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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 2004
[ ] 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 and (2) has been subject to the filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark whether the registrant is an accelerated filer (as
defined in rule 12b-2 of the Act) [X] Yes [ ] No
As of April 30, 2004, the total number of shares outstanding of
Registrant's Common Stock, par value $0.01 per share ("Common Stock"), was
1,145,280 and of Registrant's Limited Duration Class B Common Stock, par value
$0.01 per share ("Class B Common Stock"), was 231,140.
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GREY GLOBAL GROUP INC.
AND CONSOLIDATED SUBSIDIARY COMPANIES
INDEX
PAGE NO.
--------
Financial Statements:
Condensed Consolidated Balance Sheets..................... 2
Condensed Consolidated Statements of Operations........... 3
Condensed Consolidated Statements of Cash Flows........... 4
Notes to Condensed Consolidated Financial Statements...... 5
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 10
Other Information........................................... 17
Signatures.................................................. 18
Index to Exhibits........................................... 19
1
GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
2004 2003(A)
---------- ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents................................. $ 435,852 $ 510,446
Marketable securities..................................... 945 979
Accounts receivable -- net of allowance for doubtful
accounts of $22,762 in 2004 and $21,467 in 2003......... 1,283,152 1,250,241
Expenditures billable to clients.......................... 102,834 77,503
Other current assets...................................... 115,182 106,710
---------- ----------
Total current assets........................................ 1,937,965 1,945,879
Investments in and advances to nonconsolidated affiliated
companies................................................. 17,046 16,899
Fixed assets -- at cost, less accumulated depreciation of
$254,668 in 2004 and $246,455 in 2003..................... 142,431 140,687
Marketable securities....................................... 1,851 1,580
Goodwill.................................................... 302,367 286,880
Other assets -- including loans to executive officers of
$1,547 in 2004 and $5,047 in 2003......................... 137,058 133,537
---------- ----------
Total assets................................................ $2,538,718 $2,525,462
========== ==========
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $1,464,881 $1,472,944
Notes payable to banks.................................... 57,359 70,455
Accrued expenses and other................................ 339,030 325,115
Income taxes payable...................................... 14,625 21,238
Redeemable preferred stock -- at redemption value; par
value $0.01 per share; authorized 500,000 shares; issued
and outstanding 30,000 shares in 2004 and 2003.......... 12,042 12,042
---------- ----------
Total current liabilities................................... 1,887,937 1,901,794
Other liabilities, including deferred compensation of
$64,370 in 2004 and $61,318 in 2003....................... 104,274 92,271
Term loans.................................................. 125,000 125,000
Contingent convertible subordinated debentures.............. 150,000 150,000
Minority interest........................................... 14,305 14,438
Common stockholders' equity:
Common Stock -- par value $0.01 per share; authorized
50,000,000 shares; issued 1,286,636 shares in 2004 and
1,284,493 shares in 2003................................ 13 13
Limited Duration Class B Common Stock -- par value $0.01
per share; authorized 10,000,000 shares; issued 232,513
shares in 2004 and 233,559 shares in 2003............... 2 2
Paid-in additional capital................................ 61,585 57,481
Retained earnings......................................... 216,502 211,573
Accumulated other comprehensive income:
Cumulative translation adjustment....................... 20,285 7,042
---------- ----------
Total accumulated other comprehensive income.............. 20,285 7,042
---------- ----------
Loans to officer used to purchase Common Stock and Limited
Duration Class B Common Stock........................... (4,726) (4,726)
---------- ----------
293,661 271,385
Less -- cost of 142,446 and 161,389 shares of Common Stock
and 1,373 and 26,937 shares of Limited Duration Class B
Common Stock held in treasury at March 31, 2004 and
December 31, 2003, respectively......................... 36,459 29,426
---------- ----------
Total common stockholders' equity........................... 257,202 241,959
---------- ----------
Commitments and contingencies............................... -- --
---------- ----------
Total liabilities and common stockholders' equity........... $2,538,718 $2,525,462
========== ==========
- ---------------
(A) The condensed consolidated balance sheet has been derived from the audited
financial statements at that date.
See accompanying notes to condensed consolidated financial statements.
2
GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS
ENDED MARCH 31,
-----------------------
2004 2003
---------- ----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (UNAUDITED)
Revenue..................................................... $ 343,870 $ 297,643
Expenses:
Salaries and employee related expenses.................... 222,896 195,169
Office and general expenses............................... 101,960 88,094
---------- ----------
324,856 283,263
---------- ----------
Operating income............................................ 19,014 14,380
Interest expense.......................................... (5,653) (4,046)
Interest income........................................... 2,129 714
Other income -- net....................................... 477 45
---------- ----------
Income of consolidated companies before taxes on income..... 15,967 11,093
Provision for taxes on income............................... 8,143 5,214
---------- ----------
Income of consolidated companies............................ 7,824 5,879
Minority interest applicable to consolidated companies...... (1,774) (997)
Equity in earnings of nonconsolidated affiliated
companies................................................. 254 189
---------- ----------
Net income.................................................. $ 6,304 $ 5,071
========== ==========
Net income applicable to common shareholders:
Net Income.................................................. $ 6,304 $ 5,071
Effect of dividend requirement and the change in redemption
value of redeemable preferred stock....................... -- (774)
---------- ----------
Net income applicable to common shareholders................ $ 6,304 $ 4,297
========== ==========
Weighted average number of common shares outstanding
Basic..................................................... 1,358,970 1,262,132
Diluted................................................... 1,402,124 1,389,996
Earnings per common share
Basic..................................................... $ 4.64 $ 3.41
Diluted................................................... $ 4.50 $ 3.12
Dividends per common share.................................. $ 1.00 $ 1.00
========== ==========
See accompanying notes to condensed consolidated financial statements.
