<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 1998
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 41-1540245
(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)
Securities Registered Pursuant to Section 12(b) of the Act:
None.
Securities Registered Pursuant to Section 12(g) of the Act:
10 3/4% Senior Notes Due 2006
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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
--- --
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. (Applicable only to Adams
Outdoor Advertising, Inc.)
Class Outstanding as of November 12, 1998
- ----- -----------------------------------
Common Stock,
$.001 par value 10,000
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
ADAMS OUTDOOR ADVERTISING, INC.
Securities and Exchange Commission Form 10-Q
for the Third Quarter Ended September 30, 1998
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets of Adams Outdoor
Advertising Limited Partnership as of
September 30, 1998 (unaudited) and December 31, 1997........... 1
Consolidated Statements of Operations of
Adams Outdoor Advertising Limited Partnership
for the Quarters and Nine Months Ended September 30, 1998
and 1997 (unaudited)........................................... 2
Consolidated Statements of Cash Flows of
Adams Outdoor Advertising Limited Partnership
for the Nine Months Ended September 30, 1998
and 1997 (unaudited)........................................... 3
Notes to Interim Consolidated Financial Statements of
Adams Outdoor Advertising Limited Partnership (unaudited)...... 4
Balance Sheets of Adams Outdoor
Advertising, Inc. as of September 30, 1998 (unaudited)
and December 31, 1997.......................................... 5
Statements of Operations of
Adams Outdoor Advertising, Inc. for the Quarters and
Nine Months Ended September 30, 1998 and 1997 (unaudited)...... 6
Statements of Cash Flows of
Adams Outdoor Advertising, Inc. for the
Nine Months Ended September 30, 1998 and 1997 (unaudited)...... 7
Notes to Interim Financial Statements of
Adams Outdoor Advertising, Inc. (unaudited).................... 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................ 9
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PART II. OTHER INFORMATION
<S> <C>
Item 1. Legal Proceedings.............................................. 14
Item 2. Changes in Securities.......................................... 14
Item 3. Defaults Upon Senior Securities................................ 14
Item 4. Submission of Matters to a Vote of Security Holders............ 14
Item 5. Other Information.............................................. 14
Item 6. Exhibits and Reports on Form 8-K............................... 14
SIGNATURES................................................................. 15
</TABLE>
ii
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
September 30,
1998 December 31,
ASSETS (unaudited) 1997
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,850 $ 3,121
Investments 1,649 1,281
Accounts receivable, less allowance for doubtful accounts of
$802 and $700 at September 30, 1998 and December 31, 1997,
respectively 9,551 7,576
Accounts receivable from related parties 35 228
Receivables from employees 64 89
Inventories 122 142
Prepaid rent 3,121 2,452
Prepaid expenses 440 795
-------- --------
Total current assets 17,832 15,684
Property, plant and equipment, net 53,371 51,090
Intangible assets, net 9,366 10,450
Other assets 27 250
-------- --------
$ 80,596 $ 77,474
======== ========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Current liabilities:
Current installments of long-term debt $ - $ 4,000
Accounts payable 539 540
Interest payable 885 4,042
Accrued expenses and other liabilities 2,757 2,673
Deferred compensation 1,402 1,332
-------- --------
Total current liabilities 5,583 12,587
Long-term debt, less current installments 139,000 131,034
Deferred compensation 2,913 3,439
-------- --------
Total liabilities 147,496 147,060
Commitments and contingencies
Partners' equity (deficit):
General partners' deficit (67,829) (67,829)
Limited partners' equity (deficit) 929 (1,757)
-------- --------
Total partners' deficit (66,900) (69,586)
-------- --------
$ 80,596 $ 77,474
======== ========
</TABLE>
See accompanying notes to unaudited interim consolidated financial statements.
