U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1998
--------------------------------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT
For the transition period from to
-------------------- ----------------------------
Commission File Number 000-21623
OBIE MEDIA CORPORATION
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
OREGON 93-0966515
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
4211 West 11th Ave., Eugene, Oregon 97402
-----------------------------------------
(Address of principal executive offices)
541-686-8400 FAX 541-345-4339
- --------------------------------------------------------------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or 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 [ ].
As of September 27, 1998, 3,921,188 shares of the issuer's common stock
were outstanding.
This report contains 11 pages. The only exhibit is the Financial Data
Schedule.
<PAGE>
<TABLE>
<CAPTION>
OBIE MEDIA CORPORATION
Consolidated Balance Sheets
ASSETS
August 31, November 30,
Current Assets: 1998 1997
----------------------- -------------------------
(Unaudited)
<S> <C> <C>
Cash $ 90,895 $ -0-
Accounts receivable, net 3,433,357 2,878,360
Prepaid expenses and other current assets 1,157,193 790,234
Deferred income taxes 644,997 1,105,240
----------------------- -----------------------
Total current assets 5,326,442 4,773,834
Property and equipment, net 10,017,554 9,264,855
Other assets 403,705 245,733
----------------------- -----------------------
Total assets $ 15,747,701 $ 14,284,422
======================= =======================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Checks outstanding in excess of cash deposits $ 224,552 $ 173,611
Current portion of long-term debt 1,182,039 859,323
Line of credit 1,527,198 742,864
Accounts payable 177,661 403,449
Accrued expenses 1,283,680 1,166,883
Deferred revenue 889,567 781,204
----------------------- -----------------------
Total current liabilities 5,284,697 4,127,334
Deferred income taxes 733,103 630,551
----------------------- -----------------------
Long-term debt, less current portion 5,434,227 5,695,219
----------------------- -----------------------
Total liabilities 11,452,027 10,453,104
Minority interest in subsidiary 77,993 35,424
----------------------- -----------------------
Shareholders' equity:
Preferred stock, without par value, 10,000,000 shares
authorized, no shares issued and outstanding -0- -0-
Common stock, without par value, 20,000,000 shares
authorized, 3,871,188 and 3,855,484 shares issued and 6,316,864 6,173,967
outstanding, respectively
Accumulated deficit (2,099,183) (2,378,073)
----------------------- -----------------------
Total shareholders' equity 4,217,681 3,795,894
Total liabilities and shareholders' equity $ 15,747,701 $ 14,284,422
======================= =======================
</TABLE>
See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
OBIE MEDIA CORPORATION
Consolidated statements of Income
Quarter Ended Nine Months Ended
August 31 August 31
---------------------------- ----------------------------
1998 1997 1998 1997
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Outdoor advertising $1,494,239 $1,378,664 $4,252,092 $3,928,437
Transit advertising 4,220,716 2,663,737 10,619,404 5,896,053
----------- ----------- ----------- -----------
Gross revenues 5,714,955 4,042,401 14,871,496 9,824,490
Less agency commissions (609,988) (365,983) (1,409,004) (840,489)
----------- ----------- ----------- -----------
Net revenues 5,104,967 3,676,418 13,462,492 8,984,001
Operating expenses:
Direct advertising expenses 3,293,890 2,265,809 8,556,792 5,333,420
General and administrative 768,584 563,330 2,222,152 1,512,282
Start up costs 55,641 76,390 99,194 230,067
Depreciation and amortization 227,898 159,497 581,578 477,961
----------- ----------- ----------- -----------
Operating income 758,954 611,392 2,002,776 1,430,271
Other (income) expense:
Interest expense 148,100 134,370 479,342 424,970
Minority interest in subsidiary 10,368 (725) 42,569 11,949
Other -0- (11,000) -0- (51,492)
----------- ----------- ----------- -----------
Income before taxes 600,486 488,747 1,480,865 1,044,844
Provision for taxes 228,251 187,923 562,795 403,599
Net income $372,235 $300,824 $918,070 $641,245
=========== =========== =========== ===========
Basic earnings per share $0.10 $0.08 $0.24 $0.17
Shares used in basic per share
calculations 3,867,199 3,853,152 3,859,419 3,851,048
Diluted earnings per share $0.09 $0.08 $0.23 $0.17
Shares used in diluted per share
calculations 3,942,294 3,870,614 3,927,593 3,874,674
</TABLE>
See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
Obie Media Corporation
Consolidated Statements of Cash Flows
Three Months Ended Nine Months Ended
August 31, August 31, August 31, August 31,
1998 1997 1998 1997
--------------------------------- -------------------------------
(Unaudited) (Unaudited)
Cash flows from operating activities:
<S> <C> <C> <C> <C>
