<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-7898
GREY ADVERTISING INC.
(Exact name of registrant as specified in its charter)
Delaware 13-0802840
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
777 Third Avenue, New York, New York 10017
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, 212-546-2000
including area code
NOT APPLICABLE
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
As of July 31, 1996, the total number of shares outstanding of Registrant's
Common Stock, par value $1 per share ("Common Stock"), was 887,153 and of
Registrant's Limited Duration Class B Common Stock, par value $1 per share
("Class B Common Stock"), was 302,479.
<PAGE> 2
GREY ADVERTISING INC.
AND CONSOLIDATED SUBSIDIARY COMPANIES
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Financial Statements:
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 5
Condensed Consolidated Statements of Cash Flows 6
Notes to Condensed Consolidated Financial Statements 8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Other Information 12
Signatures 13
Index to Exhibits 14
</TABLE>
2
<PAGE> 3
GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31, 1995
(UNAUDITED) (A)
----------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 65,331,000 $134,313,000
Marketable securities 23,144,000 20,419,000
Accounts receivable 514,403,000 495,349,000
Expenditures billable to clients 49,965,000 46,449,000
Other current assets 52,120,000 49,614,000
--------------------------------
Total current assets 704,963,000 746,144,000
Investments in and advances to nonconsolidated
affiliated companies 16,292,000 20,693,000
Fixed assets - at cost, less accumulated depreciation
of $96,513,000 and $93,789,000 76,913,000 74,706,000
Marketable securities 61,183,000 48,252,000
Intangible assets and other assets-including loans to
officers of $5,522,000 in 1996 and 1995 69,524,000 65,342,000
--------------------------------
Total assets $928,875,000 $955,137,000
================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
(A) The consolidated balance sheet has been derived from the audited financial
statements at that date.
3
<PAGE> 4
GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS(CONTINUED)
<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31, 1995
(UNAUDITED) (A)
------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $512,307,000 $549,533,000
Notes payable to banks 78,683,000 71,336,000
Accrued expenses and other 96,882,000 97,126,000
Income taxes payable 15,611,000 18,567,000
-----------------------------------
Total current liabilities 703,483,000 736,562,000
Other liabilities including deferred compensation of
$27,477,000 and $22,021,000 38,598,000 39,620,000
Long-term debt 33,025,000 33,025,000
Minority interest 9,937,000 9,281,000
Redeemable preferred stock-at redemption value; par
value $1 per share; authorized 500,000 shares; issued
and outstanding 32,000 shares in 1996 and 1995 9,302,000 8,986,000
Common stockholders' equity:
Common Stock-par value $1 per share; authorized
10,000,000 shares; issued 1,102,454 in 1996 and
1,096,096 in 1995 1,103,000 1,096,000
Limited Duration Class B Common Stock-par value
$1 per share; authorized 2,000,000 shares; issued
329,330 shares in 1996 and 335,688 shares in 1995 329,000 336,000
Paid-in additional capital 37,785,000 37,898,000
Retained earnings 132,748,000 122,345,000
Cumulative translation adjustment 4,682,000 4,664,000
Unrealized (loss) gain on marketable securities (2,093,000) 550,000
Loans to officer used to purchase Common Stock
and Limited Duration Class B Common Stock (4,726,000) (4,726,000)
-----------------------------------
169,828,000 162,163,000
Less-cost of 214,912 and 212,848 shares of Common
Stock and 26,751 and 26,751 shares of Limited
Duration Class B Common Stock held in treasury at
June 30, 1996 and December 31, 1995, respectively 35,298,000 34,500,000
-----------------------------------
Total common stockholders' equity 134,530,000 127,663,000
-----------------------------------
Total liabilities and stockholders' equity $928,875,000 $955,137,000
===================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
(A) The consolidated balance sheet has been derived from the audited financial
statements at that date.