1
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Gross Revenues $19,083 $16,635 $53,447 $46,851
Less agency commissions 1,942 1,632 5,335 4,430
------- ------- ------- -------
Net outdoor advertising revenue 17,141 15,003 48,112 42,421
Operating expenses:
Direct advertising expenses 8,226 7,480 23,593 21,833
Corporate general and administrative 1,067 854 3,177 2,386
Depreciation and amortization 2,084 1,987 6,217 5,960
Deferred compensation 203 118 533 366
------- ------- ------- -------
Total operating expenses 11,580 10,439 33,520 30,545
------- ------- ------- -------
Operating income 5,561 4,564 14,592 11,876
------- ------- ------- -------
Other expenses (income):
Interest expense 3,568 3,616 10,859 10,894
Interest expense - related parties 1 0 15 14
Other expenses (income), net (6) (14) 56 (24)
(Gain) loss on disposals of property, plant
and equipment, net 81 1 100 (48)
------- ------- ------- -------
Total other expenses 3,644 3,603 11,030 10,836
------- ------- ------- -------
Income before extraordinary loss
on early extinguishment of debt 1,917 960 3,562 1,040
Extraordinary loss on early extinguishment of debt (330) - (330) -
------- ------- ------- -------
Net income $ 1,587 $ 960 $ 3,232 $ 1,040
======= ======= ======= =======
</TABLE>
See accompanying notes to unaudited interim consolidated financial statements.
2
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1998 1997
-------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,232 $ 1,040
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 5,587 5,321
Amortization of intangible assets 1,020 1,079
Deferred compensation expense 533 950
Payments of deferred compensation (1,262) (1,700)
Barter (income) loss (40) 62
Loss (gain) on disposals of property, plant and
equipment, net 100 (48)
Purchases of investments (95) (585)
Extraordinary loss on early extinguishment of debt 330 -
Changes in assets and liabilities:
Increase in accounts receivable, net (1,841) (1,486)
Decrease in inventories 20 28
Increase in prepaid rent and other prepaid expenses (310) (313)
Decrease (increase) in other assets 223 (136)
Increase (decrease) in accounts payable and accrued expenses 83 (562)
Decrease in interest payable (3,157) (2,657)
Decrease in other liabilities - long term - (55)
-------- -------
Net cash provided by operating activities 4,423 938
-------- -------
Cash flows from investing activities:
Additions to property, plant and equipment (8,191) (5,108)
Proceeds from sale of property, plant
and equipment 343 61
-------- -------
Net cash used in investing activities (7,848) (5,047)
-------- -------
Cash flows from financing activities:
Debt financing costs (68) (1)
Payments on long-term debt (15,944) (7,793)
Advances on revolving line of credit 19,910 12,038
Premium on Senior Notes redemption (198) -
Distributions to partners (546) (1,498)
-------- -------
Net cash provided by financing activities 3,154 2,746
-------- -------
Net decrease in cash and cash equivalents (271) (1,363)
Cash and cash equivalents at beginning of period 3,121 3,533
-------- -------
Cash and cash equivalents at end of period $ 2,850 $ 2,170
======== =======
</TABLE>
See accompanying notes to unaudited interim consolidated financial statements.
3
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements included herein
have been prepared by Adams Outdoor Advertising Limited Partnership (the
"Company") in accordance with the instructions for Form 10-Q and therefore, do
not include all information and footnotes necessary for a fair presentation of
financial position, results of operations, and cash flows in conformity with
generally accepted accounting principles. All adjustments consist of normal
recurring accruals, which are necessary for a fair presentation of the
information for the periods described. Certain information and footnote
disclosures normally included in consolidated financial statements prepared in
accordance with generally accepted accounting principles have been considered or
omitted pursuant to such rules and regulations. Although the Company believes
that the disclosures are adequate to make the information presented not
misleading, it is suggested that these consolidated financial statements be read
in conjunction with the Company's 1997 Annual Report on Form 10-K. Certain
reclassifications have been made to prior year amounts to conform with the
current year presentation.
(2) REFINANCING
On March 12, 1996, the Company refinanced (the "Refinancing") its debt structure
by issuing $105 million of 10 3/4%, Senior Notes due 2006 ("Senior Notes") under
an Indenture (the "Indenture"), and entered into a $15 million revolving line of
credit (the "Credit Facility"). On December 2, 1996 the Credit Facility was
increased to allow borrowings of up to $35 million on a revolving basis. On
March 31, 1998, the Company entered into an additional $3 million senior
unsecured credit facility. In September 1998, the proceeds from the senior
unsecured facility were used to purchase $4 million of the Company's Senior
Notes on the open market at 105% of principal plus accrued interest. As a
result of the redemption, the Company recognized an extraordinary loss of
$330,000, which represented the redemption premium plus recognition of a
proportionate share of the associated deferred financing fees.
