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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
/ X / ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1993
/ / 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 (I.R.S. 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 ------------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class Name of each exchange on which registered
- ------------------- -----------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $1 per share
------------------------------------
(Title of Class)
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.
Yes X No
--------- ---------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
Yes X No
--------- ---------
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The aggregate market value of the voting stock held by non-affiliates of
registrant was $136,030,470 as at March 1, 1994.
The registrant had 901,983 shares of its Common Stock, par value $1 per share,
and 338,844 shares of its Limited Duration Class B Common Stock, par value $1
per share, outstanding as at March 1, 1994.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual proxy statement to be furnished in connection with the
registrant's 1994 annual meeting of stockholders are incorporated by reference
into Part III.
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PART I.
ITEM 1. Business.
Registrant ("Grey") and its subsidiaries
(collectively with Grey, the "Company") have been engaged in the planning,
creation, supervision and placing of advertising since the Company's formation
in 1917. Grey was incorporated in New York in 1925 and changed its state of
incorporation to Delaware in 1974.
The Company's principal business activity consists of
providing a full range of advertising services to its clients. Typically, this
involves developing an advertising and/or marketing plan after study of a
client's business, the distribution or utilization of the client's products or
services and the use of various media (e.g., television, radio, newspapers,
magazines, direct mail, outdoor billboards) by which desired market performance
can best be achieved. The Company then creates advertising, prepares media
recommendations and places advertising in the media. The Company's business
also involves it in allied areas such as marketing consultation, audio-visual
production, cooperative advertising programs, direct marketing, research,
product publicity, public relations and sales promotion.
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The Company is not engaged in more than one industry
segment, and no separate class of similar services contributed 10% or more of
the Company's gross income or net income during 1993, 1992 or 1991.
The Company serves a diversified client roster in the
apparel, automobile, beverage, chemical, community service, computer,
corporate, electrical appliance, entertainment, food product, home furnishing,
houseware, office product, packaged goods, publishing, restaurant, retailing,
toy and travel sectors.
Advertising is a highly competitive business in which
agencies of all sizes strive to attract new clients or additional assignments
from existing clients. Competition for new business, however, is restricted
from time to time because large agencies (such as the Company) often are
precluded from providing advertising services for products or services that may
be viewed as being competitive with those of an existing client. Generally,
since advertising agencies charge clients substantially equivalent rates for
their services, competitive efforts principally focus on the skills of the
competing agencies.
Published reports indicate that there are over 500
advertising agencies of all sizes in the United States. In 1993, the Company
was the 6th largest United States advertising agency in terms of domestic gross
income according to statistics published in Adweek, a trade publication.
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Approximately 54% of the Grey's present domestic
advertising clients, representing a significant majority of the Company's 1993
domestic gross income, have been with the Company since 1989. The agreements
between the Company and most of its clients are generally terminable by either
the Company or the client on 90 days' notice as is the custom in the industry.
During 1993, one client (The Procter & Gamble Company)
represented more than 10% of the Company's consolidated income from commissions
and fees. No other client represented more than 5% of the Company's total
consolidated commissions and fees. The loss of such client or other large
clients of the Company may be expected to have an adverse effect on net income.
Losses of important clients in past years, however, have not had a long-term
effect upon the Company's financial condition or its competitive position.
On December 31, 1993, Grey and its consolidated
subsidiaries employed approximately 5,038 persons, of whom nine were executive
officers of Grey.
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As is generally the case in the advertising industry, the
Company's business traditionally has been seasonal, with greater revenues
generated in the second and fourth quarters of each year. This reflects, in
large degree, the media placement patterns of the Company's clients.
Advertising programs created by the Company are placed
principally in media distributed within the United States and overseas through
offices in the United States and a number of foreign countries. While the
Company operates on a worldwide basis, for the purposes of presenting certain
financial information in accordance with Securities and Exchange Commission
rules, its operations are deemed to be conducted in three geographic areas.
Commissions and fees, and operating profit by each such geographic area for the
years ended December 31, 1993, 1992 and 1991, and related identifiable assets
at December 31 of each of the years, are summarized in Note N of the Notes to
Consolidated Financial Statements, which is hereby incorporated herein by
reference.
While the Company has no reason to believe that its
foreign operations as a whole are presently jeopardized in any material
respect, there are certain risks of operating which do not affect domestic
operations but which may affect the Company's foreign operations from time to
time. Such risks include the possibility of limitations on repatriation of
capital or dividends, political instability, currency devaluation and
restrictions on the percentage of permitted foreign ownership.
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Executive Officers of the Registrant
as of March 1, 1994
Year first
became Execu-
Executive Officers (a) Position Age tive Officer
- ---------------------- -------- --- ------------
Robert L. Berenson President - Grey, N.Y. 54 1978
Barbara S. Feigin Exec. Vice President 56 1983
Steven G. Felsher Exec. Vice President
Finance - Worldwide,
Secretary & Treasurer 44 1989
William P. Garvey Exec. Vice President,
Chief Financial Officer
- United States 56 1970
John A. Gerster Exec. Vice President 46 1983
Edward H. Meyer Chairman of the Board,
President & Chief
Executive Officer 67 1959
Stephen A. Novick Exec. Vice President 53 1984
O. John C. Shannon President - Grey Int'l. 57 1993
Miles J. Turpin Exec. Vice President 63 1987
(a) All executive officers are elected annually by the Board of Directors
of Grey. Each executive officer has been with Grey for a period more
than five years. There exists no family relationship between any of
Grey's directors or executive officers and any other director or
executive officer or person nominated or chosen to become a director
or executive officer.
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ITEM 2. Properties.
Substantially all offices of the Company are located in
leased premises. The Company's principal office is at 777 Third Avenue, New
York, New York, where it now occupies total floor space of approximately
357,000 square feet. The main lease covering the bulk of this space expires in
1999. The Company also has significant leases covering other offices in New
York, Los Angeles, San Francisco, Amsterdam, Brussels, Copenhagen, Dusseldorf,
Hong Kong, London, Madrid, Milan, Paris, Stockholm, Sydney and Toronto.
The Company considers all space leased by it to be
adequate for the operation of its business and does not foresee any significant
difficulty in meeting its space requirements.
ITEM 3. Legal Proceedings.
The Company is not involved in any material pending legal
proceedings, not covered by insurance or by adequate indemnification, or which,
if decided adversely, would have a material effect on the operations,
liquidity or financial position of the Company.
ITEM 4. Submission of Matters to a Vote of Security Holders.
Inapplicable.
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ITEM 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
The Common Stock of Grey is traded on The Nasdaq Stock
Market under the symbol GREY and quoted on the National Market System of
NASDAQ.
As of March 1, 1994, there were 544 holders of record of
the Common Stock and 322 holders of record of the Limited Duration Class B
Common Stock.
The following table sets forth certain information about
dividends paid, and the bid and asked prices in the over-the-counter market
during the periods indicated (as published in the Wall Street Journal), with
respect to the Common Stock:
Bid Prices* Asked Prices*
----------- -------------
High Low High Low Dividends
---- --- ---- --- ---------
1992 First Quarter 128 110 135 118 .75
Second Quarter 138 125 145 130 .75
Third Quarter 137 126 137 131 .75
Fourth Quarter 140 129 140 135 .775
1993 First Quarter 157 132 158 136 .775
Second Quarter 165 143 169 150 .775
Third Quarter 189 166 191 170 .775
Fourth Quarter 187 174 188 181 .8125
* Such over-the-counter market quotations reflect interdealer prices,
without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions.
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PART II
ITEM 6. Selected Financial Data.
1989 1990 1991(c) 1992(c) 1993
Commissions and fees... $411,083,000 $481,282,000 $528,299,000 $564,468,000 $567,243,000
Expenses...... 383,659,000 449,719,000 490,570,000 522,510,000 526,455,000
Restructuring charges (a) 23,850,000
Income before taxes on
income of consolidated
companies 32,614,000 33,575,000 13,277,000 42,588,000 42,705,000
Taxes on income.... 16,808,000 17,417,000 5,057,000 19,975,000 22,487,000
Net income..... 13,920,000 14,558,000 3,807,000 15,904,000 17,681,000
Net income per common
share (b)
Primary... 10.44 10.97 3.09 12.68 13.46
Fully Diluted...... 10.05 10.64 3.08 12.25 13.00
Weighted average number
of common shares out-
standing......
Primary..... 1,250,546 1,208,093 1,196,908 1,205,241 1,263,900
Fully Diluted...... 1,314,504 1,259,599 1,248,815 1,258,799 1,319,349
Working capital...... 4,855,000 5,918,000 8,364,000 12,588,000 25,001,000
Total assets...... 527,413,000 626,522,000 735,831,000 752,364,000 820,633,000
Long-term debt.... 3,025,000 3,025,000 3,025,000 3,025,000 33,025,000
Redeemable Preferred
Stock at Redemption
Value...... 5,036,000 6,145,000 6,053,000 6,468,000 6,590,000
Common Stockholders'
equity..... 89,523,000 104,000,000 105,153,000 118,741,000 129,077,000
Cash dividend per share
of Common Stock and Limited
Duration Class B
Common Stock 2.60 2.83 2.93 3.025 3.1375
(a) During 1991, the Company recognized one-time
restructuring charges primarily related to the
absorption of the Company's subsidiary, Levine
Huntley Vick & Beaver, Inc.
(b) After giving effect to amounts attributable to
redeemable preferred stock, the assumed
exercise of dilutive stock options and, for
fully diluted net income per common share, the
assumed conversion of 8-1/2% Convertible
Subordinated Debentures issued December 1983.
(c) After restatement for adoption of FAS 109,
Accounting for Income Taxes.
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ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
RESULTS OF OPERATIONS
Income from commissions and fees ("gross income")
increased 0.5% in 1993 and 6.8% in 1992 when compared to the respective prior
years. Absent exchange rate fluctuations, gross income increased 5.9% in 1993
and 5.8% in 1992 as compared to the respective prior years. The increase in
revenue 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 less
than 1% in 1993 and 9.3% in 1992 when compared to the respective prior years.
Office and general expenses have increased 1.4% in 1993 and 1.5% in 1992 versus
prior years. These increases are generally in line with the increase in gross
income shown for such years.
Inflation did not have a material effect on either
revenue or expenses during 1991, 1992 or 1993.
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12
During the fourth quarter of 1991, the Company absorbed
the operations of its Levine Huntley Vick & Beaver, Inc. ("LHV&B") subsidiary.
In connection therewith, the Company recognized pre-tax charges of
approximately $23,850,000 ($11,000,000 after tax) related predominately to the
disposal of LHV&B's real estate obligations and leasehold assets, the write off
of certain fixed assets and goodwill, and other costs, primarily severance, in
connection with the restructuring. The Company also reflected modest similar
charges with respect to a small number of related operations. A substantial
portion of the lease obligation settlement payments and severance were paid in
the fourth quarter of 1991, and the fixed asset and goodwill write offs were
charged against the restructuring reserve in 1991. These charges represented a
majority of the costs incurred with respect to the restructuring. During 1992
and 1993, most of the remaining costs included in the restructuring charge were
settled, and at December 31, 1993 less than 10% of the original restructuring
reserve remains on the Company's balance sheet to cover any unsettled
obligations.
The effective tax rate is 52.7% in 1993, and was 46.9% in
1992, as restated (see next page) and 38.1% in 1991. The increase in the
effective tax rate in each year is primarily related to increases in the state
and local tax provisions reflecting utilization of the tax benefit associated
with the restructuring charge and due to an increased proportion of the income
before taxes being derived from higher tax jurisdictions. In addition, the
1993 effective tax rate increased because the U.S. income tax statutory rate
rose to 35% from 34%.
