<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K/A
[ ] Amendment No. 1 to Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
------------ ----------------
Commission file number 1-12407
LAMAR ADVERTISING COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 72-1205791
(State or other jurisdiction) of incorporation (I.R.S. Employer
or organization) Identification No.)
5551 CORPORATE BLVD., BATON ROUGE, LA 70808
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (225) 926-1000
Securities registered pursuant to Section 12(b) of the Act: Senior Subordinated
Notes due 2006
Name of Exchange on which registered: New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: Class A Common
Stock, $0.001 par value
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. (___)
The aggregate market value of the voting stock held by non-affiliates of the
registrant of the registrant as of March 15, 1999: $1,529,483,247
The number of shares outstanding of the registrant's Class A Common Stock
outstanding as of March 15, 1999: 43,510,884
<PAGE> 2
The number of shares outstanding of the registrant's Class B Common Stock
outstanding as of March 15, 1999: 17,699,997
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's proxy statement for the Annual Meeting of
Stockholders that was held on May 27, 1999 (the "Proxy Statement") were
incorporated by reference into Part III of the Registrant's Form 10-K for the
fiscal year ended December 31, 1998.
This Annual Report on Form 10-K/A constitutes Amendment No. 1 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1998. Items 8, 13
and 14 are hereby amended and restated as follows:
PART II
ITEM 8. FINANCIAL STATEMENTS (following on next page)
2
<PAGE> 3
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
<TABLE>
<S> <C>
Independent Auditors' Report............................................................................................4
Consolidated Balance Sheets as of December 31, 1998 and December 31, 1997 ............................................5-6
Consolidated Statements of Operations for the years ended December 31, 1998 and
1997, the two months ended December 31, 1996, and the year ended
October 31, 1996 ..................................................................................................7
Consolidated Statements of Comprehensive Income for the years ended December
31, 1998 and 1997, the two months ended December 31, 1996, and the year
ended
October 31, 1996 ..................................................................................................8
Consolidated Statements of Stockholders' Equity for the year ended October 31,
1996, the two months ended December 31, 1996 and the years ended
December 31, 1997 and 1998......................................................................................9-10
Consolidated Statements of Cash Flows for the years December 31, 1998 and 1997,
the two months ended December 31, 1996, and the year ended
October 31, 1996 .................................................................................................11
Notes to Consolidated Financial Statements ............................................................................12
</TABLE>
3
<PAGE> 4
Independent Auditors' Report
Board of Directors
Lamar Advertising Company:
We have audited the accompanying consolidated balance sheets of Lamar
Advertising Company and subsidiaries as of December 31, 1998, and December 31,
1997, and the related consolidated statements of operations, comprehensive
income, stockholders' equity and cash flows for the years ended December 31,
1998 and 1997, the two months ended December 31, 1996, and the year ended
October 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we 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. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Lamar Advertising
Company and subsidiaries as of December 31, 1998 and December 31, 1997, and the
results of their operations and their cash flows for the years ended December
31, 1998 and 1997, the two months ended December 31, 1996, and the year ended
October 31, 1996, in conformity with generally accepted accounting principles.
KPMG LLP
New Orleans, Louisiana
February 5, 1999
4
<PAGE> 5
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share data)
December 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
Assets 1998 1997
------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $128,597 7,246
Receivables:
Trade accounts, less allowance for doubtful
accounts of $2,722 in 1998 and $1,311 in 1997 39,681 29,854
Affiliates, related parties and employees 378 788
Other 321 1,284
---------- ---------
40,380 31,926
Prepaid expenses 12,346 9,112
Other current assets 1,736 1,136
---------- ---------
Total current assets 183,059 49,420
---------- ---------
Property, plant and equipment (note 5) 661,324 429,615
Less accumulated depreciation and amortization (153,972) (113,477)
---------- ---------
507,352 316,138
---------- ---------
Intangible assets (note 6) 705,934 278,923
Investment securities (note 1) -- 679
Receivables-noncurrent 1,972 1,625
Other assets 15,060 4,551
---------- --------
Total assets $1,413,377 651,336
========== ========
</TABLE>
(Continued)
5
<PAGE> 6
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
December 31, December 31,
Liabilities and Stockholders' Equity 1998 1997
------------------------------------ ---- ----
<S> <C> <C>
Current liabilities:
Trade accounts payable $ 4,258 3,308
Current maturities of long-term debt (note 9) 49,079 5,109
Accrued expenses (note 8) 25,912 14,804
Deferred income 9,589 7,537
----------- -----------
Total current liabilities 88,838 30,758
Long-term debt (note 9) 827,453 534,091
Deferred income taxes (note 10) 25,613 14,687
Deferred income 1,293 837
Other liabilities 3,401 2,250
----------- -----------
946,598 582,623
----------- -----------
Stockholders' equity (note 12):
Class A preferred stock, par value $638, $63.80
cumulative dividends, 10,000 shares authorized,
5,719 shares issued and outstanding 3,649 3,649
Class A common stock, par value $.001, 75,000,000
shares authorized, 43,392,876 and 28,453,805
shares issued and outstanding at 1998 and 1997,
respectively 43 28
Class B common stock, par value $.001, 37,500,000
shares authorized, 17,699,997 and 18,762,909
shares issued and outstanding at 1998 and 1997,
respectively 18 19
Additional paid-in capital 505,644 95,691
Accumulated deficit (42,575) (30,320)
Unrealized loss on investment securities -- (354)
----------- -----------
Stockholders' equity 466,779 68,713
----------- -----------
Total liabilities and stockholders'
equity $ 1,413,377 651,336
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share and per share data)
Years ended December 31, 1998 and 1997,
the two months ended December 31, 1996 and
the year ended October 31, 1996
<TABLE>
<CAPTION>
Year Ended Year Ended Two Months Ended Year Ended
December 31, December 31, December 31, October 31,
1998 1997 1996 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues 288,588 201,062 23,262 120,602
----------- ----------- ----------- -----------
Operating expenses:
Direct advertising expenses 92,849 63,390 7,975 41,184
General and administrative expenses 60,935 45,368 5,034 29,466
Depreciation and amortization 88,572 48,037 3,928 16,470
----------- ----------- ----------- -----------
242,356 156,795 16,937 87,120
----------- ----------- ----------- -----------
Operating income 46,232 44,267 6,325 33,482
----------- ----------- ----------- -----------
Other expense (income):
Interest income (762) (1,723) (243) (240)
Interest expense 60,008 38,230 3,803 15,441
Loss (gain) on disposition of assets (1,152) (15) 76 91
Other expenses 219 280 30 242
----------- ----------- ----------- -----------
58,313 36,772 3,666 15,534
----------- ----------- ----------- -----------
Earnings (loss) before income taxes
and extraordinary item (12,081) 7,495 2,659 17,948
Income tax expense (benefit) (note 10) (191) 4,654 1,199 7,099
----------- ----------- ----------- -----------
Earnings (loss) before extraordinary item (11,890) 2,841 1,460 10,849
Extraordinary item-Loss on debt extinguishment
net of income tax benefit of $5,660 -- -- 9,514 --
----------- ----------- ----------- -----------
Net earnings (loss) (11,890) 2,841 (8,054) 10,849
Preferred stock dividends (365) (365) (61) (365)
----------- ----------- ----------- -----------
Net earnings (loss) applicable to common stock (12,255) 2,476 (8,115) 10,484
=========== =========== =========== ===========
Earnings (loss) before extraordinary item per
common share (basic and diluted) (.24) .05 .03 .25
=========== =========== =========== ===========
Extraordinary item -- -- (.21) --
=========== =========== =========== ===========
Net earnings (loss) per common share (basic
and diluted) (.24) .05 (.18) .25
=========== =========== =========== ===========
Weighted average common shares outstanding 51,361,522 47,037,497 45,520,784 41,134,476
Incremental common shares from dilutive
stock options -- 363,483 -- 114,057
=========== =========== =========== ===========
Weighted average common shares assuming
dilution 51,361,522 47,400,980 45,520,784 41,248,533
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE> 8
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(In Thousands)
Years ended December 31, 1998 and 1997,
the two months ended December 31, 1996 and
the year ended October 31, 1996
<TABLE>
<CAPTION>
Year Ended Year Ended Two Months Ended Year Ended
December 31, December 31, December 31, October 31,
1998 1997 1996 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net earnings (loss) applicable
to common stock $ (12,255) $ 2,476 $ (8,115) $ 10,484
Other comprehensive income
change in unrealized gain
(loss) on investment
securities (net of deferred
tax expense (benefit) of
$217, $(596), $(801), $1180
for the years ended December
31, 1998, and 1997, two
months ended December 31,
1996, and the year ended
October 31, 1996) 354 (974) (1,364) 1,984
-------- -------- -------- ---------
Comprehensive income (loss) (11,901) 1,502 (9,479) 12,468
======== ======== ======== =========
</TABLE>
8
<PAGE> 9
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
(In thousands, except share and per share data)
Year ended October 31, 1996, the
two months ended December 31, 1996
and the years ended
December 31, 1997 and December 31, 1998
<TABLE>
<CAPTION>
Unrealized
Class A Class A Class B Additional Gain (Loss)
Preferred Common Common Paid-in Accumulated On Investment
Stock Stock Stock Capital Deficit Securities Total
----- ----- ----- ------- ------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, October 31, 1995 -- 16 17 -- (28,187) -- (28,154)
Conversion of 6,682,169 shares
of common stock to 5,719.49
shares of preferred stock 3,649 (2) (2) -- (3,645) -- --
Redemption of 5,427,305 shares
of common stock -- (4) -- -- (2,958) -- (2,962)
Issuance of 6,441,062 shares
of common stock -- 4 -- 62,745 -- -- 62,749
Conversion of 765,225 shares
of Class B common stock
to Class A common stock -- 1 (1) -- -- -- --
Additional consideration for
redemption of common stock -- -- -- (25,000) -- -- (25,000)
Exercise of stock options -- -- -- 315 -- -- 315
Unrealized gain on investment
securities, net of deferred
taxes of $1,180 -- -- -- -- -- 1,984 1,984
Net earnings -- -- -- -- 10,849 -- 10,849
Dividends ($.006 per common
share and $63.80 per
preferred share) -- -- -- -- (740) -- (740)
------- ------- ------- ------- ------- ------- -------
Balance, October 31, 1996 3,649 15 14 38,060 (24,681) 1,984 19,041
Issuance of 3,795,000 shares
of common stock -- 3 -- 54,168 -- -- 54,171
Exercise of stock options -- -- -- 30 -- -- 30
Net loss -- -- -- -- (8,054) -- (8,054)
Dividends (10.63 per preferred
share) -- -- -- -- (61) -- (61)
Unrealized loss on investment
securities, net of deferred
taxes of $801 -- -- -- -- -- (1,364) (1,364)
------- ------- ------- ------- ------- ------- -------
Balance, December 31, 1996 3,649 18 14 92,258 (32,796) 620 63,763
Exercise of stock options -- -- -- 3,448 -- -- 3,448
Conversion of 1,811,552 shares
of Class B common stock
to Class A common stock -- 1 (1) -- -- -- --
Net earnings -- -- -- -- 2,841 -- 2,841
Dividends ($63.80 per preferred
share) -- -- -- -- (365) -- (365)
Unrealized loss on investment
securities, net of deferred
taxes of $596 -- -- -- -- -- (974) (974)
Three-for-two stock split
(Note 12) -- 9 6 (15) -- -- --
------- ------- ------- ------- ------- ------- -------
