LAMAR ADVERTISING CO, S-3/A, 1996-11-19

LAMAR ADVERTISING CO
S-3/A, 1996-11-19
ADVERTISING AGENCIES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 19, 1996

REGISTRATION NO. 333-14677
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

---------------------

AMENDMENT NO. 2

FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

---------------------

LAMAR ADVERTISING COMPANY
(Exact Name of Registrant as Specified in its Charter)

<TABLE>
<S> <C> <C>
DELAWARE 7312 72-1205791
State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>

5551 CORPORATE BLVD.
BATON ROUGE, LOUISIANA 70808
(504) 926-1000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

KEVIN P. REILLY, JR.
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
LAMAR ADVERTISING COMPANY
5551 CORPORATE BLVD.
BATON ROUGE, LOUISIANA 70808
(504) 926-1000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

---------------------

Copies to:

STANLEY KELLER, ESQ. DENNIS J. FRIEDMAN, ESQ.
PALMER & DODGE LLP CHADBOURNE & PARKE LLP
ONE BEACON STREET 30 ROCKEFELLER PLAZA
BOSTON, MASSACHUSETTS 02108 NEW YORK, NEW YORK 10112
(617) 573-0100 (212) 408-5100

---------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.

---------------------

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following. [ ]

---------------------

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

***************************************************************************
* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY *
* NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH *
* SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO *
* REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH *
* STATE. *
* *
***************************************************************************

SUBJECT TO COMPLETION, DATED NOVEMBER 19, 1996

PROSPECTUS
2,800,000 SHARES

[LAMAR LOGO]

CLASS A COMMON STOCK

------------------

Of the 2,800,000 shares of Class A Common Stock, $0.001 par value per share
(the "Class A Common Stock"), offered hereby, 2,200,000 shares are being issued
and sold by Lamar Advertising Company (the "Company") and 600,000 shares are
being sold by certain stockholders of the Company (the "Selling Stockholders").
The Company will not receive any of the proceeds from the sale of shares by the
Selling Stockholders. See "Principal and Selling Stockholders." The Class A
Common Stock is quoted on the Nasdaq National Market System under the symbol
"LAMR." On November 15, 1996, the last reported sale price for the Class A
Common Stock as reported on the Nasdaq National Market was $25.50 per share. See
"Price Range of Class A Common Stock."

Concurrently with the offering of the shares of Class A Common Stock (this
"Offering"), the Company is offering $225,000,000 aggregate principal amount of
Senior Subordinated Notes due 2006 (the "Notes") by a separate prospectus (the
"Note Offering," and together with this Offering, the "Offerings").

The Company's authorized capital stock includes the Class A Common Stock and
shares of Class B Common Stock, $0.001 par value per share (the "Class B Common
Stock"). The economic rights of the Class A Common Stock and the Class B Common
Stock (collectively, the "Common Stock") are identical, except that each share
of Class A Common Stock entitles the holder thereof to one vote in respect of
matters submitted for the vote of holders of Common Stock, whereas each share of
Class B Common Stock entitles the holder thereof to ten votes on such matters.
Immediately after this Offering, the Reilly Family Limited Partnership, of which
Kevin P. Reilly, Jr., the Company's Chief Executive Officer, is the managing
general partner, will have the power to vote all of the outstanding shares of
Class B Common Stock (representing approximately 88.5% of the aggregate voting
power of the Common Stock, assuming no exercise of the Underwriters'
over-allotment option). Each share of Class B Common Stock converts
automatically into one share of Class A Common Stock upon sale or other transfer
to a party other than Permitted Transferees (as defined herein). See
"Description of Capital Stock."

------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 11 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
SHARES OF CLASS A COMMON STOCK OFFERED HEREBY.

------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

<TABLE>
==========================================================================================================
UNDERWRITING PROCEEDS
PRICE TO DISCOUNTS AND PROCEEDS TO TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS
<S> <C> <C> <C> <C>
Per Share $ $ $ $
- ----------------------------------------------------------------------------------------------------------
Total(3) $ $ $ $
==========================================================================================================
</TABLE>

(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting estimated expenses of $ , all of which will be
paid by the Company.
(3) The Company and certain Selling Stockholders have granted to the
Underwriters a 30-day option to purchase an additional 420,000 shares of
Class A Common Stock on the same terms as set forth above solely to cover
over-allotments, if any. See "Underwriting." If all such shares are
purchased, the total Price to Public, Underwriting Discounts and
Commissions, Proceeds to Company and Proceeds to Selling Stockholders
will be $ , $ , $ and $ , respectively. See
"Underwriting." The Company will not receive any of the proceeds from the
sale of shares by the Selling Stockholders pursuant to the over-allotment
option.
------------------

The shares of Class A Common Stock are being offered by the several
Underwriters named herein, subject to prior sale, when, as and if received and
accepted by them and subject to certain conditions. It is expected that
certificates for shares of Class A Common Stock will be available for delivery
on or about November , 1996 at the offices of Smith Barney Inc., 333 W. 34th
Street, New York, New York 10001.
------------------

SMITH BARNEY INC.
ALEX. BROWN & SONS
INCORPORATED

PRUDENTIAL SECURITIES INCORPORATED
, 1996
<PAGE> 3

[COMPANY MAP -- OUTDOOR MARKETS AND LOGO STATES]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
STOCK OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE CLASS A
COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 10B-6A UNDER
THE SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING."
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere or incorporated by reference in this prospectus. Unless otherwise
indicated, as used herein, the "Company" refers to Lamar Advertising Company
together with its consolidated subsidiaries. Unless otherwise indicated, the
information in this prospectus assumes that the Underwriters' over-allotment
option is not exercised and, to the extent that it gives effect to this
Offering, assumes a price to the public of $27.875 per share of Class A Common
Stock.

THE COMPANY

Lamar Advertising Company is one of the largest and most experienced owners
and operators of outdoor advertising structures in the United States. It
conducts a business that has operated under the Lamar name since 1902. As of
September 30, 1996, the Company operated approximately 24,000 outdoor
advertising displays in 13 southeastern, midwestern and mid-Atlantic states.
After giving effect to the acquisition of FKM Advertising Co., Inc. ("FKM") and
assuming consummation of the proposed acquisition of Outdoor East, L.P.
("Outdoor East") described below (collectively, the "Acquisitions"), the Company
will operate approximately 29,000 outdoor advertising displays in 14 states. In
each of the Company's existing 36 primary markets, the Company believes that it
is the only full-service outdoor advertising company serving such markets. The
Company also operates the largest logo sign business in the United States. Logo
signs are erected pursuant to state-awarded franchises on public rights-of-way
near highway exits and deliver brand name information on available gas, food,
lodging and camping services. The Company currently operates logo sign
franchises in 15 of the 21 states which have a privatized logo sign program. In
addition, the Company has recently entered into an agreement to acquire the
existing logo sign franchises for the states of Kentucky and Nevada, has been
awarded the logo sign franchise for the state of Florida, and was selected to
operate the tourism signing franchise for the province of Ontario, Canada. As of
September 30, 1996, the Company maintained over 22,000 logo sign structures
containing over 51,000 logo advertising displays under these franchises. The
Company has recently expanded into the transit advertising business through the
operation of displays on bus shelters, benches and buses in 8 of its 36 existing
primary markets and several other markets in the state of South Carolina. For
the fiscal year ended October 31, 1995, the Company reported net revenues and
EBITDA (as defined herein) of $102.4 million and $41.0 million, respectively.
Assuming all of the Transactions (as defined herein) were consummated, the
Company's net revenues and EBITDA for the twelve months ended July 31, 1996,
would have been $133.4 million and $54.1 million, respectively.

The Company's strategy is to be the leading provider of outdoor advertising
in each of the markets it serves, with an emphasis on markets with a media
industry ranking based on population between 50 and 250. Important elements of
this strategy are the Company's decentralized management structure and its focus
on providing high quality local sales and service. In order to be more
responsive to local market demands, the Company offers a full complement of
outdoor advertising services coupled with local production facilities,
management and account executives through its local offices. While maintaining
its local focus, the Company seeks to expand its operations within existing and
contiguous markets. The Company also pursues expansion opportunities, including
acquisitions, in additional markets. In this regard and as described more fully
below, the Company has acquired or has agreed to acquire several outdoor
advertising companies and is in preliminary negotiations to acquire another such
company. In the logo sign business, the Company's strategy is to maintain its
position as the largest operator of logo signs in the U.S. by expanding through
the addition of state logo franchises as they are awarded and through possible
acquisitions. The Company may also pursue expansion opportunities in transit and
other out-of-home media which the Company believes will enable it to leverage
its management skills and market position.

Management believes that operating in small to medium-sized markets
provides the Company with certain advantages, including a diverse and reliable
mix of local advertisers, geographic diversification and an ability to package
inventory effectively. Local advertising constituted over 81% of the Company's
outdoor advertising net revenues in fiscal 1995, which management believes is
higher than the industry average.

The Company believes that the experience of its senior and local managers
has contributed greatly to its success. Its regional managers have been with the
Company, on average, for 25 years. The average tenure of the Company's 36 local
managers is 11 years. In addition, each of the five regional managers and 32 of
the

3
<PAGE> 5

36 local managers began their careers with the Company as local sales
executives. The Company emphasizes decentralized local management of operations
with centralized support and financial and accounting controls. As a result of
this local focus, the Company maintains an extensive local operating presence
within its markets and employed a total of 110 local account executives at
September 30, 1996. Local account executives are typically supported by
additional local staff and have the ability to draw upon the resources of the
central office and offices in other markets in the event that business
opportunities or customers' needs support such allocation of resources.

The outdoor advertising industry generated total revenues of approximately
$1.8 billion in 1995, or approximately 1.1% of the total advertising
expenditures in the United States, according to recent estimates by the Outdoor
Advertising Association of America (the "OAAA"), the trade association for the
outdoor advertising industry. This represents growth of approximately 8.2% over
estimated total 1994 revenues and compares favorably to the growth of total U.S.
advertising expenditures of approximately 7.7% during the same period. Outdoor
advertising offers repetitive impact and a relatively low cost-per-thousand
impressions compared to broadcast media, newspapers, magazines and direct mail
marketing, making it attractive to both local businesses targeting a specific
geographic area or set of demographic characteristics and national advertisers
seeking mass market support. Over the past 25 years, outdoor advertising
industry revenues have grown from $0.3 billion in 1971 to $1.83 billion in 1995,
representing a compound annual growth rate of 8.0%. According to the OAAA, in
eleven of the last twenty years, outdoor advertising revenue growth exceeded
total advertising revenue growth. The Company believes that this revenue growth
is primarily the result of long term contracts that are generally renewable, a
broadening client mix, the increased use of vinyl and computer printing and
acquisition opportunities. Outdoor advertising services have recently expanded
beyond billboards to include a wide variety of out-of-home advertising media,
including advertising displays in shopping centers, malls, airports, stadiums,
movie theaters and supermarkets, as well as on taxis, trains, buses and subways.
The OAAA estimates that total out-of-home advertising revenues, including
traditional billboard advertising, exceeded $3.0 billion in 1995.

RECENT ACQUISITION ACTIVITY

The Company has recently entered into agreements to acquire, or has
acquired, the assets or capital stock of several complementary businesses. The
Company believes that these acquisitions will allow the Company to capitalize on
the operating efficiencies and cross-market sales opportunities associated with
operating in or near markets currently served by the Company.

PENDING ACQUISITIONS

The Outdoor East Acquisition

The Company has agreed to acquire substantially all of the assets of
Outdoor East for a cash purchase price of approximately $60 million. Upon
completion of the acquisition of Outdoor East, the Company will operate an
additional 1,780 posters and 2,070 bulletins in seven markets in the states of
Virginia, West Virginia, North Carolina, South Carolina, Georgia and Florida.

The acquisition of Outdoor East would add advertising displays positioned
along heavily travelled highways serving the eastern U.S. The largest market
included in this acquisition is Columbia, SC, which is the state capital, home
to the University of South Carolina and the 88th largest market in the U.S. The
Outdoor East acquisition would give the Company a presence in additional small
to medium-sized markets, including Harrisonburg, VA, Dublin, VA, Hopewell, VA,
Bluefield, WV, Valdosta, GA and Lumberton, NC. Outdoor East had approximately
$12.2 million in net revenues for the twelve months ended September 30, 1996.

The consummation of the Outdoor East acquisition, which is expected to
occur on or before December 15, 1996, is subject to customary closing
conditions, including the expiration or early termination of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act").

4
<PAGE> 6

Logo Signs

The Company has agreed to acquire the logo sign franchises for the states
of Kentucky and Nevada from Logo Signs of America, Inc. ("LSA") for $3.8 million
in cash. Upon consummation of the acquisition, the Company will operate 1,984
logo sign displays in Kentucky and 292 logo sign displays in Nevada.

The acquisition of LSA, which is expected to take place on December 2,
1996, is subject to customary closing conditions, including required regulatory
approvals.

Transit

The Company has agreed to acquire 450 transit advertising displays located
in Augusta, GA and Greenville, North Charleston, Spartanburg and Columbia, SC
from Shelter Ad Systems, Inc. for $1.1 million in cash. This acquisition is
expected to close on December 2, 1996.

COMPLETED ACQUISITIONS

The FKM Acquisition

On November 1, 1996, the Company acquired all of the outstanding capital
stock of FKM for a cash purchase price of $40 million. Upon completion of the
FKM acquisition, the Company acquired a total of 122 bulletins and 537 posters
in Youngstown, OH and 553 bulletins located across the state of Pennsylvania on
interstate highways and other primary roads. FKM had approximately $7.5 million
of net revenues for the twelve months ended September 30, 1996. The Company
financed the FKM acquisition with borrowings of $40 million under the Company's
current bank credit facility (the "Existing Credit Agreement").

The acquisition of FKM expands the Company's operations in Ohio and gives
the Company an entry into Pennsylvania. As a result of the FKM acquisition, the
Company will operate bulletin structures on non-metropolitan Pennsylvania
interstate and state highways.

Other Outdoor Advertising Acquisitions

Since July 31, 1996, the Company has also acquired for cash certain assets
of (i) Revere Outdoor Advertising in Corpus Christi, TX and Laredo, TX for $9.3
million, (ii) Southworth Advertising, Inc. in Panama City, FL, Fort Walton, FL
and Albany, GA for $1.8 million, (iii) Colonial Outdoor Advertising, Inc. in
Roanoke, VA for $1.1 million, and (iv) Walz Marketing, Inc. in Lakeland, FL for
$0.8 million. As a result of these additional acquisitions, the Company has
acquired approximately 1,686 outdoor advertising displays consisting of 195
bulletins and 519 posters in Corpus Christi, TX; 87 bulletins and 373 posters in
Laredo, TX; 45 bulletins and 164 posters in Panama City, FL; six bulletins in
Fort Walton, FL; 14 bulletins and 112 posters in Albany, GA; 50 bulletins in
Roanoke, VA and 121 bulletins in Lakeland, FL. Net revenues relating to these
acquired assets totalled approximately $3.5 million based on the most recently
completed fiscal years of the acquired businesses.

OTHER ACQUISITION

The Company has entered into a letter of intent with Headrick Outdoor, Inc.
("Headrick"), pursuant to which the Company intends to acquire the assets of
Headrick for a cash purchase price of approximately $75 million. Upon completion
of the Headrick acquisition the Company will operate an additional 3,577
bulletins in ten southeastern and midwestern states. A definitive acquisition
agreement has not yet been executed, and there can be no assurance that such an
agreement will be executed or, if executed, that the acquisition will be
consummated.

The Headrick acquisition will be subject to customary closing conditions,
including the expiration or early termination of the waiting period under the
HSR Act.

5
<PAGE> 7

FINANCING PLAN

The Company intends to finance its acquisition activity from external
sources. In this regard, the Company is negotiating the terms of a new bank
credit facility (the "New Credit Agreement") which would increase its loan
commitment to $225 million and would provide for additional borrowing of up to
$75 million at the discretion of the lenders. In addition to this Offering, the
Company is planning to issue in the Note Offering $225 million aggregate
principal amount of Notes that would be subordinate to amounts borrowed under
the New Credit Agreement. As part of this financing plan, the Company has
commenced a tender offer (the "Tender Offer" which, together with the Offerings
and the Acquisitions, are collectively referred to herein as the "Transactions")
to purchase for cash all of its 11% Senior Secured Notes due May 15, 2003 (the
"Existing Notes"), of which $100 million are currently outstanding, and is
soliciting consents to amend the indenture (the "Existing Note Indenture") and
pledge agreement relating to the Existing Notes. As of November 19, 1996, the
holders representing over a majority in principal amount of the Existing Notes
have validly tendered their Existing Notes and delivered their consents. The
acquisition of FKM was funded from borrowings under the Existing Credit
Agreement and the Outdoor East acquisition and the Tender Offer will be financed
with a portion of the net proceeds of the Offerings. This Offering is not
conditioned upon the consummation of any of the other Transactions.

