GREY GLOBAL GROUP INC - 10-Q Quarterly Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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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, 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 July 31, 2002, the total number of shares outstanding of Registrant's
Common Stock, par value $0.01 per share ("Common Stock"), was 1,064,135 and of
Registrant's Limited Duration Class B Common Stock, par value $0.01 per share
("Class B Common Stock"), was 210,194.

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GREY GLOBAL GROUP INC.

AND CONSOLIDATED SUBSIDIARY COMPANIES

INDEX

2

GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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(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.

3

GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

See accompanying notes to condensed consolidated financial statements.
4

GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

See accompanying notes to condensed consolidated financial statements.
5

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 June 30, 2002 and for the three months
ended June 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 six months ended June 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 June 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 $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.

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.

6

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 effecting income used in computing
earnings per common share ("EPS") and the weighted average number of shares of
dilutive potential common stock:

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(1) Includes 20,211 shares expected to be issued pursuant to the Senior
Management Incentive Plan.

7. During the second quarter of 2002 and 2001, total comprehensive income
amounted to $3,573 and $2,567, respectively, and for the six months ended June
30, 2002 and 2001 total comprehensive income was $9,819 and $1,623,
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 six months ended June 30, 2002 and

7

GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

2001, and related identifiable assets at June 30, 2002 and December 31, 2001 are
summarized below according to geographic region:

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 six months of the date of adoption and an annual impairment test
thereafter. 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.

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:

8

GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

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 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 $60,000. Of such
amount, approximately 55% 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 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.

11. Since March 2001, the Company has 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, 2001. 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 of the Department
and a salesman 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. 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

9

GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

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.

10

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATION

RESULTS OF OPERATIONS

Commissions and fees ("gross income") decreased 7.7% during the second
quarter of 2002 and 7.0% during the six months ended June 30, 2002 when compared
to the same periods in 2001. Absent exchange rate fluctuations, gross income
decreased 6.9% and 6.1%, respectively, in the three and six months ended June
30, 2002 when compared to the same periods in 2001. In the second quarters of
2002 and 2001, respectively, 46.6% and 42.9% of consolidated gross income was
attributable to the North American operations and 53.4% and 57.1% to
international operations. In the second quarter of 2002 and the first six months
of 2002, gross income from operations in North America increased 0.3% and
decreased 2.8%, respectively, versus the respective prior period. Gross income
from international operations decreased 13.7% (12.3% absent exchange rate
fluctuations) during the second quarter and decreased 10.3% (8.7% absent
exchange rate fluctuations) during the first six months when compared to the
same periods in 2001. The gross international income decrease was centered on
the Company's European operations which declined 15.0% during the second quarter
(14.1% absent exchange rate fluctuations) and 12.1% during the six months ended
(11.5% absent exchange rate fluctuation) 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 were also affected by the closure or disposal of certain business
units in 2001.

Salaries and employee related expenses decreased 9.6% in the second quarter
of 2002 and 7.9% for the first six months of 2002. Office and general expenses
decreased 1.2% in the second quarter and 7.9% for the six months ended June 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 $3,315 and $6,643, respectively, for the three
and six months ended June 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 half of the year also included $4,000 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 loss-net increased by $891 and $2,677, respectively, during the
second quarter and for the first six 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 decreased by $768
during the second quarter of 2002 and decreased by $835 for the six months ended
June 30, 2002 as compared to the respective prior periods. Equity in earnings of
nonconsolidated affiliated companies increased by $368 during the second quarter
of 2002 and increased $1,114 during the six months ended June 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 53.1% for the second quarter of 2002 versus 51.2%
in the same period in 2001 and 47.5% for the first six months of 2002 versus
50.8% in the same period in 2001. The increase in the second quarter is due
principally to a heavier concentration of pre-tax income in jurisdictions with
higher tax rates and the absence of recognizable tax benefits for accounting
purposes of losses in certain countries. The decrease for the six months ended
June 30, 2002 is due, in large part, to lower effective tax rates resulting
primarily from the absence of generally non-deductible goodwill amortization
expense.

Net income was $1,670 in the second quarter of 2002 and $5,984 for the
first six months of 2002 as compared to net income of $2,427 and $2,672 in the
respective prior periods. Basic and diluted earnings per common share for the
second quarter of 2002 were $1.26 and $1.16, respectively, and for the first six
months of

11

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATION -- (CONTINUED)

2002 were $4.46 and $4.08, respectively. Basic and diluted earnings per common
share for the second quarter of 2001 were $1.89 and $1.73, respectively, and for
the first six months of 2001 were $2.16 and $2.00, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents decreased by $28,756 from $276,602 at December
31, 2001 to $247,846 at June 30, 2002. The working capital deficit increased to
$107,219 at June 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 recognized as a current
liability earlier this year.

Domestically, the Company has committed bank lines of credit totaling
$90,000 at both December 31, 2001 and June 30, 2002. These lines of credit were
partially utilized during the six months ended June 30, 2002 and 2001 to secure
obligations of selected foreign subsidiaries. There was $18,100 and $18,300
outstanding under these credit lines as of June 30, 2002 and December 31, 2001,
respectively. Additionally, these lines 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 $51,600 and
$62,400 outstanding at June 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. These
instruments may at times absorb some of the Company's credit capacity.

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.

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 June 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 six months ended June 30, 2002 and 2001 was $7,700 and
$8,900, 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

12

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATION -- (CONTINUED)

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. 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 June 30, 2002 and December 31, 2001, the
Company had $46,700 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 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.

13

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Since March 2001, the Company has 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, 2001. 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 of the Department
and a salesman 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. 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 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, 2002.

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: August 14, 2002

By: /s/ LESTER M. FEINTUCK
------------------------------------
Lester M. Feintuck,
Senior Vice President
Chief Financial Officer U.S.
Controller
(Chief Accounting Officer)

Dated: August 14, 2002

15

INDEX TO EXHIBITS

E-1