Balance, December 31, 1997 $ 3,649 28 19 95,691 (30,320) (354) 68,713
------- ------- ------- ------- ------- ------- -------
</TABLE>
(Continued)
9
<PAGE> 10
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
(In thousands, except share and per share data)
Year ended October 31, 1996, the
two months ended December 31, 1996
and the years ended
December 31, 1997 and December 31, 1998
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 $ 3,649 28 19 95,691 (30,320) (354) 68,713
Issuance of 13,338,005 shares
of common stock -- 13 -- 399,288 -- -- 399,301
Exercise of stock options -- 1 -- 10,665 -- -- 10,666
Conversion of 1,062,912 shares of
Class B common stock to
Class A common stock -- 1 (1) -- -- -- --
Net loss -- -- -- -- (11,890) -- (11,890)
Dividends (63.80 per preferred
share) -- -- -- -- (365) -- (365)
Realized loss on investment
securities, net of tax -- -- -- -- -- 354 354
-------- -------- -------- -------- -------- -------- --------
Balance December 31, 1998 $ 3,649 43 18 505,644 (42,575) -0- 466,779
======== ======== ======== ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
10
<PAGE> 11
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
Years ended December 31, 1998 and 1997, the
two months ended December 31, 1996 and the
year ended October 31, 1996
<TABLE>
<CAPTION>
Year Ended Year Ended Two Months Ended Year Ended
December 31, December 31, December 31, October 31,
1998 1997 1996 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) (11,890) 2,841 (8,054) 10,849
Adjustments to reconcile net earnings (loss)
to net cash provided by operating activities:
Depreciation and amortization 88,572 48,037 3,928 16,470
Loss (gain) on disposition of assets (1,152) (15) 76 91
Loss on debt extinguishment, net of tax -- -- 9,514 --
Deferred tax expense (benefit) (7,537) (2,839) 1,055 2,308
Provision for doubtful accounts 2,883 2,098 256 580
Changes in operating assets and liabilities:
(Increase) decrease in:
Receivables (2,464) (7,646) (4,524) (2,677)
Prepaid expenses (521) (367) (28) 9
Other assets (1,929) 29 (180) (594)
Increase (decrease) in:
Trade accounts payable 250 (1,951) 249 828
Accrued expenses 4,326 6,063 (3,121) 1,302
Deferred income 2,132 (425) (38) 2,690
Other liabilities (172) (42) 18 637
-------- -------- -------- --------
Net cash provided by (used in)
operating activities 72,498 45,783 (849) 32,493
-------- -------- -------- --------
Cash flows from investing activities:
Capital expenditures (55,196) (36,654) (4,877) (25,944)
Purchase of new markets (485,514) (386,842) (108,746) (23,029)
Proceeds from sale of property and equipment 5,493 53,268 225 849
-------- -------- -------- --------
Net cash used in investing activities (535,217) (370,228) (113,398) (48,124)
-------- -------- -------- --------
Cash flows from financing activities:
Net proceeds from issuance of common stock 402,629 2,403 54,927 63,064
Proceeds from issuance of long-term debt 70 193,926 247,813 5,000
Principal payments on long-term debt (6,229) -- (110,143) --
Debt issuance costs (3,035) -- -- --
Net borrowing (payments) under credit agreements 191,000 54,720 (5,773) (41,187)
Redemption of common stock -- -- -- (7,962)
Dividends (365) (365) -- (740)
-------- -------- -------- --------
Net cash provided by financing activities 584,070 250,684 186,824 18,175
-------- -------- -------- --------
Net increase (decrease) in cash and
cash equivalents 121,351 (73,761) 72,577 2,544
Cash and cash equivalents at beginning
of period 7,246 81,007 8,430 5,886
-------- -------- -------- --------
Cash and cash equivalents at end of period 128,597 7,246 81,007 8,430
======== ======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid for interest 56,960 33,284 6,573 15,659
======== ======== ======== ========
Cash paid for income taxes 1,107 8,792 15 3,756
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
11
<PAGE> 12
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
December 31, 1998, 1997 and October 31, 1996
(1) Significant Accounting Policies
(a) Nature of Business Lamar Advertising Company ("LAC" or the
"Company") is engaged in the outdoor advertising business
operating approximately 71,900 outdoor advertising displays
in 36 states. The Company's operating strategy is to be the
leading provider of outdoor advertising services in most of
the markets it serves, with a historical emphasis on
providing a full range of outdoor advertising services in
middle markets with a population ranking between 50 and 250
in the United States.
In addition, the Company operates a logo sign business in 18
states throughout the United States and in 1 province of
Canada. Logo signs are erected pursuant to state-awarded
service contracts on public rights-of-way near highway exits
and deliver brand name information on available gas, food,
lodging and camping services. Included in the Company's logo
sign business are tourism signing contracts. Revenues of the
logo sign business contributed approximately 8%, 10% and 10%
of the Company's net revenues for the years ended December
31, 1998, 1997 and October 31, 1996, respectively.
(b) Principles of Consolidation
The accompanying consolidated financial statements include
Lamar Advertising Company, its wholly-owned subsidiary, The
Lamar Corporation (TLC), and their majority-owned
subsidiaries. All intercompany transactions and balances have
been eliminated in consolidation.
(c) Property, Plant and Equipment
Property, plant and equipment are stated at cost.
Depreciation is calculated using accelerated and
straight-line methods over the estimated useful lives of the
assets.
(d) Intangible Assets
Intangible assets, consisting primarily of goodwill, customer
lists and contracts, and non-competition agreements are
amortized using the straight-line method over the assets
estimated useful lives, generally from 5 to 15 years. Debt
issuance costs are deferred and amortized over the terms of
the related credit facilities using the interest method.
(e) Investment Securities
Investment securities at December 31, 1997 consisted of the
Company's investment in approximately 340,000 shares of
common stock of Wireless One, Inc., a publicly-held company
in the wireless cable business. The former Chief Executive
Officer of Wireless One, Inc. is an employee and principal
shareholder of the Company and has been nominated for
election as a director of the Company at the 1999 Annual
Meeting.
(Continued)
12
<PAGE> 13
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
The Wireless One, Inc. shares were classified as
available-for-sale at December 31, 1997 and were carried at
fair value with the unrealized gain or loss, net of the
related tax effect, reported as a separate component of
stockholders' equity. These shares were sold in May, 1998,
resulting in a realized loss of $875. The cost of the
Wireless One, Inc. shares owned by the Company was $1,250,
and the market value was $679 at December 31, 1997.
(f) Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed of
The Company accounts for long-lived assets in accordance with
the provisions of Statement of Financial Accounting Standards
(SFAS) No. 121, "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to be Disposed Of." SFAS No. 121
requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying
amount of an asset to future net cash flows expected to be
generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value
less costs to sell.
(g) Deferred Income
Deferred income consists principally of advertising revenue
received in advance and gains resulting from the sale of
certain assets to related parties. Deferred advertising
revenue is recognized in income as services are provided over
the term of the contract. Deferred gains are recognized in
income in the consolidated financial statements at the time
the assets are sold to an unrelated party or otherwise
disposed of.
(h) Revenue Recognition
The Company recognizes revenue from outdoor and logo sign
advertising contracts, net of agency commissions, on an
accrual basis ratably over the term of the contracts, as
advertising services are provided.
(i) Income Taxes
The Company uses the asset and liability method of accounting
for income taxes. Under the asset and liability method,
deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using tax rates expected
to apply to taxable income in the years in which those
temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of
a change in tax rates is recognized in income in the period
that includes the enactment date.
(Continued)
13
<PAGE> 14
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(j) Earnings Per Share
Earnings per share are computed in accordance with SFAS No.
128, "Earnings Per Share." The calculation of basic earnings
per share excludes any dilutive effect of stock options,
while diluted earnings per share includes the dilutive effect
of stock options.
(k) Stock Option Plan
The Company accounts for its stock option plan in accordance
with the provisions of Accounting Principles Board ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees",
and related interpretations. As such, compensation expense is
recorded on the date of grant only if the current market
price of the underlying stock exceeds the exercise price.
SFAS No. 123, "Accounting for Stock-Based Compensation",
permits entities to recognize as expense over the vesting
period the fair value of all stock-based awards on the date
of grant. Alternatively, SFAS No. 123 also allows entities to
continue to apply the provisions of APB Opinion No. 25 and
provide pro forma net income and pro forma earnings per share
disclosures for employee stock option grants made in 1995 and
future years as if the fair-value-based method defined in
SFAS No. 123 has been applied. The Company has elected to
continue to apply the provisions of APB Opinion No. 25 and
provide the pro forma disclosure provisions of SFAS No. 123.
(l) Cash and Cash Equivalents
The Company considers all highly-liquid investments with
original maturities of three months or less to be cash
equivalents.
(m) Reclassification of Prior Year Amounts
Certain amounts in the prior years' consolidated financial
statements have been reclassified to conform to the current
year presentation. These reclassifications had no effect on
previously reported net earnings.
(n) Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could
differ from those estimates.
(2) Change in Fiscal Year End
Effective January 1, 1997, the Company changed its fiscal year from a
twelve-month period ending October 31 to a twelve-month period ending
December 31. The year end change was made to conform to the
predominant year ends within the
(Continued)
14
<PAGE> 15
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
outdoor advertising industry. The consolidated statements of
operations, stockholders' equity and cash flows are presented for the
twelve months ended December 31, 1998, December 31, 1997, the two
months ended December 31, 1996 and for the twelve-months ended October
31, 1996.
(3) Acquisitions
Year Ended October 31, 1996
During the year ended October 31, 1996, the Company completed twelve
acquisitions of outdoor advertising businesses, none of which were
individually significant, for an aggregate purchase price of $24,010.
Each purchase was accounted for under the purchase method of
accounting, and, accordingly, the accompanying financial statements
include the results of operations of each acquired entity from the
date of acquisition. The Company recorded an aggregate of
approximately $6,100 of intangible assets as a result of these
acquisitions. Proforma net revenues, assuming these acquisitions had
occurred on November 1, 1995, would have been approximately $123,000.
The effect on net earnings and net earnings per share would not have
been material.
Fourteen months ended December 31, 1997
Effective November 1, 1996, the Company acquired all of the
outstanding capital stock of FKM Advertising, Co., Inc. for a cash
purchase price of approximately $40,000, and on December 10, 1996, the
Company purchased substantially all of the assets of Outdoor East,
L.P. for a total cash purchase price of approximately $60,500.
Effective April 1, 1997, the Company acquired all of the outstanding
capital stock of Penn Advertising, Inc. for a cash purchase price of
approximately $167,000. The Company subsequently sold approximately
16% of the outdoor displays acquired to Universal Outdoor, Inc. for a
cash purchase price of $46,500.