Net income $ 372,235 $ 300,824 $ 918,070 $ 641,245
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 227,898 159,497 581,578 477,961
Changes in operating assets
and liabilities 151,274 (491,083) (427,849) (808,276)
---------------- ---------------- ---------------- --------------
Net cash provided by (used in)
operating activities 751,407 (30,762) 1,071,799 310,930
---------------- ---------------- ---------------- --------------
Cash flows from investing activities:
Capital expenditures (647,644) (313,121) (1,250,897) (1,117,401)
---------------- ---------------- ---------------- --------------
Net cash used in investing
activities (647,644) (313,121) (1,250,897) (1,117,401)
---------------- ---------------- ---------------- --------------
Cash flows from financing activities:
Proceeds from common stock
issuance 52,575 -0- 52,575 -0-
Net payments on long-term debt (215,957) (198,544) (636,276) (535,424)
Credit line borrowing, net 194,786 822,721 784,334 885,457
Other financing activities (44,272) (235,412) 69,360 26,380
---------------- ---------------- ---------------- --------------
Net cash provided by (used in)
financing activities (12,868) 388,765 269,993 376,413
---------------- ---------------- ---------------- --------------
Net increase (decrease) in cash 90,895 44,882 90,895 (430,058)
Cash, beginning of period -0- -0- -0- 474,940
---------------- ---------------- ---------------- --------------
Cash, end of period $ 90,895 $ 44,882 $ 90,895 $ 44,882
================ ================ ================ ==============
Supplemental disclosure of cash flow information:
Interest capitalized $ 4,287 $ 530 $ 10,428 $ 9,000
Cash paid for interest 163,727 311,670 490,377 448,010
Cash paid for taxes 73,910 - 73,910 -
Note payable issued to purchase outdoor
advertising structures - - 698,000 -
Issuance of stock to employee benefit plan 71,903 36,875 71,903 36,875
Income tax benefit of non-qualified 28,419 - 28,419 -
stock option exercise
</TABLE>
See accompanying notes
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The interim financial statements have been prepared by Obie Media Corporation
(the "Company") without audit. In the opinion of management, the accompanying
unaudited financial statements contain all adjustments necessary to present
fairly the financial position of the Company as of August 31, 1998, and the
results of operations and cash flows of the Company for the nine months ended
August 31, 1998 and 1997. During the quarter ended August 31, 1998, a new
subsidiary, Obie Media Limited, began operations in British Columbia, Canada.
The condensed consolidated financial statements include the accounts of the
Company and its subsidiaries, and all significant intercompany accounts and
transactions have been eliminated in consolidation.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted as permitted by rules and regulations of the
Securities and Exchange Commission. The organization and business of the
Company, accounting policies followed by the Company and other information are
contained in the notes to the Company's financial statements filed as part of
the Company's November 30, 1997 Form 10-KSB. This quarterly report should be
read in conjunction with such annual report.
2. Long-Term Borrowings
The Company's Term Loan Agreement contains certain covenants including
maintenance of a cash flow coverage. The Company was in compliance with these
covenants at August 31, 1998. The Company's loan agreements were modified on
September 1, 1998. See "Subsequent Events."
3. Earnings Per Share
Earnings per common share is computed based on the weighted average number of
common shares outstanding during the periods after consideration of the dilutive
effect of stock options. All share and per share information has been adjusted
to give retroactive effect to an 11 - 10 stock split effected in November 1997.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." This
standard revises the disclosure requirements of earnings per share, simplifies
the computation of earnings per share and increases the comparability of
earnings per share on an international basis. The Company adopted SFAS No. 128
in the period ended February 28, 1998. The earnings per share under the new
standard do not differ from those calculated under the previous standard.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
August 31, 1998 August 31, 1997 August 31, 1998 August 31,1997
--------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Basic shares (weighted average) 3,867,199 3,853,152 3,859,419 3,851,048
Dilutive effect of stock options 75,095 17,462 68,174 23,626
Diluted shares 3,942,294 3,870,614 3,927,593 3,874,674
</TABLE>
<PAGE>
4. Newly Issued Financial Accounting Pronouncements
Effective in its fiscal year ending November 30, 1999, the Company will be
required to adopt SFAS No. 130 "Reporting Comprehensive Income" and SFAS No. 131
"Disclosures about Segments of an Enterprise and Related Information." SFAS No.