3
GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS
ENDED MARCH 31,
---------------------
2004 2003
--------- ---------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (UNAUDITED)
OPERATING ACTIVITIES
Net income.................................................. $ 6,304 $ 5,071
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation of fixed assets.............................. 9,169 10,012
Deferred compensation..................................... 2,799 2,080
Amortization of restricted stock and stock options........ 528 616
Equity in earnings of non-consolidated affiliated
companies, net of dividends received of $31 in 2004 and
$122 in 2003........................................... (223) (67)
Loss on the sale and write-down of investments and
marketable securities.................................. 11 161
Minority interest applicable to consolidated companies.... 1,774 997
Deferred income taxes..................................... (414) 1,001
Changes in operating assets and liabilities............... (66,520) (52,040)
-------- --------
Net cash (used in) provided by operating activities......... (46,572) (32,169)
INVESTING ACTIVITIES
Purchases of fixed assets................................... (7,118) (5,555)
Trust fund deposits......................................... (571) --
Decrease (increase) in investments in and advances to
nonconsolidated affiliated companies...................... 76 (965)
Proceeds from the sale of marketable securities............. -- 4,184
Purchases of investment securities.......................... -- (154)
Increase in goodwill........................................ (1,378) (8,883)
-------- --------
Net cash used in investing activities....................... (8,991) (11,373)
FINANCING ACTIVITIES
Repayments of short-term borrowings......................... (15,920) (6,966)
Cash dividends paid on common shares........................ (1,375) (1,281)
Cash dividends paid on Redeemable Preferred Stock........... (60) (60)
Purchase of treasury stock.................................. (8,332) --
Proceeds from exercise of stock options..................... 394 695
-------- --------
Net cash used in financing activities....................... (25,293) (7,612)
Effect of exchange rate changes on cash..................... 6,262 3,698
-------- --------
Decrease in cash and cash equivalents....................... (74,594) (47,456)
Cash and cash equivalents at beginning of period............ 510,446 351,006
-------- --------
Cash and cash equivalents at end of period.................. $435,852 $303,550
======== ========
See accompanying notes to condensed consolidated financial statements.
4
GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The Condensed Consolidated Financial Statements have been prepared by
the Company without audit as permitted by the Securities and Exchange Commission
in accordance with generally accepted accounting principles in the United States
for interim financial statements. The interim financial statements include all
adjustments, which are of a normal recurring nature, that management considers
necessary to present fairly the financial position and the results of operations
for such periods. Reference should be made to the Company's Annual Report on
Form 10-K for the year ended December 31, 2003 filed with the Securities and
Exchange Commission. Certain prior period amounts have been reclassified for
comparability with current information.
2. The financial statements as of March 31, 2004 and for the three months
ended March 31, 2004 and 2003 are unaudited. Certain of the Company's
international operations are consolidated on an up to three month lag as
permitted by accounting principles generally accepted in the United States.
Material intercompany balances and transactions have been eliminated in
consolidation.
3. The results of operations for the three months ended March 31, 2004 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 March 31, 2004 and December 31, 2003, 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 (collectively, "Preferred Stock"). All of
these shares were redeemed for cash in accordance with their terms on April 7,
2004 for the value of the shares shown on the balance sheets ($12.0 million) as
at March 31, 2004 and December 31, 2003. The holder of the Preferred Stock was
the Chairman and Chief Executive Officer of the Company. Each share of Preferred
Stock was 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) as at the year end prior to redemption, less a
fixed discount established upon the issuance of the Preferred Stock. The holder
of the Preferred Stock had been entitled to receive cumulative preferential
dividends at the annual rate of $.25 per share, and to participate in dividends
on one share of the Common Stock and one share of the Class B Common Stock to
the extent such dividends exceed the per share preferential dividend (see note
15).
6. The computation of basic earnings per common share for the quarter ended
March 31, 2004 is based on net income and the weighted average number of common
shares outstanding and, for diluted earnings per common share, includes
adjustments for the effect of the assumed exercise of dilutive stock options and
the effect of certain share grants pursuant to the Company's stock incentive
plans.
For the purpose of computing basic earnings per common share for the
quarter ending March 31, 2003, the Company's net income was reduced by the
increase in the redemption value of the Company's Preferred Stock, which was
redeemed in accordance with its terms after December 31, 2003, the date at which
the Preferred Stock was valued. For the purpose of computing diluted earnings
per common share, net income was also adjusted by the interest savings, net of
tax, on the assumed conversion of the Company's 8 1/2% Convertible Subordinated
Debentures, which were converted on December 31, 2003.
Shares issuable upon conversion of the Company's 5% Contingent Convertible
Subordinated Debentures are excluded from the computation of diluted earnings
per common share since the contingent conditions for conversion have not been
met.
