-----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, WnubwU/mSX2baYczqN68FnO4wVu8t5TABcq8B8vJX1IIdge8HvhdpBfcBUlKakhr W2IfxqLcdnQKrLoeGNbraQ== 0000950123-97-009575.txt : 19971117 0000950123-97-009575.hdr.sgml : 19971117 ACCESSION NUMBER: 0000950123-97-009575 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 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: SEC FILE NUMBER: 000-07898 FILM NUMBER: 97718211 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 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 September 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 October 31, 1997, the total number of shares outstanding of Registrant's Common Stock, par value $1 per share ("Common Stock"), was 903,815 and of Registrant's Limited Duration Class B Common Stock, par value $1 per share ("Class B Common Stock"), was 281,279. 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
SEPTEMBER 30, 1997 December 31, 1996 (UNAUDITED) (A) ------------------------------------ ASSETS Current assets: Cash and cash equivalents $ 54,635,000 $ 112,485,000 Marketable securities 14,447,000 28,688,000 Accounts receivable 659,340,000 590,002,000 Expenditures billable to clients 50,802,000 52,285,000 Other current assets 59,504,000 52,982,000 ------------------------------------ Total current assets 838,728,000 836,442,000 Investments in and advances to nonconsolidated affiliated companies 19,874,000 17,723,000 Fixed assets - at cost, less accumulated depreciation of $110,259,000 and $104,811,000 81,209,000 78,223,000 Marketable securities 56,035,000 67,419,000 Intangible assets and other assets-including loans to executive officers of $5,822,000 in 1997 and 1996 105,383,000 89,587,000 ------------------------------------ Total assets $1,101,229,000 $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)
SEPTEMBER 30, 1997 DECEMBER 31, 1996 (UNAUDITED) (A) ---------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 680,841,000 $ 619,003,000 Notes payable to banks 38,248,000 86,004,000 Accrued expenses and other 102,731,000 107,368,000 Income taxes payable 14,408,000 20,224,000 Current portion of long-term debt 10,000,000 ---------------------------------------- Total current liabilities 846,228,000 832,599,000 Other liabilities including - deferred compensation of $33,290,000 and $28,738,000 57,005,000 55,217,000 Long-term debt 23,025,000 33,025,000 Minority interest 11,958,000 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 10,222,000 10,098,000 Common stockholders' equity: Common Stock-par value $1 per share; authorized 10,000,000 shares; issued 1,123,723 in 1997 and 1,110,918 in 1996 1,124,000 1,111,000 Limited Duration Class B Common Stock-par value $1 per share; authorized 2,000,000 shares; issued 308,061 shares in 1997 and 320,866 shares in 1996 308,000 321,000 Paid-in additional capital 43,242,000 42,814,000 Retained earnings 158,996,000 144,789,000 Cumulative translation adjustment (7,889,000) 2,579,000 Unrealized loss on marketable securities (277,000) (870,000) Loans to officer used to purchase Common Stock and Limited Duration Class B Common Stock (4,726,000) (4,726,000) ---------------------------------------- 190,778,000 186,018,000 Less-cost of 219,927 and 222,810 shares of Common Stock and 26,762 and 26,759 shares of Limited Duration Class B Common Stock held in treasury at September 30, 1997 and December 31, 1996, respectively 37,987,000 38,096,000 ---------------------------------------- Total common stockholders' equity 152,791,000 147,922,000 ---------------------------------------- Total liabilities and stockholders' equity $1,101,229,000 $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 NINE MONTHS ENDED SEPTEMBER 30, | SEPTEMBER 30, ------------------------------------|---------------------------------------- 1997 1996 | 1997 1996 ------------------------------------|---------------------------------------- | Commissions and fees $201,791,000 $182,487,000 | $596,747,000 $542,497,000 Expenses: | Salaries and employee related | expenses 129,578,000 118,859,000 | 379,872,000 347,501,000 Office and general expenses 60,919,000 53,904,000 | 179,252,000 160,603,000 ------------------------------------|---------------------------------------- 190,497,000 172,763,000 | 559,124,000 508,104,000 ------------------------------------|---------------------------------------- 11,294,000 9,724,000 | 37,623,000 34,393,000 | Other income 843,000 529,000 | 2,589,000 5,658,000 ------------------------------------|---------------------------------------- Income of consolidated companies | before taxes on income 12,137,000 10,253,000 | 40,212,000 40,051,000 Provision for taxes on income (6,055,000) (5,050,000) | (20,565,000) (20,661,000) ------------------------------------|---------------------------------------- Net income of consolidated | companies 6,082,000 5,203,000 | 19,647,000 19,390,000 Minority interest applicable to | consolidated companies (436,000) (730,000) | (2,877,000) (2,757,000) Equity in earnings of nonconsolidated | affiliated companies 155,000 574,000 | 1,306,000 1,484,000 ------------------------------------|---------------------------------------- | Net income $5,801,000 $5,047,000 | $18,076,000 $18,117,000 ====================================|======================================== | Weighted average number | of common shares outstanding | Primary 1,310,986 1,295,764 | 1,306,069 1,295,757 Fully diluted 1,370,921 1,351,004 | 1,370,147 1,351,465 Net income per common share | Primary $4.28 $3.71 | $13.60 $13.46 Fully diluted $4.12 $3.58 | $13.04 $12.98 | Dividends per common share $1.00 $0.9375 | $3.00 $2.8125 =============================================================================
