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 February 28, 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 April 3, 1998, 3,855,484 shares of the issuer's common stock were
outstanding.
This report contains 7 pages. The only exhibit is the Financial Data
Schedule.
<PAGE>
<TABLE>
<CAPTION>
OBIE MEDIA CORPORATION
Consolidated Balance Sheets
ASSETS
February 28, November 30,
1998 1997
------------ ------------
<S> <C> <C>
Current assets: (Unaudited)
Cash $ - $ -
Accounts receivable, net 2,464,728 2,878,360
Prepaid expenses and other current assets 1,081,435 790,234
Deferred tax assets 1,105,240 1,105,240
------------ ------------
Total current assets 4,651,403 4,773,834
Property and equipment, net 9,415,858 9,264,855
Other assets 247,276 245,733
------------ ------------
Total assets $ 14,314,537 $ 14,284,422
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Checks outstanding in excess of cash deposits 207,570 $ 173,611
Current portion of long-term debt 905,260 859,323
Line of credit 846,327 742,864
Accounts and note payable 863,973 403,449
Accrued expenses 1,193,234 1,166,883
Deferred revenue 827,450 781,204
------------ ------------
Total current liabilities 4,843,814 4,127,334
Deferred tax liabilities 732,168 630,551
Long-term debt, less current portion 5,376,858 5,695,219
------------ ------------
Total liabilities 10,952,840 10,453,104
------------ ------------
Minority interest in subsidiary 39,186 35,424
------------ ------------
Shareholders' equity:
Preferred stock, without par value, 10,000,000 shares
authorized, no shares issued and outstanding - -
Common stock, without par value; 20,000,000 shares
authorized, 3,855,484 shares issued and outstanding 6,173,967 6,173,967
Accumulated deficit (2,851,456) (2,378,073)
------------ ------------
Total shareholders' equity 3,322,511 3,795,894
------------ ------------
Total liabilities and shareholders' equity $ 14,314,537 $ 14,284,422
============ ============
</TABLE>
See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
OBIE MEDIA CORPORATION
Consolidated Statements of Income
Three Months Ended
February 28, February 28,
1998 1997
---------------------------------------
(Unaudited)
<S> <C> <C>
Revenues:
Outdoor advertising $ 1,344,935 $ 1,264,614
Transit advertising 2,824,912 1,472,891
------------- -------------
Gross revenues 4,169,847 2,737,505
Less- Agency commissions (350,485) (212,151)
-------------- ---------------
Net revenues 3,819,362 2,525,354
Operating expenses:
Direct advertising expenses 2,497,963 1,557,148
General and administrative 688,366 476,573
Start-up costs 18,240 -
Depreciation and amortization 177,439 158,279
-------------- ---------------
Operating income 437,354 333,354
Interest expense 166,178 153,867
Minority interest in subsidiary 3,762 7,513
-------------- ---------------
Income before income taxes 267,414 171,974
Provision for income taxes 101,617 65,783
Net income $ 165,797 $ 106,191
============== ===============
Shares used in per-share calculations 3,915,796 3,863,645
Net earnings per share $ 0 .04 $ 0.03
</TABLE>
See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
OBIE MEDIA CORPORATION
Consolidated Statements of Cash Flows
Three Months Ended
February 28, February 28,
1998 1997
---------------------------------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 165,797 $ 106,191
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 177,439 158,279
Changes in operating assets and liabilities 61,388 (225,976)
---------------- ----------------
Net cash provided by operating activities 404,624 38,494
---------------- ----------------
Cash flows from investing activities:
Capital expenditures (269,622) (393,090)
---------------- ----------------
Net cash used in investing activities (269,622) (393,090)
---------------- ----------------
Cash flows from financing activities:
Payments on long-term debt (272,424) (133,815)
Borrowings on line of credit net of repayments 103,463 -
Other financing activities 33,959 13,471
---------------- ----------------
Net cash provided by (used in) financing activities (135,002) (120,344)
---------------- ----------------
Net increase (decrease) in cash - (474,940)
Cash , beginning of year - 474,940
---------------- ----------------
Cash, end of quarter $ - $ -
================ ================
Supplemental disclosures of cash flow information
Interest capitalized $ 2,704 $ 1,000
Cash paid for interest 37,862 128,722
Cash paid for taxes - -
Note payable issued to acquire outdoor advertising structures 698,000 -
</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 February 28, 1998, and the
results of operations and cash flows of the Company for the three months ended
February 28, 1998 and 1997. The condensed consolidated financial statements
include the accounts of the Company and its subsidiary, 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 February 28, 1998.