As used in this Prospectus, the term "market" refers to the geographic area
represented by the Spring 1996 Arbitron Radio Metro Market ranking, as
determined by The Arbitron Company, which ranks, according to population of
persons 12 years or older, the largest 263 markets in the U.S. -- from New York,
NY (1) to Casper, WY (263). The Company believes that the Metro Market ranking
is a standard measure of market size used by the media industry.

6
<PAGE> 8

OUTDOOR ADVERTISING

The following table sets forth certain information regarding the Company's
existing primary outdoor advertising markets and the assets proposed to be
acquired in the acquisition of Outdoor East.

EXISTING OUTDOOR ADVERTISING MARKETS(1)

<TABLE>
<CAPTION>
NUMBER OF DISPLAYS(4)
--------------------- NET
STATE/PRIMARY MARKET MARKET RANK(3) BULLETINS POSTERS REVENUES(5)
- ------------------------------------------------------- -------------- --------- ------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
LOUISIANA
Baton Rouge.......................................... 81 419 684 $ 7,280
Shreveport........................................... 126 268 730 3,389
Lafayette............................................ 97 154 353 2,035
Lake Charles......................................... 202 189 285 1,915
Monroe............................................... 226 123 508 1,534
Alexandria........................................... 198 49 224 757
Houma(2)............................................. -- 40 164 --
----- ------ ----------
Total.......................................... 1,242 2,948 16,910
TENNESSEE
Nashville............................................ 44 326 1,174 7,488
Knoxville............................................ 69 694 896 7,171
Clarksville.......................................... -- 98 357 1,533
----- ------ ----------
Total.......................................... 1,118 2,427 16,192
FLORIDA
Pensacola............................................ 125 250 662 3,113
Lakeland............................................. 104 554 372 2,875(6)
Panama City.......................................... 225 268 470 2,262(6)
Fort Myers........................................... 77 133 297 2,153
Tallahassee.......................................... 167 121 302 1,908
Fort Walton.......................................... 207 157 220 1,643(6)
Daytona Beach........................................ 93 54 339 1,456
----- ------ ----------
Total.......................................... 1,537 2,662 15,410
ALABAMA
Mobile............................................... 84 381 630 4,755
Montgomery........................................... 142 248 499 3,598
----- ------ ----------
Total.......................................... 629 1,129 8,353
TEXAS
Brownsville.......................................... 63 204 873 2,577
Beaumont............................................. 127 204 308 2,165
Corpus Christi....................................... 128 195 519 1,707(6)
Wichita Falls........................................ 235 89 165 902
Laredo............................................... 216 87 373 868(6)
----- ------ ----------
Total.......................................... 779 2,238 8,219
MISSISSIPPI
Jackson.............................................. 118 268 698 4,420
Gulfport............................................. 134 207 559 2,953
----- ------ ----------
Total.......................................... 475 1,257 7,373
GEORGIA
Savannah............................................. 154 344 604 3,307
Augusta.............................................. 107 163 471 2,482
Albany............................................... 243 106 383 1,109(6)
----- ------ ----------
Total.......................................... 613 1,458 6,898
VIRGINIA
Richmond............................................. 56 309 616 4,288
Roanoke.............................................. 101 262 450 1,958(6)
----- ------ ----------
Total.......................................... 571 1,066 6,246
PENNSYLVANIA
Statewide Highways................................... N/A 553 0 4,713(6)
KENTUCKY
Lexington............................................ 105 117 507 3,127
WEST VIRGINIA
Wheeling............................................. 213 261 551 2,626
COLORADO
Colorado Springs..................................... 98 141 355 2,486
OHIO
Dayton............................................... 52 3 529 1,960
Youngstown........................................... 90 122 537 243(6)
----- ------ ----------
Total.......................................... 125 1,066 2,203
Subtotal....................................... 8,161 17,664 $ 100,756
----- ------ ----------
</TABLE>

7
<PAGE> 9

THE OUTDOOR EAST ACQUISITION (PENDING)

LOGO SIGN FRANCHISES

The following table sets forth certain information regarding the Company's
logo business operations. As of September 30, 1996, the Company operated 51,140
logo advertising displays.

<TABLE>
<CAPTION>
# LOGO
YEAR ADVERTISING
AWARDED FRANCHISE DISPLAYS
- ------- ------------------------ -----------
<C> <S> <C>
1989 Nebraska................ 788
1989 Oklahoma................ 1,120
1990 Utah.................... 1,494
1991 Missouri(9)............. 8,254
1992 Ohio.................... 5,686
1993 Texas................... 2,177
1993 Mississippi............. 2,866
1995 Georgia................. 9,240

<CAPTION>
# LOGO
YEAR ADVERTISING
AWARDED FRANCHISE DISPLAYS
- ------- ------------------------ -----------
<C> <S> <C>
1995 Minnesota(10)........... 2,491
1995 South Carolina.......... 1,982
1996 Virginia................ 7,658
1996 Michigan................ 1,376
1996 Tennessee............... 4,216
1996 Kansas.................. 1,792
1996 New Jersey(11).......... --
</TABLE>

- ---------------

(1) Includes additional or outlying markets served by the office in the
applicable market.
(2) Houma was established as a separate primary market in fiscal 1995, and,
therefore, net revenues are not included.
(3) Indicates the Spring 1996 Arbitron Radio Metro Market ranking within which
the office is located, as determined by The Arbitron Company. The Company
believes that Metro Market ranking, which ranks, according to population of
persons 12 years or older, the largest 263 markets in the U.S., is a
standard measure of market size used by the media industry. Where no market
ranking is shown, such market is not ranked by Arbitron.
(4) The two standardized types of industry displays are bulletins and posters.
See "Business -- Company Operations." The display count is as of October
31, 1995, pro forma for acquisitions completed within the last twelve
months.
(5) Except as otherwise noted, represents net revenues for fiscal year ended
October 31, 1995 attributable to each outdoor advertising market. These
revenues, together with logo sign and transit advertising revenues and
production revenue, comprise outdoor advertising net revenues shown in the
Company's consolidated statements of earnings (loss).
(6) Reflects net revenues for the most recently completed applicable fiscal
year with respect to acquisitions completed by the Company since July 31,
1996. See "The Transactions -- Recent Acquisition Activity -- Completed
Acquisitions."

(7) Represents net revenues for the most recently completed applicable fiscal
year attributable to the outdoor advertising market proposed to be acquired
by the Company. See "The Transactions -- Recent Acquisition
Activity -- Pending Acquisitions."

(8) Net revenues for specific markets proposed to be acquired in the state of
Virginia are not available.

(9) Franchise operated by a 66.7% owned partnership.

(10) Franchise operated by a 95.0% owned partnership.

(11) The Company was recently awarded the New Jersey franchise, and,
accordingly, no logo signs had been erected as of September 30, 1996.

The Company's address is 5551 Corporate Boulevard, Baton Rouge, Louisiana
70808. Its telephone number is (504) 926-1000.

8
<PAGE> 10

THE OFFERING

Class A Common Stock offered by
the Company...................... 2,200,000 shares

Class A Common Stock offered by
the Selling Stockholders......... 600,000 shares

Common Stock to be outstanding
after the Offering............... 17,539,031 shares of Class A Common
Stock(1)
13,455,548 shares of Class B Common Stock
30,994,579 total shares of Common Stock

Use of proceeds.................. The net proceeds from this Offering,
together with the net proceeds of the Note
Offering, will be used to repay existing
indebtedness and for general corporate
purposes, including acquisitions. See "Use
of Proceeds." The Company will not receive
any proceeds from the sale of shares of
Class A Common Stock by the Selling
Stockholders. See "Principal and Selling
Stockholders."

Voting rights.................... The holders of the Class A Common Stock and
the holders of the Class B Common Stock
vote together as a single class (except as
may be otherwise required by Delaware law)
on all matters submitted to a vote of
stockholders, with each share of Class A
Common Stock entitled to one vote and each
share of Class B Common Stock entitled to
ten votes. Each share of Class B Common
Stock converts automatically into one share
of Class A Common Stock upon the sale or
other transfer of such share of Class B
Common Stock to a person or entity other
than a Permitted Transferee (as defined
under "Description of Capital
Stock -- Common Stock"). Each class of
Common Stock otherwise has identical
rights.

Nasdaq National Market
Symbol......................... LAMR

Dividend policy.................. The Company does not expect to pay
dividends on the Common Stock in the
foreseeable future. The Company's ability
to pay dividends in the future to holders
of the Common Stock will be subject to
limitations and prohibitions contained in
certain existing and future debt
instruments of the Company and to the
rights of the holders of its preferred
stock. See "Dividend Policy."
- ---------------

(1) Excludes 1,162,985 shares of Class A Common Stock issuable under outstanding
options granted pursuant to the Company's 1996 Equity Incentive Plan.

9
<PAGE> 11

SUMMARY CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA

<TABLE>
<CAPTION>
PRO FORMA
NINE MONTHS ENDED TWELVE
PRO FORMA MONTHS
YEAR ENDED OCTOBER 31, YEAR ENDED JULY 31, ENDED
--------------------------------------------------- OCTOBER 31, ------------------- JULY 31,
1991 1992 1993 1994 1995 1995(1) 1995 1996 1996(1)
-------- ------- -------- -------- -------- ----------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
Net revenues................. $ 62,262 $61,955 $ 66,524 $ 84,473 $102,408 $ 118,872 $ 76,726 $ 88,165 $133,365
Operating expenses:
Direct advertising
expenses.................. 22,143 22,783 23,830 28,959 34,386 39,783 26,564 30,969 44,947
General and administrative
expenses.................. 17,703 18,225 19,504 24,239 27,057 31,679 20,636 22,842 34,320
Depreciation and
amortization.............. 8,826 8,881 8,924 11,352 14,090 21,241 9,954 10,568 21,855
-------- ------- -------- -------- -------- --------- -------- -------- --------
Total operating
expenses................ 48,672 49,889 52,258 64,550 75,533 92,703 57,154 64,379 101,122
-------- ------- -------- -------- -------- --------- -------- -------- --------
Operating income............. 13,590 12,066 14,266 19,923 26,875 26,169 19,572 23,786 32,243
-------- ------- -------- -------- -------- --------- -------- -------- --------
Interest expense............. 11,650 10,454 11,502 13,599 15,783 24,398 11,948 11,957 24,367
Earnings before income taxes
and extraordinary item...... 936 2,625 1,677 5,227 8,308 (1,584) 6,069 10,897 5,456
Income tax expense
(benefit)(2)................ 207 270 476 (2,072) (2,390) (5,893) (2,480) 4,420 1,891
Net earnings (loss)(3)(4).... 729 2,355 (653) 7,299 10,698 4,309 8,549 6,477 3,565
Net earnings (loss)
applicable to common
stock....................... 729 2,355 (653) 7,299 10,698 4,309 8,549 6,203 3,291
Earnings per common share
before extraordinary
item(5)..................... $ .02 $ .07 $ .03 $ .21 $ .32 $ .11 $ .26 $ .23 $ .09
======== ======= ======== ======== ======== ========= ======== ======== ========
Net earnings (loss) per
common share(5)............. $ .02 $ .07 $ (.02) $ .21 $ .32 $ .11 $ .26 $ .23 .09
======== ======= ======== ======== ======== ========= ======== ======== ========
OTHER DATA:
EBITDA(6).................... 22,416 20,947 23,190 31,275 40,965 47,410 29,526 34,354 54,098
EBITDA margin................ 36% 34% 35% 37% 40% 40% 39% 39% 41%
Ratio of EBITDA to interest
expense..................... 1.9x 2.0x 2.0x 2.3x 2.6x 1.9x 2.5x 2.9x 2.2x
Ratio of net debt to
EBITDA(7)................... 4.9x 5.0x 4.6x 4.7x 3.4x 3.5 -- -- 3.4x
Ratio of total debt to
EBITDA...................... 4.9x 5.0x 5.0x 4.9x 3.6x 5.3 -- -- 4.7x
Ratio of earnings to fixed
charges(8).................. 1.1x 1.2x 1.0x 1.3x 1.4x 0.9x 1.4x 1.7x 1.2x
Capital expenditures:
Outdoor advertising......... 1,847 1,695 2,374 4,997 6,643 10,251 4,786 4,922 10,359
Logos....................... 629 3,056 2,009 2,761 1,567 1,567 1,390 7,989 8,096
Cash flows from operating
activities(9)............... 10,328 12,930 12,411 15,214 25,065 -- 10,752 15,595 --
Cash flows from investing
activities(9)............... (4,236) (7,273) (10,064) (53,569) (17,817) -- (11,049) (28,798) --
Cash flows from financing
activities(9)............... (5,133) (6,734) 6,802 37,147 (9,378) -- (5,751) 9,287 --
Number of outdoor advertising
displays(10)................ 18,829 17,835 17,659 22,369 22,547 27,605 22,512 23,089 28,147
Number of logo advertising
displays(10)................ 5,027 11,371 13,820 18,266 24,219 24,219 22,431 48,362 48,362
Cumulative logo sign
franchises(10).............. 4 5 7 7 11 11 8 15 15
</TABLE>

<TABLE>
<CAPTION>
AS OF JULY 31, 1996
----------------------------
PRO FORMA
FOR THE IPO AND
THE
ACTUAL TRANSACTIONS
-------- ---------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............................................................. $ 1,965 $ 70,512
Working capital........................................................................ 1,479 72,251
Total assets........................................................................... 150,267 329,789
Total debt (including current maturities).............................................. 160,007 252,910
Total long-term obligations............................................................ 156,674 250,800
Stockholders' equity (deficit)......................................................... (25,289) 61,118
</TABLE>

10
<PAGE> 12

- ---------------

(1) For purposes of the pro forma adjusted financial information (i) the
statement of earnings of the Company for its fiscal year ended October 31,
1995 has been combined with the statements of earnings of Outdoor East and
FKM for their fiscal year ended December 31, 1995, (ii) the statement of
earnings of the Company for the twelve month period ended July 31, 1996 has
been combined with the statements of earnings of Outdoor East and FKM for
the twelve months ended September 30, 1996 and (iii) effect has been given
to the IPO and the Transactions. For a more complete description of the pro
forma impact on the Company's results of operations see "Unaudited Pro
Forma Condensed Consolidated Financial Statements."

(2) The benefit of the Company's net operating loss carryforward was fully
recognized as of October 31, 1995, resulting in the income tax expense
shown for the nine months ended July 31, 1996, compared to the income tax
benefit for the same period in the prior year.
(3) Includes, in 1993, an extraordinary loss on debt extinguishment, net of an
income tax benefit, of $1.9 million.
(4) Pro forma financial information for the year ended October 31, 1995 and the
twelve months ended July 31, 1996 does not give effect to extraordinary
loss from the extinguishment of debt of $9,235 and $9,470, respectively.
(5) After giving effect to the approximately 778.9 for 1 split of the Company's
then-existing common stock and the redesignation of such stock as Common
Stock.
(6) "EBITDA" is defined as operating income before depreciation and
amortization. EBITDA represents a measure which management believes is
customarily used to evaluate the financial performance of companies in the
media industry. However, EBITDA is not a measure of financial performance
under generally accepted accounting principles and should not be considered
an alternative to operating income or net earnings as an indicator of the
Company's operating performance or to net cash provided by operating
activities as a measure of its liquidity.
(7) "Net debt" consists of debt less cash and cash equivalents.
(8) The ratio of earnings to fixed charges was computed by dividing earnings by
fixed charges. For this purpose, earnings consist of income from continuing
operations, before income taxes and fixed charges of the Company and its
subsidiaries plus the Company's share of the distributed income of less
than 50% owned persons. Fixed charges consist of the Company's and its
subsidiaries' interest expense (including interest costs capitalized) and
the portion of rent expense representative of an interest factor.
(9) Cash flows from operating, investing and financing activities are obtained
from the Company's consolidated statements of cash flows prepared in
accordance with generally accepted accounting principles.

(10) As of the end of the period.

11
<PAGE> 13

RISK FACTORS

In addition to the other information contained and incorporated by
reference in this Prospectus, the following factors should be considered
carefully in evaluating an investment in the shares of Class A Common Stock
offered hereby.

This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in such forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed below. Such
forward looking statements include those assuming the completion of this
Offering, the Note Offering, the Acquisitions, the Tender Offer and the New
Credit Agreement, certain of which have yet to be completed and any of which may
not be completed. The failure of the Company to complete any of these
transactions will impact the Company's capital structure, as more fully
described under "Capitalization," and could have certain other effects, many of
which are more fully described herein.

FLUCTUATIONS IN ECONOMIC AND ADVERTISING TRENDS

The Company relies on sales of advertising space for its revenues, and its
operating results are therefore affected by general economic conditions, as well
as trends in the advertising industry. A reduction in advertising expenditures
available for the Company's displays could result from a general decline in
economic conditions, a decline in economic conditions in particular markets
where the Company conducts business or a reallocation of advertising
expenditures to other available media by significant users of the Company's
displays. Although the Company believes that in recent years outdoor advertising
expenditures have increased more rapidly than total U.S. advertising
expenditures, there can be no assurance that this trend will continue or that in
the future outdoor advertising expenditures will not grow more slowly than the
advertising industry as a whole.