12
13
Minority interest decreased $3,104,000 in 1993 and
increased $3,064,000 in 1992 as compared to the respective prior years. The
decrease in 1993 and increase in 1992 were primarily due to changes in the
level of profits of majority-owned companies.
Equity in earnings of nonconsolidated companies increased
$1,068,000 in 1993 and $268,000 in 1992 as compared to the respective prior
years. These increases are due primarily to an increase in equity holdings and
an increase in the profit attributable to levels of the nonconsolidated
companies.
Net income for 1993 increased 11.2% when compared to net
income in 1992; net income for 1992, as restated (see below), increased 7.4%
over net income in 1991 excluding restructuring costs. After giving effect to
the restructuring charges, net income, as restated (see below), for 1992
increased 317.8% when compared to 1991.
Primary net income per share increased 6.2% in 1993 and,
excluding the restructuring charge, 8.1% in 1992 as compared to the respective
prior periods.
In the first quarter of 1993, the Company adopted FAS
109, Accounting for Income Taxes, as of January 1, 1993 and, as permitted,
elected to restate prior years financial statements. The effect of the
restatement was to increase the tax provision in 1992 by $600,000, reduce 1992
net income by the same amount and reduce 1991 net income by $500,000 by
recognizing a cumulative effect of the accounting change adjustment.
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14
For purposes of computing primary net income per common
share, the Company's net income was (i) reduced by dividends paid on the
Company's Preferred Stock and (ii) reduced or increased by the increase or
decrease, respectively, in redemption value of the Preferred Stock.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents on December 31, 1993 was
$181,267,000 up from $92,755,000 at the end of the prior year; the Company's
working capital at year-end increased during 1993 by $12,413,000 to
$25,001,000. These increases are largely attributable to enhanced collection
and disbursement management, and the effect of the long-term borrowing
described below. In addition, the Company invested in long-term, marketable,
highly liquid securities during the second half of 1993. At December 31, 1993,
the Company's investment in such marketable securities, principally United
States Treasury obligations with maturities between two and seven years, was
valued at $22,425,000.
Domestically, the Company maintains committed bank lines
of credit totalling $40,000,000. These lines of credit were partially utilized
during both 1993 and 1992 to secure obligations of selected foreign
subsidiaries in the respective year-end amounts of $11,100,000 and $13,331,000.
14
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The Company also maintains domestic uncommitted lines of
credit. These facilities, which are available at the discretion of the
offering banks, were not utilized during the period. There were no amounts
outstanding under these arrangements at December 31, 1993 or 1992.
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 $34,751,000 and $27,464,000
outstanding under such facilities at December 31, 1993 and 1992, respectively.
Historically, funds from operations and short-term bank
borrowings have been sufficient to meet the Company's dividend, capital
expenditure and working capital needs. While the Company has not had to
utilize long-term borrowing to fund its operating needs, in January 1993,
taking advantage of favorable terms offered, it borrowed $30,000,000, at a
fixed interest rate of 7.68%, repayable in equal installments in January 1998,
1999 and 2000. The Company does not anticipate any material increased
requirement for capital or other expenditures which will adversely affect its
liquidity.
The Company's business generally has been seasonal with
greater commissions and fees earned in the second and fourth quarters,
particularly the fourth quarter. As a result, cash, accounts receivable,
accounts payable and accrued expenses are typically higher on the Company's
year-end balance sheet than at the end of any of the preceding three quarters.
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ITEM 8. Financial Statements and Supplementary Data.
--------------------------------------------
The information required by this Item is presented
elsewhere in this report.
ITEM 9. Changes in and Disagreements with Accountants on
------------------------------------------------
Accounting and Financial Disclosure.
None.
PART III.
ITEM 10. Directors and Executive Officers of the Registrant.
---------------------------------------------------
This information is to be included in the Company's Proxy
Statement to be sent to its stockholders in connection with its 1994 annual
meeting under the caption "Election of Directors", and is hereby incorporated
herein by reference.
ITEM 11. Executive Compensation.
-----------------------
This information is to be included in the Company's Proxy
Statement to be sent to its stockholders in connection with its 1994 annual
meeting under the caption "Management Remuneration and Other Transactions", and
is hereby incorporated herein by reference.
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ITEM 12. Security Ownership of Certain Beneficial Owners and
---------------------------------------------------
Management.
-----------
This information is to be included in the Company's Proxy
Statement to be sent to its stockholders in connection with its 1994 annual
meeting under the captions "Voting Securities" and "Election of Directors", and
is hereby incorporated herein by reference.
ITEM 13. Certain Relationships and Related Transactions.
-----------------------------------------------
This information is to be included in the Company's Proxy
Statement to be sent to its stockholders in connection with its 1994 annual
meeting under the captions "Election of Directors" and "Voting Securities", and
is hereby incorporated herein by reference.
PART IV.
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on
-------------------------------------------------------
Form 8-K.
---------
(a) (1) (2)The information required
by this subsection of this Item
is presented elsewhere in this
report.
(b) Reports on Form 8-K: Registrant
-------------------
filed no reports on Form 8-K
during the last quarter of 1993.
(c) Exhibits: Reference is made to
--------
the Index of Exhibits annexed
hereto and made part hereof.
(d) Schedules: The information
---------
required by this subsection of
this Item is presented elsewhere
in this report.
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The undersigned Registrant hereby undertakes as follows,
which undertaking shall be incorporated by reference into Registrant's
Registration Statements on Form S-8, filed with the SEC pursuant to Section
6(a) of the '33 Act:
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of Registrant pursuant to the foregoing provisions, or
otherwise, Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by Registrant of expenses incurred or paid by a director, officer
or controlling person of Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By:/s/ Edward H. Meyer
------------------------
Edward H. Meyer,
Chairman, Chief Executive
Officer & President
Dated: March 30, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Mark N. Kaplan Dated: March 30, 1994
- ---------------------------------------
Mark N. Kaplan, Director
/s/ Edward H. Meyer Dated: March 30, 1994
- --------------------------------------
Edward H. Meyer, Director;
Principal Executive Officer
/s/ O. John C. Shannon Dated: March 30, 1994
- --------------------------------------
O. John C. Shannon, Director;
President - Grey International
/s/ Richard R. Shinn Dated: March 30, 1994
- ------------------------------------
Richard R. Shinn, Director
/s/ Steven G. Felsher Dated: March 30, 1994
- ----------------------------------------
Steven G. Felsher,
Principal Financial Officer
/s/ William P. Garvey Dated: March 30, 1994
- ---------------------------------------
William P. Garvey,
Principal Accounting Officer
- 19 -
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Annual Report on Form 10-K
Item 8, Item 14(a)(1) and (2) and Item 14(d)
Financial Statements and Supplementary Data
List of Financial Statements and
Financial Statement Schedules
Year ended December 31, 1993
Grey Advertising Inc.
New York, New York
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Form 10-K-Item 8, Item 14(a)(1) and (2)
Grey Advertising Inc. and Consolidated Subsidiary Companies
Index to Financial Statements and Financial Statement Schedules
The following consolidated financial statements of Grey Advertising Inc. and
consolidated subsidiary companies are included in Item 8:
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Consolidated Balance Sheets--December 31, 1993 and 1992 . . . . . . . . . . . . . . . . F-2
Consolidated Statements of Income--Years Ended
December 31, 1993, 1992 and 1991 . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Consolidated Statements of Common Stockholders' Equity--
Years Ended December 31, 1993, 1992 and 1991 . . . . . . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Cash Flows--
Years Ended December 31, 1993, 1992 and 1991 . . . . . . . . . . . . . . . . . . . . . F-7
Notes to Consolidated Financial Statements--
December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-9
The following consolidated financial statement schedules of Grey Advertising
Inc. and consolidated subsidiary companies are included in Item 14(d):
Schedule I--Marketable Securities Other Investments . . . . . . . . . . . . . . . . . . F-24
Schedule II--Amounts Receivable From Related Parties and
Underwriters, Promoters, and Employees Other Than
Related Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-25
Schedule IX--Short-Term Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . F-28
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and, therefore, have been omitted.
Summarized financial information and financial statements for nonconsolidated
foreign investee companies accounted for by the equity method have been omitted
because such companies, considered individually or in the aggregate, do not
constitute a significant subsidiary.
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Report of Independent Auditors
Board of Directors
Grey Advertising Inc.
We have audited the accompanying consolidated balance sheets of Grey
Advertising Inc. and consolidated subsidiary companies as of December 31, 1993
and 1992, and the related consolidated statements of income, common
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1993. Our audits also included the financial statement
schedules listed in the index at Item 14(a). These financial statements and
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Grey
Advertising Inc. and consolidated subsidiary companies at December 31, 1993 and
1992, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1993 in conformity
with generally accepted accounting principles. Also, in our opinion, the
related financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
As discussed in Note A to the financial statements, in 1993 the Company changed
its method of accounting for income taxes.
ERNST & YOUNG
February 11, 1994
F-1
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Grey Advertising Inc. and Consolidated Subsidiary Companies
Consolidated Balance Sheets
DECEMBER 31
1993 1992
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ASSETS
Current assets:
Cash and cash equivalents $181,267,000 $ 92,755,000
Accounts receivable 363,105,000 370,223,000
Expenditures billable to clients 22,581,000 26,205,000
Other current assets 69,116,000 92,125,000
------------ ------------
Total current assets 636,069,000 581,308,000
Investments in and advances to nonconsolidated
affiliated companies (Notes B and C) 16,104,000 11,160,000
Fixed assets--net (Note D) 57,724,000 62,974,000
Marketable securities (Notes A and E) 22,425,000
Intangibles and other assets-including loans to officers
of $4,947,000 in 1993 and $5,194,000 in 1992 (Notes A,
F, G, I and L(1)) 88,311,000 96,922,000
------------ ------------
TOTAL ASSETS $820,633,000 $752,364,000
============ ============
See notes to consolidated financial statements.
F-2
24
Grey Advertising Inc. and Consolidated Subsidiary Companies
Consolidated Balance Sheets (continued)
DECEMBER 31
1993 1992
----------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $469,227,000 $429,071,000
Notes payable to banks (Note F) 45,851,000 40,795,000
Accrued expenses and other 88,099,000 92,455,000
Income taxes payable 7,891,000 6,399,000
------------ ------------
Total current liabilities 611,068,000 568,720,000
Other liabilities, including deferred compensation of $15,342,000
and $15,891,000 (Note L(1)) 31,820,000 45,180,000
Long-term debt (Note F) 33,025,000 3,025,000
Minority interest 9,053,000 10,230,000
Redeemable preferred stock-at redemption value; par value $1 per
share; authorized 500,000 shares; issued and outstanding 32,000
shares in 1993 and 34,000 shares in 1992(Note G) 6,590,000 6,468,000
Common stockholders' equity:
Common Stock-par value $1 per share; authorized 10,000,000 shares;
issued 1,062,046 in 1993 and 1,030,892 in 1992 1,062,000 1,031,000
Limited Duration Class B Common Stock-par value $1 per share;
authorized 2,000,000 shares; issued 369,738 shares in 1993 and
400,892 shares in 1992 370,000 401,000
Paid-in additional capital 27,329,000 23,635,000
Retained earnings 131,835,000 118,737,000
Cumulative translation adjustment (3,573,000) 2,779,000
Unrealized loss on marketable securities (Notes A and E) (147,000)
Loans to officer used to purchase Common Stock and Limited
Duration Class B Common Stock (Note I) (4,726,000) (4,726,000)
------------ ------------
152,150,000 141,857,000
Less-cost of 164,372 and 163,830 shares of Common Stock and 26,851
and 30,551 shares of Limited Duration Class B Common Stock held
in treasury at December 31, 1993 and 1992, respectively 23,073,000 23,116,000
------------ ------------
Total common stockholders' equity 129,077,000 118,741,000
Retirement plans, leases and contingencies (Note L)
------------ ------------
Total liabilities and stockholders' equity $820,633,000 $752,364,000
============ ============
See notes to consolidated financial statements.