On June 3, 1997, the Company purchased substantially all of the assets
of Headrick Outdoor, Inc. for a cash purchase price of approximately
$76,600. Simultaneous with the acquisition, the Company sold
approximately 9% of the outdoor displays acquired for a total purchase
price of $6,000.
On August 15, 1997, the Company purchased from Outdoor Systems, Inc.
("OSI") for a cash purchase price of approximately $116,000 (excluding
approximately $2,000 in capitalized costs), certain outdoor
advertising assets that OSI had acquired from National Advertising
Company, a division of Minnesota Mining and Manufacturing Company.
During the year ended December 31, 1997, the Company completed 22
additional acquisitions of outdoor advertising assets, none of which
were individually significant, for an aggregate cash purchase price of
approximately $21,000.
(Continued)
15
<PAGE> 16
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
Each of these acquisitions were accounted for under the purchase method of
accounting, and, accordingly, the accompanying financial statements include the
results of operations of each acquired entity from the date of acquisition. The
acquisition costs have been allocated to assets acquired and liabilities
assumed based on fair market value at the dates of acquisition. The following
is a summary of the allocation of the acquisition costs in the above
transactions.
<TABLE>
<CAPTION>
Property
Current Plant & Customer Other Current Long-term
Assets Equipment Goodwill Lists Assets Liabilities Liabilities
------ ------- ------- ------ ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
FKM 732 12,536 23,636 3,554 632 (83) (1,007)
Outdoor East 1,579 35,431 16,148 7,958 1,069 (153) (804)
Penn Advertising, Inc. 4,645 47,745 72,435 17,752 1,448 (1,144) (22,208)
Headrick Outdoor, Inc. 825 46,553 1,640 11,494 11,091 -- --
Outdoor Systems, Inc. 6,243 27,091 63,148 23,611 -- (2,640) --
Other 370 17,106 5,132 2,787 591 (132) (5,127)
------ ------- ------- ------ ------ ------- --------
14,394 186,462 182,139 67,156 14,831 (4,152) (29,146)
====== ======= ======= ====== ====== ======= ========
</TABLE>
The following unaudited financial information for the Company gives effect to
the acquisitions during the two months ended December 31, 1996 and the year
ended December 31, 1997 as if they had occurred on November 1, 1995. These
proforma results do not purport to be indicative of the results of operations
which actually would have resulted had the acquisitions occurred on such date,
or to project the Company's results of operations for any future period.
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1997 October 31, 1996
----------------- ----------------
<S> <C> <C>
Revenues, net $ 225,903 $ 207,023
Net loss applicable to common stock (3,520) (8,977)
Net loss per common share
(basic and diluted) (.07) (.22)
</TABLE>
Year Ended December 31, 1998
On January 2, 1998, the Company purchased all the outdoor advertising assets of
Ragan Outdoor Advertising Company, Ragan Outdoor Advertising Company of Cedar
Rapids, and Ragan Outdoor Advertising Company of Rockford, L.L.C. for a cash
purchase price of $25,000.
On January 30, 1998, the Company acquired all of the outdoor advertising assets
of three related outdoor advertising companies (Pioneer Advertising Company,
Superior Outdoor Advertising Company and Overland Outdoor Advertising Company,
Inc.) located in Missouri and Arkansas for a cash purchase price of $19,200.
On April 30, 1998, the Company purchased all the outdoor advertising assets of
Northwest Outdoor Advertising, L.L.C. for a cash purchase price of
approximately $70,000. The acquired displays are located in the states of
Washington, Montana, Oregon, Idaho, Wyoming, Nebraska, Nevada and Utah.
(Continued)
16
<PAGE> 17
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
On May 15, 1998, the Company purchased the assets of Odegard Outdoor
Advertising, L.L.C., for a cash purchase price of approximately
$8,500. This acquisition increases the Company's presence in the
Kansas City, Missouri market.
On May 29, 1998, the Company entered into an agreement to purchase
from Rainier Evergreen, Inc. or through its affiliates (i) all of the
issued and outstanding common stock of American Signs, Inc., (ii) the
assets of the Sun Media division and (iii) the assets of Sun Media of
the Rockies, Inc. The asset purchases were closed on that date; while
the stock purchase was delayed due to lease transfer issues involving
the Bureau of Interior Affairs. The stock purchase was completed in
September, 1998. The total purchase price was $26,550.
On September 1, 1998, the Company entered into an agreement to
purchase all of the outdoor advertising assets of Nichols & Vann
Advertising. The Company paid a cash purchase price of $11,000 of
which $6,100 is held on deposit as of December 31, 1998, and is
included in other assets in the acCompanying balance sheet at December
31, 1998.
On October 1, 1998, the Company purchased all of the outstanding stock
of OCI for a purchase price of $385,000. The purchase price included
approximately $235,000 in cash, the assumption of OCI debt of
approximately $105,000 and the issuance of notes in the aggregate
amount of $45,000 to certain principal stockholders of OCI. Pursuant
to this acquisition, the Company acquired approximately 14,700
displays in 12 states. Funds for this acquisition were provided from
borrowings under the New Revolving Credit Facility and the Term
Facility.
During the twelve months ended December 31, 1998, the Company
completed 60 additional acquisitions of outdoor advertising assets,
none of which were individually significant, for an aggregate cash
purchase price of approximately $89 million and issuance of 63,005
shares of Class A common stock valued at approximately $2,400.
Each of these acquisitions were accounted for under the purchase
method of accounting, and accordingly, the acCompanying financial
statements include the results of operations of each acquired entity
from the date of acquisition. The acquisition costs have been
allocated to assets acquired and liabilities assumed based on fair
market value at the dates of acquisition. The following is a summary
of the allocation of the acquisition costs in the above transactions.
<TABLE>
<CAPTION>
Property
Current Plant & Customer Other Current Long-term
Assets Equipment Goodwill Lists Assets Liabilities Liabilities
------ ------- ------- ------ ------ ------- --------
<S> <C> <C> <C> <C> <C> <C>
Ragan Companies 694 9,634 13,275 1,563 10 (176) --
Pioneer and related companies 307 15,062 264 4,037 9 (479) --
Northwest Outdoor Advertising, LLC 2,176 23,667 36,199 8,498 363 (697) (273)
Odegard Outdoor Advertising, LLC 285 1,633 5,959 720 375 (272) (300)
Rainier Evergreen, Inc. 359 3,205 21,681 1,755 100 (550) (50)
Nichols & Vann Advertising -- 300 3,944 181 6,575 -- --
Outdoor Communications, Inc. 9,957 97,058 266,856 27,226 10,399 (54,112) (121,296)
Other 1,036 33,227 46,756 11,511 4,904 (3,506) (2,549)
------ ------- ------- ------ ------ ------- --------
14,814 183,786 394,934 55,491 22,735 (59,792) (124,468)
====== ======= ======= ====== ====== ======= ========
</TABLE>
(Continued)
17
<PAGE> 18
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
The following unaudited pro forma financial information for the
Company gives effect to the 1998 and 1997 acquisitions as if they had
occurred on January 1, 1997. These pro forma results do not purport to
be indicative of the results of operations which actually would have
resulted had the acquisitions occurred on such date, or to project the
Company's results of operations for any future period.
<TABLE>
<CAPTION>
Year ended Year ended
December 31, December 31,
1998 1997
---- ----
<S> <C> <C>
Revenues, net $ 342,101 307,530
========== ========
Net loss applicable to common stock (25,455) (35,117)
========== ========
Net loss per common share (.50) (.75)
========== ========
(basic and diluted)
</TABLE>
(4) Noncash Financing and Investing Activities
A summary of significant noncash financing and investing activities
for the years ended December 31, 1998, 1997 and the year ended October
31, 1996 follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C>
Disposition of assets $ 30 1,300 --
Acquisitions of assets 2,706 -- 2,104
Issuance of preferred stock
in exchange for common stock -- -- 3,649
Redemption of common stock for debt -- -- 20,000
Conversion of note receivable
to equity investment -- 500 --
Debt issuance costs -- 4,750 --
</TABLE>
Significant noncash financing activities during the two months ended
December 31, 1996 include approximately $7,000 of debt issuance costs.
(5) Property, Plant and Equipment
Major categories of property, plant and equipment at December 31, 1998
and December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Estimated life
(years) 1998 1997
------- ---- ----
<S> <C> <C> <C>
Land -- $ 25,543 15,185
Building and improvements 10-39 28,924 20,672
Advertising structures 15 576,676 371,491
Automotive and other equipment 3-7 30,181 22,267
-------- --------
$661,324 429,615
======== ========
</TABLE>
(Continued)
18
<PAGE> 19
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(6) Intangible Assets
The following is a summary of intangible assets at December 31, 1998
and December 31, 1997:
<TABLE>
<CAPTION>
Estimated life
(years) 1998 1997
------- ---- ----
<S> <C> <C> <C>
Debt issuance costs and fees 7-10 $ 20,081 14,754
Customer lists and contracts 7-10 108,903 68,185
Non-compete agreements 7-15 19,318 15,313
Goodwill 15 554,685 178,047
Other 5-15 2,947 2,624
-------- --------
$705,934 278,923
======== ========
Cost 778,655 308,621
Accumulated amortization (72,721) (29,698)
-------- --------
$705,934 278,923
======== ========
</TABLE>
(7) Leases
The Company is party to various operating leases for production
facilities and sites upon which advertising structures are built. The
leases expire at various dates, generally during the next five years,
and have varying options to renew and to cancel. The following is a
summary of minimum annual rental payments required under those
operating leases that have original or remaining lease terms in excess
of one year as of December 31:
<TABLE>
<S> <C>
1999 $ 32,262
2000 27,387
2001 23,449
2002 19,941
2003 16,977
Thereafter 84,201
</TABLE>
Rental expense related to the Company's operating leases were $43,440,
$31,411 and $19,387 for the years ended December 31, 1998, December
31, 1997 and October 31, 1996, respectively.
(8) Accrued Expenses
The following is a summary of accrued expenses at December 31, 1998
and December 31, 1997:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Payroll $ 4,863 4,390
Interest 11,629 7,357
Insurance benefits 3,715 2,613
Other 5,705 444
-------- ------
$ 25,912 14,804
======== ======
</TABLE>
(Continued)
19
<PAGE> 20
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(9) Long-term Debt
Long-term debt consists of the following at December 31, 1998 and
December 31, 1997:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
9-5/8% Senior subordinated notes $ 255,000 255,000
8-5/8% Senior subordinated notes 198,785 198,696
Bank Credit Agreement 250,000 59,000
9-1/4% Senior subordinated notes 103,949 --
8% unsecured subordinated notes (see Note 12) 15,333 17,319
Other notes with various rates and
terms 53,465 9,185
--------- --------
876,532 539,200
Less current maturities (49,079) (5,109)
--------- --------
Long-term debt, excluding current
maturities $ 827,453 534,091
========= ========
</TABLE>
Long-term debt matures as follows:
<TABLE>
<S> <C>
1999 $ 49,079
2000 18,698
2001 22,673
2002 38,435
2003 38,713
Later years 708,934
</TABLE>
In November 1996, the Company issued $255,000 in principal amount of 9
5/8% Senior Subordinated Notes due 2006 (the "1996 Notes"), with
interest payable semi-annually on June 1 and December 1 of each year.