5
GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table shows the amounts affecting net income used in
computing earnings per common share ("EPS") and the weighted average number of
dilutive potential common shares:
FOR THE THREE MONTHS
ENDED MARCH 31,
-----------------------
2004 2003
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) ---------- ----------
BASIC EARNINGS PER
COMMON SHARE
WEIGHTED AVERAGE NUMBER OF SHARES........................... 1,358,970 1,262,132
---------- ----------
Net income(1)............................................... $ 6,304 $ 5,071
Effect of dividend requirements and the change in redemption
value of redeemable preferred stock....................... -- (774)
---------- ----------
NET EARNINGS USED IN COMPUTATION............................ $ 6,304 $ 4,297
---------- ----------
PER SHARE AMOUNT............................................ $ 4.64 $ 3.41
========== ==========
DILUTED EARNINGS PER
COMMON SHARE
Weighted average number of shares used in the Basic EPS
calculation............................................... 1,358,970 1,262,132
Net effect of dilutive stock options and stock incentive
plans(2).................................................. 43,154 76,736
Assumed conversion of 8.5% convertible subordinated
debentures................................................ -- 51,128
---------- ----------
ADJUSTED WEIGHTED AVERAGE NUMBER OF SHARES.................. 1,402,124 1,389,996
---------- ----------
Net earnings used in the Basic EPS calculation.............. $ 6,304 $ 4,297
8.5% convertible subordinated debentures interest, net of
income tax effect......................................... -- 36
---------- ----------
NET EARNINGS USED IN COMPUTATION............................ $ 6,304 $ 4,333
---------- ----------
PER SHARE AMOUNT............................................ $ 4.50 $ 3.12
========== ==========
- ---------------
(1) For the three months ended March 31, 2004, dividends on the Preferred Stock
were treated as interest expense.
(2) Includes 14,877 and 17,938 shares expected to be issued pursuant to the
Senior Management Incentive Plan for the purpose of computing EPS for the
three months ended March 31, 2004 and 2003, respectively.
7. During the first quarter of 2004 and 2003, total comprehensive income
amounted to $19.6 million and $15.6 million, 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, principally, due to the change in value of the United States dollar
versus other currencies.
8. The Company is not engaged in more than one industry segment. The
Company evaluates performance by geographic region based on income or loss
before income taxes. Commissions and fees, operating income, and income (loss)
of consolidated companies before taxes on income for the three months ended
6
GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
March 31, 2004 and 2003, and related identifiable assets at March 31, 2004 and
December 31, 2003 are summarized below according to geographic region:
FOR THE THREE MONTHS ENDED MARCH 31,
-----------------------------------------------------------------------------------------------
ASIA/LATIN
NORTH AMERICA EUROPE AMERICA CONSOLIDATED
--------------------- ----------------------- ------------------- -----------------------
2004 2003 2004 2003 2004 2003 2004 2003
(IN THOUSANDS, EXCEPT SHARE AND -------- ---------- ---------- ---------- -------- -------- ---------- ----------
PER SHARE DATA)
Commissions and fees........... $143,455 $ 130,479 $ 166,822 $ 137,746 $ 33,593 $ 29,418 $ 343,870 $ 297,643
-------- ---------- ---------- ---------- -------- -------- ---------- ----------
Operating income (loss)........ 9,902 8,730 9,776 6,042 (665) (392) 19,014 14,380
-------- ---------- ---------- ---------- -------- -------- ---------- ----------
Income (loss) of consolidated
companies before taxes on
income....................... 5,195 7,028 11,537 4,526 (765) (461) 15,967 11,093
-------- ---------- ---------- ---------- -------- -------- ---------- ----------
Identifiable Assets............ 911,353 1,036,831 1,388,362 1,246,617 221,955 225,115 2,521,669 2,508,563
======== ========== ========== ========== ======== ========
Investments in and advances to
non-consolidated affiliated
companies.................... 17,046 16,899
---------- ----------
2,538,718 $2,525,462
========== ==========
Commissions and fees from the United States amounted to, approximately,
93.0% and 94.2% of the North American total for the three months ended March 31,
2004 and 2003, respectively.
9. In December 2002, the Financial Accounting Standard Board, issued
Statement of Financial Accounting Standards No. 148 ("FAS 148"), Accounting for
Stock-Based Compensation -- Transition and Disclosure which amends Statement of
Financial Accounting Standards No. 123 ("FAS 123"), Accounting for Stock-Based
Compensation. FAS 148 provides alternative methods of transition to FAS 123's
fair value method of accounting for stock-based employee compensation and amends
the disclosure provisions of FAS 123. The Company adopted FAS 123 effective
January 1, 2003, using the prospective method and expenses stock options issued
after January 1, 2003 using the fair value method as provided for in FAS 148.
There were 1,500 options granted in the first quarter of 2004. Options were not
granted in the first quarter 2003. Under FAS 123 the compensation expense for
the three months ended March 31, 2004 was $16,000.
Pro forma information regarding net income and earnings per common share
has been determined as if the Company had accounted for its employee stock
options under the fair value method for all periods presented. The approximate
fair value for these options was estimated at the date of grant using a Black-
Scholes option valuation model with the following weighted average assumptions
for the period ending March 31, 2004: risk-free interest rates of 4.96%;
dividend yields of 0.60%; volatility factors of the expected market price of the
Company's Common Stock of 0.30; and a weighted-average expected life for the
options of 7.0 years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options. Management
reviews, from time to time, whether there are more reliable option valuation
models available for use and at some point may adopt an alternative valuation
methodology.
