-----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, EoHb/dRMBk7daO9Tcaw4vDw7TIfh4YDthbGGE2Y5AlucFhI7Nbb2sAbqwwJkXl3R jWKhZ4eRzOCSJjznjXT78Q== 0000950123-97-006883.txt : 19970815 0000950123-97-006883.hdr.sgml : 19970815 ACCESSION NUMBER: 0000950123-97-006883 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NASD 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: 97660861 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 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, 1997 [ ] 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, 1997, the total number of shares outstanding of Registrant's Common Stock, par value $1 per share ("Common Stock"), was 901,080 and of Registrant's Limited Duration Class B Common Stock, par value $1 per share ("Class B Common Stock"), was 283,767. 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 13 Signatures 14 Index to Exhibits 15
2 3 GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 DECEMBER 31, 1996 (UNAUDITED) (A) ----------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 81,285,000 $ 112,485,000 Marketable securities 36,637,000 28,688,000 Accounts receivable 628,380,000 590,002,000 Expenditures billable to clients 57,120,000 52,285,000 Other current assets 55,663,000 52,982,000 ----------------------------------------------- Total current assets 859,085,000 836,442,000 Investments in and advances to nonconsolidated affiliated companies 19,755,000 17,723,000 Fixed assets - at cost, less accumulated depreciation of $107,260,000 and $104,811,000 79,462,000 78,223,000 Marketable securities 55,343,000 67,419,000 Intangible assets and other assets-including loans to officers of $5,822,000 in 1997 and 1996 99,849,000 89,587,000 ----------------------------------------------- Total assets $1,113,494,000 $1,089,394,000 ===============================================
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, 1997 DECEMBER 31, 1996 (UNAUDITED) (A) ------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 642,341,000 $ 619,003,000 Notes payable to banks 102,996,000 86,004,000 Accrued expenses and other 98,751,000 107,368,000 Income taxes payable 14,651,000 20,224,000 Current portion of long-term debt 10,000,000 -------------------------------------------------- Total current liabilities 868,739,000 832,599,000 Other liabilities including - deferred compensation of $31,229,000 and $28,738,000 52,321,000 55,217,000 Long-term debt 23,025,000 33,025,000 Minority interest 10,318,000 10,533,000 Redeemable preferred stock-at redemption value; par value $1 per share; authorized 500,000 shares; issued and outstanding 32,000 shares in 1997 and 1996 10,095,000 10,098,000 Common stockholders' equity: Common Stock-par value $1 per share; authorized 10,000,000 shares; issued 1,121,256 in 1997 and 1,110,918 in 1996 1,121,000 1,111,000 Limited Duration Class B Common Stock-par value $1 per share; authorized 2,000,000 shares; issued 310,528 shares in 1997 and 320,866 shares in 1996 311,000 321,000 Paid-in additional capital 43,196,000 42,814,000 Retained earnings 154,570,000 144,789,000 Cumulative translation adjustment (6,700,000) 2,579,000 Unrealized loss on marketable securities (761,000) (870,000) Loans to officer used to purchase Common Stock and Limited Duration Class B Common Stock (4,726,000) (4,726,000) -------------------------------------------------- 187,011,000 186,018,000 Less-cost of 220,176 and 220,810 shares of Common Stock and 26,761 and 26,759 shares of Limited Duration Class B Common Stock held in treasury at June 30, 1997 and December 31, 1996, respectively 38,015,000 38,096,000 -------------------------------------------------- Total common stockholders' equity 148,996,000 147,922,000 -------------------------------------------------- Total liabilities and stockholders' equity $1,113,494,000 $1,089,394,000 ==================================================
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, ------------------------------------------------------------------------------------- 1997 1996 1997 1996 ------------------------------------------------------------------------------------- Commissions and fees $206,208,000 $186,533,000 $394,956,000 $360,010,000 Expenses: Salaries and employee related expenses 128,208,000 114,801,000 250,294,000 228,642,000 Office and general expenses 60,314,000 56,094,000 118,333,000 106,699,000 ---------------------------------------------------------------------------------- 188,522,000 170,895,000 368,627,000 335,341,000 ---------------------------------------------------------------------------------- 17,686,000 15,638,000 26,329,000 24,669,000 Other income 807,000 290,000 1,746,000 5,129,000 ---------------------------------------------------------------------------------- Income