The 1996 Notes are senior subordinated unsecured obligations of the
Company and are subordinated in right of payment to all senior
indebtedness of the Company, pari passu with the 1997 Notes (as
defined below), and are senior to all existing and future subordinated
indebtedness of the Company.
In September 1997, the Company issued $200,000 in principal amount of
8 5/8% Senior Subordinated Notes due 2007 (the "1997 Notes") with
interest payable semi-annually on March 15 and September 15 of each
year, commencing March 15, 1998. The 1997 Notes were issued at a
discount for $198,676. The Company is using the effective interest
method to recognize the discount over the life of the 1997 Notes. The
1997 Notes are senior subordinated unsecured obligations of the
Company, subordinated in right of payment to all senior indebtedness
of the Company, pari passu with the 1996 Notes and are senior to all
existing and future subordinated indebtedness of the Company.
(Continued)
20
<PAGE> 21
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
The 1996 and 1997 Notes are redeemable at the Company's option at any time on
or after December 31, 2001 and September 15, 2002, respectively, at redemption
prices specified by the indentures, and are required to be repurchased earlier
in the event of a change of control of the Company. The indentures covering the
1996 and 1997 Notes include certain restrictive covenants which limit the
Company's ability to incur additional debt, pay dividends and make other
restricted payments, consummate certain transactions and other matters.
The Bank Credit Agreement provides the Company with a committed $225,000
revolving credit facility and a $75,000 incremental term facility to be funded
at the discretion of the lenders. As of December 31, 1997, there was $59,000
outstanding under the revolving credit facility and there were no borrowings
under the incremental term facility. The revolving credit facility bears
interest at a variable rate of interest based upon an applicable margin over
LIBOR or the prime rate. The weighted average interest rate under the facility
at December 31, 1997 was 7.93%.
The Bank Credit Agreement is guaranteed by the Company's subsidiaries and
secured by the capital stock of the Company's subsidiaries. The Bank Credit
Agreement contains various restrictive covenants, which require that the
Company meet certain minimum leverage, and coverage ratios, restrict additional
indebtedness, limit dividends and other restricted payments, limit capital
expenditures and disposition of assets, and other restrictions. In September
1997, the Company amended certain financial and other covenants in the Bank
Credit Facility, including increases in permitted capital expenditures and
permitted acquisitions.
In July, 1998, the Company entered into a new Bank Credit Agreement (the "New
Bank Credit Agreement") which consists of a committed $250,000 revolving credit
facility (the "New Revolving Credit Facility"), a $150,000 term facility (the
"Term Facility") and a $100,000 incremental facility (The "Incremental
Facility") funded at the discretion of the lenders. As of December 31, 1998,
the Company had borrowings outstanding of $150 million under the Term Facility,
$100 million under the Incremental Facility, and $0 under the New Revolving
Credit Facility. The New Bank Credit Agreement replaced the Company's previous
Bank Credit Facility.
Availability of the line under the New Revolving Credit Facility is reduced
quarterly beginning with the quarter ended March 31, 2000, in the following
amounts:
<TABLE>
<S> <C>
March 31, 2000 - December 31, 2001 6,250
March 31, 2002 - December 31, 2003 9,375
March 31, 2004 - December 31, 2004 12,500
March 31, 2005 - December 31, 2005 18,750
</TABLE>
The Term Facility will begin to amortize quarterly beginning September 30, 2000
in the following quarterly amounts:
<TABLE>
<S> <C>
September 30, 2000 - December 31, 2000 7,500
March 31, 2001 - December 31, 2001 3,750
March 31, 2002 - December 31, 2005 7,500
</TABLE>
(Continued)
21
<PAGE> 22
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
The Incremental Facility will begin quarterly principal reductions of between
1% and 2% of the outstanding balance at the date the loans begin to amortize,
beginning with the quarter ended March 31, 2001 and ending June 30, 2006.
The Incremental Facility and the Term Facility bear interest at a variable rate
of interest based on the applicable margin over LIBOR or the prime rate. The
weighted average interest rate on borrowings under the Bank Credit Agreement at
December 31, 1998, was 7.37%
Revolving credit loans may be requested under the New Revolving Credit Facility
at any time prior to maturity. The loans bear interest, at the Company's
option, at the LIBOR Rate or Chase Prime Rate plus applicable margins, such
margins being set from time to time based on the Company's ratio of debt to
trailing twelve month EBITDA. EBITDA is defined in the New Bank Credit
Agreement as operating income before depreciation and amortization, a commonly
used measure of financial performance. The New Bank Credit Agreement contains
restrictive covenants comparable to those under the prior agreement, and of a
sort customary in credit facilities for outdoor advertising companies. The
terms of the Company's credit facility and the indentures relating to the
Company's outstanding notes restrict, among other things, the Company's ability
to:
o dispose of assets;
o incur or repay debt;
o create liens; and
o make investments.
Under the Company's credit facility the Company must maintain specified
financial ratios and levels including:
o cash interest coverage;
o fixed charge coverage;
o senior debt ratios; and
o total debt ratios.
The $103,949 of 9 1/4% Senior Subordinated Notes are due 2007, with interest
payable semi-annually on February 15 and August 15 of each year, and were
previously issued by OCI. The Notes are senior subordinated unsecured
obligations of the Company, subordinated in right of payment to all senior
indebtedness of the Company, and are senior to all existing and future
subordinated indebtedness of the Company.
In November 1996, the Company commenced a tender offer for all of its $100,000
outstanding principal amount of 11% Senior Secured Notes due 2003 (the "1993
Notes"). As of December 31, 1997, approximately $98,827 of the 1993 Notes were
tendered to the Company and retired. As a result of this tender offer and the
extinguishment of other credit facilities, the Company recorded a loss on debt
extinguishment of $9,514, net of income tax benefit of $5,660, during the
two months ended December 31, 1996 (see Note 2).
(Continued)
22
<PAGE> 23
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(10) Income Taxes
Income tax expense (benefit) for the years ended December 31, 1998,
December 31, 1997, the two months ended December 31, 1996, and the
year ended October 31, 1996, consists of:
<TABLE>
<CAPTION>
Current Deferred Total
------- -------- -----
<S> <C> <C> <C>
Year ended December 31, 1998:
U.S. federal $ 6,269 (6,074) 195
State and local 1,077 (1,463) (386)
------- ------- -------
$ 7,346 (7,537) (191)
Change in deferred tax attributable
to unrealized losses on investment
securities, included in stockholders'
equity -- 217 217
------- ------- -------
$ 7,346 (7,320) 26
======= ======= =======
Year ended December 31, 1997:
U.S. federal $ 6,108 (2,475) 3,633
State and local 1,385 (364) 1,021
------- ------- -------
$ 7,493 (2,839) 4,654
Change in deferred tax attributable
to unrealized losses on investment
securities, included in stockholders'
equity -- (596) (596)
------- ------- -------
$ 7,493 (3,435) 4,058
======= ======= =======
Two months ended December 31, 1996:
U.S. federal $ -- 1,028 1,028
State and local 144 27 171
------- ------- -------
$ 144 1,055 1,199
Change in deferred tax attributable
to unrealized losses on investment
securities, included in stockholders'
equity -- (379) (379)
------- ------- -------
$ 144 676 820
======= ======= =======
Year ended October 31, 1996:
U.S. federal $ 3,991 2,683 6,674
State and local 800 (375) 425
------- ------- -------
$ 4,791 2,308 7,099
Change in deferred tax attributable
to unrealized gains on investment
securities, included in stockholders'
equity -- 1,180 1,180
------- ------- -------
$ 4,791 3,488 8,279
======= ======= =======
</TABLE>
(Continued)
23
<PAGE> 24
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
Income tax expense (benefit) attributable to continuing operations for the
years ended December 31, 1998 and 1997, the two months ended December 31, 1996,
and the year ended October 31, 1996, differs from the amounts computed by
applying the U.S. federal income tax rate of 34 percent to earnings before
income taxes as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended Two Months Ended Year Ended
December 31, December 31, December 31, October 31,
1998 1997 1996 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Computed "expected" tax
expense (benefit) (4,108) 2,548 904 6,102
Increase (reduction) in
income taxes resulting from:
Book expenses not deductible
for tax purposes 450 92 18 110
Amortization of non-
deductible goodwill 3,752 1,730 -- --
State and local income taxes,
net of federal income tax
benefit (255) 674 113 281
Other differences, net (30) (390) 164 606
------ ------ ------ ------
(191) 4,654 1,199 7,099
====== ====== ====== ======
</TABLE>
(Continued)
24
<PAGE> 25
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 1998
and December 31, 1997 are presented below:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Deferred tax liabilities:
Plant and equipment, principally
due to differences in depreciation $ (4,915) (3,125)
Plant and equipment, due to basis
differences on acquisitions (28,556) (15,582)
Intangibles, due to differences
in amortizable lives (5,058) (5,646)
-------- --------
Deferred tax liabilities (38,529) (24,353)
Deferred tax assets:
Receivables, principally due to
allowance for doubtful accounts 1,151 511
Plant and equipment, due to basis
differences on acquisitions and costs
capitalized for tax purposes 4,530 4,823
Investment in affiliates and plant and
equipment, due to gains recognized for
tax purposes and deferred for financial
reporting purposes 941 941
Accrued liabilities not deducted for tax
purposes 2,125 1,384
Net operating loss carryforward 3,563 1,673
Unrealized losses on investment securities -- 217
Other, net 606 117
-------- --------
Deferred tax assets 12,916 9,666
-------- --------
Net deferred tax liability $(25,613) (14,687)
======== ========
</TABLE>
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible.
Management considers the scheduled reversal of deferred tax liabilities,
projected future taxable income, and tax planning strategies in making this
assessment. Based upon the level of historical taxable income and projections
for future taxable income over the periods in which the deferred tax assets are
deductible, management believes it is more likely than not the Company will
realize the benefits of these deductible differences. The amount of the
deferred tax assets considered realizable, however, could be reduced in the
near term if estimates of future taxable income during the carryforward period
are reduced.
(Continued)
25
<PAGE> 26
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(11) Related Party Transactions
Affiliates, as used within these statements, are persons or entities
that are affiliated with Lamar Advertising Company or its subsidiaries
through common ownership and directorate control.
As of December 31, 1998, and December 31, 1997, debentures and ten
year subordinated notes totaling $16,749 and $19,153, respectively,
are owned by shareholders, directors and employees. Interest expense
under the debentures and ten year subordinated notes during the years
ended December 31, 1998, December 31, 1997, and October 31, 1996 was
$1,497, $1,719 and $494, respectively.
The Company purchased approximately $1,810 and $3,462 of highway signs
used in its logo sign business from Interstate Highway Signs Corp.,
("IHS") during the years ended December 31, 1998 and 1997,
respectively. IHS is a company which is majority owned by certain
directors, officers and stockholders of the Company.
