GREY Grey Global Grp. (MM)

Grey Global Group Inc. Reports Strong Third Quarter Results NEW YORK, Nov. 5 /PRNewswire-FirstCall/ -- Grey Global Group Inc. (NASDAQ:GREY) today announced its results for the third quarter of 2004. RESULTS Revenue 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") 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 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 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. (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.) Grey Global Group Inc. and Consolidated Subsidiary Companies Condensed Consolidated Statements of Operations For the Three Months Ended September 30 (in thousands, except share 2004 2003 and per share data) 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 Net income $10,321 $4,583 Weighted average number of common shares outstanding - Basic 1,375,916 1,284,261 - Diluted 1,422,245 1,408,330 Earnings per common share (Notes 1 and 2) - Basic $7.50 $3.57 - Diluted $7.26 $3.28 For the Nine Months Ended September 30 (in thousands, except share and 2004 2003 per share data) 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 Net income $27,392 $14,400 Weighted average number of common shares outstanding - Basic 1,366,452 1,273,596 - Diluted 1,409,429 1,399,596 Earnings per common share (Notes 1 and 2) - Basic $20.05 $10.30 - Diluted $19.44 $9.45 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 Global Group Inc. and Consolidated Subsidiary Companies Exchange Rate Effects on Revenue For the Three Months Ended September 30 2004 vs. 2003 Non-Exchange Rate Exchange Total Growth Impacted Growth Rate Impact Revenue from: North American operations 3.4 % 3.2 % 0.2 % International operations: Europe 18.2 % 9.3 % 8.9 % Asia/Latin America 7.3 % 5.8 % 1.5 % Total International operations 16.1 % 8.6 % 7.5 % Total Revenue 10.3 % 6.2 % 4.1 % For the Nine Months Ended September 30 2004 vs. 2003 Non-Exchange Rate Exchange Total Growth Impacted Growth Rate Impact Revenue from: North American operations 7.1 % 6.6 % 0.5 % International operations: Europe 19.0 % 6.0 % 13.0 % Asia/Latin America 13.4 % 9.1 % 4.3 % Total International operations 18.0 % 6.6 % 11.4 % Total Revenue 13.1 % 6.6 % 6.5 % DATASOURCE: Grey Global Group Inc. CONTACT: Jan A. Sneed, +1-212-546-2422, or Steven G. Felsher, +1-212-546-2440, both of Grey Global Group Inc. Web site: http://www.grey.com/

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