,412 (1,059) -------- --------- Decrease in cash and cash equivalents....................... (14,650) (152,245) Cash and cash equivalents at beginning of period............ 276,602 309,750 -------- --------- Cash and cash equivalents at end of period.................. $261,952 $ 157,505 ======== =========
See accompanying notes to condensed consolidated financial statements. 4 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 accounting principles generally accepted in the United States. Reference should be made to the Company's Annual Report on Form 10-K for the year ended December 31, 2001 filed with the Securities and Exchange Commission. 2. The financial statements as of September 30, 2002, and for the three and nine months ended September 30, 2002 and 2001 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, 2002 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 overall effective foreign tax rate in excess of the Federal statutory rate. 5. As of September 30, 2002 and December 31, 2001, 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 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. 5 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) The following table shows the amounts affecting 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, --------------------------- ------------------------- 2002 2001 2002 2001 ------------ ------------ ----------- ----------- BASIC EARNINGS PER COMMON SHARE WEIGHTED AVERAGE SHARES.............. 1,244,686 1,238,575 1,246,740 1,236,575 ---------- ---------- ---------- ---------- Net income........................... $ 2,755 $ 1,510 $ 8,739 $ 4,182 Effect of dividend requirements and the change in redemption value of redeemable preferred stock......... (366) 143 (780) 140 ---------- ---------- ---------- ---------- NET EARNINGS USED IN COMPUTATION..... $ 2,389 $ 1,653 $ 7,959 $ 4,322 ---------- ---------- ---------- ---------- PER SHARE AMOUNT..................... $ 1.92 $ 1.33 $ 6.38 $ 3.50 ========== ========== ========== ========== DILUTED EARNINGS PER COMMON SHARE Weighted average shares used in the Basic EPS calculation.............. 1,244,686 1,238,575 1,246,740 1,236,575 Net effect of dilutive stock options and stock incentive plans(1)....... 81,704 80,285 84,084 86,096 Assumed conversion of 8.5% convertible subordinated debentures......................... 51,128 51,128 51,128 51,128 ---------- ---------- ---------- ---------- ADJUSTED WEIGHTED AVERAGE SHARES..... 1,377,518 1,369,988 1,381,952 1,373,799 ---------- ---------- ---------- ---------- Net earnings used in the Basic EPS calculation........................ $ 2,389 $ 1,653 $ 7,959 $ 4,322 8.5% convertible subordinated debentures interest net of income tax effect......................... 36 35 107 106 ---------- ---------- ---------- ---------- NET EARNINGS USED IN COMPUTATION..... $ 2,425 $ 1,688 $ 8,066 $ 4,428 ---------- ---------- ---------- ---------- PER SHARE AMOUNT..................... $ 1.76 $ 1.23 $ 5.84 $ 3.22 ========== ========== ========== ==========
- --------------- (1) Includes 20,211 shares expected to be issued pursuant to the Senior Management Incentive Plan. 7. During the third quarter of 2002 and 2001, total comprehensive income amounted to $8,339 and total comprehensive loss amounted to $2,280, respectively, and for the nine months ended September 30, 2002 and 2001 total comprehensive income was $18,158 and $655, 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 and the change in fair market value of marketable securities. 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. Prior period information has been reclassified to better reflect the management reporting structure of the Company. 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 nine months ended 6 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) September 30, 2002 and 2001, and related identifiable assets at September 30, 2002 and December 31, 2001 are summarized below according to geographic region:
FOR THE THREE MONTHS ENDED SEPTEMBER 30, ----------------------------------------------------------------------------------------- NORTH AMERICA EUROPE OTHER CONSOLIDATED ------------------- ------------------- ------------------- ----------------------- 2002 2001 2002 2001 2002 2001 2002 2001 -------- -------- -------- -------- -------- -------- ---------- ---------- Commissions and fees............... $142,119 $128,186 $121,280 $130,178 $ 27,042 $ 37,600 $ 290,441 $ 295,964 -------- -------- -------- -------- -------- -------- ---------- ---------- Operating profit (loss)............. 12,237 6,362 (4,017) (2,312) 189 2,595 8,409 6,645 -------- -------- -------- -------- -------- -------- ---------- ---------- Income (loss) of consolidated companies before taxes on income.... 