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Previous: OAKHURST CO INC, 4, 1996-07-30 |
Next: CASH CAN INC, NTN 10Q, 1996-07-30 |
<PAGE> 1
FORM 8-K/A
(Amendment No. 2)
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 30, 1996 (July 29, 1996)
OUTDOOR SYSTEMS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-28256 86-0736400
- ---------------------------- ------------- ---------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2502 NORTH BLACK CANYON HIGHWAY, PHOENIX, ARIZONA 85009
- --------------------------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 246-9569
NOT APPLICABLE
--------------------------------------------------------------
(Former name or former address, if changed since last report.)
-1-
<PAGE> 2
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 of
Gannett Co., Inc. and into agreements for the financing of the Acquisition. In
Current Report on Form 8-K/A (Amendment No. 1) filed on July 18, 1996, the
Registrant reported that it had 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 $1,100.00 per $1,000.00
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 in the Pro Forma Combined Condensed
Financial Data for the year ended December 31, 1995 and as of and for the
six-month period ended June 30, 1996 which are attached as Annex A hereto and
incorporated by reference herein. The Statement was subsequently amended by that
certain Supplement to Offer to Purchase and Consent Solicitation Statement dated
July 29, 1996 which increased the total consideration to be paid per $1,000.00
principal amount of the Notes from $1,100.00 per $1,000.00 principal amount,
plus accrued and unpaid interest up to, but not including, the payment date, to
$1,116.25 per $1,000.00 principal amount, plus accrued and unpaid interest up
to, but not including, the payment date.
-2-
<PAGE> 3
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 30, 1996 OUTDOOR SYSTEMS, INC.
By: /s/ BILL M. BEVERAGE
---------------------------
Name: Bill M. Beverage
Title: Chief Financial Officer
Treasurer and Secretary
-3-
<PAGE> 4
ANNEX A
OUTDOOR SYSTEMS, INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
The following unaudited condensed consolidated pro forma financial information
combines the historical financial information of Outdoor Systems, Inc. ("OSI")
and the Outdoor Division of Gannett Co., Inc. and certain of its subsidiaries
("Gannett Outdoor") at June 30, 1996 and for the year ended December 31, 1995
and for the six month period ended June 30, 1996, after 1) pro forma transaction
adjustments to reflect (i) the acquisition of Gannett Outdoor as contemplated
by the Asset Purchase Agreement dated July 9, 1996, by and between OSI and
Gannett Outdoor and related financing; and (ii) the 1996 acquisitions by OSI
of perpetual land easements and bus benches less revenues and expenses of
outdoor advertising structures of OSI in Denver that will be sold to facilitate
the Gannett Outdoor acquisition; and 2) pro forma supplemental adjustments to
reflect (i) a net reduction in operating expenses of Gannett Outdoor; and,
(ii) the effect of conforming the capitalization of property and equipment
accounting policy of Gannett Outdoor to that of OSI.
The detailed assumptions used to prepare the unaudited condensed consolidated
pro forma financial information are contained in the notes to unaudited
condensed consolidated pro forma financial information. The unaudited condensed
consolidated pro forma financial information reflects the use of the purchase
method of accounting for the acquisition of Gannett Outdoor.
Pro forma adjustments for the acquisition of Gannett Outdoor are based upon
preliminary estimates, available information and certain assumptions that the
management of OSI deems appropriate. Final adjustments may differ from the pro
forma adjustments presented herein. The unaudited condensed consolidated pro
forma financial information does not purport to represent the results of
operations or the financial position of OSI and Gannett Outdoor that actually
would have resulted had the acquisition occurred as of the date indicated, nor
should it be taken as indicative of the future results of the operations or
future financial position of OSI and Gannett Outdoor. The unaudited condensed
consolidated pro forma financial information should be read in conjunction with
the notes to unaudited condensed consolidated pro forma financial information
and the separate historical financial statements and notes thereto of OSI and
Gannett Outdoor which are contained elsewhere herein.
