<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended October 31, 1995
-------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the transition period from to
---------------- ---------------
Commission file number 33-59624
LAMAR ADVERTISING COMPANY
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 72-1205791
-------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5551 Corporate Blvd., Baton Rouge, LA 70808
- ------------------------------------- ----------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (504) 926-1000
----------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None
Name of Each Exchange on which Registered
- -----------------------------------------
None
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-K. [ X ]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of January 16, 1996: $3,136,848 (For purposes of this filing
only, all executive officers and directors have been classified as affiliates.)
The number of shares of the registrant's common stock outstanding as of January
16, 1996 was Common 28,100,223 and Preferred 5,719.49.
<PAGE> 2
DOCUMENTS OR PARTS THEREOF INCORPORATED BY REFERENCE
Form 10-K Part into which the
Document or Part Thereof Document is Incorporated None
PART II.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data of Lamar Advertising Company for each of the years in
the five year period ended October 31, 1995 is shown below. The selected
financial data should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations and the consolidated
financial statements and the related notes thereto for the three years ended
October 31, 1995 included in Items 7 and 8, respectively (dollars in thousands,
except for share data).
<TABLE>
<CAPTION>
Year Ended October 31
-----------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
REVENUES
Net advertising revenues 101,871 83,627 65,365 60,760 60,834
Management fees 31 334 595 623 827
Rental income 506 512 564 572 601
------- ------ ------ ------ ------
102,408 84,473 66,524 61,955 62,262
------- ------ ------ ------ ------
OPERATING EXPENSES
Direct advertising expenses 34,386 28,959 23,830 22,783 22,143
General and administrative expenses 27,057 24,239 19,504 18,225 17,703
Depreciation and amortization 14,090 11,352 8,924 8,881 8,826
------- ------ ------ ------ ------
75,533 64,550 52,258 49,889 48,672
------- ------ ------ ------ ------
Operating income 26,875 19,923 14,266 12,066 13,590
------- ------ ------ ------ ------
Non-operating expense(income):
Interest income ( 199) ( 194) ( 218) ( 96) ( 213)
Interest expense 15,783 13,599 11,502 10,454 11,650
Loss(gain)on disposition of assets 2,328 675 729 ( 1,309) 216
Other expense 655 616 576 392 1,001
------- ------ ------ ------ ------
18,567 14,696 12,589 9,441 12,654
------- ------ ------ ------ ------
Earnings before income
taxes and extraordinary item 8,308 5,227 1,677 2,625 936
Income tax expense (benefit) ( 2,390) ( 2,072) 476 270 207
------- ------ ------ ------ ------
Extraordinary loss on debt
extinguishment, net of income tax
benefit of $98 - - ( 1,854) - -
------- ------ ------ ------ ------
Net earnings (loss) 10,698 7,299 ( 653) 2,355 729
======= ====== ====== ====== ======
Earnings before extraordinary item
per common share .32 .21 .03 .07 .02
======= ====== ====== ====== ======
Earnings(loss) per common share .32 .21 ( .02) .07 .02
======= ====== ====== ====== ======
OTHER DATA:
Cash dividends per common share 11.53 11.09 10.00 10.00 10.00
Cash and cash equivalents 5,886 8,016 9,224 75 1,152
Total assets 133,885 130,008 92,041 78,649 81,737
Total long-term obligations 143,944 147,957 122,774 103,567 111,267
Stockholders' deficit (28,154) (37,352) (43,249) (41,870) (43,787)
</TABLE>
<PAGE> 3
ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is a discussion of the consolidated financial condition and
results of operations of the Company for the three fiscal years ended October
31, 1995, 1994 and 1993 as compared to the same period for the prior year.
This discussion should be read in conjunction with the consolidated financial
statements of the Company and the related notes included elsewhere in this
document. References herein to specific years refer to the Company's fiscal
year ending on October 31 of such years.
OVERVIEW
The Company's net revenues, which represent gross revenues less commissions
paid to advertising agencies that contract for the use of advertising displays
on behalf of advertisers, are derived primarily from the sale of advertising on
outdoor advertising displays owned and operated by the Company. In recent
years, the Company's logo sign business has expanded rapidly and may in the
future have an increasing impact on the Company's revenues and operating
income.
The Company has grown significantly during the last three years, primarily as
the result of (i) internal growth in its existing outdoor advertising business
resulting from construction of additional outdoor advertising displays, general
improvements in occupancy and operating efficiency and increases in advertising
rates, (ii) acquisitions of outdoor advertising businesses and structures, the
most significant of which was the Company's acquisition of the 50.6% interest
that it did not already own in Lamar Holdings Corporation ("LHC") in 1994, and
(iii) the rapid expansion of the Company's logo sign business. The Company's
net advertising revenues increased by $36.4 million, representing a compound
annual growth rate of 24.8%, from $65.4 million for the fiscal year ended
October 31, 1993 to $101.9 million for the fiscal year ended October 31, 1995.
During the same period, operating cash flow increased $17.8 million,
representing a compound annual growth rate of 32.9%, from $23.2 million for the
fiscal year ended October 31, 1993 to $41.0 million for the fiscal year ended
October 31, 1995.
The Company plans to continue a strategy of expanding through both internal
growth and acquisitions. As a result of acquisitions, principally the LHC
acquisition, the purchase of displays in existing markets to increase market
penetration and the effects of consolidation of operations following each
acquisition, the operating performance of certain markets and of the Company as
a whole are not necessarily comparable on a year-to-year basis. All recent
acquisitions have been accounted for using the purchase method of accounting
and, consequently, operating results from acquired operations are included from
the respective dates of these acquisitions.
The Company relies on sales of advertising space for its revenues, and its
operating results are therefore affected by the general economic conditions, as
well as trends in the advertising industry. The Company believes that in
recent years outdoor advertising expenditures have increased more rapidly than
total U.S. advertising expenditures, but there can be no assurance that this
trend will continue or that in the future outdoor advertising will not grow
more slowly than the advertising industry as a whole.
<PAGE> 4
Manufacturers of tobacco products, primarily cigarettes, were historically
major users of outdoor advertising displays. Due to societal and governmental
pressures and other factors, in the early 1990's, leading tobacco manufacturers
substantially reduced their domestic advertising expenditures. The Company's
tobacco revenues, as a percentage of total net revenues, declined from 17% in
fiscal 1991 to 12% in fiscal 1992, 7% in fiscal 1993 and 1994 and 9% in fiscal
1995. During this period, the Company has replaced the reduced tobacco
advertising by diversifying its customer base and increasing sales to local
advertisers.
Growth of the Company's business requires significant capital expenditures to
finance internal growth, acquisitions and the up-front costs associated with
new logo sign franchises. The Company expended $7.6 million on capital
expenditures in fiscal 1993, $13.4 million in fiscal year 1994 and $14.0
million in fiscal 1995. Of these amounts, $2.0 million, $2.8 million and $1.6
million, respectively, were attributable to the logo sign business. See
"-Liquidity and Capital Resources."
In the fiscal years ended October 31, 1995 and 1994, the Company recognized an
income tax benefit from a net operating loss carryforward. The benefit of the
Company's net operating loss carryforward was fully recognized as of October
31, 1995.