10,305 4,318 (4,473) (2,462) 181 2,504 6,013 4,360 -------- -------- -------- -------- -------- -------- ---------- ---------- FOR THE NINE MONTHS ENDED SEPTEMBER 30, ----------------------------------------------------------------------------------------- NORTH AMERICA EUROPE OTHER CONSOLIDATED ------------------- ------------------- ------------------- ----------------------- 2002 2001 2002 2001 2002 2001 2002 2001 -------- -------- -------- -------- -------- -------- ---------- ---------- Commissions and fees............... $406,532 $400,176 $369,238 $412,308 $ 90,334 $102,591 $ 866,104 $ 915,075 -------- -------- -------- -------- -------- -------- ---------- ---------- Operating profit (loss)............. 26,478 6,459 2,196 13,154 (398) 2,458 28,276 22,071 -------- -------- -------- -------- -------- -------- ---------- ---------- Income (loss) of consolidated companies before taxes on income.... 21,985 2,498 (13) 13,302 (955) 1,800 21,017 17,600 -------- -------- -------- -------- -------- -------- ---------- ---------- Identifiable assets.. $853,664 $844,817 $937,799 $833,285 $188,783 $207,025 1,980,246 1,885,127 -------- -------- -------- -------- -------- -------- Investments in and advances to non- consolidated affiliated companies.......... 14,847 14,679 ---------- ---------- Total assets......... $1,995,093 $1,899,806 ========== ==========
9. Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142 ("FAS 142"), Goodwill and Other Intangible Assets. FAS 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets. Under the new rules, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized, but will be subject to annual impairment tests in accordance with the statements. Other intangible assets, with definite lives, will continue to be amortized over their useful lives. The standard requires a transitional impairment test of these assets within nine months of the date of adoption and an annual impairment test thereafter. The Company completed the transitional and annual impairment tests of goodwill and intangible assets with indefinite lives as of March 31, 2002, and no impairment was noted. 7 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) The 2001 results on a historical basis do not reflect the provisions of FAS 142. Had the Company adopted FAS 142 on January 1, 2001, the historical net income and basic and diluted net income per common share would have been changed to the adjusted amounts indicated below:
THREE MONTHS ENDED SEPTEMBER 30, 2001 -------------------------------------------------- DILUTED EARNINGS BASIC EARNINGS PER PER COMMON NET INCOME COMMON SHARE SHARE ---------- ------------------ ---------------- Reported net income................ $ 1,510 $ 1.33 $ 1.23 Goodwill amortization.............. 4,065 4.20 3.83 Income tax adjustment.............. (2,322) (3.01) (2.75) ------- ------ ------ Adjusted net income................ $ 3,253 $ 2.52 $ 2.31 ======= ====== ====== NINE MONTHS ENDED SEPTEMBER 30, 2001 -------------------------------------------------- DILUTED EARNINGS BASIC EARNINGS PER PER COMMON NET INCOME COMMON SHARE SHARE ---------- ------------------ ---------------- Reported net income................ $ 4,182 $ 3.50 $ 3.22 Goodwill amortization.............. 10,708 11.74 10.65 Income tax adjustment.............. (5,041) (7.38) (6.72) ------- ------ ------ Adjusted net income................ $ 9,849 $ 7.86 $ 7.15 ======= ====== ======
The income tax adjustment reflects the impact of the annual estimated income tax rate without goodwill amortization expense. There will be no tax adjustment for the twelve months ended December 31, 2001. In April 2001, the Emerging Issues Task Force, as part of the Financial Accounting Standard Board, issued Topic D-96, "Accounting for Management Fees Based on a Formula". This pronouncement provides guidance on revenue recognition under arrangements that contain performance-based incentive fees that are not finalized until the end of a period of time specified in the arrangement and gives the Company the option to recognize the related revenue at the end of the contract year or alternatively recognize revenue due at any point in time as if the contract were terminated at the given reporting period. The Company has adopted the provisions of this pronouncement effective January 1, 2002 and has elected to record income generally at the end of a contract period when the amount to be received is certain. In November 2001, the Emerging Issues Task Force, as part of the Financial Accounting Standard Board, issued Topic D-103, "Income Statement Characterization of Reimbursements Received for 'Out-of-Pocket' Expenses Incurred". This pronouncement provides guidance on the accounting treatment in the income statement for reimbursements received for out-of-pocket expenses incurred, and is effective for all financial reporting periods beginning after December 15, 2001. The Company has adopted, and its revenue recognition policies are in substantial compliance with, the provisions of this pronouncement effective January 1, 2002. 