REGULATION OF OUTDOOR ADVERTISING

The outdoor advertising business is subject to regulation by federal, state
and local governments. Federal law requires states, as a condition to federal
highway assistance, to restrict billboards on federally-aided primary and
interstate highways to commercial and industrial areas and imposes certain
additional size, spacing and other limitations on billboards. Some states have
adopted standards more restrictive than the federal requirements. Local
governments generally control billboards as part of their zoning regulations,
and some local governments prohibit construction of new billboards and
reconstruction of substantially damaged billboards or allow new construction
only to replace existing structures. In addition, some jurisdictions (including
certain of those within the Company's markets) have adopted amortization
ordinances under which owners and operators of outdoor advertising displays are
required to remove existing structures at some future date, often without
condemnation proceeds being available. Federal and corresponding state outdoor
advertising statutes require payment of compensation for removal by governmental
order in some circumstances. Ordinances requiring the removal of a billboard
without compensation, whether through amortization or otherwise, have been
challenged in various state and federal courts on both statutory and
constitutional grounds, with conflicting results. Although the Company has been
successful in the past in negotiating acceptable arrangements in circumstances
in which its displays have been subject to removal or amortization, there can be
no assurance that the Company will be successful in the future and what effect,
if any, such regulations may have on the Company's operations. In addition, the
Company is unable to predict what additional regulation may be imposed on
outdoor advertising in the future. Legislation regulating the content of
billboard advertisements has been introduced in Congress from time to time in
the past, although no laws which, in the opinion of management, would materially
and adversely affect the Company's business have been enacted to date. Changes
in laws and regulations affecting outdoor advertising at any level of government
may have a material adverse effect on the Company's results of operations. See
"-- Declining Tobacco Advertising" for a discussion of recent federal executive
action concerning tobacco advertising.

RESTRICTIVE COVENANTS IN DEBT INSTRUMENTS

The Existing Credit Agreement and the Existing Note Indenture contain, and
the New Credit Agreement and the indenture relating to the Notes (the
"Indenture") are each expected to contain covenants

12
<PAGE> 14

which restrict, among other things, the ability of the Company to dispose of
assets, incur or repay debt, create liens, and make certain investments and
other restricted payments. In addition, the Existing Credit Agreement requires,
and the New Credit Agreement is expected to require, the Company to maintain
specified financial ratios and levels, including cash interest coverage, fixed
charge coverage and total debt ratios. The ability of the Company to comply with
the foregoing restrictive covenants will depend on its future performance, which
is subject to prevailing economic, financial and business conditions and other
factors beyond the Company's control. See "Description of Other Indebtedness."

SUBSTANTIAL INDEBTEDNESS OF THE COMPANY

The Company presently has substantial indebtedness ($160.0 million at July
31, 1996) and contemplates increasing its indebtedness in connection with the
Acquisitions. In addition, the Company is planning to issue in the Note Offering
$225 million aggregate principal amount of Notes and is currently negotiating
the terms of the New Credit Agreement, which would increase the Company's loan
commitment to $225 million and would provide for additional borrowing of up to
$75 million at the discretion of the lenders. See "The Transactions."
Additionally, at July 31, 1996, the Company had $3.6 million of Class A
Preferred Stock, $638 par value per share (the "Class A Preferred Stock"),
outstanding which is entitled to an aggregate annual cumulative preferential
dividend of $364,903. At July 31, 1996, assuming consummation of the
Transactions and the IPO and the application of the net proceeds therefrom, the
Company's indebtedness would have been $252.9 million. A substantial part of the
Company's cash flow from operations will be dedicated to debt service and will
not be available for other purposes. Further, if the Company's net cash provided
by operating activities were to decrease from present levels, the Company could
experience difficulty in meeting its debt service obligations without additional
financing. There can be no assurance that, in the event the Company were to
require additional financing, such additional financing would be available or,
if available, would be available on favorable terms. In addition, any such
additional financing could be incurred only upon satisfaction of the debt
incurrence provisions of the Existing Note Indenture and the Indenture and may
require the consent of lenders under the Existing Credit Agreement or the New
Credit Agreement, as the case may be, or holders of other debt of the Company.
The level of the Company's indebtedness could have important consequences to
stockholders, including a reduction in the Company's flexibility to respond to
changing business and economic conditions. Certain of the Company's competitors
currently operate on a less leveraged basis and may have greater operating and
financial flexibility than the Company. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources," "Description of Indebtedness" and "Description of Capital
Stock."

ACQUISITION AND GROWTH STRATEGY RISKS

The Company's growth has been enhanced materially by strategic acquisitions
that have substantially increased the Company's inventory of advertising
displays. One element of the Company's operating strategy is to make strategic
acquisitions in markets in which it currently competes as well as in new
markets. While the Company believes that the outdoor advertising industry is
highly fragmented and that significant acquisition opportunities are available,
there can be no assurance that suitable acquisition candidates can be found, and
the Company is likely to face competition from other outdoor advertising
companies for available acquisition opportunities. In addition, if the prices
sought by sellers of outdoor advertising displays continue to rise, as
management believes may happen, the Company may find fewer acceptable
acquisition opportunities. There can be no assurance that the Company will have
sufficient capital resources to complete acquisitions or be able to obtain any
required consents of its bank lenders or that acquisitions can be completed on
terms acceptable to the Company. In addition, the Company recently has entered
into the transit advertising business and, while the Company believes that it
will be able to utilize its expertise in outdoor advertising to operate this
business, it has had limited experience in transit advertising and there is no
assurance that it will be successful.

Since July 31, 1996, the Company has completed the acquisition of, and has
entered into agreements to acquire, eight complementary businesses. The process
of integrating these businesses into the Company's operations may result in
unforeseen operating difficulties and could require significant management
attention

13
<PAGE> 15

that would otherwise be available for the development of the Company's existing
business. Moreover, there can be no assurance that the Company will realize
anticipated benefits and cost savings or that the Outdoor East acquisition or
any future acquisitions will be consummated. See "The Transactions -- Recent
Acquisition Activity" for a description of the Company's recent acquisition
activity and a discussion of certain pending transactions.

DECLINING TOBACCO ADVERTISING

Approximately 9% of the Company's outdoor advertising net revenues in
fiscal 1995 came from the tobacco products industry, compared to 7% for fiscal
1994 and 1993, 12% for fiscal 1992 and 17% for fiscal 1991. The percentage for
the nine months ended July 31, 1996, on a historical basis and on a pro forma
basis giving effect to the Pending Acquisitions, was approximately 9%.
Manufacturers of tobacco products, principally cigarettes, were historically
major users of outdoor advertising displays. Beginning in 1992, the leading
tobacco companies substantially reduced their domestic advertising expenditures
in response to societal and governmental pressures and other factors. There can
be no assurance that the tobacco industry will not further reduce advertising
expenditures in the future either voluntarily or as a result of governmental
regulation or as to what affect any such reduction may have on the Company. See
"Business -- Company Operations -- Categories of Business." Tobacco advertising
is currently subject to regulation and legislation has been introduced from time
to time in Congress that would further regulate advertising of tobacco products.
In August 1996, President Clinton signed an executive order adopting rules
proposed by the United States Food and Drug Administration which would prohibit
the use of pictures and color in tobacco advertising and restrict the proximity
of outdoor tobacco advertising to schools and playgrounds. Although certain
advertising industry and tobacco industry organizations have filed lawsuits
challenging these rules and certain members of Congress have indicated that they
may sponsor legislation to prevent these rules from going into effect, there can
be no assurance that such lawsuits will be successful or that such legislation,
if proposed, will be adopted. Subject to the outcome of litigation or
legislative action, these rules would become effective in August 1997. Further,
there can be no assurance that national or local legislation or regulations
restricting tobacco advertising will not be adopted in the future, or as to the
effect any such legislation or the voluntarily curtailment of advertising by
tobacco companies would have on the Company. See "Business -- Regulation."

COMPETITION

In addition to competition from other forms of media, including television,
radio, newspapers and direct mail advertising, the Company faces competition in
its markets from other outdoor advertising companies, some of which may be
larger and better capitalized than the Company. The Company also competes with a
wide variety of other out-of-home advertising media, the range and diversity of
which have increased substantially over the past several years to include
advertising displays in shopping centers, malls, airports, stadiums, movie
theaters and supermarkets, and on taxis, trains and buses. The Company believes
that its local orientation, including the maintenance of local offices, has
enabled it to compete successfully in its markets to date. However, there can be
no assurance that the Company will be able to continue to compete successfully
against current and future sources of outdoor advertising competition and
competition from other media or that the competitive pressures faced by the
Company will not adversely affect its profitability or financial performance. In
its logo sign business, the Company currently faces competition for state
franchises from four other national logo sign providers as well as local
companies. Competition from these sources is encountered both when a franchise
is first privatized and upon renewal thereafter. See "Business -- Competition."

POTENTIAL LOSSES FROM HURRICANES

A significant portion of the Company's structures are located in the
mid-Atlantic and Gulf Coast regions of the United States. These areas are highly
susceptible to hurricanes during the late summer and early fall. In the past,
severe storms have caused the Company to incur material losses resulting from
structural damage, overtime compensation, loss of billboards that could not
legally be replaced and reduced occupancy because billboards are out of service.
The Company has determined that it is not economical to obtain insurance

14
<PAGE> 16

against losses from hurricanes and other storms. The Company has developed
contingency plans to deal with the threat of hurricanes, including plans for
early removal of advertising faces to permit the structures to better withstand
high winds and the replacement of such faces after storms have passed. As a
result of these contingency plans, the Company has experienced lower levels of
losses from recent storms and hurricanes. Structural damage attributable to
Hurricane Andrew in 1992 was less than $500,000, and three hurricanes caused
aggregate structural damage of less than $1,000,000 in 1995. There can be no
assurance, however, that the Company's contingency plans will continue to be
effective.

RISKS IN OBTAINING AND RETAINING LOGO SIGN FRANCHISES

Logo sign franchises represent a growing portion of the Company's revenues
and operating income. The Company cannot predict the number of remaining states,
if any, that will initiate logo sign programs or convert state-run logo sign
programs to privately operated programs. Competition for new state logo sign
franchises is intense and, even after a favorable award, franchises may be
subject to challenge under state contract bidding requirements, resulting in
delays and litigation costs. In addition, state logo sign franchises are
generally, with renewal options, ten to twenty-year franchises subject to
earlier termination by the state, in most cases upon payment of compensation.
Typically, at the end of the term of the franchise, ownership of the structures
is transferred to the state without compensation to the Company. None of the
Company's logo sign franchises are due to terminate in the next two years; only
two are subject to renewal during that period and, in one case, the state
authority has verbally agreed to renew the franchise for five years. There can
be no assurance that the Company will be successful in obtaining new logo sign
franchises or renewing existing franchises. Furthermore, following the receipt
by the Company of a new state logo sign franchise, the Company generally incurs
significant start-up capital expenditures and there can be no assurance that the
Company will continue to have access to capital to fund such expenditures.

RELIANCE ON KEY EXECUTIVES

The Company's success depends to a significant extent upon the continued
services of its executive officers and other key management and sales personnel,
in particular Kevin P. Reilly, Jr., the Company's Chief Executive Officer, the
Company's five regional managers and the manager of its logo sign business.
Although the Company believes it has incentive and compensation programs
designed to retain key employees, the Company has no employment contracts with
any of its employees, and none of its executive officers are bound by
non-compete agreements. The Company does not maintain key man insurance on its
executives. The unavailability of the continuing services of any of its
executive officers and other key management and sales personnel could have an
adverse effect on the Company's business. See "Management."

STOCKHOLDERS' DEFICIT

At July 31, 1996 and October 31, 1995, the Company had a stockholders'
deficit of $25.3 million and $28.2 million, respectively. The deficit results
primarily from net losses that were incurred during the fiscal years ended
October 31, 1983 through 1990 caused primarily by high levels of depreciation
and amortization of fixed assets and acquired intangibles, and from stock
redemptions and dividends. Although the stockholders' deficit declined by
approximately $9.2 million in fiscal 1995, primarily as a result of net
earnings, there can be no assurance that this trend will continue. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

CONTROLLING STOCKHOLDER

Upon consummation of this Offering, the Reilly Family Limited Partnership,
of which Kevin P. Reilly, Jr., the Company's Chief Executive Officer, is the
managing general partner, will beneficially own shares of the Company's Common
Stock having approximately 88.5% of the total voting power of the Common Stock.
As a result, Mr. Reilly, or his successor as managing general partner, will
effectively be able to control the outcome of matters requiring a stockholder
vote, including electing directors, adopting or amending certain provisions of
the Company's certificate of incorporation and by-laws and approving or
preventing certain mergers or other similar transactions, such as a sale of
substantially all the Company's assets (including

15
<PAGE> 17

transactions that could give holders of the Company's Class A Common Stock the
opportunity to realize a premium over the then-prevailing market price for their
shares). In addition, upon consummation of this Offering, the Company's
officers, directors and their respective affiliates, other than the Reilly
Family Limited Partnership, will beneficially own shares of the Company's Common
Stock having approximately 2.4% of the total voting power of the Company's
Common Stock. Therefore, purchasers of Class A Common Stock offered hereby will
become minority stockholders of the Company and will be unable to control the
management or business policies of the Company. Moreover, subject to contractual
restrictions and general fiduciary obligations, the Company is not prohibited
from engaging in transactions with its management and principal stockholders, or
with entities in which such persons are interested. The Company's certificate of
incorporation does not provide for cumulative voting in the election of
directors and, as a result, the controlling stockholders can elect all the
directors if they so choose.

CERTAIN ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's certificate of incorporation and
by-laws may have the effect of discouraging a third party from making an
acquisition proposal for the Company and thereby inhibiting a change in control
of the Company in circumstances that could give the holders of the Class A
Common Stock the opportunity to realize a premium over the then prevailing
market price of such stock. Such provisions may also adversely affect the market
price of the Class A Common Stock. For example, the Company's certificate of
incorporation authorizes the issuance of "blank check" preferred stock (the
"Preferred Stock") with such designations, rights and preferences as may be
determined from time to time by the Board of Directors. In the event of
issuance, such Preferred Stock could be utilized, under certain circumstances,
as a method of discouraging, delaying or preventing a change in control of the
Company. In addition, the issuance of Preferred Stock may adversely affect the
voting and dividend rights, rights upon liquidation and other rights of the
holders of Common Stock (including the purchasers of Class A Common Stock in
this Offering). Although the Company has no present intention to issue any
shares of such Preferred Stock, the Company retains the right to do so in the
future. See "Description of Capital Stock -- Additional Preferred Stock."
Furthermore, the Company is subject to Section 203 of the Delaware General
Corporation Law. The existence of this provision, as well as the control of the
Company by the Reilly Family Limited Partnership, would be expected to have an
anti-takeover effect, including possibly discouraging takeover attempts that
might result in a premium over the market price for the shares of Class A Common
Stock. See "Description of Capital Stock" and "Principal and Selling
Stockholders."

LIMITED TRADING HISTORY AND VOLATILITY OF STOCK PRICE

The Company completed the initial public offering of its Class A Common
Stock in August 1996 (the "IPO") and, therefore, there is a limited trading
history for the Class A Common Stock. In addition, from time to time, there may
be significant volatility in the market price for the Class A Common Stock of
the Company. Quarterly operating results of the Company, changes in earnings
estimates by analysts, changes in general conditions in the Company's industry
or the economy or the financial markets or other developments affecting the
Company could cause the market price of the Class A Common Stock to fluctuate
substantially. In addition, in recent years the stock market has experienced
significant price and volume fluctuations. This volatility has had a significant
effect on the market price of securities issued by many companies for reasons
unrelated to their operating performance.

MANAGEMENT DISCRETION OVER USE OF NET PROCEEDS

A portion of the net proceeds of the Offering will be available for general
corporate purposes. Accordingly, management will have considerable discretion
over the use of such proceeds and may use them without stockholder approval. See
"Use of Proceeds."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of Common Stock in the public market after
this Offering could adversely affect the prevailing market price of such shares.
In addition to the 2,800,000 shares of Class A Common

16
<PAGE> 18

Stock offered hereby, as of the date of this Prospectus, there will be
28,194,579 shares of Common Stock outstanding, 22,749,329 of which are
"restricted" shares (the "Restricted Shares") under the Securities Act of 1933,
as amended (the "Securities Act"). Beginning 90 days after the date of this
Prospectus, all of the Restricted Shares will become eligible for sale in the
public market subject to restrictions pursuant to Rule 144 under the Securities
Act. See "Principal and Selling Stockholders" and "Shares Eligible for Future
Sale."

ABSENCE OF DIVIDENDS

The Company does not anticipate paying dividends on its Common Stock in the
foreseeable future. In addition, as stated above, the Existing Credit Agreement,
the Existing Indenture, the New Credit Agreement and the Indenture each place or
will place limitations on the Company's ability to pay dividends and make other
distributions on its Common Stock, and the Company's Class A Preferred Stock is
entitled to preferential dividends before any dividends may be paid on the
Common Stock. See "Dividend Policy," "Description of Capital Stock" and
"Description of Indebtedness."

