<PAGE>
United States
Securities and Exchange Commission
Washington, D.C. 20549
-------------
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 6, 1997
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Commission File No. 333-3338
Minnesota 41-1540241
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
-------------
ADAMS OUTDOOR ADVERTISING, INC.
(Exact name of registrant as specified in its charter)
Commission File No. 333-3338-01
Minnesota 41-154024
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1380 West Paces Ferry Road, N.W.
Suite 170, South Wing
Atlanta, GA 30327
(Address of principal executive offices)
(404) 233-1366
(Registrant's telephone number, including area code)
<PAGE>
Adams Outdoor Advertising Limited Partnership, a Minnesota limited
partnership and Adams Outdoor Advertising, Inc., a Minnesota corporation
hereby amend their Report on Form 8-K dated December 16, 1996. The item
number and responses thereto below are in accordance with the requirements
on Form 8-K.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
(b) Pro Forma Financial Information
(c) Exhibits
Exhibit Number Description
-------------- -----------
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
Dated: March 6, 1997 ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
By: Adams Outdoor Advertising Inc., its
general partner
By: /s/ J. Kevin Gleason
---------------------------------------
J. Kevin Gleason, Chief Executive Officer
ADAMS OUTDOOR ADVERTISING, INC.
By: /s/ J. Kevin Gleason
---------------------------------------
J. Kevin Gleason, Chief Executive Officer
<PAGE>
MORGAN NEWSOME MONROE, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1995
<PAGE>
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS 3
FINANCIAL STATEMENTS
Balance Sheet 4 - 5
Statement of Income 6
Statement of Changes in Stockholders Equity 7
Statement of Cash Flows 8
Notes to Financial Statements 9 - 12
<PAGE>
[LETTERHEAD OF AARON WILSON HARRISON, III APPEARS HERE]
- --------------------------------------------------------------------------------
The Stockholders
Morgan Newsome Monroe, Inc.
Orangeburg, South Carolina
I have audited the accompanying balance sheet of Morgan Newsome Monroe, Inc. (an
S corporation) as of December 31, 1995 and the related statements of income,
stockholders equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to in the first paragraph
present fairly, in all material respects, the financial position of Morgan
Newsome Monroe, Inc. as of December 31, 1995, and the results of its operations
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.
/s/ A. W. Harrison
Surfside Beach, South Carolina
April 1, 1996
<PAGE>
MORGAN NEWSOME MONROE, INC.
BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current Assets
Cash $ 586,514
Accounts Receivable - Trade
(Net Of Allowance for Doubtful
Accounts of $ 19,371) 415,913
Accounts Receivable - Other 3,370
Inventory 33,503
Prepaid Expenses 333,870
------------
Total Current Assets 1,373,170
------------
Property, Plant and Equipment
Land 46,000
Buildings 210,000
Advertising Structures 5,370,722
Office & Shop Equipment 121,482
Vehicles 158,669
Accumulated Depreciation (369,326)
------------
Total Property, Plant and Equipment 5,537,547
------------
Other Assets
Lease Acquisition Costs 1,515,000
Non-Compete Agreement 41,000
Loan Origination Fee 65,000
Goodwill 177,990
Accumulated Amortization (685,645)
------------
Total Other Assets 1,113,355
------------
TOTAL ASSETS $ 8,024,072
============
</TABLE>
See accountant's report and notes to financial statements.
Page 4
<PAGE>
MORGAN NEWSOME MONROE, INC.
BALANCE SHEET
December 31, 1995
LIABILITIES AND STOCKHOLDERS EQUITY
<TABLE>
<S> <C>
Current Liabilities
Accounts Payable - Trade $ 116,687
Accounts Payable - Other 7,592
Note Payable 35,063
Accrued Expenses 111,538
Customer Deposits 64,058
Current Portion Of - LTD 181,541
-----------
Total Current Liabilities 516,479
-----------
Long Term Liabilities
Long Term Debt 5,249,296
Stockholder Loans 2,844,238
-----------
Total Long Term Liabilities 8,093,534
-----------
Stockholders Equity
Common Stock At No Par Value, Authorized
100,000 Shares; Issued and Outstanding
2,000 Shares 2,000
Accumulated Deficit (587,941)
-----------
Total Stockholders Equity (585,941)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 8,024,072
===========
</TABLE>
See accountant's report and notes to financial statements.
