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FORM 8-K/A
(AMENDMENT NO. 1)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): JULY 18, 1996 (JULY 16, 1996)
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OUTDOOR SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 0-28256 86-0736400
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
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2502 NORTH BLACK CANYON HIGHWAY, PHOENIX, ARIZONA 85009
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 246-9569
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NOT APPLICABLE
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS
In the Current Report on Form 8-K filed on July 16, 1996, the
Registrant reported that it had entered into an Asset Purchase Agreement dated
July 9, 1996 with Gannett Co., Inc., and certain of its direct and indirect
subsidiaries named therein for the acquisition (the "Acquisition") of
substantially all of the billboard advertising, transit and shelter operations
of the Outdoor Division (the "Division") of Gannett Co., Inc., and into
agreements for the financing of the Acquisition. In connection with the
Acquisition and the financing thereof, the Registrant commenced a tender offer
and consent solicitation to purchase for cash all of its outstanding 10-3/4%
Senior Notes due 2003 (the "Notes") for a cash price equal to $1,100 per $1,000
principal amount plus accrued and unpaid interest, and to obtain consents for
certain proposed amendments to the Indenture dated as of August 15, 1993 by and
between the Registrant, as issuer, and United States Trust Company of New York,
as Trustee pursuant to which the Notes were issued. The tender offer and the
consent solicitation are subject to the terms and conditions set forth in an
Offer to Purchase and Consent Solicitation Statement dated July 16, 1996 (the
"Statement"). The Statement included the Unaudited Consolidated Financial
Statements of the Division with respect to each year in the three-year period
ended December 31, 1995 and each of the six-month periods ended June 30, 1996
and June 30, 1995 which are attached as Annex A hereto to and incorporated by
reference herein.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 18, 1996 OUTDOOR SYSTEMS, INC.
By: /s/ BILL M. BEVERAGE
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Name: Bill M. Beverage
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Title: Chief Financial Officer,
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Treasurer and Secretary
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GANNETT OUTDOOR
UNAUDITED COMBINED STATEMENTS OF NET ASSETS TO BE ACQUIRED BY
OUTDOOR SYSTEMS, INC.
($000 OMITTED)
ASSETS TO BE SOLD
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<CAPTION>
DECEMBER 31,
--------------------- JUNE 30,
1994 1996
-------- 1995 ----------
--------
(UNAUDITED)
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CURRENT ASSETS:
Cash............................................................... $ 2,460
Marketable securities.............................................. 12 $ 12
Receivables -- net................................................. 46,598 53,127 $ 60,426
Other current assets -- principally prepaid leases................. 13,843 15,038 20,776
-------- --------
Total current assets........................................ 62,913 68,177 81,202
PROPERTY AND EQUIPMENT -- Net (Note 3)............................... 141,204 136,183 132,636
INTANGIBLES -- Net (Note 3).......................................... 43,841 42,046 41,243
OTHER ASSETS......................................................... 1,235 1,242 1,175
-------- --------
Total assets to be acquired................................. 249,193 247,648 256,256
-------- --------
LIABILITIES TO BE ASSUMED AND NET ASSETS
CURRENT LIABILITIES:
Accounts payable................................................... 8,983 8,042 13,136
Accrued liabilities................................................ 11,680 11,905 8,914
Deferred income.................................................... 1,381 878 1,063
-------- --------
Total current liabilities................................... 22,044 20,825 23,113
DEFERRED TAXES (Note 7).............................................. 6,737 6,853 6,856
OTHER LIABILITIES.................................................... 653 283 349
-------- --------
Total liabilities to be assumed............................. 29,434 27,961 30,318
COMMITMENTS AND CONTINGENCIES (Note 4)
-------- --------
NET ASSETS TO BE ACQUIRED............................................ $219,759 $219,687 $225,938
======== ========
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See notes to unaudited combined financial statements.
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GANNETT OUTDOOR
UNAUDITED COMBINED STATEMENTS OF REVENUES
AND DIRECT EXPENSES OF NET ASSETS
TO BE ACQUIRED BY OUTDOOR SYSTEMS, INC.
