-----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, P7tfSydrSSb0vOx4VgSYmvK7hn9JfVO/af+4VzMWYyUA7zy0gDm3/OnMJuep7esy vWXyQIMl8y2elWqhchp09g== 0000950123-96-004432.txt : 19960816 0000950123-96-004432.hdr.sgml : 19960816 ACCESSION NUMBER: 0000950123-96-004432 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREY ADVERTISING INC /DE/ 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: 96612287 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 10-Q 1 FORM 10-Q -- GREY ADVERTISING INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 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, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-7898 GREY ADVERTISING INC. (Exact name of registrant as specified in its charter) Delaware 13-0802840 (State or other jurisdiction of (IRS 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, 212-546-2000 including area code 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, 1996, the total number of shares outstanding of Registrant's Common Stock, par value $1 per share ("Common Stock"), was 887,153 and of Registrant's Limited Duration Class B Common Stock, par value $1 per share ("Class B Common Stock"), was 302,479. 2 GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES INDEX
PAGE NO. -------- Financial Statements: Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Income 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 10 Other Information 12 Signatures 13 Index to Exhibits 14
2 3 GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 DECEMBER 31, 1995 (UNAUDITED) (A) ---------------------------------- ASSETS Current Assets: Cash and cash equivalents $ 65,331,000 $134,313,000 Marketable securities 23,144,000 20,419,000 Accounts receivable 514,403,000 495,349,000 Expenditures billable to clients 49,965,000 46,449,000 Other current assets 52,120,000 49,614,000 -------------------------------- Total current assets 704,963,000 746,144,000 Investments in and advances to nonconsolidated affiliated companies 16,292,000 20,693,000 Fixed assets - at cost, less accumulated depreciation of $96,513,000 and $93,789,000 76,913,000 74,706,000 Marketable securities 61,183,000 48,252,000 Intangible assets and other assets-including loans to officers of $5,522,000 in 1996 and 1995 69,524,000 65,342,000 -------------------------------- Total assets $928,875,000 $955,137,000 ================================
See accompanying notes to condensed consolidated financial statements. (A) The consolidated balance sheet has been derived from the audited financial statements at that date. 3 4 GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS(CONTINUED)
JUNE 30, 1996 DECEMBER 31, 1995 (UNAUDITED) (A) ------------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $512,307,000 $549,533,000 Notes payable to banks 78,683,000 71,336,000 Accrued expenses and other 96,882,000 97,126,000 Income taxes payable 15,611,000 18,567,000 ----------------------------------- Total current liabilities 703,483,000 736,562,000 Other liabilities including deferred compensation of $27,477,000 and $22,021,000 38,598,000 39,620,000 Long-term debt 33,025,000 33,025,000 Minority interest 9,937,000 9,281,000 Redeemable preferred stock-at redemption value; par value $1 per share; authorized 500,000 shares; issued and outstanding 32,000 shares in 1996 and 1995 9,302,000 8,986,000 Common stockholders' equity: Common Stock-par value $1 per share; authorized 10,000,000 shares; issued 1,102,454 in 1996 and 1,096,096 in 1995 1,103,000 1,096,000 Limited Duration Class B Common Stock-par value $1 per share; authorized 2,000,000 shares; issued 329,330 shares in 1996 and 335,688 shares in 1995 329,000 336,000 Paid-in additional capital 37,785,000 37,898,000 Retained earnings 132,748,000 122,345,000 Cumulative translation adjustment 4,682,000 4,664,000 Unrealized (loss) gain on marketable securities (2,093,000) 550,000 Loans to officer used to purchase Common Stock and Limited Duration Class B Common Stock (4,726,000) (4,726,000) ----------------------------------- 169,828,000 162,163,000 Less-cost of 214,912 and 212,848 shares of Common Stock and 26,751 and 26,751 shares of Limited Duration Class B Common Stock held in treasury at June 30, 1996 and December 31, 1995, respectively 35,298,000 34,500,000 ----------------------------------- Total common stockholders' equity 134,530,000 127,663,000 ----------------------------------- Total liabilities and stockholders' equity $928,875,000 $955,137,000 ===================================