THE TRANSACTIONS

RECENT ACQUISITION ACTIVITY

PENDING ACQUISITIONS

The Outdoor East Acquisition

On October 9, 1996, the Company entered into a Contract to Sell and
Purchase with Outdoor East pursuant to which the Company agreed to acquire
substantially all of the assets of Outdoor East for a cash purchase price of
approximately $60 million. Upon completion of the acquisition of Outdoor East,
the Company will operate an additional 1,780 posters and 2,070 bulletins in
seven markets in the states of Virginia, West Virginia, North Carolina, South
Carolina, Georgia and Florida.

Logo Signs

In November 1996, the Company entered into an agreement with LSA pursuant
to which the Company agreed to acquire the logo sign franchises for the states
of Kentucky and Nevada for $3.8 million in cash. Upon consummation of the
acquisition, the Company will operate 1,984 logo sign displays in Kentucky and
292 logo sign displays in Nevada.

The acquisition of LSA, which is expected to take place on December 2,
1996, is subject to customary closing conditions, including required regulatory
approvals.

17
<PAGE> 19

Transit

The Company has entered into an agreement to acquire 450 transit
advertising displays located in Augusta, GA and Greenville, North Charleston,
Spartanburg and Columbia, SC from Shelter Ad Systems, Inc. for $1.1 million in
cash.

COMPLETED ACQUISITIONS

The FKM Acquisition

On November 1, 1996, the Company acquired all of the outstanding capital
stock of FKM for a cash purchase price of $40 million. Upon completion of the
FKM acquisition, the Company acquired a total of 659 displays in Youngstown, OH
and 553 bulletins located across the state of Pennsylvania on interstate
highways and other primary roads. FKM had approximately $7.5 million of net
revenues for the twelve months ended September 30, 1996. The Company financed
the FKM acquisition with borrowings of $40 million under the Existing Credit
Agreement.

Other Outdoor Advertising Acquisitions

Since July 31, 1996, the Company has also acquired for cash certain assets
of (i) Revere Outdoor Advertising in Corpus Christi, TX and Laredo, TX for $9.3
million, (ii) Southworth Advertising, Inc. in Panama City, FL, Fort Walton, FL
and Albany, GA for $1.8 million, (iii) Colonial Outdoor Advertising, Inc. in
Roanoke, VA for $1.1 million, and (iv) Walz Marketing, Inc. in Lakeland, FL for
$0.8 million. As a result of these additional acquisitions, the Company has
acquired approximately 1,686 outdoor advertising displays consisting of 195
bulletins and 519 posters in Corpus Christi, TX; 87 bulletins and 373 posters in
Laredo, TX; 45 bulletins and 164 posters in Panama City, FL; six bulletins in
Fort Walton, FL; 14 bulletins and 112 posters in Albany, GA; 50 bulletins in
Roanoke, VA and 121 bulletins in Lakeland, FL. Net revenues relating to these
acquired assets totalled approximately $3.5 million based upon the most recently
completed fiscal years of each of the acquired businesses.

OTHER ACQUISITION

The Company has entered into a letter of intent with Headrick, pursuant to
which the Company intends to acquire the assets of Headrick for a cash purchase
price of approximately $75 million. Upon completion of the Headrick acquisition,
the Company will operate an additional 3,577 bulletins in ten southeastern and
midwestern states. A definitive acquisition agreement has not yet been executed,
and there can be no assurance that such an agreement will be executed or, if
executed, that the acquisition will be consummated.

The Headrick acquisition will be subject to customary closing conditions,
including the expiration or early termination of the waiting period under the
HSR Act.

THE TENDER OFFER

On October 17, 1996, the Company commenced a tender offer for all of the
Existing Notes and a solicitation of consents from the holders of the Existing
Notes to (i) eliminate or modify certain covenants and other provisions
contained in the Existing Note Indenture in order to improve the financial
flexibility of the Company, (ii) amend the Pledge Agreement to release the
collateral securing the Existing Notes, thereby making the Existing Notes
unsecured obligations of the Company and (iii) release the Subsidiary Guarantors
(as defined in the Existing Note Indenture) from their obligations as guarantors
under the Existing Note Indenture. The consummation of the Tender Offer is
conditioned on the valid tender of a majority of the outstanding Existing Notes
and the Company having obtained the requisite financing for payment of the
tendered Existing Notes. As of November 19, 1996, the holders representing over
a majority in principal

18
<PAGE> 20

amount of the Existing Notes had validly tendered their Existing Notes and
delivered their consents. The Tender Offer will expire on November 25, 1996,
unless further extended, at which time the Company expects to purchase all of
the Existing Notes validly tendered with a portion of the net proceeds of the
Offerings.

THE NEW CREDIT AGREEMENT

The Company is currently negotiating a New Credit Agreement which is
expected to be executed after the closing of this Offering. The New Credit
Agreement is expected to contain a $225 million commitment and provide for
additional borrowing of up to $75 million at the discretion of the lenders. See
"Description of Other Indebtedness -- New Credit Agreement" for a discussion of
the terms of the agreement. There can be no assurance that the New Credit
Agreement will be entered into.

THE NOTE OFFERING

Concurrently with this Offering, the Company is offering $225 million
aggregate principal amount of Notes by a separate prospectus. The Notes will be
issued pursuant to the Indenture and will be general unsecured obligations of
the Company subordinate in right of payment to all existing and future senior
indebtedness of the Company.

19
<PAGE> 21

USE OF PROCEEDS

The net proceeds to the Company from this Offering are estimated to be
approximately $58.0 million after deducting estimated underwriting discounts and
commissions and offering expenses. The net proceeds of this Offering, together
with the net proceeds of the Note Offering, will be used as follows:

The Company will not receive any proceeds from the sale of Class A Common
Stock by the Selling Stockholders.

<TABLE>
<CAPTION>
(DOLLARS
IN
THOUSANDS)
----------
<S> <C>
Sources of Funds:
Gross Proceeds of this Offering(1)...................................... $ 61,325
Gross Proceeds of the Note Offering..................................... 225,000
--------
Total sources................................................... $286,325
========
Uses of Funds:
Repay Existing Credit Agreement......................................... $ 9,500(2)
Repurchase Existing Notes............................................... 111,500(3)
Purchase Price of the Acquisitions(4)................................... 100,500
Financing Fees and Expenses............................................. 9,878
Cash(1)(5).............................................................. 54,947
--------
Total uses...................................................... $286,325
========
</TABLE>

- ---------------

(1) To the extent this Offering yields gross proceeds less than $61.3 million
($58.0 million net proceeds), cash will be reduced by the difference in net
proceeds.

(2) Represents amounts outstanding at July 31, 1996 under the Existing Credit
Agreement, as adjusted to give effect to the IPO, and does not reflect $40.0
million in borrowings to finance the FKM acquisition, all of which will be
repaid with a portion of the net proceeds from the Offerings. The Existing
Credit Agreement bears interest computed as a margin over either the
lender's base rate or the London Interbank Offered Rate. See "Description of
Other Indebtedness -- Existing Credit Agreement."

(3) Does not reflect the payment of $5.5 million of interest paid on November
15, 1996. Assumes the tender of all of the Existing Notes. The Existing
Notes mature on May 15, 2003 and were issued in May 1993 in an aggregate
principal amount of $100 million, all of which are currently outstanding.
The Existing Notes bear interest at the rate of 11% per annum. See
"Description of Other Indebtedness -- Existing Notes."

(4) The Company has borrowed $40.0 million under the Existing Credit Agreement
to finance the FKM acquisition, all of which will be repaid with a portion
of the net proceeds from the Offerings.

(5) This amount, together with the $225 million commitment under the New Credit
Agreement, will be available for general corporate purposes, including
future acquisitions and working capital. This amount does not reflect the
remaining $14.4 million of net proceeds from the IPO and ($0.8) million net
adjustments related to the Acquisitions.

DIVIDEND POLICY

The Company does not anticipate paying dividends on its Common Stock in the
foreseeable future. The Company intends to retain future earnings for
reinvestment in the Company. In addition, the Existing Credit Agreement and the
Existing Note Indenture contain, and the New Credit Agreement and the Indenture,
if entered into, will contain, limitations on the Company's ability to pay
dividends or make any other distributions on the Common Stock. The Company's
Class A Preferred Stock is entitled to preferential dividends, in an annual
aggregate amount of $364,903, before any dividends may be paid on the Common
Stock. See "Description of Capital Stock" and "Description of Indebtedness." Any
future determination as to the payment of dividends will be subject to such
limitations, will be at the discretion of the Company's Board of Directors and
will depend on the Company's results of operations, financial condition, capital
requirements and other factors deemed relevant by the Board of Directors.

20
<PAGE> 22

PRICE RANGE OF CLASS A COMMON STOCK

The Class A Common Stock is quoted on the Nasdaq National Market under the
symbol "LAMR." The following table sets forth, for the periods indicated, the
high and low closing sales prices for the Class A Common Stock as reported by
the Nasdaq National Market. Prior to August 2, 1996, the day on which the Class
A Common Stock was first publicly traded, there was no public market for the
Class A Common Stock.

<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Fiscal year ended October 31, 1996:
Fourth Quarter (beginning August 2, 1996)........................ $42.50 $16.00
Fiscal year ended October 31, 1997:
First Quarter (through November 15, 1996)........................ $28.00 $23.75
</TABLE>

On November 15, 1996, the last reported sale price per share for the Class
A Common Stock on the Nasdaq National Market was $25.50.

21
<PAGE> 23

CAPITALIZATION

The following table sets forth (i) the capitalization of the Company as of
July 31, 1996 and (ii) such pro forma capitalization adjusted for the IPO and
the Transactions.

<TABLE>
<CAPTION>
AS OF JULY 31, 1996
------------------------
PRO FORMA
AS ADJUSTED
FOR THE
IPO AND THE
ACTUAL TRANSACTIONS
-------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents............................................. $ 1,965 $ 70,512
======== ========
Current maturities of long-term debt.................................. 5,326 4,103
Long-term debt, less current maturities
11% Senior Secured Notes............................................ 100,000 --
Senior Subordinated Notes........................................... -- 225,000
Notes payable to bank group......................................... 34,250 --
Revolving credit facility........................................... 15,500 --
Other long-term debt................................................ 4,931 5,807
Ten-year subordinated notes......................................... -- 18,000
-------- --------
Total long-term debt, less current maturities............... 154,681 248,807
Stockholders' equity (deficit)
Class A Preferred Stock, $638 par value, 10,000 shares authorized,
5,719.49 issued and outstanding.................................. 3,649 3,649
Preferred Stock, $0.01 par value, 1,000,000 shares authorized, no
shares issued and outstanding.................................... -- --
Class A Common Stock, $0.001 par value, 50,000,000 shares
authorized, 10,180,483 actual shares issued and outstanding,
17,539,031 issued and outstanding, pro forma, as adjusted........ 10(1) 18
Class B Common Stock, $0.001 par value, 25,000,000 shares
authorized, 14,301,537 actual shares issued and outstanding,
13,455,548 issued and outstanding, pro forma, as adjusted........ 14(1) 13
Additional paid-in capital.......................................... -- 95,825
Accumulated deficit................................................. (28,962) (38,387)
-------- --------
Total stockholders' equity (deficit)........................ (25,289) 61,118
-------- --------
Total capitalization........................................ $134,718 $314,028
======== ========
</TABLE>

- ---------------

(1) Gives effect to the approximate 778.9 for 1 stock split and recapitalization
effected after July 31, 1996.

22
<PAGE> 24

SELECTED CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA

The selected consolidated statement of operations and balance sheet data
presented below are derived from the consolidated financial statements of the
Company. The financial statements of the Company for the three years ended
October 31, 1995 and as of October 31, 1994 and 1995 were audited by KPMG Peat
Marwick LLP, independent auditors, as indicated in their report included
elsewhere in this Prospectus. The consolidated statement of operations and
balance sheet data as of and for the nine months ended July 31, 1995 and 1996
are derived from unaudited financial statements. The unaudited financial
statements include all adjustments, consisting of normal recurring adjustments,
which management considers necessary for a fair presentation of the financial
position and the results of operations for these periods. The results of
operations for any such period are not necessarily indicative of the results of
operations for a full year. The data presented below should be read in
conjunction with the audited consolidated financial statements, related notes,
Management's Discussion and Analysis of Financial Condition and Results of
Operations and other financial information included herein.

<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA NINE MONTHS ENDED TWELVE
YEAR ENDED OCTOBER 31, YEAR ENDED JULY 31, MONTHS ENDED
--------------------------------------------------- OCTOBER 31, ------------------- JULY 31,
1991 1992 1993 1994 1995 1995(1) 1995 1996 1996(1)
-------- ------- -------- -------- -------- ----------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS
DATA:
Revenues:
Net advertising
revenues............... $ 60,834 $60,760 $ 65,365 $ 83,627 $101,871 $ 118,335 $ 76,295 $ 87,647 $132,741
Management fees.......... 827 623 595 334 31 31 23 45 53
Rental income............ 601 572 564 512 506 506 408 473 571
-------- ------- -------- -------- -------- --------- -------- -------- --------
Total net
revenues.......... 62,262 61,955 66,524 84,473 102,408 118,872 76,726 88,165 133,365
-------- ------- -------- -------- -------- --------- -------- -------- --------
Operating expenses:
Direct advertising
expenses............... 22,143 22,783 23,830 28,959 34,386 39,783 26,564 30,969 44,947
General and
administrative
expenses............... 17,703 18,225 19,504 24,239 27,057 31,679 20,636 22,842 34,320
Depreciation and
amortization........... 8,826 8,881 8,924 11,352 14,090 21,241 9,954 10,568 21,855
-------- ------- -------- -------- -------- --------- -------- -------- --------
Total operating
expenses.......... 48,672 49,889 52,258 64,550 75,533 92,703 57,154 64,379 101,122
-------- ------- -------- -------- -------- --------- -------- -------- --------
Operating income.......... 13,590 12,066 14,266 19,923 26,875 26,169 19,572 23,786 32,243
-------- ------- -------- -------- -------- --------- -------- -------- --------
Non-operating expense
(income):
Interest income.......... (213) (96) (218) (194) (199) (211) (133) (140) (230)
Interest expense......... 11,650 10,454 11,502 13,599 15,783 24,398 11,948 11,957 24,367
Loss (gain) on
disposition of
assets................. 216 (1,309) 729 675 2,328 2,560 1,004 818 2,146
Other expense............ 1,001 392 576 616 655 1,006 684 254 504
-------- ------- -------- -------- -------- --------- -------- -------- --------
Total non-operating
expense........... 12,654 9,441 12,589 14,696 18,567 27,753 13,503 12,889 26,787
-------- ------- -------- -------- -------- --------- -------- -------- --------
Earnings (loss) before
income taxes and
extraordinary item....... 936 2,625 1,677 5,227 8,308 (1,584) 6,069 10,897 5,456
Income tax expense
(benefit)(2)............. 207 270 476 (2,072) (2,390) (5,893) (2,480) 4,420 1,891
-------- ------- -------- -------- -------- --------- -------- -------- --------
Extraordinary loss on debt
extinguishment, net of
income tax benefit of
$98...................... -- -- (1,854) -- -- -- -- -- --
-------- ------- -------- -------- -------- --------- -------- -------- --------
Net earnings (loss)(3).... 729 2,355 (653) 7,299 10,698 4,309 8,549 6,477 3,565
Preferred stock
dividends................ -- -- -- -- -- -- -- 274 274
-------- ------- -------- -------- -------- --------- -------- -------- --------
Net earnings (loss)
applicable to common
stock.................... 729 2,355 (653) 7,299 10,698 4,309 8,549 6,203 3,291
======== ======= ======== ======== ======== ========= ======== ======== ========
Earnings per common share
before extraordinary
item(4).................. $ .02 $ .07 $ .03 $ .21 $ .32 $ .11 $ .26 $ .23 $ .09
======== ======= ======== ======== ======== ========= ======== ======== ========
Net earnings (loss) per
common share(4).......... $ .02 $ .07 $ (.02) $ .21 $ .32 $ .11 $ .26 $ .23 $ .09
======== ======= ======== ======== ======== ========= ======== ======== ========
OTHER DATA:
EBITDA(5)................. 22,416 20,947 23,190 31,275 40,965 47,410 29,526 34,354 54,098
EBITDA margin............. 36% 34% 35% 37% 40% 40% 39% 39% 41%
Ratio of EBITDA to
interest expense......... 1.9x 2.0x 2.0x 2.3x 2.6x 1.9x 2.5x 2.9x 2.2x
Ratio of net debt to
EBITDA(6)................ 4.9x 5.0x 4.6x 4.7x 3.4x 3.5 -- -- 3.4x
Ratio of total debt to
EBITDA................... 4.9x 5.0x 5.0x 4.9x 3.6x 5.3 -- -- 4.7x
Ratio of earnings to fixed
charges(7)............... 1.1x 1.2x 1.0x 1.3x 1.4x 0.9x 1.4x 1.7x 1.2x
Capital expenditures:
Outdoor advertising...... 1,847 1,695 2,374 4,997 6,643 10,251 4,786 4,922 10,359
Logos.................... 629 3,056 2,009 2,761 1,567 1,567 1,390 7,989 8,096
Cash flows from operating
activities(8)............ 10,328 12,930 12,411 15,214 25,065 -- 10,752 15,595 --
Cash flows from investing
activities(8)............ (4,236) (7,273) (10,064) (53,569) (17,817) -- (11,049) (28,798) --
Cash flows from financing
activities(8)............ (5,133) (6,734) 6,802 37,147 (9,378) -- (5,751) 9,287 --
Number of outdoor
advertising
displays(9).............. 18,829 17,835 17,659 22,369 22,547 27,605 22,512 23,089 28,147
Number of logo advertising
displays(9).............. 5,027 11,371 13,820 18,266 24,219 24,219 22,431 48,362 48,362
Cumulative logo sign
franchises(9)............ 4 5 7 7 11 11 8 15 15
BALANCE SHEET DATA(9):
Cash and cash
equivalents.............. 1,152 75 9,224 8,016 5,886 -- 1,968 1,965 70,512
Working capital........... (2,876) (7,557) 7,274 1,691 1,737 -- 178 1,479 72,251
Total assets.............. 81,737 78,649 92,041 130,008 133,885 -- 130,119 150,267 329,789
Total debt (including
current maturities)...... 110,350 104,222 115,380 153,929 146,051 -- 148,552 160,007 252,910
Total long-term
obligations.............. 111,267 103,567 122,774 147,957 143,944 -- 142,433 156,674 250,800
Stockholders' equity
(deficit)................ (43,787) (41,870) (43,249) (37,352) (28,154) -- (29,178) (25,289) 61,118
</TABLE>

23
<PAGE> 25

- ---------------

(1) For purposes of the pro forma adjusted financial information (i) the
statement of earnings of the Company for its fiscal year ended October 31,
1995 has been combined with the statements of earnings of Outdoor East and
FKM for their fiscal year ended December 31, 1995, (ii) the statement of
earnings of the Company for the twelve month period ended July 31, 1996 has
been combined with the statements of earnings of Outdoor East and FKM for
the twelve months ended September 30, 1996 and (iii) effect has been given
to the IPO and the Transactions. None of the other Transactions is a
condition to this Offering. For a more complete description of the pro forma
impact on the Company's results of operations if certain of the Transactions
are not consummated see " Unaudited Pro Forma Condensed Consolidated
Financial Statements."