10. The Company estimates that it will be required to make future payments to acquire additional shares of subsidiary companies or to complete earn-out agreements pursuant to certain acquisition arrangements not reflected as liabilities on its consolidated balance sheet of approximately $54,200. Of such amount, approximately 44% is estimated to be paid from 2005 and beyond and the remainder over the period from 2002 to 2005. The foregoing information is estimated and the actual payments made will be dependent on future events including profit and other performance measures of a number of subject companies, the fulfillment and amendment of certain contractual obligations by third parties, the movement of exchange 8 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) rates, the timing of when the Company or other parties choose to exercise certain contractual rights and other variables. 11. Since March 2001, the Company received a number of grand jury subpoenas primarily seeking documents of the Graphic Services Department ("Department") of the Company's New York Division of Grey Worldwide, relating to various vendors doing business with the Department. The subpoenas were issued at the request of the U.S. Department of Justice Antitrust Division. In March 2002, the government filed a federal criminal complaint (the "Complaint") against Mr. Mitchell Mosallem, who served as Director of the Department until December 31, 200l. The Complaint alleges that between 1991 and July 2000, Mosallem and other individuals, including employees of the Company, conspired with unnamed vendors doing business with the Department to charge clients of the Company in excess of amounts appropriately chargeable by the vendors for their services by approving vendor invoices that included charges for cost overruns on unrelated work and the cost of certain entertainment or other goods or services provided to Mosallem and other Company employees. The Complaint alleges that in the period February 1998 to July 2000, such unwarranted charges represented some portion of vendor invoices that total approximately $500. In May 2002, Mosallem was charged in a federal indictment. The indictment alleges that between 1994 and 2001 Mosallem -- together with two codefendants (a former vendor to the Department and a sales person for an unnamed vendor) -- conspired to restrain trade by rigging bids and allocating contracts for certain graphic services performed for a client of the Company. The indictment also alleges that between 1991 and May 2000, Mosallem -- together with the principal owner of the former vendor and a sales person of that former vendor -- conspired to commit mail fraud by the means outlined in the Complaint previously filed against Mosallem. In September 2002, additional mail fraud charges were added to the indictment alleging that Mosallem conspired to defraud the Company and its clients by receiving kickbacks from former vendors to the Department. In addition, in October 2002, Mr. Joseph Pannacione, a former manager in the Department who served under Mosallem, pleaded guilty to federal mail fraud charges similar to those alleged against Mosallem. Several individuals associated with former vendors to the Department have pleaded guilty to federal charges relating to the allegations with respect to Mosallem and Pannacione. The government also has indicated that it is examining whether there is Company responsibility in this matter. The Company has been cooperating with the government's investigation. In February 2002, the Company hired from outside the Company a new Director of the Department, who is actively engaged in reviewing all policies and procedures of the Department and its relationships with all vendors. In addition, Deloitte & Touche has been retained on behalf of the Company to conduct a comprehensive review of the Department, to recommend improved policies and procedures, and to assist in the determination of remedial action as appropriate. 9 PART I MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) ITEM 2. RESULTS OF OPERATIONS Commissions and fees ("gross income") decreased 1.9% during the third quarter of 2002 and 5.4% during the nine months ended September 30, 2002 when compared to the same periods in 2001. Absent exchange rate fluctuations, gross income decreased 3.5% and 5.3%, respectively, in the three and nine months ended September 30, 2002 when compared to the same periods in 2001. In the third quarters of 2002 and 2001, respectively, 48.9% and 43.3% of consolidated gross income was attributable to the North American operations and 51.1% and 56.7% to international operations. In the third quarter of 2002 and the first nine months of 2002, gross income from operations in North America increased 10.9% and 1.6%, respectively, versus the respective prior periods. Gross income from international operations decreased 11.6% (14.5% absent exchange rate fluctuations) during the third quarter and decreased 10.7% (5.3% absent exchange rate fluctuations) during the first nine months when compared to