130 established standards for reporting and display of comprehensive income and
its components in a full set of general-purpose financial statements. SFAS No.
131 changes current practice under SFAS No. 14 by establishing a new framework
on which to base segment reporting (referred to as the "management" approach)
and also requires interim reporting of segment information. Management does not
expect that the impact of adoption of these pronouncements will be material to
the Company's financial position or results of operations.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities," which
established accounting and reporting standards for all derivative instruments.
SFAS No. 133 is effective for fiscal years beginning after June 15, 1999. The
Company currently has no derivative instruments and, therefore, the adoption of
SFAS 133 will have no impact on the Company's financial position or results of
operations.
5. Related Party Transaction
In December, 1997, the Company exercised its option to purchase several outdoor
advertising structures from an affiliated partnership. The structures had
previously been leased by the Company from the partnership. The purchase price
was $698,000. In accordance with generally accepted accounting principles, the
Company recorded only the book value carried on the books of the affiliated
partnership at the date of purchase. The difference between the net book value
of these assets and the purchase price has been recorded as an addition to
accumulated deficit. The Company financed this purchase with an expansion of its
existing loan agreement with its lender.
6. Subsequent Events
On September 1, 1998, the Company closed the acquisition of the stock of P&C
Media. P&C Media sells advertising in 20 transit districts in the Eastern United
States. The Company paid $7.5 million cash, ($6.0 million current and $1.5
million deferred), issued 50,000 shares of its common stock and is contingently
liable to issue another 75,000 shares depending on the performance of P&C Media
in 1999 and 2000. The acquisition will be accounted for under the purchase
method of accounting, with the Company recording most of the purchase price
as goodwill. Future periods will reflect the amortization of this goodwill.
On September 1, 1998, the Company borrowed an additional $7 million under an
expanded credit agreement with its lender. These funds were used to pay the P&C
purchase price and reduce borrowings under the Company's revolving line of
credit. The revolving line of credit was increased from a limit of $2 million to
a limit of $4 million.
<PAGE>
MANAGEMENT'S DISCUSSION & ANALYSIS
The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the consolidated
financial statements included elsewhere in this Form 10-QSB. The following
discussion contains certain forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from the
forward-looking statements. Factors that could cause or contribute to such
differences include the following: a decline in the demand for advertising in
the areas where the Company conducts its business; a deterioration of business
conditions generally in such areas; slower than expected acceptance of the
Company's non-traditional display products; competitive factors, including
increased competition and price pressures; changes in regulatory or other
external factors; and other factors listed from time to time in the Company's
SEC reports, including but not limited to, its "Risk Factors" discussion in the
Registration Statement it filed in connection with its initial public offering
(the "IPO").
New Transit Contracts
On April 6, 1998, the Company entered into a contract to provide
advertising services to Capital Metropolitan Transportation Authority "Austin",
in Austin, Texas. Austin operates approximately 300 vehicles. The contract is
for two years with two additional one-year options at the discretion of Austin.
The Company agreed to pay Austin $1.4 million over the four-year period or 53%
of net space revenues on the vehicles, whichever is greater.
On June 23, 1998, the Company was informed by BC Transit that it had
been selected to provide transit advertising services to substantially all of
the transit districts in British Columbia, Canada. BC Transit operates
approximately 1,400 vehicles in these districts. The Company expects to sign two
separate contracts to provide these services, one covering approximately 900
vehicles in the city of Vancouver, British Columbia, and another contract
covering approximately 500 vehicles in the remainder of the province, including
Vancouver Island. Both contracts are for a total term of seven years including
option years. The Company expects to guarantee BC Transit CDN$37.7 million over
the seven-year period or 51% of net space revenue, whichever is greater. The
Company established a wholly owned subsidiary, Obie Media Limited, a BC
corporation, to conduct Canadian operations. On August 3, 1998, the Company
began operations in British Columbia. The final terms of the contract(s) are
still being negotiated.