3. Earnings Per Share
Earnings per common share is computed 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 for 10 stock split effective in November 1997.
<TABLE>
<CAPTION>
February 28, 1998 February 28, 1997
<S> <C> <C>
Issued and outstanding shares (weighted average) 3,855,484 3,855,484
Dilutive effect of stock options 60,312 8,164
--------- ---------
3,915,796 3,863,645
========= =========
</TABLE>
4. Newly Issued Financial Accounting Pronouncements
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.
<PAGE>
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. 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.
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 unique 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 4 year period or 53% of net space
revenue, whichever is greater.
Results of operations
(all dollars in $000 except per share amounts)
Revenues increased 52% from $2,738 for the three-month period ended February 28,
1997, to $4,170 for the three-month period ended February 28, 1998 due primarily
to the addition of new transit markets and additionally to higher rates and
increased occupancy in existing markets. Gross transit revenues increased
approximately 92% from $1,473 in the first quarter of 1997, to $2,825 in the
comparable period in 1998, while gross outdoor advertising revenues increased 6%
from $1,265 in 1997 to $1,345 in 1998. Agency discounts increased 65% from $212
to $350 in the first quarter of 1997 and 1998, respectively, reflecting a
greater proportion of agency business, particularly in new markets.
Direct advertising expenses increased 60% to $2,498 for the first quarter of
1998, from $1,557 in the comparable period in 1997, primarily due to increased
revenues. Direct advertising expenses rose as a percentage of net revenue
primarily due to the faster growth of transit advertising which has higher
occupancy costs as a percentage of net sales than outdoor advertising.
General and administrative (G&A) costs increased 44% to $688 in the first
quarter of 1998 from $477 in the comparable period in 1997. Increased G&A costs
are primarily due to increased payroll and other costs attributable to the
Company's growth. G&A costs decreased as a percentage of revenues primarily
because corporate costs did not need to be added proportionate to revenue for
the new markets.
Interest expense increased 8% from $154 for the three months ended February 28,
1997, to $166 for the comparable period in 1998, primarily due to increased
borrowings to support the growth of the Company.
For the reasons set out above, income before income taxes rose 55% from $172 in
the first quarter of 1997, to $267 in the comparable period in 1998. Income
taxes and net income also rose 55% for the reasons outlined above.
<PAGE>
Liquidity and Capital Resources
The Company's working capital deficit was $193 at February 28, 1998. The
decrease in working capital resulted primarily from the purchase of assets from
a related party as explained above. In addition there were seasonal reductions
in working capital items.
Net cash provided by operating activities was $405. The first quarter is a
seasonally slow time of the year. During this time, most operating assets and
liabilities decline from their year end balances.
The net cash used in investing activities, primarily investments in outdoor
advertising leases and structures, was $270.
The Company's net cash used by financing activities was $135, primarily due to
payments on long-term debt.
At February 28, 1998, the Company had outstanding borrowings of approximately
$7,128 all but $846 of which were pursuant to long-term credit agreements. The
Company also maintains a $2,000 operating line of credit. The line carries
interest at the Prime rate of the lender. As of February 28, 1998, there were
$846 in borrowings on this line of credit, and the Company's available borrowing
capacity, based on collateralized accounts was $1,673.
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.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) No reports on Form 8-K were filed by the Company during the quarter ended
February 28, 1998.
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 April 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 February, 28 1998 and is
qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> FEB-28-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 2,657,847
<ALLOWANCES> 193,119
<INVENTORY> 0<F1>
<CURRENT-ASSETS> 4,651,403
<PP&E> 13,038,135
<DEPRECIATION> 3,622,277
<TOTAL-ASSETS> 14,314,537
<CURRENT-LIABILITIES> 4,843,814
<BONDS> 6,282,118
0
0
<COMMON> 6,173,967
<OTHER-SE> (2,851,456)
<TOTAL-LIABILITY-AND-EQUITY> 14,314,537
<SALES> 0
<TOTAL-REVENUES> 4,169,847
<CGS> 0
<TOTAL-COSTS> 2,848,448
<OTHER-EXPENSES> 18,240
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 166,178
<INCOME-PRETAX> 267,414
<INCOME-TAX> 101,617
<INCOME-CONTINUING> 165,797
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 165,797
<EPS-PRIMARY> .04<F2>
<EPS-DILUTED> .04<F2>
<FN>
<F1> Information not included in Financial
Statements.
<F2> The Company is not filing restated
Financial Data Schedules as the
amounts reflected for primary and
diluted earnings per share do not
change as a result of SFAS No. 128
for the applicable periods.
</FN>
</TABLE>