($000 OMITTED)
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<CAPTION>
SIX MONTH PERIODS
ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------ -------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES:
Net advertising revenues.................. $225,165 $235,236 $247,271 $115,888 $117,733
Other income (loss)....................... 25 (67) 193 266 201
-------- -------- -------- -------- --------
Total revenues.................... 225,190 235,169 247,464 116,154 117,934
-------- -------- -------- -------- --------
OPERATING EXPENSES (Note 5):
Direct advertising........................ 132,766 134,540 135,987 66,623 67,079
General and administrative................ 57,733 61,518 67,494 31,589 32,500
Depreciation and amortization............. 19,669 19,692 17,262 8,743 8,822
Severance costs........................... 1,170 711 866
-------- -------- -------- -------- --------
Total operating expenses.......... 210,168 216,920 221,454 107,821 108,401
-------- -------- -------- -------- --------
EXCESS OF REVENUES OVER DIRECT EXPENSES..... $ 15,022 $ 18,249 $ 26,010 $ 8,333 $ 9,533
======== ======== ======== ======== ========
</TABLE>
See notes to unaudited combined financial statements.
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GANNETT OUTDOOR
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
SIX MONTH PERIODS ENDED JUNE 30, 1995 AND 1996 AND
THREE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
($000 OMITTED)
1. BASIS OF PRESENTATION
On July 9, 1996, Gannett Co., Inc. ("Gannett") and Outdoor Systems, Inc.
("Outdoor Systems") signed an agreement under which Outdoor Systems will acquire
the outdoor advertising business of Gannett ("the Purchase Agreement").
Consummation of the Purchase Agreement is subject to a number of conditions,
including the expiration or early termination of the waiting period under the
Hart Scott Rodino Anti-Trust Improvement Act of 1976.
The accompanying combined statements of net assets to be acquired by
Outdoor Systems and the related combined statements of revenues and direct
expenses of net assets to be acquired by Outdoor Systems include the accounts of
the outdoor advertising division of Gannett and the accounts of its outdoor
advertising subsidiaries, Mediacom Inc. and New York Subways Advertising Co.
(referred to collectively as "Gannett Outdoor" or "the Companies"). The
Companies operate the outdoor advertising business of Gannett and have no
separate legal status or existence.
The statement of net assets to be acquired by Outdoor Systems includes the
assets and liabilities of Gannett Outdoor on the historical cost basis of
Gannett. The related statement of revenues and direct expenses includes
historical revenues and direct expenses of the Companies when owned by Gannett
and may not be representative of the revenues and direct expenses when under
different ownership. Certain general and administrative expenses have been
allocated to the Companies by Gannett (Note 5) and are not necessarily
indicative of the costs and expenses that would have resulted had the Companies
been operated by Outdoor Systems. Charges for interest and taxes have not been
included in the statement of revenues and direct expenses because they are
considered to be corporate expenses of Gannett and not allocable to the
Companies.
Because the financial statements are not those of a separate legal entity
and the related cash flow activities for the years would not be practicable to
obtain or meaningful, a separate statement of cash flows is not presented.
The Companies are engaged principally in the rental of advertising space on
outdoor advertising structures in the New York Tri State area, Michigan,
Chicago, California, Kansas City, St. Louis, Denver, and throughout Canada.
2. SIGNIFICANT ACCOUNTING POLICIES
Revenues -- The Companies recognize revenues when billed, which is on a
monthly straight-line pro rata basis in accordance with contract terms. Costs
associated with providing service for specific contracts are expensed as
incurred, although such contracts generally extend beyond one month.
Property and equipment are recorded at cost. Normal repairs and maintenance
are expensed while improvements which extend the useful life of the asset are
capitalized. Depreciation is computed on a straight-line basis over the
following useful lives:
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Buildings............................................. 30 to 40 years
Advertising structures................................ 10 to 30 years
Vehicles.............................................. 4 to 15 years
Other equipment....................................... 5 to 10 years
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Intangibles are principally excess of purchase price over net assets
acquired and those acquired after October 31, 1970 are amortized over periods of
40 years. The Companies periodically reviews for changes in circumstances to
determine whether there are conditions that indicate that the carrying amount of
such assets
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GANNETT OUTDOOR
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
may not be recoverable. If such conditions are deemed to exist, the Companies
will determine whether estimated future undiscounted cash flows are less than
the carrying amount of such assets, in which case the Companies will calculate
an impairment loss. Any impairment loss will be recorded as a component of the
operating expenses.
Foreign Currency assets and liabilities are generally translated into U.S.
dollars using the exchange rates in effect at the statement of financial
position date. Results of operations are generally translated using the average
exchange rate throughout the period.
Use of Estimates -- The preparation of these financial statements
necessarily 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 reported period. Actual results
could differ from these estimates.
