<PAGE>   1

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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------

                                   FORM 10-K

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 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)

<TABLE>
<S>                                            <C>
                   DELAWARE                                      13-0802840
       (STATE OR OTHER JURISDICTION OF                        (I.R.S. EMPLOYER
        INCORPORATION OR ORGANIZATION)                     IDENTIFICATION NUMBER)

     777 THIRD AVENUE, NEW YORK, NEW YORK                          10017
   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                      (ZIP CODE)
</TABLE>

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:  212-546-2000

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

<TABLE>
<CAPTION>
             TITLE OF EACH CLASS                 NAME OF EACH EXCHANGE ON WHICH REGISTERED
             -------------------                 -----------------------------------------
<S>                                            <C>
                     NONE                                           NONE
</TABLE>

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                    COMMON STOCK, PAR VALUE $0.01 PER SHARE
                                (TITLE OF CLASS)

     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 and (2) has been subject to the filing
requirements for the past 90 days.  Yes [X]  No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  Yes [X]  No [ ]

     The aggregate market value of the voting stock held by non-affiliates of
the registrant was $574,335,312 as at March 1, 2001.

     The registrant had 1,029,763 shares of its Common Stock, par value $0.01
per share, and 223,659 shares of its Limited Duration Class B Common Stock, par
value $0.01 per share, outstanding as at March 1, 2001.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the annual proxy statement to be furnished in connection with
the registrant's 2001 annual meeting of stockholders are incorporated by
reference into Part III.
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<PAGE>   2

                                    PART I.

ITEM 1.  BUSINESS.

     The registrant ("Grey") and its subsidiaries (collectively with Grey, the
"Company") have been engaged in the planning, creation, supervision and placing
of advertising since the Company's formation in 1917. Grey was incorporated in
New York in 1925 and changed its state of incorporation to Delaware in 1974.

     The Company's principal business activity consists of providing a full
range of advertising and marketing communications services to clients on an
international or local basis. Most typically, this involves developing an
advertising and/or marketing plan after study of a client's business, the
distribution or utilization of the client's products or services and the use of
various media (e.g., television, radio, newspapers, magazines, direct mail,
outdoor billboards and the Internet) by which desired market performance can
best be achieved. The Company then creates advertising, prepares media
recommendations and places advertising in the media. The Company's business also
involves it in allied areas such as marketing consultation, audio-visual
production, co-marketing programs, database management, direct marketing,
interactive consulting and production, marketing research, media research and
buying, product publicity, public affairs, public relations and sales promotion.

     The Company serves a diversified client roster in the apparel, automobile,
beverage, chemical, communications, community service, computer software and
hardware, corporate services, electrical appliance, entertainment and media,
food product, home furnishing, houseware, healthcare, packaged goods,
publishing, restaurant, retailing, toy and other sectors.

     Advertising is a highly competitive business in which agencies of all sizes
and other providers of creative or media services strive to attract new clients
or additional assignments from existing clients. Competition for new business,
however, is restricted from time to time because large agencies (such as the
Company) may be precluded from providing advertising services to products or
services that may be viewed as being competitive with those of an existing
client. Generally, since advertising agencies charge clients substantially
equivalent rates for their services, competitive efforts principally focus on
the skills of the competing agencies.

     Published reports indicate that there are over 500 advertising agencies of
all sizes in the United States. According to a report published in 2000
(Advertising Age, a trade publication), the Company was the sixth largest United
States advertising agency in terms of worldwide gross income.

     A majority of Grey's domestic gross income is from clients that have been
with the Company more than five years. The agreements between the Company and
most of its clients are generally terminable by either the Company or the client
upon mutually agreed notice, as is the custom in the industry. Clients may also
modify advertising budgets at any time and for any reason, and because the
agency's compensation in many cases is determined by reference to client
expenditures, shifts in advertising budgets may result in increased or reduced
levels of revenue for the Company.

     During 2000, one client (The Procter & Gamble Company), which has been a
client of the Company for more than forty years, represented approximately 10%
of the Company's consolidated income from commissions and fees. The loss of this
client would have an adverse effect on the results of the Company. No other
client represented more than 5% of the Company's total consolidated income from
commissions and fees. The loss of any single client in past years has not had a
long-term negative impact on the Company's financial condition or its
competitive position.

     On December 31, 2000, the Company and its nonconsolidated affiliated
companies employed approximately 14,250 persons, of whom seven are executive
officers of Grey.

     As is generally the case in the advertising industry, the Company's
business traditionally has been seasonal, with greater revenues generated in the
second and fourth quarters of each year. This reflects, in large degree, the
media placement patterns of the Company's clients.

     Advertising programs created by the Company and its nonconsolidated
affiliated companies are placed principally in media distributed within the
United States and internationally through its offices in the United States and
more than 90 other countries. While the Company operates on a worldwide basis,
for the purpose of
                                        1
<PAGE>   3

presenting certain financial information in accordance with accounting
principles generally accepted in the United States, its operations are deemed to
be conducted in three geographic areas. Commissions and fees, operating profit
and other relevant information by each such geographic area for the years ended
December 31, 2000, 1999 and 1998, and related identifiable and total assets at
December 31 of each of the years, are summarized in the Notes to Consolidated
Financial Statements.

     While the Company has no reason to believe that its international
operations as a whole are presently jeopardized in any material respect, there
are certain risks which do not affect domestic operations but which may affect
the Company's international operations from time to time. Such risks include the
possibility of limitations on repatriation of capital or dividends, political
instability, currency devaluation and restrictions on the percentage of
permitted international ownership.

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. 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, technological
developments, changes in the general economic conditions that affect exchange
rates, interest rates and/or consumer spending either in the United States or
international markets in which the Company operates, unanticipated expenses,
client preferences which can be affected by competition, and the ability to
project risk factors which may vary. Certain of these factors are discussed in
greater detail elsewhere herein.

                           EXECUTIVE OFFICERS OF GREY
                              AS OF MARCH 1, 2001

<TABLE>
<CAPTION>
                                                                                       YEAR FIRST BECAME
EXECUTIVE OFFICERS(A)                                POSITION                   AGE    EXECUTIVE OFFICER
---------------------                                --------                   ---    -----------------
<S>                                    <C>                                      <C>    <C>
Robert L. Berenson...................  Vice Chairman -- General Manager         61           1978
Lester M. Feintuck...................  Senior Vice President Chief Financial    47           1998
                                       Officer -- US Controller
Steven G. Felsher....................  Vice Chairman, Chief Financial           51           1989
                                       Officer -- Worldwide, Secretary &
                                       Treasurer
John A. Gerster......................  Exec. Vice President                     53           1983
Edward H. Meyer......................  Chairman of the Board, President &       74           1959
                                       Chief Executive Officer
Stephen A. Novick....................  Vice Chairman, Chief Creative Officer    60           1984
O. John C. Shannon...................  President -- Grey International          64           1993
</TABLE>

---------------
(a) All executive officers are elected annually by the Board of Directors of
    Grey. Each executive officer has been with Grey for a period greater than
    five years. There exists no family relationship between any of Grey's
    directors or executive officers and any other director or executive officer
    or person nominated or chosen to become a director or executive officer.

ITEM 2.  PROPERTIES.

     Substantially all offices of the Company are located in leased premises.
The Company's principal office is at 777 Third Avenue, New York, New York, where
it occupies approximately 400,000 square feet of space.

                                        2
<PAGE>   4

The Company's lease covering this space expires at the end of 2009. The Company
also has leases covering other offices, including in New York, Los Angeles,
Amsterdam, Auckland, Brussels, Buenos Aires, Copenhagen, Dusseldorf, Hong Kong,
Jakarta, Kuala Lumpur, London, Madrid, Melbourne, Mexico City, Milan, Oslo,
Paris, Sao Paolo, Johannesburg, Stockholm, Sydney, Tokyo and Toronto.

     The Company considers all space leased by it to be adequate for the
operation of its business and does not foresee any significant difficulty in
meeting its space requirements.

ITEM 3.  LEGAL PROCEEDINGS.

     In the Company's judgment, it is not involved in any material pending legal
proceedings other than ordinary routine litigation incidental to the business of
the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     None

                                    PART II.

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.

     The Common Stock is traded on The NASDAQ Stock Market's National Market and
listed on the NASDAQ Stock Market under the symbol GREY.

     As of March 1, 2001, there were 412 holders of record of the Common Stock
and 194 holders of record of the Limited Duration Class B Common Stock.

     The following table sets forth certain information about dividends paid,
and the bid prices on the NASDAQ Stock Market during the periods indicated with
respect to the Common Stock:

<TABLE>
<CAPTION>
                                                             BID PRICES*
                                                          DOLLARS PER SHARE
                                                          -----------------      DIVIDENDS
                                                           HIGH        LOW       PER SHARE
                                                          ------      -----      ---------
<S>   <C>                                                 <C>         <C>        <C>
1999  First Quarter...................................      388       311          $1.00
      Second Quarter..................................      342       284           1.00
      Third Quarter...................................      372       322           1.00
      Fourth Quarter..................................      397       325           1.00
2000  First Quarter...................................      433       380           1.00
      Second Quarter..................................      503       403           1.00
      Third Quarter...................................      623       495           1.00
      Fourth Quarter..................................      641       526           1.00
</TABLE>

---------------
* Such over-the-counter market quotations reflect inter-dealer prices, without
  retail mark-up, mark-down or commission and may not necessarily represent
  actual transactions.

                                        3
<PAGE>   5

ITEM 6.  SELECTED FINANCIAL DATA.

<TABLE>
<CAPTION>
                                  2000          1999          1998          1997          1996
                               ----------    ----------    ----------    ----------    ----------
                                        (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S>                            <C>           <C>           <C>           <C>           <C>
Commissions and fees.........  $1,247,448    $1,067,212    $  935,181    $  858,752    $  765,498
Expenses.....................   1,182,512     1,034,339       882,524       793,832       706,965
Income of consolidated
  companies before taxes on
  income.....................      54,224        38,270        59,152        69,291        65,693
Provision for taxes on
  income.....................      29,752        27,400        29,856        33,719        31,612
Net income...................      19,404         6,401        25,877        30,451        28,602
Earnings per common share(a)
  Basic......................       15.70          5.13         20.81         25.03         22.98
  Diluted....................       14.41          4.86         18.98         21.89         20.45
Weighted average number of
  common shares outstanding
  Basic......................   1,230,696     1,237,007     1,220,767     1,180,146     1,185,841
  Diluted....................   1,349,979     1,333,379     1,345,928     1,355,452     1,339,111
Working capital
  (deficiency)...............     (51,421)      (56,887)        3,464        50,526         3,843
Total assets.................   1,989,320     1,809,254     1,489,653     1,199,987     1,089,394
Long-term debt...............     128,025        78,025        78,025        78,025        33,025
Redeemable preferred stock at
  redemption value...........       9,995        10,150        10,333        10,760        10,098
Common stockholders'
  equity.....................     171,935       171,365       173,389       162,306       147,922
Cash dividends per share of
  Common Stock and Limited
  Duration Class B Common
  Stock......................        4.00          4.00          4.00          4.00        3.8125
</TABLE>

---------------
(a) After giving effect to amounts attributable to redeemable preferred stock
    and for diluted earnings per common share to the assumed (i) exercise of
    dilutive stock options, (ii) issuance of shares pursuant to the Company's
    Senior Management Incentive Plan and (iii) conversion of 8 1/2% Convertible
    Subordinated Debentures.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

RESULTS OF OPERATIONS

     Income from commissions and fees ("gross income") increased 16.9% in 2000
and 14.1% in 1999 as compared to the respective prior years. Absent exchange
rate fluctuations, gross income increased 21.5% in 2000 and 16.9% in 1999. In
2000, 1999 and 1998, respectively, 44.1%, 43.6% and 44.9% of consolidated gross
income was attributable to domestic operations and 55.9%, 56.4% and 55.1%,
respectively, to international operations. In 2000, gross income from domestic
operations increased 18.3% versus 1999 and was up 10.8% in 1999 versus 1998.
Gross income from international operations increased 15.8% (24.0% absent
exchange rate fluctuations) in 2000 when compared to 1999 and 16.8% (21.8%
absent exchange rate fluctuations) in 1999 when compared to 1998. The increases
in gross income in both years primarily resulted from expanded activities from
existing clients, the continued growth of the Company's general advertising
agency and specialized communications operations, and from acquired companies.