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 NINE MONTHS ENDED SEPTEMBER 30, 1997 1996 ---------------------------------- OPERATING ACTIVITIES Net income $ 18,076,000 $ 18,117,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization of fixed assets 18,186,000 13,714,000 Amortization of intangibles 4,036,000 3,948,000 Deferred compensation 10,940,000 10,692,000 Equity in earnings of nonconsolidated affiliated companies, net of dividends received of $259,000 and $235,000 (1,047,000) (1,249,000) 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 2,877,000 2,757,000 Amortization of restricted stock expense 146,000 75,000 Deferred income taxes (5,325,000) (4,500,000) Changes in operating assets and liabilities: Increase in accounts receivable (92,919,000) (50,175,000) Increase in expenditures billable to clients (1,682,000) (785,000) Increase in other current assets (9,515,000) (10,583,000) Decrease (increase) in other assets 359,000 (1,743,000) Increase (decrease) in accounts payable 83,554,000 (4,834,000) Decrease in accrued expenses and other (7,556,000) (2,707,000) Decrease in income taxes payable (4,228,000) (3,597,000) Increase (decrease) in other liabilities 824,000 (2,653,000) ---------------------------------- Net cash provided by (used in) operating activities 16,726,000 (38,277,000) INVESTING ACTIVITIES Purchases of fixed assets (23,875,000) (19,133,000) Trust fund deposits (2,334,000) (1,868,000) Proceeds from the sale of marketable securities 41,683,000 91,634,000 Purchases of marketable securities (15,844,000) (110,620,000 Proceeds from the sale of a nonconsolidated affiliated company and a non-marketable investment security 8,947,000 Increase in intangibles, primarily goodwill (14,514,000) (7,002,000) (Increase) decrease in investments in and advances to nonconsolidated affiliated companies (1,104,000) 539,000 ---------------------------------- Net cash (used in) investing activities (15,988,000) (37,503,000)
6 7 GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 1996 ----------------------------------- FINANCING ACTIVITIES Net (repayments of) proceeds from short-term borrowings $ (45,898,000) $ 18,234,000 Common shares acquired for treasury (218,000) (1,910,000) Cash dividends paid on Common Shares (3,553,000) (3,346,000) Cash dividends paid on Redeemable Preferred Stock (192,000) (180,000) Issuance of restricted stock 26,000 25,000 Proceeds from exercise of stock options 71,000 300,000 ----------------------------------- Net cash (used in) provided by financing activities (49,764,000) 13,123,000 Effect of exchange rate changes on cash (8,824,000) (2,025,000) ----------------------------------- Decrease in cash and cash equivalents (57,850,000) (64,682,000) Cash and cash equivalents at beginning of period 112,485,000 134,313,000 ----------------------------------- Cash and cash equivalents at end of period $ 54,635,000 $ 69,631,000 ===================================
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 September 30, 1997 and for the three and nine month periods ended September 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 nine month periods ended September 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 nine month periods ended September 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 nine month periods ended September 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 September 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 holder 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 earnings per share information in financial statements by simplifying the existing guidelines, revising disclosure requirements, and increasing the comparability of earnings per share calculations on a worldwide basis. SFAS 128 is effective for financial statements issued for periods ending after December 15, 1997. The Company does not anticipate that the new standard will have a material impact 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 10.6% during the third quarter of 1997 and 10% during the nine months ended September 30, 1997 when compared to the same periods in 1996. Absent exchange rate fluctuations, gross income increased 15.8% in the three months ended September 30, and 14.3% in the nine months ended September 30, 1997 when compared to the same periods in 1996. In the third quarter of 1997 and 1996, respectively, 46.2% and 45.9% of consolidated gross income was attributable to domestic operations and 53.8% and 54.1% to international operations. In the third quarter of 1997 and the first nine months of 1997, respectively, gross income from domestic operations increased 11.2% and 11.3% versus the respective prior periods. Gross income from international operations increased 10.1% for the third quarter, (19.8% absent exchange rate fluctuations) and 8.9% for the first nine months of 1997 (16.9% 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 9% in the third quarter of 1997 and 9.3% for the first nine months of 1997 when compared to the respective prior periods. Office and general expenses increased 13% and 11.6% for the three and nine month periods ended September 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 decreased by $294,000 in the third quarter of 1997 and increased by $120,000 for the first nine 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 decreased by $419,000 in the third quarter of 1997 and by $178,000 for the first nine 