Exhibit 99.1
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FOR IMMEDIATE RELEASE Contact:
Jan A. Sneed (212) 546-2422
Steven G. Felsher (212) 546-2440
GREY GLOBAL GROUP INC.
REPORTS STRONG THIRD QUARTER RESULTS
New York, New York - November 5, 2004--Grey Global Group Inc. (NASDAQ:
GREY) today announced its results for the third quarter of 2004.
RESULTS
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Revenue
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Revenue for the third quarter was $358.0 million, an increase of 10.3% ($33.5
million) from the same quarter in 2003. For the nine months ended September 30,
2004, revenue was up $123.8 million, an increase of 13.1%. Revenue improved at
both the Company's non-North American ("international") and North American
operations. The increase was due, in part, to the continuing impact of a weaker
dollar; on a constant currency basis, revenue was up 6.2% for the quarter and
6.6% for the nine months ended September 30, 2004. Revenue for the North
American operations increased by 3.4% for the quarter and 7.1% for the nine
months, with exchange rate movements having only a marginal impact.
International operations reported a revenue increase of 16.1% for the quarter;
absent the effect of the exchange rate movements, international revenue would
have been up 8.6%. For the nine months ended September 30, 2004, international
revenue increased 18.0% (6.6% absent exchange rate increases).
Income of Consolidated Companies before Taxes on Income ("pre-tax profit")
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The Company reported pre-tax profit grew by 74.4% ($9.4 million) for the third
quarter when compared to the corresponding quarter in 2003 and 69.4% ($24.8
million) for the nine months ended September 30, 2004. In the third quarter, the
Company recognized $2.5 million of expenses in connection with the previously
announced signing of an agreement to have the Company merge into WPP Group plc.
and a loss of $1.8 million on the sale of its majority interest in APCO
Worldwide Inc., part of the Company's public relations/affairs operations. Even
after these charges, the Company's margins improved significantly. Comparisons
to 2003 third quarter results are also affected by the absence of a $2.6 million
reserve recorded last year in connection with the liquidation of a business in
Europe.
Net Income/EPS
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Net income was $10.3 million for the third quarter of 2004 and $27.4 million for
the nine months ended September 30, 2004 compared with $4.6 million and $14.4
million for the corresponding periods in 2003.
Basic and diluted earnings per common share for the three months ended September
30, 2004 were $7.50 and $7.26, respectively, compared to $3.57 and $3.28 for the
same quarter in 2003. Basic and diluted earnings were $20.05 and $19.44,
respectively, for the nine months ended September 30, 2004 versus $10.30 and
$9.45 in 2003.
GREY/2004
Page Two
* * * * *
Grey Global Group ranks among the largest global communications companies in the
world. Grey Global Group operates branded independent business units in many
communications disciplines including general advertising, public
relations/public affairs, direct marketing, internet communications, healthcare
marketing, brand strategy and design, and on-line and off-line media services.
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(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 Statements" contained in the
Company's most recent Form 10-K and in other filings.)
(Charts follow)
GREY/2004
Page Three
Grey Global Group Inc. and Consolidated Subsidiary Companies
Condensed Consolidated Statements of Operations
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For the Three Months
Ended September 30
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(in thousands, except share and per share data) 2004 2003
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Revenue $ 358,025 $ 324,487
Income of consolidated companies before taxes on income 21,910 12,560
Provision for taxes on income 10,652 6,405
Minority interest applicable to consolidated companies (1,191) (1,577)
Equity in earnings of nonconsolidated affiliated companies 254 5
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Net income $ 10,321 $ 4,583
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Weighted average number of common shares outstanding
- Basic 1,375,916 1,284,261
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- Diluted 1,422,245 1,408,330
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Earnings per common share (Notes 1 and 2)
- Basic $ 7.50 $ 3.57
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- Diluted $ 7.26 $3.28
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For the Nine Months
Ended September 30
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(in thousands, except share and per share data) 2004 2003
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Revenue $1,065,909 $ 942,075
Income of consolidated companies before taxes on income 60,634 35,801
Provision for taxes on income 30,014 17,793
Minority interest applicable to consolidated companies (3,990) (4,029)
Equity in earnings of nonconsolidated affiliated companies 762 421
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Net income $ 27,392 $ 14,400
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Weighted average number of common shares outstanding
- Basic 1,366,452 1,273,596
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- Diluted 1,409,429 1,399,596
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Earnings per common share (Notes 1 and 2)
- Basic $20.05 $10.30
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- Diluted $19.44 $ 9.45
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1. Earnings used in the computation of basic and diluted earnings per share in
2003 were reduced by the increase in value of the Company's Preferred
Stock; the Preferred Stock was redeemed on April 7, 2004 at a value
determined as at December 31, 2003 and, accordingly, there has been no such
reduction after December 31, 2003.
2. After giving effect to amounts attributable to the assumed exercise of
dilutive stock options and the effect of certain share grants pursuant to
the Company's stock incentive plans.
GREY/2004
Page Four
Grey Global Group Inc. and Consolidated Subsidiary Companies
Exchange Rate Effects on Revenue
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For the Three Months Ended September 30
2004 vs. 2003
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Non-Exchange Rate Exchange Rate
Total Growth Impacted Growth Impact
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Revenue from:
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North American operations 3.4% 3.2% 0.2%
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International operations:
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Europe 18.2% 9.3% 8.9%
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Asia/Latin America 7.3% 5.8% 1.5%
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Total International operations 16.1% 8.6% 7.5%
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Total Revenue 10.3% 6.2% 4.1%
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For the Nine Months Ended September 30
2004 vs. 2003
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Non-Exchange Rate Exchange Rate
Total Growth Impacted Growth Impact
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Revenue from:
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North American operations 7.1% 6.6% 0.5%
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International operations:
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Europe 19.0% 6.0% 13.0%
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Asia/Latin America 13.4% 9.1% 4.3%
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Total International operations 18.0% 6.6% 11.4%
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Total Revenue 13.1% 6.6% 6.5%
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