Substantially all of the assets of the Company are pledged to secure
indebtedness of up to $35.0 million (of which approximately $35.0 million was
outstanding as of September 30, 1998) under the Credit Facility and,
accordingly, the lenders thereunder will have a prior claim on those assets.
Permitted borrowings under the Credit Facility are subject to various
conditions. In addition, the availability of borrowings are subject to
compliance with certain financial covenants. The agreement governing the Credit
Facility contains a number of covenants that are more restrictive than those
contained in the Indenture, including covenants requiring the Company to
maintain certain financial ratios that become more restrictive over time.
Adverse operating results could cause noncompliance with one or more of these
covenants, reducing the Company's borrowing availability, and, in certain
circumstances, entitling the lenders to accelerate the maturity of outstanding
borrowings. In November, 1998 the senior unsecured credit facility was
increased to $8 million.
4
<PAGE>
ADAMS OUTDOOR ADVERTISING, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30,
1998 December 31,
ASSETS (Unaudited) 1997
----------- ------------
<S> <C> <C>
Investment............................................................... $ 40 $ 40
====== =====
STOCKHOLDER'S EQUITY
Preferred stock, $0.001 par value
Authorized 800,000 shares; no shares issued and outstanding....... $ - $ -
Common stock, $0.001 par value
Authorized 200,000 shares; 10,000 shares issued and outstanding.... 100 100
Additional paid-in capital............................................... 900 900
Common stock subscribed.................................................. (960) (960)
------ -----
$ 40 $ 40
====== =====
</TABLE>
See accompanying notes to unaudited interim financial statements
5
<PAGE>
ADAMS OUTDOOR ADVERTISING, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Nine months Ended
September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues.................................................... $ - $ - $ - $ -
Expenses.................................................... $ - $ - $ - $ -
------ ------ ------ ------
Net income (loss)........................................... $ - $ - $ - $ -
====== ====== ====== ======
</TABLE>
See accompanying notes to unaudited interim financial statements
6
<PAGE>
ADAMS OUTDOOR ADVERTISING, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months Ended
September 30,
-------------------
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities............................................ $ - $ -
Cash flows from investing activities............................................ - -
Cash flows from financing activities............................................ - -
------ ------
Net change in cash........................................................ - -
Cash at beginning of period..................................................... - -
------ ------
Cash at end of period........................................................... $ - $ -
====== ======
</TABLE>
See accompanying notes to unaudited interim financial statements
7
<PAGE>
ADAMS OUTDOOR ADVERTISING, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited financial statements included herein have been
prepared by Adams Outdoor Advertising, Inc. ("AOAI") in accordance with the
instructions for Form 10-Q and, therefore, do not include all information and
footnotes necessary for a fair presentation of financial position, results of
operations, and cash flow in conformity with generally accepted accounting
principles. All adjustments consist of normal recurring accruals, which are
necessary for a fair presentation of the information for the periods described.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been considered or omitted pursuant to such rules and regulations.
Although AOAI believes that the disclosures are adequate to make the information
presented not misleading, it is suggested that these financial statements be
read in conjunction with AOAI's 1997 Annual Report on Form 10-K.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Except for its interests and activities as managing general partner of Adams
Outdoor Advertising Limited Partnership (the "Company"), Adams Outdoor
Advertising, Inc. ("AOAI") has nominal assets and does not conduct any
operations. Accordingly, the following "Management's Discussion and Analysis of
Financial Condition and Results of Operations" relate to the Company and the
consolidated financial statements of the Company included in this filing.
Certain matters discussed in this Quarterly Report on Form 10-Q are "forward-
looking statements" intended to qualify for the safe harbors from liability
established by the Private Securities Litigation Reform Act of 1995. These
forward-looking statements can generally be identified as such because the
context of the statement will include forward-looking terminology such as
"believes," "anticipates," "expects," "would," "estimate," "continue," or the
negative thereof or variations thereon or comparable terminology. Similarly,
statements that describe the Company's future plans, objectives or goals are
also forward-looking statements. Such forward-looking statements are subject to
certain risks and uncertainties which could cause actual results to differ
materially from those anticipated as of the date of this report. Certain of
such risks and uncertainties are described in close proximity to such forward-
looking statements. Other factors that could effect such results, performance
or achievement are set forth in "Risk Factors" in Amendment No. 3 to the
Company's Registration Statement on Form S-4 (Registration No. 333-03338) as
updated by the Company's Annual Report on Form 10-K for the year ended December
31, 1997 including those risks to the Company presented by financial leverage,
government regulation with respect to zoning, restrictions on outdoor
advertising by the tobacco industry, competition and general economic
conditions.
