<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-7898
GREY GLOBAL GROUP INC.
-----------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-0802840
-------------------------------- ------------------------------------
(State or other jurisdiction of (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, including area code: 212-546-2000
NOT APPLICABLE
--------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--------- ---------
As of October 31, 2000, the total number of shares outstanding of Registrant's
Common Stock, par value $0.01 per share ("Common Stock"), was 1,026,775 and of
Registrant's Limited Duration Class B Common Stock, par value $0.01 per share
("Class B Common Stock"), was 226,226.
<PAGE> 2
GREY GLOBAL GROUP INC.
AND CONSOLIDATED SUBSIDIARY COMPANIES
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Financial Statements:
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Operations 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 11
Other Information 13
Signatures 14
Index to Exhibits 15
</TABLE>
2
<PAGE> 3
GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
(in thousands, except share and per share data) 2000 1999
----------------------------------------------- (UNAUDITED) (A)
-----------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 129,282 $ 306,556
Marketable securities 5,002 5,581
Accounts receivable 1,001,979 940,612
Expenditures billable to clients 50,467 51,991
Other current assets 105,928 93,207
-----------------------------------------------
Total current assets 1,292,658 1,397,947
Investments in and advances to nonconsolidated affiliated companies 17,485 17,961
Fixed assets-at cost, less accumulated depreciation of $171,718 in 2000 and
$158,370 in 1999 147,004 126,939
Marketable securities 17,274 22,429
Intangibles-net of accumulated amortization of $51,493 in 2000 and $42,818 in 1999 174,411 157,115
Other assets-including loans to executive officers of $5,247 in 2000 and 1999 111,033 86,863
-----------------------------------------------
Total assets $ 1,759,865 $ 1,809,254
===============================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
(A) The condensed consolidated balance sheet has been derived from the
audited financial statements at that date.
3
<PAGE> 4
GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(CONTINUED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
(in thousands, except share and per share data) 2000 1999
----------------------------------------------- (UNAUDITED) (A)
-----------------------------------------------
<S> <C> <C>
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,125,450 $ 1,161,508
Notes payable to banks 78,132 68,500
Accrued expenses and other 180,574 208,254
Income taxes payable 17,556 16,572
-----------------------------------------------
Total current liabilities 1,401,712 1,454,834
Other liabilities, including deferred compensation of $51,741 in 2000 and $44,160
in 1999 77,195 75,260
Long-term debt 78,025 78,025
Minority interest 21,378 19,620
Redeemable Preferred Stock-at redemption value; par value $0.01 per share in 2000
and $1 per share in 1999; authorized 500,000 shares; issued and outstanding
30,000 shares in 2000 and 1999 10,048 10,150
Common stockholders' equity:
Common Stock- par value $0.01 per share in 2000 and $1 per share in 1999;
authorized 50,000,000 shares in 2000 and 10,000,000 shares in 1999; issued
1,234,898 shares in 2000 and 1,228,534 shares in 1999 12 1,229
Limited Duration Class B Common Stock-par value $0.01 per share in 2000 and
$1 per share in 1999; authorized 10,000,000 shares in 2000 and 2,000,000
shares in 1999; issued 255,723 shares in 2000 and 261,224 shares in 1999 3 261
Paid-in additional capital 42,724 39,763
Retained earnings 203,254 191,042
Accumulated other comprehensive loss:
Cumulative translation adjustment (26,312) (15,462)
Unrealized loss on marketable securities (3,369) (141)
-----------------------------------------------
Total accumulated other comprehensive loss (29,681) (15,603)
-----------------------------------------------
Loans to officer used to purchase Common Stock and Limited Duration
Class B Common Stock (4,726) (4,726)
-----------------------------------------------
211,586 211,966
Less-cost of 211,249 and 218,514 shares of Common Stock and 26,937 and 26,937
shares of Limited Duration Class B Common Stock held in treasury in 2000
and 1999, respectively 40,079 40,601
-----------------------------------------------
Total common stockholders' equity 171,507 171,365
-----------------------------------------------
Total liabilities and common stockholders' equity $ 1,759,865 $ 1,809,254
===============================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
(in thousands, except share and per share data) SEPTEMBER 30, SEPTEMBER 30,
----------------------------------------------- 2000 1999 2000 1999
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commissions and fees $ 301,825 $ 262,048 $ 896,908 $ 750,908
Expenses:
Salaries and employee related expenses 196,352 171,099 581,029 499,179
Office and general expenses 92,002 81,661 276,577 238,913