F-3
25
Grey Advertising Inc. and Consolidated Subsidiary Companies
Consolidated Statements of Income
YEAR ENDED DECEMBER 31
1993 1992 1991
--------------------------------------------------------
Commissions and fees $567,243,000 $564,468,000 $528,299,000
Expenses:
Salaries and employee related expenses (Note L(1)) 348,462,000 346,933,000 317,531,000
Office and general expenses (Note L(2)) 177,993,000 175,577,000 173,039,000
Restructuring costs (Note M) 23,850,000
------------ ------------ ------------
526,455,000 522,510,000 514,420,000
------------ ------------ ------------
40,788,000 41,958,000 13,879,000
Other income (expense)-net (Note C) 1,917,000 630,000 (602,000)
------------ ------------ ------------
Income before taxes on income of consolidated
companies 42,705,000 42,588,000 13,277,000
Provision for taxes on income (Note K) 22,487,000 19,975,000 5,057,000
------------ ------------ ------------
Net income of consolidated companies before
cumulative effect of accounting change 20,218,000 22,613,000 8,220,000
Minority interest applicable to consolidated
companies (4,508,000) (7,612,000) (4,548,000)
Equity in nonconsolidated affiliated companies 1,971,000 903,000 635,000
------------ ------------ ------------
Net income before cumulative effect of
accounting change 17,681,000 15,904,000 4,307,000
Cumulative effect of accounting change (500,000)
------------ ------------ ------------
Net income $17,681,000 $15,904,000 $3,807,000
============ ============ ============
Earnings per Common Share (Note J):
Primary
Before cumulative effect of accounting
change $13.46 $12.68 $3.51
Cumulative effect of accounting change .42
----------- ----------- -----------
Net income $13.46 $12.68 $3.09
=========== =========== ===========
Fully diluted
Before cumulative effect of accounting
change $13.00 $12.25 $3.48
Cumulative effect of accounting change .40
----------- ----------- -----------
Net income $13.00 $12.25 $3.08
=========== =========== ===========
See notes to consolidated financial statements.
F-4
26
Grey Advertising Inc. and Consolidated Subsidiary Companies
Consolidated Statements of Common Stockholders' Equity
Years ended December 31, 1993, 1992 and 1991
PAID-IN
COMMON ADDITIONAL RETAINED
STOCK CAPITAL EARNINGS
-----------------------------------------------
Balance at December 31, 1990 $1,432,000 $18,092,000 $106,608,000
Net income 3,807,000
Cash dividends-Common Shares-$2.93 per share (3,335,000)
Cash dividends-Redeemable Preferred Stock-$5.85 per share (199,000)
Common Shares acquired-at cost
Decrease in redemption value of Redeemable Preferred
Stock (Note G) 92,000
Restricted Stock Plan activity (Note H) 433,000
Tax benefit from restricted stock (Note H) 937,000
Common Shares issued upon exercise of stock options 568,000
Translation adjustment
---------- ----------- ------------
Balance at December 31, 1991 1,432,000 20,030,000 106,973,000
Net income 15,904,000
Cash dividends-Common Shares-$3.025 (3,519,000)
Cash dividends-Redeemable Preferred Stock-$6.05 (206,000)
Common Shares acquired-at cost
Increase in redemption value of Redeemable Preferred
Stock (Note G) (415,000)
Restricted Stock Plan activity (Note H) 252,000
Tax benefit from restricted stock (Note H) 119,000
Common Shares issued upon exercise of stock options 498,000
Tax benefit from exercise of stock options 1,556,000
Deferred compensation used to purchase Common Shares 20,000
Senior Management Incentive Plan activity (Note L) 1,160,000
Notes receivable from senior executive related to exercise of
stock options (Note I)
Translation adjustment
---------- ----------- ------------
Balance at December 31, 1992 1,432,000 23,635,000 118,737,000
COMMON STOCK
HELD IN TREASURY OTHER
-------------------------- EQUITY
SHARES AMOUNT ACCOUNTS TOTAL
----------------------------------------------------------
Balance at December 31, 1990 301,390 $(28,156,000) $6,024,000 $104,000,000
Net income 3,807,000
Cash dividends-Common Shares-$2.93 per share (3,335,000)
Cash dividends-Redeemable Preferred Stock-$5.85 per share (199,000)
Common Shares acquired-at cost 3,211 (361,000) (361,000)
Decrease in redemption value of Redeemable Preferred
Stock (Note G) 92,000
Restricted Stock Plan activity (Note H) (5,000) 288,000 721,000
Tax benefit from restricted stock (Note H) 937,000
Common Shares issued upon exercise of stock options (23,786) 759,000 1,327,000
Translation adjustment (1,836,000) (1,836,000)
------- ------------ ---------- ------------
Balance at December 31, 1991 275,815 (27,470,000) 4,188,000 105,153,000
Net income 15,904,000
Cash dividends-Common Shares-$3.025 (3,519,000)
Cash dividends-Redeemable Preferred Stock-$6.05 (206,000)
Common Shares acquired-at cost 7,375 (891,000) (891,000)
Increase in redemption value of Redeemable Preferred
Stock (Note G) (415,000)
Restricted Stock Plan activity (Note H) 252,000
Tax benefit from restricted stock (Note H) 119,000
Common Shares issued upon exercise of stock options (70,999) 4,112,000 4,610,000
Tax benefit from exercise of stock options 1,556,000
Deferred compensation used to purchase Common Shares (17,810) 1,133,000 1,153,000
Senior Management Incentive Plan activity (Note L) 1,160,000
Notes receivable from senior executive related to exercise of
stock options (Note I) (4,726,000) (4,726,000)
Translation adjustment (1,409,000) (1,409,000)
------- ------------ ---------- ------------
Balance at December 31, 1992 194,381 (23,116,000) (1,947,000) 118,741,000
F-5
27
Grey Advertising Inc. and Consolidated Subsidiary Companies
Consolidated Statements of Common Stockholders' Equity (continued)
Years ended December 31, 1993, 1992 and 1991
PAID-IN
COMMON ADDITIONAL RETAINED
STOCK CAPITAL EARNINGS
-----------------------------------------------
Net income $17,681,000
Cash dividends-Common Shares-$3.1375 per share (3,911,000)
Cash dividends-Redeemable Preferred Stock-$6.275 per share (204,000)
Common Shares acquired-at cost
Increase in redemption value of Redeemable Preferred
Stock (Note G) (468,000)
Restricted Stock Plan activity (Note H) $256,000
Tax benefit from restricted stock (Note H) 66,000
Common Shares issued upon exercise of stock options (44,000)
Tax benefit from exercise of stock options 46,000
Senior Management Incentive Plan activity (Note L) 3,370,000
Translation adjustment
Unrealized loss on marketable securities (Notes A and E)
---------- ----------- ------------
Balance at December 31, 1993 $1,432,000 $27,329,000 $131,835,000
========== =========== ============
COMMON STOCK
HELD IN TREASURY OTHER
-------------------------- EQUITY
SHARES AMOUNT ACCOUNTS TOTAL
------------------------------------------------------------
Net income $ 17,681,000
Cash dividends-Common Shares-$3.1375 per share (3,911,000)
Cash dividends-Redeemable Preferred Stock-$6.275 per share (204,000)
Common Shares acquired-at cost 5,426 $ (787,000) (787,000)
Increase in redemption value of Redeemable Preferred
Stock (Note G) (468,000)
Restricted Stock Plan activity (Note H) 256,000
Tax benefit from restricted stock (Note H) 66,000
Common Shares issued upon exercise of stock options (8,584) 830,000 786,000
Tax benefit from exercise of stock options 46,000
Senior Management Incentive Plan activity (Note L) 3,370,000
Translation adjustment $(6,352,000) (6,352,000)
Unrealized loss on marketable securities (Notes A and E) (147,000) (147,000)
------- ------------ ----------- ------------
Balance at December 31, 1993 191,223 $(23,073,000) $(8,446,000) $129,077,000
======= ============ =========== ============
See notes to consolidated financial statements.
F-6
28
Grey Advertising Inc. and Consolidated Subsidiary Companies
Consolidated Statements of Cash Flows
YEAR ENDED DECEMBER 31
1993 1992 1991
-------------------------------------------------
OPERATING ACTIVITIES
Net income $17,681,000 $15,904,000 $ 3,807,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of fixed assets 13,591,000 13,171,000 13,612,000
Amortization of intangibles 5,486,000 7,682,000 5,104,000
Deferred compensation 6,379,000 8,572,000 9,718,000
Equity in earnings of nonconsolidated
affiliated companies, net of dividends
received of $1,336,000, $595,000 and $440,000 (635,000) (308,000) (195,000)
Minority interest applicable to consolidated
companies 4,508,000 7,612,000 4,548,000
Writedown of investments in affiliates 1,344,000
Amortization of restricted stock expense 256,000 280,000 527,000
Cumulative effect of accounting change 500,000
Deferred income taxes (3,271,000) 5,351,000 (10,981,000)
Asset writeoffs related to restructuring (Note M) 6,997,000
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (29,082,000) 27,633,000 (49,044,000)
Decrease (increase) in expenditures billable
to clients 555,000 (4,014,000) (3,056,000)
Decrease (increase) in other current assets 28,454,000 (11,434,000) (25,660,000)
(Increase) decrease in other assets (2,202,000) (4,592,000) 5,714,000
Increase in accounts payable 76,731,000 769,000 97,569,000
(Decrease) increase in accrued expenses and
other (5,580,000) 8,976,000 12,594,000
Increase (decrease) in income taxes payable 2,385,000 478,000 (2,822,000)
(Decrease) in other liabilities (7,298,000) (26,160,000) (4,502,000)
----------- ----------- -----------
Net cash provided by operating activities 107,958,000 49,920,000 65,774,000
INVESTING ACTIVITIES
Purchases of fixed assets (13,421,000) (11,904,000) (14,664,000)
Increase in investments in and advances to
nonconsolidated affiliated companies (4,849,000) (1,731,000) (402,000)
Purchases of marketable securities (22,572,000)
Increase in intangibles, primarily goodwill (6,770,000) (1,780,000) (18,212,000)
----------- ----------- -----------
Net cash used in investing activities (47,612,000) (15,415,000) (33,278,000)
F-7
29
Grey Advertising Inc. and Consolidated Subsidiary Companies
Consolidated Statements of Cash Flows (continued)
YEAR ENDED DECEMBER 31
1993 1992 1991
--------------------------------------------------
FINANCING ACTIVITIES
Common Shares issued under Restricted Stock Plan $ 240,000
Net proceeds from (repayments of) short-term
borrowings $ 9,762,000 $(11,331,000) 12,307,000
Common Shares acquired for treasury (787,000) (492,000) (361,000)
Cash dividends paid on Common Shares (3,884,000) (3,519,000) (3,335,000)
Cash dividends paid on Redeemable Preferred Stock (204,000) (206,000) (199,000)
Proceeds from exercise of stock options 786,000 1,041,000 1,327,000
Proceeds from the redemption of Redeemable
Preferred Stock (300,000)
Proceeds from long-term debt 30,000,000
------------ ------------ -----------
Net cash provided by (used in) financing activities 35,373,000 (14,507,000) 9,979,000
Effect of exchange rate changes on cash (7,207,000) 1,231,000 (2,112,000)
------------ ------------ -----------
Increase in cash and cash equivalents 88,512,000 21,229,000 40,363,000
Cash and cash equivalents at beginning of year 92,755,000 71,526,000 31,163,000
------------ ------------ -----------
Cash and cash equivalents at end of year $181,267,000 $ 92,755,000 $71,526,000
============ ============ ===========
SUPPLEMENTAL INFORMATION REGARDING NON-CASH FINANCING ACTIVITIES.