RESULTS OF OPERATIONS
Quarter Ended September 30, 1998 Compared With Quarter Ended September 30, 1997
- -------------------------------------------------------------------------------
Net revenues (gross revenues net of agency commissions) for the quarter ended
September 30, 1998 of $17.1 million increased by 14.3% from $15.0 million for
the comparable period in 1997. This increase resulted from higher advertising
rates and an increase in the number of displays sold.
It has been reported that certain cigarette manufacturers who are defendants in
numerous class-action suits throughout the United States have reached agreement
with the Attorneys General of various states for an out of court settlement with
respect to such suits. The settlement is subject to various conditions
including approval and implementing legislation by the United States Congress. A
reduction in outdoor advertising by the tobacco industry would cause an
immediate reduction in the Company's direct revenue from such advertisers at
least in the immediate term following the imposition of such ban while alternate
sources of advertising are secured. Such ban would also increase the available
space on the existing inventory of billboards in the outdoor advertising
industry. This could in turn result in a reduction of outdoor advertising rates
in each of the Company's outdoor advertising markets or limit the ability of
industry participants to increase rates for some period of time. Accordingly,
there can be no assurance that the Company
9
<PAGE>
will immediately replace tobacco industry advertising revenue in the event of a
total ban of tobacco advertising on outdoor billboards and signs and the
consequences of such ban could have a material adverse affect on the Company.
Furthermore, even in the event the advertising ban does not take place, state
and local governments have recently proposed and some have enacted regulations
restricting or banning outdoor advertising of tobacco in certain jurisdictions.
Direct advertising expenses for the quarter ended September 30, 1998 of $8.2
million increased by 10.0% from $7.5 million for the comparable period in 1997.
The increase was attributable to direct costs associated with increased sales
from new displays and an increase in sales commissions due to higher average
rates.
Corporate, general and administrative expenses for the quarter ended September
30, 1998 of $1.1 million increased by 25.0% from $854,000 for the comparable
period in 1997. This increase was attributable to increased professional fees,
travel expenses and costs associated with the new Company logo and
identification project.
Depreciation and amortization for the quarter ended September 30, 1998 of $2.1
million increased by 4.9% from $2.0 million for the comparable period in 1997.
Depreciation expense increased as a result of additions to property, plant and
equipment during 1997 and early 1998 from acquisitions and building of new
structures.
Deferred compensation expense for the quarter ended September 30, 1998 of
$203,000 increased by 72.0% from $118,000 for the comparable period in 1997
primarily due to increased Operating Profit and vesting.
Interest expense for the quarters ended September 30, 1998 and September 30,
1997 was $3.6 million. For the quarter ended September 30, 1998 and September
30, 1997, the effective interest rates were 10.0% and 10.3%, respectively, on
average outstanding balances of $137.3 million and $134.9 million, respectively.
During the three months ended September 30, 1998 the Company incurred an
extraordinary loss of $330,000 on the early extinguishment of $4 million of its
Senior Notes. See note 1 in accompanying financial statements.
Net income for the quarter ended September 30, 1998 increased to $1.6 million
from $960,000 for the comparable period in 1997 as a result of the items
discussed above.
Nine Months Ended September 30, 1998 Compared With Nine Months Ended September
- ------------------------------------------------------------------------------
30, 1997
- --------
Net revenues (gross revenues net of agency commissions) for the nine months
ended September 30, 1998 of $48.1 million increased by 13.4% from $42.4 million
for the comparable period in 1997. This increase resulted from higher
advertising rates and an increase in the number of displays sold.
10
<PAGE>
Direct advertising expenses for the nine months ended September 30, 1998 of
$23.6 million increased by 8.1% from $21.8 million for the comparable period in
1997. The increase was attributable to direct costs associated with increased
sales from new displays and an increase in sales commissions due to higher
average rates.
Corporate, general and administrative expenses for the nine months ended
September 30, 1998 of $3.2 million increased by 33.2% from $2.4 for the
comparable period in 1997. This increase was attributable to increased
professional fees, travel expenses and costs associated with the new Company
logo and identification project.