the same periods in 2001. The gross international income decrease was centered on the Company's European operations which declined 6.8% during the third quarter (12.4% absent exchange rate fluctuations) and 10.4% during the nine months ended (11.8% absent exchange rate fluctuation) and on the Latin American operations in the third quarter which decreased by 49.11% (30.45% absent exchange rate fluctuations) when compared to the same periods in 2001. In Europe, particularly in Northern Europe, results were affected by the generally slow economic conditions, coupled with losses of selected local clients, and weakness in a number of advertising categories including telephony. Comparisons are also affected by the closure or disposal of certain business units in 2001. Salaries and employee related expenses decreased 2.4% in the third quarter of 2002 and 6.2% for the first nine months of 2002. Office and general expenses decreased 2.7% in the third quarter and 6.2% for the nine months ended September 30, 2002. The decrease in operating expenses is the result of staff cuts and cost containment effected in 2001 offset somewhat by continuing costs associated with reducing staff further in a number of markets in connection with declines in gross income. Office and general expenses were lower, in part, by the absence of goodwill amortization expense of $4,065 and $10,708, respectively, for the three and nine months ended September 30, 2002, as well as the effect of the disposition of real estate in the fourth quarter of 2001. Office and general expenses during the first nine months of 2002 also included $5,049 for professional fees incurred and accruable costs in connection with the investigation mentioned in Item 1 in the Other Information section and below in the section of this report entitled "Legal Proceedings". Inflation did not have a material effect on gross income or expenses during 2002 or 2001. Other expense-net increased by $111 and $2,788, respectively, during the third quarter and for the first nine months of 2002 primarily as the result of reduced interest income due to lower interest earned on invested funds. Minority interest applicable to consolidated companies increased by $58 during the third quarter of 2002 and decreased by $777 for the nine months ended September 30, 2002 as compared to the respective prior periods. Equity in earnings of nonconsolidated affiliated companies increased by $725 during the third quarter of 2002 and increased $1,839, during the nine months ended September 30, 2002 when compared to the same periods in 2001. The fluctuations are primarily due to changes in the level of profits of majority-owned companies and of nonconsolidated affiliated companies. The effective tax rate is 52.4% for the third quarter of 2002 versus 47.6% in the same period in 2001 and 48.9% and 50.0%, respectively, for the first nine months of 2002 and 2001. The increase in the third quarter is due principally to a heavier concentration of pre-tax income in jurisdictions with higher effective tax rates as well as currently non-recognizable tax benefits, attributable to losses in certain countries. Net income was $2,755 in the third quarter of 2002 and $8,739 for the first nine months of 2002 as compared to net income of $1,510 and $4,182 in the respective prior periods. Basic and diluted earnings per 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS -- (CONTINUED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) common share for the third quarter of 2002 were $1.92 and $1.76, respectively, and for the first nine months of 2002 were $6.38 and $5.83, respectively. Basic and diluted earnings per common share for the third quarter of 2001 were $1.33 and $1.23, respectively, and for the first nine months of 2001 were $3.50 and $3.22, respectively. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents decreased by $14,650 from $276,602 at December 31, 2001 to $261,952 at September 30, 2002. The working capital deficit increased to $116,649 at September 30, 2002, versus a deficit of $91,518 at December 31, 2001. The decrease in cash and cash equivalents is, primarily, attributable to the timing of collections of accounts receivable and billing of expenses to clients versus payments to trade vendors. The decrease in working capital is primarily due to the expected settlement of an obligation in the first quarter of 2003 related to an acquisition made in a previous year which was reclassified from a long-term liability to a current liability earlier this year. Domestically, the Company has a short-term committed bank line of credit in the amount of $90,000 at both December 31, 2001 and September 30, 2002, which is renewable annually. This line of credit was partially utilized during the nine months ended September 30, 2002 and 2001. There was $19,900 and $18,300 outstanding under this credit line as of September 30, 2002 and December 31, 2001, respectively. Additionally, this line of credit may be used to secure borrowings in other foreign subsidiaries. 