This pro forma data does not give effect to cost reductions that are anticipated
to be achieved subsequent to the acquisitions from (i) reductions in facility
costs arising from renegotiated rents or reduced space and the elimination of
expenses incurred by terminated employees; (ii) a reduction in labor costs
arising from production efficiencies and a reduced numbers of direct production
and direct sales employees; and, (iii) increased sales efficiencies arising from
a reorganization of the sales compensation system.
<PAGE> 5
OUTDOOR SYSTEMS, INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
JUNE 30, 1996
(Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HISTORICAL
---------------------- PRO FORMA
GANNETT ADJUSTMENTS PRO
ASSETS OSI OUTDOOR (DECREASE) FORMA
--- ------- ----------- -----
<S> <C> <C> <C> <C>
CURRENT ASSETS $ 15,070 $ 81,202 $ 30,161 (1) $ 126,433
PROPERTY AND EQUIPMENT - Net 112,457 132,636 479,537 (1) 724,630
PERPETUAL LAND EASEMENTS 23,674 23,674
INTANGIBLE ASSETS - Net 41,243 23,563 (2) 60,000
(4,806)(1)
DEFERRED FINANCING COSTS 3,920 (3,274)(3) 17,208
16,562 (1)
BRIDGE DEFERRED FINANCING COSTS 16,813 (1) 16,813
DEFERRED INCOME TAXES 1,597 1,597
OTHER ASSETS 3,827 1,175 5,002
--------- --------- --------- ---------
TOTAL $ 160,545 $ 256,256 $ 558,556 $ 975,357
========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
$ 2,580 (1)
---------
CURRENT LIABILITIES $ 7,188 $ 23,113 33,375 (1) $ 66,256
LONG-TERM DEBT:
10.75% senior notes 114,670 (114,670)(1)
Senior credit facility 23,750 451,250 (1) 475,000
Senior subordinated credit facility 240,000 (1) 240,000
Other long-term obligations 40 40
--------- --------- --------- ---------
Total long-term obligations 138,460 576,580 715,040
--------- --------- --------- ---------
OTHER LONG-TERM LIABILITIES 4,473 7,205 23,563 (2) 35,241
--------- --------- --------- ---------
Total liabilities 150,121 30,318 636,098 816,537
--------- --------- --------- ---------
REDEEMABLE PREFERRED STOCK 165,000 (1) 165,000
--------- --------- --------- ---------
NET ASSETS TO BE ACQUIRED 225,938 (225,938)(1)
--------- --------- --------- ---------
SHAREHOLDERS' EQUITY (DEFICIT):
Common stock 120 120
Additional paid-in capital 34,047 34,047
Accumulated deficit (19,690) (13,330)(1) (36,294)
(3,274)(3)
Treasury stock (4,053) (4,053)
--------- --------- --------- ---------
Total shareholders' equity (deficit) 10,424 (16,604) (6,180)
--------- --------- --------- ---------
TOTAL $ 160,545 $ 256,256 $ 558,556 $ 975,357
========= ========= ========= =========
</TABLE>
-2-
<PAGE> 6
OUTDOOR SYSTEMS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
AT JUNE 30, 1996
(AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
The following explanations describe the assumptions used in determining the pro
forma adjustments necessary to present the pro forma financial position of OSI
after giving effect to the acquisition of Gannett Outdoor.
<TABLE>
<S> <C>
1. This entry records the bridge financing that OSI will use to acquire
Gannett and the use of the financing proceeds.
