FOR IMMEDIATE RELEASE CONTACT:
Jan A. Sneed (212) 546-2422
Steven G. Felsher (212) 546-2440
GREY GLOBAL GROUP REPORTS 2001 RESULTS
New York, NY - March 13, 2002 -- Grey Global Group Inc. (NASDAQ: GREY) today
reported its results for 2001.
RESULTS
For the twelve months ended December 31, 2001, gross billings were $8.1 billion,
down 2.4% versus 2000. Gross billings for the fourth quarter were $2.0 billion,
a decrease of 13.9% when compared to the same quarter in 2000. Income from
commissions and fees ("revenues") declined by like percentages for the three and
twelve months ended December 31, 2001.
Net income from operations was $7.8 million for the full year as compared to
$27.2 million for the prior year; net income from operations in the fourth
quarter was $3.6 million, down from $11.1 million from the corresponding quarter
in the previous year.
During the quarter, the Company took a non-cash charge of $32.2 million
consisting of write-offs or write-downs of investments in Internet-related early
stage businesses, impaired goodwill and certain marketable securities, and the
write-off of leasehold improvements and fixed assets related to the disposal of
more than 160,000 square feet of leased space.
The net loss after the non-cash charge was $24.4 million for the full year and
$28.6 million for the fourth quarter.
Basic and diluted earnings per common share before the non-cash charge for the
year ended December 31, 2001 were $6.32 and $5.81, respectively, and for the
three months then ended were $2.82 and $2.58, respectively. After the non-cash
charge, both basic and diluted loss per common share for the full year and the
three month period ended December 31, 2001 were $18.46 and $21.88, respectively.
COMPANY COMMENT
The Company's 2001 performance was affected by reductions in client spending
principally attributable to the overall economic weakness. Businesses most
seriously affected by the challenging environment were those which were
project-related and those that had a strong presence in the technology and
telecommunications sectors. The Internet-related operations also performed
weakly overall. Throughout the year, the Company responded to these influences
by aligning its expense base incurring increased severance and related costs in
so doing. The Company also closed, merged or disposed of a number of business
units, and this, in turn, negatively impacts prior period revenue comparisons.
MORE....................
GREY/2001 RESULTS
PAGE TWO
Grey Global Group partner companies won major new business over the course of
2001, with a particularly strong performance in the fourth quarter. Significant
new business wins in 2001 include:
GREY WORLDWIDE (GLOBAL ADVERTISING COMPANY)
IN THE UNITED STATES: BellSouth (for its advertising and direct marketing
account along with Grey Direct), Advil from Wyeth, Aetna Healthcare and Mars'
Milky Way (and Mars Bar in Europe). IN EUROPE: Electrolux, Toys "R" Us and
important new brands from Sara Lee. IN ASIA: China Telecom and Carlsberg Beer.
IN LATIN AMERICA: BMW in Brazil, and additional business from Mars, Procter &
Gamble and Seagram.
MEDIACOM (GLOBAL MEDIA SERVICES COMPANY)
IN THE UNITED STATES:consolidated media services for Diageo's Guinness UDV,
GlaxoSmithKline and Danone. IN EUROPE: Royal Dutch/Shell's pan-European media
planning and buying (as well as its global corporate advertising), Prudential
Group's Egg, a leading Internet bank, the Royal Bank of Scotland's Direct Line
automobile insurance and Sony Music. In addition, MediaCom's global digital
division BEYOND INTERACTIVE won Sprint, Fireman's Fund, Cendant and General
Motors.
GREY HEALTHCARE (GLOBAL HEALTHCARE COMPANY)
Major assignments from Boehringer Ingelheim, Novartis, Johnson & Johnson,
Pfizer, Allergan and Roche, as well as global professional marketing
responsibilities for the blockbuster arthritis drug Celebrex, marketed by
Pharmacia and Pfizer.
GREY DIRECT (GLOBAL DIRECT MARKETING COMPANY)
IN THE UNITED STATES: Bell South (with Grey Worldwide) as well as Cendant,
Compaq, SlimFast and Showtime. In EUROPE: Bertelsmann, 3M Europe, Mars, Adobe
Software-Europe. IN ASIA: Samsung Financial, Philips Lighting Division and SONY
Entertainment Television.
GCI GROUP (GLOBAL PUBLIC RELATIONS COMPANY)
IN NORTH AMERICA: General Motors, Forest Labs, Holiday Inn, Coca-Cola,
Starbucks, SlimFast and The Royal Bank of Scotland. IN EUROPE: Saab
Automobiles. IN ASIA: P&G's Pringles and Janssen Cilag. IN EUROPE AND THE UNITED
STATES: Cap Gemini Ernst & Young.
APCO (GLOBAL PUBLIC AFFAIRS COMPANY)
IN THE UNITED STATES: USA Today, Compaq, Raytheon, Union Pacific Railroad, and
the Governments of Mexico, Mongolia and Liechtenstein. IN EUROPE AND CHINA:
Chubb Insurance. IN RUSSIA AND EASTERN EUROPE: YUKOS Oil.
GREY INTERACTIVE (GLOBAL INTERACTIVE COMPANY)
IN THE UNITED STATES: Whitehall Robbins, Mars' M&Ms and Celebrations brands, and
P&G's Febreze. IN EUROPE: Whirlpool and The Walt Disney Company.
J. BROWN (U.S. CO-MARKETING COMPANY)
Important co-marketing assignments from Playtex, Alcoa and Pharmacia.