----------------------------------------------------------------------------
288,354 252,760 857,606 738,092
----------------------------------------------------------------------------
13,471 9,288 39,302 12,816
Other (loss) income-net (1,232) 778 1,181 2,086
----------------------------------------------------------------------------
Income of consolidated companies
before taxes on income 12,239 10,066 40,483 14,902
Provision for taxes on income 6,403 5,254 21,235 14,254
----------------------------------------------------------------------------
Income of consolidated companies 5,836 4,812 19,248 648
Minority interest applicable to
consolidated companies (1,031) (1,262) (4,595) (3,693)
Equity in earnings of nonconsolidated
affiliated companies 337 1,081 1,368 1,154
----------------------------------------------------------------------------
Net income (loss) $ 5,142 $ 4,631 $ 16,021 $ (1,891)
============================================================================
Weighted average number
of common shares outstanding
Basic 1,227,346 1,237,281 1,229,489 1,238,225
Diluted 1,352,909 1,337,006 1,345,967 1,238,225
Earnings (loss) per common share
Basic $4.19 $3.68 $12.97 ($1.06)
Diluted $3.82 $3.43 $11.92 ($1.06)
Dividends per common share $1.00 $1.00 $3.00 $3.00
============================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
(in thousands, except share and per share data) SEPTEMBER 30,
----------------------------------------------- 2000 1999
----------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 16,021 $ (1,891)
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Depreciation and amortization of fixed assets 28,388 23,835
Amortization of intangibles 8,675 8,274
Deferred compensation 9,138 2,714
Equity in earnings of nonconsolidated affiliated companies, net of
dividends received of $93 in 2000 and $630 in 1999 (1,275) (524)
Loss from the sale of marketable securities 137 25
Minority interest applicable to consolidated companies 4,595 3,693
Restricted stock expense 915 401
Deferred income taxes (1,800) 878
Changes in operating assets and liabilities (156,767) (30,208)
----------------------------------------------------
Net cash (used in) provided by operating activities (91,973) 7,197
INVESTING ACTIVITIES
Purchases of fixed assets (54,636) (38,016)
Trust fund deposits (2,738) (2,866)
Decrease (increase) in investments in and advances to
nonconsolidated affiliated companies 1,751 (2,508)
Purchases of marketable securities (2,741) (1,689)
Proceeds from the sale of marketable securities 3,938 46,762
Purchases of investment securities (15,573) -
Increase in intangibles, primarily goodwill (25,971) (27,107)
----------------------------------------------------
Net cash used in investing activities (95,970) (25,424)
</TABLE>
6
<PAGE> 7
GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
(in thousands, except share and per share data) SEPTEMBER 30,
----------------------------------------------- 2000 1999
------------------------------------------------------
<S> <C> <C>
FINANCING ACTIVITIES
Net proceeds from short-term borrowings 16,116 17,547
Common shares acquired for treasury (2,642) (1,007)
Cash dividends paid on common shares (3,733) (3,739)
Cash dividends paid on redeemable Preferred Stock (180) (180)
Issuance of restricted stock 13 16
Proceeds from exercise of stock options 1,468 751
------------------------------------------------------
Net cash provided by financing activities 11,042 13,388
Effect of exchange rate changes on cash (373) (1,242)
------------------------------------------------------
Decrease in cash and cash equivalents (177,274) (6,081)
Cash and cash equivalents at beginning of period 306,556 153,816
------------------------------------------------------
Cash and cash equivalents at end of period $ 129,282 $ 147,735
======================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE> 8
GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
1. As permitted by the Securities and Exchange Commission, the accompanying
unaudited Consolidated Financial Statements and Notes thereto have been
condensed and, therefore, do not contain all disclosures required by
generally accepted accounting principles. Reference should be made to the
Company's Annual Report on Form 10-K for the year ended December 31, 1999
filed with the Securities and Exchange Commission.
2. The financial statements as of September 30, 2000 and for the three and
nine months ended September 30, 2000 and 1999 are unaudited. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included.
3. The results of operations for the three and nine months ended September
30, 2000 are not necessarily indicative of the results to be expected for
the full year.
4. The provision for taxes on income results in an effective tax rate that
is greater than the Federal statutory rate principally due to state and
local income taxes and an effective foreign tax rate in excess of the
Federal statutory rate and, in 1999, the non-recognition of tax benefits
of certain international net operating losses.