In 1992, the Company granted a loan of $3,170,000 in partial payment for the
purchase of common stock (see Note I).
See notes to consolidated financial statements.
F-8
30
Grey Advertising Inc. and Consolidated Subsidiary Companies
Notes to Consolidated Financial Statements
December 31, 1993
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its majority owned subsidiaries. Material intercompany balances and
transactions have been eliminated in consolidation.
Certain amounts for years prior to 1993 have been reclassified to conform with
the current year classification.
COMMISSIONS AND FEES
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 billed. Payroll costs are
expensed as incurred.
CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents. The carrying amount of
cash equivalents approximates fair value because of the short maturities of
those instruments.
INVESTMENTS IN AND ADVANCES TO NONCONSOLIDATED AFFILIATED COMPANIES
The Company carries its investments in nonconsolidated affiliated companies on
the equity method. The Company is amortizing the excess ($6,995,000 in 1993 and
$3,669,000 in 1992) of the cost of its investments in certain of these
companies over the related net equity at the date of acquisition over periods
of up to 20 years. Certain investments which are not material in the aggregate
are carried on the cost method.
FIXED ASSETS
Depreciation of furniture, fixtures and equipment is provided for over their
estimated useful lives ranging from three to ten years and has been computed
principally by the straight-line method. Amortization of leaseholds and
leasehold improvements is provided for principally over the terms of the
related leases, which are not in excess of the lives of the assets.
F-9
31
Grey Advertising Inc. and Consolidated Subsidiary Companies
Notes to Consolidated Financial Statements (continued)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FOREIGN CURRENCY TRANSLATION
Primarily all balance sheet accounts of the Company's foreign operations are
translated at the exchange rate in effect at each year end and income statement
accounts are translated at the average exchange rates prevailing during the
year. Resulting translation adjustments are made directly to a separate
component of stockholders' equity. Foreign currency transaction gains and
losses are reported in income. During 1993, 1992 and 1991, foreign currency
transaction gains and losses were not material.
INTANGIBLES
The excess ($63,965,000 in 1993 and $63,895,000 in 1992) of purchase price over
underlying net equity of certain consolidated subsidiaries at the date of
acquisition is being amortized by the straight-line method over periods of up
to 20 years.
INCOME TAXES
Effective January 1, 1993, the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by FAS
109, Accounting for Income Taxes. As permitted under the new rules, the
Company has restated its 1992 and 1991 financial statements (see Note K). The
Company provides appropriate foreign withholding taxes on unremitted earnings
of consolidated and nonconsolidated foreign companies.
MARKETABLE SECURITIES
Effective December 31, 1993, the Company has adopted FAS 115, Accounting for
Certain Investments in Debt and Equity Securities. The Company has classified
its investments in marketable securities as available-for-sale at the time of
purchase and re-evaluates such designation as of each balance sheet date.
Available-for-sale securities are carried at fair value, based on publicly
quoted market prices, with unrealized gains and losses reported as a separate
component of stockholders' equity.
POSTRETIREMENT BENEFITS
During 1992, the Company adopted FAS 106, Accounting for Postretirement
Benefits Other Than Pensions. The costs incurred resulting from the adoption of
this pronouncement were not material.
F-10
32
Grey Advertising Inc. and Consolidated Subsidiary Companies
Notes to Consolidated Financial Statements (continued)
B. FOREIGN OPERATIONS
The following financial data is applicable to consolidated foreign
subsidiaries:
1993 1992 1991
----------------------------------------------
Current assets $357,391,000 $369,342,000 $369,022,000
Current liabilities 363,948,000 372,391,000 363,792,000
Other assets--net of
other liabilities 45,889,000 61,205,000 56,842,000
Net income 2,584,000 4,473,000 6,827,000
Consolidated retained earnings at December 31, 1993 includes equity in
unremitted earnings of nonconsolidated foreign companies of approximately
$2,937,000.
C. OTHER INCOME (EXPENSE)-NET
1993 1992 1991
--------------------------------------------
Interest income $7,307,000 $6,565,000 $5,964,000
Interest expense (7,558,000) (7,170,000) (6,125,000)
Dividends from affiliates 674,000 198,000 351,000
Writedown of investments (1,344,000)
Other--net 1,494,000 1,037,000 552,000
---------- ---------- ----------
$1,917,000 $ 630,000 $(602,000)
========== ========== ==========
D. FIXED ASSETS
Components of fixed assets-at cost are:
1993 1992
--------------------------------
Furniture, fixtures and equipment $90,304,000 $91,950,000
Leaseholds and leasehold improvements 42,091,000 41,711,000
----------- -----------
132,395,000 133,661,000
Less accumulated depreciation and
amortization 74,671,000 70,687,000
----------- -----------
$57,724,000 $62,974,000
----------- -----------
F-11
33
Grey Advertising Inc. and Consolidated Subsidiary Companies
Notes to Consolidated Financial Statements (continued)
E. MARKETABLE SECURITIES
At December 31, 1993, the Company's investments in marketable securities
consist of U.S. Treasury obligations with maturities of 2 to 7 years and a
market value of $22,425,000. At December 31, 1993, the Company has recorded
unrealized losses of $147,000 related to these investments.
F. CREDIT ARRANGEMENTS AND LONG-TERM DEBT
The Company maintains committed lines of credit of $40,000,000 with various
banks and may draw against the lines on unsecured demand notes at rates below
the applicable bank's prime interest rate. These lines of credit were partially
utilized during both 1993 and 1992 to secure obligations of selected foreign
subsidiaries in the respective year-end amounts of $11,100,000 and $13,331,000.
The Company had $34,751,000 and $27,464,000 outstanding under other uncommitted
lines of credit at December 31, 1993 and 1992, respectively. The carrying
amount of the debt outstanding under both the committed and uncommitted lines
of credit approximates fair value because of the short maturities of the
underlying notes.
In January 1993, the Company borrowed $30,000,000 from the Prudential Insurance
Company at a fixed interest rate of 7.68% repayable in equal installments of
$10,000,000 in January 1998, 1999 and 2000. The terms of the loan agreement
require, inter alia, that the Company maintain specified levels of net worth,
meet certain cash flow requirements and limit its incurrence of additional
indebtedness to certain specified amounts. At December 31, 1993, the Company
was in compliance with all of these covenants. The fair value of the
Prudential debt is estimated to be $31,400,000 at December 31, 1993. This
estimate was determined using a discounted cash flow analysis using current
interest rates for debt having the similar terms and remaining maturities.
The remaining balance of long-term debt consists of 8-1/2% Convertible
Subordinated Debentures due December 10, 1996 which are currently convertible
into 8.43 shares of Common Stock and an equal amount of Limited Duration Class
B Common Stock, subject to certain adjustments, for each $1,000 principal
amount of such Debentures. The debt was issued in exchange for cash and a
$3,000,000, 9% promissory note, payable December 10, 1997, from an officer of
the Company and is included in other assets at
F-12
34
Grey Advertising Inc. and Consolidated Subsidiary Companies
Notes to Consolidated Financial Statements (continued)
F. CREDIT ARRANGEMENTS AND LONG-TERM DEBT (CONTINUED)
December 31, 1993 and 1992. During 1991, the Company extended the maturity
dates of the debt and related promissory note to the dates indicated above.
During each of the years 1993, 1992 and 1991, the Company paid to the officer
interest of $257,000 pursuant to the terms of the 8 1/2% Convertible
Subordinated Debenture. During each of the years 1993, 1992 and 1991, the
officer paid to the Company interest of $270,000 pursuant to the terms of the
9% promissory note.
For the years 1993, 1992 and 1991, the Company made interest payments of
$6,529,000, $7,242,000 and $6,118,000, respectively.
G. REDEEMABLE PREFERRED STOCK
The Company has outstanding at December 31, 1993 and 1992, 22,000 and 24,000
shares, respectively, of its Series 1 Preferred Stock and 5,000 shares each of
its Series 2 and Series 3 Preferred Stock, which are held by current and former
senior employees of the Company including one executive officer. The shares
were issued at a price equal to the book value of the Common Stock at the time
of issuance less a fixed amount. One dollar per share was paid in cash and the
balance was represented by full recourse promissory notes, payable in May 1996,
bearing interest at 9% per annum. In April 1993, the Company, at the option of
one holder, after attainment of age 65, redeemed 2,000 shares of Series 1
Preferred Stock at a price of $347,000. The Company discharged its obligation
by payment of cash of $300,000 and forgiveness of the holder's promissory note
of $47,000. The amount of the full recourse promissory notes included in other
assets at December 31, 1993 and 1992 was $763,000 and $810,000, respectively.
The interest paid to the senior employees in 1993, 1992 and 1991, pursuant to
the terms of these notes was $70,000, $77,000, and $77,000, respectively.
The redemption price per share for the Preferred Stock is the combined book
value per share of the Common Stock and Limited Duration Class B Common Stock
as adjusted in accordance with the terms of the respective Certificates of
Designation and Terms of each series of Preferred Stock upon redemption less a
fixed discount. Holders of the Preferred Stock may have their shares redeemed
upon termination of employment prior to age 65. The Company is obligated to
redeem such shares following the holder's retirement after age 65.
F-13
35
Grey Advertising Inc. and Consolidated Subsidiary Companies
Notes to Consolidated Financial Statements (continued)
G. REDEEMABLE PREFERRED STOCK (CONTINUED)
Following the distribution of the new class of Common Stock designated Limited
Duration Class B Common Stock, the holders of the Preferred Stock became
entitled to eleven votes per share on all matters submitted to the vote of
stockholders. The holders of the Series 1 Preferred Stock are entitled, as
well, to vote as a single class to elect or remove one-quarter of the Board of
Directors, to approve the merger or consolidation of the Company or the sale by
it of all or substantially all of its assets, and to approve the authorization
or issuance of any other class of Preferred Stock having equivalent voting
rights.
The holders of the Preferred Stock are entitled to receive cumulative
preferential dividends at the annual rate of $.25 per share, and to participate
in dividends on the Common Stock and Limited Duration Class B Common Stock to
the extent such dividends, on a per share basis, exceed the preferential
dividends.
In the event of the liquidation of the Company, holders of Preferred Stock are
entitled to a preferential liquidation distribution of $1.00 per share in
addition to all accrued and unpaid preferential dividends.
The total carrying value of the Series 1, 2 and 3 Preferred Stock (applicable
to those shares outstanding at each respective year end) increased by $468,000
and $415,000 in 1993 and 1992, respectively, and decreased by $92,000 in 1991,
which represents the change in redemption value during those periods. This
change is referred to as "Additional Capital Applicable to Redeemable Preferred
Stock" in the Certificates of Designation and Terms of the Series 1, 2 and 3
Preferred Stock.
H. COMMON STOCK
The Company has authorized and outstanding two classes of common stock, Common
Stock and Limited Duration Class B Common Stock (Class B Common Stock), both $1
par value per share.
The Class B Common Stock has the same dividend and liquidation rights as the
Common Stock and a holder of each share of Class B Common Stock is entitled to
ten votes on all matters submitted to stockholders. The shares of Class B
Common Stock are restricted as to transferability and upon transfer, except to
specified limited classes of transferees, will convert into shares of Common
Stock which have one vote per share. The Class B Common Stock will
automatically convert to Common Stock on April 30, 1996.