(CREDIT)
Increase in debt to finance acquisition as follows:
Senior credit facility $(451,250)
Senior subordinated credit facility (240,000)
Redeemable preferred stock (165,000)
Elimination of historical net assets of Gannett Outdoor 225,938
Change in assets and liabilities resulting from allocation of
purchase price:
Intangibles (4,806)
Property and equipment 479,537
Increase in deferred financing costs attributable to Senior
Credit Facility 16,562
Increase in deferred financing costs attributable to Senior
Subordinated Credit Facility and redeemable preferred stock
("Bridge Financing") 16,813
Accrual for transaction fees and expenses (33,375)
Increase in accumulated deficit due to premium paid and other
costs of tendering for 10.75% Senior Notes 13,330
Increase in cash 30,161
Accrual for estimated severance costs for Gannett Outdoor
employees to be termination at acquisition date (2,580)
Redemption of 10.75% Senior Notes 114,670
---------
$ 0
=========
Severance costs have been estimated to be an average of
six weeks compensation for employees terminated.
2. Entry to record the increase in intangibles and deferred
income taxes arising from application of SFAS No. 109
to allocation of purchase price:
Intangibles $ 23,563
Deferred income taxes (23,563)
---------
$ 0
=========
3. Entry to record the write-off of deferred financing costs
related to the 10.75%Senior Notes:
Write-off of deferred financing costs $ (3,274)
Increase in accumulated deficit 3,274
---------
$ 0
=========
</TABLE>
-3-
<PAGE> 7
OUTDOOR SYSTEMS, INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
SIX MONTH PERIOD ENDED JUNE 30, 1996
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
HISTORICAL -------------------------------------------------------------
-------------------------- PRO FORMA
GANNETT TRANSACTION SUPPLEMENTAL
OSI OUTDOOR ADJUSTMENTS TOTAL ADJUSTMENTS PRO FORMA
--- ------- ----------- ----- ------------ ---------
REVENUES:
<S> <C> <C> <C> <C> <C> <C>
Outdoor advertising - net $ 36,229 $ 117,733 $ (959)(1) $ 153,003 $ 153,003
Other income 298 201 1,306(1) 1,805 1,805
------------ ------------ ------------ ------------ ------------
Total revenues 36,527 117,934 347 154,808 154,808
------------ ------------ ------------ ------------ ------------
OPERATING EXPENSES:
Production and selling 16,151 80,971 (604)(1) 96,518 $ (400)(4) 84,936
(11,182)(5)
General and administrative 2,213 18,608 113(1) 20,934 (5,697)(6) 15,237
Depreciation and amortization 5,259 8,822 (77)(1)
11,900(2) 25,904 25,904
------------ ------------ ------------ ------------ ------------ ------------
Total operating
expenses 23,623 108,401 11,332 143,356 (17,279) 126,077
------------ ------------ ------------ ------------ ------------ ------------
OPERATING INCOME 12,904 9,533 (10,985) 11,452 17,279 28,731
INTEREST EXPENSE 28,627(3)
7,929 520(1) 37,076 37,076
------------ ------------ ------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE
INCOME TAXES 4,975 9,533 (40,132) (25,624 17,279 (8,345)
INCOME TAXES (CREDIT) 1,990 1,990 (5,328)(7) (3,338)
------------ ------------ ------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE
EXTRAORDINARY LOSS 2,985 9,533 (40,132) (27,614 22,607 (5,007)
EXTRAORDINARY LOSS (844) (844 (844)
------------ ------------ ------------ ------------ ------------ ------------
NET INCOME (LOSS) 2,141 9,533 (40,132) (28,458 22,607 (5,851)
LESS PREFERRED AND
COMMON STOCK ITEMS (3,461) (3,461 (10,888)(8) (14,349)
------------ ------------ ------------ ------------ ------------ ------------
INCOME (LOSS)
ATTRIBUTABLE TO
COMMON SHAREHOLDER $ (1,320) $ 9,533 $ (40,132) $ (31,919 $ 11,719 $ (20,200)
============ ============ ============ ============ ============ ============
INCOME (LOSS) PER
COMMON AND COMMON