Depreciation and amortization for the nine months ended September 30, 1998 of
$6.2 million increased by 4.3% from $6.0 million for the comparable period in
1997. Depreciation expense increased as a result of additions to property, plant
and equipment during 1997 and early 1998 from acquisitions and building of new
structures.
Deferred compensation expense for the nine months ended September 30, 1998 of
$533,000 increased by 45.6% from $366,000 for the comparable period in 1997
primarily due to increased Operating Profit and vesting.
Interest expense for the nine months ended September 30, 1998 and September 30,
1997 was $10.9 million. For the nine months ended September 30, 1998 and
September 30, 1997, the effective interest rates were 10.2% and 10.3%,
respectively, on average outstanding balances of $137.1 million and $135.1
million, respectively.
During the three months ended September 30, 1998 the Company incurred an
extraordinary loss of $330,000 on the early extinguishment of $4 million of its
Senior Notes. See note 1 in accompanying financial statements.
Net income for the nine months ended September 30, 1998 increased to $3.2
million from $1.0 million for the comparable period in 1997 as a result of the
items discussed above.
Operating Cash Flow is defined as operating income (loss) before (i)
depreciation and amortization expenses and (ii) deferred compensation expense.
As a partnership the Company is not subject to federal corporate income tax.
Operating Cash Flow is not intended to represent net cash provided by operating
activities as defined by generally accepted accounting principles and should not
be considered as an alternative to net income or loss as an indicator of the
Company's operating performance or to net cash provided by operating, investing
and financing activities as a measure of liquidity or ability to meet cash
needs. The Company believes Operating Cash Flow is a measure commonly reported
and widely used by analysts, investors and other interested parties in the media
industry. Accordingly, this information is disclosed herein to permit a more
complete comparative analysis of the Company's performance relative to other
companies in the media industry. Operating Cash Flow for the nine months ended
September 30, 1998 of $21.3 million increased by 17.3% from $18.2 million for
the comparable period in 1997. Operating Cash Flow for the quarter ended
September 30, 1998 of $7.8 million increased by 17.7% from $6.7 million for the
comparable period in 1997.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
In 1996 the Company, together with its managing general partner, AOAI placed
$105,000,000 of their 10 3/4% Senior Notes due 2006 issued under an indenture
(the "Indenture") and entered into a Credit Facility (the "Credit Facility). As
part of the Refinancing, substantially all of the Company's outstanding debt was
refinanced. As a result of the Refinancing, the average maturities of the
Company's debt were extended to 2006.
Historically, the Company's cash needs have arisen from operating expenses
(primarily direct advertising expenses and corporate general and administrative
expenses), debt service, capital expenditures and deferred compensation payments
under phantom stock agreements. As a result of the Refinancing, the Company's
interest expense has increased due to the higher weighted average interest rate.
The Company's primary sources of cash are net cash generated from operating
activities and borrowings under the Credit Facility. The Company's net cash
provided by operations increased significantly to $4.4 million for the nine
months ended September 30, 1998 from $938,000 for the nine months ended
September 30, 1997.
The Company expects that its capital expenditures during 1998 will be
approximately $10.0 million and will be primarily for new billboard construction
and the upgrading of existing displays. The Company made capital expenditures of
$8.2 million during the nine months ended September 30, 1998 compared to $5.1
million during the nine months ended September 30, 1997.
At September 30, 1998 and December 31, 1997, the Company's accrued liability for
deferred compensation payable under phantom stock agreements with key employees
was $4.3 million and $4.8 million, respectively, in the aggregate. The Credit
Facility and the Indenture permit the payment of the deferred compensation when
due, subject to certain annual limitations. Such payments are scheduled to be
paid during the 1998 through 2002 period. During the nine months ended
September 30, 1998, payments of deferred compensation totaled $1.3 million
compared to $1.7 million in the same 1997 period.
The Company has revolving credit facilities of up to $38.0 million, $35 million
secured and $3 million unsecured. At September 30, 1998, the outstanding
borrowings were $38.0 million. On September 1, 1998 the Company repurchased $4
million of their own bonds in the open market for 105% of principal plus accrued
interest. As a result of the redemption, the Company recognized an extraordinary
loss of $330,000, which represented the redemption premium plus recognition of a
proportionate share of the associated deferred financing fees. The purchase was
funded by the unsecured revolver as well as availability under the secured loan.