5. As of September 30, 2000 and December 31, 1999, the Company had
outstanding 20,000 shares of Series I Preferred Stock, and 5,000 shares
each of its Series II and Series III Preferred Stock. The holder of these
shares is the Chairman and Chief Executive Officer of the Company. Each
share of Preferred Stock is to be redeemed by the Company at a price
equal to the book value per share attributable to one share of Common
Stock and one share of Class B Common Stock (subject to certain
adjustments) upon redemption, less a fixed discount established upon the
issuance of the Preferred Stock. The holder of each class of Preferred
Stock is entitled to receive cumulative preferential dividends at the
annual rate of $.25 per share, and to participate in dividends on one
share of the Common Stock and one share of the Class B Common Stock to
the extent such dividends exceed the per share preferential dividend. The
redemption date for the Series I, Series II and Series III Preferred
Stock is fixed at April 7, 2004.
6. The computation of basic earnings per common share is based on the
weighted average number of common shares outstanding and, for diluted
earnings per common share, is adjusted for the dilutive effect, if any,
of the assumed exercise of dilutive stock options, shares issuable
pursuant to the Company's Senior Management Incentive Plan and the
assumed conversion of the Company's 8 1/2% Convertible Subordinated
Debentures. For the purpose of computing basic earnings per common share,
the Company's net income is adjusted by dividends paid on the Company's
Preferred Stock and by the change in redemption value of the Company's
Preferred Stock during the period. For the purpose of computing diluted
earnings per common share, net income is also adjusted by the interest
savings, net of tax, on the assumed conversion of the Company's 8 1/2%
Convertible Subordinated Debentures. Additionally, in computing diluted
earnings per common share, the average quarterly market price is used to
determine the
8
<PAGE> 9
GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(in thousands, except share and per share data)
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. The following table
shows the amounts effecting income used in computing earnings per common
share ("EPS") and the weighted average number of shares of dilutive
potential common stock:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------------------------------------------------------
2000 1999 2000 1999
----------------------------------------------------------------------------
BASIC EARNINGS (LOSS) PER
-------------------------
COMMON SHARE
------------
<S> <C> <C> <C> <C>
WEIGHTED AVERAGE SHARES 1,227,346 1,237,281 1,229,489 1,238,225
------------------------ ----------------------------------------------------------------------------
Net income (loss) $ 5,142 $ 4,631 $ 16,021 $ (1,891)
Effect of dividend requirements and the change in
redemption value of redeemable preferred stock (4) (84) (80) 577
----------------------------------------------------------------------------
NET EARNINGS (LOSS) USED IN COMPUTATION $ 5,138 $ 4,547 $ 15,941 $ (1,314)
----------------------------------------------------------------------------
PER SHARE AMOUNT $4.19 $3.68 $12.97 ($1.06)
============================================================================
DILUTED EARNINGS (LOSS) PER
---------------------------
COMMON SHARE
------------
Weighted average shares used in the Basic EPS
calculation 1,227,346 1,237,281 1,229,489 1,238,225
Net effect of dilutive stock options and stock
incentive plans (2) 74,435 48,597 65,350 (1) -
Assumed conversion of 8.5% convertible subordinated
debentures 51,128 51,128 51,128 (1) -
----------------------------------------------------------------------------
ADJUSTED WEIGHTED AVERAGE SHARES 1,352,909 1,337,006 1,345,967 1,238,225
----------------------------------------------------------------------------
Net earnings (loss) used in the Basic EPS calculation $ 5,138 $ 4,547 $15,941 $ (1,314)
8.5% convertible subordinated debentures
interest net of income tax effect 35 34 105 (1) -
----------------------------------------------------------------------------
NET EARNINGS (LOSS) USED IN COMPUTATION $ 5,173 $ 4,581 $ 16,046 $ (1,314)
----------------------------------------------------------------------------
PER SHARE AMOUNT $3.82 $3.43 $11.92 ($1.06)
============================================================================
</TABLE>
(1) For the nine months ended September 30, 1999, the assumed exercise
of stock options, issuances under stock incentive plans and the
assumed conversion of the 8 1/2% Convertible Subordinated
Debentures each had an anti-dilutive effect. As such, these items
have been excluded from the diluted EPS calculation for the
period.
(2) Includes 14,894 and 15,239 shares expected to be issued pursuant
to the Senior Management Incentive Plan for the three and nine
months ended September 30, 2000, respectively, and 11.030 shares
expected to be issued pursuant to the Senior Management Incentive
Plan for the three months ended September 30, 1999. Due to their
anti-dilutive effect, shares expected to be issued pursuant to the
Senior Management Incentive Plan for the nine months ended
September 30, 1999 were not included in the calculation.
