<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, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-7898
GREY ADVERTISING INC.
(Exact name of registrant as specified in its charter)
Delaware 13-0802840
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
777 Third Avenue, New York, New York 10017
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, 212-546-2000
including area code
NOT APPLICABLE
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
As of July 31, 1997, the total number of shares outstanding of Registrant's
Common Stock, par value $1 per share ("Common Stock"), was 901,080 and of
Registrant's Limited Duration Class B Common Stock, par value $1 per share
("Class B Common Stock"), was 283,767.
<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 13
Signatures 14
Index to Exhibits 15
</TABLE>
2
<PAGE> 3
GREY ADVERTISING INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 1997 DECEMBER 31, 1996
(UNAUDITED) (A)
-----------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 81,285,000 $ 112,485,000
Marketable securities 36,637,000 28,688,000
Accounts receivable 628,380,000 590,002,000
Expenditures billable to clients 57,120,000 52,285,000
Other current assets 55,663,000 52,982,000
-----------------------------------------------
Total current assets 859,085,000 836,442,000
Investments in and advances to nonconsolidated
affiliated companies 19,755,000 17,723,000
Fixed assets - at cost, less accumulated depreciation
of $107,260,000 and $104,811,000 79,462,000 78,223,000
Marketable securities 55,343,000 67,419,000
Intangible assets and other assets-including loans to
officers of $5,822,000 in 1997 and 1996 99,849,000 89,587,000
-----------------------------------------------
Total assets $1,113,494,000 $1,089,394,000
===============================================
</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, 1997 DECEMBER 31, 1996
(UNAUDITED) (A)
-------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 642,341,000 $ 619,003,000
Notes payable to banks 102,996,000 86,004,000
Accrued expenses and other 98,751,000 107,368,000
Income taxes payable 14,651,000 20,224,000
Current portion of long-term debt 10,000,000
--------------------------------------------------
Total current liabilities 868,739,000 832,599,000
Other liabilities including - deferred compensation of
$31,229,000 and $28,738,000 52,321,000 55,217,000
Long-term debt 23,025,000 33,025,000
Minority interest 10,318,000 10,533,000
Redeemable preferred stock-at redemption value; par value $1 per share;
authorized 500,000 shares; issued
and outstanding 32,000 shares in 1997 and 1996 10,095,000 10,098,000
Common stockholders' equity:
Common Stock-par value $1 per share; authorized
10,000,000 shares; issued 1,121,256 in 1997 and
1,110,918 in 1996 1,121,000 1,111,000
Limited Duration Class B Common Stock-par value $1 per share; authorized
2,000,000 shares; issued
310,528 shares in 1997 and 320,866 shares in 1996 311,000 321,000
Paid-in additional capital 43,196,000 42,814,000
Retained earnings 154,570,000 144,789,000
Cumulative translation adjustment (6,700,000) 2,579,000
Unrealized loss on marketable securities (761,000) (870,000)
Loans to officer used to purchase Common Stock
and Limited Duration Class B Common Stock (4,726,000) (4,726,000)
--------------------------------------------------
187,011,000 186,018,000
Less-cost of 220,176 and 220,810 shares of Common
Stock and 26,761 and 26,759 shares of Limited
Duration Class B Common Stock held in treasury at
June 30, 1997 and December 31, 1996, respectively 38,015,000 38,096,000
--------------------------------------------------
Total common stockholders' equity 148,996,000 147,922,000
--------------------------------------------------
Total liabilities and stockholders' equity $1,113,494,000 $1,089,394,000
==================================================
</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,
-------------------------------------------------------------------------------------
1997 1996 1997 1996
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commissions and fees $206,208,000 $186,533,000 $394,956,000 $360,010,000
Expenses:
Salaries and employee related
expenses 128,208,000 114,801,000 250,294,000 228,642,000
Office and general expenses 60,314,000 56,094,000 118,333,000 106,699,000
----------------------------------------------------------------------------------
188,522,000 170,895,000 368,627,000 335,341,000
----------------------------------------------------------------------------------
17,686,000 15,638,000 26,329,000 24,669,000
Other income 807,000 290,000 1,746,000 5,129,000
----------------------------------------------------------------------------------