Page 5
<PAGE>
MORGAN NEWSOME MONROE, INC.
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
Operating Revenue
Gross Rental Income $ 3,862,963
Less Agency Discounts (279,840)
------------
Total Operating Revenue 3,583,123
Cost of Sales 1,430,260
------------
Gross Profit 2,152,863
Selling, General & Administrative
Salaries - Sales 35,373
Salaries - Sales 60,718
Sales Commissions 209,966
Salaries - Leasing 8,308
Salaries - Office 95,319
Salaries - Management 292,027
Employer FICA Expense 51,359
Unemployment Tax Expense 4,710
Utilities 3,521
Telephone 43,657
Office Expense 36,892
Auto Expense 22,025
Insurance 54,262
Health Insurance 38,622
Dues & Licenses 8,110
Miscellaneous 10,186
Repairs & Maintenance 6,265
Professional Fees 60,091
Advertising and Promo 4,309
Travel 17,071
Workers Comp Insurance 21,476
Bank Charges 176
Bad Debt Expense 17,654
------------
Total Selling, General & Administrative 1,102,097
------------
Income From Operations 1,050,766
Other Income and Expense
Interest Income 6,200
Interest Expense (583,360)
Depreciation & Amortization (967,874)
------------
Total Other Income and Expense (1,545,034)
------------
Net Loss $ (494,268)
============
</TABLE>
See accountant's report and notes to financial statements.
Page 6
<PAGE>
MORGAN NEWSOME MONROE, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Common
Stock Common Accumulated
Shares Stock Deficit
---------- ---------- -----------
<S> <C> <C> <C>
Stockholders Equity
January 1, 1995 $ 1,000 $ 1,000 $ ( 93,673)
Issuance of Stock 1,000 1,000
Net loss (494,268)
---------- ---------- -----------
Stockholders Equity
December 31, 1995 $ 2,000 $ 2,000 $ (587,941)
========== ========== ===========
</TABLE>
See accountant's report and notes to financial statements.
Page 7
<PAGE>
MORGAN NEWSOME MONROE, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
Cash flows from operating activities:
Net Loss $ (494,268)
-------------
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 967,874
(Increase) in Accounts Receivable - Trade (307,222)
Decrease in Accounts Receivable - Other 1,630
(Increase) in Inventory (26,007)
(Increase) in Prepaid Expenses (279,147)
Increase in Accounts Payable - Trade 110,123
Increase in Accounts Payable - Other 3,049
Increase in Accrued Expenses 52,947
Increase in Customer Deposits 46,773
-------------
Total adjustments 570,020
-------------
Net cash provided by operating activities 75,752
-------------
Cash flows from investing activities:
Cash payment for the purchase of property (4,229,056)
Cash payment for the purchase of other assets (1,391,000)
-------------
Net cash (used) by investing activities (5,620,056)
-------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 5,523,616
Proceeds from issuance of common stock 1,000
Net borrowings on insurance financing 35,063
Proceeds from stockholders loans 2,095,238
Principal payments on long-term debt (1,592,779)
-------------
Net cash provided by financing activities 6,062,138
-------------
Net increase in cash 517,834
Cash, beginning of year 68,680
-------------
Cash, end of year $ 586,514
=============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest expense $ 583,360
=============
</TABLE>
See accountant's report and notes to financial statements.
Page 8
<PAGE>
MORGAN NEWSOME MONROE, INC.
NOTES TO FINANCIAL STATEMENTS
(SEE ACCOUNTANT'S REPORT)
NOTE 1. ORGANIZATION
- ---------------------
Morgan Newsome Monroe, Inc. (the Company) is located in Orangeburg, South
Carolina and is engaged in the leasing of billboard advertising space primarily
in South and North Carolina. The Company began operations in 1994.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
This summary of significant accounting policies of the Company is presented to
assist in understanding Company's financial Statements. The financial statements
and notes are representations of the Company's management, who is responsible
for their integrity and objectivity. These policies conform to generally
accepted accounting principles and have been consistently applied in the
preparation of the financial statements.