EQUIVALENT SHARES $ (.08) $ (1.30)
============ ============
WEIGHTED AVERAGE
NUMBER OF COMMON
AND COMMON
EQUIVALENT SHARES
OUTSTANDING 15,573,117 15,573,117
============ ============
</TABLE>
-4-
<PAGE> 8
OUTDOOR SYSTEMS, INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
HISTORICAL --------------------------------------------------------------
--------------------------- PRO FORMA
GANNETT TRANSACTION SUPPLEMENTAL
OSI OUTDOOR ADJUSTMENTS TOTAL ADJUSTMENTS PRO FORMA
--- ------- ----------- ----- ------------ ---------
REVENUES:
<S> <C> <C> <C> <C> <C>
Outdoor advertising - net $ 64,396 $ 247,271 $ (1,112)(1) $ 310,555 $ 310,555
Other income 417 193 3,221(1) 3,831 3,831
------------ ------------ ------------ ------------ ------------
Total revenues 64,813 247,464 2,109 314,386 314,386
------------ ------------ ------------ ------------ ------------
OPERATING EXPENSES:
Production and selling 30,462 171,091 (756)(1) 200,797 $ (4,080)(4) 174,353
(22,364)(5) --
General and administrative 4,096 32,390 374(1) 36,860 (10,848)(6) 26,012
Depreciation and amortization 9,970 17,262 172(1) 51,585 51,585
24,181(2)
Severance 711 711 711
------------ ------------ ------------ ------------ ------------ ------------
Total operating
expenses 44,528 221,454 23,971 289,953 (37,292) 252,661
------------ ------------ ------------ ------------ ------------ ------------
OPERATING INCOME 20,285 26,010 (21,862) 24,433 37,292 61,725
INTEREST EXPENSE 17,199 55,914(3)
1,039(1) 74,152 74,152
------------ ------------ ------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE
INCOME TAXES 3,086 26,010 (78,815) (49,719) 37,292 (12,427)
INCOME TAXES (CREDIT) 318 318 (6,205)(7) (5,887)
------------ ------------ ------------ ------------ ------------ ------------
NET INCOME (LOSS) 2,768 26,010 (78,815) (50,037) 43,497 (6,540)
LESS PREFERRED AND
COMMON STOCK ITEMS (2,461) (2,461) (21,775)(8) (24,236)
------------ ------------ ------------ ------------ ------------ ------------
INCOME (LOSS)
ATTRIBUTABLE TO
COMMON SHAREHOLDER $ 307 $ 26,010 $ (78,815) $ (52,498) $ 21,722 $ (30,776)
============ ============ ============ ============ ============ ============
INCOME (LOSS) PER
COMMON AND COMMON
EQUIVALENT SHARES $ .02 $ (1.82)
============ ============
WEIGHTED AVERAGE
NUMBER OF COMMON
AND COMMON
EQUIVALENT SHARES
OUTSTANDING 16,949,385 16,949,385
============ ============
</TABLE>
-5-
<PAGE> 9
OUTDOOR SYSTEMS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED PRO FORMA
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995 AND FOR THE
SIX MONTH PERIOD ENDED JUNE 30, 1996
(Amounts in Thousands)
- --------------------------------------------------------------------------------
The following explanations describe the assumptions used in determining the pro
forma adjustments necessary to present the pro forma results of operations of
OSI and Gannett Outdoor for the year ended December 31, 1995 and for the six
month period ended June 30, 1996.
<TABLE>
<CAPTION>
SIX MONTH
YEAR PERIOD
ENDED ENDED
DECEMBER 31, JUNE 30,
1995 1996
------------ ---------
<S> <C> <C>
(1) This adjustments reflects pro forma changes in revenues and expenses
arising from the Denver bus bench and CSX permanent land easement
acquisitions in 1996, less revenues and expenses of outdoor
advertising structures of OSI in Denver that will be sold to
facilitate the Gannett Outdoor acquisition:
Revenues $ (1,112) $ (959)
Other income 3,221 1,306
Production and selling (756) (604)
General and administrative 374 113
Depreciation and amortization 172 (77)
Interest 1,039 520
Interest reflects the cost of such acquisitions at the OSI average
borrowing rate less interest on the proceeds from the sale of the
certain outdoor advertising structures that will be sold.