Income of consolidated companies
before taxes on income 18,493,000 15,928,000 28,075,000 29,798,000
Provision for taxes on income (9,247,000) (8,405,000) (14,510,000) (15,611,000)
----------------------------------------------------------------------------------
Net income of consolidated
companies 9,246,000 7,523,000 13,565,000 14,187,000
Minority interest applicable to
consolidated companies (2,072,000) (858,000) (2,441,000) (2,027,000)
Equity in earnings of nonconsolidated
affiliated companies 526,000 142,000 1,151,000 910,000
----------------------------------------------------------------------------------
Net income $ 7,700,000 $ 6,807,000 $ 12,275,000 $ 13,070,000
==================================================================================
Weighted average number
of common shares outstanding
Primary 1,306,121 1,300,614 1,304,949 1,300,307
Fully diluted 1,372,491 1,351,072 1,371,319 1,352,962
Net income per common share
Primary $5.62 $5.04 $9.31 $9.72
Fully diluted $5.37 $4.88 $8.91 $9.39
Dividends per common share $1.00 $0.9375 $2.00 $1.875
==================================================================================
</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,
1997 1996
--------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $12,275,000 $13,070,000
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization of fixed assets 11,750,000 8,948,000
Amortization of intangibles 2,633,000 2,505,000
Deferred compensation 7,324,000 7,467,000
Equity in earnings of nonconsolidated affiliated companies,
net of dividends received of $442,000 and $202,000 (709,000) (708,000)
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 2,441,000 2,027,000
Amortization of restricted stock expense 98,000 50,000
Deferred income taxes (3,550,000) (3,000,000)
Changes in operating assets and liabilities:
Increase in accounts receivable (56,150,000) (24,523,000)
Increase in expenditures billable to clients (6,993,000) (5,048,000)
Increase in other current assets (5,146,000) (3,613,000)
Increase in other assets (4,009,000) (2,867,000)
Increase(decrease) in accounts payable 40,004,000 (31,020,000)
(Decrease) increase in accrued expenses and other (10,225,000) 3,992,000
Decrease in income taxes payable (4,318,000) (6,561,000)
Decrease in other liabilities (3,376,000) (2,957,000)
--------------------------------------------------
Net cash used in operating activities (17,951,000) (46,992,000)
INVESTING ACTIVITIES
Purchases of fixed assets (14,868,000) (12,324,000)
Trust fund deposits (1,692,000) (1,303,000)
Proceeds from the sale of marketable securities 14,484,000 83,158,000
Purchases of marketable securities (10,243,000) (101,457,000)
Proceeds from the sale of a nonconsolidated affiliated
company and a non-marketable investment security 8,947,000
Increase in intangibles, primarily goodwill (6,466,000) (5,396,000)
(Increase) decrease in investments in and advances to
nonconsolidated affiliated companies (1,323,000) 539,000
--------------------------------------------------
Net cash used in investing activities (20,108,000) (27,836,000)
</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,
1997 1996
----------------------------------------------------
<S> <C> <C>
FINANCING ACTIVITIES
Net proceeds from short-term borrowings $ 16,866,000 $ 11,199,000
Common shares acquired for treasury (218,000) (1,000,000)
Cash dividends paid on Common Shares (2,368,000) (2,231,000)
Cash dividends paid on Redeemable Preferred Stock (128,000) (120,000)
Issuance of restricted stock 3,000 25,000
Proceeds from exercise of stock options 71,000 253,000
----------------------------------------------------
Net cash provided by financing activities 14,226,000 8,126,000
Effect of exchange rate changes on cash (7,367,000) (2,280,000)
----------------------------------------------------
Decrease in cash and cash equivalents (31,200,000) (68,982,000)
Cash and cash equivalents at beginning of period 112,485,000 134,313,000
----------------------------------------------------
Cash and cash equivalents at end of period $ 81,285,000 $ 65,331,000
====================================================
</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, 1996
filed with the Securities and Exchange Commission.
2. The financial statements as of June 30, 1997 and for the three and six
month periods ended June 30, 1997 and 1996 are unaudited. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair representation have been included.
3. The results of operations for the three and six month periods ended June
30, 1997 are not necessarily indicative of the results to be expected for
the full year.