4
<PAGE> 5
GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------------------------------------------------------
1996 1995 1996 1995
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commissions and fees $186,533,000 $169,703,000 $360,010,000 $321,640,000
Expenses:
Salaries and employee related
expenses 114,801,000 106,092,000 228,642,000 204,281,000
Office and general expenses 56,094,000 49,617,000 106,699,000 95,095,000
-------------------------------------------------------------------------
170,895,000 155,709,000 335,341,000 299,376,000
-------------------------------------------------------------------------
15,638,000 13,994,000 24,669,000 22,264,000
Other income (loss) - net 290,000 (370,000) 5,129,000 (64,000)
-------------------------------------------------------------------------
Income of consolidated companies
before taxes on income 15,928,000 13,624,000 29,798,000 22,200,000
Provision for taxes on income (8,405,000) (6,874,000) (15,611,000) (11,386,000)
-------------------------------------------------------------------------
Net income of consolidated
companies 7,523,000 6,750,000 14,187,000 10,814,000
Minority interest applicable to
consolidated companies (858,000) (1,006,000) (2,027,000) (1,901,000)
Equity in nonconsolidated
affiliated companies 142,000 263,000 910,000 786,000
-------------------------------------------------------------------------
Net income $ 6,807,000 $ 6,007,000 $ 13,070,000 $ 9,699,000
=========================================================================
Weighted average number
of common shares outstanding
Primary 1,300,614 1,320,489 1,300,307 1,320,791
Fully diluted 1,351,072 1,377,389 1,352,962 1,380,419
Net income per common share
Primary $5.04 $4.28 $9.72 $6.86
Fully diluted $4.88 $4.13 $9.39 $6.61
Dividends per common share $0.9375 $0.875 $1.875 $1.75
=========================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30,
1996 1995
-----------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $13,070,000 $9,699,000
Adjustments to reconcile net income to net cash used
in operating activities:
Depreciation and amortization of fixed assets 8,948,000 7,690,000
Amortization of intangibles 2,505,000 1,971,000
Deferred compensation 7,467,000 6,127,000
Equity in earnings of nonconsolidated affiliated
companies, net of dividends received of $202,000
and $-0- (708,000) (786,000)
Gains from the sale of a nonconsolidated affiliated
company, a non-marketable investment security
and marketable securities (4,754,000)
Minority interest applicable to consolidated companies 2,027,000 1,901,000
Amortization of restricted stock expense 50,000 111,000
Deferred income taxes (3,000,000) (3,025,000)
Changes in operating assets and liabilities:
Increase in accounts receivable (24,523,000) (28,145,000)
Increase in expenditures billable to clients (5,048,000) (9,539,000)
(Increase) decrease in other current assets (3,613,000) 8,354,000
Increase in other assets (2,867,000) (5,736,000)
(Decrease) increase in accounts payable (31,020,000) 5,782,000
Increase in accrued expenses and other 3,992,000 11,933,000
Decrease in income taxes payable (6,561,000) (8,878,000)
Decrease in other liabilities (2,957,000) (804,000)
-----------------------------------
Net cash used in operating activities (46,992,000) (3,345,000)
INVESTING ACTIVITIES
Purchases of fixed assets (12,324,000) (9,906,000)
Trust fund deposits (1,303,000)
Proceeds from the sale of marketable securities 83,158,000 10,948,000
Purchases of marketable securities (101,457,000) (12,988,000)
Proceeds from the sale of a nonconsolidated affiliated
company and a non-marketable investment security 8,947,000
Increase in intangibles, primarily goodwill (5,396,000) (2,875,000)
Decrease (increase) in investments and advances to
nonconsolidated affiliated companies 539,000 (829,000)
-----------------------------------
Net cash used in investing activities (27,836,000) (15,650,000)
</TABLE>
6
<PAGE> 7
GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30,
1996 1995
-----------------------------------
<S> <C> <C>
FINANCING ACTIVITIES
Net proceeds from short-term borrowings $ 11,199,000 $ 3,934,000
Common shares acquired for treasury (1,000,000) (6,576,000)
Cash dividends paid on Common Shares (2,231,000) (2,174,000)
Cash dividends paid on Redeemable Preferred Stock (120,000) (112,000)
Issuance of restricted stock 25,000
Proceeds from exercise of stock options 253,000 336,000
-----------------------------------
Net cash provided by (used in) financing activities 8,126,000 (4,592,000)
Effect of exchange rate changes on cash (2,280,000) 3,981,000
-----------------------------------
Decrease in cash and cash equivalents (68,982,000) (19,606,000)
Cash and cash equivalents at beginning of period 134,313,000 170,077,000
-----------------------------------
Cash and cash equivalents at end of period $ 65,331,000 $ 150,471,000
===================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE> 8
GREY ADVERTISING INC.