7
GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
For purposes of pro forma disclosure, the estimated fair value of the options is
amortized to expense over the options' vesting period. The Company's pro forma
information follows:
THREE MONTHS
ENDED MARCH 31,
---------------
2004 2003
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) ------ ------
Net Income (as reported).................................... $6,304 $5,071
Add: Stock-based employee compensation expense included in
reported net income, net of related tax effects........... 259 326
(Less): Total stock-based employee compensation expense
determined under fair value based method, net of related
tax effects............................................... (409) (514)
------ ------
Pro forma net income........................................ $6,154 $4,883
Earnings per common share:
Basic -- as reported...................................... $ 4.64 $ 3.41
Basic -- pro forma........................................ $ 4.53 $ 3.26
Diluted -- as reported.................................... $ 4.50 $ 3.12
Diluted -- pro forma...................................... $ 4.39 $ 2.99
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 (collectively, "Agreements") pursuant to certain acquisition
arrangements not reflected as liabilities on its consolidated balance sheet of
approximately $55.0 million. Of such amount, 38% is estimated to be paid over
the period from 2004 through 2007 and the remainder to be paid from 2008 and
beyond. The foregoing information is estimated and the actual payments made will
be dependent on future events primarily related to the attainment of earnings
goals, specified operating margins and revenue targets or a combination thereof
in respect of a number of subject companies. Other factors which must be
considered in making the estimate include the fulfillment and amendment of
certain contractual obligations by third parties, the movement of exchange
rates, the timing of when the Company or other parties choose to exercise
certain contractual rights and other variables.
Many of the Agreements do not provide for maximum or minimum amounts
payable. Therefore, there is no definitive range of the amounts payable in the
future. The estimated amounts payable were computed using assumptions as to
earnings bases, dividend rates, earnings growth rates and other factors deemed
to be reasonable for the underlying situations. If the Company were to increase
the earnings assumptions used in estimating the amounts payable uniformly by
10%, the estimated amounts payable would increase to $65.6 million; if the
earnings assumptions were decreased uniformly by 10%, the estimated amounts
payable would decrease to $44.4 million.
11. The Company assesses the fair value and recoverability of intangible
assets, primarily goodwill, in accordance with Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets. As part of the annual
evaluation, the fair value of the business units, on the regional levels of
North America and Europe, is compared to the carrying value of those business
units. For the purposes of the analysis, Asian and Latin American business units
are combined with the respective North American and European regions reflecting
the fact that investments in the Asian and Latin American regions are
principally needed to support multi-national clients in North America and
Europe. If impairment is indicated, the excess of the carrying value of the
goodwill over fair value of the business units is written-off. The Company
completed its annual impairment test of goodwill and intangible assets with
indefinite lives as of March 31, 2004, and no impairment was identified nor were
there impairment indicators subsequent to March 31, 2004.
8
GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
12. A significant part of the Company's business involves 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. The utilization of these instruments may at times absorb some of
the Company's credit capacity. In addition, from time to time, the Company may
guarantee certain financial and other obligations of its consolidated
subsidiaries.
13. On May 15, 2003, the FASB issued Statement of Financial Accounting
Standards No. 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity ("FAS 150"). This Statement
establishes standards for classifying and measuring as liabilities certain
financial instruments that embody obligations of the issuer, and have
characteristics of both liabilities and equity. FAS 150 represents a significant
change in practice in the accounting for a number of financial instruments,
including mandatorily redeemable equity instruments. Effective July 1, 2003, the
Company's redeemable Preferred Stock has been classified as a liability.
Additionally, thereafter in 2003, the change in the redemption value of the
Company's redeemable Preferred Stock and dividend payments to the preferred
shareholder which previously had been recorded as changes in Retained Earnings
were recorded as increases in interest expense. The adoption of FAS 150 did not
have an effect on EPS. As noted above, the Company redeemed the Preferred Stock
on April 7, 2004.
14. In January 2003, the FASB issued FASB Interpretation No. 46
"Consolidation of Variable Interest Entities" an Interpretation of ARB No. 51
("FIN 46"), which requires variable interest entities (often referred to as
special purpose entities or SPEs) to be consolidated if certain criteria are
met. FIN 46 was effective as of January 31, 2003 for variable interest entities
created after that date and other variable interest entities in the first
quarter of 2004. The adoption of FIN 46 did not have any impact on the Company's
consolidated financial statements.
15. On January 5, 2004, Edward H. Meyer, the Company's Chairman and Chief
Executive Officer, exercised non-qualified stock options (the "Options") to
purchase 40,000 shares of Common Stock at an aggregate exercise price of $5.94
million (or $148.50 per share). The Options, which had been issued in 1995
pursuant to the Company's 1994 Stock Incentive Plan (the "Plan"), were set to
expire on January 5, 2004. In accordance with the terms of the Plan, Mr. Meyer
elected to pay the exercise price through delivery to the Company of 8,774
shares, based on the $677 per share closing price on January 5, 2004. Mr. Meyer
also delivered to the Company 12,316 shares of Common Stock in satisfaction of
tax withholding obligations, based on the $676.51 per share price as determined
in accordance with applicable tax regulations.
16. The Company recognized a $6.1 million loss on the sale of a subsidiary
at its Scandinavian operation in the first quarter of 2004. The Company believes
it has no continuing liability that will have a material impact on the financial
statements.
17. On April 7, 2004, the Company redeemed, in accordance with their terms,
all of the outstanding shares of the Company's Series I Preferred Stock, Series
II Preferred Stock and Series III Preferred Stock. The Preferred Stock, which
was originally issued over 20 years ago pursuant to the Company's Book Value
Preferred Stock Plan, was owned by Mr. Edward H. Meyer, the Company's Chairman
and Chief Executive Officer. The redemption price paid of $12.0 million was paid
in cash. On April 7, 2004, Mr. Meyer repaid in full $0.8 million of certain
promissory notes provided to the Company by Mr. Meyer at the time the Preferred
Stock was originally acquired.