F-14
36
Grey Advertising Inc. and Consolidated Subsidiary Companies
Notes to Consolidated Financial Statements (continued)
H. COMMON STOCK (CONTINUED)
Shares which have been issued and are now outstanding under the provisions of
the Company's Restricted Stock Plan are subject to restrictions as to
transferability expiring generally five or six years from the date of issue. In
1990, an additional 100,000 shares of Common Stock were authorized under this
Plan. During 1993, the restriction lapsed on 1,400 shares of Common Stock and
no shares of Class B Common Stock. At December 31, 1993 and 1992, there were
125,000 and 124,800 shares of Common Stock and 49,900 and 49,900 shares of
Class B Common Stock, respectively, reserved by the Company and available for
issuance under this Plan. Compensation to employees under the Plan of $214,000
representing the unamortized excess of the market value of restricted stock
over any cash consideration received, is carried as a reduction of Paid-In
Additional Capital and is charged to income ($256,000 in 1993, $252,000 in 1992
and $481,000 in 1991) over the related required period of service of the
respective employees.
The tax benefit, resulting from the difference between compensation expense
deducted for tax purposes and compensation expense charged to income, is
recorded as an increase to Paid-In Additional Capital.
I. STOCK OPTION PLANS
EXECUTIVE GROWTH PLAN
Under the terms of the Company's qualified stock option plan (Executive Growth
Plan), options may be granted to officers and key employees at prices not less
than 100% of the fair market value of the shares on the date of grant. At
December 31, 1993 and 1992, there were no options outstanding and no options
exercisable and at December 31, 1991 and 1990, there were 25,000 options of
Class B Common Stock and 25,000 options of Common Stock outstanding and
exercisable under this plan. During 1992, these options were exercised at a
total option price of $3,237,000, and were paid for with cash of $67,000 and a
note from an officer of the Company in the amount of $3,170,000 due and payable
in December 2001 at a fixed interest rate of 6.06%. At December 31, 1993,
142,847 shares of Common Stock and 142,847 shares of Class B Common Stock were
reserved by the Company for issuance with respect to the Plan. In addition, the
holder of the options was entitled to receive an additional amount representing
the dividends which would have been paid if the options had been exercised on
the date of grant. The holder used this additional amount ($1,153,000) to
purchase an additional 8,905 shares of both Common Stock and Class B Common
Stock. The additional amount was reflected as compensation expense in 1992 and
in years prior to the exercise.
F-15
37
Grey Advertising Inc. and Consolidated Subsidiary Companies
Notes to Consolidated Financial Statements (continued)
I. STOCK OPTION PLANS (CONTINUED)
In addition, and in accordance with the terms of the option agreement, the
holder of the options issued to the Company a promissory note in the principal
amount of $2,340,000 bearing interest at the rate of 6.06%, payable in December
2001, to settle his obligation to provide the Company with funds necessary to
pay the required withholding taxes due upon the exercise of the options. The
Company received a tax benefit of $1,556,000 upon the exercise of the options.
A portion of this note equal to the tax benefit and the full amount of the note
for $3,170,000 are reflected in a separate component of stockholders' equity at
December 31, 1993 and 1992.
The interest paid to the Company by the holder pursuant to the terms of the two
notes issued in connection with the option exercise was $334,000 in 1993. No
interest payments were made in 1992.
INCENTIVE STOCK OPTION PLAN
In 1982, the Company adopted an Incentive Stock Option Plan. Under this plan in
which options were available to be granted through May 1992, options were
granted to key employees, including officers, at a price not less than 100% of
the fair market value of the shares on the date of grant. A Committee of the
Board of Directors determined the terms and conditions under which options may
be granted or exercised. However, options (i) may not be exercised within
twelve months from the date of grant, (ii) may not be granted to Committee
members, (iii) expire within ten years from the date of grant and (iv) must be
exercised in the order of grant.
Transactions involving outstanding stock options under this Plan were:
NUMBER OF SHARES
----------------------------
CLASS B
COMMON COMMON TOTAL
STOCK STOCK OPTION PRICE
-------------------------------------------
Outstanding, December 31, 1990 26,992 31,992 $3,995,000
Cancelled (266) (266) (35,000)
Exercised (11,893) (11,893) (1,325,000)
------- ------- ----------
Outstanding, December 31, 1991 14,833 19,833 2,635,000
Cancelled (500) (500) (65,000)
Exercised (10,233) (10,233) (1,323,000)
------- ------- ----------
Outstanding, December 31, 1992 4,100 9,100 1,247,000
Cancelled (300) (300) (58,000)
Exercised (3,700) (3,700) (676,000)
------- ------- ----------
Outstanding, December 31, 1993 100 5,100 $513,000
======= ======= ==========
F-16
38
Grey Advertising Inc. and Consolidated Subsidiary Companies
Notes to Consolidated Financial Statements (continued)
I. STOCK OPTION PLANS (CONTINUED)
As of December 31, 1993, options to acquire 2,242 shares of Common Stock and
100 shares of Class B Common Stock were exercisable. The Company has reserved
29,684 shares of Common Stock and 29,684 shares of Class B Common Stock for
issuance with respect to this plan.
NONQUALIFIED STOCK OPTION PLAN
On December 2, 1987, the Company adopted a Nonqualified Stock Option Plan,
whereby 100,000 shares of Common Stock were reserved for issuance. In 1990, the
number of shares of Common Stock authorized for issuance under this Plan was
increased to 200,000. At the discretion of a Committee of the Board of
Directors, nonqualified stock options are granted to employees eligible to
receive options at prices not less than 100% of the fair market value of the
shares on the date of grant, and options must be exercised within 10 years of
grant and for only specified limited periods beyond termination of employment.
Transactions involving outstanding stock options under this Plan were:
NUMBER TOTAL
OF SHARES OPTION PRICE
--------------------------------
Outstanding, December 31, 1990 35,750 $3,558,000
Cancelled (1,100) (120,000)
Issued 6,200 869,000
--------- ----------
Outstanding, December 31, 1991 40,850 4,307,000
Cancelled (2,200) (257,000)
Issued 1,000 131,000
Exercised (533) (50,000)
--------- ----------
Outstanding, December 31, 1992 39,117 4,131,000
Cancelled (567) (58,000)
Exercised (1,184) (110,000)
--------- ----------
Outstanding, December 31, 1993 37,366 $3,963,000
========= ==========
Available for future grants 160,917
=========
As of December 31, 1993 and 1992, 19,668 and 8,051 of the outstanding options,
respectively, were exercisable.
F-17
39
Grey Advertising Inc. and Consolidated Subsidiary Companies
Notes to Consolidated Financial Statements (continued)
J. COMPUTATION OF NET INCOME PER COMMON SHARE
The computation of net income per common share is based on the weighted average
number of common shares outstanding, including adjustments for the effect of
the assumed exercise of dilutive stock options and shares issuable pursuant to
the Company's Senior Management Incentive Plan (see Note L(1)) (1,263,900 in
1993, 1,205,241 in 1992 and 1,196,908 in 1991) and, for fully diluted net
income per common share, the assumed conversion of the 8-1/2% Convertible
Subordinated Debentures issued in December 1983. Also, for the purpose of
computing net income per common share, the Company's net income is reduced by
dividends on the Preferred Stock and is reduced or increased to the extent of
an increase or decrease, respectively, in redemption value of the Preferred
Stock. Primary net income per common share is computed as if stock options
were exercised at the beginning of the period and the funds obtained thereby
used to purchase common shares 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 is higher, is used
to determine the number of shares which are assumed to be repurchased.
The effects of the Preferred Stock dividend requirements and the change in
redemption values amounted to $.53, $.52 and $.09 per share in 1993, 1992 and
1991, respectively.
K. INCOME TAXES
Effective January 1, 1993, the Company adopted FAS 109 (see Note A). As
permitted under the new rules, the Company restated its 1992 and 1991 financial
statements. The effect of adoption of FAS 109 was to reduce net income in 1992
by $600,000 or $0.50 per share, through an increase to the deferred provision
for income taxes. The cumulative effect of adoption as of January 1, 1991 was
to reduce net income by $500,000.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and amounts used for income tax purposes. At December 31, 1993, and
at December 31, 1992 and 1991, as restated, the Company had deferred tax assets
of $16,282,000, $15,334,000 and $21,928,000 and deferred tax liabilities of
$12,194,000, $14,517,000 and $15,760,000, respectively, detailed as follows:
F-18
40
Grey Advertising Inc. and Consolidated Subsidiary Companies
Notes to Consolidated Financial Statements (continued)
K. INCOME TAXES (CONTINUED)
DEFERRED TAX ASSETS (LIABILITIES)
1993 1992 1991
-------------------------------------------
Restructuring costs and related future tax benefits $3,531,000 $5,767,000 $7,411,000
Deferred compensation 5,730,000 4,220,000 8,792,000
Accrued expenses 7,021,000 5,347,000 5,725,000
Safe harbor lease and depreciation (9,228,000) (10,772,000) (12,267,000)
Tax on unremitted foreign earnings and other (2,966,000) (3,745,000) (3,493,000)
---------- ----------- -----------
4,088,000 817,000 6,168,000
Valuation allowance for deferred tax assets
---------- ----------- -----------
Net deferred tax assets $4,088,000 $817,000 $6,168,000
========== =========== ===========
The components of income before taxes on income are as follows:
1993 1992 1991
----------------------------------------
Domestic $28,646,000 $20,440,000 $(6,648,000)
Foreign 14,059,000 22,148,000 19,925,000
------------- ----------- -----------
$42,705,000 $42,588,000 $13,277,000
============= =========== ===========
Provisions (benefits) for Federal, foreign, state and local income taxes
consisted of the following:
1993 1992 1991
------------------------ ------------------------- -------------------------
CURRENT DEFERRED CURRENT DEFERRED CURRENT DEFERRED
------------------------------------------------------------------------------
Federal $12,106,000 $(2,448,000) $1,649,000 $3,752,000 $2,867,000 $(3,981,000)
Foreign 8,580,000 (1,578,000) 11,727,000 8,447,000
State and
local 5,072,000 755,000 1,248,000 1,599,000 4,724,000 (7,000,000)
----------- ----------- ----------- ---------- ----------- ------------
$25,758,000 $(3,271,000) $14,624,000 $5,351,000 $16,038,000 $(10,981,000)
=========== =========== =========== ========== =========== ============
The effective tax rate varied from the statutory Federal income tax rate as
follows:
1993 1992 1991
---------------------------------------
Statutory Federal tax rate 35.0% 34.0% 34.0%
State and local income taxes (benefits), net of Federal
income tax 8.9 4.4 (11.3)
Difference in foreign tax rates 8.4 11.2 14.7
Withholding tax on unremitted foreign earnings 1.2 1.0 3.2
Adjustment of prior years' provisions (2.2) (4.9)
Other--net 1.4 1.2 (2.5)
------- ------- ------
52.7% 46.9% 38.1%
======= ======= ======
During the years 1993, 1992 and 1991, the Company made income tax payments of
$18,748,000, $14,435,000 and $13,905,000, respectively.
F-19
41
Grey Advertising Inc. and Consolidated Subsidiary Companies
Notes to Consolidated Financial Statements (continued)
L. RETIREMENT PLANS, DEFERRED COMPENSATION, LEASES AND CONTINGENCIES
1. The Company's Profit Sharing Plan is available to all employees of the
Company and qualifying subsidiaries meeting certain eligibility
requirements. The Plan provides for contributions by the Company at the
discretion of the Board of Directors, subject to maximum limitations. The
Company also operates a noncontributory Employee Stock Ownership Plan
covering eligible employees of the Company and qualifying subsidiaries,
under which the Company may make contributions (in stock or cash) to an
Employee Stock Ownership Trust ("ESOT") in amounts each year as determined
at the discretion of the Board of Directors. The Company made no stock
contributions to the Plan in 1993, 1992 and 1991. The Company and the ESOT
have certain rights to purchase shares from participants whose employment
has terminated. In addition to the two plans noted above, various
subsidiaries maintain separate profit sharing and retirement arrangements.
Furthermore, the Company also provides additional retirement and deferred
compensation benefits to certain officers and employees.