AND CONSOLIDATED SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. As permitted by the Securities and Exchange Commission, the accompanying
unaudited Consolidated Financial Statements and Notes thereto have been
condensed and therefore do not contain all disclosures required by
generally accepted accounting principles. Reference should be made to the
Company's Annual Report on Form 10-K for the year ended December 31, 1995
filed with the Securities and Exchange Commission. Certain amounts for the
prior year have been reclassified to conform to the current period
classification.
2. The financial statements as of June 30, 1996 and for the three and six
month periods ended June 30, 1996 and 1995 are unaudited. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair representation have been included.
3. The results of operations for the three and six month periods ended June
30, 1996 are not necessarily indicative of the results to be expected for
the full year.
4. The computations of net income per common share for the three and six
month periods ended June 30, 1996 and 1995 are based on the weighted
average number of common shares outstanding, adjusted for the effect, if
any, of the assumed exercise of dilutive stock options and of shares
payable in Common Stock pursuant to the Company's Senior Management
Incentive Plan and, for fully diluted net income per common share, the
assumed conversion of the 8 1/2% Convertible Subordinated Debentures
issued in December 1983. Also, for the purpose of computing net income per
common share for the three and six month periods ended June 30, 1996 and
1995, the Company's net income was reduced by dividends on the Preferred
Stock and also adjusted by the change in the redemption value of Preferred
Stock. Primary net income per common share is computed as if the stock
options were exercised at the beginning of the period and as if the funds
obtained thereby were used to purchase Common Stock at the average market
price during the period. In computing fully diluted net income per common
share, the market price at the close of the period or the average market
price, whichever was higher, was used to determine the number of shares
which would be assumed to be repurchased. The market price for a share of
Class B Common Stock, which is not publicly traded, is deemed to be equal
to the market price of a share of Common Stock, into which a share of
Class B Common Stock may be converted at the option of the holder, as of
the date such valuation is made.
5. The provision for taxes on income is greater than the Federal statutory
rate principally due to state and local income taxes and effective foreign
tax rates that are in excess of the Federal statutory rate.
8
<PAGE> 9
6. As of June 30, 1996 and December 31, 1995, the Company had outstanding
20,000 shares of Series I Preferred Stock, 5,000 shares each of its Series
II and Series III Preferred Stock, and 2,000 shares of Series 1 Preferred
Stock. Each share of Preferred Stock is to be redeemed by the Company at a
price equal to the book value per share attributable to one share of
Common Stock and one share of Class B Common Stock pertaining upon
redemption (subject to certain adjustments), less a fixed discount
established upon the issuance of the Preferred Stock. The holders
(including one senior executive) of each class of Preferred Stock are
entitled to receive cumulative preferential dividends at the annual rate
of $0.25 per share, and to participate in dividends on one share of the
Common Stock and one share of the Class B Common Stock to the extent such
dividends exceed the per share preferential dividend. The redemption date
for the Series I, Series II and Series III Preferred Stock is fixed at
April 7, 2004. The terms of the Series I, Series II and Series III
Preferred Stock also give the holder, his estate or legal representative,
as the case may be, the option to require the Company to redeem his
Preferred Stock for a period of 12 months following his (i) death, (ii)
permanent disability or permanent mental disability, (iii) termination of
full-time employment for good reason or (iv) termination of full-time
employment by the Company without cause. The holder of the Series 1
Preferred Stock has the option to have his shares redeemed upon
termination of his employment prior to age 65; the Company is obligated to
redeem such shares following the attainment of age 65 by such holder
thereof following termination of employment. In connection with the
ownership of Series I, Series II and Series III Preferred Stock, the
senior executive issued to the Company full recourse promissory notes
(which are included in Other Assets in the accompanying condensed
consolidated balance sheet).