9
PART I
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
ITEM 2. RESULTS OF OPERATIONS
FIRST QUARTER ENDED 2004 COMPARED TO FIRST QUARTER ENDED 2003
Overview
Grey ranks among the largest global communications companies in the world.
Grey operates business units in many communications disciplines including
general advertising, public relation/public affairs, direct marketing, internet
communications, healthcare marketing, brand strategy and design, and on-line and
off-line media services. Frequently, our clients use a number of our business
units.
In the first quarter of 2004, revenue grew by 15.5%, income of consolidate
companies before taxes ("pre-tax profit") grew by 43.9% and net income increased
by 24.3% over the first quarter of 2003. These improved results are primarily
attributable to increased profitability in Europe even after a continuation of
large losses at the Company's Scandinavian operations
Liquidity is strong with continued high cash and cash equivalents balances.
Revenue
The following chart shows the breakdown of the Company's revenue in the
first quarter of 2004 and 2003 by area:
2004 2003
--------------------- ---------------------
PERCENTAGE PERCENTAGE
AMOUNT OF TOTAL AMOUNT OF TOTAL
(IN THOUSANDS, EXCEPT PERCENTAGE DATA) -------- ---------- -------- ----------
Revenue from:
North American operations................ $143,455 41.7% $130,480 43.8%
-------- ----- -------- -----
Non-North American operations
("international"):
Europe.............................. 166,822 48.5% 137,746 46.3%
Asia/Latin America.................. 33,593 9.8% 29,417 9.9%
-------- ----- -------- -----
Total International operations........ 200,415 58.3% 167,163 56.2%
-------- ----- -------- -----
Total Revenue.............................. $343,870 100.0% $297,643 100.0%
-------- ----- -------- -----
10
International operations contributed a greater percentage of the Company's
revenue in the first quarter of 2004 than the corresponding quarter in the
previous year because of the continuing strengthening of Grey foreign currencies
against the United States dollar; the impact of exchange rate movements is
summarized in the next chart:
2004 VS. 2003
---------------------------------
NON-EXCHANGE EXCHANGE
TOTAL RATE IMPACTED RATE
GROWTH GROWTH IMPACT
------ ------------- --------
Revenue from:
North American operations........................... 9.9% 9.0% 0.9%
International operations:
Europe........................................... 21.1% 5.1% 16.0%
Asia/Latin America............................... 14.2% 5.9% 8.3%
Total International operations...................... 19.9% 5.2% 14.7%
Total Revenue......................................... 15.5% 6.8% 8.7%
Revenue increased 15.5%, or $46.2 million, during the first quarter of 2004
when compared to the same period in 2003. Revenue at the Company's international
operations grew by $33.3 million, of which $25.8 million was due to the
weakening of the dollar against selected foreign, principally European,
currencies. In the first quarter of 2004, revenue in North America increased
9.9% versus the respective prior period primarily from increased business from
existing clients.
Expenses
Salaries and employee related expenses increased 14.2% in the first quarter
of 2004 as compared to the same period in 2003. Of the increase, 8.2% was
attributable to exchange rate movements. The increase is generally in line with
the increase in revenue.
Office and general expenses increased 15.7% in the first quarter of 2004,
as compared to the first quarter of the prior year. Absent the impact of
exchange rates, office and general expenses were up 7.0%. The increase includes
a loss of $6.1 million related to the sale of a majority-owned subsidiary of the
Company's Scandinavian operations.
PERCENTAGE
2004 2003 CHANGE
(IN THOUSANDS, EXCEPT PERCENTAGE DATA) -------- ------- ----------
Expenses:
Salaries and employee related expenses.............. $222,896 195,169 14.2%
Office and general expenses......................... 101,960 88,094 15.7%
-------- ------- ----
Total expenses........................................ $324,856 283,263 14.7%
-------- ------- ----
Inflation did not have a material effect on gross income or expenses during
2004 or 2003.
Other Income/Expense
Other Income/Expense for 2004 compared to 2003 is set forth below:
PERCENTAGE
2004 2003 CHANGE
(IN THOUSANDS, EXCEPT PERCENTAGE DATA) ------ ------ ----------
Interest expense....................................... (5,653) (4,046) 39.7%
Interest income........................................ 2,129 714 198.2%
Other income/expense -- net............................ 477 45 960.0%
11
Interest expense increased because of the impact of the issuance in the
fourth quarter of 2003 of the Company's 5% Contingent Convertible Subordinated
Debentures ("Convertible Debentures"). Interest income increased because of
higher invested cash balances.
Pre-tax Profit
The Company's pre-tax profit rose by $4.9 million (up 43.9%) from the first
quarter of 2003. Pre-tax profit in North America decreased because of the higher
interest costs associated with the Convertible Debentures which offset a 21.2%
increase in operating income.
The pre-tax profit from the Company's European operations for the first
quarter of 2004 was up over 2.5 times. This result was achieved despite a loss
of $6.1 million recognized in the quarter on the sale of a subsidiary at the
Company's Scandinavian operation. This subsidiary, and another Scandinavian
subsidiary which was sold and for which a loss was taken in 2003, had period
losses of $1.1 million in the three months ended March 31, 2004 versus $0.5
million in the first quarter of 2003; the Company anticipates incurring no
further losses from these business units. Overall, the Company's Scandinavian
operations had a loss of $8.9 million (absent exchange rate movements of $7.2
million) for the first quarter in 2004, as compared to a $2.6 million pre-tax
loss incurred in the corresponding period in 2003. The pre-tax loss incurred in
Scandinavia reflects the extensive steps the Company has taken to remediate its
operations there.