     Salaries and employee related expenses increased 14.8% in 2000 and 16.2% in
1999 as compared to the respective prior years. Office and general expenses
increased 13.4% in 2000 and 19.2% in 1999 versus respective prior years.
Expenses increased at a rate less than the rate of increase for gross income
principally because of a focus on cost containment. The increase in office and
general expenses in 1999 is partially attributable to higher costs of amortizing
acquisitions, the write-off of certain assets at a number of the Company's loss
making locations, and the need for greater and generally more expensive real
estate.

                                        4
<PAGE>   6

     Inflation did not have a material effect on revenue or expenses in 2000,
1999 or 1998.

     Other income-net decreased in 2000 by $16,109,000 and decreased in 1999 by
$1,098,000 as compared to the comparable prior periods. The decrease in 2000 is
primarily the result of a non-cash charge consisting of a write-down of
investments in Internet-related early stage businesses and a reduction of
interest income from available marketable securities. The 1999 decrease is
primarily due to a reduction of interest income from available marketable
securities, offset to a limited degree by overall gains on the sale of certain
of those securities.

     The effective tax rate was 54.9% for 2000 as compared to 71.6% in 1999. In
2000, the Company's tax rate returned to historical levels. The tax rate in 1999
was especially high because the Company decided it was not prudent to recognize
the future tax benefit attributable to losses at certain international
subsidiaries generated last year; should the benefit from these losses be
realized against taxable profits in the future, it will have a positive impact
on the Company's results when recognized. The tax rate in 1998 was 50.5%.

     Minority interest increased by $720,000 in 2000 and $1,524,000 in 1999, as
compared to the respective prior years. The changes in 2000 and in 1999 were
primarily due to changes in the levels of ownership and the level of profits, of
majority-owned companies.

     Equity in earnings of nonconsolidated affiliated companies increased
$121,000 in 2000 and $474,000 in 1999 as compared to the respective prior years.
These changes are due primarily to changes in the level of ownership and the
level of profits attributable to the nonconsolidated companies.

     The Company reported net income of $19,404,000 in 2000 as compared to
$6,401,000 in 1999 and $25,877,000 in 1998. Diluted earnings per common share
was $14.41 in 2000 as compared to $4.86 in 1999 and $18.98 in 1998.

     For the purpose of computing basic earnings per common share, the Company's
net income was adjusted by (i) dividends paid on the Company's preferred stock
and (ii) the change in redemption value of the Company's preferred stock. For
the purpose of computing diluted earnings per common share, net income was also
adjusted by the interest savings, net of tax, on the assumed conversion of the
Company's 8 1/2% Convertible Subordinated Debentures.

     Net income in 2000 rebounded significantly from a historically low level in
1999, in large measure because of better performances at a number of business
units, principally, selected international operations for which 1999 was
difficult, the improvement of the tax rate as described above, the overall
growth of the Company, organically through new business and through selected
acquisitions coupled with a focus on responsible cost management. The
improvement in net income was restrained, however, by the aforementioned
non-cash charge the Company took in 2000.

LIQUIDITY AND CAPITAL RESOURCES

     Cash and cash equivalents were $309,750,000 and $306,556,000 at December
31, 2000 and 1999, respectively, and the Company's investment in marketable
securities was $16,803,000 and $28,010,000 at December 31, 2000 and 1999,
respectively. The continued high level of liquidity reflects the Company's
ongoing focus on its cash management process. Working capital increased by
$5,466,000 to a deficit of $51,421,000 at December 31, 2000 versus a deficit of
$56,887,000 at December 31, 1999.

     Domestically, the Company maintains committed bank lines of credit totaling
$59,000,000. These lines of credit were partially utilized during both 2000 and
1999 to secure obligations of selected international subsidiaries in the amounts
of $19,000,000 and $20,500,000 at December 31, 2000 and 1999, respectively.

                                        5
<PAGE>   7

     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. Amounts outstanding under such facilities at December 31,
2000 and 1999 were $28,016,000 and $48,000,000, respectively.

     Historically, funds from operations and borrowings have been sufficient to
meet the Company's dividend, capital expenditure, acquisition and working
capital needs. The Company expects that such sources will be sufficient to meet
its short-term cash requirements in the future. The Company has two loans
outstanding from the Prudential Insurance Company of America. The first loan of
$75,000,000 from December 1997 bears interest at the rate of 6.94% and is
repayable in three equal annual installments, commencing in December 2003. The
second loan of $50,000,000 was taken in November 2000, bears interest at the
rate of 8.17% and is repayable in two equal annual installments, commencing in
November 2006. The Company does not anticipate any material increased
requirement for capital or other expenditures which will adversely affect its
liquidity.

     The Company's business generally has been seasonal with greater gross
income earned in the second and fourth quarters, particularly the fourth
quarter. As a result, cash, accounts receivable, accounts payable and accrued
expenses are typically at their height on the Company's year-end balance sheet
than at the end of any of the preceding three quarters.

FASB STATEMENT 133

     In June 1998, the Financial Accounting Standards Board issued Statement No.
133, Accounting for Derivative Instruments and Hedging Activities ("FAS 133").
FAS 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, (collectively referred to as derivatives) and for hedging activities.
It requires that an entity recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at fair value.
Changes in derivative fair values will either be recognized in earnings in the
period of change or reported as a component of other comprehensive income
(outside earnings) and subsequently reclassified into earnings when the
forecasted transaction affects earnings. FAS 133 is effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000. The Company will
adopt the new statement in the first quarter of 2001. The adoption of this
standard is not expected to have any significant impact on the Company's Balance
Sheets or its Statements of Income and Cash Flows.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The Company's results may be affected by currency exchange rate
fluctuations given the Company's extensive international operations. Generally,
the foreign currency exchange risk is limited to net income of each operation
because the Company's revenues and expenses, by country, are almost exclusively
denominated in the local currency of each respective country with both revenue
and expense items matched.

     Occasionally, the Company enters into foreign currency contracts for known
cash flows related to repatriation of earnings from its international
subsidiaries or identified liabilities in foreign currencies. The term of each
such foreign currency contract entered into in 2000 was for less than three
months. At December 31, 2000, there were no foreign currency contracts open. The
Company had no derivative contracts outstanding at December 31, 2000 or 1999,
respectively.

     The Company has investments in private equity securities, corporate bonds
and equity securities that may be subject to changes in general economic
conditions and fluctuations in interest rates. Excess funds are invested in
short-term liquid securities and money market funds.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The information required by this Item is presented in this report beginning
on Page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

     None.
                                        6
<PAGE>   8

                                   PART III.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     Information with respect to the directors of Grey is incorporated herein by
reference to the Company's proxy statement ("Proxy Statement") to be sent to its
stockholders in connection with its 2001 Annual Meeting and will be included
under the caption "Election of Directors". Information with respect to the
Grey's executive officers is set forth in Part I of this report.

ITEM 11.  EXECUTIVE COMPENSATION.

     The information required by this Item is incorporated herein by reference
to the Proxy Statement and will be included under the caption "Management
Remuneration and Other Transactions".

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The information required by this Item is incorporated herein by reference
to the Proxy Statement and will be included under the captions "Election of
Directors" and "Voting Securities".

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The information required by this Item is incorporated herein by reference
to the Proxy Statement and will be included under the captions "Election of
Directors" and "Voting Securities".

                                    PART IV.

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

     (a) (1) (2) The information required by this subsection of this Item is
presented in the index to Financial Statements on Page F-1.

     (3) The information required by this subsection of this Item is provided in
the Index of Exhibits at Page E-1 of this report. Such index provides a listing
of exhibits filed with this report and those incorporated herein by reference.

                                        7
<PAGE>   9

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                          GREY GLOBAL GROUP INC.

                                          By: /s/ EDWARD H. MEYER
                                            ------------------------------------
                                            Edward H. Meyer,
                                              Chairman, Chief Executive Officer
                                            & President

                                          Dated: March 30, 2001

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of Registrant
and in the capacities and on the date indicated.

<TABLE>
<S>                                                  <C>

/s/ MARK N. KAPLAN                                   Dated: March 30, 2001
---------------------------------------------------
Mark N. Kaplan, Director

/s/ EDWARD H. MEYER                                  Dated: March 30, 2001
---------------------------------------------------
Edward H. Meyer, Director;
Principal Executive Officer

/s/ RICHARD REISS, JR.                               Dated: March 30, 2001
---------------------------------------------------
Richard Reiss, Jr., Director

/s/ O. JOHN C. SHANNON                               Dated: March 30, 2001
---------------------------------------------------
O. John C. Shannon, Director;
President -- Grey International

/s/ STEVEN G. FELSHER                                Dated: March 30, 2001
---------------------------------------------------
Steven G. Felsher,
Principal Financial Officer

/s/ LESTER M. FEINTUCK                               Dated: March 30, 2001
---------------------------------------------------
Lester M. Feintuck,
Principal Accounting Officer
</TABLE>

                                        8
<PAGE>   10

                           ANNUAL REPORT ON FORM 10-K
                  ITEM 8, ITEM 14(a)(1) AND (2) AND ITEM 14(d)
                  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                          LIST OF FINANCIAL STATEMENTS
                          YEAR ENDED DECEMBER 31, 2000
                             GREY GLOBAL GROUP INC.
                               NEW YORK, NEW YORK
<PAGE>   11

                   FORM 10-K -- ITEM 8, ITEM 14(a)(1) AND (2)
          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

                         INDEX TO FINANCIAL STATEMENTS

     The following consolidated financial statements of Grey Global Group Inc.
and consolidated subsidiary companies are included in Item 8:

<TABLE>
<S>                                                           <C>
Report of Independent Auditors..............................   F-2

Consolidated Balance Sheets -- December 31, 2000 and 1999...   F-3
Consolidated Statements of Income -- Years Ended December
  31, 2000, 1999 and 1998...................................   F-5
Consolidated Statements of Common Stockholders'
  Equity -- Years Ended December 31, 2000, 1999 and 1998....   F-6
Consolidated Statements of Cash Flows -- Years Ended
  December 31, 2000, 1999 and 1998..........................   F-9
Notes to Consolidated Financial Statements -- December 31,
  2000......................................................  F-11
</TABLE>

     All schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and, therefore, have been omitted.

     Summarized financial information and financial statements for
nonconsolidated foreign investee companies accounted for by the equity method
have been omitted because such companies, considered individually or in the
aggregate, do not constitute a significant subsidiary.

                                       F-1
<PAGE>   12

                         REPORT OF INDEPENDENT AUDITORS

Board of Directors
Grey Global Group Inc.

     We have audited the accompanying consolidated balance sheets of Grey Global
Group Inc. and consolidated subsidiary companies as of December 31, 2000 and
1999, and the related consolidated statements of income, common stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 2000. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Grey Global Group Inc. and consolidated subsidiary companies at December 31,
2000 and 1999, and the consolidated results of their operations and their cash
flows for each of the three years in the period ended December 31, 2000, in
conformity with accounting principles generally accepted in the United States.