The Company maintains a Senior Management Incentive Plan ("SMIP") in which
deferred compensation is granted to senior executive or management
employees deemed essential to the continued success of the Company. The
amount recorded as an expense related to this Plan amounted to $4,581,000,
$4,340,000 and $4,529,000 in 1993, 1992 and 1991, respectively.
Approximately $3,343,000 and $1,160,000 of Plan expense incurred in 1993
and 1992, respectively, will be payable in Company stock in accordance with
the terms of the Plan. These awards convert into 18,461 and 8,624
equivalent shares of Common Stock in 1993 and 1992, respectively. The
future obligation related to the stock award has been reflected as an
increase to Paid-In Additional Capital.
Expenses related to the foregoing plans and benefits aggregated $21,057,000
in 1993, $25,002,000 in 1992, and $20,300,000 in 1991.
In December 1990, the Company amended its employment agreement with its
Chairman and Chief Executive Officer, which extended the term of that
agreement through December 31, 1997. Concurrently, the Company also
discharged this individual's pension obligation which had been established
pursuant to the terms of his long-standing employment agreement. This
obligation was partially satisfied with a distribution of approximately
$19.8 million from a trust fund previously established by the Company for
this purpose. The remainder of the amount necessary to discharge this
obligation (approximately $9.5 million) was distributed from general
F-20
42
Grey Advertising Inc. and Consolidated Subsidiary Companies
Notes to Consolidated Financial Statements (continued)
L. RETIREMENT PLANS, DEFERRED COMPENSATION, LEASES AND CONTINGENCIES
(CONTINUED)
corporate funds. Included in other assets at December 31, 1993 and 1992 is
approximately $9.5 and $11.9 million, respectively, related to this
arrangement which is being amortized to expense over the remaining term of
the related employment agreement.
Pursuant to an employment agreement, dated December 21, 1990, an executive
officer of the Company borrowed $1,000,000 from the Company repayable at
December 31, 1995, except that one-fifth of the principal of the loan is
forgiven by the Company each December 31, beginning with December 31, 1991,
provided that the officer continues to be employed by the Company on those
dates. In 1993, 1992 and 1991, the Company has included in each year
$200,000 of compensation expense, representing the amount of loan forgiven
each year. As of December 31, 1993 and 1992, the remaining loan balance
was $400,000 and $600,000, respectively (the long term portion of the loan,
$200,000 in 1993 and $400,000 in 1992, is included in other assets).
2. Rental expense amounted to approximately $32,725,000 in 1993, $33,741,000
in 1992 and $29,106,000 in 1991 which is net of sub-lease rental income of
$2,016,000 in 1993, $3,343,000 in 1992, and $3,483,000 in 1991. Approximate
minimum rental commitments, excluding escalations, under noncancellable
operating leases are as follows:
SUB-LEASE
OFFICE SPACE COMMITMENTS TOTAL
-------------------------------------------------------------
1994 $27,007,000 $(807,000) $26,200,000
1995 24,467,000 (392,000) 24,075,000
1996 24,085,000 (373,000) 23,712,000
1997 21,256,000 (341,000) 20,915,000
1998 19,626,000 (324,000) 19,302,000
Beyond 1998 43,925,000 (335,000) 43,590,000
------------- ------------ -------------
$160,366,000 $(2,572,000) $157,794,000
============= ============ =============
3. The Company is not involved in any pending legal proceedings not covered by
insurance or by adequate indemnification or which, if decided adversely,
would have a material effect on either the results of operations,
liquidity or financial position of the Company.
F-21
43
Grey Advertising Inc. and Consolidated Subsidiary Companies
Notes to Consolidated Financial Statements (continued)
M. RESTRUCTURING COSTS
In November 1991, the Company recorded a charge for restructuring costs of
$23,850,000 primarily in connection with the absorption of a former subsidiary.
These charges related predominantly to the disposal of the subsidiary's real
estate obligations and leasehold assets, the write-off of certain of its fixed
assets, goodwill and other costs, primarily severance, in connection with the
integration. The restructuring costs also included similar modest charges with
respect to a small number of related operations. The components of the
restructuring charge as recorded in the fourth quarter of 1991 were as follows:
Lease termination-payments and other lease related costs $12,200,000
Write-off of fixed assets and leasehold improvements 4,400,000
Write-off of goodwill of former subsidiaries 2,500,000
Severance payments 2,300,000
Other costs 2,450,000
------------
$23,850,000
============
The amount provided in 1991 was for liabilities which existed as of the fourth
quarter of 1991 and was not for any events anticipated to happen after December
31, 1991. Most personnel reduction related to the absorption of the former
subsidiaries occurred during the fourth quarter of 1991 and the severance
accrual was adequate to cover those liabilities. Of the deferred tax benefits
totaling $7,411,000, related to the restructuring charge that was recorded in
1991, $1,644,000 was realized in 1992 and $2,236,000 realized in 1993 (see Note
K). The remaining deferred tax balance is expected to be realized over the
next couple of years.
F-22
44
Grey Advertising Inc. and Consolidated Subsidiary Companies
Notes to Consolidated Financial Statements (continued)
N. INDUSTRY SEGMENT AND RELATED INFORMATION
Commissions and fees and operating profit by geographic area for the years
ended December 31, 1993, 1992 and 1991, and related identifiable assets at
December 31, 1993, 1992 and 1991 are summarized below (000s omitted):
UNITED STATES WESTERN EUROPE
-------------------------------- ---------------------------------
1993 1992 1991 1993 1992 1991
-------------------------------------------------------------------
COMMISSIONS AND FEES $ 267,964 $ 241,279 $ 248,322 $ 260,005 $ 281,632 $ 242,644
-------------------------------------------------------------------
OPERATING PROFIT (LOSS) $ 28,809 $ 20,023 $ (8,239) $ 11,415 $ 16,594 $ 17,866
-------------------------------------------------------------------
OTHER INCOME ( EXPENSE)--NET
INCOME BEFORE TAXES ON INCOME OF
CONSOLIDATED COMPANIES
IDENTIFIABLE ASSETS $ 353,532 $ 260,849 $ 246,990 $ 389,723 $ 427,728 $ 421,656
-------------------------------------------------------------------
INVESTMENTS IN AND ADVANCES TO
NONCONSOLIDATED AFFILIATED
COMPANIES
TOTAL ASSETS
OTHER CONSOLIDATED
--------------------------------- -----------------------------------
1993 1992 1991 1993 1992 1991
----------------------------------------------------------------------
COMMISSIONS AND FEES $ 39,274 $ 41,557 $ 37,333 $ 567,243 $ 564,468 $ 528,299
----------------------------------------------------------------------
OPERATING PROFIT (LOSS) 564 $ 5,341 $ 4,252 $ 40,788 $ 41,958 $ 13,879
---------------------------------
OTHER INCOME (EXPENSE)--NET 1,917 630 (602)
-----------------------------------
INCOME BEFORE TAXES ON INCOME OF
CONSOLIDATED COMPANIES $ 42,705 $ 42,588 $ 13,277
===================================
IDENTIFIABLE ASSETS $ 61,274 $ 52,627 $ 56,714 $ 804,529 $ 741,204 $ 725,360
---------------------------------
INVESTMENTS IN AND ADVANCES TO
NONCONSOLIDATED AFFILIATED
COMPANIES 16,104 11,160 10,471
-----------------------------------
TOTAL ASSETS $ 820,633 $ 752,364 $ 735,831
===================================
COMMISSIONS AND FEES FROM ONE CLIENT AMOUNTED TO 13.0%, 13.4% AND 10.6% OF THE
CONSOLIDATED TOTAL IN 1993, 1992 AND 1991, RESPECTIVELY.
F-23
45
SCHEDULE I -- MARKETABLE SECURITIES -- OTHER INVESTMENTS
GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
YEAR ENDED DECEMBER 31, 1993
- ---------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C
- ---------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES
OR UNITS -- PRINCIPAL
NAME OF ISSUER AND AMOUNTS OF BONDS COST OF
TITLE OF EACH SHARE AND NOTES EACH ISSUE
- ---------------------------------------------------------------------------------------------------------------------
SECURITIES AVAILABLE-FOR-SALE (1)
U. S. GOVERNMENT OBLIGATIONS $22,050,000 $22,572,000
- ---------------------------------------------------------------------------------------------------------------------------
COL. A COL. D COL. E
- ---------------------------------------------------------------------------------------------------------------------------
AMOUNT AT WHICH EACH
PORTFOLIO OF EQUITY
SECURITY ISSUES AND
MARKET VALUE OF EACH OTHER SECURITY ISSUE
NAME OF ISSUER AND EACH ISSUE AT CARRIED IN THE BALANCE
TITLE OF EACH SHARE BALANCE SHEET DATE SHEET
- ---------------------------------------------------------------------------------------------------------------------------
SECURITIES AVAILABLE-FOR-SALE (1)
U. S. GOVERNMENT OBLIGATIONS $22,425,000 $22,425,000
(1) SECURITIES AVAILABLE-FOR-SALE ARE CARRIED AT FAIR VALUE WITH UNREALIZED
GAINS AND LOSSES INCLUDED AS A SEPARATE COMPONENT OF STOCKHOLDERS'
EQUITY.
F-24
46
Schedule II-Amounts Receivable from Related Parties and Underwriters,
Promoters,
and Employees Other Than Related Parties
GREY ADVERTISING INC.
AND CONSOLIDATED SUBSIDIARY COMPANIES
- ---------------------------------------------------------------------------------------------------------------
Col. A Col. B Col. C
- ---------------------------------------------------------------------------------------------------------------
Balance at
Name of Debtor Beginning of Period Additions
- ---------------------------------------------------------------------------------------------------------------
Year ended December 31, 1993:
E. Meyer, 6.06% interest bearing note receivable,
due December 2001 $3,170,000
E. Meyer, 6.06% interest bearing note receivable,
due December 2001 2,340,000
E. Meyer, 9% interest bearing note receivable,
due December 1997 3,000,000
E. Meyer, 9% interest bearing note receivable,
due May 1996 763,000
S. Novick, 7.5% interest bearing loan receivable,
due December 1995 (1) 600,000
Vasoft Pty. Ltd., noninterest bearing loan receivable,
due September 30, 1996 (2) 130,000 $7,000
Promaton Pty. Ltd., noninterest bearing loan receivable,
due September 30, 1995 (3) 130,000 7,000
I. Herdman, noninterest bearing loan receivable,
due February 1993 137,000
Khun Han Pty. Ltd., 9.25% interest bearing loan
receivable, due September 30, 1994 (4) 360,000
C. Preisler, noninterest bearing note receivable,
due January 1993 190,000
Thomas Gad, noninterest bearing notes receivable,
due between 1994 and 1997 382,000 238,000
-----------------------------------
$11,202,000 $252,000
===================================
- ------------------------------------------------------------------------------------------------------------------------------------
Col. A Col. D Col. E
-------------------------------------------------------------------------
Deductions Balance at End of Period
- ------------------------------------------------------------------------------------------------------------------------------------
(1) (2) (1) (2)
Name of Debtor Amounts Collected Amounts Written Off Current Not Current
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1993:
E. Meyer, 6.06% interest bearing note receivable,
due December 2001 $3,170,000
E. Meyer, 6.06% interest bearing note receivable,
due December 2001 2,340,000
E. Meyer, 9% interest bearing note receivable,
due December 1997 3,000,000
E. Meyer, 9% interest bearing note receivable,
due May 1996 763,000
S. Novick, 7.5% interest bearing loan receivable,
due December 1995 (1) $200,000 $200,000 200,000
Vasoft Pty. Ltd., noninterest bearing loan receivable,
due September 30, 1996 (2) 137,000
Promaton Pty. Ltd., noninterest bearing loan receivable,
due September 30, 1995 (3) 137,000
I. Herdman, noninterest bearing loan receivable,
due February 1993 137,000
Khun Han Pty. Ltd., 9.25% interest bearing loan
receivable, due September 30, 1994 (4) 263,000 97,000
C. Preisler, noninterest bearing note receivable,
due January 1993 190,000
Thomas Gad, noninterest bearing notes receivable,
due between 1994 and 1997 403,000 135,000 82,000
---------------------------------------------------------------------
$1,193,000 $432,000 $9,829,000
=====================================================================
(1)--The amount reflected in Column D (1) represents the amount of the loan
forgiven in 1993.