(3) Pro forma financial information for the year ended October 31, 1995 and the
twelve months ended July 31, 1996 does not give effect to extraordinary loss
from extinguishment of debt net of tax of $9,235 and $9,470, respectively.

(4) After giving effect to the approximately 778.9 for 1 split of the Company's
then-existing common stock and the recapitalization effected after July 31,
1996.

(5) "EBITDA" is defined as operating income before depreciation and
amortization. It represents a measure which management believes is
customarily used to evaluate the financial performance of companies in the
media industry. However, EBITDA is not a measure of financial performance
under generally accepted accounting principles and should not be considered
an alternative to operating income or net earnings as an indicator of the
Company's operating performance or to net cash provided by operating
activities as a measure of its liquidity.

(6) "Net debt" consists of debt less cash and cash equivalents.

(7) The ratio of earnings to fixed charges was computed by dividing earnings by
fixed charges. For this purpose, earnings consist of income from continuing
operations, before income taxes and fixed charges of the Company and its
subsidiaries plus the Company's share of the distributed income of less than
50% owned persons. Fixed charges consist of the Company's and its
subsidiaries' interest expense (including interest costs capitalized) and
the portion of rent expense representative of an interest factor.

(8) Cash flows from operating, investing and financing activities are obtained
from the Company's consolidated statements of cash flows prepared in
accordance with generally accepted accounting principles.

(9) As of the end of the period.

24
<PAGE> 26

LAMAR ADVERTISING COMPANY

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following sets forth unaudited pro forma condensed consolidated
financial information for the Company. The unaudited pro forma condensed
consolidated statements of earnings for the year ended October 31, 1995, the
nine month period ended July 31, 1996 and for the twelve month period ended July
31, 1996 give effect to (i) the consummation of the IPO and the application of
the net proceeds therefrom, (ii) the Acquisitions, (iii) the Offerings and the
application of the estimated net proceeds therefrom, and (iv) the Tender Offer,
as if each had occurred on the first date of each such period. The unaudited pro
forma condensed consolidated balance sheet as of July 31, 1996 has been prepared
as if the IPO, the Acquisitions, the Offerings and the Tender Offer had occurred
on July 31, 1996.

For purposes of the pro forma financial information (i) the statement of
earnings of the Company for its fiscal year ended October 31, 1995 has been
combined with the statements of earnings of Outdoor East and FKM for their
fiscal year ended December 31, 1995, (ii) the statement of earnings of the
Company for the nine months ended July 31, 1996 has been combined with the
statements of earnings of Outdoor East and FKM for the nine months ended
September 30, 1996, (iii) the statement of earnings of the Company for the
twelve month period ended July 31, 1996 has been combined with the statements of
earnings of Outdoor East and FKM for the twelve months ended September 30, 1996
and (iv) the balance sheet of the Company as of July 31, 1996 has been combined
with the balance sheets of Outdoor East and FKM as of September 30, 1996.

The unaudited pro forma condensed consolidated financial statements give
effect to the Acquisitions under the purchase method of accounting.

The unaudited pro forma condensed consolidated financial statements have
been prepared by the Company's management. The unaudited pro forma data are not
designed to represent and do not represent what the Company's results of
operations or financial position would have been had the aforementioned
transactions been completed on or as of the dates assumed, and are not intended
to project the Company's results of operations for any future period or as of
any future date. The unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the audited and unaudited
consolidated financial statements and notes of the Company and certain acquired
businesses included elsewhere or incorporated by reference herein.

25
<PAGE> 27

LAMAR ADVERTISING COMPANY

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
YEAR ENDED OCTOBER 31, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
INITIAL EQUITY
OFFERING OUTDOOR
LAMAR ADJUSTMENTS FKM EAST
---------- -------------- ------- -------
<S> <C> <C> <C> <C>
Revenues
Outdoor advertising, net......................................... $ 101,871 $ 4,956 $11,508
Rental income.................................................... 506 --
Management fees from related and affiliated parties.............. 31 --
Other income..................................................... -- 45 --
Interest income.................................................. -- 12 --
---------- --------- ------- -------
102,408 5,013 11,508
---------- --------- ------- -------
Direct expenses
Direct advertising expenses...................................... 34,386 1,513 3,884
General and administrative expenses.............................. 27,057 1,119 3,548
Depreciation and amortization.................................... 14,090 1,823 2,675
---------- --------- ------- -------
75,533 4,455 10,107
---------- --------- ------- -------
Operating income................................................... 26,875 558 1,401
---------- --------- ------- -------
Other expense (income)
Interest income.................................................. (199) 0
Interest expense................................................. 15,783 (2,337)(1)(6) 1,039 2,060
Loss on disposition of assets.................................... 2,328 232 --
Other expenses................................................... 655 7 344
---------- --------- ------- -------
18,567 (2,337) 1,278 2,404
---------- --------- ------- -------
Earnings (loss) before income taxes................................ 8,308 2,337 (720) (1,003)
Income tax expense (benefit)..................................... (2,390) 935(11) (192)
---------- --------- ------- -------
Net earnings (loss)................................................ $ 10,698 $ 1,402 $ (528) $(1,003)
========== ========= ======= =======
Net earnings per common share...................................... $ 0.32
==========
Weighted average number of shares outstanding...................... 33,772,107 4,294,041
========== =========

<CAPTION>
TENDER
OFFER AND
ADJUSTMENTS NOTE PRO FORMA
ACQUISITION FOR THIS OFFERING COMBINED AS
ADJUSTMENTS OFFERING ADJUSTMENTS ADJUSTED
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues
Outdoor advertising, net......................................... $ 118,335
Rental income.................................................... 506
Management fees from related and affiliated parties.............. 31
Other income..................................................... (45)(8) 0
Interest income.................................................. (12)(7) 0
------- --------- ------- ----------
(57) 118,872
------- --------- ------- ----------
Direct expenses
Direct advertising expenses...................................... 39,783
General and administrative expenses.............................. (45)(8) 31,679
Depreciation and amortization.................................... 2,565(2) 88(5) 21,241
------- --------- ------- ----------
2,520 88 92,703
------- --------- ------- ----------
Operating income................................................... (2,577) (88) 26,169
------- --------- ------- ----------
Other expense (income)
Interest income.................................................. (12)(7) (211)
Interest expense................................................. (3,085)(3) 10,938(4) 24,398
Loss on disposition of assets.................................... 2,560
Other expenses................................................... 1,006
------- --------- ------- ----------
(3,097) 10,938 27,753
------- --------- ------- ----------
Earnings (loss) before income taxes................................ 520 (11,026) (1,584)
Income tax expense (benefit)..................................... 165(11) (4,410)(11) (5,893)
------- --------- ------- ----------
Net earnings (loss)................................................ $ 355 $ $(6,616) $ 4,309
======= ========= ======= ==========
Net earnings per common share...................................... $ 0.11
========= ==========
Weighted average number of shares outstanding...................... 2,200,000 40,266,148
========= ==========
</TABLE>

26
<PAGE> 28

LAMAR ADVERTISING COMPANY

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
NINE MONTHS ENDED JULY 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
INITIAL EQUITY
OFFERING OUTDOOR
LAMAR ADJUSTMENTS FKM EAST
---------- -------------- ------ -------
<S> <C> <C> <C> <C>
Revenues
Outdoor advertising, net.......................................... $ 87,647 $ $5,924 $ 9,130
Rental income..................................................... 473
Management fees from related and affiliated parties............... 45 100
Other income...................................................... 80 --
Interest income................................................... 20 --
----------- ---------- ------ -------
88,165 6,024 9,230
----------- ---------- ------ -------
Direct expenses
Direct advertising expenses....................................... 30,969 1,744 3,004
General and administrative expenses............................... 22,842 1,352 2,699
Depreciation and amortization..................................... 10,568 1,975 2,192
----------- ---------- ------ -------
64,379 5,071 7,895
----------- ---------- ------ -------
Operating income.................................................... 23,786 953 1,335
----------- ---------- ------ -------
Other expense (income)
Interest income................................................... (140)
Interest expense.................................................. 11,957 (1,871)(1)(6) 1,589 2,160
Loss on disposition of assets..................................... 818
Other expenses.................................................... 254 6 790
----------- ---------- ------ -------
12,889 (1,871) 1,595 2,950
----------- ---------- ------ -------
Earnings (loss) before income taxes................................. 10,897 1,871 (642) (1,615)
Income tax expense (benefit)...................................... 4,420 748(11) (120) --
----------- ---------- ------ -------
Net earnings (loss)................................................. $ 6,477 $ 1,123 $ (522) $(1,615)
========== ====== =======
Preferred stock dividends........................................... 274
-----------
Net earnings (loss) applicable to common stock...................... 6,203
===========
Net earnings per common share....................................... $ 0.23
===========
Weighted average number of shares outstanding....................... 27,068,544 4,294,041
=========== ==========

<CAPTION>
TENDER
OFFER AND
ADJUSTMENTS NOTE PRO FORMA
ACQUISITION FOR THIS OFFERING COMBINED AS
ADJUSTMENTS OFFERING ADJUSTMENTS ADJUSTED
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues
Outdoor advertising, net.......................................... $ $ $ $ 102,701
Rental income..................................................... 473
Management fees from related and affiliated parties............... (100)(9) 45
Other income...................................................... (80)(8) --
Interest income................................................... (20)(7) --
------- ---------- ------- ----------
(200) 103,219
------- ---------- ------- ----------
Direct expenses
Direct advertising expenses....................................... 35,717
General and administrative expenses............................... (80)(8) 26,813
Depreciation and amortization..................................... 1,129(2) (5) 15,864
------- ---------- ------- ----------
1,049 78,394
------- ---------- ------- ----------
Operating income.................................................... (1,249) 24,825
------- ---------- ------- ----------
Other expense (income)
Interest income................................................... (20)(7) (160)
Interest expense.................................................. (3,738)(3) 8,203(4) 18,300
Loss on disposition of assets..................................... 818
Other expenses.................................................... (716)(10) 334
------- ---------- ------- ----------
(4,474) 8,203 19,292
------- ---------- ------- ----------
Earnings (loss) before income taxes................................. 3,225 (8,203) 5,533
Income tax expense (benefit)...................................... 847(11) (3,281)(11) 2,614
------- ---------- ------- ----------
Net earnings (loss)................................................. $ 2,378 $ $(4,922) $ 2,919
======= =======
Preferred stock dividends........................................... 274
----------
Net earnings (loss) applicable to common stock...................... 2,645
========== ==========
Net earnings per common share....................................... $ 0.08
========== ==========
Weighted average number of shares outstanding....................... 2,200,000 33,562,585
========== ==========

</TABLE>

27
<PAGE> 29

LAMAR ADVERTISING COMPANY

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
TWELVE MONTHS ENDED JULY 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
INITIAL EQUITY
OFFERING OUTDOOR
LAMAR ADJUSTMENTS FKM EAST
----------- -------------- ------ -------
<S> <C> <C> <C> <C>
Revenues
Outdoor advertising, net.......................................... 113,223 7,376 12,142
Rental income..................................................... 571 -- --
Management fees from related and affiliated parties............... 53 -- 100
Other income...................................................... -- 85 --
Interest income................................................... -- 24 --
---------- --------- ----- ------
113,847 7,485 12,242
---------- --------- ----- ------
Direct expenses
Direct advertising expenses....................................... 38,791 2,214 3,942
General and administrative expenses............................... 29,263 1,632 3,510
Depreciation and amortization..................................... 14,704 2,453 2,941
---------- --------- ----- ------
82,758 6,299 10,393
---------- --------- ----- ------
Operating income.................................................... 31,089 1,186 1,849
---------- --------- ----- ------
Other expense (income)
Interest income................................................... (206)
Interest expense.................................................. 15,792 (2,377)(1)(6) 1,965 2,672
Loss on disposition of assets..................................... 2,142 4 0
Other expenses.................................................... 225 10 985
---------- --------- ----- ------
17,953 (2,377) 1,979 3,657
---------- --------- ----- ------
Earnings (loss) before income taxes................................. 13,136 2,377 (793) (1,808)
Income tax expense (benefit)...................................... 4,510 951(11) (157)
---------- --------- ----- ------
Net earnings (loss)................................................. 8,626 1,426 (636) (1,808)
========= ===== ======
Preferred stock dividends........................................... 274
----------
Net earnings (loss) applicable to common
stock............................................................. 8,352
==========
Net earnings per common share....................................... $0.29
==========
Weighted average number of shares
outstanding....................................................... 28,778,075 4,294,041
========== =========

<CAPTION>
TENDER OFFER
ADJUSTMENTS AND NOTE PRO FORMA
ACQUISITION FOR THIS OFFERING COMBINED
ADJUSTMENTS OFFERING ADJUSTMENTS AS ADJUSTED
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Revenues
Outdoor advertising, net.......................................... 132,741
Rental income..................................................... 571
Management fees from related and affiliated parties............... (100)(9) 53
Other income...................................................... (85)(8) 0
Interest income................................................... (24)(7) 0
------ --------- ------- ----------
(209) 133,365
------ --------- ------- ----------
Direct expenses
Direct advertising expenses....................................... 44,947
General and administrative expenses............................... (85)(8) 34,320
Depreciation and amortization..................................... 1,669(2) 88(5) 21,855
------ --------- ------- ----------
1,584 88 101,122
------ --------- ------- ----------
Operating income.................................................... (1,793) (88) 32,243
------ --------- ------- ----------
Other expense (income)
Interest income................................................... (24)(7) (230)
Interest expense.................................................. (4,623)(3) 10,938(4) 24,367
Loss on disposition of assets..................................... 2,146
Other expenses.................................................... (716)(10) 504
------ --------- ------- ----------
(5,363) 10,938 26,787
------ --------- ------- ----------
Earnings (loss) before income taxes................................. 3,570 (11,026) 5,456
Income tax expense (benefit)...................................... 998(11) (4,410)(11) 1,891
------ --------- ------- ----------
Net earnings (loss)................................................. 2,572 (6,616) 3,565
====== =======
Preferred stock dividends........................................... 274
--------- ----------
Net earnings (loss) applicable to common
stock............................................................. 3,291
========= ==========
Net earnings per common share....................................... $ 0.09
========= ==========
Weighted average number of shares
outstanding....................................................... 2,200,000 35,272,116
========= ==========
</TABLE>