See accompanying notes to condensed consolidated financial statements. (A) The consolidated balance sheet has been derived from the audited financial statements at that date. 4 5 GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------------------------------------------------------- 1996 1995 1996 1995 ------------------------------------------------------------------------- Commissions and fees $186,533,000 $169,703,000 $360,010,000 $321,640,000 Expenses: Salaries and employee related expenses 114,801,000 106,092,000 228,642,000 204,281,000 Office and general expenses 56,094,000 49,617,000 106,699,000 95,095,000 ------------------------------------------------------------------------- 170,895,000 155,709,000 335,341,000 299,376,000 ------------------------------------------------------------------------- 15,638,000 13,994,000 24,669,000 22,264,000 Other income (loss) - net 290,000 (370,000) 5,129,000 (64,000) ------------------------------------------------------------------------- Income of consolidated companies before taxes on income 15,928,000 13,624,000 29,798,000 22,200,000 Provision for taxes on income (8,405,000) (6,874,000) (15,611,000) (11,386,000) ------------------------------------------------------------------------- Net income of consolidated companies 7,523,000 6,750,000 14,187,000 10,814,000 Minority interest applicable to consolidated companies (858,000) (1,006,000) (2,027,000) (1,901,000) Equity in nonconsolidated affiliated companies 142,000 263,000 910,000 786,000 ------------------------------------------------------------------------- Net income $ 6,807,000 $ 6,007,000 $ 13,070,000 $ 9,699,000 ========================================================================= Weighted average number of common shares outstanding Primary 1,300,614 1,320,489 1,300,307 1,320,791 Fully diluted 1,351,072 1,377,389 1,352,962 1,380,419 Net income per common share Primary $5.04 $4.28 $9.72 $6.86 Fully diluted $4.88 $4.13 $9.39 $6.61 Dividends per common share $0.9375 $0.875 $1.875 $1.75 =========================================================================
See accompanying notes to condensed consolidated financial statements. 5 6 GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1996 1995 ----------------------------------- OPERATING ACTIVITIES Net income $13,070,000 $9,699,000 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization of fixed assets 8,948,000 7,690,000 Amortization of intangibles 2,505,000 1,971,000 Deferred compensation 7,467,000 6,127,000 Equity in earnings of nonconsolidated affiliated companies, net of dividends received of $202,000 and $-0- (708,000) (786,000) Gains from the sale of a nonconsolidated affiliated company, a non-marketable investment security and marketable securities (4,754,000) Minority interest applicable to consolidated companies 2,027,000 1,901,000 Amortization of restricted stock expense 50,000 111,000 Deferred income taxes (3,000,000) (3,025,000) Changes in operating assets and liabilities: Increase in accounts receivable (24,523,000) (28,145,000) Increase in expenditures billable to clients (5,048,000) (9,539,000) (Increase) decrease in other current assets (3,613,000) 8,354,000 Increase in other assets (2,867,000) (5,736,000) (Decrease) increase in accounts payable (31,020,000) 5,782,000 Increase in accrued expenses and other 3,992,000 11,933,000 Decrease in income taxes payable (6,561,000) (8,878,000) Decrease in other liabilities (2,957,000) (804,000) ----------------------------------- Net cash used in operating activities (46,992,000) (3,345,000) INVESTING ACTIVITIES Purchases of fixed assets (12,324,000) (9,906,000) Trust fund deposits (1,303,000) Proceeds from the sale of marketable securities 83,158,000 10,948,000 Purchases of marketable securities (101,457,000) (12,988,000) Proceeds from the sale of a nonconsolidated affiliated company and a non-marketable investment security 8,947,000 Increase in intangibles, primarily goodwill (5,396,000) (2,875,000) Decrease (increase) in investments and advances to nonconsolidated affiliated companies 539,000 (829,000) ----------------------------------- Net cash used in investing activities (27,836,000) (15,650,000)
6 7 GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1996 1995 ----------------------------------- FINANCING ACTIVITIES Net proceeds from short-term borrowings $ 11,199,000 $ 3,934,000 Common shares acquired for treasury (1,000,000) (6,576,000) Cash dividends paid on Common Shares (2,231,000) (2,174,000) Cash dividends paid on Redeemable Preferred Stock (120,000) (112,000) Issuance of restricted stock 25,000 Proceeds from exercise of stock options 253,000 336,000 ----------------------------------- Net cash provided by (used in) financing activities 8,126,000 (4,592,000) Effect of exchange rate changes on cash (2,280,000) 3,981,000 ----------------------------------- Decrease in cash and cash equivalents (68,982,000) (19,606,000) Cash and cash equivalents at beginning of period 134,313,000 170,077,000 ----------------------------------- Cash and cash equivalents at end of period $ 65,331,000 $ 150,471,000 ===================================