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 remained relatively constant at 49.9% in the third quarter of 1997 and 51.1% in the first nine months of 1997 versus 49.3% and 51.6% in the same periods in 1996, respectively. Net income increased by 14.9% in the three months ended September 30, 1997 and decreased 0.2% in the nine months ended September 30, 1997 when compared to net income for the same periods in 1996. Primary net income per common share increased by 15.4% in the three month period ended September 30, 1997 and by 1% in the nine month period ended September 30, 1997 versus the comparable periods in 1996. Fully diluted net income per common share increased by 15.1% for the three months ended September 30, 1997 and 0.5% for the nine months ended September 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 13%, and primary and fully diluted earnings per common share were up 14.2% and 13.4%, respectively, for the first nine 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 $11,343,000 from $3,843,000 at December 31, 1996 to $(7,500,000) at September 30, 1997. Cash and cash equivalents decreased by $57,850,000 from $112,485,000 to $54,635,000. 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 repayment of short-term borrowings and the timing of collections of accounts receivable and billing of expenses to clients versus payments to trade vendors. Domestically, the Company has committed lines of credit totaling $51,000,000. These lines of credit were partially utilized during the three and nine months ended September 30, 1997 and 1996 to secure obligations of selected foreign subsidiaries. The lines of credit were not in use as of September 30, 1997. There was $25,000,000 outstanding under these credit lines as of September 30, 1996. 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 $38,248,000 and $61,008,000 outstanding at September 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 September 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: November 14, 1997 By:/s/ Steven G. Felsher ----------------------------- Steven G. Felsher Executive Vice President - Finance - Worldwide Secretary and Treasurer (Duly Authorized Officer) DATE: November 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 Table of Item 601 Exhibits Numbering System Where 601 of Regulation S-K) Description of Exhibit Exhibit May Be Found - -------------------------------------------------------------------------------------------------------------------- (11) Statement Re: Computation of Net Income per Common Share (unaudited) (27) Financial Data Schedule
15 EX-11 2 COMPUTATION OF EARNINGS 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 NINE MONTHS ENDED SEPTEMBER 30, | SEPTEMBER 30, ------------------------------------|------------------------------------ PRIMARY 1997 1996 | 1997 1996 ------------------------------------|------------------------------------- | Weighted average shares outstanding(1) 1,278,136 1,262,740 | 1,277,362 1,263,117 | | Net effect of dilutive stock options - | based on the treasury stock method using | average market price 32,850 33,024 | 28,707 32,640 ------------------------------------|------------------------------------- TOTAL 1,310,986 1,295,764 | 1,306,069 1,295,757 ====================================|===================================== | | Net Income $ 5,801,000 $ 5,047,000 | $ 18,076,000 $ 18,117,000 Less: Effect of dividend requirements and | the change in redemption value of | redeemable preferred stock (191,000) (238,000) | (316,000) (675,000) ------------------------------------|------------------------------------- NET EARNINGS USED IN COMPUTATION $ 5,610,000 $ 4,809,000 | $ 17,760,000 $ 17,442,000 ====================================|===================================== | Per share amount $4.28 $3.71 | $13.60 $13.46 ====================================|===================================== | | FULLY DILUTED | Weighted average shares outstanding (1) 1,278,136 1,262,740 | 1,277,362 1,263,117 | 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 41,768 37,372 | 41,768 37,456 | | | Assumed conversion of 8-1/2% convertible | subordinated debentures issued December 1983 51,017 50,892 | 51,017 50,892 ------------------------------------|------------------------------------- TOTAL 1,370,921 1,351,004 | 1,370,147 1,351,465 ====================================|===================================== | Net Income $ 5,801,000 $ 5,047,000 | $ 18,076,000 $ 18,117,000 Less: Effect of dividend requirements and the | change in redemption value of redeemable | preferred stock (191,000) (238,000) | (316,000) (675,000) | Add: 8-1/2% convertible subordinated | debentures interest, net of income | tax effect 35,000 35,000 | 104,000 104,000 | --------------------------------------------------------------------------- NET EARNINGS USED IN COMPUTATION $ 5,645,000 $ 4,844,000 | $ 17,864,000 $ 17,546,000 =====================================|===================================== | Per share amount $4.12 $3.58 | $13.04 $12.98 ===========================================================================
(1) Includes 93,266 shares and 73,696 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 SEPTEMBER 30, 1997 AND THE UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 OF GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1997 SEP-30-1997 54,635 14,447 659,340 0 0 838,728 191,468 110,259 1,101,229 846,228 23,025 10,222 0 1,432 151,359 1,101,229 596,747 596,747 0 0 559,124 0 8,400 40,212 20,565 18,076 0 0 0 18,076 13.60 13.04
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