(12) Stockholders' Equity
On December 31, 1997, the Board of Directors approved a three-for-two
split of its Class A and Class B common stock subject to the approval
by the shareholders of an increase in the authorized number of shares
of Class A and Class B common stock. On February 26, 1998, the
shareholders approved an increase in the authorized number of shares
of Class A common stock to 75,000,000 and Class B common stock to
37,500,000. The stock split, which was effected by means of a 50%
stock dividend, was paid to shareholders on February 27, 1998. Par
value of the common stock remained unchanged at $.001. Common stock
and additional paid in capital were adjusted to reflect the split as
of December 31, 1997. All references to share and per share
information in the consolidated financial statements and related
footnotes have been restated to reflect the effect of the split for
all periods presented.
During 1995 and 1996, the Company repurchased 3.6% and 12.9%,
respectively, of its then outstanding common stock (1,830,750 and
5,427,305 shares, respectively) from certain of its existing
stockholders for an aggregate purchase price of approximately $4
million. The terms of such repurchases entitled the selling
stockholders to receive additional consideration from the Company in
the event that the Company consummated a public offering of its common
stock at a higher price within 24 months of the repurchase. In
satisfaction of that obligation, upon completion of the Company's
initial public equity offering in August 1996, the Company paid the
selling stockholders an aggregate of $5.0 million in cash and issued
to them ten-year subordinated notes in the aggregate principal amount
of $20,000. The notes bear interest at 8% (1% above the ten-year
treasury note rate when issued) and are payable in monthly
installments of $167, plus interest. The balance outstanding under
these notes at December 31, 1998 and December 31, 1997, was $15,333
and $17,319, respectively.
In June, 1998, the Company completed a public offering of 6,375,000
shares of Class A Common Stock at $29.00 per share. Net proceeds to
the Company after underwriting discounts from the equity offering were
$177.5 million. These proceeds were used to pay down outstanding bank
debt of approximately $173.0 million with the remainder used for
operations.
In December, 1998, the Company completed a public offering of
6,900,000 shares of Class A Common Stock at $35 per share. Net
proceeds to the Company after underwriting discounts from the equity
offering were $219.8 million. These proceeds were used to pay down
outstanding bank debt of approximately $99.0 million with the
remainder used for debt reduction and acquisitions in 1999.
26
<PAGE> 27
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
The rights of the Class A and Class B common stock are equal in all
respects, except holders of Class B common stock have ten votes per
share on all matters in which the holders of common stock are entitled
to vote and holders of Class A common stock have one vote per share on
such matters. The Class B common stock will convert automatically into
Class A common stock upon the sale or transfer to persons other than
permitted transferees (as defined in the Company's certificate of
incorporation, as amended).
(13) Stock Option Plan
In 1996, the Company adopted the 1996 Equity Incentive Plan (the "1996
Plan"). The purpose of the 1996 Plan is to attract and retain key
employees and consultants of the Company. The 1996 Plan authorizes the
grant of stock options, stock appreciation rights and restricted stock
to employees and consultants of the Company capable of contributing to
the Company's performance. Options granted under the 1996 Plan
generally become exercisable over a five-year period and expire 10
years from the date of grant. The Company initially reserved an
aggregate of 3,000,000 shares of Class A Common Stock (as adjusted for
the Company's February 1998 three-for-two stock split) for awards
under the 1996 Plan. In September, 1998, the Board of Directors of the
Company voted to increase the number of shares reserved for issuance
under the 1996 Plan by 1,000,000 shares to 4,000,000 shares, subject
to the approval of the stockholders of the Company, at its next
regularly scheduled shareholders' meeting.
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." Accordingly, no compensation cost has been recognized
for the stock option grants. Had compensation cost for the Company's
stock option plan been determined based on the fair value at the grant
date for awards in 1996, 1997 and 1998, consistent with the provisions
of SFAS No. 123, the Company's net earnings (loss) and earnings (loss)
per share would have been reduced to the pro forma amounts indicated
below:
<TABLE>
<CAPTION>
Year Ended Year Ended Two Months Ended Year Ended
December 31, December 31, December 31, October 31,
1998 1997 1996 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net earnings (loss) applicable
to common stock - as reported $ (12,255) 2,476 (8,115) 10,484
========= ========= ========= =========
Net earnings (loss) applicable
to common stock - pro forma $ (15,145) (603) (8,666) 8,891
========= ========= ========= =========
Earnings (loss) per common share -
as reported (basic and diluted) $ (.24) .05 (.18) .25
========= ========= ========= =========
Earnings (loss) per common share -
pro forma (basic and diluted) $ (.29) (.01) (.19) .22
========= ========= ========= =========
</TABLE>
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following
weighted-average assumptions used:
<TABLE>
<CAPTION>
Grant Dividend Expected Risk Free Expected
Year Yield Volatility Interest Rate Lives
---- ----- ---------- ------------- -----
<S> <C> <C> <C> <C>
1998 0% 59% 5% 4
1997 0% 40% 6% 3
1996 0% 53% 6% 3
</TABLE>
27
<PAGE> 28
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
Information regarding the 1996 Plan for the years ended December 31,
1998 and December 31, 1997, two months ended December 31, 1996, and year
ended October 31, 1996, is as follows:
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
----------------------------- ----------------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
------ ----- ------ -----
<S> <C> <C> <C> <C>
Outstanding,
beginning of year 1,868,804 $ 11.60 1,774,896 $ 10.85
Granted 950,500 29.88 399,000 15.20
Exercised (538,154) 10.84 (225,256) 10.67
Canceled (40,583) 18.24 (79,836) 10.96
---------- ------------- ---------- -------------
Outstanding, end of
year 2,240,567 $ 19.25 1,868,804 $ 11.60
========== ============= ========= =============
Price for exercised
shares $ 10.84 $ 10.67
Shares available for
grant, end of year 963,682 873,599
Weighted average fair
value of options
granted during
the year $ 13.09 $ 7.18
</TABLE>
<TABLE>
<CAPTION>
Two Months Ended
December 31, 1996 October 31, 1996
---------------------------- ---------------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
------ ----- ------ -----
<S> <C> <C>
Outstanding,
beginning of year 1,742,753 10.67 -- --
Granted 36,750 17.93 1,772,250 10.67
Exercised (2,844) 10.67 (29,497) 10.67
Canceled (1,763) 10.67 -- --
--------- ------------- --------- -------------
Outstanding, end of
year 1,774,896 10.85 1,742,753 $ 10.67
========= ============ ========= =============
Price for exercised
shares $ 10.67 10.67
Shares available for
grant, end of year 1,192,763 1,227,750
Weighted average fair
value of options
granted during
the year $ 10.06 $ 4.14
</TABLE>
The following table summarizes information about fixed-price stock
options outstanding at December 31, 1998:
<TABLE>
<CAPTION>
Number Weighted Number
Range Outstanding Average Weighted Exercisable Weighted
Of At Remaining Average At Average
Exercise December 31, Contractual Exercise December 31, Exercise
Prices 1998 Life Price 1998 Price
------ ---- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C>
$ 10.67 979,467 7.62 $ 10.67 333,849 $ 10.67
10.67 - 13.67 149,000 7.66 13.25 17,750 13.25
13.83 - 18.42 137,100 7.63 16.86 1,200 17.67
26.17 63,000 8.14 22.79 0 0
26.69 209,000 7.61 26.69 0 0
30.34 694,000 7.62 30.34 116,100 30.34
37.50 9,000 7.60 37.50 0 0
</TABLE>
No stock appreciation rights or restricted stock authorized by the
1996 Plan have been granted.
(14) Commitments and Other Contingencies
The Company sponsors a partially self-insured group health insurance
program. The Company is obligated to pay all claims under the program,
which are in excess of premiums, up to program limits of $150 per
employee, per claim, per year. The Company is also self-insured with
respect to its income disability benefits and against casualty losses
on advertising structures. Amounts for expected losses, including a
provision for losses incurred but not reported, is included in accrued
expenses in the accompanying consolidated financial statements. The
Company maintains a $500 letter of credit with a bank to meet
requirements of the Company's worker's compensation insurance carrier.
(Continued)
28
<PAGE> 29
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
The Company sponsors The Lamar Corporation Savings and Profit Sharing
Plan covering employees who have completed one year of service and are
at least 21 years of age. The Company matches 50% of employees'
contributions up to 5% of related compensation. Employees can
contribute up to 15% of compensation. Full vesting on the Company's
matched contributions occurs after five years. Annually, at the
Company's discretion, an additional profit sharing contribution may be
made on behalf of each eligible employee. In total, for the years
ended December 31, 1998, December 31, 1997 and October 31, 1996, the
Company contributed $952, $1,181 and $1,262, respectively.
The Company sponsors a Deferred Compensation Plan for the benefit of
certain of its senior management who meet specific age and years of
service criteria. Employees who have attained the age of 30 and have a
minimum of 10 years of service are eligible for annual contributions
to the Plan generally ranging from $3 to $8, depending on the
employee's length of service. LAC's contributions to the Plan are
maintained in a "rabbi" trust and, accordingly, the assets and
liabilities of the Plan are reflected in the balance sheet of LAC.
Upon termination, death or disability, participating employees are
eligible to receive an amount equal to the fair market value of the
assets in the employee's deferred compensation account. The Company
has contributed $406, $190 and $182 to the Plan during the years ended
December 31, 1998, December 31, 1997, and October 31, 1996,
respectively. Contributions to the Deferred Compensation Plan are
discretionary and are determined by the Board of Directors.
The Company is the subject of litigation arising during the normal
course of business. In the opinion of management and the general
counsel of the Company, those claims will not have a material impact
on the financial position, results of operations or liquidity of the
Company.
(15) Summarized Financial Information of Subsidiaries
Except as set forth below, separate financial statements of each of
the Company's direct or indirect subsidiaries that have guaranteed the
Company's obligations under the 1996 Notes and the 1997 Notes
(collectively, the "Guarantors") are not included herein because the
Guarantors are jointly and severally liable under the guarantees, and
the aggregate assets, liabilities, earnings and equity of the
Guarantors are substantially equivalent to the assets, liabilities,
earnings and equity of the Company on a consolidated basis.
Summarized financial information for Missouri Logos, a Partnership, a
66-2/3% owned subsidiary of the Company and the only subsidiary of the
Company that is not a Guarantor, is set forth below:
<TABLE>
<CAPTION>
Balance Sheet Information: 1998 1997
---- ----
<S> <C> <C> <C>
Current assets $ 248 237
Total assets 297 290
Current liabilities 7 7
Total liabilities 7 7
Venturers' equity 290 283
Income Statement Information: 1998 1997 1996
---- ---- ----
Revenues $1,038 991 931
Net income 523 540 545
</TABLE>
(Continued)
29
<PAGE> 30
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(16) Disclosures About Fair Value of Financial Instruments
The following table presents the carrying amounts and estimated fair
values of the Company's financial instruments at December 31, 1998 and
1997. The fair value of the financial instrument is defined as the
amount at which the instrument could be exchanged in a current
transaction between willing parties.