7. As of July 29, 1996, the Company and the senior executive, who is the
holder of the 8 1/2% Subordinated Convertible Debentures due December 10,
1996 ("Debentures") and the issuer of the $3,000,000, 9% Promissory Note
("Promissory Note"), mutually agreed to extend the maturity dates of the
Debentures and the Promissory Note to December 31, 2003 and December 31,
2004, respectively. All other terms of the Debentures and the Promissory
Note remain in full force and effect.
9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Income from commissions and fees increased 9.9% during the second quarter of
1996 and 11.9% during the six months ended June 30, 1996 when compared to the
same periods in 1995. Absent exchange rate fluctuations, gross income increased
10.3% in the three months ended June 30, and 10.8% in the six months ended June
30, 1996 when compared to the same periods in 1995. In the second quarter of
1996 and 1995, respectively, 46.4% and 43.7% of consolidated gross income was
attributable to domestic operations and 53.6% and 56.3% to international
operations. In the second quarter of 1996 and the first six months of 1996,
respectively, gross income from domestic operations increased 16.8% and 13.7%
versus the respective prior periods. Gross income from international operations
increased 4.6% for the second quarter, (5.2% absent exchange rate fluctuations)
and 10.5% for the first six months of 1996 (8.4% absent exchange rate
fluctuations) when compared to the same periods in 1995. The increase in gross
income in both years primarily resulted from expanded activities from existing
clients and the continued growth of the Company's general agency and specialized
operations. The increase in gross income from international operations is
indicative of the continued development of the Company's worldwide business.
Salaries and employee related expenses increased 8.2% in the second quarter of
1996 and 11.9% for the first six months of 1996 when compared to the respective
prior periods. Office and general expenses increased 13.1% and 12.2% for the
three and six month periods ended June 30, 1996, respectively, versus the
comparable prior periods. These changes are generally in line with the increases
in gross income.
Inflation did not have a material effect on revenue or expenses during 1996 or
1995.
Minority interest applicable to consolidated companies decreased by $148,000 in
the second quarter of 1996 but increased by $126,000 for the first six months of
1996 as compared to the respective prior periods. These variances are primarily
due to changes in the level of profits of majority-owned companies.
Equity in earnings of nonconsolidated affiliated companies decreased by $121,000
in the second quarter of 1996 but increased by $124,000 for the first six months
of 1996 as compared to the respective prior periods. These variances are
primarily due to changes in the level of profits of nonconsolidated affiliated
companies.
10
<PAGE> 11
RESULTS OF OPERATIONS (CONTINUED)
The effective tax rate increased to 52.8% in the second quarter of 1996 and
52.4% in the first six months of 1996 versus 50.5% and 51.3% in the same periods
in 1995, respectively. These increases are due in part to an increase in
effective foreign tax rates.
Other income was affected positively, in the first quarter of 1996, by
non-recurring, non-operating pre-tax income of approximately $4,000,000
primarily related to gains on the sale of the Company's equity position in a
nonconsolidated subsidiary and the liquidation of a non-marketable investment
security.
Net income increased by 13.3% and 34.8% in the three and six months ended June
30, 1996, respectively, when compared to net income for the same periods in
1995. Primary net income per common share increased by 17.8% and 41.7% in the
three and six month periods ended June 30, 1996, respectively, versus the
comparable periods in 1995. Fully diluted net income per common share increased
by 18.2% for the three months ended June 30, 1996 and 42.1% for the six months
ended June 30, 1996 when compared to the same periods in 1995. Absent the
non-recurring, non-operating gains occurring in the first quarter of 1996,
primary and fully diluted net income per common share increased by 19.1% and
19.7% respectively, for the six months ended June 30, 1996 as compared to the
same period in 1995. For purposes of computing primary net income per common
share, the Company's net income is adjusted by (i) dividends paid on the
Company's Preferred Stock and (ii) the change in redemption value of the
Preferred Stock.