The following table presents certain items in the Consolidated Statements of
Earnings (Loss) as a percentage of net revenues for the years ended October 31,
1995, 1994, and 1993.
<TABLE>
<CAPTION>
Year Ended October 31,
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net revenues...........................100.0% 100.0% 100.0%
Operating expenses
Direct advertising expenses........... 33.6 34.3 35.8
General and administrative expenses... 26.4 28.7 29.3
Operating cash flow.................... 40.0 37.0 34.9
Depreciation and amortization.......... 13.8 13.4 13.4
Operating income....................... 26.2 23.6 21.4
Interest expense....................... 15.4 16.1 17.3
Non-operating expense.................. 18.1 17.4 18.9
Net earnings (loss).................... 10.4 8.6 ( 1.0)
</TABLE>
YEAR ENDED OCTOBER 31, 1995 COMPARED TO YEAR ENDED OCTOBER 31, 1994
Net revenues increased $17.9 million or 21.2% to $102.4 million for the twelve
months ended October 31, 1995 from $84.5 million for the same period in 1994.
This increase was predominantly attributable to higher outdoor advertising net
revenues, which rose $17.9 million or 23.0% during this period. The increase
in outdoor advertising net revenues was principally attributable to increases
in number of displays and advertising rates, with occupancy rates remaining
relatively steady. Operations acquired subsequent to fiscal 1993 generated
$9.1 million of this increase in outdoor advertising net revenues. This
increase in net revenues was partially offset by a decrease in management fees
resulting from the LHC acquisition. Continued development of the logo sign
business resulted in logo advertising revenue increasing $0.3 million or 5.5%
for the twelve months ended October 31, 1995 as compared to the prior fiscal
year.
<PAGE> 5
Operating expenses, exclusive of depreciation and amortization, increased $8.2
million or 15.5% to $61.4 million for the twelve months ended October 31, 1995
from $53.2 million for the same period in 1994. The LHC operations acquired in
May 1994 generated $5.5 million of this increase in operating expenses; the
remaining $2.7 million of the increase was generated by previously existing
operations. This $2.7 million increase was primarily the result of
acquisitions which caused an expansion of the Company's work force, which
required higher aggregate commissions, workers' compensation costs and employee
benefit expenses.
Depreciation and amortization expense increased $2.7 million or 24% from $11.4
million for the year ended October 31, 1994 to $14.1 million for the year ended
October 31, 1995. This increase in depreciation and amortization was generated
by the assets purchased during fiscal years 1994 and 1995.
Because the Company's operating expenses declined as a percentage of net
revenues to 73.8% for fiscal 1995 from 76.4% for fiscal 1994, operating income
increased $7.0 million or 34.9% from $19.9 million for the twelve months ended
October 31, 1994 to $26.9 million for the twelve months ended October 31, 1995.
Interest expense increased $2.2 million or 16.1% to $15.8 million for the
twelve months ended October 31, 1995 from $13.6 million for the same period in
1994. Approximately $1.8 million of the increase in interest expense reflected
an additional $35.0 million in debt incurred in May 1994 to finance the LHC
acquisition. The remaining $0.4 million increase in interest expense was due
to increased working capital borrowings throughout fiscal 1995.
The Company had a significant net operating loss carryforward and, therefore,
income tax expense for this period reflected the alternative minimum tax, state
income tax and the recognition in the current year of the deferred tax benefit
generated by the net operating loss carryforward.
As a result of the foregoing factors, net earnings increased $3.4 million or
46.6% to $10.7 million for the twelve months ended October 31, 1995 from $7.3
million for the same period in 1994.
YEAR ENDED OCTOBER 31, 1994 COMPARED TO YEAR ENDED OCTOBER 31, 1993
Net revenues increased $18.0 million or 27.0% to $84.5 million for the twelve
months ended October 31, 1994 from $66.5 million for the same period in 1993.
Higher outdoor advertising net revenues contributed $16.6 million of this
increase, resulting from increases in number of displays, occupancy rates and
advertising rates. Logo advertising revenues increased $1.4 million or 34%
from $4.3 million for the twelve months ended October 31, 1993 to $5.7 million
for the twelve months ended October 31, 1994. The increase in revenues from
logo advertising was generated by the build-out of logos in Texas and
Mississippi and the continued expansion of the existing systems.
Operating expenses, exclusive of deprecation and amortization, increased $9.9
million or 22.8% to $53.2 million for the twelve months ended October 31, 1994
from $43.3 million for the same period in 1993. This increase was
approximately evenly split between existing operations and those acquired after
fiscal 1993.
Depreciation and amortization expense increased $2.4 million or 27.2% to $11.4
million for the twelve months ended October 31,1994 from $8.9 million for the
<PAGE> 6
twelve months ended October 31, 1993. $1.8 million of such increase was
attributable to operations acquired after fiscal 1993, with $1.2 million
representing depreciation of newly acquired boards and $0.6 million
representing amortization related to intangibles capitalized as part of such
acquisitions.
Because revenue growth outpaced increases in expenses, operating income
increased $5.7 million or 39.7% to $19.9 million for the twelve months ended
October 31, 1994 from $14.3 million for the same period in 1993.
Interest expense increased $2.1 million or 18.2% to $13.6 million for the
twelve months ended October 31, 1994 from $11.5 million for the twelve months
ended October 31, 1993. Approximately $1.4 million of such increase reflects
an additional $35.0 million of debt incurred in connection with the May 1994
LHC acquisition. The remaining $0.7 million of the increase in interest
expense was due to the issuance in May 1993 of $100 million in aggregate
principal amount of Senior Notes with a fixed interest rate of 11.0%. Prior to
the issuance of the Senior Notes, the Company's debt consisted primarily of
variable rate bank financing with a lower net interest cost.
As a result of the foregoing factors, net earnings increased $8.0 million to
$7.3 million for the twelve months ended October 31, 1994 from a net loss of
$0.7 million for the same period in 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company's net cash provided by operating activities increased to $15.2
million in fiscal 1994 from $12.4 million in fiscal 1993 due primarily to the
increase in net earnings. Net cash used in investing activities increased from
$10.1 million in fiscal 1993 to $53.6 million in fiscal 1994, due primarily to
the LHC acquisition. Net cash used in financing activities increased from $6.8
million in fiscal 1993 to $37.1 million in fiscal year 1994 due primarily to
the incurrence of indebtedness pursuant to a new $35.0 million bank term loan
used to complete the LHC acquisition.
The Company's net cash provided by operating activities increased to $25.1
million in fiscal 1995 due primarily to a $3.4 million increase in net earnings
and the addition of non-cash items, including a $2.7 million increase in
depreciation and amortization. Net cash used in investing activities decreased
from $53.6 million in fiscal 1994 to $17.8 million in fiscal 1995 due primarily
to a $37.6 million decrease in purchase of new markets attributable to the
inclusion of the LHC acquisition in fiscal 1994, offset by a $1.8 million
increase in capital expenditures and purchases of intangibles. Net cash used
in financing activities decreased $46.5 million in fiscal 1995 due to a $44.5
million decrease in proceeds from issuance of long term debt compared to fiscal
1994.