A. Basis of Presentation
The accompanying financial statements of the Company have been prepared on
the accrual basis of accounting.
B. Inventory
Inventory consists mainly of spare parts and supplies which are necessary
to maintain the Company's advertising structures. Inventory is stated at
cost.
C. Property, Plant & Equipment
The cost of property, plant and equipment is depreciated over the estimated
useful lives of the related assets. Depreciation is computed on the
straight-line method. Maintenance and repairs are charged to operations
when incurred. Betterments and renewals are capitalized. When property and
equipment is sold or otherwise disposed of, the asset and related
accumulated depreciation are relieved, and any gain or loss is included in
income.
The useful lives of property, plant and equipment for purposes of computing
depreciation are:
Buildings 39 years
Advertising Structures 15 years
Office & Shop Equipment 5 - 7 years
Vehicles 5 years
Page 9
<PAGE>
MORGAN NEWSOME MONROE, INC.
NOTES TO FINANCIAL STATEMENTS
(SEE ACCOUNTANT'S REPORT)
NOTE - 2 ACCOUNTING POLICIES (Continued)
- ----------------------------
Depreciation expense for the year ended December 31, 1995 was
$ 334,442.
D. Other Assets
Certain costs incurred in connection with the Company's acquisitions of its
billboard advertising space have been capitalized. The cost of these other
assets is amortized over the estimated useful lives of the related assets.
Amortization is computed on the straight-line method.
The useful lives of other assets for purposes of computing amortization
are:
Lease Acquisition Costs 2 years
Non-Compete Agreement 15 years
Loan Origination Fee 5 years
Goodwill 15 years
Amortization expense for the year ended December 31, 1995 was $ 633,432.
E. Bad Debts
Accounts receivable are reserved under the allowance for doubtful accounts
method when an account is determined to be uncollectible. At December 31,
1995 the balance in the allowance for doubtful accounts was $ 19,371.
During the year the Company recognized $ 17,654 of bad debt expense.
F. Income Taxes
The Company, with the consent of its stockholders, has elected under the
Internal Revenue Code to be treated as an S Corporation. In lieu of
corporation income taxes, the stockholders of an S corporation are taxed
on their proportionate share of the Company's taxable income. Therefore,
no liability or provision for Federal or state income taxes has been
included in the financial statements.
NOTE 3. NOTE PAYABLE
- ----------------------
During the year ended December 31 1995 the Company elected to finance $35,063 of
its annual property insurance premium of $46,750. The financing agreement's
provisions require that the Company make nine, (9), monthly payments of $4,069
beginning on January 20, 1996. The financing agreement's stated rate of
interest is 10.5 percent.
Page 10
<PAGE>
MORGAN NEWSOME MONROE, INC.
NOTES TO FINANCIAL STATEMENTS
(SEE ACCOUNTANT'S REPORT)
NOTE 4. LONG-TERM DEBT
- ----------------------
At December 31, 1995 Long-term debt consisted of the following:
10.00% note payable to the Southtrust
Bank of Alabama, N.A.; collateralized by
land, land improvements, fixtures,
furnishings, equipment, additions, now
owned or acquired; all accounts, contract
rights, and general intangibles, sign leases,
permits and or licenses now owned or
hereinafter entered into; assignment of all
rent contracts; due in monthly installments
of $59,103 . $ 5,411,009
9.30% note payable to a finance company;
secured by a vehicle; due in monthly
installments of $591 19,828
7.00% notes payable to stockholders of
the Company, with principal payments to
the stockholders to be subordinated to
the terms and conditions contained in the
provisions of the Southtrust Bank of
Alabama, N.A. note payable; six, (6),
separate notes. 2,844,238
----------
8,275,075
Less: current maturities 181,541
----------
$8,093,534
----------
Principal payments on the long-term debt due in future years are as
follows as of December 31, 1995:
1996 $ 181,541
1997 200,509
1998 221,459
1999 239,112
2000 4,588,216
-----------
$ 5,430,837
===========
Principal payments to the stockholders' under the terms of their notes are
subject to their demand upon satisfaction of the Southtrust Bank of Alabama,
N.A.'s note.