7. During the third quarter of 2000 and 1999, total comprehensive loss
amounted to $1,146 and total comprehensive income amounted to $2,683,
respectively, and for the nine months ended September 30, 2000 and 1999
total comprehensive income was $1,943 and total comprehensive loss was
$8,254, respectively. The difference between net income and total
comprehensive income is the result of the change in the translated value
of the net assets of the Company's international operations due to the
change in value of the United States dollar versus other currencies.
9
<PAGE> 10
GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(in thousands, except share and per share data)
8. The Company is not engaged in more than one industry segment. The Company
evaluates performance by geographic region based on profit or loss before
income taxes. Commissions and fees are attributed to the geographic region
that generates the billings. Commissions and fees, operating profit, and
income (loss) of consolidated companies before taxes on income for the
three and nine months ended September 30, 2000 and 1999, and related
identifiable assets at September 30, 2000 and December 31, 1999 are
summarized below according to geographic region:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30,
----------------------------------------------------------------------------------------------
UNITED STATES EUROPE OTHER CONSOLIDATED
-------------------- --------------------- --------------------- ----------------------
2000 1999 2000 1999 2000 1999 2000 1999
-------------------- --------------------- --------------------- ----------------------
<C> <C> <C> <C> <C> <C> <C> <C>
Commissions and fees $135,066 $120,163 $125,306 $ 107,278 $ 41,453 $ 34,607 $ 301,825 $ 262,048
-------------------- --------------------- --------------------- ----------------------
Operating profit (loss) 7,080 6,641 5,920 1,642 471 1,005 13,471 9,288
-------------------- --------------------- --------------------- ----------------------
Income (loss) of
consolidated companies
before taxes on income 7,408 7,651 4,186 1,729 645 686 12,239 10,066
-------------------- --------------------- --------------------- ----------------------
Identifiable assets
Investments in and
advances to non-
consolidated affiliated
companies
Total assets
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------------------------------------------------------------------------
UNITED STATES EUROPE OTHER CONSOLIDATED
------------------- --------------------- --------------------- -----------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------------- --------------------- --------------------- -----------------------
<C> <C> <C> <C> <C> <C> <C> <C>
Commissions and fees $ 400,521 $325,531 $378,042 $341,912 $118,345 $ 83,465 $ 896,908 $ 750,908
------------------- --------------------- --------------------- -----------------------
Operating profit (loss) 16,961 13,187 19,486 7,438 2,855 (7,809) 39,302 12,816
-------------------- --------------------- --------------------- ----------------------
Income (loss) of
consolidated companies
before taxes on income 20,591 16,354 16,848 7,447 3,044 (8,899) 40,483 14,902
------------------- --------------------- --------------------- -----------------------
Identifiable assets 688,443 796,657 793,302 752,662 260,635 241,974 1,742,380 1,791,293
------------------- --------------------- ---------------------
Investments in and
advances to non-
consolidated affiliated
companies 17,485 17,961
-----------------------
Total assets $ 1,759,865 $1,809,254
=======================
</TABLE>
10
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
(in thousands, except share and per share data)
RESULTS OF OPERATIONS
Income from commissions and fees ("gross income") increased 15.2% during the
third quarter of 2000 and 19.4% during the nine months ended September 30, 2000
when compared to the same periods in 1999. Absent exchange rate fluctuations,
gross income increased 19.7% in the three months ended September 30, 2000 and
24.2% in the nine months ended September 30, 2000 when compared to the same
periods in 1999. In the third quarters of 2000 and 1999, respectively, 44.8% and
45.9% of consolidated gross income was attributable to domestic operations and
55.2% and 54.1% to international operations. In the third quarter of 2000 and
the first nine months of 2000, respectively, gross income from domestic
operations increased 12.4% and 23.0% versus the respective prior periods, while
gross income from international operations increased 17.5%, (25.9% absent
exchange rate fluctuations) for the third quarter of 2000 and 16.7% (25.2%
absent exchange rate fluctuations) for the first nine months of 2000 when
compared to the same periods in 1999. The increase in gross income primarily
resulted from the impact of new client assignments, the continued growth of the
Company's media and marketing communications operations, and from acquired
companies.
Salaries and employee related expenses increased 14.8% in the third quarter of
2000 and 16.4% for the first nine months of 2000 when compared to the respective
prior periods. Office and general expenses increased 12.7% and 15.8% for the
three and nine months ended September 30, 2000 versus the comparable prior
periods. These increases are slightly less than the increases in gross income.