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 $46,667 and $62,400 outstanding at September 30, 2002 and December 31, 2001, respectively. The changes in the level of short-term borrowing and bank overdrafts are primarily due to the timing differences on the payments to media and other vendors. A significant part of the Company's business practice is the purchase of media time and space in many markets from various media suppliers. Consistent with industry practices, in a number of countries, the Company from time to time, directly or through a local media buying operation, is required to guarantee payment to the media suppliers in the form of performance bonds, letters of credit or other similar financial instruments which relate to liabilities shown in the Accounts Payable section of the Condensed Consolidated Balance Sheet. In addition, from time to time, the Company may guarantee certain financial and other obligations of its consolidated subsidiaries; the utilization of these instruments may at times absorb some of the Company's credit capacity. The Company estimates that it will be required to make future payments to acquire additional shares of subsidiary companies or to complete earn-out agreements pursuant to certain acquisition arrangements not reflected as liabilities on its consolidated balance sheet of approximately $54,200. Of such amount, approximately 44% is estimated to be paid from 2005 and beyond and the remainder over the period from 2002 to 2005. The foregoing information is estimated and the actual payments made will be dependent on future events including profit and other performance measures of a number of subject companies, the fulfillment and amendment of certain contractual obligations by third parties, the movement of exchange rates, the timing of when the Company or other parties choose to exercise certain contractual rights and other variables. Historically, funds from operations, bank and other borrowings have been sufficient to meet the Company's dividend, capital expenditure, acquisition and working capital needs. The Company expects that such sources will be sufficient to meet its near-term cash requirements in the future and will enable the Company to meet its longer-term obligations. The Company has two loans outstanding from the Prudential Insurance Company of America. The first loan of $75.0 million from December 1997 bears interest at the rate of 6.94% and is repayable in three equal annual installments, commencing in December 2003. The second loan of $50.0 million was taken in November 2000, bears interest at the rate of 8.17% and is repayable in two equal annual installments, commencing in November 2006. 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS -- (CONTINUED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) The loans and the availability of the Company's committed lines of credit contain certain covenants related to the Company's capital, debt load and cash flow. As of September 30, 2002 and December 31, 2001, the Company was in compliance with these covenants. The total interest expense related to the Company's borrowings for the nine months ended September 30, 2002 and 2001 was $11,686 and $13,296, respectively. CRITICAL ACCOUNTING POLICIES The Company's discussion and analysis of financial condition and results from operations are based on the condensed consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements in conformity with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company's critical accounting policies include: REVENUE RECOGNITION Income derived from advertising placed with media is generally recognized based upon the publication or broadcast dates. Income resulting from expenditures billable to clients is generally recognized when the service is performed and billed. Media income and income resulting from expenditures billable to clients is clearly defined and determinable. Labor based income is recognized in the month of service as service is provided throughout the life of each contract. At the end of the reporting period, labor based contracts are reviewed to determine amounts earned and amounts collectible from such earned amounts for the purposes of recognizing revenue amounts appropriate for the period. IMPAIRMENT OF INTANGIBLES The Company assesses the fair value and recoverability of intangible assets, primarily goodwill, in accordance with Statement of Financial Accounting Standards No. 142 ("FAS 142"), Goodwill and Other Intangible Assets. When assessing impairment, the carrying value of goodwill is compared to the fair value of the business units holding the goodwill at a regional level: North America, Europe, Asia and Latin America. For the purposes of the calculation, Asia and Latin America are then combined with North America and Europe indicating the need to support multi-national clients in those markets. The