MORE....................
GREY/2001 RESULTS
PAGE THREE
Business success continued into early 2002 with Grey Worldwide's notable wins of
Procter & Gamble's global advertising for major Clairol hair coloring brands
(Nice & Easy, Natural Instincts, Hydrience, and Ultress), GlaxoSmithKline's
global advertising account for Sensodyne, Smucker's in the United States and Eli
Lilly's assignment for Cialis in Latin America. In addition, MediaCom has been
selected to handle the United States media accounts of Staples and Century 21.
The cost reductions taken and the strong record of new business success give the
Company continued confidence in its prospects.
* * * * *
Grey Global Group Inc. ranks among the largest global marketing communications
companies in the world with offices in more than 90 countries. Grey Global Group
operates branded independent partner companies in many communications
specialties including general advertising, public relations/public affairs,
direct marketing, Internet communications, healthcare marketing, and on-line and
off-line media services.
(Part of this announcement may contain forward-looking statements that involve
risks and uncertainties, and actual results could differ materially from those
projected in the forward-looking statements. The risks and uncertainties are
detailed from time to time in reports filed with the Securities and Exchange
Commission, including but not limited to the last section of the Management's
Discussion and Analysis entitled "Forward-Looking Information is Subject to Risk
and Uncertainty" contained in the company's Annual Report on Form 10-K and in
other filings.)
(Chart follows)
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Grey Global Group Inc. and Consolidated Subsidiary Companies
Condensed Consolidated Statements of Operations
FOR THE THREE MONTHS
ENDED DECEMBER 31
- -----------------------------------------------------------------------------------------------------------------------------------
Results of Non-Cash Post Non-Cash Results of Non-Cash Post Non-Cash
Operations Charge Charge Operations Charge Charge
- -----------------------------------------------------------------------------------------------------------------------------------
(in thousands, except share
and per share data) 2001 2000
--------------------------------------------------------------------------------------------
Gross billings (Note 1) $ 2,013,926 $ 2,013,926 $ 2,338,102 $ 2,338,102
Commissions and fees 301,938 301,938 350,540 350,540
Income (loss) of consolidated
companies before taxes on income 10,453 (32,169) (21,716) 25,682 (11,941) 13,741
Provision for taxes on income 5,245 40 5,285 12,696 (4,179) 8,517
Minority interest applicable to
consolidated companies (1,011) (1,011) (1,790) (1,790)
Equity in earnings of nonconsolidated
affiliated companies (598) (598) (51) (51)
--------------------------------------------------------------------------------------------
Net income (loss) $ 3,599 $ (32,209) $ (28,610) $ 11,145 $ (7,762) $ 3,383
============================================================================================
Weighted average number of common
shares outstanding
- Basic 1,241,755 1,241,755 1,241,755 1,234,311 1,234,311 1,234,311
============================================================================================
- Diluted 1,373,406 1,373,406 1,373,406 1,361,060 1,361,060 1,361,060
============================================================================================
Earnings per common share (Note 2)
- Basic $ 2.82 $ (24.70) $ (21.88) $ 8.72 $ (5.98) $ 2.74
============================================================================================
- Diluted $ 2.58 $ (24.46) $ (21.88) $ 7.94 $ (5.43) $ 2.51
FOR THE TWELVE MONTHS
ENDED DECEMBER 31
- -----------------------------------------------------------------------------------------------------------------------------------
Results of Non-Cash Post Non-Cash Results of Non-Cash Post Non-Cash
Operations Charge Charge Operations Charge Charge
- -----------------------------------------------------------------------------------------------------------------------------------
(in thousands, except share
and per share data) 2001 2000
--------------------------------------------------------------------------------------------
Gross billings (Note 1) $ 8,117,477 $ 8,117,477 $ 8,320,478 $ 8,320,478
Commissions and fees 1,217,013 1,217,013 1,247,448 1,247,448
Income (loss) of consolidated
companies before taxes on income 28,053 (32,169) (4,116) 66,165 (11,941) 54,224
Provision for taxes on income 14,047 40 14,087 33,931 (4,179) 29,752
Minority interest applicable to
consolidated companies (5,034) (5,034) (6,385) (6,385)
Equity in earnings of
non consolidated
affiliated companies (1,191) (1,191) 1,317 1,317
--------------------------------------------------------------------------------------------
Net income (loss) $ 7,781 $ (32,209) $ (24,428) $ 27,166 $ (7,762) $ 19,404
=============================================================================================
Weighted average number of common
shares outstanding
- Basic 1,237,880 1,237,880 1,237,880 1,230,696 1,230,696 1,230,696
=============================================================================================
- Diluted 1,371,617 1,371,617 1,371,617 1,349,979 1,349,979 1,349,979
=============================================================================================
Earnings per common share (Note 2)
- Basic $ 6.32 $ (24.78) $ (18.46) $ 21.70 $ (6.00) $ 15.70
=============================================================================================
- Diluted $ 5.81 $ (24.27) $ (18.46) $ 19.89 $ (5.48) $ 14.41
1. Amounts reported computed in accordance with industry practice of
multiplying commissions and fees by 6.67.
2. After giving effect to amounts attributable to redeemable preferred
stock and for diluted net income per common share (i) to the assumed
exercise of dilutive stock options, (ii) to the shares issuable
pursuant to the Company's Senior Management Incentive Plan and (iii) to
the assumed conversion of the 8 1/2% Convertible Subordinated
Debentures.
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