Inflation did not have a material effect on revenue or expenses during 2000 or
1999.
Minority interest applicable to consolidated companies decreased by $231 in the
third quarter of 2000 and increased by $902 for the first nine months of 2000 as
compared to the respective prior periods. The fluctuations are primarily due to
changes in the level of profits of majority-owned companies.
Equity in earnings of nonconsolidated affiliated companies decreased by $744 in
the third quarter of 2000 and increased by $214 for the first nine months of
2000 as compared to the respective prior periods. The fluctuations are primarily
due to changes in the level of profits of nonconsolidated affiliated companies.
The effective tax rate is 52.3% for the third quarter of 2000 and 52.5% for the
first nine months of 2000. The rate for the nine months ended September 30, 2000
is significantly lower than for the comparable period in 1999 because the
Company decided it was not prudent to recognize the future tax benefits
attributable to net operating losses at certain international subsidiaries
generated last year.
Net income was $5,142 in the third quarter of 2000 and $16,021 for the first
nine months of 2000 as compared to net income of $4,631 and a net loss of
$1,891, respectively, in the comparable prior periods. Basic and diluted
earnings per common share for the third quarter of 2000 were
11
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS (CONTINUED)
(in thousands, except share and per share data)
$4.19 and $3.82, respectively, and for the first nine months of 2000 were $12.97
and $11.92. Basic and diluted income per common share was $3.68 and $3.43,
respectively, for the third quarter of 1999. Both basic and diluted loss per
common share was each $1.06 for the nine months ended September 30, 1999. Net
income increased despite the negative impact of the strengthening of the U.S.
dollar, lower interest income from cash balances, costs incurred in connection
with the Company's continued upgrading of its general advertising agency
operations and adverse market conditions affecting a number of the Companies
internet businesses. The increased level of profits is, in large measure,
attributable to the continued growth and improvement of the Company's
specialized marketing communications and international units.
LIQUIDITY AND CAPITAL RESOURCES
Working capital decreased by $52,167 to a deficit of $109,054 at September 30,
2000, versus a deficit of $56,887 at December 31, 1999. Cash and cash
equivalents decreased by $177,274 from $306,556 to $129,282 at September 30,
2000. The decrease in cash and cash equivalents is attributable to the
acquisition of a number of companies, the continued expansion of the Company's
media and marketing communications operations internationally and 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 $64,000 that together, with its other sources of funding, it
believes adequate. These lines of credit were partially utilized during the
three months ended September 30, 2000 and 1999 to secure obligations of selected
foreign subsidiaries. There was $30,700 and $20,500 outstanding under these
credit lines as of September 30, 2000 and December 31, 1999, 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 was $47,432 and $48,000 outstanding at September 30,
2000 and December 31, 1999, respectively.
FORWARD LOOKING STATEMENTS
In connection with the provisions of the Private Securities Litigation Reform
Act of 1995 (the "Reform Act"), the Company may include Forward Looking
Statements (as defined in the Reform Act) in oral or written public statements
issued by or on behalf of the Company. These Forward Looking Statements may
include, among other things, plans, objectives, projections, anticipated future
economic performance or assumptions and the like that are subject to risks and
uncertainties. As such, actual results or outcomes may differ materially from
those discussed in the Forward Looking Statements. Important factors which may
cause actual results to differ, include but are not limited to the following:
the unanticipated loss of a material client or key personnel, delays or
reductions in client budgets, shifts in industry rates 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 international markets in which the
Company operates, unanticipated expenses, client preferences which can be
affected by competition, the inability to implement upgrades for certain
computer programs which are not Year 2000 compliant 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
8K during the quarter ended September 30, 2000.
13
<PAGE> 14
GREY GLOBAL GROUP 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: November 14, 2000 By:/s/ Steven G. Felsher
-----------------------------
Steven G. Felsher
Executive Vice President -
Finance - Worldwide
Secretary and Treasurer
(Duly Authorized Officer)
DATE: November 14, 2000 By:/s/ Lester M. Feintuck
-----------------------------
Lester M. Feintuck
Senior Vice President -
Chief Financial Officer - US Operations
Controller
(Chief Accounting Officer)
14
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Page Number in Sequential
Number Assigned to Exhibit Table of Item 601 Exhibits Numbering System Where Exhibit
(i.e. 601 of Regulation S-K) Description of Exhibits May be Found
---------------------------- ----------------------- ------------
<S> <C> <C>
27 Financial Data Schedule 16
</TABLE>
15