4. The computations of net income per common share for the three and six month
periods ended June 30, 1997 and 1996 are based on the weighted average
number of common shares outstanding, adjusted for the effect, if any, of
the assumed exercise of dilutive stock options and of shares payable in
Common Stock pursuant to the Company's Senior Management Incentive Plan
and, for fully diluted net income per common share, the assumed conversion
of the Company's 8-1/2% Convertible Subordinated Debentures. Also, for the
purpose of computing net income per common share for the three and six
month periods ended June 30, 1997 and 1996, the Company's net income was
reduced by dividends on the Preferred Stock and also adjusted by the change
in the redemption value of Preferred Stock. Primary net income per common
share is computed as if the stock options were exercised at the beginning
of the period and as if the funds obtained thereby were used to purchase
Common Stock at the average market price during the period. In computing
fully diluted net income per common share, the market price at the close of
the period or the average market price, whichever was higher, was used to
determine the number of shares which would be assumed to be repurchased.
The market price for a share of Class B Common Stock, which is not publicly
traded, is deemed to be equal to the market price of a share of Common
Stock, into which a share of Class B Common Stock may be converted at the
option of the holder, as of the date such valuation is made.
5. The provision for taxes on income is greater than the Federal statutory
rate principally due to state and local income taxes and effective foreign
tax rates that are in excess of the Federal statutory rate.
8
<PAGE> 9
GREY ADVERTISING INC.
AND CONSOLIDATED SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. As of June 30, 1997 and December 31, 1996, the Company had outstanding
20,000 shares of Series I Preferred Stock, 5,000 shares each of its Series
II and Series III Preferred Stock, and 2,000 shares of Series 1 Preferred
Stock. The holder of the Series I, Series II and Series III Preferred Stock
is the Chairman and Chief Executive Officer of the Company, and the Series
1 Preferred Stock is held by a former employee. Each share of Preferred
Stock is to be redeemed by the Company at a price equal to the book value
per share attributable to one share of Common Stock and one share of Class
B Common Stock (subject to certain adjustments), less a fixed discount
established upon the issuance of the Preferred Stock. The holders of each
class of Preferred Stock are entitled to receive cumulative preferential
dividends at the annual rate of $0.25 per share, and to participate in
dividends on one share of the Common Stock and one share of the Class B
Common Stock to the extent such dividends exceed the per share preferential
dividend. The redemption date for the Series I, Series II and Series III
Preferred Stock is fixed at April 7, 2004. The terms of the Series I,
Series II and Series III Preferred Stock also give the holder, his estate
or legal representative, as the case may be, the option to require the
Company to redeem his Preferred Stock for a period of 12 months following
his (i) death, (ii) permanent disability or permanent mental disability,
(iii) termination of full-time employment for good reason or (iv)
termination of full-time employment by the Company without cause. The
Company is obligated to redeem the Series 1 Preferred Stock following the
attainment of age 65 by the holder thereof. In connection with the
ownership of Series I, Series II and Series III Preferred Stock, the senior
executive issued to the Company full recourse promissory notes (which are
included in Other Assets in the accompanying condensed consolidated balance
sheet).
7. In February 1997, the Financial Accounting Standards Board issued Statement
No. 128 ("SFAS 128") "Earnings Per Share." SFAS 128 is designed to improve
the EPS information in financial statements by simplifying the existing
computational guidelines, revising disclosure requirements, and increasing
the comparability of EPS on an international basis. SFAS 128 is effective
for financial statements issued for periods ending after December 15, 1997.
The Company has not yet assessed the impact that the new standard will have
on either the computation of its earnings per share amounts or its related
disclosures.
9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Income from commissions and fees increased 10.5% during the second quarter of
1997 and 9.7% during the six months ended June 30, 1997 when compared to the
same periods in 1996. Absent exchange rate fluctuations, gross income increased
14.8% in the three months ended June 30, and 13.5% in the six months ended June
30, 1997 when compared to the same periods in 1996. In the second quarter of
1997 and 1996, respectively, 46.8% and 46.4% of consolidated gross income was
attributable to domestic operations and 53.2% and 53.6% to international
operations. In the second quarter of 1997 and the first six months of 1997,
respectively, gross income from domestic operations increased 11.4% and 12.9%
versus the respective prior periods. Gross income from international operations
increased 9.8% for the second quarter, (17.7% absent exchange rate fluctuations)
and 7.1% for the first six months of 1997 (14.1% absent exchange rate
fluctuations) when compared to the same periods in 1996. The increase in gross
income in both years primarily resulted from expanded activities from existing
clients and the continued growth of the Company's general agency and specialized
operations.