LIQUIDITY AND CAPITAL RESOURCES
Working capital decreased by $8,102,000 from $9,582,000 at December 31, 1995 to
$1,480,000 at June 30, 1996. Cash and cash equivalents decreased by $68,982,000
from $134,313,000 to $65,331,000. The decrease in cash and cash equivalents is
largely attributable to the increase in long-term marketable securities and the
timing of collections of accounts receivable versus payments to trade vendors.
Domestically, the Company has committed lines of credit totaling $50,000,000.
These lines of credit were partially utilized during the three and six months
ended June 30, 1996 and 1995 to secure obligations of selected foreign
subsidiaries. There was $15,000,000 outstanding under these credit lines as of
June 30, 1996 and 1995.
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 $63,683,000 and $56,691,000 outstanding at June
30, 1996 and 1995, respectively.
11
<PAGE> 12
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: Reference is made to the Index annexed hereto
and made a part hereof.
(b) Reports on Form 8-K: The Company did not file any reports
on Form 8-K during the quarter ended June 30, 1996.
12
<PAGE> 13
GREY ADVERTISING INC.
AND CONSOLIDATED SUBSIDIARY COMPANIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GREY ADVERTISING INC.
(REGISTRANT)
DATE: August 14, 1996 By:/s/ Steven G. Felsher
-----------------------------
Steven G. Felsher
Executive Vice President -
Finance - Worldwide
Secretary and Treasurer
(Duly Authorized Officer)
DATE: August 14, 1996 By:/s/ William P. Garvey
-----------------------------
William P. Garvey
Executive Vice President
Chief Financial Officer -
United States
(Chief Accounting Officer)
13
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Number Assigned to Exhibit Page Number in Sequential
(i.e., Exhibit Table of Item 601 Table of Item 601 Exhibits Numbering System Where
of Regulation S-K) Description of Exhibit Exhibit May Be Found
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
(4.01) Extension Agreement, dated as of
July 29, 1996 between Grey and
Edward H. Meyer relating to the
extension of the maturity date of
the 8 1/2% Convertible Debentures
("Convertible Debentures") held by
Mr. Meyer. (15)
(4.02) Extension Agreement, dated as of
July 29, 1996 between Grey and
Edward H. Meyer relating to the
extension of the Promissory Note
issued by Mr. Meyer in connection
with the Convertible Debentures. (16)
(11) Statement Re: Computation of Net
Income per Common Share (unaudited) (17)
(27) Financial Data Schedule (18)
</TABLE>
14
<PAGE> 1
EXTENSION AGREEMENT
AGREEMENT, dated as of July 29, 1996, by and between GREY ADVERTISING
INC., a Delaware corporation ("Grey"), having its principal offices at 777 Third
Avenue, New York, New York 10017, and EDWARD H. MEYER, residing at 580 Park
Avenue, New York, New York 10022 ("Meyer").
WHEREAS, Grey issued to Meyer $3,025,000 principal amount of its 8 1/2%
Subordinated Convertible Debentures, due December 10, 1996 (following a previous
extension of the maturity date thereof) ("Debentures").
NOW, THEREFORE, for good and valuable consideration, and in
consideration of the premises and the mutual covenants herein contained, the
parties agree as follows:
1. The maturity date of the Debentures is extended until the close of
business December 31, 2003.
2. All other terms of the Debentures shall remain in full force and
effect, and continue unaffected by the agreements herein contained.
IN WITNESS WHEREOF, this Agreement has been signed as of the date
hereinabove first written.
GREY ADVERTISING INC.
By: /s/ Steven G. Felsher /s/ Edward H. Meyer
- ------------------------------- ------------------------------
Edward H. Meyer
15
<PAGE> 1
EXTENSION AGREEMENT
AGREEMENT, dated as of July 29, 1996, by and between GREY ADVERTISING
INC., a Delaware corporation ("Grey"), having its principal offices at 777 Third
Avenue, New York, New York 10017, and EDWARD H. MEYER, residing at 580 Park
Avenue, New York, New York 10022 ("Meyer").
WHEREAS, Meyer issued to Grey his 9% promissory note, dated as of
December 10, 1983 (the maturity date of which security was subsequently
extended, "Promissory Note"), as partial payment for his purchase of Grey's
8 1/2% Subordinated Convertible Debentures.