During the three fiscal years ended October 31, 1995, the Company's aggregate
capital expenditures, as shown in the Consolidated Statements of Cash Flow,
were $35.0 million. Of this amount, the Company spent in the fiscal years
1993, 1994 and 1995 approximately $2.4 million, $5.0 million and $9.3 million,
respectively, to build and maintain structures within its existing markets and
$2.0 million, $2.8 million and $1.6 million, respectively, to meet the capital
expenditures requirements of state logo sign franchise operations.
<PAGE> 7
During fiscal year 1995, the Company was awarded four new state logo
franchises. They are Georgia, Minnesota, South Carolina and Virginia. In
addition, the state of Texas is expanding its existing program currently run by
Lamar, and has awarded the expansion contract to the Company. Due to the
capital requirements necessary in 1996 to fund these new franchises,
approximately $13 million, the Company effective October, 1995 amended its
existing Bank credit agreement partially deferring short term principal
payments. In addition, the Company has entered into a new $15 million reducing
credit line with its Bank group. This line may only be used to finance the
cost of new logo franchises awarded to it.
Effective May 1, 1994, the Company completed the LHC acquisition in a
transaction accounted for as a purchase for a price of $43.5 million, which was
financed with the proceeds of a bank term loan in the amount of $35.0 million,
with the remainder financed from the Company's revolving credit facilities.
On May 19, 1993, the Company issued $100 million in aggregate principal amount
of Senior Notes. Simultaneously with the sale of the Senior Notes, the Company
entered into a new Bank Credit Agreement which provided an $8 million term loan
and a $20 million working capital line of credit. The majority of the net
proceeds from the issuance of Senior Notes was utilized to extinguish existing
variable rate debt prior to maturity and pay related expenses. See
"Description of Indebtedness-Senior Notes."
The Company expects to have sufficient funds going forward to cover all debt
service and capital expenditure requirements.
<PAGE> 8
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Index to Financial Statements
Independent Auditors' Report
Consolidated Balance Sheets
Consolidated Statements of Earnings
Consolidated Statements of Stockholders' Deficit
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Separate financial statements of the guarantor subsidiaries are not included
because such subsidiaries are jointly and severally liable, and the aggregate
assets, liabilities, earnings and equity of the guarantor subsidiaries are
substantially equivalent to the assets, liabilities, earnings and equity of the
parent on a consolidated basis.
<PAGE> 9
Independent Auditors' Report
Board of Directors
Lamar Advertising Company
Baton Rouge, Louisiana:
We have audited the accompanying consolidated balance sheets of Lamar
Advertising Company and subsidiaries as of October 31, 1995 and 1994, and the
related consolidated statements of earnings, stockholders' deficit and cash
flows for each of the years in the three-year period ended October 31, 1995.
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 October 31, 1995 and 1994, and the results of
their operations and their cash flows for each of the years in the three-year
period ended October 31, 1995, in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
January 12, 1996, except as to note
14, which is as of July 24, 1996
<PAGE> 10
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share data)
October 31, 1995 and 1994
<TABLE>
<CAPTION>
Assets 1995 1994
------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,886 8,016
Receivables (note 3):
Trade accounts, less allowance for doubtful
accounts of $551 in 1995 and 1994 10,741 9,963
Affiliates, related parties and employees 583 560
Other 109 68
--------- -------
11,433 10,591
Prepaid expenses 1,247 1,200
Other current assets 1,266 1,287
--------- -------
Total current assets 19,832 21,094
--------- -------
Property, plant and equipment (note 4) 168,402 159,707
Less accumulated depreciation and
amortization (77,524) (70,884)
--------- -------
90,878 88,823
--------- -------
Intangible assets (note 5) 13,406 14,062
Receivables - noncurrent (note 3) 918 751
Deferred taxes (note 10) 5,951 2,650
Other assets 2,900 2,628
--------- -------
Total assets $ 133,885 130,008
========= =======
Liabilities and Stockholders' Deficit
-------------------------------------
Current liabilities:
Trade accounts payable 2,435 1,123
Current maturities of long-term debt (note 9) 3,479 7,054
Accrued expenses (note 8) 9,733 9,647
Deferred income 2,448 1,579
--------- -------
Total current liabilities 18,095 19,403
Long-term debt (note 9) 142,572 146,875
Deferred income 749 668
Other liabilities 623 414
--------- -------
162,039 167,360
--------- -------
</TABLE>
(Continued)
<PAGE> 11
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Stockholders' deficit (note 12):
Class A common stock, par value $.001,
50,000,000 shares authorized,
15,657,623 and 16,504,263
shares issued and outstanding in
1995 and 1994, respectively $ 16 17
Class B common stock, par value, $.001,
25,000,000 shares authorized,
16,897,379 and 17,271,240
shares issued and outstanding in 1995 and
1994, respectively 17 17
Accumulated deficit (28,187) (37,386)
---------- -------
Stockholders' deficit (28,154) (37,352)
Commitments and contingencies (notes 7 and 13)
---------- -------
Total liabilities and stockholders'
deficit $ 133,885 130,008
========== =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 12
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Consolidated Statements of Earnings
(In thousands, except per share data)
Years ended October 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Revenues, net:
Outdoor advertising, net $ 101,871 83,627 65,365
Management fees from related and
affiliated parties 31 334 595
Rental income 506 512 564
--------- ------ ------
102,408 84,473 66,524
--------- ------ ------
Operating expenses:
Direct advertising expenses 34,386 28,959 23,830
General and administrative expenses 27,057 24,239 19,504
Depreciation and amortization 14,090 11,352 8,924
--------- ------ ------
75,533 64,550 52,258
--------- ------ ------
Operating income 26,875 19,923 14,266
--------- ------ ------
Other expense (income):
Interest income (199) (194) (218)
Interest expense 15,783 13,599 11,502
Loss on disposition of assets 2,328 675 729
Other expenses 655 616 576
--------- ------ ------
18,567 14,696 12,589
--------- ------ ------
Earnings before income taxes
and extraordinary item 8,308 5,227 1,677
Income tax expense (benefit) - (note 10) (2,390) (2,072) 476
--------- ------ ------
Earnings before extraordinary item 10,698 7,299 1,201
------- ------ ------
Extraordinary loss on debt
extinguishment, net of income tax
benefit of $98 (note 9) - - (1,854)
--------- ------ ------
Net earnings (loss) $ 10,698 7,299 (653)
========= ====== ======
Earnings per common share
before extraordinary item $ .32 .21 .03
======= === ====
Net earnings (loss) per common share $ .32 .21 (.02)
======= === ====
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 13
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Deficit
(In thousands, except per share data)
Years ended October 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
Class A Class B Additional
common common paid-in Accumulated
stock stock capital deficit Total
----- ----- ------- ------- -----
<S> <C> <C> <C> <C> <C>
Balance, October 31, 1992 $ 19 15 403 (42,307) $(41,870)
Shares issued 1 2 627 - 630
Redemption of 1,690,163 shares
of common stock ( 2) - (899) - (901)
Net loss - - - (653) (653)
Dividends ($.01 per share) - - - (455) (455)