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
----------------- -----------------
Carrying Estimated Carrying Estimated
-------- --------- -------- ---------
Amount Fair Value Amount Fair Value
------ ---------- ------ ----------
<S> <C> <C> <C> <C>
Marketable investment securities $ -0- -0- $ 679 $ 679
Long-term debt $ 827,453 874,091 534,091 575,198
</TABLE>
The estimated fair value amounts have been determined by the Company
using available market information and appropriate valuation
methodologies as follows:
o The carrying amounts of cash and cash equivalents,
receivables, trade accounts payable, accrued expenses, and
deferred income approximate fair value because of the short
term nature of these items.
o The fair value of the Company's marketable investment
securities are based on quoted market prices.
o The fair value of long-term debt is based upon market quotes
obtained from dealers where available and by discounting
future cash flows at rates currently available to the Company
for similar instruments when quoted market rates are not
available.
Fair value estimates are subject to inherent limitations. Estimates of
fair values are made at a specific point in time, based on relevant
market information and information about the financial instrument. The
estimated fair values of financial instruments presented above are not
necessarily indicative of amounts the Company might realize in actual
market transactions. Estimates of fair value are subjective in nature
and involve uncertainties and matters of significant judgement and
therefore cannot be determined with precision. Changes in assumptions
could significantly affect the estimates.
(17) Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
Fiscal Year 1998 Quarters
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Net revenues $ 58,397 69,675 73,528 86,988
Net revenues less direct
advertising expenses 37,567 48,066 51,271 58,835
Net earnings (loss)
applicable to common stock (4,682) (1,253) 1,538 (7,858)
Net earnings per common
share (basic) (.10) (.02) .03 (.15)
Net earnings per common
share (diluted) (.10) (.02) .03 (.15)
</TABLE>
(Continued)
30
<PAGE> 31
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
<TABLE>
<CAPTION>
Fiscal Year 1997 Quarters
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Net revenues $ 37,847 50,108 55,485 57,622
Net revenues less direct
advertising expenses 24,380 34,625 38,974 39,693
Net earnings (loss)
applicable to common stock 1,205 1,402 916 (1,047)
Net earnings (loss) per
common share (basic) .03 .03 .02 (.02)
Net earnings (loss) per
common share (diluted) .03 .03 .02 (.02)
</TABLE>
(18) New Accounting Pronouncements
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-5, Reporting on the Costs of
Start-Up Activities. SOP 98-5 is effective for financial statements
for fiscal years beginning after December 15, 1998, and requires that
the costs of start-up activities, including organizational costs, be
expensed as incurred. At December 31, 1998, the Company estimates that
$1,169, of such capitalized costs are included in intangible assets on
the Company's balance sheet.
The effect of SOP 98-5 will be recorded in the first quarter of fiscal
1999 as the cumulative effect of a change in accounting principle, as
described in Accounting Principles Board Opinion No. 20 "Accounting
Changes".
(19) Subsequent Events
Subsequent to December 31, 1998, the Company purchased substantially
all of the assets of four outdoor advertising companies for a total
purchase price of approximately $63,000 in cash. The acquisitions will
be accounted for under the purchase method of accounting.
SCHEDULE 2
Lamar Advertising
Valuation and Qualifying Accounts
The Years Ended December 31, 1998 and 1997, the Two Months Ended
December 31, 1996, and the Year Ended October 31, 1996
(in 000's)
<TABLE>
<CAPTION>
Balance at Charged to Balance at
Beginning of Costs and end of
Description Period Expenses Deductions period
- -------------------------------------------------------------- ------------------ ---------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Year ended December 31, 1998
Deducted in balance sheet from trade accounts
receivable: Allowance for doubtful accounts $ 1,311 2,883 1,472 2,722
Deducted in balance sheet from intangible
assets: Amortization of intangible assets $ 29,698 43,023 -- 72,721
Year ended December 31, 1997
Deducted in balance sheet from trade accounts
receivable: Allowance for doubtful accounts $ 814 2,098 1,601 1,311
Deducted in balance sheet from intangible
assets: Amortization of intangible assets $ 9,273 20,425 -- 29,698
Two months ended December 31, 1996
Deducted in balance sheet from trade accounts
receivable: Allowance for doubtful accounts $ 551 263 -- 814
Deducted in balance sheet from intangible assets:
Amortization of intangible assets $ 10,137 1,266 2,130 9,273
Year ended October 31, 1996
Deducted in balance sheet from trade accounts
receivable: Allowance for doubtful accounts $ 551 580 580 551
Deducted in balance sheet from intangible assets:
Amortization of intangible assets $ 7,067 3,070 -- 10,137
</TABLE>
31
<PAGE> 32
PART III
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The first part of the response to this item is incorporated by
reference from the discussion responsive thereto under the caption "Certain
Relationships and Related Transactions" in the Company's Proxy Statement
relating to the 1999 Annual Meeting of Stockholders.
In October 1996, certain directors and officers of the Company and
members of their immediate families have invested approximately
$1,200,000 in Sign Acquisition Corporation, a privately-held holding
company which owns all of the outstanding capital stock of Interstate Highway
Sign Corp. Interstate manufactures the signs on which many of the Company's
logo sign plates are affixed. Prior to the investment, the Board of Directors
determined that it was not an investment of interest to the Company because the
business of SAC was not consistent with the Company's overall business strategy
and because SAC did not provide margins of the level historically produced by
the Company. The Company had in the past purchased logo signs from Interstate
as one of its suppliers and has continued to do so. The Company made
approximately $3,462,000 in payments to Interstate during 1997 and
approximately $1,810,000 in payments during 1998, and expects to make payments
in comparable amounts in 1999. The payments made by the Company in 1997
represented approximately 15.7% of Interstate's consolidated gross revenues for
its fiscal year ended February 28, 1998, and the payments made by the Company
in 1998 represented approximately 8.2% of Interstate's consolidated gross
revenues for its fiscal year ended February 28, 1999. Kevin P. Reilly, Jr.,
Sean E. Reilly, Charles W. Lamar, III, Gerald H. Marchand and Jack S. Rome, Jr.
and members of their immediate families hold equity interests in SAC. These
interests are comprised of shares of common stock beneficially owned by them
and held in a voting trust for which Kevin P. Reilly, Jr. serves as the
trustee, and warrants to purchase additional shares of common stock of SAC. The
shares beneficially owned by these persons and members of their immediate
families represent the following interests in the outstanding capital stock of
SAC: Kevin P. Reilly, Jr. and Sean E. Reilly are each considered to own 26.7%;
Mr. Lamar, 11.7%; Mr. Marchand, 4.4%; and Mr. Rome, 1.8%. Assuming that each of
these persons and their immediate family members exercised in full the warrants
to purchase common stock held by them, these persons would beneficially own
approximately 35.1%, 15.3%, 5.9% and 2.2%, respectively, of the outstanding
capital stock of SAC. Kevin P. Reilly, Sr., the father of Kevin P. Reilly, Jr.
and Sean E. Reilly, is the Chairman of the Board of Directors of SAC. Kevin P.
Reilly, Jr. and Jennifer Reilly, the wife of Sean E. Reilly, are members of the
Board of Directors of SAC.
32
<PAGE> 33
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) 1. FINANCIAL STATEMENTS
The financial statements are listed under Part II, Item 8 of this
Report.
2. FINANCIAL STATEMENT SCHEDULES
The financial statement schedules are included under Part II, Item 8
of this Report.
3. EXHIBITS
The exhibits are listed below under Part IV, Item 14(c) of this
Report.
(B) REPORTS ON FORM 8-K
Reports on Form 8-K were filed with the Commission during the fourth
quarter of 1998 to report the following items as of the dates
indicated:
On October 15, 1998, the Company filed a report on Form 8-K
in order to announce the acquisition of all of the
outstanding capital stock of Outdoor Communications, Inc.
("OCI"), for a purchase price of approximately $385 million.
On October 19, 1998, the Company amended its report on Form
8-K originally filed on October 15, 1998 to present under
Item 7 the historical financial statements and related notes
for OCI (and its predecessor companies OCI Corp. of Michigan
and Mass Communications Corp.) as well as to include pro
forma financial information of the Company giving effect to
the acquisition.
On December 22, 1998, the Company filed a report on Form 8-K
in order to furnish certain exhibits for incorporation by
reference into the Registration Statement on Form S-3 of
Lamar Advertising Company previously filed with Securities
and Exchange Commission (File No. 333-50559), which
Registration Statement was declared effective by the
Commission on April 28, 1998, Lamar Advertising Company is
filing an Underwriting Agreement dated December 18, 1998
between Lamar and Morgan Stanley & Co. Incorporated as
Exhibit 1.2 to such Registration Statement and an opinion of
Palmer & Dodge LLP, counsel to the Company, regarding the
validity of certain shares of the Company's Class A Common
Stock, sold by the Company pursuant to such Underwriting
Agreement as Exhibit 5.3 to such Registration Statement.
On December 23, 1998, the Company filed a report on Form 8-K
to announce that it sold 6.9 million shares of its Class A
Common Stock at a price to the public of $32.50 through
Morgan Stanley & Co., Inc. acting as the sole underwriter in
this transaction. The shares sold included 900,000 shares
under the underwriter's over-allotment option, which was
exercised in full.
<PAGE> 34
(C) EXHIBITS
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
3.1 Amended and Restated Certificate of Incorporation of the
Company. Filed as Exhibit 3.1 to the Company's Registration
Statement on Form S-1 (File No. 333-05479), and incorporated
herein by reference.
3.2 Certificate of Amendment to the Amended and Restated
Certificate of Incorporation of the Company. Previously filed
as Exhibit 3.2 to the Company's Annual Report on Form 10-K
for fiscal year ended December 31, 1997, (File No. 1-12407),
and incorporated herein by reference.
3.3 By-laws of the Company, as amended. Previously filed as
Exhibit 3.2 to the Company's Registration Statement on Form
S-1 (File No. 333- 05479), and incorporated herein by
reference.
4.1 Specimen certificate for the shares of Class A Common Stock
of the Company. Previously filed as Exhibit 4.1 to the
Company's Registration Statement on Form S-1 (File No.
333-05479), and incorporated herein by reference.
4.2 Senior Secured Note dated May 19, 1993. Previously filed as
Exhibit 4.1 to the Company's Registration Statement on Form
S-1 (File No. 33- 59624), and incorporated herein by
reference.
4.3 Indenture dated May 15, 1993 relating to the Company's 11%
Senior Secured Notes due May 15, 2003. Previously filed as
Exhibit 4.3 to the Company's Registration Statement on Form
S-1 (File No. 33-59624), and incorporated herein by
reference.
4.4 First Supplemental Indenture dated July 30, 1996 relating to
the Company's 11% Senior Secured Notes due May 15, 2003.
Previously filed as Exhibit 4.5 to the Company's Registration
Statement on Form S-1 (File No. 333-05479), and incorporated
herein by reference.
4.5 Form of Second Supplemental Indenture in the form of an
Amended and Restated Indenture dated November 8, 1996
relating to the Company's 11% Senior Secured Notes due May
15, 2003. Previously filed as Exhibit 4.1 to the Company's
Current Report on Form 8-K filed on November 15, 1996 (File
No. 1-12407), and incorporated herein by reference.