excess of carrying value over fair value is deemed to be impaired and written-off. The Company has completed the transitional and annual impairment tests of goodwill and intangible assets with indefinite lives as of March 31, 2002, and no impairment was noted. DEFERRED TAXES The Company recognizes deferred taxes based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities. The net deferred tax assets are regularly reviewed for recoverability and a valuation allowance is established, based upon historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences. At September 30, 2002 and December 31, 2001, the Company had $47,300 and $45,600, respectively, of deferred tax assets net of a valuation reserve of $27,300, in both 2002 and 2001, which it believes to be appropriate. 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 12 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS -- (CONTINUED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 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 or methods of compensation, consolidation of client businesses, government compliance costs or litigation, unanticipated natural disasters, terrorist acts, 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 and the ability to project risk factors which may vary. The forward looking statements speak only as of the date when made. The Company does not undertake to update such statements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's results may be affected by currency exchange rate fluctuations given the Company's extensive international operations. Generally, the foreign currency exchange risk is limited to net income of each operation because the Company's revenues and expenses, by country, are almost exclusively denominated in the local currency of each respective country with both revenue and expense items matched. Occasionally, the Company enters into foreign currency contracts for known cash flows related to repatriation of earnings from its international subsidiaries or identified liabilities in foreign currencies. The term of each such foreign currency contract entered into in 2001 was for less than three months. At September 30, 2002 and December 31, 2001, there were no foreign currency contracts open. The Company had no derivative contracts outstanding at September 30, 2002 or December 31, 2001, respectively. The Company has investments in private equity securities, corporate bonds and equity securities that may be subject to changes in general economic conditions and fluctuations in interest rates. Excess funds are invested in short term liquid securities and money market funds. ITEM 4. CONTROLS AND PROCEDURES The Company's management, including the Chief Executive Officer and Chief Financial Officer, have conducted an evaluation of the effectiveness of disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective in ensuring that all material information required to be filed in this quarterly report has been made known to them in a timely fashion. There have been no significant changes in internal controls, or in factors that could significantly affect internal controls, subsequent to the date the Chief Executive Officer and Chief Financial Officer completed their evaluation. 13 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Since March 2001, the Company received a number of grand jury subpoenas primarily seeking documents of the Graphic Services Department ("Department") of the Company's New York Division of Grey Worldwide, relating to various vendors doing business with the Department. The subpoenas were issued at the request of the U.S. Department of Justice Antitrust Division. In March 2002, the government filed a federal criminal complaint (the "Complaint") against Mr. Mitchell Mosallem, who served as Director of the Department until December 31, 200l. The Complaint alleges that between 1991 and July 2000, Mosallem and other individuals, including employees of the Company, conspired with unnamed vendors doing business with the Department to charge clients of the Company in excess of amounts appropriately chargeable by the vendors for their services by approving vendor invoices that included charges for cost overruns on unrelated work and the cost of certain entertainment or other goods or services provided to Mosallem and other Company employees. The Complaint alleges that in the period February 1998 to July 2000, such unwarranted charges represented some portion of vendor invoices that total approximately $500,000. In May 2002, Mosallem was charged in a federal indictment. The indictment alleges that between 1994 and 2001 Mosallem -- together with two codefendants (a former vendor to the Department and a sales person for an unnamed vendor) -- conspired to restrain trade by rigging bids and allocating contracts for certain graphic services performed for a client of the Company. The indictment also alleges that between 1991 and May 2000, Mosallem -- together