See accompanying notes to condensed consolidated financial statements. 7 8 GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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, 1995 filed with the Securities and Exchange Commission. Certain amounts for the prior year have been reclassified to conform to the current period classification. 2. The financial statements as of June 30, 1996 and for the three and six month periods ended June 30, 1996 and 1995 are unaudited. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair representation have been included. 3. The results of operations for the three and six month periods ended June 30, 1996 are not necessarily indicative of the results to be expected for the full year. 4. The computations of net income per common share for the three and six month periods ended June 30, 1996 and 1995 are based on the weighted average number of common shares outstanding, adjusted for the effect, if any, of the assumed exercise of dilutive stock options and of shares payable in Common Stock pursuant to the Company's Senior Management Incentive Plan and, for fully diluted net income per common share, the assumed conversion of the 8 1/2% Convertible Subordinated Debentures issued in December 1983. Also, for the purpose of computing net income per common share for the three and six month periods ended June 30, 1996 and 1995, the Company's net income was reduced by dividends on the Preferred Stock and also adjusted by the change in the redemption value of Preferred Stock. Primary net income per common share is computed as if the stock options were exercised at the beginning of the period and as if the funds obtained thereby were used to purchase Common Stock at the average market price during the period. In computing fully diluted net income per common share, the market price at the close of the period or the average market price, whichever was higher, was 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. The provision for taxes on income is greater than the Federal statutory rate principally due to state and local income taxes and effective foreign tax rates that are in excess of the Federal statutory rate. 8 9 6. As of June 30, 1996 and December 31, 1995, the Company had outstanding 20,000 shares of Series I Preferred Stock, 5,000 shares each of its Series II and Series III Preferred Stock, and 2,000 shares of Series 1 Preferred Stock. 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 pertaining upon redemption (subject to certain adjustments), less a fixed discount established upon the issuance of the Preferred Stock. The holders (including one senior executive) of each class of Preferred Stock are entitled to receive cumulative preferential dividends at the annual rate of $0.25 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. The terms of the Series I, Series II and Series III Preferred Stock also give the holder, his estate or legal representative, as the case may be, the option to require the Company to redeem his Preferred Stock for a period of 12 months following his (i) death, (ii) permanent disability or permanent mental disability, (iii) termination of full-time employment for good reason or (iv) termination of full-time employment by the Company without cause. The holder of the Series 1 Preferred Stock has the option to have his shares redeemed upon termination of his employment prior to age 65; the Company is obligated to redeem such shares following the attainment of age 65 by such holder thereof following termination of employment. In connection with the ownership of Series I, Series II and Series III Preferred Stock, the senior executive issued to the Company full recourse promissory notes (which are included in Other Assets in the accompanying condensed consolidated balance sheet). 7. As of July 29, 1996, the Company and the senior executive, who is the holder of the 8 1/2% Subordinated Convertible Debentures due December 10, 1996 ("Debentures") and the issuer of the $3,000,000, 9% Promissory Note ("Promissory Note"), mutually agreed to extend the maturity dates of the Debentures and the Promissory Note to December 31, 2003 and December 31, 2004, respectively. All other terms of the Debentures and the Promissory Note remain in full force and effect. 9 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Income from commissions and fees increased 9.9% during the second quarter of 1996 and 11.9% during the six months ended June 30, 1996 when compared to the same periods in 1995. Absent exchange rate fluctuations, gross income increased 10.3% in the three months ended June 30, and 10.8% in the six months ended June 30, 1996 when compared to the same periods in 1995. In the second quarter of 1996 and 1995, respectively, 46.4% and 43.7% of consolidated gross income was attributable to domestic operations and 53.6% and 56.3% to international operations. In the second quarter of 1996 and the first six months of 1996, respectively, gross income from domestic operations increased 16.8% and 13.7% versus the respective prior periods. Gross income from international operations increased 4.6% for the second quarter, (5.2% absent exchange rate fluctuations) and 10.5% for the first six months of 1996 (8.4% absent exchange rate fluctuations) when compared to the same periods in 1995. The increase in gross income in both years primarily resulted from expanded activities from existing clients and the continued growth of the Company's general agency and specialized operations. The increase in gross income from international operations is indicative of the continued development of the Company's worldwide business. Salaries and employee related expenses increased 8.2% in the second quarter of 1996 and 11.9% for the first six months of 1996 when compared to the respective prior periods. Office and general expenses increased 13.1% and 12.2% for the three and six month periods ended June 30, 1996, respectively, versus the comparable prior periods. These changes are generally in line with the increases in gross income. Inflation did not have a material effect on revenue or expenses during 1996 or 1995. Minority interest applicable to consolidated companies decreased by $148,000 in the second quarter of 1996 but increased by $126,000 for the first six months of 1996 as compared to the respective prior periods. These variances are primarily due to changes in the level of profits of majority-owned companies. Equity in earnings of nonconsolidated affiliated companies decreased by $121,000 in the second quarter of 1996 but increased by $124,000 for the first six months of 1996 as compared to the respective prior periods. These variances are primarily due to changes in the level of profits of nonconsolidated affiliated companies. 