----- ----- ----- ------ -------
Balance, October 31, 1993 18 17 131 (43,415) (43,249)
Redemption of 1,327,985 shares
of common stock ( 1) - (131) (771) (903)
Net earnings - - - 7,299 7,299
Dividends ($.01 per share) - - - (499) (499)
----- ----- ----- ------ -------
Balance, October 31, 1994 17 17 - (37,386) (37,352)
Redemption of 1,220,500 shares
of common stock ( 1) - - (999) (1,000)
Net earnings - - - 10,698 10,698
Dividends ($.01 per share) - - - (500) (500)
----- ----- ----- ------ -------
Balance, October 31, 1995 $ 16 17 - (28,187) (28,154)
===== ===== ===== ====== =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 14
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
Years ended October 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 10,698 7,299 (653)
Adjustments to reconcile net earnings
(loss) to net cash provided by
operating activities:
Depreciation and amortization 14,090 11,352 8,924
Loss on disposition of assets 2,328 675 729
Deferred taxes (3,301) (2,650) -
Provision for doubtful accounts 502 508 471
Changes in operating assets and
liabilities:
(Increase) decrease in
receivables (1,344) (1,391) (1,998)
(Increase) decrease in prepaid
expenses (47) (321) 4
(Increase) decrease in other
assets (418) (1,640) 34
Increase (decrease) in trade
accounts payable 1,312 (69) (502)
Increase in accrued expenses 86 1,356 4,817
Increase (decrease) in deferred
income 950 (113) 596
Increase (decrease) in other
liabilities 209 208 (11)
------ ------ ------
Net cash provided by
operating activities 25,065 15,214 12,411
------ ------ ------
Cash flows from investing activities:
Capital expenditures (14,046) (13,357) (7,550)
Purchase of new markets (2,885) (40,482) -
Proceeds from sale of property and
equipment 717 733 396
Purchase of intangible assets (1,603) (463) (2,352)
Investments in and advances to
affiliated companies - - (558)
------ ------ ------
Net cash used in investing
activities (17,817) (53,569) (10,064)
------ ------ ------
</TABLE>
(Continued)
<PAGE> 15
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
(In thousands)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from issuance of long-term
debt $ - 44,515 105,611
Principal payments on long-term debt (7,878) (5,966) (97,453)
Redemption of common stock (1,000) (903) (901)
Dividends (500) (499) (455)
-------- ------ -------
Net cash provided by (used
in)financing activities (9,378) 37,147 6,802
-------- ------ -------
Net increase (decrease) in
cash and cash equivalents (2,130) (1,208) 9,149
Cash and cash equivalents at
beginning of year 8,016 9,224 75
-------- ------ -------
Cash and cash equivalents
at end of year $ 5,886 8,016 9,224
======== ====== =======
Supplemental disclosures of cash flow
information:
Cash paid for interest $ 15,825 13,461 6,994
======== ====== =======
Cash paid for income taxes $ 1,028 267 295
======== ====== =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 16
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(In thousands, except share and per share data)
October 31, 1995, 1994 and 1993
(1) Significant Accounting Policies
(a) Principles of Consolidation
The accompanying consolidated financial statements include Lamar
Advertising Company, its wholly-owned subsidiaries, Lamar Holding
Company (LHC) and The Lamar Corporation (TLC), their
majority-owned subsidiaries and Interstate Logos, Inc., a
subsidiary of both LAC and TLC (collectively, the Company or LAC).
All intercompany transactions and balances have been eliminated.
Prior to May 1994, the Company owned 49.36% of the outstanding
stock of LHC, which investment was accounted for by the equity
method. On May 10, 1994, LAC acquired substantially all of the
assets of LHC. The proceeds from the sale of its assets were used
by LHC to repay existing debt and redeem all of its shareholders
other than LAC, resulting in LHC becoming a wholly-owned
subsidiary of LAC. The acquisition has been accounted for using
the purchase method of accounting.
(b) 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.
(c) Intangible Assets
Debt issuance costs are deferred and amortized over the terms of
the related credit facilities using the interest method. Other
intangible assets are initially recorded at cost and amortized
using the straight- line method over the assets' estimated useful
lives, generally from 5 to 10 years.
(d) 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
(Continued)
<PAGE> 17
2
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(In thousands, except share and per share data)
income in the consolidated financial statements at the time the
assets are sold to an unrelated party or otherwise disposed of.
(e) 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.
(f) 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.
(g) Earnings Per Share
Earnings per common share are computed by dividing net earnings by
the weighted average number of common shares outstanding during
each year (33,772,107 shares in 1995, 35,089,188 shares in 1994
and 35,470,837 shares in 1993). Such amounts have been adjusted
to reflect the approximate 778.9-for-1 stock split and the
concurrent exchanges of shares in a recapitalization that will
occur in connection with the Offering referred to in Note 14.
(h) Cash and Cash Equivalents
The Company considers all highly-liquid investments with original
maturities of three months or less to be cash equivalents.
(i) Reclassification of Prior Year Amounts
Certain amounts in the prior years consolidated financial
statements have been reclassified to conform with the current
year presentation. These reclassifications had no effect on
previously reported net earnings.
<PAGE> 18
3
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(In thousands, except share and per share data)
(2) Noncash Financing and Investing Activities
A summary of significant noncash financing and investing activities
follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Noncash dispositions of assets $ 3,788 445 336
Noncash acquisitions of assets 4,341 - 1,817
Common stock issued in exchange
for investment in affiliate - - 630
</TABLE>
(3) Receivables
The following is a summary of accounts and notes receivable as of
October 31:
<TABLE>
<CAPTION>
1995 1994
---- ----
Current Noncurrent Current Noncurrent
------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Trade accounts
receivable,
net $ 10,741 - 9,963 -
Related parties 452 - 291 -
Employees, other
than related
parties 131 - 269 -
Other 109 918 68 751
-------- --- ------ ---
$ 11,433 918 10,591 751
======== === ====== ===
</TABLE>
(4) Property, Plant and Equipment
Major categories of property, plant and equipment at October 31, 1995
and 1994 are as follows:
<TABLE>
<CAPTION>
Estimated
life (years) 1995 1994
----------- ---- ----
<S> <C> <C> <C>
Land - $ 7,826 7,739
Building and improvements 10-32 15,553 15,132
Advertising structures 15 131,071 123,592
Automotive and other equipment 3-7 13,952 13,244
--------- -------
$ 168,402 159,707
========= =======
</TABLE>
(Continued)
<PAGE> 19
4
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(In thousands, except share and per share data)
(5) Intangible Assets
The following is a summary of intangible assets at October 31:
<TABLE>
<CAPTION>
Estimated
life (years) 1995 1994
----------- ---- ----
<S> <C> <C> <C>
Debt issuance costs 10 $ 3,180 3,604
Customer lists and
unexpired contracts 7 7,103 7,581
Non-compete agreements 7-15 1,036 1,296
Organization costs 5 673 219
Loan fees 7-10 1,051 1,027
Other 7-10 363 335
-------- ------
$ 13,406 14,062
======== ======
Cost 20,473 18,870
Accumulated amortization (7,067) (4,808)
-------- ------
Net intangible assets $ 13,406 14,062
======== ======
</TABLE>
(6) Lamar Holdings Corporation
Prior to May 1994, the Company owned 49.36% of the common stock of LHC.