28
<PAGE> 30

LAMAR ADVERTISING COMPANY

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JULY 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
INITIAL EQUITY
OFFERING OUTDOOR
LAMAR ADJUSTMENTS FKM EAST
-------- -------------- ------- -------
<S> <C> <C> <C> <C>
Current assets
Cash and cash equivalents.......................................... $ 1,965 $ 14,396(13) $ 80 $ 1,026
Net receivables.................................................... 15,491 668 1,951
Other current assets............................................... 2,905 620 853
-------- -------- ------- -------
Total current assets......................................... 20,361 14,396 1,368 3,830
-------- -------- ------- -------
Property, plant & equipment
Property, plant and equipment,
net.............................................................. 105,185 7,209 15,566
-------- -------- ------- -------
Other assets
Intangibles........................................................ 16,891 (299)(17) 8,676 4,219
Other assets....................................................... 7,830 1,689 775
-------- -------- ------- -------
Total assets................................................. $150,267 $ 14,097 $18,942 $24,390
======== ======== ======= =======
Current liabilities
Current maturities of long-term debt............................... 5,326 (1,500)(19) 1,490 867
Other current liabilities.......................................... 13,556 386 1,157
-------- -------- ------- -------
18,882 (1,500) 1,876 2,024
-------- -------- ------- -------
Long-term liabilities
Long-term debt..................................................... 154,681 (22,250)(21) 15,748 22,943
Deferred income.................................................... 779 -- --
Other liabilities.................................................. 1,214 -- --
-------- -------- ------- -------
Total liabilities............................................ 175,556 (23,750) 17,624 24,967
-------- -------- ------- -------
Stockholders' equity (deficit)....................................... (25,289) 37,847(22) 1,318 (577)
-------- -------- ------- -------
Total liabilities and stockholders' deficit.................. $150,267 $ 14,097 $18,942 $24,390
======== ======== ======= =======

<CAPTION>
TENDER
OFFER AND
ADJUSTMENTS NOTE PRO FORMA
ACQUISITION FOR THIS OFFERING COMBINED AS
ADJUSTMENTS OFFERING ADJUSTMENTS ADJUSTED
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Current assets
Cash and cash equivalents.......................................... $(102,402)(13) $57,985(13) $ 97,462(13) $ 70,512
Net receivables.................................................... (2,025)(14) 16,085
Other current assets............................................... (853)(15) 3,525
--------- ------- -------- --------
Total current assets......................................... (105,280) 57,985 97,462 90,122
--------- ------- -------- --------
Property, plant & equipment
Property, plant and equipment,
net.............................................................. 25,275(16) 153,235
--------- ------- -------- --------
Other assets
Intangibles........................................................ 40,656(17) 2,330(17) 72,473
Other assets....................................................... (2,618)(18) 6,283(18) 13,959
--------- ------- -------- --------
Total assets................................................. $ (41,967) $57,985 $106,075 $329,789
========= ======= ======== ========
Current liabilities
Current maturities of long-term debt............................... (2,080)(19) 4,103
Other current liabilities.......................................... (1,331)(20) 13,768
--------- ------- -------- --------
(3,411) 17,871
--------- ------- -------- --------
Long-term liabilities
Long-term debt..................................................... (37,815)(21) 115,500(21) 248,807
Deferred income.................................................... 779
Other liabilities.................................................. 1,214
--------- ------- -------- --------
Total liabilities............................................ (41,226) 115,500 268,671
--------- ------- -------- --------
Stockholders' equity (deficit)....................................... (741)(22) 57,985(22) (9,425)(22) 61,118
--------- ------- -------- --------
Total liabilities and stockholders' deficit.................. $ (41,967) $57,985 $106,075 $329,789
========= ======= ======== ========
</TABLE>

29
<PAGE> 31

NOTES TO UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)

For purposes of determining the pro forma effect of the IPO and the
Transactions on the Company's unaudited Condensed Consolidated Statements of
Earnings for the year ended October 31, 1995, the nine months ended July 31,
1996, and the twelve months ended July 31, 1996, the following adjustments have
been made:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED TWELVE MONTHS
YEAR ENDED JULY 31, ENDED
OCTOBER 31, 1995 1996 JULY 31, 1996
---------------- ----------- -------------
<S> <C> <C> <C>
(1) Represents the elimination of interest
expense on bank loans under the Existing
Credit Agreement as a result of the
application of the net proceeds from the
IPO.......................................... $ (3,864) $(3,031) $(3,904)
(2) Represents incremental amortization and
depreciation due to the application of
purchase accounting. Depreciation and
amortization are calculated using accelerated
and straight line methods over the estimated
useful lives of the
assets...................................... 2,565 1,129 1,669
(3) Represents the net effect on interest expense
resulting from (i) additional borrowings
assumed in the acquisitions and (ii) the
elimination of interest expense on debt not
assumed in the acquisitions.................. (3,085) (3,738) (4,623)
(4) To eliminate historical interest expense on
the Existing Notes and to record interest
expense on the Notes at an assumed rate of
9.75%. (A difference of .125% in the assumed
rate of interest would have changed income by
$281, $211 and $281 for the year ended
October 31, 1995, the nine months ended July
31, 1996 and the twelve months ended July 31,
1996, respectively.)
Interest expense on
the Note Offering... 21,938 16,453 21,938
Interest expense on
the Existing
Notes............... (11,000) (8,250) (11,000) 10,938 8,203 10,938
------- ------- -------
(5) The increase in amortizing debt issuance costs
associated with the Note Offering over the
Existing Notes amortization......................
Amortization under
Note Offering....... 653 490 653
Amortization on
Existing Notes...... (565) (490) (565) 88 -- 88
------- ------- -------

(6) Interest expense on the $20 million ten year
subordinated notes issued to existing
shareholders at the time of the IPO.......... 1,527 1,160 1,527
(7) To reclassify interest income in order to
conform to the Company's presentation........ (12) (20) (24)
</TABLE>

30
<PAGE> 32

NOTES TO UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<S> <C> <C> <C>
(8) To reclassify other income in order to
conform to the Company's presentation........ (45) (80) (85)
(9) To eliminate management fee income on Outdoor
East historical financial statements, which
would not have been earned had the
Acquisitions been consummated on November 1,
1994......................................... -- (100) (100)
(10) To eliminate costs associated with the sale
and reorganization of Outdoor East which
would not have been incurred had the
Acquisitions been consummated on November 1,
1994......................................... -- (716) (716)
(11) To record the tax effect on pro forma
statements for:
IPO....................................... 935 748 951
Acquisitions.............................. 165 847 998
Tender Offer and Note Offering............ (4,410) (3,281) (4,410)
(12) The accompanying pro forma results of
operation do not give effect to the
extraordinary loss on the extinguishment of
debt of $9,235, $9,425 and $9,470 for the
year ended October 31, 1995, for the nine
months ended July 31, 1996 and for the twelve
months ended July 31, 1996; respectively,
however, such amounts have been reflected as
an adjustment to pro forma retained earnings.
</TABLE>

For purposes of determining the pro forma effect of the IPO and the
Transactions on the Company's unaudited Condensed Consolidated Balance Sheet as
of July 31, 1996, the following adjustments have been made:

<TABLE>
<CAPTION>
TENDER OFFER
ADJUSTMENTS AND
IPO ACQUISITION FOR THIS NOTE OFFERING
ADJUSTMENTS ADJUSTMENTS OFFERING ADJUSTMENTS
----------- ----------- ----------- -------------
<C> <S> <C> <C> <C> <C>
(13) Cash:
Net proceeds of the IPO and the
Transactions................................ $ 63,146 $57,985 $ 218,462
Use of proceeds of the IPO and the
Transactions................................ (48,750) (121,000)
Represents purchase of FKM.................... $ (40,000)
Payoff of receivable from
shareholder -- FKM.......................... 74
Represents purchase of Outdoor East........... (60,500)
To record payoff of note assumed -- Outdoor
East........................................ (950)
To remove cash not purchased from Outdoor
East........................................ (1,026)
-------- --------- -------- ---------
$ 14,396 $(102,402) $57,985 $ 97,462
======== ========= ======== =========
(14) Net receivables:
Payoff of receivable from
shareholder -- FKM.......................... $ (74)
To remove net receivables not purchased from
Outdoor East................................ (1,951)
---------
$ (2,025)
=========
</TABLE>

31
<PAGE> 33

NOTES TO UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
TENDER OFFER
ADJUSTMENTS AND
IPO ACQUISITION FOR THIS NOTE OFFERING
ADJUSTMENTS ADJUSTMENTS OFFERING ADJUSTMENTS
-------- --------- -------- ---------
<C> <S> <C> <C> <C> <C>
(15) Other current assets:
To remove net receivables not purchased from
Outdoor East................................ $ (853)
=========
(16) Property, plant and equipment:
To record the net increase in property, plant
and equipment from the allocation of the
purchase price of the FKM acquisition....... $ 5,421
To record the net increase in structures from
the allocation of the purchase price of the
Outdoor East acquisition.................... 19,854
---------
$ 25,275
=========
(17) Intangibles:
To reclassify additional offering fees........ $ (299)
To record net intangible assets from purchase
of FKM...................................... $ 17,730
To record net intangible assets from purchase
of Outdoor East assets...................... 22,926
To record capitalized fees of the Notes
Offering.................................... $ 6,538
To remove issuance costs of Existing Notes.... (4,208)
-------- --------- ---------
$ (299) $ 40,656 $ 2,330
======== ========= =========
(18) Other assets:
To eliminate other assets not purchased from
Outdoor East................................ $ (775)
To record reduction of deferred tax asset
after giving effect to FKM acquisition...... (1,843)
To record tax effect of loss on early
extinguishment of debt...................... $ 6,283
--------- ---------
$ (2,618) $ 6,283
========= =========
(19) Current maturities of long-term debt:
To record payoff of borrowings under the
Existing Credit Agreement................... $ (3,500)
To record ten year subordinated note payable,
current portion............................. 2,000
To remove liabilities not assumed in FKM
acquisition................................. $ (1,467)
To record net current maturities of long-term
debt related to Outdoor East acquisition.... (613)
-------- ---------
$ (1,500) $ (2,080)
======== =========
</TABLE>

32
<PAGE> 34

NOTES TO UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
TENDER OFFER
ADJUSTMENTS AND
IPO ACQUISITION FOR THIS NOTE OFFERING
ADJUSTMENTS ADJUSTMENTS OFFERING ADJUSTMENTS
----------- ----------- ----------- -------------
<C> <S> <C> <C> <C> <C>
(20) Other current liabilities:
To remove liabilities not assumed from
Outdoor East................................ $ (1,157)
To remove liabilities not assumed from FKM.... (174)
-----------
$ (1,331)
=========
(21) Long-term debt:
To record payoff of loans under the Existing
Credit Agreement............................ $ (40,250) $ (9,500)
To record ten year subordinated note payable,
long-term portion........................... 18,000
To remove net liabilities not assumed from
FKM......................................... $ (15,733)
To remove net liabilities not assumed from
Outdoor East................................ (22,082)
To record effect of Tender Offer.............. (100,000)
To record effect of the issuance of the
Notes....................................... 225,000
-------- --------- ---------
$ (22,250) $ (37,815) $ 115,500
======== ========= =========
(22) Stockholders' deficit:
Net proceeds of the IPO and this Offering
assuming the sale of 2,200 shares at a price
of $27.875 per share........................ $ 62,847 $ 57,985
Consideration related to previous stock
redemptions................................. (25,000)
To reverse historical equity in connection
with the Acquisitions....................... (741)
To record effect on equity due to loss on
early extinguishment of debt................ $ (9,425)
-------- --------- -------- ---------
$ 37,847 $ (741) $ 57,985 $ (9,425)
======== ========= ======== =========
</TABLE>

33
<PAGE> 35

MANAGEMENT'S 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, and for the nine months ended July 31, 1996 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, and
the pro forma condensed consolidated statements of the Company and the related
notes, included in and incorporated by reference to this Prospectus. 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 Holding 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, EBITDA 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 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 those acquisitions. The Company has recently acquired
FKM for an aggregate cash purchase price of $40 million, acquired logo sign
franchises in Kansas and Tennessee for an aggregate cash purchase price of $1.4
million and has acquired certain outdoor advertising properties for an aggregate
cash cost of approximately $12.2 million. In addition, the Company has executed
agreements to purchase Outdoor East for an aggregate cash purchase price of
approximately $60 million, the logo sign franchises for Kentucky and Nevada for
$3.8 million in cash certain transit advertising displays for approximately $1.1
million in cash, and has executed a letter of intent to acquire the assets of an
additional outdoor advertising company at a cash purchase price of approximately
$75 million. The Company intends to finance its acquisition activities from
external sources, including the proceeds of this Offering, the proceeds of the
Note Offering and borrowings under the New Credit Agreement. See "The
Transactions."

The Company relies on sales of advertising space for its revenues, and its
operating results are therefore affected by 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.

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

34
<PAGE> 36

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 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, 1994 and 1995, 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, resulting in the recognition of income tax expense for the nine months
ended July 31, 1996.

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, 1993, 1994 and 1995 and for the nine months ended July 31, 1995 and 1996:

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED OCTOBER 31, ENDED JULY 31,
------------------------- ---------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net revenues............................... 100.0% 100.0% 100.0% 100.0% 100.0%
Operating expenses
Direct advertising expenses.............. 35.8 34.3 33.6 34.6 35.1
General & administrative expenses........ 29.3 28.7 26.4 26.9 25.9
Operating cash flow........................ 34.9 37.0 40.0 38.5 39.0
Depreciation and amortization.............. 13.4 13.4 13.8 13.0 12.0
Operating income........................... 21.4 23.6 26.2 25.5 27.0
Interest expense........................... 17.3 16.1 15.4 15.6 13.6
Other expense.............................. 18.9 17.4 18.1 17.6 14.6
Net earnings (loss)........................ (1.0) 8.6 10.4 11.1 7.3
</TABLE>

EFFECTS OF THE ACQUISITIONS

The Acquisitions will result in the addition of 2,745 bulletins and 2,317
posters, or a total of 5,062 outdoor advertising displays, to the Company's
inventory, which represents a 21% increase in its outdoor advertising displays.
The Company has also acquired an additional 1,686 outdoor advertising displays
since July 31, 1996.

The FKM acquisition expands the Company's operations in Ohio through the
addition of the Youngstown market and gives the Company a presence in
Pennsylvania through the operation of FKM's inventory of bulletins located on
interstate highways and other primary roads in that state. The Outdoor East
acquisition will add a billboard operation with structures positioned along
heavily travelled highways serving the Eastern U.S. It will also add the
Columbia, SC market, which is ranked as the 88th largest market in the U.S., as
well as several smaller markets and displays located along North Carolina
interstate highways and primary roads.

On a pro forma basis for the twelve months ending July 31, 1996, the
Acquisitions add $19.5 million in net outdoor advertising revenues to the
Company's $113.2 net outdoor advertising revenues for the period, which
constitutes an increase of 17%. The Company expects to be able to achieve
certain operating efficiencies through the addition of outdoor advertising
businesses operating in or near markets currently served by the Company.

RECENT RESULTS

Based upon preliminary information, the Company estimates that its net
revenue and EBITDA for the fiscal year ended October 31, 1996 will be in the
approximate range of $119.0 million and $48.5 million, respectively. The
Company's net revenue and EBITDA for the fiscal year ended October 31, 1995 were

35
<PAGE> 37

$102.4 million and $41.0 million, respectively. This subsection contains forward
looking statements and estimates which could prove inaccurate. The Company's
fiscal year has just ended and its results have not yet been determined, nor has
the year-end audit taken place. Consequently, the estimates contained in this
subsection are subject to change depending on the finalization of actual
results, potential year-end adjustments and completion of the audit. In
addition, the Company's results could be affected by the factors identified in
"Risk Factors."

NINE MONTHS ENDED JULY 31, 1996 COMPARED TO NINE MONTHS ENDED JULY 31, 1995

Net revenues increased $11.4 million or 14.9% to $88.2 million for the nine
months ended July 31, 1996 compared to $76.8 million for the same period in
1995. This increase was primarily a result of the $6.8 million increase in
outdoor advertising net revenues, principally attributable to increases in
number of displays of approximately 600 and advertising rates at an average of
6%, with occupancy rates remaining relatively steady, and a $4.3 million
increase in logo sign revenue due to the continued development of that program.
Net outdoor advertising revenue for the period was $77.5 million and logo sign
revenue was $9.0 million.

Operating expenses, exclusive of depreciation and amortization, increased
$6.6 million or 14.0% for the nine months ended July 31, 1996 as compared to the
same period in 1995. This increase was the result of an increase in health
insurance rates, increases in personnel costs, sign site rent, graphics expense,
other costs related to the increase in revenue and additional operating expenses
related to outdoor asset acquisitions and the continued development of the logo
sign business.

Depreciation and amortization expense increased $0.6 million or 6.2% from
$10.0 million for the nine months ended July 31, 1995 to $10.6 million for nine
months ended July 31, 1996.

Due to the above factors, operating income increased $4.2 million or 21.5%
to $23.8 million for the nine months ended July 31, 1996 from $19.6 million for
the same period in 1995.

Interest expense remained relatively constant for both periods.

Income tax expense for the nine months ended July 31, 1996 increased $6.9
million over the same period in 1995. For the past several years the Company has
had a substantial net operating loss carryforward. The benefit of the Company's
net operating loss carryforward was fully recognized as of October 31, 1995.

As a result of the foregoing factors, net earnings for the nine months
ended July 31, 1996 decreased $2.1 million as compared to the same period in
1995.