(2)--Vasoft Pty. Ltd. is a company controlled by James Allan, a director of Grey
Advertising (NSW) Pty. Limited.
(3)--Promaton Pty. Ltd. is a company controlled by Garry Murphie, a director of
Grey Advertising (NSW) Pty. Limited.
(4)--Khun Han Pty. Ltd. is a company controlled by Greg Harper, a director of
Grey Advertising (Victoria) Pty. Ltd.
F-25
47
Schedule II--Amounts Receivable from Related Parties and Underwriters,
Promoters,
and Employees Other Than Related Parties
GREY ADVERTISING INC.
AND CONSOLIDATED SUBSIDIARY COMPANIES
Col. A Col. B Col. C
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
Name of Debtor Balance at
Beginning of Period Additions
- --------------------------------------------------------------------------------------------------
Year ended December 31, 1992:
E. Meyer, 6.06% interest bearing note receivable,
due December 2001 $3,170,000
E. Meyer, 6.06% interest bearing note receivable,
due December 2001 2,340,000
E. Meyer, 9% interest bearing note receivable,
due December 1997 $3,000,000
E. Meyer, 9% interest bearing note receivable,
due May 1996 763,000
S. Novick, 7.5% interest bearing loan receivable,
due December 1995 (1) 800,000
Vasoft Pty. Ltd., noninterest bearing loan
receivable, 130,000
due September 30, 1996 (2)
Promaton Pty. Ltd., noninterest bearing loan
receivable, 130,000
due September 30, 1995 (3)
I. Herdman, noninterest bearing loan receivable,
due February 1993 137,000
Khun Han Pty. Ltd., 9.25% interest bearing loan
receivable, due September 30, 1994 (4) 509,000
C. Preisler, noninterest bearing note receivable,
due January 1993 190,000
Thomas Gad, noninterest bearing notes receivable,
due between 1994 and 1997 460,000
--------------------------------
$4,563,000 $7,066,000
================================
Col. A Col. D Col. E
- ------------------------------------------------------------------------------------------------------------------------------------
Deductions Balance at End of Period
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Debtor (1) (2) (1) (2)
Amounts Collected Amounts Written Off Current Not Current
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1992:
E. Meyer, 6.06% interest bearing note receivable,
due December 2001 $3,170,000
E. Meyer, 6.06% interest bearing note receivable,
due December 2001 2,340,000
E. Meyer, 9% interest bearing note receivable,
due December 1997 3,000,000
E. Meyer, 9% interest bearing note receivable,
due May 1996 763,000
S. Novick, 7.5% interest bearing loan receivable,
due December 1995 (1) $200,000 $200,000 400,000
Vasoft Pty. Ltd., noninterest bearing loan
receivable, 130,000
due September 30, 1996 (2)
Promaton Pty. Ltd., noninterest bearing loan
receivable, 130,000
due September 30, 1995 (3)
I. Herdman, noninterest bearing loan receivable,
due February 1993 137,000
Khun Han Pty. Ltd., 9.25% interest bearing loan
receivable, due September 30, 1994 (4) 149,000 217,000 143,000
C. Preisler, noninterest bearing note receivable,
due January 1993 190,000
Thomas Gad, noninterest bearing notes receivable,
due between 1994 and 1997 78,000 382,000
--------------------------------------------------------------------
$427,000 $744,000 $10,458,000
====================================================================
(1)--The amount reflected in Column (D)(1) represents the amount of loan
forgiven in 1992.
(2)--Vasoft Pty. Ltd. is a company controlled by James Allan, a director of
Grey Advertising (NSW) Pty. Limited.
(3)--Promaton Pty. Ltd. is a company controlled by Garry Murphie, a director of
Grey Advertising (NSW) Pty. Limited.
(4)--Khun Han Pty. Ltd. is a company controlled by Greg Harper, a director of
Grey Advertising (Victoria) Pty. Ltd.
F-26
48
Schedule II--Amounts Receivable from Related Parties and Underwriters,
Promoters,
and Employees Other Than Related Parties (continued)
GREY ADVERTISING INC.
AND CONSOLIDATED SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------------------------
Col. A Col. B Col. C
- --------------------------------------------------------------------------------------------------
Name of Debtor Balance at
Beginning of Period Additions
- --------------------------------------------------------------------------------------------------
Year ended December 31, 1991:
E. Meyer, 9% interest bearing note receivable,
due December 1997 $3,000,000
E. Meyer, 9% interest bearing note receivable,
due May 1996 763,000
S. Novick, 7.5% interest bearing loan receivable,
due December 1995 (1) $1,000,000
-----------------------------------
$3,763,000 $1,000,000
===================================
- ------------------------------------------------------------------------------------------------------------------------------------
Col. A Col. D Col. E
Deductions Balance at End of Period
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Debtor (1) (2) (1) (2)
Amounts Collected Amounts Written Off Current Not Current
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1991:
E. Meyer, 9% interest bearing note receivable,
due December 1997 $3,000,000
E. Meyer, 9% interest bearing note receivable,
due May 1996 763,000
S. Novick, 7.5% interest bearing loan receivable,
due December 1995 (1) $200,000 $200,000 600,000
--------------------------------------------------------------------
$200,000 $200,000 $4,363,000
====================================================================
(1) The amount reflected in Column (D) (1) represents the amount of loan
forgiven in 1991.
F-27
49
SCHEDULE IX--SHORT-TERM BORROWINGS
GREY ADVERTISING INC.
AND CONSOLIDATED SUBSIDIARY COMPANIES
- -----------------------------------------------------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D
- -----------------------------------------------------------------------------------------------------------------------------
Maximum
Weighted Amount
Balance Average Outstanding
Category of Aggregate at End of Interest During the
Short-Term Borrowings Period Rate Period
- -----------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1993:
Notes payable to banks (a) $11,100,000 7.7% $13,759,000
Notes payable to banks (b) 34,751,000 10.9% 39,638,000
Year ended December 31, 1992:
Notes payable to banks (a) $13,331,000 10.5% $14,257,000
Notes payable to banks (b) 27,464,000 11.9% 45,852,000
Year ended December 31, 1991:
Notes payable to banks (b) $50,470,000 11.6% $53,115,000
- -----------------------------------------------------------------------------------
Col. A Col. E Col. F
- -----------------------------------------------------------------------------------
Average Weighted
Amount Average
Outstanding Interest Rate
Category of Aggregate During the During the
Short-Term Borrowings Period Period
- -----------------------------------------------------------------------------------
Year ended December 31, 1993:
Notes payable to banks (a) $12,400,000 (c) 7.7% (d)
Notes payable to banks (b) 31,427,000 11.1% (d)
Year ended December 31, 1992:
Notes payable to banks (a) $13,522,000 (c) 10.2% (d)
Notes payable to banks (b) 35,922,000 12.0% (d)
Year ended December 31, 1991:
Notes payable to banks (b) $38,092,000 (c) 11.8% (d)
(a)--Notes payable to banks represent borrowings under lines of credit
arrangements which are subject to termination at a specified date.
(b)--Notes payable to banks represent promissory notes under credit
arrangements.
(c)--The average amount outstanding during the period is the weighted monthly
outstanding balance.
(d)--The weighted average interest rate during the period was computed by
dividing the actual interest expense by the weighted average outstanding
amount.
F-28
50
INDEX TO EXHIBITS
Number Assigned
to Exhibit (i.e. 601
of Regulation S-K) Description of Exhibits
------------------ -----------------------
3.01 Restated Certificate of Incorporation
of Grey Advertising Inc. ("Grey").
(Incorporated herein by reference to
Exhibit 4.01 to Grey's Registration
Statement on Form S-8, dated January
9, 1987, filed with the Securities
and Exchange Commission, 450 Fifth
Street, N.W., Washington, D.C., 20549
("SEC"), pursuant to Section 6(a)
of the Securities Act of 1933 (" '33 Act"),
under Commission File No. 33-11253.)
3.02 By-Laws of Grey as amended.
(Incorporated herein by reference to
Exhibit 3.02 to Grey's Annual Report
on Form 10-K for the fiscal year
ended December 31, 1988.)
3.03 Designation and Terms
of Series 1 Preferred Stock of Grey.
(Incorporated herein by reference
to Article Fourth, Section
A(III) of Exhibit 4.01 to Grey's
Registration Statement on Form S-8
filed with the SEC pursuant to
Section 6(a) of the '33 Act.)
3.04 Designation and Terms
of Series 2 Preferred Stock of Grey.
(Incorporated herein by reference
to Article Fourth, Section A(IV)
of Exhibit 4.01 to Grey's
Registration Statement on Form S-8
filed with the SEC pursuant to
Section 6(a) of the '33 Act.)
3.05 Designation and Terms
of Series 3 Preferred Stock of Grey.
(Incorporated herein by reference
to Article Fourth, Section A(V)
of Exhibit 4.01 to Grey's
Registration Statement on Form S-8
filed with the SEC pursuant to
Section 6(a) of the '33 Act.)
51
INDEX TO EXHIBITS
Number Assigned
to Exhibit (i.e. 601
of Regulation S-K) Description of Exhibits
------------------ ---------------------------
3.06 Purchase Agreement, dated as of
December 10, 1983, between Grey
and Edward H. Meyer relating
to the sale to Mr. Meyer of Grey's
8-1/2% Convertible Debentures, of
even date therewith ("Convertible
Debenture"). (Incorporated herein by
reference to Exhibit 3.08 to Grey's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1983.)
3.07 Extension Agreements, dated as of
November 19, 1991 between Grey and
Edward H. Meyer relating to the
extension of the maturity dates of
the Convertible Debenture and
related Promissory Note. (Incorporated
herein by reference to Exhibit 3.07 to
Grey's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991.)
3.08 Form of Convertible Debenture.
(Incorporated herein by reference to
Exhibit 3.09 to Grey's Annual Report
on Form 10-K for the fiscal year ended
December 31, 1983.)
9.01 Form of Voting Trust Agreement, dated
as of February 24, 1986, among certain
Beneficiaries, Grey, Edward H. Meyer and
Ronald A. Nicholson. (Incorporated herein
by reference to Exhibit 9.02
to Grey's Annual Report
on Form 10-K for the fiscal year
ended December 31, 1985.)
9.02 Form of Amended and Restated Voting Trust
Agreement, dated as of August 31, 1987,
among certain Beneficiaries, Grey and
Edward H. Meyer. (Incorporated herein by
reference to Exhibit 10.01 to Grey's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1987.)
52
INDEX TO EXHIBITS
Number Assigned
to Exhibit (i.e. 601
of Regulation S-K) Description of Exhibits
------------------ -----------------------
9.03 Form of Voting Trust Agreement, dated
as of December 1, 1989, among certain
Beneficiaries, Grey and Edward H. Meyer.
(Incorporated herein by reference to
Exhibit 9.03 to Grey's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1989.)
9.04 Form of Amended and Restated Voting
Trust Agreement, dated as of March
21, 1994, among certain Beneficiaries,
Grey and Edward H. Meyer.
10.01 Employment Agreement, dated as of
February 9, 1984, between Grey and
Edward H. Meyer ("Meyer Employment
Agreement"). (Incorporated herein
by reference to Exhibit 10.01 to Grey's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1983.)