4.6 Notice of Trustee dated November 8, 1996 with respect to the
release of the security interest in the Trustee on behalf of
the holders of the Company's 11% Senior Secured Notes due May
15, 2003. Previously filed as Exhibit 4.2 to the Company's
Current Report on Form 8-K filed on November 15, 1996 (File
No. 1-12407), and incorporated herein by reference.
4.7 Form of Subordinated Note. Previously filed as Exhibit 4.8 to
the Company's Registration Statement on Form S-1 (File No.
333-05479), and incorporated herein by reference.
</TABLE>
<PAGE> 35
<TABLE>
<S> <C>
4.8 Indenture dated as of November 15, 1996 between the Company,
certain of its subsidiaries and State Street Bank and Trust
Company, as trustee, relating to the Company's 9 5/8% Senior
Subordinated Notes due 2006. Previously filed as Exhibit 4.11
to the Company's Registration Statement on Form S-3 (File No.
333-14789), and incorporated herein by reference.
4.9 Form of 9 5/8% Senior Subordinated Note due 2006. Previously
filed as Exhibit 4.12 to the Company's Registration Statement
on Form S-3 (File No. 333-14789), and incorporated herein by
reference.
4.10 Form of 8 5/8% Senior Subordinated Note due 2007. Previously
filed as Exhibit 4.10 to the Company's Annual Report on Form
10-K for fiscal year ended December 31, 1997, (File No.
1-12407), and incorporated herein by reference.
4.11 Indenture dated as of September 25, 1997 between the Company,
certain of its subsidiaries, and State Street Bank and Trust
Company, as trustee, relating to the Company's 8 5/8% Senior
Subordinated Notes due 2007. Previously filed as Exhibit 4.2
to the Company's Current Report on Form 8-K filed on
September 30, 1997 (File No. 1-12407), and incorporated
herein by reference.
4.12 Indenture dated August 15, 1997, relating to Outdoor
Communications, Inc. 9 1/4% Senior Subordinated Notes.
Previously filed as Exhibit 4.1 to the Company's Quarterly
Report on Form 10-Q for the period ended September 30, 1998,
(File No. 1-12407) and incorporated herein by reference.
4.13 Supplemental Indenture to the Indenture dated August 15, 1997
among Outdoor Communications, Inc., certain of its
subsidiaries and First Union National Bank as Trustee, dated
October 1, 1998. Previously filed as Exhibit 4.2 to the
Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1998, (File No. 1-12407) and incorporated
herein by reference.
4.14 Supplemental Indenture to the Indenture dated August 15, 1997
among Outdoor Communications, Inc., certain of its
subsidiaries and First Union National Bank, as Trustee, dated
October 23, 1998. Previously filed as Exhibit 4.3 to the
Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1998, (File No. 1-12407) and incorporated
herein by reference.
4.15 Supplemental Indenture to the Indenture dated November 15,
1996 among the Company, certain of its subsidiaries and State
Street Bank and Trust Company, as Trustee, dated October 23,
1998. Previously filed as Exhibit 4.4 to the Company's
Quarterly Report on Form 10-Q for the period ended September
30, 1998, (File No. 1-12407) and incorporated herein by
reference.
4.16 Supplemental Indenture to the Indenture dated September 25,
1997 among the Company, certain of its subsidiaries and State
Street Bank and Trust Company, as Trustee, dated October 23,
1998. Previously filed as Exhibit 4.5 to the Company's
Quarterly Report on Form 10-Q for the period ended September
30, 1998, (File No. 1-12407) and incorporated herein by
reference.
</TABLE>
<PAGE> 36
<TABLE>
<S> <C>
10.1 Consulting Agreement dated July 1, 1996 between the Lamar
Texas Limited Partnership and the Reilly Consulting Company,
L.L.C., of which Kevin P. Reilly, Sr. is the manager.
Previously filed as Exhibit 10.2 to the Company's
Registration Statement on Form S-1 (File No. 33-05479), and
incorporated herein by reference.
10.2 Indenture dated as of September 24, 1986 relating to the
Company's 8% Unsecured Subordinated Debentures. Previously
filed as Exhibit 10.3 to the Company's Registration Statement
on Form S-1 (File No. 33-59624), and incorporated herein by
reference.
10.3* The Lamar Savings and Profit Sharing Plan Trust. Previously
filed as Exhibit 10.4 to the Company's Registration Statement
on Form S-1 (File No. 33-59624), and incorporated herein by
reference.
10.4 Trust under The Lamar Corporation, its Affiliates and
Subsidiaries Deferred Compensation Plan dated October 3,
1993. Previously filed as Exhibit 10.11 to the Company's
Annual Report on Form 10-K for the fiscal year ended October
31, 1995 (File No. 33-59624), and incorporated herein by
reference.
10.5* 1996 Equity Incentive Plan. Previously filed as Exhibit 10.14
to the Company's Registration Statement on Form S-1 (File No.
333-05479), and incorporated herein by reference.
10.6 Bank Credit Agreement dated December 18, 1996 between the
Company, certain of its subsidiaries, the lenders party
thereto and The Chase Manhattan Bank, as administrative
agent. Previously filed as Exhibit 10.18 to the Company's
Annual Report on Form 10-K for the fiscal year ended October
31, 1996 (File No. 1-12407), and incorporated herein by
reference.
10.7 Amendment No. 1 to the Bank Credit Agreement dated as of
March 31, 1997 between the Company, the Subsidiary Guarantors
party thereto, the Lenders party thereto and the Chase
Manhattan Bank, as administrative agent. Previously filed as
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
for the period ended March 31, 1997 (File No. 1-12407), and
incorporated herein by reference.
10.8 Amendment No. 2 to the Bank Credit Agreement dated as of
September 12, 1997 between the Company, certain of its
subsidiaries, the lenders party thereto and The Chase
Manhattan Bank, as administrative agent. Previously filed as
Exhibit 10.2 to the Company's Current Report on Form 8-K
filed on September 30, 1997 (File No. 1-12407), and
incorporated herein by reference.
10.9 Amendment No. 3 to the Bank Credit Agreement dated as of
December 31, 1997 between the Company, certain of its
subsidiaries, the lenders party thereto and The Chase
Manhattan Bank, as administrative agent. Previously filed as
Exhibit 10.9 to the Company's Annual Report on Form 10-K for
fiscal year ended December 31, 1997, (File No. 1- 12407), and
incorporated herein by reference.
10.10 Contract to Sell and Purchase, dated as of October 9, 1996,
between the Company and Outdoor East L.P. Previously filed as
Exhibit 10.16 to the Company's Registration Statement on Form
S-3 (File No. 333- 14677), and incorporated herein by
reference.
</TABLE>
<PAGE> 37
<TABLE>
<S> <C>
10.11 Stock Purchase Agreement, dated as of September 25, 1996,
between the Company and the shareholders of FKM Advertising,
Co., Inc. Previously filed as Exhibit 10.17 to the Company's
Registration Statement on Form S-3 (File No. 333-14677), and
incorporated herein by reference.
10.12 Stock Purchase Agreement dated as of February 7, 1997 between
the Company and the stockholders of Penn Advertising, Inc.
named therein. Previously filed as Exhibit 2.1 to the
Company's Current Report on Form 8-K filed on April 14, 1997
(File No. 1-12407), and incorporated herein by reference.
10.13 Asset Purchase Agreement dated as of August 15, 1997
between The Lamar Corporation and Outdoor Systems, Inc.
Previously filed as Exhibit 2.1 to the Company's Current
Report on Form 8-K filed on August 27, 1997 (File No.
1-12407), and incorporated herein by reference.
10.14 Bank Credit Agreement dated July 16, 1998, between the
Company, certain of its subsidiaries, the lenders party
thereto and The Chase Manhattan Bank, as administrative
agent. Previously filed as Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the period ended June 30,
1998, (File No. 0-020833), and incorporated herein by
reference.
10.15 Amendment No. 1 to the Amended and Restated Bank Credit
Agreement dated September 15, 1998, between the Company,
certain of its subsidiaries, the lenders party thereto and
The Chase Manhattan Bank, as administrative agent. Previously
filed as Exhibit 10.4 to the Company's Quarterly Report on
Form 10-Q for the period ended September 30, 1998 (File No.
0-20833) and incorporated herein by reference.
10.16 Stock Purchase Agreement dated as of October 1, 1998, between
the Company and the stockholders of Outdoor Communications,
Inc. named therein. Previously filed as Exhibit 2.1 to the
Company's Current Report on Form 8-K filed on October 15,
1998 (File No. 0-20833), and incorporated herein by
reference.
10.17 Amendment No. 4 to Credit Agreement dated as of March 31,
1998, between Lamar Advertising Company, certain of its
subsidiaries, the lenders party thereto and The Chase
Manhattan Bank, as administrative agent. Previously filed as
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
for the period ended March 31, 1998 (File No. 1- 12407), and
incorporated herein by reference.
**11.1 Statement regarding computation of per share earnings.
**21.1 Subsidiaries of the Company.
**23.1 Consent of KPMG LLP.
23.2 Consent of KPMG LLP. Filed herewith.
**27.1 Financial Data Schedule.
</TABLE>
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* Management contract or compensatory plan or arrangement in which the
executive officers or directors of the Company participate.
** Previously filed with the Company's Annual Report of Form 10-K for the
fiscal year ended December 31, 1998 (File No. 1-12407)
<PAGE> 38
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
LAMAR ADVERTISING COMPANY
DATED: August 4, 1999 By: /s/ Kevin P. Reilly, Jr.
-----------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive Officer
<PAGE> 39
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
3.1 Amended and Restated Certificate of Incorporation of the
Company. Filed as Exhibit 3.1 to the Company's Registration
Statement on Form S-1 (File No. 333-05479), and incorporated
herein by reference.
3.2 Certificate of Amendment to the Amended and Restated
Certificate of Incorporation of the Company. Previously filed
as Exhibit 3.2 to the Company's Annual Report on Form 10-K
for fiscal year ended December 31, 1997, (File No. 1-12407),
and incorporated herein by reference.
3.3 By-laws of the Company, as amended. Previously filed as
Exhibit 3.2 to the Company's Registration Statement on Form
S-1 (File No. 333- 05479), and incorporated herein by
reference.
4.1 Specimen certificate for the shares of Class A Common Stock
of the Company. Previously filed as Exhibit 4.1 to the
Company's Registration Statement on Form S-1 (File No.
333-05479), and incorporated herein by reference.
4.2 Senior Secured Note dated May 19, 1993. Previously filed as
Exhibit 4.1 to the Company's Registration Statement on Form
S-1 (File No. 33- 59624), and incorporated herein by
reference.
4.3 Indenture dated May 15, 1993 relating to the Company's 11%
Senior Secured Notes due May 15, 2003. Previously filed as
Exhibit 4.3 to the Company's Registration Statement on Form
S-1 (File No. 33-59624), and incorporated herein by
reference.
4.4 First Supplemental Indenture dated July 30, 1996 relating to
the Company's 11% Senior Secured Notes due May 15, 2003.