Taxes
The effective tax rate is 51.0% for the first quarter of 2004 versus 47% in
the same period in 2003. The increase is due principally to losses incurred in
Scandinavia for which no tax benefit is recorded.
Minority Interest/Equity Accounting
Minority interest applicable to consolidated companies increased by $0.8
million and equity in earnings of nonconsolidated affiliated companies increased
by $65,000 during the first quarter of 2004 as compared to the respective prior
period. The fluctuations were primarily due to changes in the level of profits
of the Company's majority-owned companies and nonconsolidated affiliated
companies.
Net Income/EPS
Net income was $6.3 million in the first quarter of 2004 as compared to net
income of $5.1 million in the respective prior period, an increase of 24.3%.
Currency movements account for approximately $0.2 million of the increase in net
income for the quarter. Diluted earnings per share increased by 44.2% to $4.50
per share as against $3.12 per share. Diluted earnings per share increased at a
greater percentage rate than the increase in net income because increases in the
value of the Preferred Stock reduced the earnings used for the determination of
earnings per share calculations in 2003; the Preferred Stock was redeemed in
April 2004 and there was no such reduction in earnings used for the
determination of earnings per share calculations for the first quarter 2004. The
Company's Preferred Stock was redeemed on April 7, 2004 and its value was fixed
as of December 31, 2003. In the first quarter of 2003, the portion of the net
income available to the Preferred Shares was $0.8 million dollars.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased by $74.6 million from $510.4 million at
December 31, 2003 to $435.8 million at March 31, 2004. The working capital
remained relatively constant at $50.0 million at March 31, 2004, versus $44.1
million at December 31, 2003. 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 Company had available $110.0 million under an annual revolving credit
facility from a syndicate of JP Morgan Chase Bank, HSBC Bank USA, Fleet National
Bank, Barclays Bank PLC, North Fork Bank and City National Bank at March 31,
2004 and December 31, 2003. This line of credit was not utilized during the
12
quarter. A portion of the line can be borrowed in certain foreign currencies and
used by the Company's international operations. 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
$57.4 million and $70.5 million outstanding at March 31, 2004 and December 31,
2003, respectively under these facilities. The changes in the level of
short-term borrowing and bank overdrafts are primarily due to the timing
differences on payments to media and other vendors.
A significant part of the Company's business involves 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. The
utilization of these instruments may at times absorb some of the Company's
credit capacity. In addition, from time to time, the Company may guarantee
certain financial and other obligations of its consolidated subsidiaries.
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 bore interest at
the rate of 6.94% and was originally repayable in three equal annual
installments, commencing in December 2003. This loan was renegotiated in March
2003, with a fixed interest rate of 7.41%, and principal repayments of $25.0
million in March, 2007, 2008 and 2009, respectively. The second loan of $50.0
million was drawn in November 2000, bears interest at the rate of 8.17% and is
repayable in two equal annual installments, commencing in November 2006.
In October 2003, the Company sold $150 million principal amount of its 5.0%
Contingent Convertible Subordinated Debentures, due 2033 ("Debentures"). The
Debentures are convertible in shares of the Common Stock at an initial
conversion price of $961.20 per share provided that any one of several
contingencies are met, including that the Common Stock trades above $1,153.44
for specified periods of time.
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 March 31, 2004 and December 31, 2003, the Company was in compliance
with these covenants.
On January 5, 2004, Edward H. Meyer, the Company's Chairman and Chief
Executive Officer, exercised non-qualified stock options (the "Options") to
purchase 40,000 shares of Common Stock at an aggregate exercise price of $5.94
million (or $148.50 per share). The Options, which had been issued in 1995
pursuant to the Company's 1994 Stock Incentive Plan (the "Plan"), were set to
expire on January 5, 2004. In accordance with the terms of the Plan, Mr. Meyer
elected to pay the exercise price through delivery to the Company of 8,774
shares, based on the $677 per share closing price on January 5, 2004. Mr. Meyer
also delivered to the Company 12,316 shares of Common Stock in satisfaction of
tax withholding obligations, based on the $676.51 per share price as determined
in accordance with applicable tax regulations.