LHC was founded in 1989 by TLC, members of its management and certain
institutional investors to provide outdoor advertising services in
markets other than those served by TLC.
Effective May 1, 1994, LAC acquired substantially all of the assets and
assumed certain liabilities of LHC for a purchase price of $43,500. The
proceeds from the sale of its assets were used by LHC to repay existing
debt and redeem all of its shareholders other than LAC, resulting in LHC
becoming a wholly-owned subsidiary of LAC. The acquisition has been
accounted for as a purchase and accordingly, the purchase price
attributable to shareholders other than LAC (50.64%) has been allocated
to the assets acquired based on their fair values. The results of
operations of LHC have been included in LAC's consolidated financial
statements from May 1, 1994.
(Continued)
<PAGE> 20
5
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(In thousands, except share and per share data)
The following unaudited pro forma financial information presents the
combined results of operations of LAC and LHC as if the acquisition had
occurred as of the beginning of 1994 and 1993, after giving effect to
certain adjustments, including additional depreciation expense,
increased interest expense on debt related to the acquisition, and
related income tax effects. The pro forma financial information does
not necessarily reflect the results of operations that would have
occurred had the companies constituted a single entity during such
period.
<TABLE>
<CAPTION>
Year ended
October 31,
1994 1993
---- ----
(unaudited)
<S> <C> <C>
Revenues, net $ 92,480 81,303
========== ======
Net income (loss) before
extraordinary item $ 6,265 (1,856)
========== ======
Net income (loss) $ 6,265 (3,710)
========== ======
Earnings (loss) per share before
extraordinary item $ .18 (.05)
======= ===
Earnings (loss) per share $ .18 (.10)
======= ===
</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 October 31:
<TABLE>
<S> <C>
1996 $ 10,546
1997 8,654
1998 7,172
1999 5,857
2000 4,486
========
</TABLE>
(Continued)
<PAGE> 21
6
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(In thousands, except share and per share data)
Rental expense related to the Company's operating leases was $17,053,
$14,999 and $10,983 for the years ended October 31, 1995, 1994 and 1993,
respectively.
The Company leases a portion of its corporate office building to tenants
under operating leases. The following is a summary of property held for
lease at October 31:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Land $ 53 47
Buildings 1,892 2,454
Less accumulated depreciation (1,124) (1,754)
----- -----
$ 821 747
===== =====
</TABLE>
Minimum future rental income for noncancelable leases in effect as of
October 31, 1995 is as follows:
<TABLE>
<S> <C>
Year ending October 31:
1996 $ 224
1997 152
1998 115
1999 99
2000 97
=====
</TABLE>
(8) Accrued Expenses
The following is a summary of accrued expenses at October 31:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Payroll $ 2,134 2,084
Interest 5,400 5,442
Insurance benefits 1,457 1,374
Other 742 747
------- -----
$ 9,733 9,647
======= =====
</TABLE>
(Continued)
<PAGE> 22
7
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(In thousands, except share and per share data)
(9) Long-term Debt
Long-term debt consists of the following at October 31:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Senior Secured Notes $ 100,000 100,000
Note payable to a bank group 39,250 43,000
1993 Series A Line of Credit,
payable to bank - 2,000
8% Series A unsecured subordinated
discount debentures, maturing
through 2001 (11.5% effective yield) 2,706 3,095
5% to 10% notes payable to banks and
others with varying maturities
secured by plant and equipment 3,713 4,960
10% to 12% Series A unsecured
subordinated debentures maturing
in 1996 and 1997 372 372
Other notes with various rates and
terms 10 502
--------- -------
146,051 153,929
Less current maturities (3,479) (7,054)
--------- -------
Long term debt, excluding current
maturities $ 142,572 146,875
========= =======
</TABLE>
<TABLE>
Long term debt matures as follows:
<S> <C>
1996 $ 3,479
1997 5,465
1998 9,235
1999 12,154
2000 12,516
Later years 103,202
----------
$ 146,051
==========
</TABLE>
(Continued)
<PAGE> 23
8
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(In thousands, except share and per share data)
The Senior Secured Notes were issued on May 19, 1993. The notes
bear interest at 11% payable semiannually. The notes mature in
2003 and are subject to redemption at the option of the Company
at any time on or after May 15, 1998. There is no sinking fund
obligation associated with the notes. The notes rank senior in
right of payment to all subordinated debt of the Company and
pari passu in right of payment with all unsubordinated
borrowings of the Company and are unconditionally guaranteed by
certain subsidiaries of the Company. The notes are secured by a
pledge of the capital stock of all of the Subsidiary Guarantors,
subject to certain provisions. Additionally, the Company is
obligated to pledge the capital stock and obtain the guarantee
of all future restricted subsidiaries as security.
A portion of the proceeds from the Senior Secured Notes was used
to extinguish existing variable and fixed rate debt prior to
maturity. In connection with the extinguishment, the Company
incurred a loss of approximately $1,900 which has been reflected
as an extraordinary item in the accompanying consolidated
financial statements. The per share amount of the aggregate
loss net of related income tax effect is .05 for the year
ended October 31, 1993.
The indenture contains certain restrictive financial covenants,
including the following:
o Limitation on outstanding debt of the Company and any of
its restricted subsidiaries;
o Limitation of the payment of cash dividends and other
restricted payments;
o Limitation on sale and leaseback transactions, and
o Limitation on sales or disposals of assets.
The Company was in compliance with such covenants as of October
31, 1995.
On May 19, 1993, the Company also entered into a Bank Credit
Agreement which provided an $8,000 term loan and a $20,000
working capital line of credit. The term loan
(Continued)
<PAGE> 24
9
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(In thousands, except share and per share data)
will amortize over four years beginning in 1995 and the
availability under the revolving credit facility will be reduced
over a three-year period beginning in 1995 until the facility
terminates in 1998. The term loan and the revolving credit
facility are secured by a pledge of the capital stock of all of
the Company's present subsidiaries. During 1994, the Company
executed certain amendments to the Bank Credit Agreement,
including increasing the term loan to $43,000. During 1995, the
Company executed additional amendments to the Bank Credit
Agreement, including a change in the Commitment to reduce the
revolving line of credit over a three-year period beginning in
1999 until the facility terminates in 2001. As of October 31,
1995, the balance of the term loan was $39,250 with an interest
rate of 8.09%. The Bank Credit Agreement contains certain
restrictive financial covenants, including the following:
o Maintaining specific ratios of cash flow to debt service
and total debt;
o Limitation of the payment of dividends;
o Limitation on investments and joint ventures;
o Limitation on capital expenditures, and
o Limitation on sales or disposals of assets.
The Company was in compliance with such covenants as of October
31, 1995.
The 8% Series A, unsecured subordinated debentures with an
original face amount of $4,844 were issued in 1986 at a discount
of $986, which is being amortized over the life of the
debentures. The total unamortized discount was $238 and $314 at
October 31, 1995 and 1994, respectively.
(10) Income Taxes
LAC files a consolidated federal income tax return which includes all of
its qualifying subsidiaries.
