Greenhill & Co. Reports Second Quarter Earnings Per Share of $0.27

Greenhill & Co. Reports Second Quarter Earnings Per Share of
$0.27 


NEW YORK, July 21  /PRNewswire-FirstCall/ -- Greenhill & Co., Inc. (NYSE: GHL)
today reported revenues of $34.9 million and pro forma net income of $7.8
million for the quarter ended June 30, 2004.  Pro forma diluted earnings per
share were $0.27 per share for the quarter ended June 30, 2004.

The Firm's second quarter revenues compare with revenues of $37.8 million for
the second quarter of 2003, which represents a decrease of $2.9 million or 8%. 
On a year-to-date basis, revenue through June 30, 2004 was $64.4 million,
compared to $54.6 million for the comparable period in 2003, representing an
increase of $9.8 million or 18%.

The Firm's quarterly revenues can fluctuate materially depending on the number
and size of completed transactions on which it advised, as well as other
factors.  Accordingly, the revenues in any particular quarter may not be
indicative of future results.

For the second quarter actual net income was $7.8 million and earnings per
share were $0.27.  Although actual and pro forma second quarter net income and
earnings per share were similar this quarter, we believe that the pro forma
results more accurately depict our results as a public company and will provide
the most meaningful basis for comparison among present, historical and future
periods.  Prior to our initial public offering we operated as a limited
liability company and our earnings did not fully reflect either the
compensation expense we expect to pay our managing directors or the taxes that
we expect to pay as a corporation.  Additionally, a portion of our earnings
attributable to our European operations was recorded as minority interest. Our
pro forma results increase compensation expense and tax expense to amounts we
expect to pay as a public corporation and eliminate the minority interest.

The Firm's second quarter pro forma net income compares with pro forma net
income of $9.4 million in the second quarter of 2003, which represented a
decrease of $1.6 million or 17%.  On a year-to-date basis, pro forma net income
was $14.3 million through June 30, 2004, compared to pro forma net income of
$12.4 million for the comparable period in 2003, which represents an increase
of $1.9 million or 15%.  The Firm had net income of $7.8 million and $17.4
million in the second quarters of 2004 and 2003, respectively.  The Firm had
net income of $18.3 million and $23.0 million for the six months ended June 30,
2004 and 2003, respectively.

"We are pleased with our financial results, and our confidence in our business
model has grown following the completion of our initial public offering.  The
IPO has raised our visibility to prospective clients as well as enhanced our
ability to attract new talent," Robert F. Greenhill, Chairman and CEO, said.

                                 Revenues

  Revenues By Source


The following provides a breakdown of total revenues by source for the
three-month and six-month periods ended June 30, 2004 and June 30, 2003,
respectively:

                    Revenue by Principal Source of Revenue
                                 (unaudited)
                                (in millions)

                          Three Months Ended           Six Months Ended
                         6/30/04      6/30/03         6/30/04      6/30/03
                             % of         % of            % of         % of
                      Amount Total Amount Total    Amount Total Amount Total
  Financial Advisory   $27.8   80%  $36.4   96%     $53.3   83%  $52.0   95%
  Merchant Banking &
   Interest Income       7.1   20%    1.4    4%      11.1   17%    2.6    5%
  Total Revenue        $34.9  100%  $37.8  100%     $64.4  100%  $54.6  100%

  Financial Advisory Revenues


Financial Advisory Revenues were $27.8 million in the second quarter of 2004
compared to $36.4 million in the second quarter of 2003, which represents a
decrease of 24%.  For the six months ended June 30, 2004, Financial Advisory
Revenues were $53.3 million compared to $52.0 million for the comparable period
in 2003, representing an increase of 3%.

Completed transactions in the second quarter of 2004 included: the
restructuring and sale of Allegiance Telecom, Inc. to XO Communications, Inc.;
the sale of assets of Atlantic Electric & Gas Ltd. to Scottish and Southern
Energy plc; the merger of Informa Group plc with Taylor & Francis Group plc;
and the acquisition of International Multifoods by J.M. Smucker Company.

Announced transactions in the second quarter of 2004 included Marsh & McClennan
Companies, Inc.'s acquisition of Kroll Inc. and the buyback of a minority
interest by the Cayzer Trust Company Limited.

"While the current improving economy has led to a decline in
restructuring-related activity, more traditional M&A activity has begun to
increase for us as well as for the market generally," Scott L. Bok and Simon A.
Borrows, Co-Presidents, commented.

Merchant Banking & Interest Income

The Firm earned $7.1 million in Merchant Banking & Interest Income in the
second quarter of 2004 compared to $1.4 million in the second quarter of 2003,
representing an increase of 407%.  This increase is primarily due to unrealized
principal investment gains in the Greenhill Capital Partners (GCP) portfolio,
including the Firm's proportionate share of the gain relating to the initial
public offering of Global Signal Inc. (NYSE:GSL) in June, as well as the
recognition of profit overrides associated with gains in the GCP portfolio.