of consolidated companies before taxes on income 18,493,000 15,928,000 28,075,000 29,798,000 Provision for taxes on income (9,247,000) (8,405,000) (14,510,000) (15,611,000) ---------------------------------------------------------------------------------- Net income of consolidated companies 9,246,000 7,523,000 13,565,000 14,187,000 Minority interest applicable to consolidated companies (2,072,000) (858,000) (2,441,000) (2,027,000) Equity in earnings of nonconsolidated affiliated companies 526,000 142,000 1,151,000 910,000 ---------------------------------------------------------------------------------- Net income $ 7,700,000 $ 6,807,000 $ 12,275,000 $ 13,070,000 ================================================================================== Weighted average number of common shares outstanding Primary 1,306,121 1,300,614 1,304,949 1,300,307 Fully diluted 1,372,491 1,351,072 1,371,319 1,352,962 Net income per common share Primary $5.62 $5.04 $9.31 $9.72 Fully diluted $5.37 $4.88 $8.91 $9.39 Dividends per common share $1.00 $0.9375 $2.00 $1.875 ==================================================================================
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, 1997 1996 -------------------------------------------------- OPERATING ACTIVITIES Net income $12,275,000 $13,070,000 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization of fixed assets 11,750,000 8,948,000 Amortization of intangibles 2,633,000 2,505,000 Deferred compensation 7,324,000 7,467,000 Equity in earnings of nonconsolidated affiliated companies, net of dividends received of $442,000 and $202,000 (709,000) (708,000) 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 2,441,000 2,027,000 Amortization of restricted stock expense 98,000 50,000 Deferred income taxes (3,550,000) (3,000,000) Changes in operating assets and liabilities: Increase in accounts receivable (56,150,000) (24,523,000) Increase in expenditures billable to clients (6,993,000) (5,048,000) Increase in other current assets (5,146,000) (3,613,000) Increase in other assets (4,009,000) (2,867,000) Increase(decrease) in accounts payable 40,004,000 (31,020,000) (Decrease) increase in accrued expenses and other (10,225,000) 3,992,000 Decrease in income taxes payable (4,318,000) (6,561,000) Decrease in other liabilities (3,376,000) (2,957,000) -------------------------------------------------- Net cash used in operating activities (17,951,000) (46,992,000) INVESTING ACTIVITIES Purchases of fixed assets (14,868,000) (12,324,000) Trust fund deposits (1,692,000) (1,303,000) Proceeds from the sale of marketable securities 14,484,000 83,158,000 Purchases of marketable securities (10,243,000) (101,457,000) Proceeds from the sale of a nonconsolidated affiliated company and a non-marketable investment security 8,947,000 Increase in intangibles, primarily goodwill (6,466,000) (5,396,000) (Increase) decrease in investments in and advances to nonconsolidated affiliated companies (1,323,000) 539,000 -------------------------------------------------- Net cash used in investing activities (20,108,000) (27,836,000)
6 7 GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1997 1996 ---------------------------------------------------- FINANCING ACTIVITIES Net proceeds from short-term borrowings $ 16,866,000 $ 11,199,000 Common shares acquired for treasury (218,000) (1,000,000) Cash dividends paid on Common Shares (2,368,000) (2,231,000) Cash dividends paid on Redeemable Preferred Stock (128,000) (120,000) Issuance of restricted stock 3,000 25,000 Proceeds from exercise of stock options 71,000 253,000 ---------------------------------------------------- Net cash provided by financing activities 14,226,000 8,126,000 Effect of exchange rate changes on cash (7,367,000) (2,280,000) ---------------------------------------------------- Decrease in cash and cash equivalents (31,200,000) (68,982,000) Cash and cash equivalents at beginning of period 112,485,000 134,313,000 ---------------------------------------------------- Cash and cash equivalents at end of period $ 81,285,000 $ 65,331,000 ====================================================