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.

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.

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<PAGE> 38

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 depreciation 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 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
Existing Notes with a fixed interest rate of 11.0%. Prior to the issuance of the
Existing 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.

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<PAGE> 39

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically satisfied its working capital requirements
with cash from operations and revolving credit borrowings. Its acquisitions have
been financed primarily with borrowed funds.

On August 7, 1996, the Company sold pursuant to the IPO 4,000,000 shares of
its Class A Common Stock and selling stockholders sold 735,000 shares at a price
of $16.00 per share. The net proceeds to the Company from the sale of the
4,000,000 shares were approximately $58.8 million after deducting expenses and
underwriting discounts.

The Company used a portion of the net proceeds from the IPO to repay
existing indebtedness in the aggregate principal amount of approximately $43.8
million, consisting of (i) bank term loans of $37.8 million and (ii) $6.0
million of outstanding loans under a revolving credit facility. The Company used
approximately $5.0 million of the net proceeds from the IPO to pay a portion of
the contingent consideration payable to stockholders whose shares of common
stock were repurchased by the Company in October 1995 and March 1996. The
Company issued to such stockholders $20.0 million aggregate principal amount of
ten-year subordinated notes as the balance of the contingent consideration.

In addition, on August 15, 1996, the Underwriters' over-allotment option to
purchase an additional 294,041 shares from the Company was exercised, yielding
net proceeds to the Company of approximately $4.4 million.

The remaining net proceeds from the IPO are available for general corporate
purposes, including possible acquisitions and repayment of indebtedness. In
August 1996, the Company used net proceeds from the IPO to purchase certain
outdoor advertising properties for an aggregate cash price of $12.2 million.

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 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.

For the nine months ended July 31, 1996, net cash provided by operating
activities was $15.6 million, a $4.8 million increase from $10.8 million in the
corresponding period of 1995. The increase occurred, despite a $2.1 million
decrease in net earnings, due primarily to a $5.6 million increase in deferred
taxes due to the benefit of the Company's net operating loss carryforward having
been fully recognized at year end October 31, 1995, and a $1.9 million increase
in deferred income generated by the additional logo sign franchises offset by a
$1.9 million increase in receivables. Net cash used in investing activities
increased $17.7 million for the nine months ended July 31, 1996 as compared to
the same period in 1995 due to a $8.9 million increase in capital expenditures
primarily due to the build-out of the Company's new logo sign franchises, a $7.1
million increase in purchase of new markets, a $1.0 million increase in purchase
of intangible assets and a $0.7 increase in notes receivable. Net cash provided
by financing activities increased $15.0 million for the nine months ended July
31, 1996 as compared to the same period in 1995. The increase was due to the
increase in borrowings of $15.5 million under revolving credit facilities to
finance capital expenditures, purchase new markets and meet seasonal operating
requirements. A $2.8 million decrease in principal payments on long-term debt
was partially offset by the $3.0 million stock redemption in March 1996.

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<PAGE> 40

During the three fiscal years ended October 31, 1995, the Company's
aggregate capital expenditures, as shown in the Consolidated Statements of Cash
Flows, 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 $6.6 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
expenditure requirements of state logo sign franchise operations.

During fiscal 1995, the Company was awarded new state logo sign franchises
in the following four states: Georgia, Minnesota, South Carolina and Virginia.
During fiscal 1996, the Company was awarded new contracts in New Jersey and
Michigan as well as the expansion of the existing Texas program which it
currently operates. It also acquired the Kansas and Tennessee franchises from
one of its competitors. Due to the capital needed to fund these new franchises,
the Company amended its existing bank credit agreement effective October 1995,
partially deferring short-term principal payments. In December 1995, the Company
entered into a $15 million reducing credit line with its bank group. This line
may only be used to finance the cost of logo sign franchises awarded to the
Company after October 31, 1995. As of July 31, 1996, the Company had borrowed
approximately $9.5 million to finance the cost of these logo sign franchises. In
addition, the Company is currently negotiating with its existing lenders the
terms of the New Credit Agreement, which would increase the amount of the bank
loan commitment to the Company to $225 million and would replace the Existing
Credit Agreement.

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 Existing Notes. Simultaneously with the sale of the Existing 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 line of
credit has recently been amended to provide for borrowings of up to $50 million.
The majority of the net proceeds from the issuance of Existing Notes was
utilized to extinguish existing variable rate debt prior to maturity and pay
related expenses. See "Description of Other Indebtedness -- Existing Notes." On
October 17, 1996, the Company commenced a cash Tender Offer for all of the
Existing Notes. See "The Transactions -- The Tender Offer."

The Company expects to pursue a policy of continued growth through
acquisitions. In this regard, the Company recently acquired FKM for an aggregate
cash purchase price of $40 million with borrowings under the Existing Credit
Agreement and acquired logo sign franchises in Kansas and Tennessee for an
aggregate cash purchase price of $1.4 million. Since July 31, 1996, the Company
has also acquired outdoor advertising properties for an aggregate cash cost of
approximately $12.2 million. Furthermore, the Company has executed agreements to
purchase an additional outdoor advertising company for an aggregate cash
purchase price of approximately $60 million, two additional logo sign franchises
for approximately $3.8 million in cash and certain transit advertising displays
for approximately $1.1 million in cash. In addition, the Company has executed a
letter of intent to acquire the assets of an additional outdoor advertising
company at a cash purchase price of approximately $75 million. The Company
intends to finance its acquisition activities from external sources, including
the proceeds of this Offering, the proceeds of the Note Offering and borrowings
under the New Credit Agreement. There can be no assurance, however, that the
Company will enter into the New Credit Agreement. See "The Transactions."

The Company believes that internally generated funds and funds available
for borrowing under its bank credit facilities will be sufficient for the
foreseeable future to satisfy all debt service obligations and to finance its
current operations.

INFLATION

In the last three years, inflation has not had a significant impact on the
Company.

SEASONALITY

The Company's revenues and operating results have exhibited some degree of
seasonality in past periods. Typically, the Company experiences its strongest
financial performance in the fourth fiscal quarter and its lowest revenues in
the first fiscal quarter. The Company expects this trend to continue in the
future. Because a

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<PAGE> 41

significant portion of the Company's expenses are fixed, a reduction in revenues
in any quarter is likely to result in a period to period decline in operating
performance and net earnings.

NEW ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board has issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," which established a new accounting principle for accounting for
the impairment of certain loans, certain investments in debt and equity
securities, long-lived assets that will be held and used including certain
identifiable intangibles and goodwill related to those assets and long-lived
assets and certain identifiable intangibles to be disposed of. This statement is
effective for fiscal years beginning after December 15, 1995. While the Company
has not completed its evaluation of the impact that will result from adopting
this statement, it does not believe that adoption of the statement will have a
significant impact on the Company's financial position and results of
operations.

The Financial Accounting Standards Board also issued SFAS No. 123,
"Accounting for Stock Based Compensation," effective also for fiscal years
beginning after December 15, 1995. The new statement encourages, but does not
require, companies to measure stock-based compensation cost using a fair value
method, rather than the intrinsic value method prescribed by the Accounting
Principles Board (APB) Opinion No. 25. Companies choosing to continue to measure
stock-based compensation using the intrinsic value method must disclose on a pro
forma basis net earnings per share as if the fair value method were used.
Management is currently evaluating the requirements of SFAS No. 123. Management
does not believe that SFAS No. 123 will have a material impact on operating
income.

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<PAGE> 42

BUSINESS

GENERAL

Lamar Advertising Company is one of the largest and most experienced owners
and operators of outdoor advertising structures in the United States. It
conducts a business that has operated under the Lamar name since 1902. As of
September 30, 1996, the Company operated approximately 24,000 outdoor
advertising displays in 13 southeastern, midwestern and mid-Atlantic states.
After giving effect to the acquisition of FKM and assuming consummation of the
acquisition of Outdoor East, the Company will operate approximately 29,000
outdoor advertising displays in 14 states. In each of the Company's existing 36
primary markets, the Company believes that it is the only full-service outdoor
advertising company serving such markets. The Company also operates the largest
logo sign business in the United States. Logo signs are erected pursuant to
state-awarded franchises on public rights-of-way near highway exits and deliver
brand name information on available gas, food, lodging and camping services. The
Company currently operates logo sign franchises in 15 of the 21 states which
have a privatized logo sign program, was awarded the logo sign franchise for the
state of Florida in November 1996, and in October 1996 was selected to operate a
tourism signing franchise for the province of Ontario, Canada. In addition, the
Company has recently entered into an agreement to acquire the existing logo sign
franchises for the states of Kentucky and Nevada. As of September 30, 1996, the
Company maintained over 22,000 logo sign structures containing over 51,000 logo
advertising displays under these franchises. The Company has recently expanded
into the transit advertising business through the operation of displays on bus
shelters, benches and buses in 8 of its 36 primary markets and several other
markets in the state of South Carolina. For the fiscal year ended October 31,
1995, the Company reported net revenues and EBITDA of $102.4 million and $41.0
million, respectively. Assuming all of the Transactions were consummated, the
Company's net revenues and EBITDA for the twelve months ended July 31, 1996,
would have been $133.4 million and $54.1 million, respectively.

INDUSTRY OVERVIEW

Outdoor Advertising

The outdoor advertising industry generated total revenues of approximately
$1.8 billion in 1995, or approximately 1.1% of the total advertising
expenditures in the United States, according to recent estimates by the OAAA.
This represents growth of approximately 8.2% over estimated total 1994 revenues
and compares favorably to the growth of total U.S. advertising expenditures of
approximately 7.7% during the same period. Outdoor advertising offers repetitive
impact and a relatively low cost-per-thousand impressions (a standard
measurement of the cost-effectiveness of an advertising medium) compared to
broadcast media, newspapers,

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<PAGE> 43

magazines and direct mail marketing, making it attractive to both local
businesses targeting a specific geographic area or set of demographic
characteristics and national advertisers seeking mass market support. Over the
past 25 years, outdoor advertising industry revenues have grown from $0.3
billion in 1971 to $1.83 billion in 1995, representing a compound annual growth
rate of 8.0%. According to OAAA, in eleven of the last twenty years, outdoor
advertising revenue growth exceeded total advertising revenue growth. The
Company believes that this revenue growth is primarily the result of long term
contracts that are generally renewable, a broadening client mix, the increased
use of vinyl and computer printing and acquisition opportunities.

Advertisers purchase outdoor advertising for a variety of reasons. Outdoor
advertising is a highly targeted medium that can be used to concentrate on a
particular geographic location or demographic group. In the case of local
businesses such as hotels, restaurants, service stations and other roadside
businesses, the use of outdoor advertising generates a message that reaches
potential customers close to the point of sale and provides ready directional
information. Similarly, national advertisers often use outdoor advertising when
test marketing a product because of the medium's ability to reach a broad
audience in a specific market. In addition, outdoor advertising is attractive
because of its constant repetition and comparatively low cost-per-thousand
impressions as compared to broadcast media, magazines, newspapers and direct
mail marketing. As a result, advertisers desiring to build brand awareness and
develop mass-market support often find outdoor advertising effective in
generating high visibility in a cost-effective manner. Outdoor advertising is
also often combined with other media to reinforce messages being provided to
consumers.

Outdoor advertising, which began in the late 19th century when advertising
"bills" were pasted or "posted" on rented wooden boards, has evolved over the
years to its present form with two types of standardized displays -- posters in
standard and junior sizes and more permanent fixed and rotary bulletins. The
outdoor advertising industry continues to evolve as a result of a number of
factors. The category of out-of-home advertising (advertising transmitted other
than through the print and broadcast media) now includes more than just
traditional billboard and roadside displays. The use of displays in shopping
centers, malls, airports, stadiums, movie theaters and supermarkets has
expanded, and the presence of advertising on subways, buses, taxicabs and
transit shelters is now commonplace. In addition, while tobacco product
companies, historically the largest users of outdoor advertising, have reduced
their reliance on the medium, the outdoor advertising industry has continued to
grow through increasing visibility and attractiveness to local advertisers and
national retail and consumer products companies. Also, advances in production
technology, such as computer printing, vinyl advertising copy and improved
lighting techniques, have facilitated a more creative and effective use of the
medium and a more durable product. These technological improvements also permit
outdoor advertising companies to respond more promptly to customer needs,
operate more efficiently and make greater use of advertising copy used in other
print media, thus providing advertisers the opportunity to present a unified
campaign. Finally, the outdoor advertising industry has benefitted from the
increase in automobile travel time for business and leisure due to increased
highway congestion and the movement of businesses and residences from cities to
outlying suburbs. A study recently published by the Office of Highway
Information Management of the Federal Highway Administration indicated that,
during the period from 1983 to 1990, licensed drivers in the United States
increased by 11%, vehicles owned increased by 15%, the number of vehicle trips
increased by 25% and vehicle miles increased by 40%. The Company believes that
these trends demonstrate that consumer exposure to existing billboard structures
also increased during this period.

According to media publications, the top ten categories of business ranked
by outdoor advertising expenditures for 1995 were entertainment and amusements,
tobacco products, retail establishments, business and consumer services,
automotive, travel and hotels, publishing and media, beer and wine, insurance
and real estate, and drugs and remedies. The Company's sales by category of
business is described under "Company Operations" below.

The outdoor advertising industry is comprised of several large outdoor
advertising and media companies with operations in multiple markets, as well as
many smaller and local companies operating a limited number of displays in a
single or a few local markets. The OAAA estimates that there are approximately
1,000 companies in the industry operating a total of approximately 396,000
displays. There has been a trend toward

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<PAGE> 44

consolidation in the outdoor advertising industry in recent years and the
Company expects this trend to continue.

Logo Signs

Throughout the 1970's and 1980's many states developed logo sign programs
using state and federal highway matching dollars. Logo signs provide brand name
information on available gas, food, lodging and camping services near highway
exits. Brand name advertising display plates are posted on logo sign structures
to provide this information to highway travellers. In 1985, Minnesota became the
first state to privatize its logo sign program by contracting with a private
firm for the construction, marketing, administration and maintenance of logo
signs in lieu of using government resources. Since then 21 other states have
awarded contracts for privatized logo sign programs, and several others are
considering such privatization programs.

Conversion of state-run logo sign programs to privately owned and operated
programs is attractive to state governments, in part because of the efficiencies
offered by private contractors.

Transit

A relatively new opportunity within the out-of-home advertising industry is
transit advertising. Increasing numbers of local governments are providing
transit shelters and benches to enhance the service and image of local transit
systems. New government regulations pertaining to the Americans with
Disabilities Act, as well as demands by the public, are creating a need for bus
shelter locations which are practical and accessible by handicapped individuals.
These locations, as well as buses, are increasingly being used for out-of-home
advertising.

As with state-awarded logo sign franchises, municipalities have begun to
issue contracts for transit displays on bus shelters, benches and buses to
private enterprises. Under these contracts, the private party constructs the
shelters or benches, which it can use for advertising displays. In some cases,
the rights for bus displays are also included under the contract. The primary
benefits of privatizing transit advertising are the avoidance of capital
expenditures by the municipality, the prospect of additional revenue for the
municipality, the consistent quality that a coordinated transit program can
provide and the benefits of regular cleaning and maintenance undertaken by
private enterprises.

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<PAGE> 45

MARKETS

The following table sets forth certain information regarding the Company's
existing primary outdoor advertising markets and the assets proposed to be
acquired in the acquisition of Outdoor East.

OUTDOOR ADVERTISING

EXISTING OUTDOOR ADVERTISING MARKETS(1)

<TABLE>
<CAPTION>
NUMBER OF DISPLAYS(4) NET
--------------------- REVENUES(5)
STATE/PRIMARY MARKET MARKET RANK(3) BULLETINS POSTERS --------------
- ---------------------------------------------------------- -------------- --------- ------- (IN THOUSANDS)
<S> <C> <C> <C> <C>
LOUISIANA
Baton Rouge............................................. 81 419 684 $ 7,280
Shreveport.............................................. 126 268 730 3,389
Lafayette............................................... 97 154 353 2,035
Lake Charles............................................ 202 189 285 1,915
Monroe.................................................. 226 123 508 1,534
Alexandria.............................................. 198 49 224 757
Houma(2)................................................ -- 40 164 --
----- ------ --------
Total............................................. 1,242 2,948 16,910
TENNESSEE
Nashville............................................... 44 326 1,174 7,488
Knoxville............................................... 69 694 896 7,171
Clarksville............................................. -- 98 357 1,533
----- ------ --------
Total............................................. 1,118 2,427 16,192
FLORIDA
Pensacola............................................... 125 250 662 $ 3,113
Lakeland................................................ 104 554 372 2,875(6)
Panama City............................................. 225 268 470 2,262(6)
Fort Myers.............................................. 77 133 297 2,153
Tallahassee............................................. 167 121 302 1,908
Fort Walton............................................. 207 157 220 1,643(6)
Daytona Beach........................................... 93 54 339 1,456
----- ------ --------
Total............................................. 1,537 2,662 15,410
ALABAMA
Mobile.................................................. 84 381 630 4,755
Montgomery.............................................. 142 248 499 3,598
----- ------ --------
Total............................................. 629 1,129 8,353
TEXAS
Brownsville............................................. 63 204 873 2,577
Beaumont................................................ 127 204 308 2,165
Corpus Christi.......................................... 128 195 519 1,707(6)
Wichita Falls........................................... 235 89 165 902
Laredo.................................................. 216 87 373 868(6)
----- ------ --------
Total............................................. 779 2,238 8,219
MISSISSIPPI
Jackson................................................. 118 268 698 4,420
Gulfport................................................ 134 207 559 2,953
----- ------ --------
Total........................................... 475 1,257 7,373
GEORGIA
Savannah................................................ 154 344 604 3,307
Augusta................................................. 107 163 471 2,482
Albany.................................................. 243 106 383 1,109(6)
----- ------ --------
Total............................................. 613 1,458 6,898
</TABLE>

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<PAGE> 46

LOGO SIGN FRANCHISES

The following table sets forth certain information regarding the Company's
logo business operations. As of September 30, 1996, the Company operated 51,140
logo advertising displays.