Acquisition
On June 10, 1998, the Company signed a letter of intent to acquire the
stock of P&C Media. P&C Media sells transit advertising under contracts with 20
transit agencies in the Eastern and Midwestern United States, including
Cleveland and Cincinnati, Ohio; Milwaukee, Wisconsin; Hartford, Connecticut; and
Ft. Lauderdale, Florida. The transit districts under agreement with P&C Media
operate approximately 3,000 vehicles. The Company agreed to pay a cash purchase
price of $7.5 million, plus up to 125,000 shares of Obie Media common stock,
depending on P&C Media's future earnings. P&C Media's president and sole
shareholder, Mr. Wayne P. Schur, will serve as president of the Company's P&C
Media subsidiary and will become an Executive Vice President of the Company. On
September 1, 1998, the Company completed the acquisition of P&C Media. See
footnote 6 above.
<PAGE>
Three Months Ended August 31, 1998 Compared to the Three Months Ended August 31,
1997
Gross revenues increased $1.7 million, or 41.4%, to $5.7 million for
the three months ended August 31, 1998 compared to $4.0 million for the same
period in 1997. This increase was principally due to revenues from new transit
districts. Agency discounts increased $244,000, or 66.7%, to $610,000 from
$366,000, primarily due to the large proportion of existing agency business in
the new markets.
Direct advertising expenses increased $1.0 million, or 45.4%, to $3.3
million for the three months ended August 31, 1998 compared to $2.3 million for
the comparable period in 1997. This increase was primarily the result of
increased revenues. Direct advertising expenses increased as a percentage of
gross revenues due to the faster growth of the transit business, where costs,
especially occupancy costs, are higher than in the outdoor business.
The Company incurred start up costs of $56,000 in the third quarter of
1998 and $76,000 in the comparable period in 1997 associated with attempting to
obtain new transit district agreements and pre-opening costs in locations where
the Company has new transit agreements. The Company will incur start-up costs in
the future. The amount will vary, both in total cost and as a percentage of
revenues, depending on the complexity and number of proposals for new districts
and the success of the Company in obtaining contracts for new districts.
General and administrative expense increased $205,000, or 36.4%, to
$769,000 for the quarter ended August 31, 1998 from $563,000 for the quarter
ended August 31, 1997. The increase in general and administrative expenses is
less, in percentage terms, than the increase in revenues. As the Company's
revenues grow, general and administrative costs will grow, but should decline as
a percentage of revenues.
Depreciation and amortization expense increased $68,000, or 42.9%, from
$159,000 for the three months ended August 31, 1997 to $228,000 for the
comparable period in 1998, primarily due to investments in office equipment in
new markets and upgrading the computer capability in the Company's existing
operations.
Due to the above factors, operating income increased $148,000, or
24.1%, to $759,000 for the three months ended August, 31, 1998 from $611,000 for
the same period in 1997.
Interest expense remained relatively constant between the periods,
increasing $14,000, or 10.2%, from $134,000 in the third quarter of 1997, to
$148,000 in the third quarter of 1998. Due to the acquisition of P&C Media (See
"Acquisition" above), interest expense is expected to increase in future
periods.
Provision for income taxes increased proportionate to the increase in
income before tax.
As a result of the foregoing factors, net income for the three months
ended August 31, 1998 increased $71,000 to $372,000 as compared to $301,000 for
the same period in 1997.
<PAGE>
Nine Months Ended August 31, 1998 Compared to the Nine Months Ended August 31,
1997
Gross revenues increased $5.0 million, or 51.4%, to $14.9 million for
the nine months ended August 31, 1998 compared to $9.8 million for the same
period in 1997. This increase was principally due to increased transit revenues
from new districts, such as British Columbia, and transit districts operating
less than a full nine months in 1997, primarily Dallas. Agency discounts
increased $569,000 or 67.6% to $1.4 million in the first nine months of 1998
from $840,000 in the comparable period in 1997, primarily due to the large
proportion of existing agency business in the new markets.
Direct advertising expenses increased $3.2 million, or 60.4%, to $8.6
million for the nine months ended August 31, 1998 compared to $5.3 million for
the comparable period in 1997. This increase was primarily the result of
increased revenues. Direct advertising expenses increased as a percentage of
gross revenues due to the faster growth of the transit business, where costs,
especially occupancy costs, are higher than in the outdoor business.
The Company incurred start up costs of $99,000 in the first nine months
of 1998 and $230,000 in the comparable period in 1997 associated with attempting
to obtain new transit district agreements and pre-opening costs in locations
where the Company has new transit agreements. The Company will incur start-up
costs in the future. The amount will vary, both in total cost and as a
percentage of revenues, depending on the complexity and number of proposals for
new districts and the success of the Company in obtaining contracts for new
districts.