SUMMARY OF SIGNIFICANT CONTRACTUAL OBLIGATIONS
PAYMENTS DUE BY PERIOD AS OF DECEMBER 31, 2003
--------------------------------------------------------------
2009 AND
NOT INCLUDED ON THE BALANCE SHEET 2004 2005 2006 2007 2008 BEYOND TOTAL
- --------------------------------- -------- ----- ----- ----- ----- -------- --------
(IN THOUSANDS)
Media and production commitments........... $1,090.8 $ -- $ -- $ -- $ -- $ -- $1,090.8
Acquisition agreements..................... 4.0 4.7 10.8 1.4 2.7 30.7 54.3
Operating leases........................... 76.1 68.2 58.2 53.7 49.2 57.9 363.3
-------- ----- ----- ----- ----- ----- --------
Total.................................... $1,170.9 $72.9 $69.0 $55.1 $51.9 $88.6 $1,508.4
======== ===== ===== ===== ===== ===== ========
13
PAYMENTS DUE BY PERIOD AS OF DECEMBER 31, 2003
-------------------------------------------------
2009 AND
LONG TERM LIABILITIES 2005 2006 2007 2008 BEYOND TOTAL
- --------------------- ----- ----- ----- ----- -------- ------
(IN THOUSANDS)
Long term debt............................... $ -- $25.0 $50.0 $25.0 $175.0 $275.0
Deferred compensation........................ 15.7 3.1 41.7 5.5 17.5 83.5
Capital leases............................... 3.0 0.4 0.1 0.1 0.1 3.7
Other........................................ 1.8 0.2 0.1 0.1 -- 2.2
----- ----- ----- ----- ------ ------
Total...................................... $20.5 $28.7 $91.9 $30.7 $192.6 $364.4
===== ===== ===== ===== ====== ======
As at March 31, 2004, there had been no material change to the contractual
obligations set forth in the table except for media commitments which can
fluctuate by material amounts in the ordinary course of business. The media
commitments listed above decreased significantly in the quarter ended March 31,
2004 as a result of the seasonality of media purchasing patterns and related
billings in the normal course of business.
The Company makes commitments when it purchases media time and space from
various media suppliers on behalf of its clients. The liability for the media is
generally recorded on the Company's balance sheet when the client is billed,
usually in the month that the underlying advertising appears. As part of the
general practice in the industry, the Company frequently is required to reserve,
or commit to purchase, media time and space with the media suppliers well before
a commercial is aired or a publication reaches the market. The duration of these
commitments vary depending on the type of media purchased and the terms of the
particular purchase. The duration of any commitment may be as short as a few
days or as long as a year. These commitments are only entered following the
specific authorization of clients who, in turn, commit to reimburse the Company.
In practice, clients fulfill their commitments to the Company enabling it, in
turn, to fulfill its commitments. There are, however, instances where a client
may seek to alter its commitments to purchase media. It is general industry
practice that media suppliers seek to accommodate the client's wishes, in part,
because the media suppliers wish to maintain good, on-going relations with
important clients, such as the Company represents, and large buyers of media
like the Company.
At December 31, 2003, the amount of Company's media commitments not
recorded on its balance sheet was $1,048.7 million, of which $357.0 million was,
as of that date, cancelable by the terms of those commitments. The Company
guards against loss in respect of its media commitments in various ways. The
Company considers the credit-worthiness of its clients and sets relevant terms
of business appropriately, and may purchase credit insurance in certain
instances. In certain markets, the Company is also protected in respect of its
commitments if a client does not fulfill its underlying obligations by the rule
of sequential liability, which generally provides that a buyer of media is not
required to pay a media supplier unless such buyer has been paid by its client.
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 accounting principles generally accepted in the United States
requires the Company to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements. Estimates also affect the
reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates. The Company's critical accounting
policies include:
REVENUE RECOGNITION
Income derived from advertising placed with media is generally recognized
based upon the publication or broadcast dates. Income resulting from
expenditures billable to clients is generally recognized when the service is
performed and billed. Media income and income resulting from expenditures
billable to clients is
14
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 examined to determine
what was earned and collectable on such earned amounts for the purposes of
recognizing revenue amounts appropriate for the period. Income from
performance-based incentive fees is generally recorded at the end of a contract
period when the amount to be received can be reasonably estimated.
ACQUISITIONS AND IMPAIRMENT OF INTANGIBLES
The Company, from time to time, makes acquisitions that complement its core
capabilities and strategies, enhance its existing client service infrastructure
and/or provide additional support for current clients. The price of the
acquisitions may be in excess of the fair value of the net tangible assets
acquired. The Company accounts for these acquisitions in accordance with
Statement of Financial Accounting Standards No. 141, Business Combinations.
Normally, acquired client and employment relationships are short term in nature
or cancelable at will, and an acquired entity will have a minimum of tangible
assets over which to allocate purchase price. Therefore, a substantial portion
of the purchase price is allocated to goodwill.
The Company assesses the fair value and recoverability of intangible
assets, almost exclusively goodwill, in accordance with Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible Assets. When
assessing potential impairment of goodwill, the fair value of all business units
at the regional levels of North America and Europe is compared to the carrying
value of those business units. For the purposes of the analysis, Asian and Latin
American business units are combined with the respective North American and
European regions reflecting the fact that investments in the Asian and Latin
American regions are principally needed to support multi-national clients
serviced in North America and Europe. If impairment is indicated, the excess of
the carrying value of the goodwill over fair value of the business units is
written-off. The Company completed its annual impairment test of goodwill and
intangible assets with indefinite lives as of March 31, 2004, and no impairment
was identified, nor were there any impairment indicators subsequent to March 31,
2004.
FIXED ASSETS
Fixed assets fall into three main categories; furniture and fixtures,
computer equipment and leasehold improvements. Depreciation of furniture and
fixtures, and computer equipment is computed principally by the straight-line
method over the useful life of the asset, normally five to ten years for
furniture and fixtures, and three to five years for computer equipment.
Amortization of leasehold improvements is provided for on a straight-line basis
principally over the terms of the related leases but not in excess of the useful
lives of the underlying assets.
SALARIES AND EMPLOYEE RELATED EXPENSES
The Company records salaries and employee related expenses as a period cost
when incurred. Salary expense is generally recorded in the period that the
salary is paid. Discretionary bonuses are estimated and accrued as short-term
liabilities each period. Bonuses are paid shortly after year end. Stock and
other incentive plans and contractual bonuses are clearly identifiable and
determinable, and are generally accrued when earned by the employee.