(Continued)
<PAGE> 25
10
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(In thousands, except share and per share data)
Total income tax expense (benefit) for the years ended October 31, 1995,
1994 and 1993 is allocated as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Income from continuing operations $(2,390) (2,072) 476
Extraordinary item - - (98)
------- ----- ---
$(2,390) (2,072) 378
======= ===== ====
</TABLE>
Income tax expense (benefit) attributable to continuing operations for
the years ended October 31, 1995, 1994 and 1993 consists of:
<TABLE>
<CAPTION>
Current Deferred Total
------- -------- -----
<S> <C> <C> <C>
1995:
U.S. federal $ 290 (3,301) (3,011)
State and local 621 - 621
----- ----- -----
$ 911 (3,301) (2,390)
===== ===== =====
1994:
U.S. federal 165 (2,650) (2,485)
State and local 413 - 413
----- ----- -----
$ 578 (2,650) (2,072)
===== ===== =====
1993:
U.S. federal 155 - 155
State and local 321 - 321
----- ----- -----
$ 476 - 476
===== ===== =====
</TABLE>
Income taxes attributable to continuing operations in 1995 and 1994
include adjustments to the beginning-of-the- year valuation allowance on
the Company's deferred tax assets in the amounts of $5,939 and $3,882,
respectively. The improved business conditions and resulting
profitability has resulted in a change in management's judgment
regarding the realizability of the deferred tax assets.
(Continued)
<PAGE> 26
11
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(In thousands, except share and per share data)
Income tax expense (benefit) for 1995, 1994 and 1993, differs from the
amounts computed by applying the U.S. federal income tax rate of 34
percent to pretax income from continuing operations as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Computed "expected" tax expense $ 2,825 1,777 570
Increase (reduction) in income
taxes resulting from:
Change in beginning of the year
balance of the valuation
allowance for deferred tax
assets (5,939) (3,882) (217)
State and local income taxes,
net of federal income tax
benefit 410 273 214
Other differences, net 314 (240) (91)
------- ----- ---
Actual income tax expense
(benefit) $(2,390) (2,072) 476
======= ===== ===
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
October 31, 1995 and 1994 are presented below:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Deferred tax liabilities:
Plant and equipment, principally due
to differences in depreciation $(4,656) (5,411)
Intangibles, due to differences in
amortizable lives (594) (569)
------- -----
Deferred tax liabilities $(5,250) (5,980)
======= =====
</TABLE>
(Continued)
<PAGE> 27
12
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Deferred tax assets:
Receivables, principally due to
allowance for doubtful accounts
and accounts written off $ 193 187
Plant and equipment, due to additional
costs capitalized for tax purposes
pursuant to the Tax Reform Act of
1986 764 641
Plant and equipment, due to basis
differences on acquisitions of
assets 4,064 4,276
Investment in affiliates and plant and
equipment due to gains previously
recognized for tax purposes and
deferred for financial reporting
purposes 1,719 1,357
Net operating loss carryforwards 2,262 6,512
Investment tax credit carryforwards 929 982
Other, net 1,270 614
-------- ------
Gross deferred tax assets 11,201 14,569
Less valuation allowance - (5,939)
-------- ------
Deferred tax assets $ 11,201 8,630
======== ======
Net deferred taxes $ 5,951 2,650
======== ======
</TABLE>
The valuation allowance for deferred tax assets as of November 1, 1993
was $9,821.
(Continued)
<PAGE> 28
13
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(In thousands, except share and per share data)
For federal income tax purposes, the following carryforwards are
available as of October 31, 1995:
<TABLE>
<CAPTION>
Expiration
----------
<S> <C> <C>
Net operating loss $ 6,465 2003-2005
Investment credit 929 1995-2001
Alternative minimum tax credit 660 Indefinite
</TABLE>
(11) Other Related Party Transactions
Affiliates, as used within these statements, are companies which are
affiliated with Lamar Advertising Company or its subsidiaries through
common ownership and directorate control.
The Company receives income and incurs costs in transactions with
related parties and affiliates. The following is a summary of such
transactions for the years ended October 31:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Revenues:
Management fee income $ 31 334 595
Rental income - - 209
Interest income 8 59 75
Production of logo plates 143 143 341
Expenses:
Interest expense 296 308 390
Rent expense - 71 143
</TABLE>
The Company is a party to a consulting agreement with a shareholder and
former Chairman of the Board of the Company. The agreement, which
expires in 1996, provides for annual payments of $120 and an annual
bonus of up to $100. The Company incurred consulting expense of $120
under this agreement in 1995, 1994 and 1993. Additionally, the Company
paid consulting fees of $110 to this individual in 1995.
As of October 31, 1995 and 1994, debentures totaling $2,950 and $3,600,
respectively, are owned by shareholders, directors and employees.
(Continued)
<PAGE> 29
14
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(In thousands, except share and per share data)
During 1993, the Company purchased all outstanding stock of Lamar
Advertising of Wichita Falls, Inc., a company which, at the time of the
acquisition, was owned by certain stockholders of LAC. The total
consideration was approximately $1,375, which approximated the book
value of the underlying assets.
During 1993, a subsidiary of the Company purchased a building from a
joint venture whose principals included the former Chairman of the Board
and two officers of the Company for a price of approximately $740.
Additionally in 1993, this subsidiary purchased two buildings from a
director of the Company for approximately $530.
(12) Common Stock
The rights of Class A and Class B common stock (as in effect on October
31, 1995) are equal in all respects, except holders of Class A common
stock shall have preemptive rights with respect to Class A common stock
and Class B is non-voting.
(13) Commitments and Other Contingencies
The Company sponsors a partially self-insured group health insurance
program. Coverage is available to all employees who work in excess of
30 hours per week. 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 has purchased
third-party insurance coverage for claims in excess of this amount. 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, are included in accrued expenses in the accompanying
(Continued)
<PAGE> 30
15
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(In thousands, except share and per share data)
consolidated financial statements. The Company maintains a $1,000 letter
of credit with a bank to meet requirements of the Company's workers'
compensation insurance carrier. The Company also maintains a $375
letter of credit with an insurance company to partially collateralize a
surety bond for a logo company.
The Company established The Lamar Corporation Savings and Profit Sharing
Plan effective January 1, 1988. Participants include all 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.
The Company contributed $512, $230 and $313 for the years ended October
31, 1995, 1994, and 1993, respectively.
On November 1, 1993, LAC established The Lamar Corporation, Its
Affiliates and Subsidiaries Deferred Compensation Plan (the Plan) for
the benefit of certain of its senior management who meet specified 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 will
be maintained in a "rabbi" trust and, accordingly, the assets and
liabilities of the Plan will be 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 $240, $442, and $101 to the Plan during 1995, 1994 and 1993,
respectively. Contributions to the 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 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.
(Continued)
<PAGE> 31
16
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(In thousands, except share and per share data)
(14) Subsequent Events (Unaudited)
On December 30, 1995, the Certificate of Incorporation of the Company
was amended to authorize 10,000 shares of Class A preferred stock with a
par value of $638 per share and no voting rights. The Class A preferred
stock are cumulative and are priority to Class A and Class B common
stock dividends at the rate of $15.95 per share per quarter.