General and administrative expense increased $710,000, or 46.9%, to
$2.2 million for the nine months ended August 31, 1998 from $1.5 million for the
nine months ended August 31, 1997. The increase resulted primarily from
increased costs of administering new districts and districts which operated for
less than nine months in 1997. The increase in general and administrative
expenses is less, in percentage terms, than the increase in revenues. As the
Company's revenues grow, general and administrative costs will grow, but should
decline as a percentage of revenues.
Depreciation and amortization expense increased $104,000, or 21.7%,
from $478,000 for the nine months ended August 31, 1997 to $582,000 for the
comparable period in 1998, primarily due to investments in equipment in new
markets and upgrading the computer capability in the Company's existing
operations.
Due to the above factors, operating income increased $573,000, or
40.0%, to $2.0 million for the nine months ended August, 31, 1998 from $1.4
million for the same period in 1997.
Interest expense remained relatively constant between the periods. Due
to the acquisition of P&C Media (See "Acquisition" above) interest expense is
expected to increase in future periods.
Provision for income taxes increased proportionate to the increase in
income before tax.
As a result of the foregoing factors, net income for the nine months
ended August 31, 1998 increased $277,000 as compared to the same period in 1997.
<PAGE>
Liquidity and Capital Resources
The Company's working capital at August 31, 1998 was $42,000. The
decrease in working capital during the quarter was primarily due to increased
working capital needs from the Company's growth net of refinancing a short-term
note payable with long-term borrowings.
For the nine months ended August 31, 1998, net cash provided by
operating activities was $1.1 million, an increase of $761,000 from the
corresponding period in 1997, primarily due to the increase in net income. Net
cash used in investing activities increased to $1.3 million in the first nine
months of 1998 from $1.1 million in the comparable period in 1997, primarily due
to the purchase of real property in Vancouver, British Columbia in connection
with beginning operations in Canada. Net cash provided by financing activities
was $270,000 in the first three quarters of 1998 compared to $376,000 in the
first three quarters of 1997. Financing cash was provided previously by
borrowings on the Company's line of credit, net of repayments of long-term debt.
At August 31, 1998, the Company had outstanding borrowings of $8.1
million, of which $6.6 million was pursuant to long-term credit agreements, and
$1.5 million was pursuant to the Company's operating line of credit. On
September 1, 1998, in connection with the acquisition of P&C Media, the Company
expanded its credit arrangements with its lender. The Company borrowed an
additional $7 million, using such funds to pay the P&C Media purchase price and
to reduce borrowings under the Company's operating line of credit. In addition,
on September 1, 1998, the Company's operating line of credit was increased from
a maximum of $2 million to a maximum of $4 million. At September 1, 1998,
borrowings of $627,000 were outstanding under the expanded line of credit, and
the Company's available borrowing capacity under the line, based on
collateralized accounts, was $3.2 million.
The Company believes that cash generated from operations and borrowings
under its credit agreements will be sufficient to finance the Company's
operations, including anticipated capital expenditures, through fiscal 1998.
Seasonality
The Company's transit advertising revenues have exhibited some degree
of seasonality. Typically, the Company experiences its lowest revenues during
the first quarter of each year. The Company expects this trend to continue. A
reduction in revenues in any quarter is likely to result in a period-to-period
decline in operating performance and net income.
Year 2000 Compliance
The Year 2000 problem is the result of the inability of some computers
and computer software programs to accurately recognize, for dates after 1999,
dates which are often expressed as a two-digit number. The inability to
accurately recognize date information could affect computer operations and
calculations or cause computer systems and computer-dependent mechanical systems
not to operate at all.
<PAGE>
The Company is in various stages of assessing its internal technical
and non-technical systems to ascertain whether they are Year 2000 compliant.
After conducting tests, the Company has identified one information processing
system which is not Year 2000 compliant and has determined that the cost of
replacing or updating the system should not exceed $25,000. The Company believes
that its information processing systems used in financial reporting and
record-keeping, and the majority of its incidental software systems, are, or can
be made without material cost, Year 2000 compliant. The Company is in the
process of phasing out all of its personal computer work stations which are not
Year 2000 compliant. It does not believe that a material number of its work
stations will need to be replaced. The Company has not yet definitively
determined the extent to which its information processing systems used in
designing and producing art work are Year 2000 compliant. Further, the Company
has only generally assessed its non-technical systems which may be dependent
upon computer components, including telephone and voice-mail systems, in order
to identify systems that are not Year 2000 compliant
The Company has engaged the services of a full-time information
processing manager to, among other duties, assist in identifying any Year 2000
issues which may arise in its technical and non-technical systems and implement
any necessary modifications. The Company expects to complete its Year 2000
assessment of its internal technical and non-technical systems by May 31, 1999.