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 reviewed regularly 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 March 31, 2004 and December 31, 2003, the
Company had $54.1 million and $53.7 million, respectively, of deferred tax
assets net of a valuation reserve of $28.1 million, in 2004 and $25.4 million in
2003, which it believes to be appropriate.
15
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. 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 of compensation, government
compliance costs or litigation, unanticipated natural disasters, terrorist
attacks, war, technological developments, creditworthiness of clients and
suppliers, changes in the general economic conditions that affect exchange
rates, changes in interest rates and/or consumer spending either in the United
States or non-United States markets in which the Company operates, unanticipated
expenses, client preferences which can be affected by competition, and/or
changes in the competitive frame, and the ability to project risk factors which
may vary. The forward looking statements speak only as of the date when made.
The Company does not undertake to update such statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's results may be affected by currency exchange rate
fluctuations given the Company's extensive international operations. Generally,
the foreign currency exchange risk is limited to net income of each operation
because the Company's revenue and expenses by country are almost exclusively
denominated in the local currency of each respective country with both revenue
and expense items matched.
Occasionally, the Company enters into foreign currency contracts for known
cash flows related to repatriation of earnings from its international
subsidiaries or identified liabilities in foreign currencies. The term of each
such foreign currency contract entered into in 2004 and 2003 was for less than
three months and the amount open at March 31, 2004 and December 31, 2003 was not
material. At March 31, 2004 and December 31, 2003, there were no foreign
currency contracts open. The Company had no derivative contracts outstanding at
March 31, 2004 or December 31, 2003, respectively. The Company has investments
in private equity securities, corporate bonds and equity securities that may be
subject to changes in general economic conditions and fluctuations in interest
rates. Excess funds are generally invested in short term liquid securities and
money market funds.
ITEM 4. CONTROLS AND PROCEDURES
The Company's management, including the Chief Executive Officer and Chief
Financial Officer, has conducted an evaluation of the effectiveness of
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based
on that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the disclosure controls and procedures are effective in ensuring
that all material information required to be filed in this quarterly report has
been made known to them in a timely fashion. There have been no significant
changes in internal controls, or in factors that could significantly affect
internal controls, subsequent to the date the Chief Executive Officer and Chief
Financial Officer completed their evaluation.
16
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY
SECURITIES
ISSUER PURCHASES OF EQUITY SECURITIES
(C)TOTAL NUMBER OF (D)MAXIMUM NUMBER
SHARES (OR UNITS) (OR APPROXIMATE DOLLAR
(B)AVERAGE PURCHASED AS PART VALUE) OF SHARES (OR
(A)TOTAL NUMBER OF PRICE PAID OF PUBLICLY UNITS) THAT MAY YET BE
SHARES (OR UNITS) PER SHARE ANNOUNCED PLANS OR PURCHASED UNDER THE
SECURITY PERIOD PURCHASED (OR UNIT) PROGRAMS PLANS OR PROGRAMS
- -------- -------------- ------------------ ---------- ------------------ ----------------------
Common Stock......... Quarter ended 21,090 $676.71 - 0 - --
March 31, 2004
Total................ 21,090(1) $676.71 - 0 - --
- ---------------
(1) On January 5, 2004, Edward H. Meyer, the Company's Chairman and Chief
Executive Officer, exercised non-qualified stock options (the "Options") to
purchase 40,000 shares of Common Stock at an aggregate exercise price of
$5,940,000 (or $148.50 per share). The Options, which had been issued in
1995 pursuant to the Company's 1994 Stock Incentive Plan (the "Plan"), were
set to expire on January 5, 2004. In accordance with the terms of the Plan,
Mr. Meyer elected to pay the exercise price through delivery to the Company
of 8,774 shares, based on the $677 per share closing price on January 5,
2004. Mr. Meyer also delivered to the Company 12,316 shares of Common Stock
in satisfaction of tax withholding obligations, based on the $676.51 per
share price as determined in accordance with applicable tax regulations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: Reference is made to the Index annexed hereto and made a part
hereof.
Reports on Form 8-K:
The Company filed a report on Form 8-K, dated January 8, 2004,
reporting Item 5, "Other Events".
The Company filed a report on Form 8-K, dated February 27, 2004,
reporting Items 5, 9 and 12, "Other Events", "Regulation FD Disclosure"
and "Disclosure of Results of Operations and Financial Condition",
respectively.
The Company filed a report on Form 8-K, dated March 2, 2004, reporting
Items 9 and 12, "Regulation FD Disclosure" and "Disclosure of Results
of Operations and Financial Condition", respectively.
The Company filed a report on Form 8-K, dated April 9, 2004, reporting
Item 5, "Other Events".
The Company filed a report on Form 8-K, dated April 19, 2004, reporting
Item 5, "Other Events".
17
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: May 10, 2004
By: /s/ LESTER M. FEINTUCK
------------------------------------
Lester M. Feintuck,
Senior Vice President,
Chief Financial Officer -- U.S.,
Controller
(Chief Accounting Officer)
Dated: May 10, 2004
18
INDEX TO EXHIBITS
NUMBER ASSIGNED TO
EXHIBIT (I.E. 601 OF TABLE OF ITEM 601 EXHIBITS
REGULATION S-K) DESCRIPTION OF EXHIBITS
- -------------------- --------------------------
31.1 Certification of Chief Executive Officer pursuant to section
302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
32.0 Certification of CEO and CFO Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
19