                                          ERNST & YOUNG LLP

New York, New York
February 16, 2001

                                       F-2
<PAGE>   13

          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                        DECEMBER 31
                                                              --------------------------------
                                                                   2000              1999
                                                              --------------    --------------
                                                              (IN THOUSANDS, EXCEPT SHARE AND
                                                                      PER SHARE DATA)
<S>                                                           <C>               <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................    $  309,750        $  306,556
  Marketable securities.....................................         3,006             5,581
  Accounts receivable.......................................       999,152           940,612
  Expenditures billable to clients..........................        90,075            51,991
  Other current assets......................................       105,689            93,207
                                                                ----------        ----------
Total current assets........................................     1,507,672         1,397,947
Investments in and advances to nonconsolidated affiliated
  companies.................................................        16,198            17,961
Fixed assets -- net.........................................       147,735           126,939
Marketable securities.......................................        13,797            22,429
Intangibles -- net of accumulated amortization of $54,420 in
  2000 and $42,818 in 1999..................................       192,110           157,115
Other assets -- including loans to executive officers of
  $5,247 in 2000 and 1999...................................       111,808            86,863
                                                                ----------        ----------
Total assets................................................    $1,989,320        $1,809,254
                                                                ==========        ==========
</TABLE>

                See notes to consolidated financial statements.
                                       F-3
<PAGE>   14

          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

                   CONSOLIDATED BALANCE SHEETS -- (CONTINUED)

<TABLE>
<CAPTION>
                                                                        DECEMBER 31
                                                              --------------------------------
                                                                   2000              1999
                                                              --------------    --------------
                                                              (IN THOUSANDS, EXCEPT SHARE AND
                                                                      PER SHARE DATA)
<S>                                                           <C>               <C>
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................    $1,239,940        $1,161,508
  Notes payable to banks....................................        47,016            68,500
  Accrued expenses and other................................       245,751           208,254
  Income taxes payable......................................        26,386            16,572
                                                                ----------        ----------
Total current liabilities...................................     1,559,093         1,454,834
Other liabilities -- including deferred compensation of
  $54,290 in 2000 and $44,160 in 1999.......................        99,597            75,260
Long-term debt..............................................       128,025            78,025
Minority interest...........................................        20,675            19,620
Redeemable preferred stock -- at redemption value; par value
  $0.01 per share in 2000 and $1.00 per share in 1999;
  authorized 500,000 shares in 2000 and 1999; issued and
  outstanding 30,000 shares in 2000 and 1999................         9,995            10,150
Common stockholders' equity:
  Common Stock -- par value $0.01 per share in 2000 and
     $1.00 per share in 1999; authorized 50,000,000 shares
     in 2000 and 10,000,000 shares in 1999; issued 1,238,524
     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 $1.00 per share in 1999;
     authorized 10,000,000 shares in 2000 and 2,000,000
     shares in 1999; issued 251,663 shares in 2000 and
     261,224 shares in 1999.................................             3               261
  Paid-in additional capital................................        46,004            39,763
  Retained earnings.........................................       205,378           191,042
  Accumulated other comprehensive loss:
     Cumulative translation adjustment......................       (27,388)          (15,462)
     Unrealized loss on marketable securities...............        (7,336)             (141)
                                                                ----------        ----------
  Total accumulated other comprehensive loss................       (34,724)          (15,603)
                                                                ----------        ----------
  Loans to officer used to purchase Common Stock and Limited
     Duration Class B Common Stock..........................        (4,726)           (4,726)
                                                                ----------        ----------
                                                                   211,947           211,966
  Less -- cost of 210,749 and 218,514 shares of Common Stock
     and 26,937 and 26,937 shares of Limited Duration Class
     B Common Stock held in treasury at December 31, 2000
     and 1999, respectively.................................        40,012            40,601
                                                                ----------        ----------
Total common stockholders' equity...........................       171,935           171,365
Retirement plans, leases and contingencies..................
                                                                ----------        ----------
Total liabilities and common stockholders' equity...........    $1,989,320        $1,809,254
                                                                ==========        ==========
</TABLE>

                See notes to consolidated financial statements.
                                       F-4
<PAGE>   15

          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

                       CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31
                                                          ------------------------------------------------
                                                               2000              1999             1998
                                                          --------------    --------------    ------------
                                                          (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S>                                                       <C>               <C>               <C>
Commissions and fees....................................    $1,247,448        $1,067,212        $935,181
Expenses:
  Salaries and employee related expenses................       799,956           697,083         599,681
  Office and general expenses...........................       382,556           337,256         282,843
                                                            ----------        ----------        --------
                                                             1,182,512         1,034,339         882,524
                                                            ----------        ----------        --------
                                                                64,936            32,873          52,657
Other (loss) income -- net..............................       (10,712)            5,397           6,495
                                                            ----------        ----------        --------
Income of consolidated companies before taxes on
  income................................................        54,224            38,270          59,152
Provision for taxes on income...........................        29,752            27,400          29,856
                                                            ----------        ----------        --------
Income of consolidated companies........................        24,472            10,870          29,296
Minority interest applicable to consolidated
  companies.............................................        (6,385)           (5,665)         (4,141)
Equity in earnings of nonconsolidated affiliated
  companies.............................................         1,317             1,196             722
                                                            ----------        ----------        --------
Net income..............................................    $   19,404        $    6,401        $ 25,877
                                                            ==========        ==========        ========
Earnings per Common Share:
  Basic.................................................    $    15.70        $     5.13        $  20.81
  Diluted...............................................    $    14.41        $     4.86        $  18.98
</TABLE>

                See notes to consolidated financial statements.
                                       F-5
<PAGE>   16

          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

             CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
<TABLE>
<CAPTION>

                                                                  PAID-IN
                                                        COMMON   ADDITIONAL   COMPREHENSIVE   RETAINED
                                                        STOCK     CAPITAL        INCOME       EARNINGS
                                                        ------   ----------   -------------   --------
                                                        (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S>                                                     <C>      <C>          <C>             <C>
Balance at December 31, 1997..........................  $1,432    $44,349                     $169,214
  Comprehensive income:
    Net income........................................                           $25,877        25,877
    Other comprehensive loss:
      Translation adjustment..........................                            (2,294)
      Unrealized loss on marketable securities, net of
         reclassification adjustment for gains
         included in net income of $256...............                            (1,496)
                                                                                 -------
    Other comprehensive loss..........................                            (3,790)
                                                                                 -------
  Total comprehensive income..........................                           $22,087
                                                                                 =======
  Cash dividends -- Common Shares -- $4.00 per
    share.............................................                                          (4,895)
  Cash dividends -- Redeemable Preferred
    Stock -- $8.00 per share..........................                                            (244)
  Common Shares acquired -- at cost...................
  Dividends payable in Common Shares pursuant to the
    Senior Management Incentive Plan..................                                             (14)
  Increase in redemption value of Redeemable Preferred
    Stock.............................................                                            (224)
  Restricted stock activity...........................                 81
  Tax benefit from restricted stock...................                  8
  Common Shares issued upon exercise of stock
    options...........................................                  5
  Senior Management Incentive Plan activity...........     56      (5,611)
                                                        ------    -------                     --------
Balance at December 31, 1998..........................  1,488      38,832                      189,714
                                                        ------    -------                     --------

<CAPTION>
                                                           COMMON STOCK                  ACCUMULATED
                                                         HELD IN TREASURY                   OTHER
                                                        ------------------   LOANS TO   COMPREHENSIVE
                                                        SHARES     AMOUNT    OFFICERS       LOSS          TOTAL
                                                        -------   --------   --------   -------------    --------
                                                           (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S>                                                     <C>       <C>        <C>        <C>              <C>
Balance at December 31, 1997..........................  248,860   $(38,730)  $(4,726)     $ (9,233)      $162,306
  Comprehensive income:
    Net income........................................                                                     25,877
    Other comprehensive loss:
      Translation adjustment..........................
      Unrealized loss on marketable securities, net of
         reclassification adjustment for gains
         included in net income of $256...............
    Other comprehensive loss..........................                                      (3,790)        (3,790)
  Total comprehensive income..........................
  Cash dividends -- Common Shares -- $4.00 per
    share.............................................                                                     (4,895)
  Cash dividends -- Redeemable Preferred
    Stock -- $8.00 per share..........................                                                       (244)
  Common Shares acquired -- at cost...................      427       (168)                                  (168)
  Dividends payable in Common Shares pursuant to the
    Senior Management Incentive Plan..................                                                        (14)
  Increase in redemption value of Redeemable Preferred
    Stock.............................................                                                       (224)
  Restricted stock activity...........................      625        (21)                                    60
  Tax benefit from restricted stock...................                                                          8
  Common Shares issued upon exercise of stock
    options...........................................     (200)        23                                     28
  Senior Management Incentive Plan activity...........                                                     (5,555)
                                                        -------   --------   -------      --------       --------
Balance at December 31, 1998..........................  249,712    (38,896)   (4,726)      (13,023)       173,389
                                                        -------   --------   -------      --------       --------
</TABLE>

                See notes to consolidated financial statements.

                                       F-6
<PAGE>   17

          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

     CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY -- (CONTINUED)
                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
<TABLE>
<CAPTION>

                                                                  PAID-IN
                                                        COMMON   ADDITIONAL   COMPREHENSIVE   RETAINED
                                                        STOCK     CAPITAL        INCOME       EARNINGS
                                                        ------   ----------   -------------   --------
                                                        (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S>                                                     <C>      <C>          <C>             <C>
Balance at December 31, 1998..........................  1,488      38,832                      189,714
  Comprehensive income:
    Net income........................................                           $ 6,401         6,401
    Other comprehensive income (loss):
      Translation adjustment..........................                            (3,746)
      Unrealized gain on marketable securities, net of
         reclassification adjustment for gains
         included in net income of $1,980.............                             1,166
                                                                                 -------
    Other comprehensive loss..........................                            (2,580)
                                                                                 -------
  Total comprehensive income..........................                           $ 3,821
                                                                                 =======
  Cash dividends -- Common Shares -- $4.00 per
    share.............................................                                          (4,979)
  Cash dividends -- Redeemable Preferred
    Stock -- $8.00 per share..........................                                            (240)
  Common Shares acquired -- at cost...................
  Dividends payable in cash pursuant to the Senior
    Management Incentive Plan.........................                                             (37)
  Decrease in redemption value of Redeemable Preferred
    Stock.............................................                                             183
  Restricted stock activity...........................               (536)
  Tax benefit from restricted stock...................                 12
  Common Shares issued upon exercise of stock
    options...........................................                230
  Senior Management Incentive Plan activity...........      2       1,225
                                                        ------    -------                     --------
Balance at December 31, 1999..........................  1,490      39,763                      191,042
                                                        ------    -------                     --------

<CAPTION>
                                                           COMMON STOCK                  ACCUMULATED
                                                         HELD IN TREASURY                   OTHER
                                                        ------------------   LOANS TO   COMPREHENSIVE
                                                        SHARES     AMOUNT    OFFICERS       LOSS          TOTAL
                                                        -------   --------   --------   -------------    --------
                                                           (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S>                                                     <C>       <C>        <C>        <C>              <C>
Balance at December 31, 1998..........................  249,712    (38,896)   (4,726)      (13,023)       173,389
  Comprehensive income:
    Net income........................................                                                      6,401
    Other comprehensive income (loss):
      Translation adjustment..........................
      Unrealized gain on marketable securities, net of
         reclassification adjustment for gains
         included in net income of $1,980.............
    Other comprehensive loss..........................                                      (2,580)        (2,580)
  Total comprehensive income..........................
  Cash dividends -- Common Shares -- $4.00 per
    share.............................................                                                     (4,979)
  Cash dividends -- Redeemable Preferred
    Stock -- $8.00 per share..........................                                                       (240)
  Common Shares acquired -- at cost...................   10,043     (3,361)                                (3,361)
  Dividends payable in cash pursuant to the Senior
    Management Incentive Plan.........................                                                        (37)
  Decrease in redemption value of Redeemable Preferred
    Stock.............................................                                                        183
  Restricted stock activity...........................   (9,820)     1,132                                    596
  Tax benefit from restricted stock...................                                                         12
  Common Shares issued upon exercise of stock
    options...........................................   (4,484)       524                                    754
  Senior Management Incentive Plan activity...........                                                      1,227
                                                        -------   --------   -------      --------       --------
Balance at December 31, 1999..........................  245,451    (40,601)   (4,726)      (15,603)       171,365
                                                        -------   --------   -------      --------       --------
</TABLE>

                See notes to consolidated financial statements.