The Company has only generally assessed its relationships with third
parties whose inability to achieve timely Year 2000 compliance could have a
material adverse effect on the Company's financial condition or results of
operations. These third parties are primarily transit districts, advertising
agencies, vendors, banks, utilities and freight companies whose failure to
achieve timely Year 2000 compliance could delay customer orders for the
Company's services, delay receipt of payments by customers for services rendered
and disrupt other aspects of the Company's operations. The Company expects that
its general assessment of Year 2000 issues with regard to its material
relationships with third parties will continue through 1999. However, certain of
such third parties are subject to stringent regulations which mandate that they
achieve timely Year 2000 compliance. Further, the Company does not believe that
the commodities and services upon which it relies are of a kind or nature which
is particularly sensitive to Year 2000 issues. In addition, the Company believes
that its diversified customer and supplier base should prevent one or a few of
its vendors' or customers' failure to be Year 2000 compliant from having a
material adverse effect on its financial condition or results of operations.
The Company has yet to determine the total estimated cost of its Year
2000 compliance program. Expenditures through August 31, 1998 are immaterial.
The Company believes that a reasonably likely worst case scenario as to
the effect on it of the Year 2000 compliance issue is that several of its large
customers fail to become Year 2000 compliant thus delaying their advertising
orders and reducing the Company's revenues. In addition, the Company could be
required to replace its information processing systems used in designing and
producing art work with systems which are Year 2000 compliant. The Company
believes that its replacement of such systems would result in a capital
expenditure by it of not more than $50,000.
The Company has not developed a contingency plan in the event the
Company or any of the third parties with which it has a material relationship
fail to achieve timely Year 2000 compliance. The Company may develop a Year 2000
contingency plan after it has completed its internal and external assessment of
Year 2000 issues which may affect it. The Company will continue to update its
assessment of its Year 2000 readiness as it receives updated information from
its Year 2000 compliance program.
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its annual meeting of shareholders on April 3, 1998.
At the meeting, Brian B. Obie, Delores M. Mord, Randall C. Pape', Stephen A.
Wendell and Richard C. Williams were reelected to the Board of Directors for
one-year terms. Voting on the election of directors was as follows:
Votes Votes Broker
For Withheld Non-Votes
Brian B. Obie 2,988,088 0 0
Delores M. Mord 2,988,088 0 0
Randall C. Pape' 2,988,088 0 0
Stephen a. Wendell 2,988,088 0 0
Richard C. Williams 2,987,858 150 0
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) A report on Form 8-K was filed by the Company on September 1, 1998
reporting the acquisition of P&C Media.
Signature
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Obie Media Corporation
Date Octoer 14, 1998 By: /s/ James W. Callahan
---------------------- ---------------------
James W. Callahan
Chief Financial Officer
Signing on behalf of the registrant and
as principal financial and accounting officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial
information extracted from the financial
statements of Obie Media Corporation which are
included in its quarterly report, Form 10-QSB,
for the quarter ended August 31, 1998 and is
qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Nov-30-1998
<PERIOD-END> Aug-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 3,698,005
<ALLOWANCES> 264,648
<INVENTORY> 0<F1>
<CURRENT-ASSETS> 5,326,442
<PP&E> 14,002,659
<DEPRECIATION> 3,985,105
<TOTAL-ASSETS> 15,747,701
<CURRENT-LIABILITIES> 5,284,697
<BONDS> 6,616,266
0
0
<COMMON> 6,316,864
<OTHER-SE> (2,099,183)
<TOTAL-LIABILITY-AND-EQUITY> 15,747,701
<SALES> 0
<TOTAL-REVENUES> 14,871,496
<CGS> 0
<TOTAL-COSTS> 9,965,796
<OTHER-EXPENSES> 99,194
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 479,342
<INCOME-PRETAX> 1,480,865
<INCOME-TAX> 562,795
<INCOME-CONTINUING> 918,070
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 918,070
<EPS-PRIMARY> .24
<EPS-DILUTED> .23
<FN>
<F1> Information not included in Financial
Statements
</FN>
</TABLE>