10 11 RESULTS OF OPERATIONS (CONTINUED) The effective tax rate increased to 52.8% in the second quarter of 1996 and 52.4% in the first six months of 1996 versus 50.5% and 51.3% in the same periods in 1995, respectively. These increases are due in part to an increase in effective foreign tax rates. Other income was affected positively, in the first quarter of 1996, by non-recurring, non-operating pre-tax income of approximately $4,000,000 primarily related to gains on the sale of the Company's equity position in a nonconsolidated subsidiary and the liquidation of a non-marketable investment security. Net income increased by 13.3% and 34.8% in the three and six months ended June 30, 1996, respectively, when compared to net income for the same periods in 1995. Primary net income per common share increased by 17.8% and 41.7% in the three and six month periods ended June 30, 1996, respectively, versus the comparable periods in 1995. Fully diluted net income per common share increased by 18.2% for the three months ended June 30, 1996 and 42.1% for the six months ended June 30, 1996 when compared to the same periods in 1995. Absent the non-recurring, non-operating gains occurring in the first quarter of 1996, primary and fully diluted net income per common share increased by 19.1% and 19.7% respectively, for the six months ended June 30, 1996 as compared to the same period in 1995. For purposes of computing primary net income per common share, the Company's net income is adjusted by (i) dividends paid on the Company's Preferred Stock and (ii) the change in redemption value of the Preferred Stock. LIQUIDITY AND CAPITAL RESOURCES Working capital decreased by $8,102,000 from $9,582,000 at December 31, 1995 to $1,480,000 at June 30, 1996. Cash and cash equivalents decreased by $68,982,000 from $134,313,000 to $65,331,000. The decrease in cash and cash equivalents is largely attributable to the increase in long-term marketable securities and the timing of collections of accounts receivable versus payments to trade vendors. Domestically, the Company has committed lines of credit totaling $50,000,000. These lines of credit were partially utilized during the three and six months ended June 30, 1996 and 1995 to secure obligations of selected foreign subsidiaries. There was $15,000,000 outstanding under these credit lines as of June 30, 1996 and 1995. 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 were $63,683,000 and $56,691,000 outstanding at June 30, 1996 and 1995, respectively. 11 12 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 8-K during the quarter ended June 30, 1996. 12 13 GREY ADVERTISING 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, 1996 By:/s/ Steven G. Felsher ----------------------------- Steven G. Felsher Executive Vice President - Finance - Worldwide Secretary and Treasurer (Duly Authorized Officer) DATE: August 14, 1996 By:/s/ William P. Garvey ----------------------------- William P. Garvey Executive Vice President Chief Financial Officer - United States (Chief Accounting Officer) 13 14 INDEX TO EXHIBITS
Number Assigned to Exhibit Page Number in Sequential (i.e., Exhibit Table of Item 601 Table of Item 601 Exhibits Numbering System Where of Regulation S-K) Description of Exhibit Exhibit May Be Found - ---------------------------------------------------------------------------------------------------- (4.01) Extension Agreement, dated as of July 29, 1996 between Grey and Edward H. Meyer relating to the extension of the maturity date of the 8 1/2% Convertible Debentures ("Convertible Debentures") held by Mr. Meyer. (15) (4.02) Extension Agreement, dated as of July 29, 1996 between Grey and Edward H. Meyer relating to the extension of the Promissory Note issued by Mr. Meyer in connection with the Convertible Debentures. (16) (11) Statement Re: Computation of Net Income per Common Share (unaudited) (17) (27) Financial Data Schedule (18)
