GREY Grey Global Grp. (MM)

Grey Global Group Inc. Reports Second Quarter Results NEW YORK, Aug. 9 /PRNewswire-FirstCall/ -- Grey Global Group Inc. (NASDAQ:GREY) today announced its results for the second quarter of 2004. RESULTS Revenue Revenue for the second quarter was $364.0 million, an increase of 13.8% ($44.1 million) from the same quarter in 2003. For the six months ended June 30, 2004, revenue was up $90.3 million, an increase of 14.6%. Revenue growth was attributable to improvement in the Company's non-North American ("international") and North American operations reflecting, in part, the impact of a weaker dollar; on a constant currency basis, revenue was up 6.8% for the quarter and for the six months ended June 30, 2004. Revenue for the North American operations increased by 8.4% for the quarter and 9.1% for the six months, with exchange rate movements having only a marginal impact. International operations reported a revenue increase of 18.1% for the quarter; absent the effect of the exchange rate movements, revenue at our international operations would have been up 5.8%; for the six months ended June 30, 2004, international revenue increased 19.0% (5.5% absent exchange rate increases). Income of Consolidated Companies before Taxes on Income ("pre-tax profit") The Company reported pre-tax profit grew by 87.3% ($10.6 million) for the second quarter when compared to the corresponding quarter in 2003 and 66.6% ($15.5 million) for six months ended June 30, 2004. This result was achieved despite continuing losses in the Company's Scandinavian operations: a $4.6 million loss in the second quarter of 2004 as compared to a loss of $4.7 million in the corresponding quarter in 2003 and $13.5 million through June 30, 2004 versus $7.4 million for the same period in 2003. Net Income/EPS Net income was $10.8 million for the second quarter of 2004 and $17.1 million for the six months ended June 30, 2004 compared with $4.7 million and $9.8 million for the corresponding periods in 2003. Basic and diluted earnings per common share for the three months ended June 30, 2004 were $7.89 and $7.62, respectively, compared to $3.33 and $3.07 for the same quarter in 2003. Basic and diluted earnings were $12.54 and $12.12, respectively, for the six months ended June 30, 2004 versus $6.73 and $6.19 in 2003. Company Comment The Company's growth in revenue and profitability continued in the second quarter with improved performances shown in all regions. Most notably, pre- tax profit more than doubled in Europe despite the losses in Scandinavia mentioned above. 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 June 30 (in thousands, except share and per share data) 2004 2003 Revenue $364,014 $319,946 Income of consolidated companies before taxes on income 22,757 12,147 Provision for taxes on income 11,219 6,174 Minority interest applicable to consolidated companies (1,025) (1,455) Equity in earnings of nonconsolidated affiliated companies 254 226 Net income $10,767 $4,744 Weighted average number of common shares outstanding - Basic 1,364,288 1,274,154 - Diluted 1,412,599 1,394,287 Earnings per common share (Notes 1 and 2) - Basic $7.89 $3.33 - Diluted (Note 2) $7.62 $3.07 For the Six Months Ended June 30 (Note 1) (in thousands, except share and per share data) 2004 2003 Revenue $707,884 $617,589 Income of consolidated companies before taxes on income 38,724 23,240 Provision for taxes on income 19,362 11,388 Minority interest applicable to consolidated companies (2,799) (2,452) Equity in earnings of nonconsolidated affiliated companies 508 415 Net income $17,071 $9,815 Weighted average number of common shares outstanding - Basic 1,361,629 1,268,177 - Diluted 1,408,229 1,391,623 Earnings per common share (Notes 1 and 2) - Basic $12.54 $6.73 - Diluted $12.12 $6.19 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 was no such reduction after that date. 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 June 30 2004 vs. 2003 Non-Exchange Exchange Rate Total Growth Rate Impact Impacted Growth Revenue from: North American operations 8.4 % 8.1 % 0.3 % International operations: Europe 17.8 % 3.6 % 14.2 % Asia/Latin America 19.1 % 15.4 % 3.7 % Total International operations 18.1 % 5.8 % 12.3 % Total Revenue 13.8 % 6.8 % 7.0 % For the Six Months Ended June 30 2004 vs. 2003 Non-Exchange Exchange Rate Total Growth Rate Impact Impacted Growth Revenue from: North American operations 9.1 % 8.5 % 0.6 % International operations: Europe 19.4 % 4.3 % 15.1 % Asia/Latin America 16.8 % 10.9 % 5.9 % Total International operations 19.0 % 5.5 % 13.5 % Total Revenue 14.6 % 6.8 % 7.8 % DATASOURCE: Grey Global Group Inc. CONTACT: Jan A. Sneed, +1-212-546-2422, Steven G. Felsher, +1-212-546-2440, both of Grey Global Group Inc. Web site: http://www.grey.com/

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