In the first six months of 2004, the Company earned $11.1 million in Merchant
Banking & Interest Income compared to $2.6 million in the first six months of
2003, an increase of 327%.

"We continue to see a good flow of investment opportunities while harvesting a
number of successful investments made in recent years," commented Robert H.
Niehaus, Chairman of GCP.

                                 Expenses

  Operating Expenses


The following table sets forth information relating to our actual and pro forma
operating expenses, which are reported net of reimbursements:

                  Actual and Pro Forma Operating Expenses
                                (unaudited)
                               (in millions)

                                       Three Months Ended   Six Months Ended
                                        6/30/04  6/30/03    6/30/04  6/30/03
  Actual Compensation & Benefit Expense   $13.5     $6.3     $22.8    $11.0
       % of Revenues                         39%      17%       35%      20%
  Pro Forma Compensation & Benefit
   Expense                                 15.7     17.0      29.0     24.6
       % of Revenues                         45%      45%       45%      45%

  Non-Compensation Expense:
       Other Operating Expenses             5.0      3.8       9.2      7.1
       Depreciation & Amortization          0.8      0.8       1.5      1.6
  Total Non-Compensation Expenses           5.8      4.6      10.7      8.7
       % of Revenues                         17%      12%       17%      16%

  Total Actual Operating Expenses          19.3     10.9      33.5     19.7
       % of Revenues                         55%      29%       52%      36%
  Total Pro Forma Operating Expenses       21.5     21.6      39.7     33.3
       % of Revenues                         62%      57%       62%      61%

  Compensation and Benefits


Our actual compensation and benefits expense in the second quarter of 2004 was
$13.5 million and for the six months ended June 30, 2004 was $22.8 million. 
Our compensation and benefits expense for the period since completion of our
IPO reflects a 45% ratio of compensation to revenues.  One factor in
determining compensation expense was the accounting impact of the introduction
into our compensation packages of equity-related compensation in the form of
restricted stock units.

The principal component of our operating expenses is compensation and benefits
expense.  Because we were a limited liability company prior to our IPO,
payments for services rendered by our managing directors generally were
accounted for as distributions of members' capital or minority interest expense
rather than as compensation expense.  As a result, our pre-IPO compensation and
benefits expense has not reflected a large portion of payments for services
rendered by our managing directors and understates the expected operating costs
to be incurred as a public company.  As a corporation, we include all payments
for services rendered by our managing directors in compensation and benefits
expense.

On a pro forma basis, Total Compensation and Benefits Expense was $15.7 million
in the second quarter of 2004 compared to $17.0 million in the second quarter
of 2003, an 8% decrease.  The pro forma analysis reflects a 45% ratio of
compensation to revenues for the relevant periods.

For the six months ended June 30, 2004, on a pro forma basis, Total
Compensation and Benefits Expense was $29.0 million compared to $24.6 million
for the six months ended June 30, 2003, which represents an 18% increase.  The
pro forma analysis reflects a 45% ratio of compensation to revenues for the
relevant periods.

Non-Compensation Expense

Our non-compensation expenses were $5.8 million in the second quarter of 2004,
which compared to $4.6 million in the second quarter of 2003, representing an
increase of 26%.  The increase is related principally to increases in rent
expense of $0.4 million, recruiting expenses of $0.4 million and expenses
associated with operating as a public entity of $0.3 million.

For the first six months of 2004, our non-compensation expenses were $10.7
million, which compared to $8.7 million in the first six months of 2004,
representing an increase of 23%.

Non-compensation expense as a percentage of revenue in the three months and six
months ended June 30, 2004 were 17% and 17%, respectively.  This compares to
12% and 16% for the three months and six months ended June 30, 2003,
respectively.  The increase in these expenses as a percentage of revenue is
principally related to increases in rent from new office space and the costs of
being a public company.

Provision for Income Taxes

As a limited liability company, Greenhill was not subject to U.S. federal or
state income taxes and its U.K. controlled affiliate Greenhill & Co.
International LLP, as a limited liability partnership, was generally not
subject to U.K. income taxes.  As of completion of our IPO in May 2004, we are
subject to federal, foreign and state corporate income taxes.

The Provision for Taxes in the second quarter of 2004 was $5.6 million. On a
pro forma basis, assuming a tax rate of 42% for the full period, our Provision
for Taxes would be $5.6 million.  This compares to a pro forma Provision for
Taxes in the second quarter of 2003 on a similar basis of $6.8 million, which
represents an 18% decrease.

For the six months ended June 30, 2004, on a pro forma basis assuming a tax
rate of 42% for the full period, our Provision for Taxes was $10.4 million
compared to pro forma provision for taxes of $8.9 million for the six months
ended June 30, 2003, which represents a 17% increase.