Substantially all of the assets of the Company are pledged to secure
indebtedness under the secured credit facility. The agreement governing the
secured credit facility contains a number of covenants that are more restrictive
than those contained in the Indenture, including covenants requiring the Company
to maintain certain financial ratios that become more restrictive over time.
Adverse operating results could cause noncompliance with one or more of these
covenants, reducing the Company's borrowing availability and, in certain
circumstances, entitling the lenders to accelerate the maturity of outstanding
borrowings.
12
<PAGE>
The Company believes that net cash provided from operations and available credit
under its credit facilities will be sufficient to meet its cash needs for its
current operations, required debt payments, anticipated capital expenditures and
deferred compensation payments for the next twelve months.
IMPACT OF INFLATION
Though increases in operating costs could adversely affect the Company's
operations, management does not believe that inflation has had a material effect
on operating profit during the past several years.
SEASONALITY
Although revenues during the first and fourth quarter are slightly lower than
the other quarters, management does not believe that seasonality has a
significant impact on the operations or cash flow of the Company.
Information contained in this 10-Q including, without limitation, in the
foregoing Management's Discussion and Analysis of Financial Condition and
Results of Operations may contain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995, which can be
identified by the use of forward-looking terminology as "may," "will," "would,"
"expect," "anticipate," "estimate," or "continue" or the negative thereof or
other variations thereon or comparable terminology. Certain factors, including
financial leverage, government regulation with respect to zoning and
restrictions on outdoor advertising by the tobacco industry, competition and
general economic condition could cause actual results to differ materially from
those in such forward-looking statements.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
During the period covered by this Report, the constituent instruments defining
the rights of the holders of registered securities were not materially modified,
nor were the rights evidenced by the registered securities limited or qualified
by the issuance or modification of any other class of securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
During the period covered by this Report, there has been no material default
with respect to any indebtedness of the Registrants.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
(27) Financial data schedule
(b) No reports on Form 8-K have been filed during the quarter for which
the report is filed.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrants have duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 12, 1998 ADAMS OUTDOOR ADVERTISING
LIMITED PARTNERSHIP
By Adams Outdoor Advertising, Inc.
Its General Partner
By /s/ J. Kevin Gleason
---------------------
J. Kevin Gleason
President and Chief Executive Officer
By /s/ Abe Levine
--------------
Abe Levine
Chief Financial Officer
(Principal Financial and Accounting Officer)
ADAMS OUTDOOR ADVERTISING, INC.
By /s/ J. Kevin Gleason
---------------------
J. Kevin Gleason
President and Chief Executive Officer
By /s/ Abe Levine
--------------
Abe Levine
Chief Financial Officer
(Principal Financial and Accounting Officer)
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet of Adams Outdoor Advertising Limited Partnership as of September 30, 1998
and the related Statements of Operations and Cash Flows and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001011977
<NAME> ADAMS OUTDOOR ADVERTISING, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 2,850
<SECURITIES> 0
<RECEIVABLES> 10,452
<ALLOWANCES> (802)
<INVENTORY> 122
<CURRENT-ASSETS> 17,832
<PP&E> 116,673
<DEPRECIATION> (63,302)
<TOTAL-ASSETS> 80,596
<CURRENT-LIABILITIES> 5,583
<BONDS> 139,000
0
0
<COMMON> 0
<OTHER-SE> (66,900)
<TOTAL-LIABILITY-AND-EQUITY> 80,596
<SALES> 17,141
<TOTAL-REVENUES> 17,141
<CGS> 0
<TOTAL-COSTS> 9,496
<OTHER-EXPENSES> 2,084
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,569
<INCOME-PRETAX> 1,917
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,917
<DISCONTINUED> 0
<EXTRAORDINARY> (330)
<CHANGES> 0
<NET-INCOME> 1,587
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet of Adams Outdoor Advertising, Inc. as of September 30, 1998 and the
related Statements of Operations and Cash Flows and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<CIK> 0001011976
<NAME> ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 0
<SECURITIES> 40
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 40
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 100
<OTHER-SE> (60)
<TOTAL-LIABILITY-AND-EQUITY> 40
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>