14 EX-4.01 2 EXTENSION AGREEMENT RE CONVERTIBLE DEBENTURES 1 EXTENSION AGREEMENT AGREEMENT, dated as of July 29, 1996, by and between GREY ADVERTISING INC., a Delaware corporation ("Grey"), having its principal offices at 777 Third Avenue, New York, New York 10017, and EDWARD H. MEYER, residing at 580 Park Avenue, New York, New York 10022 ("Meyer"). WHEREAS, Grey issued to Meyer $3,025,000 principal amount of its 8 1/2% Subordinated Convertible Debentures, due December 10, 1996 (following a previous extension of the maturity date thereof) ("Debentures"). NOW, THEREFORE, for good and valuable consideration, and in consideration of the premises and the mutual covenants herein contained, the parties agree as follows: 1. The maturity date of the Debentures is extended until the close of business December 31, 2003. 2. All other terms of the Debentures shall remain in full force and effect, and continue unaffected by the agreements herein contained. IN WITNESS WHEREOF, this Agreement has been signed as of the date hereinabove first written. GREY ADVERTISING INC. By: /s/ Steven G. Felsher /s/ Edward H. Meyer - ------------------------------- ------------------------------ Edward H. Meyer 15 EX-4.02 3 EXTENSION AGREEMENT RE PROMISSORY NOTE 1 EXTENSION AGREEMENT AGREEMENT, dated as of July 29, 1996, by and between GREY ADVERTISING INC., a Delaware corporation ("Grey"), having its principal offices at 777 Third Avenue, New York, New York 10017, and EDWARD H. MEYER, residing at 580 Park Avenue, New York, New York 10022 ("Meyer"). WHEREAS, Meyer issued to Grey his 9% promissory note, dated as of December 10, 1983 (the maturity date of which security was subsequently extended, "Promissory Note"), as partial payment for his purchase of Grey's 8 1/2% Subordinated Convertible Debentures. NOW, THEREFORE, for good and valuable consideration, and in consideration of the premises and the mutual agreements herein contained, the parties hereby agree as follows: 1. The maturity date of the Promissory Note is extended until December 31, 2004. 2. All other terms of the Promissory Note shall remain in full force and effect, and continue unaffected by the agreements herein contained. IN WITNESS WHEREOF, this Agreement has been signed as of the date hereinabove first written. GREY ADVERTISING INC. By: /s/ Steven G. Felsher /s/ Edward H. Meyer - ------------------------------- ------------------------------ Edward H. Meyer 16 EX-11 4 STATEMENT RE: COMPUTATION OF NET INCOME PER C/S 1 GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES EXHIBIT - STATEMENT RE: COMPUTATION OF NET INCOME PER COMMON SHARE (UNAUDITED) EXHIBIT - 11
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED JUNE 30, JUNE 30, --------------------------------------------------------------------- 1996 1995 1996 1995 --------------------------------------------------------------------- PRIMARY Weighted average shares outstanding(1) 1,266,181 1,294,583 1,267,860 1,297,331 Net effect of dilutive stock options - based on the treasury stock method using average market price 34,433 25,906 32,447 23,460 --------------------------------------------------------------------- TOTAL 1,300,614 1,320,489 1,300,307 1,320,791 ===================================================================== Net Income $6,807,000 $6,007,000 $13,070,000 $9,699,000 Less: Effect of dividend requirements and the change in redemption value of redeemable preferred stock (253,000) (357,000) (437,000) (644,000) --------------------------------------------------------------------- NET EARNINGS USED IN COMPUTATION $6,554,000 $5,650,000 $12,633,000 $9,055,000 ===================================================================== Per share amount $5.04 $4.28 $9.72 $6.86 ===================================================================== FULLY DILUTED Weighted average shares outstanding (1) 1,266,181 1,294,583 1,267,860 1,297,331 Net effect of dilutive stock options - based on the treasury stock method using the period-end market price, if higher than the average market price 33,999 31,807 34,210 32,089 Assumed conversion of 8 1/2% convertible subordinated debentures issued December 1983 50,892 50,999 50,892 50,999 --------------------------------------------------------------------- TOTAL 1,351,072 1,377,389 1,352,962 1,380,419 ===================================================================== Net Income $6,807,000 $6,007,000 $13,070,000 $9,699,000 Less: Effect of dividend requirements and the change in redemption value of redeemable preferred stock (253,000) (357,000) (437,000) (644,000) Add: 8 1/2% convertible subordinated debentures interest, net of income tax effect 35,000 35,000 70,000 69,000 --------------------------------------------------------------------- NET EARNINGS USED IN COMPUTATION $6,589,000 $5,685,000 $12,703,000 $9,124,000 ===================================================================== Per share amount $4.88 $4.13 $9.39 $6.61 =====================================================================
(1) Includes 78,248 shares and 54,287 shares for 1996 and 1995, respectively, expected to be issued pursuant to the terms of the Senior Management Incentive Plan. 17 EX-27 5 FINANCIAL DATA SCHEDULE
5 GREY ADVERTISING INC. & CONSOLIDATED SUBSIDIARY COMPANIES FINANCIAL DATA SCHEDULE EXHIBIT - 27 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1996 AND THE UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1996 OF GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 6-MOS DEC-31-1996 JUN-30-1996 65,331 23,144 514,403 0 0 704,963 173,426 96,513 928,875 703,483 33,025 9,302 0 1,432 133,098 928,875 360,010 360,010 0 0 335,341 0 4,900 29,798 15,611 13,070 0 0 0 13,070 9.72 9.39
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