Page 11
<PAGE>
MORGAN NEWSOME MONROE, INC
NOTES TO FINANCIAL STATEMENTS
(SEE ACCOUNTANT'S REPORT)
NOTE 5. OPERATING LEASES
- ------------------------
Rent expense for all operating leases for the year ended December 31, 1995 was
approximately $563,898. Of this amount, approximately $520,218 was incurred by
the Company during the year ended December 31, 1995 for billboard leases.
Billboard lease terms vary based upon individual lease agreements ranging from
monthly to twenty years. Most of the billboard leases which were reduced to
writing contain termination and renewal clauses. The Company anticipates that
its future years lease expenses will approximate the amounts incurred during the
year ended December 31, 1995.
NOTE 6. RELATED PARTY TRANSACTIONS
- ----------------------------------
During the year ended December 31, 1995 stockholders of the Company loaned
approximately $2,095,238 to the Company. At December 31, 1995 the amount
payable to the stockholders was approximately $2,844,238. During the year
ended December 31, 1995 the Company paid approximately $151,245 in interest to
its stockholders.
NOTE 7. CONCENTRATION OF CREDIT RISK
- ------------------------------------
At December 31, 1995 the Company maintained all of its operating funds, and cash
balances, in four different bank accounts located in one bank. At December 31,
1995 the Company's cash balances exceeded the FDIC insured limits by
approximately $486,514.
NOTE 8. PURCHASE AGREEMENT
- --------------------------
At December 31, 1995 the Company was committed to purchase 5.23 acres of land
located in South Carolina. At December 31, 1995 the Company had paid $5,000 as
earnest money toward the $100,000 purchase price of the property. During January
1996 the Company paid the balance due under the terms of the purchase agreement.
Page 12
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
Unaudited Pro Forma Financial Statements
The unaudited pro forma statements of operations for the year ended December 31,
1995 and the nine months ended September 30, 1996 illustrate the estimated
effects of the acquisitions as if each had occurred as of the beginning of the
earliest period presented. The unaudited pro forma balance sheet reflects the
acquisitions as if each had occurred on September 30, 1996.
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
Unaudited Pro Forma Balance Sheet
<TABLE>
<CAPTION>
September 30, 1996
-------------------------------------------------------------------
Historical
------------------------------------ Pro Forma Pro Forma
(in thousands) Adams MNM Matthews Adjustments Combined
------------------------------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 4,067 $ (48) $ -- $ 48 (2) $ 4,067
Accounts receivable 6,673 443 141 (96) (2) 7,161
Inventories 203 61 -- -- 264
Prepaid rent 1,814 356 220 -- 2,390
Other prepaid expenses 837 16 -- -- 853
Total current assets 13,594 828 361 (48) 14,735
------------------------------------ ----------- -------------
Property, plant & equipment, net 30,416 6,465 3,687 6,949 (2) 52,130
4,613 (3)
Intangible assets, net
Noncompete agreements -- -- -- 1,650 (2) 1,750
100 (3)
Lease acquisition costs 9,803 -- -- -- 9,803
Other 71 420 -- (420) (2) 71
------------------------------------ ----------- -------------
Total intangible assets 9,874 420 -- 1,750 11,624
------------------------------------ ----------- -------------
Total assets $ 53,884 $ 7,713 $ 4,048 $ 8,651 $ 78,489
==================================== =========== =============
Current liabilities:
Accounts payable 407 294 33 294 (2) 440
Interest payable 588 39 -- 39 (2) 588
Accrued expenses and other 1,549 227 135 141 (2) 1,770
Current installments of long-term debt 231 182 35 182 (2) 266
Deferred compensation 1,699 -- -- -- 1,699
------------------------------------ ----------- -------------
Total current liabilities 4,474 742 203 656 4,763
Long term debt, less current installments 113,839 5,834 -- 5,819 (2) 138,155
(15,743) (5)
(8,558) (5)
Deferred compensation 29 -- -- -- 29
Due to affiliate -- 2,844 3,845 6,689 (3) --
Other liabilities 2,354 -- -- -- 2,354
------------------------------------ ----------- -------------
Total liabilities 120,696 9,420 4,048 (11,137) 145,301
------------------------------------ ----------- -------------
Partners equity (deficit)
Common stock -- 2 -- 2 (2) --
Accumulated deficit (1,709) -- (1,709) (2) --