                                       F-7
<PAGE>   18

          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

     CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY -- (CONTINUED)
                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
<TABLE>
<CAPTION>

                                                                  PAID-IN
                                                       COMMON    ADDITIONAL   COMPREHENSIVE   RETAINED
                                                        STOCK     CAPITAL        INCOME       EARNINGS
                                                       -------   ----------   -------------   --------
                                                       (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S>                                                    <C>       <C>          <C>             <C>
Balance at December 31, 1999.........................    1,490     39,763                      191,042
  Comprehensive income:
    Net income.......................................                           $ 19,404        19,404
    Other comprehensive loss:
      Translation adjustment.........................                            (11,926)
      Unrealized gain on marketable securities, net
         of reclassification adjustment for gains
         included in net income of $860..............                             (7,195)
                                                                                --------
    Other comprehensive loss.........................                            (19,121)
                                                                                --------
  Total comprehensive income.........................                           $    283
                                                                                ========
  Cash dividends -- Common Shares -- $4.00 per
    share............................................                                           (4,983)
  Cash dividends -- Redeemable Preferred
    Stock -- $8.00 per share.........................                                             (240)
  Common Shares acquired -- at cost..................
  Decrease in redemption value of Redeemable
    Preferred Stock..................................                                              155
  Restricted stock activity..........................                 856
  Tax benefit from restricted stock..................                  11
  Common Shares issued upon exercise of stock
    options..........................................                 605
  Common Shares issued in accordance with Employee
    Stock Ownership Plan.............................
  Senior Management Incentive Plan activity..........        1      3,293
  Reduction of par value from $1.00 per share to
    $0.01 per share..................................   (1,476)     1,476
                                                       -------    -------                     --------
Balance at December 31, 2000.........................  $    15    $46,004                     $205,378
                                                       =======    =======                     ========

<CAPTION>
                                                          COMMON STOCK                  ACCUMULATED
                                                        HELD IN TREASURY                   OTHER
                                                       ------------------   LOANS TO   COMPREHENSIVE
                                                       SHARES     AMOUNT    OFFICERS       LOSS          TOTAL
                                                       -------   --------   --------   -------------    --------
                                                          (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S>                                                    <C>       <C>        <C>        <C>              <C>
Balance at December 31, 1999.........................  245,451    (40,601)   (4,726)      (15,603)       171,365
  Comprehensive income:
    Net income.......................................                                                     19,404
    Other comprehensive loss:
      Translation adjustment.........................
      Unrealized gain on marketable securities, net
         of reclassification adjustment for gains
         included in net income of $860..............
    Other comprehensive loss.........................                                     (19,121)       (19,121)
  Total comprehensive income.........................
  Cash dividends -- Common Shares -- $4.00 per
    share............................................                                                     (4,983)
  Cash dividends -- Redeemable Preferred
    Stock -- $8.00 per share.........................                                                       (240)
  Common Shares acquired -- at cost..................    6,040     (2,642)                                (2,642)
  Decrease in redemption value of Redeemable
    Preferred Stock..................................                                                        155
  Restricted stock activity..........................   (3,496)       423                                  1,279
  Tax benefit from restricted stock..................                                                         11
  Common Shares issued upon exercise of stock
    options..........................................   (6,986)       874                                  1,479
  Common Shares issued in accordance with Employee
    Stock Ownership Plan.............................   (3,323)     1,934                                  1,934
  Senior Management Incentive Plan activity..........                                                      3,294
  Reduction of par value from $1.00 per share to
    $0.01 per share..................................
                                                       -------   --------   -------      --------       --------
Balance at December 31, 2000.........................  237,686   $(40,012)  $(4,726)     $(34,724)      $171,935
                                                       =======   ========   =======      ========       ========
</TABLE>

                See notes to consolidated financial statements.

                                       F-8
<PAGE>   19

          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31
                                                              -----------------------------------
                                                                2000         1999         1998
                                                              ---------    ---------    ---------
                                                                (IN THOUSANDS, EXCEPT SHARE AND
                                                                        PER SHARE DATA)
<S>                                                           <C>          <C>          <C>
OPERATING ACTIVITIES
Net income..................................................  $  19,404    $   6,401    $  25,877
Adjustments to reconcile net income to net cash provided by
  operating activities, net of acquisitions:
Depreciation and amortization of fixed assets...............     40,179       33,532       27,992
Amortization of intangibles.................................     12,108       11,405        7,957
Deferred compensation.......................................     12,922        6,844       12,366
Equity in earnings of nonconsolidated affiliated companies,
  net of dividends received of $599 in 2000, $645 in 1999,
  and $856 in 1998..........................................       (718)        (551)         134
Gains from the sale of marketable securities................       (886)      (1,980)        (256)
Loss on the write-down of investment securities.............     11,941           --           --
Gains from the sale of a nonconsolidated affiliated
  company...................................................         --           --         (336)
Minority interest applicable to consolidated companies......      6,385        5,665        4,141
Amortization of restricted stock expense....................        975          586           84
Deferred income taxes.......................................     (8,705)      (3,211)      (4,793)
Changes in operating assets and liabilities:
  Increase in accounts receivable...........................   (113,155)    (169,498)    (106,600)
  (Increase) decrease in expenditures billable to clients...    (47,017)      11,059       (9,644)
  Increase in other current assets..........................    (21,290)     (21,169)      (9,590)
  Increase in other assets..................................    (22,869)     (13,470)      (7,264)
  Increase in accounts payable..............................    142,526      320,910      110,878
  Increase (decrease) in accrued expenses and other.........     38,234       33,601       (1,721)
  Increase (decrease) in income taxes payable...............     12,263       (5,761)       7,656
  Increase in other liabilities.............................     24,383        1,264           35
                                                              ---------    ---------    ---------
Net cash provided by operating activities...................    106,680      215,627       56,916
INVESTING ACTIVITIES
Purchases of fixed assets...................................    (69,897)     (51,255)     (47,068)
Trust fund deposits.........................................     (5,621)      (3,660)      (5,306)
Increase (decrease) in investments in and advances to
  non-consolidated affiliated companies.....................      2,481         (705)        (840)
Purchases of marketable securities..........................     (2,741)      (7,840)     (41,088)
Proceeds from the sales of marketable securities............      8,627       67,236       26,684
Purchases of investment securities..........................    (15,573)      (7,123)          --
Increase in intangibles, primarily goodwill.................    (47,103)     (52,021)     (24,839)
                                                              ---------    ---------    ---------
Net cash used in investing activities.......................   (129,827)     (55,368)     (92,457)
FINANCING ACTIVITIES
Net (repayments of) proceeds from short-term borrowings.....    (12,311)       1,941       45,694
Proceeds from term loan.....................................     50,000           --           --
Common Shares acquired for treasury.........................     (2,642)      (3,361)        (168)
Preferred Shares redeemed to treasury.......................         --           --         (651)
Cash dividends paid on Common Shares........................     (4,983)      (5,016)      (4,895)
Cash dividends paid on Redeemable Preferred Stock...........       (240)        (240)        (244)
Net proceeds from issuance (payments for repurchase) of
  Restricted Stock..........................................        314           22          (18)
Proceeds from exercise of stock options.....................      1,479          754           28
Borrowings under life insurance policies....................        614          536          510
                                                              ---------    ---------    ---------
Net cash provided by (used in) financing activities.........     32,231       (5,364)      40,256
Effect of exchange rate changes on cash.....................     (5,890)      (2,155)      (1,452)
                                                              ---------    ---------    ---------
Increase in cash and cash equivalents.......................      3,194      152,740        3,263
Cash and cash equivalents at beginning of year..............    306,556      153,816      150,553
                                                              ---------    ---------    ---------
Cash and cash equivalents at end of year....................  $ 309,750    $ 306,556    $ 153,816
                                                              =========    =========    =========
</TABLE>

                See notes to consolidated financial statements.
                                       F-9
<PAGE>   20

          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

A.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of the Company
and its majority owned subsidiaries. Material intercompany balances and
transactions have been eliminated in consolidation.

USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements. Estimates also affect the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those estimates.

COMMISSIONS AND FEES AND ACCOUNTS RECEIVABLE

     Income derived from advertising placed with media is generally recognized
based upon the publication or broadcast dates. Income resulting from
expenditures billable to clients is generally recognized when billed. Labor
based income is recognized in the month of service. Payroll costs are expensed
as incurred. Accounts receivable include both the income recognized as well as
the actual media and production costs which are paid for by the Company and
rebilled to clients at the Company's cost.

CASH EQUIVALENTS

     The Company considers all highly liquid investments with a maturity of
three months or less from the purchase date to be cash equivalents. The carrying
amount of cash equivalents approximates fair value because of the short
maturities of those instruments.

INVESTMENTS IN AND ADVANCES TO NONCONSOLIDATED AFFILIATED COMPANIES

     The Company generally carries its investments in nonconsolidated affiliated
companies on the equity method. Certain investments which are not material in
the aggregate are carried at cost.

FIXED ASSETS

     Depreciation of furniture, fixtures and equipment is provided for over
their estimated useful lives ranging from three to ten years and has been
computed principally by the straight-line method. Amortization of leaseholds and
leasehold improvements is provided for principally over the terms of the related
leases, which are not in excess of the lives of the assets.

FOREIGN CURRENCY TRANSLATION

     Primarily all balance sheet accounts of the Company's international
operations are translated at the exchange rate in effect at each year end and
statement of income accounts are translated at the average exchange rates
prevailing during the year. Resulting translation adjustments are recorded as a
component of other comprehensive income (loss). Foreign currency transaction
gains and losses are reported in income. During 2000, 1999 and 1998, foreign
currency transaction gains and losses were not material.

INTANGIBLES

     The excess of purchase price over the underlying net equity of certain
consolidated subsidiaries and nonconsolidated affiliated companies ("goodwill")
is amortized by the straight-line method over periods of up to twenty years. The
amounts of intangibles, net of accumulated amortization, associated with
consolidated
                                       F-10
<PAGE>   21
          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

subsidiaries and nonconsolidated investments (included in Investments in and
Advances to Nonconsolidated Affiliated Companies) were $192,110 and $2,339 in
2000, and $157,115 and $3,001 in 1999, respectively.

     The Company periodically assesses the carrying value of its goodwill and
the respective periods of amortization. As part of the evaluation, the Company
considers a number of factors including actual operating results, the impact of
gains and losses of major local clients, the impact of any loss of key local
management staff and any changes in general economic conditions. The Company
quantifies the recoverability of goodwill based on each agency's estimated
future non-discounted cash flows over the applicable remaining amortization
periods. This requires management to make certain specific assumptions with
respect to future revenue and expense levels. When multiple investments are made
in a single company, a weighted average amortization period is used. Charges to
reflect permanent impairment are recorded to the extent that the unamortized
carrying value of the goodwill exceeds the future cumulative discounted cash
flows.

INCOME TAXES

     The Company uses the liability method of accounting for income taxes. Under
this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using enacted tax rates and laws that will be in effect when
the differences are expected to reverse. The Company provides appropriate
foreign withholding taxes on unremitted earnings of consolidated and
nonconsolidated foreign companies.

MARKETABLE SECURITIES

     The Company has designated all its marketable securities as
available-for-sale. Available-for-sale securities are carried at fair value,
based on publicly quoted market prices, with unrealized gains and losses
reported as other comprehensive income (loss).

INVESTMENT SECURITIES

     Investment securities are primarily investments in private companies and
are included in Other Assets. Because quoted market prices are not available,
such investments are recorded at cost net of impairment write-downs, if
necessary.

STOCK-BASED COMPENSATION

     As permitted by Financial Accounting Standards Statement No. 123,
Accounting for Stock-Based Compensation, the Company accounts for stock-based
awards in accordance with APB Opinion No. 25, Accounting For Stock Issued to
Employees. No compensation expense is recorded for options granted at fair
market value at the date of grant. The excess of the fair market value of
Restricted Stock over the cash consideration received is amortized as
compensation over the period of restriction. The future obligation to issue
stock, pursuant to the Company's Senior Management Incentive Plan, is included
in Paid-in Additional Capital and results in periodic charges to compensation.

EARNINGS PER COMMON SHARE

     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 includes adjustments for the effect of the assumed exercise of dilutive
stock options, the shares issuable pursuant to the Company's Senior Management
Incentive Plan (see Note M(1)) and the assumed conversion of the 8 1/2%
Convertible Subordinated Debentures. For the purpose of computing basic earnings
per common share, the Company's net income is adjusted for dividends on the
Preferred Stock and by the increase or decrease in redemption value of

                                       F-11
<PAGE>   22
          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

the Preferred Stock during the relevant 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.

B.  INTERNATIONAL OPERATIONS

     The following financial data is applicable to the Company's consolidated
international subsidiaries:

<TABLE>
<CAPTION>
                                                       2000        1999        1998
                                                     --------    --------    --------
<S>                                                  <C>         <C>         <C>
Current assets.....................................  $736,295    $685,512    $610,767
Current liabilities................................   776,271     718,620     621,164
Other assets -- net of other liabilities...........   252,810     186,271     161,619
Net income (loss)..................................    16,774     (14,665)        745
</TABLE>

     Consolidated retained earnings at December 31, 2000 includes equity in
unremitted earnings of nonconsolidated international companies of approximately
$12,137.