with the principal owner of the former vendor and a sales person of that former vendor -- conspired to commit mail fraud by the means outlined in the Complaint previously filed against Mosallem. In September 2002, additional mail fraud charges were added to the indictment alleging that Mosallem conspired to defraud the Company and its clients by receiving kickbacks from former vendors to the Department. In addition, in October 2002, Mr. Joseph Pannacione, a former manager in the Department who served under Mosallem, pleaded guilty to federal mail fraud charges similar to those alleged against Mosallem. Several individuals associated with former vendors to the Department have pleaded guilty to federal charges relating to the allegations with respect to Mosallem and Pannacione. The government also has indicated that it is examining whether there is Company responsibility in this matter. The Company has been cooperating with the government's investigation. In February 2002, the Company hired from outside the Company a new Director of the Department, who is actively engaged in reviewing all policies and procedures of the Department and its relationships with all vendors. In addition, Deloitte & Touche has been retained on behalf of the Company to conduct a comprehensive review of the Department, to recommend improved policies and procedures, and to assist in the determination of remedial action as appropriate. In the Company's judgment, it is not involved in any other material pending proceedings. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company held its annual stockholders' meeting on September 20, 2002. Proxies for the meeting were solicited by the Company pursuant to Regulation 14A under the Securities Exchange Act of 1934. At the meeting, Daniel S. Shapiro, the nominee for the election to the Board of Directors as listed in the Company's Proxy Statement for the meeting , was elected. The following number of shares were cast with respect to the election of Mr. Shapiro: 3,252,546 votes FOR; -0- votes AGAINST; 43,166 abstentions; and 115,217 broker non-votes. In addition, votes cast regarding the ratification of the selection of independent auditors of the Company for fiscal year 2002 were as follows: 3,225,224 votes FOR; 70,295 votes AGAINST; 193 abstentions; and 115,217 broker non-votes. 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 filed a report dated August 8, 2002, reporting Item 9. "Regulation FD Disclosure." No financial statements were furnished with this report, which included exhibits related to the Statement Under Oath of the Principal Executive Officer and the Principal Financial Officer pursuant to Securities and Exchange Commissions Order No. 4-460. 14 GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) 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 GLOBAL GROUP INC. (Registrant) By: /s/ STEVEN G. FELSHER ------------------------------------ Steven G. Felsher, Vice Chairman Chief Financial Officer Secretary and Treasurer (Duly Authorized Officer) Dated: November 13, 2002 By: /s/ LESTER M. FEINTUCK ------------------------------------ Lester M. Feintuck, Senior Vice President Chief Financial Officer U.S. Controller (Chief Accounting Officer) Dated: November 13, 2002 15 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Edward H. Meyer, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Grey Global Group Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ EDWARD H. MEYER -------------------------------------- Name: Edward H. Meyer Title: Chief Executive Officer Date: November 13, 2002 16 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Steven G. Felsher, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Grey Global Group Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ STEVEN G. FELSHER -------------------------------------- Name: Steven G. Felsher Title: Chief Financial Officer Date: November 13, 2002 17 INDEX TO EXHIBITS
NUMBER ASSIGNED TO EXHIBIT (I.E. 601 OF TABLE OF ITEM 601 REGULATION S-K) EXHIBITS DESCRIPTION OF EXHIBITS - -------------------- -------------------------------- 99.1 Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
18 EX-99.1 3 y65468exv99w1.txt CERTIFICATION OF CEO AND CFO Exhibit 99.1 CERTIFICATION OF CEO AND CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of Grey Global Group Inc. (the "Company") for the quarterly period ending September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Edward H. Meyer, as Chief Executive Officer of the Company, and Steven G. Felsher, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge(1): (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. By:/s/ Edward H. Meyer Name: Edward H. Meyer Title: Chief Executive Officer Date: November 13, 2002 By:/s/ Steven G. Felsher Name: Steven G. Felsher Title: Chief Financial Officer Date: November 13, 2002 This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. - ------------------ 27 -----END PRIVACY-ENHANCED MESSAGE-----