(2) The adjustment to depreciation and amortization expense consists of
the increase in depreciation and amortization expense arising from
purchase accounting adjustments as follows:
ASSETS AMORTIZATION PERIOD
Advertising structures 20 years $ 39,443 $ 19,722
Goodwill 30 years 2,000 1,000
-------- --------
Total 41,443 20,722
Amount recorded in financial statements 17,262 8,822
-------- --------
Pro forma adjustment $ 24,181 $ 11,900
(3) Reflects additional interest expense and amortization of debt discount
expense on the debt to be issued in connection with the acquisition less
interest on the 10.75% Senior Notes anticipated to be redeemed, as follows:
Interest expense:
Senior credit facility $ 41,895 $ 20,947
Senior subordinated credit facility 27,600 13,800
Less interest on 10.75% notes and existing senior credit facility (17,199) (7,929)
Amortization of deferred financing costs over a seven year period 3,618 1,809
-------- --------
Total interest expense $ 55,914 $ 28,627
======== ========
It is anticipated that the total amount of the bridge deferred financing
costs will be written off when the bridge financing is repaid.
(4) The adjustment to production and selling expenses consists of a decrease
in expenses due to capitalization by OSI of items expensed by Gannett due
to fixed asset capitalization policy of Gannett that has a different
capitalization policy than that of OSI $ 4,080 $ 400
======== ========
</TABLE>
-6-
<PAGE> 10
<TABLE>
<CAPTION>
SIX
MONTH
YEAR PERIOD
ENDED ENDED
DECEMBER 31, JUNE 30,
1995 1996
------------ --------
<S> <C> <C>
(5) This adjustment to production and selling expenses consists of a
decrease in payroll and payroll related costs due to termination of
employees at date of acquisition or as soon as permitted under
applicable loan due to:
Elimination of production and sales overhead functions $ 7,724 $ 3,862
Consolidation of Canadian production facility 1,640 820
Elimination of production support positions 2,591 1,295
Elimination of national sales and marketing functions 5,053 2,527
Elimination of administrative support positions 5,356 2,678
------- -------
$22,364 $11,182
======= =======
Amounts for 1995 have been determined based upon specific employees
identified for termination plus benefits estimated to be 30% of payroll.
Amounts for the six month period ended June 30, 1996 have been determined
based upon 50% of 1995 amounts adjusted for known changes.
(6) This adjustment to general and administrative expenses consists of:
a decrease in payroll and payroll related costs due to termination of
employees at date of acquisition or as soon as permitted under
applicable law due to:
Elimination of national office functions $ 4,162 $ 2,081
Consolidation of accounting and administrative functions to
eliminate positions or duplicate efforts 5,770 2,885
------- -------
9,932 4,966
Expenses of national office to be closed 916 731
------- -------
$10,848 $ 5,697
======= =======
Amounts for 1995 have been determined based upon a) specific employees
identified for termination plus benefits estimated to be 30% of payroll.
Amounts for the six month period ended June 30, 1996 have been determined
based upon 50% of 1995 amounts adjusted for known changes; and b) actual
expenses of the national office.
(7) The adjustment to income taxes consists of reflecting the income
tax effect of pro forma adjustments at a blended rate of 40% $ 6,205 $(5,328)
======= =======
(8) Adjustments to:
Amortize deferred financing costs applicable to preferred stock over a
seven year period $ 1,150 $ 575
Record LIBOR plus 7% (12.5%) preferred stock dividend 20,625 10,313
------- -------
$21,775 $10,888
======= =======
</TABLE>
It is anticipated that the total amount of the deferred financing costs
applicable will be written off when the redeemable preferred stock is
redefined.
-7-
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