C.  OTHER (LOSS) INCOME -- NET

     Details of other (loss) income -- net are:

<TABLE>
<CAPTION>
                                                      2000         1999         1998
                                                    ---------    ---------    --------
<S>                                                 <C>          <C>          <C>
Interest income...................................  $  14,526    $  14,995    $ 16,113
Interest expense..................................    (15,100)     (12,479)    (11,506)
Write-down of investments.........................    (11,941)          --          --
Gains from the sale of marketable securities......        886        1,980         592
Dividends from affiliates.........................          6           86          93
Other income -- net...............................        911          815       1,203
                                                    ---------    ---------    --------
                                                    $ (10,712)   $   5,397    $  6,495
                                                    =========    =========    ========
</TABLE>

D.  FIXED ASSETS

     Components of fixed assets -- at cost are:

<TABLE>
<CAPTION>
                                                                2000         1999
                                                              ---------    ---------
<S>                                                           <C>          <C>
Furniture, fixtures and equipment...........................  $ 221,697    $ 205,451
Leaseholds and leasehold improvements.......................     95,977       79,858
                                                              ---------    ---------
                                                                317,674      285,309
Accumulated depreciation and amortization...................   (169,939)    (158,370)
                                                              ---------    ---------
                                                              $ 147,735    $ 126,939
                                                              =========    =========
</TABLE>

E.  ACQUISITIONS AND RELATED COSTS

     For the years ended December 31, 2000, 1999 and 1998, the Company completed
a number of acquisitions which enhanced its core advertising agency capabilities
in selected markets and expanded its presence in specialized communications
areas. Furthermore, the Company increased its stakes in majority-owned
subsidiaries in certain markets. All acquisitions and increased investments were
accounted for under the purchase method, and goodwill arising from these
transactions is being amortized in accordance with the Company's policy. The
purchase price and corresponding goodwill in connection with a number of the

                                       F-12
<PAGE>   23
          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

acquisitions may be increased by contingent payouts to certain of the sellers
depending on the future earnings of the acquired entities.

     In 2000, the aggregate purchase price for acquisitions and increased
investments was $85,082. In July 2000, the Company completed the acquisition of
Callegari Berville ("CB"), a French company for $43,000, in cash, in exchange
for a 100% ownership. The Company also recorded a liability for acquisition
related guaranteed deferred payments of $22,000. CB's net assets included
$13,000 of cash which was included in the consolidated balance sheet at December
31, 2000. Pro-forma results of operations for 2000, would not be materially
different from the reported results.

     In 1999, the aggregate purchase price for acquisitions and increased
investments was $53,784. None of the acquisitions were significant on an
individual basis and the results of the operations from these acquired entities
for the period were not material. Pro-forma results of operations for 1999 would
not be materially different from the reported amounts.

     In late December 1998, pursuant to a cash tender offer, the common and
preferred shareholders of TMBG Media Co. ("TMBG"), a United Kingdom company,
agreed to be acquired by the Company. In January 1999, the Company distributed
cash in the amount of $47,006 in exchange for 100% of TMBG's voting common stock
and 90% of its preferred stock. The acquisition was funded out of operating
cash. Results of operations of TMBG for the period December 23, 1998 to December
31, 1998 were not material and thus were not included in the Consolidated
Statement of Income for the year ended December 31, 1998. TMBG's net assets
including $14,158 of cash as well as the liability related to the tendered
shares of TMBG were included in the consolidated balance sheet at December 31,
1998. Pro-forma results of operations for 1998 would not be materially different
from the reported amount.

F.  MARKETABLE SECURITIES AND OTHER INVESTMENT SECURITIES

     The marketable securities and other investment securities, by type of
investment, held by the Company at December 31, 2000 and 1999 are as follows:

<TABLE>
<CAPTION>
                                                               2000       1999
                                                              -------    -------
<S>                                                           <C>        <C>
Marketable securities:
  Maturities of one year or less:
     Money market funds.....................................  $ 2,836    $ 1,355
     Equity securities......................................      170      4,226
                                                              -------    -------
                                                                3,006      5,581
                                                              -------    -------
  Maturities greater than one year:
     Corporate bonds........................................   13,797     22,429
                                                              -------    -------
Total marketable securities.................................  $16,803    $28,010
                                                              =======    =======
Investment securities, primarily private equity
  securities................................................  $13,629    $ 9,985
                                                              =======    =======
</TABLE>

     At December 31, 2000, the Company had unrealized gains of $3,616 and
unrealized losses of $10,952 related primarily to investments in both U.S. and
non-U.S. corporate bonds; all such bonds are denominated in U.S. dollars. At
December 31, 1999, the Company had unrealized gains of $2,790 and unrealized
losses of $2,931 related primarily to investments in both U.S. and non-U.S.
corporate bonds; all such bonds are denominated in U.S. dollars. At December 31,
2000 and 1999, the Company's investments in marketable securities, classified as
long-term, had an average maturity of approximately 5.29 and 5.43 years,
respectively.

                                       F-13
<PAGE>   24
          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

G.  CREDIT ARRANGEMENTS AND LONG-TERM DEBT

     The Company maintains committed lines of credit of $59,000 with various
domestic banks and may draw against the lines on unsecured demand notes at rates
below the applicable bank's prime interest rate. These lines of credit, which
are renewable annually, were partially utilized during both 2000 and 1999 by
selected foreign subsidiaries in the amount of $19,000 and $20,500 at the end of
each respective year. The Company had $28,016 and $48,000 outstanding under
other uncommitted lines of credit at December 31, 2000 and 1999, respectively.
The weighted average interest rate for the borrowings under the uncommitted
lines of credit was 5.96% and 5.91% at December 31, 2000 and 1999, respectively.
The carrying amount of the debt outstanding under both the committed and
uncommitted lines of credit approximates fair value because of the short
maturities of the underlying notes. Occasionally, the Company enters into
foreign currency contracts for known cash flows related to the repatriation of
earnings from its international subsidiaries. The terms of each foreign currency
contract entered into in 2000 and 1999 were for less than three months. At
December 31, 2000, there were no foreign currency contracts open.

     The Company has two outstanding loans from the Prudential Insurance Company
of America ("Prudential"). The first loan of $75,000 from December 1997 has a
fixed interest rate of 6.94% with the principal repayable in equal installments
of $25,000 in December 2003, 2004 and 2005. The second loan of $50,000 from
November 2000 has a fixed interest rate of 8.17% and is repayable in two equal
installments of $25,000 in November 2006 and 2007. The fair value of the
Prudential debt is estimated to be $126,600 and $72,510 at December 31, 2000 and
1999, respectively. This estimate was determined using a discounted cash flow
analysis using current interest rates for debt having similar terms and
remaining maturities.

     The terms of the committed lines of credit and the loan agreements require,
inter alia, that the Company meet certain capital and cash flow requirements and
limit its incurrence of additional indebtedness to certain specified amounts. At
December 31, 2000 and 1999, the Company was in compliance with all of these
covenants.

     The remaining portion of long-term debt consists of 8 1/2% Convertible
Subordinated Debentures, due December 31, 2003, which are currently convertible
into 8.44 shares of Common Stock and an equal number of shares of Limited
Duration Class B Common Stock ("Class B Common Stock"), subject to certain
adjustments, for each $1 principal amount of such debentures. The debentures
were issued in exchange for cash and a $3,000 9% promissory note from the
Chairman and Chief Executive Officer of the Company, payable on December 31,
2004 (included in Other Assets at December 31, 2000 and 1999). During each of
the years 2000, 1999 and 1998, the Company paid to the officer interest of $257
pursuant to the terms of the debentures and the officer paid to the Company
interest of $270 pursuant to the terms of the 9% promissory note.

     Long-term debt at December 31, 2000 and 1999 is as follows:

<TABLE>
<CAPTION>
                                                                2000       1999
                                                              --------    -------
<S>                                                           <C>         <C>
Term loans..................................................  $125,000    $75,000
Convertible debentures......................................     3,025      3,025
                                                              --------    -------
Long-term debt..............................................  $128,025    $78,025
                                                              ========    =======
</TABLE>

                                       F-14
<PAGE>   25
          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

     The scheduled repayment of long-term debt is as follows:

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31                                       AMOUNT
------------------------                                      --------
<S>                                                           <C>
2003........................................................  $ 28,025
2004........................................................    25,000
2005........................................................    25,000
2006........................................................    25,000
2007........................................................    25,000
                                                              --------
                                                              $128,025
                                                              ========
</TABLE>

     During 2000 and 1999, the Company borrowed against the cash surrender value
of the life insurance policies that it owns on the life of its Chairman and
Chief Executive Officer. The amounts borrowed at December 31, 2000 and 1999 are
$21,825 and $19,965, respectively, with an interest rate of 7.85% and 7.30%,
respectively, and are carried as a reduction of the related cash surrender value
that is included in Other Assets. Of the amounts borrowed in 2000 and 1999, the
Company received $614 and $536 in cash, respectively, and $1,245 was used in
each year to pay premiums on the underlying life insurance policies. For the
years 2000, 1999 and 1998, the Company made interest payments of $15,115,
$12,502 and $11,673, respectively.

H.  REDEEMABLE PREFERRED STOCK

     As of December 31, 2000 and 1999, the Company had outstanding 20,000 shares
of Series I Preferred Stock, and 5,000 shares each of Series II and Series III
Preferred Stock. The holder of the Series I, Series II and Series III Preferred
Stock is the Chairman and Chief Executive Office of the Company. The terms of
each class of Preferred Stock, including the basic economic terms relating
thereto, are essentially the same. The redemption date for the Series I, Series
II and Series III Preferred Stock is fixed at April 7, 2004, unless redeemed
earlier under circumstances described below. The terms of the Series I, Series
II and Series III Preferred Stock also give the holder, his estate or legal
representative, as the case may be, the option to require the Company to redeem
his Preferred Stock for a period of 12 months following his (i) death, (ii)
permanent disability or permanent mental disability, (iii) termination of
full-time employment for good reason or (iv) termination of full-time employment
by the Company without cause.

     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 Class
B Common Stock to the extent such dividends exceed the per share preferential
dividend. In connection with his ownership of the Series I, Series II and Series
III Preferred Stock, the holder issued to the Company full recourse promissory
notes totaling $763 (included in Other Assets at December 31, 2000 and 1999)
with a maturity date of April 2004. The interest paid by the holder to the
Company in 2000, 1999 and 1998 pursuant to the terms of these notes was
approximately $69 in each year.

     In accordance with the terms of the respective Certificates of Designation
and Terms of each Series of Preferred Stock ("Certificates"), the Board of
Directors determined the change in redemption value would not reflect a 1994
write-off of goodwill but rather reflect amortization as if the Company had
continued to write-off goodwill in accordance with historical amortization
schedules.

     Following the distribution of Class B Common Stock, the holder of the
Preferred Stock became entitled to eleven votes per share on all matters
submitted to the vote of stockholders. The holder of the Series I Preferred
Stock is entitled, as well, to vote as a single class to elect or remove
one-quarter of the Board of

                                       F-15
<PAGE>   26
          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Directors, to approve the merger or consolidation of the Company or the sale by
it of all or substantially all of its assets, and to approve the authorization
or issuance of any other class of Preferred Stock having equivalent voting
rights.

     In the event of the liquidation of the Company, the holder of the Preferred
Stock is entitled to a preferential liquidation distribution of $1.00 per share
in addition to all accrued and unpaid preferential dividends.

     The total carrying value of the Preferred Stock (applicable to those shares
outstanding at each respective year-end) decreased by $155 and $183 in 2000 and
1999, respectively. The change in carrying value represents the change in
aggregate redemption value during those periods. This change is referred to as
"Additional Capital Applicable to Redeemable Preferred Stock" in the respective
Certificates.

I.  COMMON STOCK

     The Company has authorized and outstanding two classes of common stock,
Common Stock and Class B Common Stock. In 2000, the Company decreased the par
value of each class of Common Stock to $0.01 par value per share. In 1999, each
class of Common Stock had a $1.00 par value per share. The Class B Common Stock
has the same dividend and liquidation rights as the Common Stock, and a holder
of each share of Class B Common Stock is entitled to ten votes on all matters
submitted to stockholders. The shares of Class B Common Stock are restricted as
to transferability and upon transfer, except to specified limited classes of
transferees, will convert into shares of Common Stock which have one vote per
share. The Class B Common Stock will automatically convert to Common Stock on
April 3, 2006.