Liquidity and Capital Resources

Our cash balance was $85.6 million as of June 30, 2004, and we have no debt. 
Our shareholders' equity as of June 30, 2004 was $109.4 million.

We had total commitments (not reflected on our balance sheet) relating to
future principal investments in Greenhill Capital Partners of $20.3 million as
of June 30, 2004.  Subsequently, on July 1, 2004, we funded $6.8 million of
this amount as part of a capital call from Greenhill Capital Partners to fund
several pending investments, which reduced our cash balance and remaining
commitments.  Further capital calls may be made at any time through June 2005,
depending on the timing and level of investments by GCP, although we do not
expect these commitments to be drawn in full.

Dividend

The Board of Directors of Greenhill & Co., Inc. has declared a dividend of
$0.08 per share to be paid on September 14, 2004 to common stockholders of
record on August 19, 2004.

Greenhill & Co., Inc. is an independent investment banking firm that (i)
provides financial advice on significant mergers, acquisitions, restructurings
and similar corporate finance matters and (ii) manages merchant banking funds
and commits capital to those funds.  Greenhill acts for clients located
throughout the world from offices in New York, London and Frankfurt.

Cautionary Note Regarding Forward-Looking Statements

The preceding discussion should be read in conjunction with our condensed
consolidated financial statements and the related notes that appear below. We
have made statements in this discussion that are forward-looking statements. In
some cases, you can identify these statements by forward-looking words such as
"may," "might," "will," "should," "expect," "plan," "anticipate," "believe,"
"estimate," "predict," "potential" or "continue," the negative of these terms
and other comparable terminology. These forward-looking statements, which are
subject to risks, uncertainties and assumptions about us, may include
projections of our future financial performance, based on our growth strategies
and anticipated trends in our business. These statements are only predictions
based on our current expectations and projections about future events. There
are important factors that could cause our actual results, level of activity,
performance or achievements to differ materially from the results, level of
activity, performance or achievements expressed or implied by the
forward-looking statements.  These factors include, but are not limited to,
those discussed in our Registration Statement on Form S-1 (Commission file
number 333-113526) under the caption "Risk Factors."

                    Greenhill & Co., Inc. and Subsidiaries
           Condensed Consolidated Statements of Income (Unaudited)

                            Three Months Ended         Six Months Ended
                                  June 30,                  June 30,
                              2004        2003          2004        2003
  Revenues

  Financial advisory
   fees                  $27,801,947  $36,391,860  $53,339,242  $51,962,502
  Merchant banking
   revenue                 6,878,759    1,218,929   10,886,486    2,410,788
  Interest income            172,438      224,837      192,941      251,357
       Total Revenues     34,853,144   37,835,626   64,418,669   54,624,647

  Expenses

  Compensation and
   benefits               13,519,168    6,310,369   22,755,368   10,987,616
  Occupancy and
   equipment rental        1,477,520    1,017,778    2,831,872    2,081,576
  Depreciation and
   amortization              759,488      817,010    1,531,550    1,627,773
  Information services       664,738      689,769    1,425,301    1,302,927
  Professional fees          563,271      480,074      847,779      684,352
  Travel related
   expenses                  802,969      810,259    1,696,168    1,531,736
  Other operating
   expenses                1,538,349      765,507    2,443,918    1,518,915
       Total Expenses     19,325,503   10,890,766   33,531,956   19,734,895

       Income before Tax
        and Minority
        Interest          15,527,641   26,944,860   30,886,713   34,889,752

  Minority interest in
   net income of
   subsidiary              2,092,353    8,514,231    6,487,050   10,645,603

       Income before Tax  13,435,288   18,430,629   24,399,663   24,244,149

  Provision for taxes      5,626,649    1,054,552    6,110,951    1,270,401

       Net Income         $7,808,639  $17,376,077  $18,288,712  $22,973,748


  Average common shares
   outstanding:
       Basic              28,494,540                26,758,276
       Diluted            28,537,025                26,800,762
  Earnings per share:
       Basic                   $0.27                     $0.68
       Diluted                 $0.27                     $0.68

  Pro forma average
   common shares
   outstanding:
       Basic              28,494,540   25,000,000   26,758,276   25,000,000
       Diluted            28,537,025   25,000,000   26,800,762   25,000,000
  Pro forma earnings per
   share:
       Basic                   $0.27        $0.38        $0.53        $0.49
       Diluted                 $0.27        $0.38        $0.53        $0.49

  See Notes to the Pro Forma Condensed Consolidated Statement of Income


                  Greenhill & Co., Inc. and Subsidiaries
    Pro Forma Condensed Consolidated Statements of Income (Unaudited)