General partners' deficit (67,812) -- -- -- (67,812)
Limited partners' equity 1,000 -- -- -- 1,000
------------------------------------ ----------- -------------
Total partners' deficit (66,812) (1,707) -- 2 (66,812)
------------------------------------ ----------- -------------
Total liabilities and partners' deficit $ 53,884 $ 7,713 $ 4,048 $ (11,135) $ 78,489
==================================== =========== =============
</TABLE>
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
Unaudited Pro Forma Statement of Operations
<TABLE>
<CAPTION>
Year Ended December 31, 1995
--------------------------------------------------------------------
(in thousands) Historical
----------------------------------- Pro Forma Pro Forma
Adams MNM Matthews Adjustments Combined
------------------------------------------------- ------------
<S> <C> <C> <C> <C> <C>
Gross revenues $ 47,589 $ 3,863 $ 2,413 $ - $ 53,865
Less agency commissions (4,698) (280) (117) - (5,095)
------------------------------------------------- ------------
Net outdoor advertising revenue 42,891 3,583 2,296 - 48,770
Operating expenses:
Direct advertising 20,848 2,256 1,126 - 24,230
Corporate general and administrative 1,114 276 380 - 1,770
Depreciation and amortization 5,568 968 412 1,416 (6) 7,603
619 (6)
(968) (4)
(412) (4)
Deferred compensation 2,427 - - - 2,427
------------------------------------------------ ------------
Total operating expenses 29,957 3,500 1,918 655 36,030
------------------------------------------------ ------------
Operating income 12,934 83 378 (655) 12,740
Other expenses (income):
Interest expense 9,865 583 442 1,338 (5) 11,930
727 (5)
(583) (4)
(442) (4)
Interest expense - related parties 1,398 - - - 1,398
Other expenses (income) net 16 (6) - - 10
(Gain) loss on sale of PP&E, net 93 - - - 93
------------------------------------------------ ------------
Total other expenses 11,372 577 442 1,040 13,431
------------------------------------------------ ------------
Net income (loss) $ 1,562 $ (494) $ (64) $ (1,695) $ (691)
================================================ ============
</TABLE>
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
Unaudited Pro Forma Statement of Operations
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1996
------------------------------------------------------------------------
(in thousands) Historical
--------------------------------------- Pro Forma Pro Forma
Adams MNM Matthews Adjustments Combined
------------------------------------------------------ ------------
<S> <C> <C> <C> <C> <C>
Gross revenues $ 38,671 $ 4,331 $ 1,959 $ - $ 44,961
Less agency commissions (3,864) (316) (99) - (4,279)
------------------------------------------------------ ------------
Net outdoor advertising revenue 34,807 4,015 1,860 - 40,682
Operating expenses:
Direct advertising 16,297 3,055 1,009 - 20,361
Corporate general and administrative 1,320 357 174 - 1,851
Depreciation and amortization 4,339 1,074 317 1,063 (6) 5,867
465 (6)
(1,074) (4)
(317) (4)
Deferred compensation 550 - - - 550
------------------------------------------------------ ------------
Total operating expenses 22,506 4,486 1,500 137 28,629
------------------------------------------------------ ------------
Operating income 12,301 (471) 360 (137) 12,053
Other expenses (income):
Interest expense 8,835 650 332 1,004 (5) 10,385
546 (5)
(650) (4)
(332) (4)
Interest expense - related parties 344 - - - 344
Other expenses (income) net (10) - 113 - 103
(Gain) loss on sale of PP&E, net (19) - - - (19)
------------------------------------------------------ ------------
Total other expenses 9,150 650 445 568 10,813
------------------------------------------------------ ------------
Net income (loss) $ 3,151 $ (1,121) $ (85) $ (705) $ 1,240
====================================================== ============
</TABLE>
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
Notes to Unaudited Pro Forma Financial Statements
The unaudited pro forma financial statements have been prepared using the
purchase method of accounting, whereby the total cost of the acquisitions is
allocated to the tangible and intangible assets acquired and liabilities assumed
based upon their respective fair values at the effective dates of such
acquisitions. For the purposes of the unaudited financial information, such
allocations have been made based upon currently available information and
management's estimates.