J.  STOCK INCENTIVE PLAN

     The Company's 1994 Stock Incentive Plan ("Stock Incentive Plan") is the
Company's active restricted stock and stock option plan. Under the Stock
Incentive Plan, awards in the form of incentive or nonqualified stock options or
restricted stock are available to be granted through June 2003 to officers and
other key employees. A maximum of 500,000 shares of Common Stock is available
for grant under the Stock Incentive Plan. Stock options cannot be granted at a
price less than 100% of the fair market value of the shares on the date of
grant. A committee of the Board of Directors ("Committee") determines the terms
and conditions under which the awards may be granted, vest or are exercisable.
Options must be exercised within ten years of the date of grant. Shares of
restricted stock may be sold to participants at a purchase price determined by
the Committee (which may be less than fair market value per share).

     The Stock Incentive Plan replaced the Restricted Stock Plan, the Executive
Growth Plan, and the Nonqualified Stock Option Plan (collectively, the "Prior
Plans"), and any shares available for granting of awards under the Prior Plans
are no longer available for such awards. Options granted pursuant to the Prior
Plans remain outstanding and in full force, and shares reserved thereunder
remain so for such purposes. Under the Prior Plans, nonqualified and incentive
stock options were granted to employees eligible to receive options at prices
not less than 100% of the fair market value of the shares on the date of grant.
Options must be exercised within ten years of grant and for only specified
limited periods beyond termination of employment.

                                       F-16
<PAGE>   27
          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

     Transactions involving nonqualified options under the Stock Incentive and
Prior Plans were:

<TABLE>
<CAPTION>
                                                             NUMBER      WEIGHTED AVERAGE
                                                            OF SHARES     EXERCISE PRICE
                                                            ---------    ----------------
<S>                                                         <C>          <C>
Outstanding, December 31, 1997............................   142,424           $183
Granted...................................................    45,400            333
Exercised.................................................      (200)           141
Forfeited.................................................    (8,675)           209
                                                             -------
Outstanding, December 31, 1998............................   178,949            220
Granted...................................................    18,870            318
Exercised.................................................    (4,484)           168
Forfeited.................................................   (14,449)           221
                                                             -------
Outstanding, December 31, 1999............................   178,886            231
GRANTED...................................................    24,189            433
EXERCISED.................................................    (7,052)           210
FORFEITED.................................................    (5,899)           297
                                                             -------
OUTSTANDING, DECEMBER 31, 2000............................   190,124            255
                                                             =======
</TABLE>

     There were 108,164, 93,273, and 76,750 options exercisable and 265,123,
54,135, and 68,860 options available at December 31, 2000, 1999 and 1998,
respectively. The weighted average fair value of the options granted during
2000, 1999 and 1998 was $235, $135 and $108, respectively.

     The remaining weighted average contractual life and weighted average
exercise price of options outstanding as of December 31, 2000 and the weighted
average exercise price for options exercisable at December 31, 2000 are as
follows:

<TABLE>
<CAPTION>
                           OPTIONS OUTSTANDING                     OPTIONS EXERCISABLE
             -----------------------------------------------   ----------------------------
 RANGE OF     NUMBER OF    WEIGHTED AVERAGE      WEIGHTED       NUMBER OF       WEIGHTED
 EXERCISE      SHARES         REMAINING          AVERAGE         SHARES         AVERAGE
  PRICES     OUTSTANDING   CONTRACTUAL LIFE   EXERCISE PRICE   EXERCISABLE   EXERCISE PRICE
 --------    -----------   ----------------   --------------   -----------   --------------
<S>          <C>           <C>                <C>              <C>           <C>
$149-168        72,249        3.4 years            $150           53,546          $150
 187-196         1,616        5.0 years             194              618           192
   235          32,200        5.3 years             235           20,000           235
 259-282         4,450        6.3 years             260            4,000           259
 312-340        56,088        5.8 years             329           30,000           333
 403-638        23,521        9.3 years             436                0             0
               -------                                           -------
  Total        190,124                                           108,164
               =======                                           =======
</TABLE>

     In 2000, 4,821 shares of Restricted Stock were issued at a price of $1.00
per share. In 1999, 9,820 shares of Restricted Stock were issued at a price of
$1.00 per share. In 1998, 1,375 shares of Restricted Stock were issued at a
price of $1.00 per share. All stock is issued with restrictions as to
transferability with various expiration dates between two and five years and are
subject to forfeiture. In 2000, 250 restricted shares lapsed and 1,075 shares
were forfeited and held in Treasury. In 1999, 1,750 restricted shares lapsed
with no forfeitures.

     Compensation to employees under the Stock Incentive and Prior Plans of
$4,342 in 2000, $3,447 in 1999 and $671 in 1998, representing the excess of the
market value of restricted stock over any cash consideration

                                       F-17
<PAGE>   28
          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

received, is carried as a reduction of Paid-In Additional Capital and is charged
to income ($1,275 in 2000, $586 in 1999 and $166 in 1998) over the related
required period of service of the respective employees.

PRO FORMA INFORMATION

     Pro forma information regarding net income and earnings per common share
have been determined as if the Company had accounted for its employee stock
options under the fair value method. The approximate fair value for these
options was estimated at the date of grant using a Black-Scholes option
valuation model with the following weighted average assumptions for the years
2000, 1999 and 1998, respectively; risk-free interest rates of 6.60%, 5.69% and
5.53%; dividend yields of 0.93%, 1.26% and 1.18%; volatility factors of the
expected market price of the Company's Common Stock of .39, .27 and .19; and a
weighted-average expected life for the options of 10.0, 10.0, and 9.3 years.

     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restriction
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options. For purposes of
pro forma disclosures, the estimated fair value of the options is amortized to
expense over the options' vesting period. The Company's pro forma information
follows:

<TABLE>
<CAPTION>
                                                          2000       1999      1998
                                                         -------    ------    -------
<S>                                                      <C>        <C>       <C>
Pro forma net income...................................  $18,335    $5,613    $24,450
Pro forma earnings per common share:
  Basic................................................  $ 14.87    $ 4.52    $ 19.67
  Diluted..............................................  $ 13.66    $ 4.30    $ 17.95
</TABLE>

                                       F-18
<PAGE>   29
          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

K.  COMPUTATION OF EARNINGS PER COMMON SHARE

     The following table shows the amounts used in computing earnings per common
share and the effect on income and the weighted average number of shares of
dilutive potential common stock.

<TABLE>
<CAPTION>
                                                             FOR THE YEAR ENDED DECEMBER 31
                                                         --------------------------------------
                                                            2000          1999          1998
                                                         ----------    ----------    ----------
<S>                                                      <C>           <C>           <C>
BASIC EARNINGS PER COMMON SHARE
WEIGHTED-AVERAGE SHARES................................   1,230,696     1,237,007     1,220,767
                                                         ----------    ----------    ----------
Net Income.............................................  $   19,404    $    6,401    $   25,877
Effect of dividend requirements and the change in
  redemption value of redeemable preferred stock.......         (85)          (57)         (468)
                                                         ----------    ----------    ----------
NET EARNINGS USED IN COMPUTATION.......................  $   19,319    $    6,344    $   25,409
                                                         ----------    ----------    ----------
PER SHARE AMOUNT.......................................  $    15.70    $     5.13    $    20.81
                                                         ==========    ==========    ==========

DILUTED EARNINGS PER COMMON SHARE
Weighted-average shares used in Basic..................   1,230,696     1,237,007     1,220,767
Net effect of dilutive stock options and stock
  incentive plans(1)...................................      68,155        45,244        74,121
Assumed conversion of 8.5% Convertible Subordinated
  Debentures...........................................      51,128        51,128        51,040
                                                         ----------    ----------    ----------
ADJUSTED WEIGHTED-AVERAGE SHARES.......................   1,349,979     1,333,379     1,345,928
                                                         ----------    ----------    ----------
Net Income used in Basic...............................  $   19,319    $    6,344    $   25,409
8.5% Convertible Subordinated Debentures interest net
  of income tax effect.................................         140           137           137
                                                         ----------    ----------    ----------
NET EARNINGS USED IN COMPUTATION.......................  $   19,459    $    6,481    $   25,546
                                                         ----------    ----------    ----------
PER SHARE AMOUNT.......................................  $    14.41    $     4.86    $    18.98
                                                         ==========    ==========    ==========
</TABLE>

---------------
(1) Includes 15,501, 11,954, and 31,481 shares for 2000, 1999 and 1998,
    respectively, expected to be issued pursuant to the terms of the Senior
    Management Incentive Plan.

                                       F-19
<PAGE>   30
          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

L.  INCOME TAXES

     Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and amounts used for income tax purposes. At December 31, 2000 and
1999, the Company had deferred tax assets and deferred tax liabilities as
follows:

<TABLE>
<CAPTION>
                                                              DEFERRED TAX ASSETS
                                                                 (LIABILITIES)
                                                              --------------------
                                                                2000        1999
                                                              --------    --------
<S>                                                           <C>         <C>
Deferred compensation.......................................  $ 30,070    $ 23,691
Accrued expenses............................................     5,436       3,928
Safe harbor lease and depreciation..........................       490       2,041
Foreign net operating losses................................    26,445      24,857
Tax on unremitted foreign earnings and other................       413      (1,956)
                                                              --------    --------
                                                                62,854      52,561
Valuation allowance.........................................   (19,503)    (17,915)
                                                              --------    --------
Net deferred tax assets.....................................  $ 43,351    $ 34,646
                                                              ========    ========
Included in:
  Other current assets......................................  $  9,096    $  9,520
  Other assets..............................................    34,255      25,126
                                                              --------    --------
                                                              $ 43,351    $ 34,646
                                                              ========    ========
</TABLE>

     The components of income of consolidated companies before taxes on income
are as follows:

<TABLE>
<CAPTION>
                                                         2000       1999       1998
                                                        -------    -------    -------
<S>                                                     <C>        <C>        <C>
Domestic..............................................  $13,645    $33,143    $44,600
Foreign...............................................   40,579      5,127     14,552
                                                        -------    -------    -------
                                                        $54,224    $38,270    $59,152
                                                        =======    =======    =======
</TABLE>

     Provisions (benefits) for Federal, foreign, state and local income taxes
consisted of the following:

<TABLE>
<CAPTION>
                                2000                   1999                   1998
                         -------------------    -------------------    -------------------
                         CURRENT    DEFERRED    CURRENT    DEFERRED    CURRENT    DEFERRED
                         -------    --------    -------    --------    -------    --------
<S>                      <C>        <C>         <C>        <C>         <C>        <C>
Federal................  $15,694    $(9,353)    $11,698    $(1,052)    $11,382    $ 1,526
Foreign................   16,979        953      13,476     (2,048)     16,010     (6,886)
State and local........    5,784       (305)      5,437       (111)      7,257        567
                         -------    -------     -------    -------     -------    -------
                         $38,457    $(8,705)    $30,611    $(3,211)    $34,649    $(4,793)
                         =======    =======     =======    =======     =======    =======
</TABLE>

     The effective tax rate varied from the statutory Federal income tax rate as
follows:

<TABLE>
<CAPTION>
                                                              2000    1999    1998
                                                              ----    ----    ----
<S>                                                           <C>     <C>     <C>
Statutory Federal tax rate..................................  35.0%   35.0%   35.0%
State and local income taxes, net of Federal income tax
  benefits..................................................   6.6     9.0     8.6
Difference in foreign tax rates inclusive of not-tax
  benefited net operation losses............................  11.4    27.3     6.8
Withholding tax on unremitted foreign earnings..............   0.1     0.1     0.1
Other -- net................................................   1.8     0.2      --
                                                              ----    ----    ----
                                                              54.9%   71.6%   50.5%
                                                              ====    ====    ====
</TABLE>

                                       F-20
<PAGE>   31
          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

     During the years 2000, 1999 and 1998, the Company made income tax payments
of $29,141 $37,026, and $31,104, respectively.

     The tax benefit resulting from the difference between compensation expense
deducted for tax purposes and compensation expense charged to income for
restricted stock and nonqualified stock options is recorded as an increase to
Paid-in Additional Capital.

     At December 31, 2000, the Company had cumulative net operating losses
attributable to foreign subsidiaries of approximately $89,600. The duration over
which the tax benefits attributable to these losses may be realized varies on a
country by country basis, but in no instance will any of the benefits expire
before 2004. Since a portion of the benefits may fail to be realized, a
valuation allowance has been reflected.