Salaries and employee related expenses increased 11.7% in the second quarter of
1997 and 9.5% for the first six months of 1997 when compared to the respective
prior periods. Office and general expenses increased 7.5% and 10.9% for the
three and six month periods ended June 30, 1997, respectively, versus the
comparable prior periods. These changes are generally in line with the increases
in gross income.
Inflation did not have a material effect on revenue or expenses during 1997 or
1996.
Minority interest applicable to consolidated companies increased by $1,214,000
in the second quarter of 1997 and by $414,000 for the first six months of 1997
as compared to the respective prior periods. These variances are primarily due
to changes in the level of profits of majority-owned companies.
Equity in earnings of nonconsolidated affiliated companies increased by $384,000
in the second quarter of 1997 and by $241,000 for the first six months of 1997
as compared to the respective prior periods. These variances are primarily due
to changes in the level of profits of nonconsolidated affiliated companies.
10
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
The effective tax rate decreased to 50.0% in the second quarter of 1997 and
51.7% in the first six months of 1997 versus 52.8% and 52.4% in the same periods
in 1996, respectively. These decreases are due in principal part to a decrease
in effective foreign tax rates.
Net income increased by 13.1% in the three months ended June 30, 1997 and
decreased 6.1% in the six months ended June 30, 1997 when compared to net income
for the same periods in 1996. Primary net income per common share increased by
11.5% in the three month period ended June 30, 1997 and decreased 4.2% in the
six month period ended June 30, 1997 versus the comparable periods in 1996.
Fully diluted net income per common share increased by 10.0% for the three
months ended June 30, 1997 and decreased 5.1% for the six months ended June 30,
1997 when compared to the same periods in 1996. The first quarter of 1996,
however, was favorably affected by non-recurring, non-operating pre-tax income
of almost $4,000,000 primarily related to gains on the sale of an equity
position in a nonconsolidated subsidiary and the liquidation of a non-marketable
investment security. Absent such one-time gains, net income was up 12.1%, and
primary and fully diluted earnings per common share were up 14.0% and 12.6%,
respectively, for the first six months of 1997. For purposes of computing
primary net income per common share, the Company's net income is adjusted by (i)
dividends paid on the Company's Preferred Stock and (ii) the change in
redemption value of the Preferred Stock.
LIQUIDITY AND CAPITAL RESOURCES
Working capital decreased by $13,497,000 from $3,843,000 at December 31, 1996 to
$(9,654,000) at June 30, 1997. Cash and cash equivalents decreased by
$31,200,000 from $112,485,000 to $81,285,000. The decrease in working capital is
primarily attributable to the reclassification of a portion of long-term debt to
current liabilities. The decrease in cash and cash equivalents is largely
attributable to the timing of collections of accounts receivable and billing of
expenses to clients versus payments to trade vendors. Domestically, the Company
has committed lines of credit totaling $51,000,000. These lines of credit were
partially utilized during the three and six months ended June 30, 1997 and 1996
to secure obligations of selected foreign subsidiaries. There was $26,000,000
and $15,000,000 outstanding under these credit lines as of June 30, 1997 and
1996, respectively.
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 $76,996,000 and $63,683,000 outstanding at June
30, 1997 and 1996, respectively.
11
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
- -----------------------------------------------------
In connection with the provisions of the Private Securities Litigation Reform
Act of 1995 (the "Reform Act"), the Company may include Forward Looking
Statements (as defined in the Reform Act) in oral or written public statements
issued by or on behalf of the Company. These Forward Looking Statements may
include, among other things, plans, objectives, projections, anticipated future
economic performance or assumptions and the like that are subject to risks and
uncertainties. As such, actual results or outcomes may differ materially from
those discussed in the Forward Looking Statements. Important factors which may
cause actual results to differ include but are not limited to the following:
the unanticipated loss of a material client or key personnel, delays or
reductions in client advertising budgets, shifts in industry rates of
compensation, government compliance costs or litigation, unanticipated natural
disasters, changes in the general economic conditions that affect interest
rates and/or consumer spending both in the U.S. and the Company's international
marketplace, unanticipated expenses, client preferences which can be affected
by competition and the ability to project risk factors which may vary.