NOW, THEREFORE, for good and valuable consideration, and in
consideration of the premises and the mutual agreements herein contained, the
parties hereby agree as follows:
1. The maturity date of the Promissory Note is extended until December
31, 2004.
2. All other terms of the Promissory Note shall remain in full force
and effect, and continue unaffected by the agreements herein contained.
IN WITNESS WHEREOF, this Agreement has been signed as of the date
hereinabove first written.
GREY ADVERTISING INC.
By: /s/ Steven G. Felsher /s/ Edward H. Meyer
- ------------------------------- ------------------------------
Edward H. Meyer
16
<PAGE> 1
GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
EXHIBIT - STATEMENT RE: COMPUTATION OF NET INCOME PER COMMON SHARE (UNAUDITED)
EXHIBIT - 11
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------------------------------------------------
1996 1995 1996 1995
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY
Weighted average shares outstanding(1) 1,266,181 1,294,583 1,267,860 1,297,331
Net effect of dilutive stock options -
based on the treasury stock method using
average market price 34,433 25,906 32,447 23,460
---------------------------------------------------------------------
TOTAL 1,300,614 1,320,489 1,300,307 1,320,791
=====================================================================
Net Income $6,807,000 $6,007,000 $13,070,000 $9,699,000
Less: Effect of dividend requirements and
the change in redemption value of
redeemable preferred stock (253,000) (357,000) (437,000) (644,000)
---------------------------------------------------------------------
NET EARNINGS USED IN COMPUTATION $6,554,000 $5,650,000 $12,633,000 $9,055,000
=====================================================================
Per share amount $5.04 $4.28 $9.72 $6.86
=====================================================================
FULLY DILUTED
Weighted average shares outstanding (1) 1,266,181 1,294,583 1,267,860 1,297,331
Net effect of dilutive stock options - based on
the treasury stock method using the period-end
market price, if higher than the average
market price 33,999 31,807 34,210 32,089
Assumed conversion of 8 1/2% convertible
subordinated debentures issued December 1983 50,892 50,999 50,892 50,999
---------------------------------------------------------------------
TOTAL 1,351,072 1,377,389 1,352,962 1,380,419
=====================================================================
Net Income $6,807,000 $6,007,000 $13,070,000 $9,699,000
Less: Effect of dividend requirements and the
change in redemption value of redeemable
preferred stock (253,000) (357,000) (437,000) (644,000)
Add: 8 1/2% convertible subordinated debentures
interest, net of income tax effect 35,000 35,000 70,000 69,000
---------------------------------------------------------------------
NET EARNINGS USED IN COMPUTATION $6,589,000 $5,685,000 $12,703,000 $9,124,000
=====================================================================
Per share amount $4.88 $4.13 $9.39 $6.61
=====================================================================
</TABLE>
(1) Includes 78,248 shares and 54,287 shares for 1996 and 1995, respectively,
expected to be issued pursuant to the terms of the Senior Management
Incentive Plan.
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
GREY ADVERTISING INC. & CONSOLIDATED SUBSIDIARY COMPANIES
FINANCIAL DATA SCHEDULE
EXHIBIT - 27
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1996 AND THE
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE THREE AND SIX MONTH
PERIODS ENDED JUNE 30, 1996 OF GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY
COMPANIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 65,331
<SECURITIES> 23,144
<RECEIVABLES> 514,403
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 704,963
<PP&E> 173,426
<DEPRECIATION> 96,513
<TOTAL-ASSETS> 928,875
<CURRENT-LIABILITIES> 703,483
<BONDS> 33,025
9,302
0
<COMMON> 1,432
<OTHER-SE> 133,098
<TOTAL-LIABILITY-AND-EQUITY> 928,875
<SALES> 360,010
<TOTAL-REVENUES> 360,010
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 335,341
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,900
<INCOME-PRETAX> 29,798
<INCOME-TAX> 15,611
<INCOME-CONTINUING> 13,070
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,070
<EPS-PRIMARY> 9.72
<EPS-DILUTED> 9.39
</TABLE>