10.02 Amendments Two through Seven to Meyer
Employment Agreement. (Incorporated
herein by reference to Exhibit 10.02
to Grey's Annual Report on Form 10-K
for the fiscal year ended December 31,
1985, Exhibit 10.03 to Grey's Annual
Report on Form 10-K for the fiscal
year ended December 31, 1987,
Exhibit 1 to Grey's Current Report on
Form 8-K, dated May 9, 1988, filed with
the SEC pursuant to Section 13 of the
1934 Act, Exhibit 2 to Grey's current
Report on Form 8-K, dated May 9, 1988,
filed with the SEC pursuant to Section
13 of the 1934 Act. Exhibit I to Grey's
Current Report on Form 8-K, dated
June 9, 1989, filed with the SEC
pursuant to Section 13 of the 1934 Act
and Exhibit 10.07 to Grey's Annual
Report on Form 10-K for the fiscal
year ended December 31, 1990 respectively.)
53
INDEX TO EXHIBITS
Number Assigned
to Exhibit (i.e. 601
of Regulation S-K) Description of Exhibits
------------------ ------------------------
10.03 Pension Agreement, dated as of
May 9, 1988, between Grey and Meyer.
(Incorporated herein by reference to
Exhibit 3 to Grey's Current Report
on Form 8-K, dated May 9, 1988
filed with the SEC pursuant to
Section 13 of the 1934 Act.)
10.04 Employment Agreement, dated as of
December 21, 1990, by and between
Grey and Stephen A. Novick.
(Incorporated herein by reference
to Exhibit 10.11 to Grey's Annual
Report on Form 10-K for the fiscal
year ended December 31, 1990.)
10.05 Employment Agreement, dated as of
December 1, 1992, by and between
Grey and Robert L. Berenson. (Incor-
porated herein by reference to
Exhibit 10.05 to Grey's Annual Report
on Form 10-K for the fiscal year
ended December 31, 1992.)
10.06 Employment Agreement, dated as of
January 1, 1993 by and between Grey and
Barbara S. Feigin.
10.07 Grey Advertising Inc. Book Value Pre-
ferred Stock Plan, as amended. (In-
corporated herein by reference to
Exhibit 4.1 to Grey's Current Report on
Form 8-K, dated June 14, 1983, filed
with the SEC pursuant to Section 13 of
the 1934 Act.)
10.08 Grey Advertising Inc. Amended and Re-
stated Senior Executive Officer Pension
Plan. (Incorporated herein by reference
to Exhibit 10.08 to Grey's Annual Report
on Form 10-K for the fiscal year ended
December 31, 1984.)
54
INDEX TO EXHIBITS
Number Assigned
to Exhibit (i.e. 601
of Regulation S-K) Description of Exhibits
------------------ -----------------------
10.9 Grey Advertising Inc. Amended and Re-
stated 1988 Senior Management Incentive
Plan. (Incorporated herein by reference
to Exhibit 10.17 to Grey's Annual Report
on Form 10-K for the fiscal year ended
December 31, 1988.)
10.10 Grey Advertising Inc. Restricted Stock
Plan, as amended and restated as of
April 3, 1986. (Incorporated herein by
reference to Exhibit 4.03 to Grey's
Registration Statement on Form S-8, filed
with the SEC pursuant to Section 6(a) of
the '33 Act.)
10.11 Form of Restricted Stock Purchase Agree-
ment under Grey Advertising Inc. Re-
stricted Stock Plan. (Incorporated
herein by reference to Exhibit 4.04 to
Grey's Registration Statement on Form S-8,
filed with the SEC pursuant to Section
6(a) of the '33 Act.)
10.12 Grey Advertising Inc. Executive
Growth Plan, as amended and
restated. (Incorporated herein by
reference to Exhibit 10.14 to Grey's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1985.)
10.13 Stock Option Agreement, dated as
of October 13, 1984, by and between
Grey and Edward H. Meyer ("Meyer Option
Agreement"). (Incorporated
herein by reference to Exhibit 10.15 to
Grey's Annual Report on Form 10-K for
the fiscal year ended December 31, 1985.)
55
INDEX TO EXHIBITS
Number Assigned
to Exhibit (i.e. 601
of Regulation S-K) Description of Exhibits
------------------ -----------------------
10.14 Extension Agreement, dated as of
March 27, 1992, by and between Grey and
Edward H. Meyer, relating to the Meyer
Option Agreement. (Incorporated herein
by reference to Exhibit 10.13 to Grey's
Annual Report on Form 10-K for the fiscal
year ended December 31, 1992.)
10.15 Amendment One to Meyer Option Agreement,
dated as of December 29, 1992. (Incor-
porated herein by reference to
Exhibit 10.14 to Grey's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1992.)
10.16 Notice of Exercise, dated
December 29, 1992, from Edward H. Meyer
to Grey pursuant to the Meyer Option Agreement.
(Incorporated herein by reference to Exhibit 10.15
to Grey's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992.)
10.17 Promissory Notes I and II, dated as of December 29,
1992, from Edward H. Meyer to Grey, delivered
pursuant to the Meyer Option Agreement.
(Incorporated herein by reference to
Exhibit 10.16 to Grey's Annual Report on Form
10-K for the fiscal year ended December 31, 1992.)
10.18 Grey Advertising Inc. Incentive Stock
Option Plan, as amended and restated
as of April 3, 1986. (Incorporated
herein by reference to Exhibit 4.04
to Grey's Registration Statement on
Form S-8 filed with the SEC pursuant
to Section 6(a) of the '33 Act.)
56
INDEX TO EXHIBITS
Number Assigned
to Exhibit (i.e. 601
of Regulation S-K) Description of Exhibits
------------------ -----------------------
10.19 Form of Incentive Stock Option Agree-
ment under Grey Advertising Inc.
Incentive Stock Option Plan. (In-
corporated herein by reference to
Exhibit 4.05 to Grey's Registration
Statement on Form S-8, filed with the
SEC pursuant to Section 6(a) of the
'33 Act.)
10.20 Grey Advertising Inc. 1987 Stock
Option Plan. (Incorporated herein by
reference to Exhibit 10.24 to Grey's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1988.)
10.21 Form of Stock Option Agreement under
Grey Advertising Inc. Stock Option
Plan. (Incorporated herein by
reference to Grey's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1988.)
10.22 Note Agreement, dated as of
January 19, 1993, by and between Grey
and The Prudential Insurance Company
of America. (Incorporated herein by
reference to Exhibit 10.21 to Grey's
Annual Report on Form 10-K for the fiscal
year ended December 31, 1992.)
10.23 Bonuses - Grey has paid bonuses to
certain of its executive officers
(including those who are directors)
and employees in prior years includ-
ing 1993, and may do so in future
years. Bonuses have been and may
be in the form of cash, shares of
stock or both although Grey pre-
sently does not have any plans to
pay stock bonuses. Bonuses are not
granted pursuant to any formal plan.
57
INDEX TO EXHIBITS
Number Assigned
to Exhibit (i.e. 601
of Regulation S-K) Description of Exhibits
------------------ -----------------------
10.24 Directors' Fees - It is the policy of
Grey to pay each of its non-employee
directors a fee of $4,500 per fiscal
quarter and a fee of $3,000 for each
meeting of the Board of Directors
attended. This policy is not embodied
in any written document.
10.25 Deferred Compensation Agreement,
dated December 23, 1981, between
Grey and Mark N. Kaplan, regarding
deferral of payment of director's
fees to which Mr. Kaplan may become
entitled. (Incorporated herein by
reference to Exhibit 10.18 to Grey's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1982.)
10.26 On March 23, 1978, Grey's Board of
Directors, at a meeting thereof held
on such date, approved an arrangement
whereby Grey is required to accrue for
Edward H. Meyer, the difference between
the amount contributed by Grey on behalf
of Mr. Meyer under the Profit Sharing
Plan and Grey's Employee Stock Owner-
ship Plan, and the amount which would
have been contributed to such plans on his
behalf had such plans not contained maximum
annual limitations on contributions and
credits, as required by the Employee Retire-
ment Income Security Act of 1974. Such
accrual is to be paid to Mr. Meyer as if it
had been contributed to his account under
the Profit Sharing Plan. Such arrangement
is not embodied in any written document.
58
INDEX TO EXHIBITS
Number Assigned
to Exhibit (i.e. 601
of Regulation S-K) Description of Exhibits
------------------ -----------------------
10.27 Lease, dated as of July 1, 1978 by and
between Grey and William Kaufman and
J. D. Weiler, regarding space at 777
Third Avenue, New York, New York
("Main Lease"). (Incorporated herein
by reference to Exhibit 10.21 to
Grey's Annual Report on Form 10-K for the
fiscal year ended December 31, 1982.)
10.28 First Amendment to Main Lease.
(Incorporated herein by reference to
Exhibit 10.22 to Grey's Annual Report
on Form 10-K for the fiscal year ended
December 31, 1982.)
10.29 Second Amendment to Main Lease.
(Incorporated herein by reference
to Exhibit 10.23 to Grey's Annual
Report on Form 10-K for the fiscal
year ended December 31, 1982.)
10.30 Third Amendment to Main Lease.
(Incorporated herein by reference
to Exhibit 10.24 to Grey's Annual
Report on Form 10-K for the fiscal
year ended December 31, 1982.)
10.31 Fourth Amendment to Main Lease.
(Incorporated herein by reference
to Exhibit 10.25 to Grey's Annual
Report on Form 10-K for the fiscal
year ended December 31, 1982.)
59
INDEX TO EXHIBITS
Number Assigned
to Exhibit (i.e. 601
of Regulation S-K) Description of Exhibits
------------------ -----------------------
10.32 Fifth Amendment to Main Lease.
(Incorporated herein by reference
to Exhibit 10.26 to Grey's Annual
Report on Form 10-K for the fiscal
year ended December 31, 1982.)
10.33 Sixth Amendment to Main Lease.
(Incorporated herein by reference
to Exhibit 10.27 to Grey's Annual
Report on Form 10-K for the fiscal
year ended December 31, 1982.)
10.34 Seventh Amendment to Main Lease.
(Incorporated herein by reference to
Exhibit 10.28 to Grey's Annual Report
on Form 10-K for the fiscal year
ended December 31, 1982.)
10.35 Eighth Amendment to Main Lease.
(Incorporated herein by reference
to Exhibit 10.29 to Grey's Annual
Report on Form 10-K for the fiscal
year ended December 31, 1982.)
10.36 Ninth Amendment to Main Lease.
(Incorporated herein by reference
to Exhibit 10.30 to Grey's Annual
Report on Form 10-K for the fiscal
year ended December 31, 1983.)
10.37 Tenth Amendment to Main Lease.
(Incorporated herein by reference to
Exhibit 10.33 to Grey's Annual Report
on Form 10-K for the fiscal year ended
December 31, 1984.)
60
INDEX TO EXHIBITS
Number Assigned
to Exhibit (i.e. 601
of Regulation S-K) Description of Exhibits
------------------ -----------------------
10.38 Eleventh Amendment to Main Lease.
(Incorporated herein by reference to
Exhibit 10.34 to Grey's Annual Report
on Form 10-K for the fiscal year ended
December 31, 1984.)
10.39 Twelfth Amendment to Main Lease.
(Incorporated herein by reference
to Exhibit 10.35 to Grey's Annual
Report on Form 10-K for the fiscal
year ended December 31, 1985.)
10.40 Thirteenth Amendment to Main Lease.
(Incorporated herein by reference to
Exhibit 10.36 to Grey's Annual Report
on Form 10-K for the fiscal year
ended December 31, 1985.)
10.41 Fourteenth Amendment to Main Lease.
(Incorporated herein by reference to
Exhibit 10.36 to Grey's Annual Report
on Form 10-K for the fiscal year ended
December 31, 1986.)
11.01 Statement re: Computation of Net
Income Per Share.
21.01 Subsidiaries of Grey.
23.01 Consent of Auditors
10K-Exhibits