12
<PAGE> 13
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: Reference is made to the Index annexed hereto and
made a part hereof.
(b) Reports on Form 8-K: The Company did not file any reports on
Form 8-K during the quarter ended June 30, 1997.
13
<PAGE> 14
GREY ADVERTISING INC.
AND CONSOLIDATED SUBSIDIARY COMPANIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GREY ADVERTISING INC.
(REGISTRANT)
DATE: August 14, 1997 By:/s/ Steven G. Felsher
-----------------------------
Steven G. Felsher
Executive Vice President -
Finance - Worldwide
Secretary and Treasurer
(Duly Authorized Officer)
DATE: August 14, 1997 By:/s/ William P. Garvey
----------------------------
William P. Garvey
Executive Vice President
Chief Financial Officer -
United States
(Chief Accounting Officer)
14
<PAGE> 15
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>
(11) Statement Re: Computation of Net
Income per Common Share (unaudited)
(16)
(27) Financial Data Schedule (17)
</TABLE>
15
<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,
-------------------------------------------------------------------------
PRIMARY 1997 1996 1997 1996
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Weighted average shares outstanding(1) 1,278,972 1,266,181 1,277,800 1,267,860
Net effect of dilutive stock options -
based on the treasury stock method using
average market price 27,149 34,433 27,149 32,447
-------------------------------------------------------------------------
TOTAL 1,306,121 1,300,614 1,304,949 1,300,307
=========================================================================
Net Income $7,700,000 $6,807,000 $12,275,000 $13,070,000
Less: Effect of dividend requirements and
the change in redemption value of
redeemable preferred stock (360,000) (253,000) (125,000) (437,000)
-------------------------------------------------------------------------
NET EARNINGS USED IN COMPUTATION $7,340,000 $6,554,000 $12,150,000 $12,633,000
=========================================================================
Per share amount $5.62 $5.04 $9.31 $9.72
=========================================================================
FULLY DILUTED
Weighted average shares outstanding (1) 1,278,972 1,266,181 1,277,800 1,267,860
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 42,502 33,999 42,502 34,210
Assumed conversion of 8-1/2% convertible
subordinated debentures issued December 1983 51,017 50,892 51,017 50,892
-------------------------------------------------------------------------
TOTAL 1,372,491 1,351,072 1,371,319 1,352,962
=========================================================================
Net Income $7,700,000 $6,807,000 $12,275,000 $13,070,000
Less: Effect of dividend requirements and the
change in redemption value of redeemable
preferred stock (360,000) (253,000) (125,000) (437,000)
Add: 8-1/2% convertible subordinated debentures
interest, net of income tax effect 35,000 35,000 70,000 70,000
-------------------------------------------------------------------------
NET EARNINGS USED IN COMPUTATION $7,375,000 $6,589,000 $12,220,000 $12,703,000
=========================================================================
Per share amount $5.37 $4.88 $8.91 $9.39
=========================================================================
</TABLE>
(1) Includes 94,097 shares and 78,248 shares for 1997 and 1996,
respectively, expected to be issued pursuant to the terms of the Senior
Management Incentive Plan.
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 AND THE
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX
MONTH PERIODS ENDED JUNE 30, 1997 OF GREY ADVERTISING INC. AND CONSOLIDATED
SUBSIDIARY COMPANIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 81,285
<SECURITIES> 36,637
<RECEIVABLES> 628,380
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 859,085
<PP&E> 186,722
<DEPRECIATION> 107,260
<TOTAL-ASSETS> 1,113,494
<CURRENT-LIABILITIES> 868,739
<BONDS> 23,025
10,095
0
<COMMON> 1,432
<OTHER-SE> 147,564
<TOTAL-LIABILITY-AND-EQUITY> 1,113,494
<SALES> 394,956
<TOTAL-REVENUES> 394,956
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 368,627
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,600
<INCOME-PRETAX> 28,075
<INCOME-TAX> 14,510
<INCOME-CONTINUING> 12,275
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,275
<EPS-PRIMARY> 9.31
<EPS-DILUTED> 8.91
</TABLE>