Previously filed as Exhibit 4.5 to the Company's Registration
Statement on Form S-1 (File No. 333-05479), and incorporated
herein by reference.
4.5 Form of Second Supplemental Indenture in the form of an
Amended and Restated Indenture dated November 8, 1996
relating to the Company's 11% Senior Secured Notes due May
15, 2003. Previously filed as Exhibit 4.1 to the Company's
Current Report on Form 8-K filed on November 15, 1996 (File
No. 1-12407), and incorporated herein by reference.
4.6 Notice of Trustee dated November 8, 1996 with respect to the
release of the security interest in the Trustee on behalf of
the holders of the Company's 11% Senior Secured Notes due May
15, 2003. Previously filed as Exhibit 4.2 to the Company's
Current Report on Form 8-K filed on November 15, 1996 (File
No. 1-12407), and incorporated herein by reference.
4.7 Form of Subordinated Note. Previously filed as Exhibit 4.8 to
the Company's Registration Statement on Form S-1 (File No.
333-05479), and incorporated herein by reference.
</TABLE>
<PAGE> 40
<TABLE>
<S> <C>
4.8 Indenture dated as of November 15, 1996 between the Company,
certain of its subsidiaries and State Street Bank and Trust
Company, as trustee, relating to the Company's 9 5/8% Senior
Subordinated Notes due 2006. Previously filed as Exhibit 4.11
to the Company's Registration Statement on Form S-3 (File No.
333-14789), and incorporated herein by reference.
4.9 Form of 9 5/8% Senior Subordinated Note due 2006. Previously
filed as Exhibit 4.12 to the Company's Registration Statement
on Form S-3 (File No. 333-14789), and incorporated herein by
reference.
4.10 Form of 8 5/8% Senior Subordinated Note due 2007. Previously
filed as Exhibit 4.10 to the Company's Annual Report on Form
10-K for fiscal year ended December 31, 1997, (File No.
1-12407), and incorporated herein by reference.
4.11 Indenture dated as of September 25, 1997 between the Company,
certain of its subsidiaries, and State Street Bank and Trust
Company, as trustee, relating to the Company's 8 5/8% Senior
Subordinated Notes due 2007. Previously filed as Exhibit 4.2
to the Company's Current Report on Form 8-K filed on
September 30, 1997 (File No. 1-12407), and incorporated
herein by reference.
4.12 Indenture dated August 15, 1997, relating to Outdoor
Communications, Inc. 9 1/4% Senior Subordinated Notes.
Previously filed as Exhibit 4.1 to the Company's Quarterly
Report on Form 10-Q for the period ended September 30, 1998,
(File No. 1-12407) and incorporated herein by reference.
4.13 Supplemental Indenture to the Indenture dated August 15, 1997
among Outdoor Communications, Inc., certain of its
subsidiaries and First Union National Bank as Trustee, dated
October 1, 1998. Previously filed as Exhibit 4.2 to the
Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1998, (File No. 1-12407) and incorporated
herein by reference.
4.14 Supplemental Indenture to the Indenture dated August 15, 1997
among Outdoor Communications, Inc., certain of its
subsidiaries and First Union National Bank, as Trustee, dated
October 23, 1998. Previously filed as Exhibit 4.3 to the
Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1998, (File No. 1-12407) and incorporated
herein by reference.
4.15 Supplemental Indenture to the Indenture dated November 15,
1996 among the Company, certain of its subsidiaries and State
Street Bank and Trust Company, as Trustee, dated October 23,
1998. Previously filed as Exhibit 4.4 to the Company's
Quarterly Report on Form 10-Q for the period ended September
30, 1998, (File No. 1-12407) and incorporated herein by
reference.
4.16 Supplemental Indenture to the Indenture dated September 25,
1997 among the Company, certain of its subsidiaries and State
Street Bank and Trust Company, as Trustee, dated October 23,
1998. Previously filed as Exhibit 4.5 to the Company's
Quarterly Report on Form 10-Q for the period ended September
30, 1998, (File No. 1-12407) and incorporated herein by
reference.
</TABLE>
<PAGE> 41
<TABLE>
<S> <C>
10.1 Consulting Agreement dated July 1, 1996 between the Lamar
Texas Limited Partnership and the Reilly Consulting Company,
L.L.C., of which Kevin P. Reilly, Sr. is the manager.
Previously filed as Exhibit 10.2 to the Company's
Registration Statement on Form S-1 (File No. 33-05479), and
incorporated herein by reference.
10.2 Indenture dated as of September 24, 1986 relating to the
Company's 8% Unsecured Subordinated Debentures. Previously
filed as Exhibit 10.3 to the Company's Registration Statement
on Form S-1 (File No. 33-59624), and incorporated herein by
reference.
10.3* The Lamar Savings and Profit Sharing Plan Trust. Previously
filed as Exhibit 10.4 to the Company's Registration Statement
on Form S-1 (File No. 33-59624), and incorporated herein by
reference.
10.4 Trust under The Lamar Corporation, its Affiliates and
Subsidiaries Deferred Compensation Plan dated October 3,
1993. Previously filed as Exhibit 10.11 to the Company's
Annual Report on Form 10-K for the fiscal year ended October
31, 1995 (File No. 33-59624), and incorporated herein by
reference.
10.5* 1996 Equity Incentive Plan. Previously filed as Exhibit 10.14
to the Company's Registration Statement on Form S-1 (File No.
333-05479), and incorporated herein by reference.
10.6 Bank Credit Agreement dated December 18, 1996 between the
Company, certain of its subsidiaries, the lenders party
thereto and The Chase Manhattan Bank, as administrative
agent. Previously filed as Exhibit 10.18 to the Company's
Annual Report on Form 10-K for the fiscal year ended October
31, 1996 (File No. 1-12407), and incorporated herein by
reference.
10.7 Amendment No. 1 to the Bank Credit Agreement dated as of
March 31, 1997 between the Company, the Subsidiary Guarantors
party thereto, the Lenders party thereto and the Chase
Manhattan Bank, as administrative agent. Previously filed as
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
for the period ended March 31, 1997 (File No. 1-12407), and
incorporated herein by reference.
10.8 Amendment No. 2 to the Bank Credit Agreement dated as of
September 12, 1997 between the Company, certain of its
subsidiaries, the lenders party thereto and The Chase
Manhattan Bank, as administrative agent. Previously filed as
Exhibit 10.2 to the Company's Current Report on Form 8-K
filed on September 30, 1997 (File No. 1-12407), and
incorporated herein by reference.
10.9 Amendment No. 3 to the Bank Credit Agreement dated as of
December 31, 1997 between the Company, certain of its
subsidiaries, the lenders party thereto and The Chase
Manhattan Bank, as administrative agent. Previously filed as
Exhibit 10.9 to the Company's Annual Report on Form 10-K for
fiscal year ended December 31, 1997, (File No. 1- 12407), and
incorporated herein by reference.
10.10 Contract to Sell and Purchase, dated as of October 9, 1996,
between the Company and Outdoor East L.P. Previously filed as
Exhibit 10.16 to the Company's Registration Statement on Form
S-3 (File No. 333- 14677), and incorporated herein by
reference.
</TABLE>
<PAGE> 42
<TABLE>
<S> <C>
10.11 Stock Purchase Agreement, dated as of September 25, 1996,
between the Company and the shareholders of FKM Advertising,
Co., Inc. Previously filed as Exhibit 10.17 to the Company's
Registration Statement on Form S-3 (File No. 333-14677), and
incorporated herein by reference.
10.12 Stock Purchase Agreement dated as of February 7, 1997 between
the Company and the stockholders of Penn Advertising, Inc.
named therein. Previously filed as Exhibit 2.1 to the
Company's Current Report on Form 8-K filed on April 14, 1997
(File No. 1-12407), and incorporated herein by reference.
10.13 Asset Purchase Agreement dated as of August 15, 1997
between The Lamar Corporation and Outdoor Systems, Inc.
Previously filed as Exhibit 2.1 to the Company's Current
Report on Form 8-K filed on August 27, 1997 (File No.
1-12407), and incorporated herein by reference.
10.14 Bank Credit Agreement dated July 16, 1998, between the
Company, certain of its subsidiaries, the lenders party
thereto and The Chase Manhattan Bank, as administrative
agent. Previously filed as Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the period ended June 30,
1998, (File No. 0-020833), and incorporated herein by
reference.
10.15 Amendment No. 1 to the Amended and Restated Bank Credit
Agreement dated September 15, 1998, between the Company,
certain of its subsidiaries, the lenders party thereto and
The Chase Manhattan Bank, as administrative agent. Previously
filed as Exhibit 10.4 to the Company's Quarterly Report on
Form 10-Q for the period ended September 30, 1998 (File No.
0-20833) and incorporated herein by reference.
10.16 Stock Purchase Agreement dated as of October 1, 1998, between
the Company and the stockholders of Outdoor Communications,
Inc. named therein. Previously filed as Exhibit 2.1 to the
Company's Current Report on Form 8-K filed on October 15,
1998 (File No. 0-20833), and incorporated herein by
reference.
10.17 Amendment No. 4 to Credit Agreement dated as of March 31,
1998, between Lamar Advertising Company, certain of its
subsidiaries, the lenders party thereto and The Chase
Manhattan Bank, as administrative agent. Previously filed as
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
for the period ended March 31, 1998 (File No. 1- 12407), and
incorporated herein by reference.
**11.1 Statement regarding computation of per share earnings.
**21.1 Subsidiaries of the Company.
**23.1 Consent of KPMG LLP.
23.2 Consent of KPMG LLP. Filed herewith.
**27.1 Financial Data Schedule.
</TABLE>
- --------------
* Management contract or compensatory plan or arrangement in which the
executive officers or directors of the Company participate.
** Previously filed with the Company's Annual Report on form 10-K for the
fiscal year ended December 31, 1998 (File No. 1-12407).
<PAGE> 1
EXHIBIT 23.2
Independent Auditors' Report on
Financial Statement Schedule and Consent
The Board of Directors
Lamar Advertising Company:
The audits referred to in our report dated February 5, 1999, included the
related financial statement schedule for the years ended December 31, 1998 and
1997, the two months ended December 31, 1996 and the year ended October 31,
1996. This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement schedule based on our audits. In our opinion, such financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
We consent to incorporation by reference in the Registration Statement of Lamar
Advertising Company (the "Company") on Form S-8 (No. 333-10337), the four
Registration Statements of the Company on Form S-3 (Nos. 333-50559, 333-52851,
333-66059, and 333-71929) and the Registration Statement of the Company on Form
S-4 (No. 333-60331) of our report dated February 5, 1999, relating to the
consolidated balance sheets of Lamar Advertising Company and subsidiaries as of
December 31, 1998, and 1997, and the related consolidated statements of
operations, comprehensive income, stockholders' equity, and cash flows for the
years ended December 31, 1998 and 1997, the two months ended December 31, 1996
and the year ended October 31, 1996, which report appears in the December 31,
1998, annual report on Form 10-K of Lamar Advertising Company.
KPMG LLP
New Orleans, Louisiana
August 4, 1999