M.  RETIREMENT PLANS, DEFERRED COMPENSATION, EXECUTIVE OFFICER LOANS, LEASES AND
    CONTINGENCIES

     1.  The Company's Profit Sharing Plan is available to eligible employees of
Grey and qualifying subsidiaries meeting certain eligibility requirements. This
plan provides for contributions by the Company at the discretion of the Board of
Directors, subject to maximum limitations, as well as employee pre-tax
contributions. The Company also maintains a noncontributory Employee Stock
Ownership Plan covering eligible employees of the Company and qualifying
subsidiaries, under which the Company may make contributions in stock or cash to
an Employee Stock Ownership Trust (ESOT) in amounts each year as determined at
the discretion of the Board of Directors. The Company made both cash and stock
contributions to the ESOT in 2000, and only cash contributions in 1999 and 1998.
The Company and the ESOT have certain rights to purchase shares from
participants whose employment has terminated. In addition to the two plans noted
above, a number of subsidiaries maintain separate profit sharing and retirement
arrangements. Furthermore, the Company also provides additional retirement and
deferred compensation benefits to certain executive officers and employees. The
Company maintains a Senior Management Incentive Plan ("Plan") in which deferred
compensation is granted to senior executive or management employees deemed
important to the continued success of the Company. The Plan has operated as an
ongoing series of individual plans each with terms of five years. The latest
plan in the series commenced in 1998 and provides for awards to be made through
2002. Awards vest to participants after the conclusion of the fifth year of
continued employment following admission to the plan, including the year the
participant was admitted. The amount recorded as an expense related to the Plan
amounted to $8,209, $4,414 and $7,600 in 2000, 1999 and 1998, respectively.
Approximately $2,975, $1,876 and $2,295 of plan expense incurred in 2000, 1999
and 1998, respectively, will be payable in Common Stock in accordance with the
terms of the Plan. The awards payable in Common Stock were converted into an
equivalent number of shares of Common Stock, based on the average of the market
values on the last 15 business days of the calendar year. The net increase to
Paid-in Additional Capital for the 2000 Plan is $3,293 and relates to the future
obligation to issue Common Stock. At December 31, 2000, approximately 22,962
shares are payable in Common Stock pursuant to the Plan of which approximately
366 shares were vested.

     2.  In 1995, the Company and its Chairman and Chief Executive Officer
entered into an agreement extending the term of his employment agreement with
the Company through December 31, 2002. This agreement further provides for the
deferral of certain compensation otherwise payable to the Chairman and Chief
Executive pursuant to his employment agreement and the payment of such deferred
compensation into a trust, commonly referred to as a rabbi trust, established
with United States Trust Company of New York. The purpose of the trust
arrangement is to ensure the Company's ability to deduct compensation paid to
the Chairman and Chief Executive Officer without the application of Section
162(m) of the Internal Revenue Code ("Section"). The Section, under certain
circumstances, denies a tax deduction to an employer for certain compensation
expenses in excess of $1,000 per year paid by a publicly held corporation to
certain of its executives. Amounts deferred and paid into the trust, as adjusted
for the earnings and gains or losses on the

                                       F-21
<PAGE>   32
          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

trust assets, will be paid to the Chairman and Chief Executive Officer or to his
estate, as the case may be, following the expiration of his employment
agreement, or the termination of his employment by reason of death or
disability. In 1998, the Company made payments to the rabbi trust which are to
be used to fund a pension obligation to be payable to the Chairman and Chief
Executive Officer over the eleven year period following the normal expiration of
his current employment agreement ("pension period"). The initial pension deposit
was for $1,040 with annual pension deposits of $360 ratably payable through
2002. The amount of the pension to be paid to the Chairman and Chief Executive
Officer will depend on and be limited to, the funds in the rabbi trust during
the pension period. In addition, upon termination of his employment prior to the
commencement of the pension period or upon his death, any undistributed funds in
the rabbi trust would be paid to him or his estate, as the case may be, in
satisfaction of any future obligations with respect to this pension.

     At December 31, 2000 and 1999, the value of the trust was $26,881 and
$21,260, respectively, and is included in Other Assets and the Company's related
deferred compensation obligation for the same amount is included in Other
Liabilities.

     Amounts charged to expense related to the foregoing plans and benefits
aggregated $40,917 in 2000, $30,961 in 1999 and $32,266 in 1998.

     3.  An executive officer has outstanding loans with the Company totaling
$700 as of December 31, 2000 and 1999, which are reflected in Other Assets. The
loan to this executive officer will be forgiven and included as compensation
expense by the Company in installments of $200 and $500 in 2003 and 2004,
respectively, assuming his continued employment through those dates.

     In connection with a 1992 exercise of the stock options, the Company
received a cash payment of $67 and a note from the Chairman and Chief Executive
Officer of the Company in the amount of $3,170, due in December 2001, bearing
interest at the rate of 6.06%. In addition, and in accordance with the terms of
the option agreement, the holder of the options issued to the Company a
promissory note in the principal amount of $2,340 bearing interest at the rate
of 6.06%, payable in December 2001, to settle his obligation to provide the
Company with funds necessary to pay the required withholding taxes due upon the
exercise of the options. A portion of the second note ($1,556) equal to the tax
benefit received by the Company upon exercise and the full amount of the note
for $3,170 are reflected in a separate component of common stockholders' equity.
The interest paid to the Company by the holder pursuant to the terms of the two
notes issued in connection with the option exercise was $334 in 2000, 1999 and
1998.

     4.  Rental expense amounted to approximately $55,321 in 2000, $51,943 in
1999 and $44,364 in 1998. Approximate minimum rental commitments, excluding
escalations, under noncancellable operating leases are as follows:

<TABLE>
<S>                                                         <C>
2001......................................................    56,000
2002......................................................    52,000
2003......................................................    46,000
2004......................................................    42,000
2005......................................................    37,000
Beyond 2005...............................................    89,000
                                                            --------
                                                            $322,000
                                                            ========
</TABLE>

     5.  The Company is not involved in any pending legal proceedings not
covered by insurance or by adequate indemnification or which, if decided
adversely, would have a material effect on the results of operations, liquidity
or financial position of the Company.

                                       F-22
<PAGE>   33
          GREY GLOBAL GROUP INC. AND CONSOLIDATED SUBSIDIARY COMPANIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

N.  RESULTS BY QUARTER (UNAUDITED)

     A summary of the quarterly unaudited results of operations for the years
ended December 31, 2000 and 1999 follows:

<TABLE>
<CAPTION>
                                                       FOR THE THREE MONTHS ENDED
                             -------------------------------------------------------------------------------
                                  MARCH 31            JUNE 30            SEPTEMBER 30        DECEMBER 31
                             ------------------  ------------------   ------------------  ------------------
                               2000      1999      2000      1999       2000      1999      2000      1999
                             --------  --------  --------  --------   --------  --------  --------  --------
                                             (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S>                          <C>       <C>       <C>       <C>        <C>       <C>       <C>       <C>
Commissions and fees.......  $288,708  $227,907  $306,375  $260,954   $301,825  $262,048  $350,540  $316,304
Results from operations....    11,808     3,057    14,023       471     13,471     9,288    25.634    20,057
Net income.................     5,154       107     5,725    (6,629)     5,142     4,631     3,383     8,292
Earnings per Common Share:
  Basic....................  $   4.11  $   0.20  $   4.67  $  (4.93)  $   4.19  $   3.68  $   2.74  $   6.21
  Diluted..................  $   3.81  $   0.20  $   4.29  $  (4.93)  $   3.82  $   3.43  $   2.51  $   5.77
Rounding differences may arise upon accumulation of quarterly per share data.
</TABLE>

     Net income and earnings per share for the fourth quarter of 2000 were
adversely affected by a non-cash charge consisting of a write-down of
investments in Internet-related early stage businesses. Net income without this
charge would have been $11,145 for the fourth quarter of 2000 versus $8,294 for
the fourth quarter of 1999 and Basic and Diluted earnings per share would have
been $8.72 and $7.94, respectively, for the fourth quarter of 2000 versus $6.21
and $5.44, respectively, for the fourth quarter of 1999.

O.  INDUSTRY SEGMENT AND RELATED INFORMATION

     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 billings. Commissions and fees, operating profit, interest
income/expense, and related identifiable assets at December 31, 2000, 1999 and
1998, are summarized below according to geographic region:
<TABLE>
<CAPTION>
                                 UNITED STATES                        EUROPE                           OTHER
                         ------------------------------   ------------------------------   ------------------------------
                           2000       1999       1998       2000       1999       1998       2000       1999       1998
                         --------   --------   --------   --------   --------   --------   --------   --------   --------
<S>                      <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Commissions and fees...  $549,818   $464,858   $419,469   $532,096   $478,219   $415,685   $165,534   $124,135   $100,027
                         --------   --------   --------   --------   --------   --------   --------   --------   --------
Operating profit
 (loss)................    20,843     26,668     38,501     42,031     22,322     27,509      2,062    (16,117)   (13,353)
Interest income
 (expense) -- net......     3,079      3,699      4,677     (3,862)       121        853        209     (1,304)      (923)
Other income
 (expense).............   (10,137)     2,776      1,422         38         66        785        (39)        39       (319)
                         --------   --------   --------   --------   --------   --------   --------   --------   --------
Income (loss) of
 consolidated companies
 before taxes on
 income................  $ 13,785   $ 33,143   $ 44,600   $ 38,207   $ 22,509   $ 29,147   $  2,232   $(17,382)  $(14,595)
                         ========   ========   ========   ========   ========   ========   ========   ========   ========
Equity in earnings of
 nonconsolidated
 affiliated
 companies.............
Identifiable assets....  $791,655   $796,657   $608,880   $880,675   $752,662   $699,637   $300,792   $241,974   $164,431
Investments in and
 advances to
 nonconsolidated
 affiliated
 companies.............
Total assets...........

<CAPTION>
                                     CONSOLIDATED
                         ------------------------------------
                            2000         1999         1998
                         ----------   ----------   ----------
<S>                      <C>          <C>          <C>
Commissions and fees...  $1,247,448   $1,067,212   $  935,181
                         ----------   ----------   ----------
Operating profit
 (loss)................  $   64,936   $   32,873   $   52,657
Interest income
 (expense) -- net......        (574)       2,516        4,607
Other income
 (expense).............     (10,138)       2,881        1,888
                         ----------   ----------   ----------
Income (loss) of
 consolidated companies
 before taxes on
 income................  $   54,224   $   38,270   $   59,152
                         ==========   ==========   ==========
Equity in earnings of
 nonconsolidated
 affiliated
 companies.............  $    1,317   $    1,196   $      722
                         ==========   ==========   ==========
Identifiable assets....  $1,973,122   $1,791,293   $1,472,948
Investments in and
 advances to
 nonconsolidated
 affiliated
 companies.............      16,198       17,961       16,705
                         ----------   ----------   ----------
Total assets...........  $1,989,320   $1,809,254   $1,489,653
                         ==========   ==========   ==========
</TABLE>

     Commissions and fees from one client amounted to 10.2%, 11.2% and 13.4% of
the consolidated total in 2000, 1999 and 1998, respectively.