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, 1996 filed with the Securities and Exchange Commission. 2. The financial statements as of June 30, 1997 and for the three and six month periods ended June 30, 1997 and 1996 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, 1997 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, 1997 and 1996 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 Company's 8-1/2% Convertible Subordinated Debentures. Also, for the purpose of computing net income per common share for the three and six month periods ended June 30, 1997 and 1996, 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 GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 6. As of June 30, 1997 and December 31, 1996, 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. The holder of the Series I, Series II and Series III Preferred Stock is the Chairman and Chief Executive Officer of the Company, and the Series 1 Preferred Stock is held by a former employee. 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), less a fixed discount established upon the issuance of the Preferred Stock. The holders 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 Company is obligated to redeem the Series 1 Preferred Stock following the attainment of age 65 by the holder thereof. 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. In February 1997, the Financial Accounting Standards Board issued Statement No. 128 ("SFAS 128") "Earnings Per Share." SFAS 128 is designed to improve the EPS information in financial statements by simplifying the existing computational guidelines, revising disclosure requirements, and increasing the comparability of EPS on an international basis. SFAS 128 is effective for financial statements issued for periods ending after December 15, 1997. The Company has not yet assessed the impact that the new standard will have on either the computation of its earnings per share amounts or its related disclosures. 9 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Income from commissions and fees increased 10.5% during the second quarter of 1997 and 9.7% during the six months ended June 30, 1997 when compared to the same periods in 1996. Absent exchange rate fluctuations, gross income increased 14.8% in the three months ended June 30, and 13.5% in the six months ended June 30, 1997 when compared to the same periods in 1996. In the second quarter of 1997 and 1996, respectively, 46.8% and 46.4% of consolidated gross income was attributable to domestic operations and 53.2% and 53.6% to international operations. In the second quarter of 1997 and the first six months of 1997, respectively, gross income from domestic operations increased 11.4% and 12.9% versus the respective prior periods. Gross income from international operations increased 9.8% for the second quarter, (17.7% absent exchange rate fluctuations) and 7.1% for the first six months of 1997 (14.1% absent exchange rate fluctuations) when compared to the same periods in 1996. 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. Salaries and employee related expenses increased 11.7% in the second quarter of 1997 and 9.5% for the first six months of 1997 when compared to the respective prior periods. Office and general expenses increased 7.5% and 10.9% for the three and six month periods ended June 30, 1997, 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 1997 or 1996. Minority interest applicable to consolidated companies increased by $1,214,000 in the second quarter of 1997 and by $414,000 for the first six months of 1997 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 increased by $384,000 in the second quarter of 1997 and by $241,000 for the first six months of 1997 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 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS (CONTINUED) The effective tax rate decreased to 50.0% in the second quarter of 1997 and 51.7% in the first six months of 1997 versus 52.8% and 52.4% in the same periods in 1996, respectively. These decreases are due in principal part to a decrease in effective foreign tax rates. Net income increased by 13.1% in the three months ended June 30, 1997 and decreased 6.1% in the six months ended June 30, 1997 when compared to net income for the same periods in 1996. Primary net income per common share increased by 11.5% in the three month period ended June 30, 1997 and decreased 4.2% in the six month period ended June 30, 1997 versus the comparable periods in 1996. Fully diluted net income per common share increased by 10.0% for the three months ended June 30, 1997 and decreased 5.1% for the six months ended June 30, 1997 when compared to the same periods in 1996. The first quarter of 1996, however, was favorably affected by non-recurring, non-operating pre-tax income of almost $4,000,000 primarily related to gains on the sale of an equity position in a nonconsolidated subsidiary and the liquidation of a non-marketable investment security. Absent such one-time gains, net income was up 12.1%, and primary and fully diluted earnings per common share were up 14.0% and 12.6%, respectively, for the first six months of 1997. 