As of December 30, 1995, 4,454,397 shares of Class A common stock with a
$.001 per share stated value were converted into 5,719.49 shares of
Class A preferred stock with a $638 per share par value. This
conversion resulted in an approximate $3,600 charge to accumulated
deficit.
On March 1, 1996, 3,463,666 shares of Class A common stock and 154,218
shares of Class B common stock, $.001 stated value, were redeemed at a
price of $.82 per share. This redemption resulted in a $3,000 charge to
accumulated deficit. In connection with the redemption, the Company has
agreed, contingent upon completion of the Offering referred to below, to
pay additional consideration of $1.38 per share in cash and $5.52 per
share in ten-year subordinated notes, which would result in an
additional charge to stockholders' equity of $25,000.
Subsequent to April 30, 1996, the Company advanced $450 to a
stockholder. The loan is payable on or before October 15, 1996.
Effective July 1, 1996, the Company entered into a consulting agreement
with an affiliate of a shareholder and former Chairman of the Board of
the Company to replace the expiring consulting agreement discussed in
note 11. The agreement provides for a $120 annual consulting fee for a
term of ten years.
In July 1996, the Board of Directors of the Company authorized the
issuance of up to 5,445,250 shares of Class A Common Stock, $.001 par
value per share, to be registered under Securities Act of 1933 (the
"Offering"). In connection with the Offering, the Company effected a
recapitalization consisting of an approximate 778.9-for-1 stock split
and an exchange of common stock for new Class A and Class B common stock
which is equal in all respects, except holders
(Continued)
<PAGE> 32
17
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(In thousands, except share and per share data)
of Class B common stock have ten votes per share and holders of Class A
common stock have one vote per share. Class B common stock converts
automatically into Class A common stock upon the sale or transfer to
persons other than permitted transferees.
Also in connection with the Offering, the Company proposes to adopt 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 will authorize 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. The
Company will reserve an aggregate of 2,000,000 shares (after giving
effect to the recapitalization referred to in Note 12) of Class A common
stock for awards under the 1996 Plan.
<PAGE> 33
PART III.
ITEM 11. EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
Annual Compensation
-------------------
$ $ All Other
Name and Principal Position Year Salary Bonus Compensation(1)
- --------------------------- ---- ------ ----- ---------------
<S> <C> <C> <C> <C>
Kevin P. Reilly, Jr. 1993 120,000 100,000 -
President, Chief Executive 1994 120,000 150,000 5,000
Officer 1995 120,000 200,000 5,500
Gerald H. Marchand 1993 106,000 75,000 -
Vice Pres., Regional Manager 1994 106,000 197,443 50,000
of Baton Rouge Region 1995 106,000 156,543 50,000
Robert E. Campbell 1993 84,000 61,000 -
Vice President, Regional 1994 90,000 73,208 7,500
Manager of Central Region 1995 90,000 96,984 7,500
T. Everett Stewart 1993 80,000 50,000 -
President, Interstate 1994 80,000 65,000 4,000
Logos, Inc. 1995 80,000 116,500 4,500
Hollis T. Wood (2) 1993 90,000 40,000 -
Vice President, Regional 1994 90,000 89,638 6,000
Manager of Knoxville Region 1995 90,000 93,862 6,500
</TABLE>
(1) The reported amounts consist of employer contributions under the Company's
deferred compensation plan.
(2) Mr. Wood is no longer employed by the Company.
Compensation Committee Interlocks and Insider Participation
The Company's Board of Directors as a whole determines the compensation of the
Company's officers. Kevin P. Reilly, Jr., Gerald H. Marchand, and Keith A.
Istre are all executive officers of the Company who currently serve on the
Company's Board of Directors. None of the individuals named above participates
in decisions by the Company's directors regarding such individual's own
compensation.
Kevin P. Reilly, Jr., Gerald H. Marchand and Keith A. Istre are directors and
executive officers of the Company who are also directors and executive officers
of the following subsidiaries of the Company (the "Subsidiaries"):
<PAGE> 34
Compensation Committee Interlocks and Insider Participation (Continued)
The Lamar Corporation
Interstate Logos, Inc.
Lamar Advertising of Colorado Springs, Inc.
Lamar Advertising of Jackson, Inc.
Lamar Advertising of Mobile, Inc.
Lamar Advertising of South Georgia, Inc.
Lamar Advertising of South Mississippi, Inc.
Texas General Partner, Inc.
Texas Limited Partnership
Tennessee Limited Partner, Inc.
Tennessee Limited Partnership
TLC Properties, Inc.
Lamar Air, LLC
PCS, Inc.
Missouri Logos, Inc.
Nebraska Logos, Inc.
Oklahoma Logos, Inc.
Utah Logos, Inc.
Ohio Logos, Inc.
Texas Logos, Inc.
Mississippi Logos, Inc.
Georgia Logos, Inc.
South Carolina Logos, Inc.
Virginia Logos, Inc.
Minnesota Logos, Inc.
New Jersey Logos, Inc.
PART 4.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
Independent Auditors' Report
Consolidated Balance Sheets
Consolidated Statements of Earnings
Consolidated Statements of Stockholders' Deficit
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(3) Exhibits
<PAGE> 35
The following exhibits are filed as part of this Report:
3.1 Amended and Restated Certificate of Incorporation of the Company.
Previously 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 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 Subsidiary Guarantee dated May 19, 1993. Previously filed as Exhibit 4.2
to the Company's Registration Statement on Form S-1 (File No. 33-59624),
and incorporated herein by reference.
4.4 Indenture dated May 15, 1993. 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.
4.5 Pledge Agreement dated May 19, 1993. Previously filed as Exhibit 4.4 to
the Company's Registration Statement on Form S-1 (File No. 33-59624), and
incorporated herein by reference.
4.6 Form of Subordinated Note. Previously filed as Exhibit 4.6 to the
Company's Registration Statement on Form S-1 (File No. 333-05479) and
incorporated herein by reference.
10.1 Bank Credit Agreement between the Company and The Chase Manhattan Bank
(National Association) dated May 19, 1993. Previously filed as Exhibit
10.1 to the Company's Registration Statement on Form S-1 (File No.
33-59624), and incorporated herein by reference.
10.2 Consultation 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. 333-05479) and
incorporated herein by reference.
10.3 Indenture dated as of September 24, 1986 relating to 8% Unsecured
Subordinated Debentures. 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 The Lamar Savings and Profit Sharing Plan Trust. Previously filed as
Exhibit 10.5 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 Amendment and Waiver to the Bank Credit Agreement between the Company and
the
<PAGE> 36
Chase Manhattan Bank, dated September 30, 1993. Previously filed as
Exhibit 10.6 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.
10.6 Second Amendment to the Bank Credit Agreement between the Company and the
Chase Manhattan Bank, dated January 1, 1994. Previously filed as Exhibit
10.7 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.
10.7 Third Amendment to the Bank Credit Agreement between the Company and the
Chase Manhattan Bank, dated May 10, 1994. Previously filed as Exhibit
10.8 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.
10.8 Fourth Amendment to the Bank Credit Agreement between the Company and the
Chase Manhattan Bank, dated October 31, 1994. Previously filed as Exhibit
10.9 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.