                                       F-23
<PAGE>   34

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
 NUMBER ASSIGNED TO
EXHIBIT (I.E. 601 OF
  REGULATION S-K)                       DESCRIPTION OF EXHIBITS
--------------------                    -----------------------
<C>                   <S>
       3.01           Restated Certificate of Incorporation of Grey Global Group
                      Inc. ("Grey"). (Incorporated herein by reference to Exhibit
                      3.1 to Grey's Current Report on Form 8-K, dated July 13,
                      2000, filed with the SEC pursuant to Section 13 of the 1934
                      Act.)
       3.02           By-Laws of Grey as amended. (Incorporated herein by
                      reference to Exhibit 3.02 to Grey's Annual Report on Form
                      10-K for the fiscal year ended December 31, 1988.)
       4.01           Stockholder Exchange Agreement, dated as of April 7, 1994,
                      by and between Grey and Edward H. Meyer. (Incorporated
                      herein by reference to Exhibit 10(a) of Grey's Current
                      Report on Form 8-K, dated April 7, 1994, filed with the SEC
                      pursuant to Section 13 of the 1934 Act.)
       4.02           Purchase Agreement, dated as of December 10, 1983, between
                      Grey and Edward H. Meyer relating to the sale to Mr. Meyer
                      of Grey's 8 1/2% Convertible Debentures, of even date
                      therewith ("Convertible Debenture"). (Incorporated herein by
                      reference to Exhibit 3.08 to Grey's Annual Report on Form
                      10-K for the fiscal year ended December 31, 1983.)
       4.03           Extension Agreement, dated as of November 19, 1991 between
                      Grey and Edward H. Meyer relating to the extension of the
                      maturity dates of the Convertible Debenture and related
                      Promissory Note. (Incorporated herein by reference to
                      Exhibit 3.07 to Grey's Annual Report on Form 10-K for the
                      fiscal year ended December 31, 1991.)
       4.04           Form of Convertible Debenture. (Incorporated herein by
                      reference to Exhibit 3.09 to Grey's Annual Report on Form
                      10-K for the fiscal year ended December 31, 1983.)
       4.05           Extension Agreements dated as of July 29, 1996 between Grey
                      and Edward H. Meyer relating to the extension of the
                      maturity dates of the Convertible Debenture and related
                      Promissory Note. (Incorporated herein by reference to
                      Exhibit 4.01 and 4.02 to Grey's Quarterly Report on Form
                      10-Q for the quarter ended June 30, 1996).
       9.01           Voting Trust Agreement, dated as of December 1, 1989, among
                      the several Beneficiaries, Grey and Edward H. Meyer as
                      Voting Trustee. (Incorporated herein by reference to Exhibit
                      9.03 to Grey's Annual report on Form 10-K for the fiscal
                      year ended December 31, 1989.)
       9.02           Amended and Restated Voting Trust Agreement, dated as of
                      February 24, 1986, as amended and restated as of August 31,
                      1987 and again amended and restated as of March 21, 1994,
                      among the several Beneficiaries where-under, Grey and Edward
                      H. Meyer as Voting Trustee. (Incorporated herein by
                      reference to Exhibit 9.04 to Grey's Annual Report on Form
                      10-K for the fiscal year ended December 31, 1993.)
      10.01*          Employment Agreement, dated as of February 9, 1984, between
                      Grey and Edward H. Meyer ("Meyer Employment Agreement").
                      (Incorporated herein by reference to Exhibit 10.01 to Grey's
                      Annual Report on Form 10-K for the fiscal year ended
                      December 31, 1983.)
</TABLE>

                                       E-1
<PAGE>   35

<TABLE>
<CAPTION>
 NUMBER ASSIGNED TO
EXHIBIT (I.E. 601 OF
  REGULATION S-K)                       DESCRIPTION OF EXHIBITS
--------------------                    -----------------------
<C>                   <S>
      10.02*          Amendments Two through Ten to Meyer Employment Agreement.
                      (Incorporated herein by reference to Exhibit 10.02 to Grey's
                      Annual Report on Form 10-K for the fiscal year ended
                      December 31, 1985, Exhibit 10.03 to Grey's Annual Report on
                      Form 10-K for the fiscal year ended December 31, 1987,
                      Exhibit 1 to Grey's Current Report on Form 8-K, dated May 9,
                      1988, filed with the SEC pursuant to Section 13 of the 1934
                      Act, Exhibit 2 to Grey's Current Report on Form 8-K, dated
                      May 9, 1988, filed with the SEC pursuant to Section 13 of
                      the 1934 Act. Exhibit I to Grey's Current Report on Form
                      8-K, dated June 9, 1989, filed with the SEC pursuant to
                      Section 13 of the 1934 Act, Exhibit 10.07 to Grey's Annual
                      Report on Form 10-K for the fiscal year ended December 31,
                      1990, Exhibit 10.03 to Grey's Annual Report on Form 10-K for
                      the fiscal year ended December 31, 1994, Exhibit 10.03 to
                      Grey's Annual Report on Form 10-K for the fiscal year ended
                      December 31, 1997, and Exhibit 10.01 to Grey's Quarterly
                      Report on Form 10-Q for the quarter ended March 31, 1998,
                      respectively.)
      10.03*          Deferred Compensation Trust Agreement dated March 22, 1995
                      ("Trust Agreement"), by and between Grey and United States
                      Trust Company of New York. (Incorporated herein by reference
                      to Exhibit 10.04 to Grey's Annual Report on Form 10-K for
                      the fiscal year ended December 31, 1994.)
      10.04*          First and Second Amendments to Trust Agreement (Incorporated
                      herein by reference to Exhibit 10.05 to Grey's Annual Report
                      on Form 10-K for the fiscal year ended December 31, 1995,
                      and Exhibit 10.02 to Grey's Quarterly Report on Form 10-Q
                      for the quarter ended March 31, 1998, respectively.)
      10.05*          Employment Agreement dated as of July 21, 2000, by and
                      between Grey and Steven G. Felsher.
      10.06*          Grey Advertising Inc. Book Value Preferred Stock Plan, as
                      amended. (Incorporated herein by reference to Exhibit 4.1 to
                      Grey's Current Report on Form 8-K, dated June 14, 1983,
                      filed with the SEC pursuant to Section 13 of the 1934 Act.)
      10.07*          Grey Advertising Inc. Amended and Restated Senior Executive
                      Officer Pension Plan. (Incorporated herein by reference to
                      Exhibit 10.08 to Grey's Annual Report on Form 10-K for the
                      fiscal year ended December 31, 1984.)
      10.08*          Grey Advertising Inc. Amended and Restated 1993 Senior
                      Management Incentive Plan. (Incorporated herein by reference
                      to Exhibit 10.01 to Grey's Quarterly Report on Form 10-Q for
                      the quarter ended September 30, 1996.)
      10.09*          Grey Advertising Inc. 1998 Senior Management Incentive Plan
                      (Incorporated herein by reference to Exhibit A to Grey's
                      Annual Meeting Proxy Statement)
      10.10*          Promissory Notes I and II, dated as of December 29, 1992,
                      from Edward H. Meyer to Grey, delivered pursuant to the
                      Stock Option Agreement dated as of October 13, 1984 by and
                      between Grey and Edward H. Meyer. (Incorporated herein by
                      reference to Exhibit 10.16 to Grey's Annual Report on Form
                      10-K for the fiscal year ended December 31, 1992.)
      10.11*          Stock Option Agreement, effective as of January 5, 1995, by
                      and between Grey and Edward H. Meyer. (Incorporated herein
                      by reference to Exhibit 13 to Amendment No. 8 to the
                      Statement on Schedule 13D, dated as of March 10, 1995, filed
                      by Edward H. Meyer.)
      10.12*          Stock Option Agreement effective as of November 26, 1996, by
                      and between Grey and Edward H. Meyer. (Incorporated herein
                      by reference to Exhibit 15 to Amendment No. 10 to the
                      Statement on Schedule 13D, dated as of February 11, 1997,
                      filed by Edward H. Meyer.)
</TABLE>

                                       E-2
<PAGE>   36

<TABLE>
<CAPTION>
 NUMBER ASSIGNED TO
EXHIBIT (I.E. 601 OF
  REGULATION S-K)                       DESCRIPTION OF EXHIBITS
--------------------                    -----------------------
<C>                   <S>
      10.13*          Stock Option Agreement, effective as of January 23, 1998, by
                      and between Grey and Edward H. Meyer. (Incorporated herein
                      by reference to Exhibit 16 to Amendment No. 11 to the
                      Statement on Schedule 13D, dated as of March 13, 1998, filed
                      by Edward H. Meyer.)
       10.14          Registration Rights Agreement, dated as of June 5, 1986,
                      between Grey and Edward H. Meyer. (Incorporated herein by
                      reference to Exhibit 12 to Amendment No. 8 to the Statement
                      on Schedule 13D, dated as of March 10, 1995, filed by Edward
                      H. Meyer.)
      10.15*          Grey Advertising Inc. Incentive Stock Option Plan, as
                      amended and restated as of April 3, 1986. (Incorporated
                      herein by reference to Exhibit 4.04 to Grey's Registration
                      Statement on Form S-8 filed with the SEC pursuant to Section
                      6(a) of the '33 Act.)
      10.16*          Grey Advertising Inc. 1987 Stock Option Plan. (Incorporated
                      herein by reference to Exhibit 10.24 to Grey's Annual Report
                      on Form 10-K for the fiscal year ended December 31, 1988.)
      10.17*          Grey Advertising Inc. amended and restated 1994 Stock
                      Incentive Plan. (Incorporated herein by reference to Exhibit
                      10.02 to Grey's Quarterly Report on Form 10-Q for the
                      quarter ended September 30, 1996.)
       10.18          Note Agreement, dated as of December 23, 1997, by and
                      between Grey and the Prudential Insurance Company of
                      America. (Incorporated herein by reference to Exhibit 10.20
                      to Grey's Annual Report on Form 10-K for the fiscal year
                      ended December 31, 1997)
       10.19          Note Agreement, dated as of November 13, 2000 by and between
                      Grey and the Prudential Insurance Company of America.
                      (Incorporated herein by reference to Exhibit 99.1 to Grey's
                      Current Report on Form 8-K dated November 13, 2000, filed
                      with the SEC pursuant to Section 13 of the 1934 Act.)
      10.20*          Bonuses -- Grey has paid bonuses to certain of its executive
                      officers (including those who are directors) and employees
                      in prior years including 2000, and may do so in future
                      years. Bonuses have been and may be in the form of cash,
                      shares of stock or both although Grey presently does not
                      have any plans to pay stock bonuses. Bonuses are not granted
                      pursuant to any formal plan.
      10.21*          Director's Fees -- It is the policy of Grey to pay each of
                      its non-employee directors a fee of $4,500 per fiscal
                      quarter and a fee of $3,000 for each meeting of the Board of
                      Directors attended. This policy is not embodied in any
                      written document.
      10.22*          Deferred Compensation Agreement, dated December 23, 1981,
                      between Grey and Mark N. Kaplan, regarding deferral of
                      payment of director's fees to which Mr. Kaplan may become
                      entitled. (Incorporated herein by reference to Exhibit 10.18
                      to Grey's Annual Report on Form 10-K for the fiscal year
                      ended December 31, 1982.)
</TABLE>

                                       E-3
<PAGE>   37

<TABLE>
<CAPTION>
 NUMBER ASSIGNED TO
EXHIBIT (I.E. 601 OF
  REGULATION S-K)                       DESCRIPTION OF EXHIBITS
--------------------                    -----------------------
<C>                   <S>
      10.23*          On March 23, 1978, Grey's Board of Directors, at a meeting
                      thereof held on such date, approved an arrangement whereby
                      Grey is required to accrue for Edward H. Meyer, the
                      difference between the amount contributed by Grey on behalf
                      of Mr. Meyer under the Profit Sharing Plan and Grey's
                      Employee Stock Ownership Plan, and the amount which would
                      have been contributed to such plans on his behalf had such
                      plans not contained maximum annual limitations on
                      contributions and credits, as required by the Employee
                      Retirement Income Security Act of 1974. Such accrual is to
                      be paid to Mr. Meyer as if it had been contributed to his
                      account under the Profit Sharing Plan. Such arrangement is
                      not embodied in any written document.
       10.24          Lease, dated as of July 1, 1978, by and between Grey and
                      William Kaufman and J. D. Weiler, regarding space at 777
                      Third Avenue, New York, New York ("Main Lease").
                      (Incorporated herein by reference to Exhibit 10.21 to Grey's
                      Annual Report on Form 10-K for the fiscal year ended
                      December 31, 1982.)
       10.25          First through Eighteenth Amendments to Main Lease
                      (Incorporated herein by reference to Exhibits 10.22, 10.23,
                      10.24, 10.25, 10.26, 10.27, 10.28 and 10.29 to Grey's Annual
                      Report on Form 10-K for the fiscal year ended December 31,
                      1982, Exhibit 10.30 to Grey's Annual Report on Form 10-K for
                      the fiscal year ended December 31, 1983, Exhibits 10.33 and
                      10.34 to Grey's Annual Report on Form 10-K for the fiscal
                      year ended December 31, 1984, Exhibits 10.35 and 10.36 to
                      Grey's Annual Report on Form 10-K for the fiscal year ended
                      December 31, 1985, Exhibit 10.36 to Grey's Annual Report on
                      Form 10-K for the fiscal year ended December 31, 1986,
                      Exhibit 10.27 to Grey's Annual Report on Form 10-K for the
                      fiscal year ended December 31, 1997, and Exhibit 10.26 to
                      Greys Annual Report on Form 10-K for the fiscal year ended
                      December 31, 1998, respectively.)
       21.01          Subsidiaries of Grey
       23.01          Consent of Independent Auditors
</TABLE>

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* Management contract or compensatory plan or arrangement identified in
  compliance with Item 14(c) of the rules governing the preparation of this
  report.

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