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 $13,497,000 from $3,843,000 at December 31, 1996 to $(9,654,000) at June 30, 1997. Cash and cash equivalents decreased by $31,200,000 from $112,485,000 to $81,285,000. The decrease in working capital is primarily attributable to the reclassification of a portion of long-term debt to current liabilities. The decrease in cash and cash equivalents is largely attributable to 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 $51,000,000. These lines of credit were partially utilized during the three and six months ended June 30, 1997 and 1996 to secure obligations of selected foreign subsidiaries. There was $26,000,000 and $15,000,000 outstanding under these credit lines as of June 30, 1997 and 1996, 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 were $76,996,000 and $63,683,000 outstanding at June 30, 1997 and 1996, respectively. 11 12 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS (CONTINUED) - ----------------------------------------------------- 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 advertising 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 Company's international marketplace, unanticipated expenses, client preferences which can be affected by competition 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 8-K during the quarter ended June 30, 1997. 13 14 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, 1997 By:/s/ Steven G. Felsher ----------------------------- Steven G. Felsher Executive Vice President - Finance - Worldwide Secretary and Treasurer (Duly Authorized Officer) DATE: August 14, 1997 By:/s/ William P. Garvey ---------------------------- William P. Garvey Executive Vice President Chief Financial Officer - United States (Chief Accounting Officer) 14 15 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 - ------------------------------------------------------------------------------------------------------------ (11) Statement Re: Computation of Net Income per Common Share (unaudited) (16) (27) Financial Data Schedule (17)
15 EX-11 2 COMPUTATION OF NET INCOME PER SHARE 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, ------------------------------------------------------------------------- PRIMARY 1997 1996 1997 1996 ------------------------------------------------------------------------- Weighted average shares outstanding(1) 1,278,972 1,266,181 1,277,800 1,267,860 Net effect of dilutive stock options - based on the treasury stock method using average market price 27,149 34,433 27,149 32,447 ------------------------------------------------------------------------- TOTAL 1,306,121 1,300,614 1,304,949 1,300,307 ========================================================================= Net Income $7,700,000 $6,807,000 $12,275,000 $13,070,000 Less: Effect of dividend requirements and the change in redemption value of redeemable preferred stock (360,000) (253,000) (125,000) (437,000) ------------------------------------------------------------------------- NET EARNINGS USED IN COMPUTATION $7,340,000 $6,554,000 $12,150,000 $12,633,000 ========================================================================= Per share amount $5.62 $5.04 $9.31 $9.72 ========================================================================= FULLY DILUTED Weighted average shares outstanding (1) 1,278,972 1,266,181 1,277,800 1,267,860 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 42,502 33,999 42,502 34,210 Assumed conversion of 8-1/2% convertible subordinated debentures issued December 1983 51,017 50,892 51,017 50,892 ------------------------------------------------------------------------- TOTAL 1,372,491 1,351,072 1,371,319 1,352,962 ========================================================================= Net Income $7,700,000 $6,807,000 $12,275,000 $13,070,000 Less: Effect of dividend requirements and the change in redemption value of redeemable preferred stock (360,000) (253,000) (125,000) (437,000) Add: 8-1/2% convertible subordinated debentures interest, net of income tax effect 35,000 35,000 70,000 70,000 ------------------------------------------------------------------------- NET EARNINGS USED IN COMPUTATION $7,375,000 $6,589,000 $12,220,000 $12,703,000 ========================================================================= Per share amount $5.37 $4.88 $8.91 $9.39 =========================================================================
(1) Includes 94,097 shares and 78,248 shares for 1997 and 1996, respectively, expected to be issued pursuant to the terms of the Senior Management Incentive Plan. 16 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 AND THE UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1997 OF GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1997 JUN-30-1997 81,285 36,637 628,380 0 0 859,085 186,722 107,260 1,113,494 868,739 23,025 10,095 0 1,432 147,564 1,113,494 394,956 394,956 0 0 368,627 0 5,600 28,075 14,510 12,275 0 0 0 12,275 9.31 8.91
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