The historical financial statements are derived from the audited financial
statements of Adams Outdoor Advertising L.P. (the "Company") and Morgan Newsome
Monroe, Inc. ("MNM") for the year ended December 31, 1995, the unaudited
financial statements of Matthew Outdoor Advertising Acquisition Co. L.P.
("Matthews") for the year ended December 31, 1995, and the unaudited statements
of the Company, MNM, and Matthews for the nine months ended September 30, 1996.
The unaudited financial statements reflect all adjustments, consisting primarily
of normal recurring accruals, which in the opinion of management of the Company
are necessary for a fair presentation of results for the respective periods.
The unaudited pro forma financial information does not purport to represent what
the results of operations or financial position of the Company would actually
have been if the acquisitions had occurred on such dates or to project the
results of operations or financial position of the Company for any future date
or period.
(1) Reflects for the year ended December 31, 1995 and for the nine months ended
September 30, 1996, the historical operating results of MNM and Matthews.
(2) Reflects adjustments to record the acquisition of MNM including the
anticipated purchase price allocation, and the elimination of historical equity
accounts at September 30, 1996. The purchase price of MNM includes the payment
of $15,679,000 in cash and the payment of $64,000 in transaction expenses. The
purchase price allocation reflects: (i) a $1,650,000 increase in intangible
assets related to noncompete agreements with the former owners; (ii) net credit
adjustments of $8,851,000 to remove assets and liabilities not assumed by the
Company in the asset purchase; (iii) an increase of $6,949,000 in the historical
basis of property, plant and equipment; and (iv) the elimination of the
historical equity accounts of MNM ($2,000 in common stock and $1,709,000 in
accumulated deficit).
(3) Reflects adjustments to record the acquisition of Matthews including the
anticipated purchase price allocation at September 30, 1996. The purchase price
of Matthews includes the payment of $8,315,000 in cash and the payment of
$243,000 in transaction expenses. The purchase price allocation reflects: (i) a
$100,000 increase in intangible assets related to noncompete agreements with the
former owner; (ii) net credit adjustments of $5,295,000 to remove assets and
liabilities not assumed by the Company in the asset purchase; and (iii) an
increase of $3,163,000 in the historical basis of property, plant and equipment.
(4) To remove historical interest and depreciation expense based on the
historical debt structure and asset bases of MNM and Matthews. For historical
presentation of interest expense at Matthews, interest expense was added for
intercompany borrowings at an assumed interest rate of 11.5%. For historical
presentation of depreciation expense at Matthews, depreciation expense was
calculated on the gross book values of fixed assets using estimated lives of
fifteen years for advertising structures and three years for vehicles.
<PAGE>
(5) Reflects interest expense resulting from borrowings to fund the acquisitions
at the Company's borrowing rate of 8.5% for the year ended December 31, 1995 and
through the date of consummation of the acquisitions for the nine months ended
September 30, 1996.
Borrowings
----------
MNM $15,743,000
Matthews $ 8,558,000
(6) Reflects an increase in depreciation and amortization expense as a result of
the allocation of purchase price to intangible assets and property, plant and
equipment for the year ended December 31, 1995 and through the date of
consummation of the acquisitions for the nine months ended September 30, 1996.