                                     Pro Forma               Pro Forma
                                 Three Months Ended       Six Months Ended
                                      June 30,                June 30,
                        (a)       2004        2003        2004        2003
                                   (in thousands except per share data)

  Total revenues               $34,853     $37,836     $64,419     $54,625

  Compensation and
   benefits             (b)     15,684      17,026      28,989      24,581
  Other expenses                 5,806       4,580      10,777       8,747
  Total expenses                21,490      21,606      39,766      33,328

  Income before tax and
   minority interest            13,363      16,230      24,653      21,297

  Minority interest in net
   income of subsidiary (c)          -           -           -           -

  Income before tax             13,363      16,230      24,653      21,297

  Provision for taxes   (d)      5,612       6,817      10,354       8,945

  Net income                    $7,751      $9,413     $14,299     $12,352
  Pro forma average common
   shares outstanding:  (e)
      Basic                 28,494,540  25,000,000  26,758,276  25,000,000
      Diluted               28,537,025  25,000,000  26,800,762  25,000,000
  Pro forma earnings per share:
      Basic                      $0.27       $0.38       $0.53       $0.49
      Diluted                    $0.27       $0.38       $0.53       $0.49

  See Notes to the Pro Forma Condensed Consolidated Statement of Income


    Notes to the Pro Forma Condensed Consolidated Statement of Income

  (a) Prior to the initial public offering we were a limited liability
      company and our historical earnings did not fully reflect the
      compensation expense we expect to pay our managing directors or taxes
      that we expect to pay as a public corporation. Additionally, a portion
      of our earnings attributable to our European operations was recorded
      as minority interest.  We believe that the pro forma results, which
      increase compensation expense and tax expense to amounts we expect to
      pay as a corporation and eliminate the minority interest, more
      accurately depict our results as a public company.

  (b) Because the Firm had been a limited liability company prior to IPO,
      payments for services rendered by managing directors generally had
      been accounted for as distributions of members' capital rather than as
      compensation expense. As a corporation, the Firm includes all payments
      for services rendered by managing directors in compensation and
      benefits expense.

      Compensation and benefits expense, reflecting the Firm's conversion to
      corporate form, will consist of cash compensation and non-cash
      compensation related to the restricted stock units awarded to
      employees at the time of the Firm's initial public offering
      consummated on May 11, 2004, as well as any additional restricted
      stock units awarded in the future. It is the Firm's policy that total
      compensation and benefits, including that payable to the managing
      directors, will not exceed 50% of total revenues each year (although
      the Firm retains the ability to change this policy in the future).
      Adjustments to increase compensation expense for the three months
      ended June 30, 2004 and 2003 of $2.2 million and $10.7 million,
      respectively, have been made to record total compensation and benefits
      expense at 45% of total revenues.  Adjustments to increase
      compensation expense for the six months ended June 30, 2004 and 2003
      of $6.2 million and $13.6 million, respectively, have been made to
      record total compensation and benefits expense at 45% of total
      revenues.

  (c) For the three months ended June 30, 2004 and 2003, historical income
      before tax has been increased by $2.1 million and $8.5 million,
      respectively, to reflect the elimination on a pro forma basis of
      minority interests held by the European managing directors in
      Greenhill & Co. International.  For the six months ended June 30, 2004
      and 2003, historical income before tax has been increased by $6.5
      million and $10.6 million, respectively, to reflect the elimination on
      a pro forma basis of minority interests held by the European managing
      directors in Greenhill & Co. International.

  (d) As a limited liability company, the Firm was generally not subject to
      income taxes except in foreign and local jurisdictions. For the three
      months ended June 30, 2004 and 2003, adjustments of $0.0 million and
      $5.8 million, respectively, have been made to adjust the Firm's
      effective tax rate to 42.0%, reflecting assumed federal, foreign,
      state and local income taxes as a corporation.  For the six months
      ended June 30, 2004 and 2003, adjustments of $4.2 million and $7.7
      million, respectively, have been made to increase the Firm's effective
      tax rate to 42.0%, reflecting assumed federal, foreign, state and
      local income taxes as a corporation.

  (e) For 2004 the actual and pro forma numbers of common shares outstanding
      give effect to (i) 25,000,000 shares issued in connection with the
      reorganization of the Firm in conjunction with the initial public
      offering as if it occurred on January 1, 2004 and (ii) the weighted
      average of the 5,750,000 shares and the common stock equivalents
      issued in conjunction with the initial public offering.  For 2003 the
      pro forma number of common shares outstanding gives effect to the
      shares issued in connection with the reorganization of the Firm as if
      it occurred on January 1, 2003.

   Contact: John D. Liu,
            Chief Financial Officer
            Greenhill & Co., Inc.
            [phone]


DATASOURCE: Greenhill & Co., Inc.



CONTACT:  John D. Liu, Chief Financial Officer, Greenhill & Co., Inc.,

[phone]

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