3. PROPERTY AND EQUIPMENT AND INTANGIBLES
Property and equipment consist of the following at December 31:
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<CAPTION>
1994 1995
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<S> <C> <C>
Advertising structures......................................... $249,971 $253,716
Equipment...................................................... 33,694 35,612
Buildings and improvements..................................... 23,953 24,186
Construction in progress....................................... 2,099 3,816
Land........................................................... 9,936 10,437
-------- --------
Total................................................ 319,653 327,767
Less accumulated depreciation.................................. 178,449 191,584
-------- --------
Property and equipment -- net................................ $141,204 $136,183
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Depreciation expense was $16,628, $16,725 and $15,467 for the three years
ended December 31, 1993, 1994 and 1995, respectively.
Intangibles consist of the following at December 31:
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<CAPTION>
1994 1995
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Total intangibles.............................................. $ 57,673 $ 57,255
Less accumulated amortization.................................. 13,832 15,209
-------- --------
Intangibles -- net............................................. $ 43,841 $ 42,046
======== ========
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Amortization expense was $3,041, $2,967 and $1,795 for the three years
ended December 31, 1993, 1994 and 1995, respectively.
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GANNETT OUTDOOR
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
4. COMMITMENTS AND CONTINGENCIES
Leases -- The Companies lease land, buildings and equipment under operating
leases with various terms expiring at various dates. At December 31, 1995,
minimum annual rentals under all operating leases for the next five years are as
follows:
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<S> <C>
1996............................................................... $ 3,141
1997............................................................... 3,125
1998............................................................... 3,071
1999............................................................... 2,536
2000............................................................... 1,609
Thereafter......................................................... 2,964
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Total.................................................... $16,446
=======
</TABLE>
Operating lease expense was $61,553, $61,302 and $62,616 for the three
years ended December 31, 1993, 1994 and 1995.
Litigation -- The Companies is involved in various legal matters that
management considers to be in the normal course of business. In the Companies
management's opinion, based upon the advice of legal counsel, such matters will
be settled without material effect on the Companies' financial position or
results of operations.
5. TRANSACTIONS WITH GANNETT
During 1993, 1994 and 1995, the Companies received corporate charges from
Gannett for insurance and substantially all employee benefit costs. Such amounts
were allocated to the Companies based upon estimates of the Companies' pro rata
portion of such costs. Amounts included in the statements of revenues and direct
expenses for such items are as follows:
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<CAPTION>
1993 1994 1995
------ ------ ------
<S> <C> <C> <C>
Insurance................................................ $3,162 $2,450 $2,862
Employee benefits........................................ $2,897 $3,158 $3,262
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6. CANADIAN OPERATIONS
For the three years ended December 31 amounts included in the combined
financial statements applicable to Canadian operations were as follows:
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<CAPTION>
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Revenues.............................................. $56,417 $57,686 $66,380
Excess of revenues over certain expenses.............. $ 5,294 $ 5,738 $ 7,712
Assets................................................ $84,376 $47,714 $51,888
</TABLE>
7. OTHER
Deferred taxes are applicable to Mediacom Inc. the Companies' Canadian
subsidiary. Such taxes arise from the amortization of advertising structures for
tax purposes over a shorter period than amortized for financial statement
purposes.
8. NOTES TO INTERIM COMBINED FINANCIAL STATEMENTS
Basis of Presentation -- The accompanying unaudited interim combined
financial statements have been prepared utilizing generally accepted accounting
principles applicable to interim financial statements.
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GANNETT OUTDOOR
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Accordingly, such financial statements are limited as set forth in Note 1 and
also do not include all of the information and notes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments and reclassifications considered necessary for a
fair and comparable presentation have been included and are of a normal
recurring nature. Operating results for the six month period ended June 30,
1996, are not necessarily indicative of the results that may be expected for the
year ending December 31, 1996.
Gannett Acquisition -- On July 9, 1996, Gannett signed the Purchase
Agreement with Outdoor Systems under which Outdoor Systems will acquire Gannett
Outdoor for approximately $690,000 cash, subject to certain working capital
adjustments on the date of closing. The completion of the Agreement is subject
to a number of conditions, including the expiration or early termination of the
waiting period under the Hart Scott Rodino Anti-Trust Improvement Act of 1976.
Accounting Matters -- On January 1, 1996, the Companies adopted Statement
of Financial Accounting Standards ("SFAS") No. 121, Accounting for the
Impairment of Long-Lived Assets and For Long-Lived Assets to be Disposed Of. The
adoption of SFAS No. 121 had no effect on these combined financial statements.
* * * * * *
A-6