10.9 Fifth Amendment to the Bank Credit Agreement between the Company and the
Chase Manhattan Bank, dated October 15, 1995. Previously filed as Exhibit
10.10 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.
10.10 Sixth Amendment to the Bank Credit Agreement between the Company and the
Chase Manhattan Bank, dated July 12, 1996. Previously filed as Exhibit
10.10 to the Company's Registration Statement on Form S-1 (File No.
333-05479), and incorporated herein by reference.
10.11 Trust under The Lamar Corporation, It's Affiliates and Subsidiaries
Deferred Compensation Plan dated October 31, 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.
10.12 Bank Credit Agreement between the Company and the Chase Manhattan Bank
(National Association) dated December 22, 1995 Previously filed as
Exhibit 10.12 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.
10.13 Amendment One to Bank Credit Agreement between the Company and the Chase
Manhattan Bank (National Association)dated July 12, 1996. Previously
filed as Exhibit 10.13 to the Company's Registration Statement on Form S-1
(File No. 333-05479), and incorporated herein by reference.
10.14 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.
21 Subsidiaries of the Registrant. Previously filed as Exhibit 21 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.
______________________
(b) Reports on 8-K
None
<PAGE> 37
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
LAMAR ADVERTISING COMPANY
(Registrant)
August 1, 1996 /s/ KEVIN P. REILLY, JR.
- -------------------- ----------------------------------
Date Kevin P. Reilly, Jr.
President and Chief Executive Officer
August 1, 1996 /s/ KEITH A. ISTRE
- -------------------- ----------------------------------
Date Keith A. Istre
Chief Financial Officer
August 1, 1996 /s/ RENEE S. FURR
- -------------------- ----------------------------------
Date Renee S. Furr
Controller
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
August 1, 1996 /s/ KEVIN P. REILLY, JR.
- -------------------- ----------------------------------
Date Kevin P. Reilly, Jr.
President, Chief Executive Officer and
Director
August 1, 1996 /s/ KEITH A. ISTRE
- -------------------- ----------------------------------
Date Keith A. Istre
Chief Financial Officer, Treasurer and
Director
August 1, 1996 /s/ DUDLEY W. COATES
- -------------------- ----------------------------------
Date Dudley W. Coates
Director
August 1, 1996 /s/ CHARLES W. LAMAR III
- -------------------- ----------------------------------
Date Charles W. Lamar, III
Director
<PAGE> 38
SIGNATURES
----------
August 1, 1996 /s/ GERALD H. MARCHAND
- -------------------- ----------------------------------
Date Gerald H. Marchand
Director
August 1, 1996 /s/ JACK S. ROME
- -------------------- ----------------------------------
Date Jack S. Rome
Director
August 1, 1996 /s/ WILLIAM R. SCHMIDT
- -------------------- ----------------------------------
Date William R. Schmidt
Director
August 1, 1996 /s/ T. EVERETT STEWART
- -------------------- ----------------------------------
Date T. Everett Stewart
Director
<PAGE> 39
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
3.1 Amended and Restated Certificate of Incorporation of the Company.
Previously 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 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 Subsidiary Guarantee dated May 19, 1993. Previously filed as Exhibit 4.2
to the Company's Registration Statement on Form S-1 (File No. 33-59624),
and incorporated herein by reference.
4.4 Indenture dated May 15, 1993. 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.
4.5 Pledge Agreement dated May 19, 1993. Previously filed as Exhibit 4.4 to
the Company's Registration Statement on Form S-1 (File No. 33-59624), and
incorporated herein by reference.
4.6 Form of Subordinated Note. Previously filed as Exhibit 4.6 to the
Company's Registration Statement on Form S-1 (File No. 333-05479) and
incorporated herein by reference.
10.1 Bank Credit Agreement between the Company and The Chase Manhattan Bank
(National Association) dated May 19, 1993. Previously filed as Exhibit
10.1 to the Company's Registration Statement on Form S-1 (File No.
33-59624), and incorporated herein by reference.
10.2 Consultation 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. 333-05479) and
incorporated herein by reference.
10.3 Indenture dated as of September 24, 1986 relating to 8% Unsecured
Subordinated Debentures. 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 The Lamar Savings and Profit Sharing Plan Trust. Previously filed as
Exhibit 10.5 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 Amendment and Waiver to the Bank Credit Agreement between the Company and
the
<PAGE> 40
Chase Manhattan Bank, dated September 30, 1993. Previously filed as
Exhibit 10.6 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.
10.6 Second Amendment to the Bank Credit Agreement between the Company and the
Chase Manhattan Bank, dated January 1, 1994. Previously filed as Exhibit
10.7 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.
10.7 Third Amendment to the Bank Credit Agreement between the Company and the
Chase Manhattan Bank, dated May 10, 1994. Previously filed as Exhibit
10.8 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.
10.8 Fourth Amendment to the Bank Credit Agreement between the Company and the
Chase Manhattan Bank, dated October 31, 1994. Previously filed as Exhibit
10.9 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.
10.9 Fifth Amendment to the Bank Credit Agreement between the Company and the
Chase Manhattan Bank, dated October 15, 1995. Previously filed as Exhibit
10.10 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.
10.10 Sixth Amendment to the Bank Credit Agreement between the Company and the
Chase Manhattan Bank, dated July 12, 1996. Previously filed as Exhibit
10.10 to the Company's Registration Statement on Form S-1 (File No.
333-05479), and incorporated herein by reference.
10.11 Trust under The Lamar Corporation, It's Affiliates and Subsidiaries
Deferred Compensation Plan dated October 31, 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.
10.12 Bank Credit Agreement between the Company and the Chase Manhattan Bank
(National Association) dated December 22, 1995 Previously filed as
Exhibit 10.12 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.
10.13 Amendment One to Bank Credit Agreement between the Company and the Chase
Manhattan Bank (National Association)dated July 12, 1996. Previously
filed as Exhibit 10.13 to the Company's Registration Statement on Form S-1
(File No. 333-05479), and incorporated herein by reference.
10.14 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.
21 Subsidiaries of the Registrant. Previously filed as Exhibit 21 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.
27 Financial Data Schedule
______________________
(b) Reports on 8-K
None
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<CASH> 5,886
<SECURITIES> 0
<RECEIVABLES> 11,984
<ALLOWANCES> 551
<INVENTORY> 0
<CURRENT-ASSETS> 19,832
<PP&E> 168,402
<DEPRECIATION> 77,524
<TOTAL-ASSETS> 133,885
<CURRENT-LIABILITIES> 18,095
<BONDS> 142,572
<COMMON> 33
0
0
<OTHER-SE> (28,187)
<TOTAL-LIABILITY-AND-EQUITY> 133,885
<SALES> 101,871
<TOTAL-REVENUES> 102,408
<CGS> 0
<TOTAL-COSTS> 34,386
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 714
<INTEREST-EXPENSE> 15,783
<INCOME-PRETAX> 8,308
<INCOME-TAX> (2,390)
<INCOME-CONTINUING> 10,698
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,698
<EPS-PRIMARY> .32
<EPS-DILUTED> .32
</TABLE>