- ---------------
(1) Includes additional or outlying markets served by the office in the
applicable market.
(2) Houma was established as a separate primary market in fiscal 1995, and,
therefore, net revenues are not included.

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<PAGE> 47

(3) Indicates the Spring 1996 Arbitron Radio Metro Market ranking within which
the office is located, as determined by The Arbitron Company. The Company
believes that Metro Market ranking, which ranks, according to population of
persons 12 years or older, the largest 263 markets in the U.S., is a
standard measure of market size used by the media industry. Where no market
ranking is shown, such market is not ranked by Arbitron.
(4) The two standardized types of industry displays are bulletins and posters.
See "Business -- Company Operations." The display count is as of October
31, 1995 pro forma for acquisitions completed within the last twelve
months.
(5) Except as otherwise noted, represents net revenues for fiscal year ended
October 31, 1995 attributable to each outdoor advertising market. These
revenues, together with logo sign and transit advertising revenues and
production revenue, comprise outdoor advertising net revenues shown in the
Company's consolidated statements of earnings (loss).
(6) Reflects net revenues for the most recently completed applicable fiscal
year with respect to acquisitions completed by the Company since July 31,
1996. See "The Transactions -- Recent Acquisition Activity -- Completed
Acquisitions."

(8) Net revenues for specific markets proposed to be acquired in the state of
Virginia are not available.

(9) Franchise operated by a 66.7% owned partnership.

(10) Franchise operated by a 95.0% owned partnership.

(11) The Company was recently awarded the New Jersey franchise, and,
accordingly, no logo signs had been erected as of September 30, 1996.

BUSINESS STRATEGY

OUTDOOR ADVERTISING

The Company's overall business strategy is to be the leading provider of
outdoor advertising in each of the markets it serves, with an emphasis on
markets with a population ranking between 50 and 250. This strategy includes the
following elements:

Operating Strategy

Small and Medium-Sized Market Focus. The Company's leading position in each
of its 36 primary outdoor advertising markets is a result of a successful
operating strategy dedicated to growth and acquisitions primarily within the
target range of markets having a population ranking between 50 and 250.
Management believes that operating in these markets provides certain advantages,
including the benefits of a diverse and reliable mix of local advertisers,
geographic diversification and an ability to package inventory effectively.

High Quality Local Sales and Service. The Company identifies and closely
monitors the needs of its customers and seeks to provide them with quality
advertising products at a lower cost than competitive media. The Company
believes it has a reputation for providing excellent customer service and
quality outdoor advertising space and displays.

The Company's 118-person sales force is supported by 36 full-service
offices. In each primary market, the Company has recruited and trained a skilled
sales force, placing an emphasis on market research and use of artistic
creativity. Each salesperson is compensated under a performance-based
compensation system and supervised by a local sales manager executing a
coordinated marketing plan. Art departments assist local customers in the
development and production of creative, effective advertisements. The Company
believes repeat sales are evidence that the Company delivers quality products
and services.

Centralized Control/Decentralized Management. Management believes that, in
its existing 36 primary markets, the Company is the only full-service outdoor
advertising company offering a full complement of outdoor advertising services
coupled with local production facilities, management and account executives.
Local offices operate in defined geographic areas and function essentially as
independent business units, consistent with senior management's philosophy that
a decentralized organization is more responsive to particular local market
demands.

The Company maintains centralized accounting and financial control over its
local operations, but local managers are responsible for the day-to-day
operations in each local market and are compensated according to that market's
financial performance. Each local manager reports to one of five regional
managers who in turn report to the Company's Chief Executive Officer. Management
believes empowering local management and sales personnel to respond to market
conditions has been a major factor in the Company's success.

46
<PAGE> 48

Effective Inventory Management. The Company believes that the local
presence of sales personnel contributes to the Company's ability to increase
occupancy rates by attracting and servicing local customers. Additionally, a
national sales office at corporate headquarters allows the Company to package
inventory effectively to take advantage of national advertising campaigns in the
Company's markets. The Company's inventory is managed by state-of-the-art
mapping, charting and accounting software.

GROWTH STRATEGY

Internal Growth. Within its existing markets, the Company enhances revenue
and cash flow growth by employing highly targeted local marketing efforts to
improve display occupancy rates and by selectively increasing advertising rates.
This strategy is facilitated through its local sales and service offices which
allow management to respond quickly to the demands of its local customer base.
In addition, the Company routinely invests in upgrading its existing structures
and constructing new display faces in order to provide quality service to its
current customers and to attract new advertisers.

Acquisitions. Aggressive internal growth is enhanced by focused
acquisitions in small to medium-sized markets, resulting in increased operating
efficiencies, greater geographic diversification and increased market
penetration. The Company has demonstrated its ability to grow successfully
through acquisitions, having completed over 80 acquisitions since 1983. In
addition to acquiring positions in new markets, the Company purchases smaller
outdoor advertising properties within existing or contiguous markets.
Acquisitions offer opportunities for inter-market cross-selling and the
opportunity to centralize and combine accounting and administrative functions,
thereby achieving economies of scale.

The table below sets forth certain information regarding acquisitions which
the Company has made or has agreed to make subsequent to the fiscal year ended
October 31, 1993:
<TABLE>
<CAPTION>
YEAR MARKET BULLETINS POSTERS
- ---- -------------------- --------- -------
<C> <S> <C> <C>
1994 Panama City, FL 214 317
1994 Daytona Beach, FL(1) 56 349
1994 Shreveport, LA(1) 271 760
1994 Savannah, GA(1) 357 621
1994 Beaumont, TX(1) 202 302
1994 Fort Myers, FL(1) 122 289
1994 Clarksville, TN(1) 112 325
1994 Lakeland, FL(1) 214 357
1994 Augusta, GA 8 69
1994 Pensacola, FL 49 218
1994 Montgomery, AL 76 33
1994 Beaumont, TX 40 0
1995 Richmond, VA 184 0
1995 Nashville, TN 0 254
1995 Nashville, TN 317 0
1995 Roanoke, VA 129 0
1995 Augusta, GA 98 0

<CAPTION>
YEAR MARKET BULLETINS POSTERS
- ---- -------------------- --------- -------
<C> <S> <C> <C>
1996 Lakeland, FL 249 0
1996 Corpus Christi, TX 195 519
1996 Laredo, TX 87 373
1996 Panama City, FL 45 164
1996 Fort Walton, FL 6 0
1996 Albany, GA 14 112
1996 Lakeland, FL 121 0
1996 Roanoke, VA 50 0
1996 Youngstown, OH(2) 125 534
1996 PA highways(2)(4) 553 0
1996 Valdosta, GA(3) 338 181
1996 Columbia, SC(3) 338 571
1996 Dublin, VA(3) 99 221
1996 Hopewell, VA(3) 56 291
1996 Harrisonburg, VA(3) 9 123
1996 Bluefield, WV(3) 306 281
1996 NC highways(3)(4) 924 112
</TABLE>

- ---------------
(1) Acquired on May 1, 1994 from LHC, which prior to such date was a 49% owned
and managed subsidiary of the Company.

(2) Acquired from FKM on November 1, 1996. See "The Transactions -- Completed
Acquisitions -- The FKM Acquisition."

(3) Proposed to be acquired from Outdoor East. See "The Transactions -- Recent
Acquisition Activity -- The Outdoor East Acquisition."
(4) These acquisitions relate to displays located along interstate highways and
other primary roads throughout the states of Pennsylvania and North Carolina
and which are not located within one of the Company's existing markets.

The Company believes that there will be future opportunities for
implementing the Company's acquisition strategy given the industry's
fragmentation and current consolidation trends. Additionally, the small to
medium-sized markets which fit the Company's growth strategy offer a large
number of potential acquisition opportunities.

47
<PAGE> 49

Logo Signs

The Company entered the business of logo sign advertising in 1988. The
Company is now the largest provider of logo sign services in the United States,
having been awarded 16 of the 22 privatized state logo sign franchises awarded
to date and having entered into an agreement to acquire two additional
franchises. The Company's strategy is to be the leading logo sign provider in
the country. The Company was also selected to operate the tourism signing
franchise for the province of Ontario, Canada in October 1996. The Company is
currently negotiating a definitive agreement with the province with respect to
the franchise, which the Company expects will be executed by December 31, 1996.

Adopting many of the decentralized operational strategies of the outdoor
advertising division, the Company's logo sign division maintains contacts and
local sales offices in each of the states in which it operates. Relationships
with customers are developed and maintained at the state level; accounting, MIS
and certain administrative functions are centralized at the Company's
headquarters.

In competing for state-awarded logo sign franchises, the Company seeks to
form strategic alliances with premier signing contractors in order to present to
state highway departments the combined benefits of entities with substantial
local presence and national resources. As the industry leader, the Company has
gained significant operating experience and compiled a database of information
it believes is unequalled in this industry. The Company shares its knowledge and
database information with state highway departments initiating new logo sign
programs, and believes this interaction provides significant advantages when
seeking new logo sign franchises.

After securing a franchise, the Company generally contracts with an
independent construction firm for the erection and maintenance of the logo sign
structures in order to avoid the expense of staffing and maintaining a
construction presence. The Company then processes orders for logo sign services
through its corporate staff and a small sales force in the state.

The Company maximizes participation and customer satisfaction through the
use of market surveys, coupled with a customer focused sales program to
potential logo sign advertisers. Employing these methods, in Mississippi, for
example, the revenue from logo sign advertising displays increased from $263,100
for the twelve months prior to the Company receiving the state's logo sign
franchise to $621,000 for the twelve months following the Company being awarded
such franchise. This revenue increase was the result of a 57% increase in the
number of logo advertising displays and an increase in advertising rates during
the twelve months following receipt of the franchise.

The Company believes its market-leading position in the logo sign industry
will continue to increase as additional states privatize their logo sign
programs and recognize the track record and core competency of the Company in
building and servicing logo sign programs. The Company anticipates bidding on
the logo sign franchise in an additional state during 1996. The Company plans to
pursue additional logo sign franchises, through both new franchise awards and,
possibly, the acquisition of other logo sign franchise operators. Logo sign
opportunities arise periodically, both from states initiating new logo sign
programs and states converting from government owned and operated programs to
privately owned and operated programs. Furthermore, the Company plans to pursue
tourism signing programs in Canada and is seeking to expand into other state-
authorized signage programs, such as those involving directional signs providing
tourist information.

Transit and Other

The Company has recently expanded into the transit advertising business
through the operation of displays on bus shelters, benches and buses in eight of
its 36 primary markets and other markets throughout the state of South Carolina.
The Company plans to continue pursuing transit advertising opportunities that
arise in its primary markets and to expand into other markets.

With the growth in wireless communication, particularly the buildout of
personal communications services systems following the recent FCC allocation of
radio spectrum, the Company is exploring ways to realize additional revenue by
contracting with communications providers for use of the Company's billboard

48
<PAGE> 50

structures to attach transmission and reception devices. The Company has
agreements with two of the largest potential wireless communication service
providers regarding possible future use of its billboards.

COMPANY OPERATIONS

Outdoor Advertising

Sales and Service

The Company conducts its outdoor advertising operations through its 36
local offices. Local offices operate in defined geographic areas and function
essentially as independent business units, consistent with senior management's
philosophy that a decentralized organization is more responsive to particular
local market demands and provides greater incentives to employees. The Company's
management policy is one of centralized accounting and financial control coupled
with decentralized sales and production. Local managers in each of the Company's
primary markets are responsible for the day-to-day operations of their outdoor
office and are compensated according to the Company's financial performance in
that market. Each local manager reports to one of five regional managers who in
turn report to the Company's Chief Executive Officer.

The following is a list of the Company's regional managers and their
experience with the Company and in the outdoor advertising industry as of
September 30, 1996:

<TABLE>
<CAPTION>
YEARS YEARS
WITH IN
NAME REGION COMPANY INDUSTRY
---------------------------------------- ------------------- ------- --------
<S> <C> <C> <C>
Gerald H. Marchand...................... Baton Rouge Region 38 38
Robert E. Campbell...................... Central Region 24 24
Phillip C. Durant....................... Eastern Region 19 21
Thomas F. Sirmon........................ Mobile Region 17 17
Myron A. LaBorde........................ Florida Region 25 25
</TABLE>

The Company's regional managers have been with the Company, on average, for
25 years. The Company's local managers have been with the Company, on average,
for 14 years and have worked in the industry, on average, for 11 years.

Inventory

The Company operates the following types of outdoor advertising displays:

Bulletins generally are 14 feet high and 48 feet wide (672 square
feet) and consist of panels on which advertising copy is displayed. The
advertising copy is either handpainted onto the panels at the Company's
facilities in accordance with design specifications supplied by the
advertiser and attached to the outdoor advertising structure, or printed
with computer-generated graphics on a single sheet of vinyl that is
"wrapped" around the structure. On occasion, to attract more attention,
some of the panels may extend beyond the linear edges of the display face
and may include three-dimensional embellishments. Because of their greater
impact and higher cost, bulletins are usually located on major highways.

Standardized posters generally are 12 feet high by 25 feet wide (300
square feet) and are the most common type of billboard. Advertising copy
for these posters consists of lithographed or silk-screened paper sheets
supplied by the advertiser that are pasted and applied like wallpaper to
the face of the display, or single sheets of vinyl with computer-generated
advertising copy that are wrapped around the structure. Standardized
posters are concentrated on major traffic arteries.

Junior posters usually are 6 feet high by 12 feet wide (72 square
feet). Displays are prepared and mounted in the same manner as standardized
posters, except that vinyl sheets are not typically used on junior posters.
Most junior posters, because of their smaller size, are concentrated on
city streets and target pedestrian traffic.

49
<PAGE> 51

For the Company's fiscal year ended October 31, 1995, approximately 55% of
the Company's outdoor advertising net revenues were derived from bulletin sales
and 45% from poster sales. Over the same period, bulletin and poster occupancy
averaged approximately 82% and 77%, respectively. The Company regularly donates
unoccupied display space for use by charitable and civic organizations.

The physical structures are typically owned by the Company and are built on
locations the Company either owns or leases. In each local office one employee
typically performs site leasing activities for the markets served by that
office. See "-- Company Operations -- Facilities."

Bulletin space is generally sold as individually selected displays which
remain in one location, usually an interstate highway or other main road, for
the duration of the advertising contract. Bulletins may also be sold as part of
a rotary plan where advertising copy is periodically rotated from one location
to another within a particular market. Poster space is generally sold in
packages called "showings," which comprise a given number of displays in a
market area. Posters provide advertisers with access either to a specified
percentage of the general population or to a specific targeted audience.
Displays making up a showing are placed in well-traveled areas and are
distributed so as to reach a wide audience in a particular market.

Production

The Company's production staff in each of its existing 35 primary markets
performs the full range of activities required to create and install outdoor
advertising in all of its markets. Production work includes creating the
advertising copy design and layout, painting the design or coordinating its
printing and installing the designs on displays. The Company provides its
production services to local advertisers and to advertisers that are not
represented by advertising agencies, since national advertisers represented by
advertising agencies often use preprinted designs that require only
installation. The Company's creative and production personnel typically develop
new designs or adopt copy from other media for use on billboards. The Company's
artists also often assist in the development of marketing presentations,
demonstrations and strategies to attract new advertisers.

With the increased use of vinyl and pre-printed advertising copy furnished
to the outdoor advertising company by the advertiser or its agency, outdoor
advertising companies require less labor-intensive production work. In addition,
increased use of vinyl and preprinted copy is also attracting more customers to
the outdoor advertising medium. The Company believes that this trend over time
will reduce operating expenses associated with production activities.

50
<PAGE> 52

Categories of Business

The following table sets forth the top ten categories of business from
which the Company derived its outdoor advertising revenues for fiscal 1995 and
the respective percentages of such revenue. These business categories accounted
for approximately 73.6% of the Company's total outdoor advertising net revenues
in the fiscal year ended October 31, 1995. No one advertiser accounted for more
than 3.0% of the Company's total outdoor advertising net revenues in that
period.

<TABLE>
<CAPTION>
PERCENTAGE
NET ADVERTISING
CATEGORIES REVENUES
--------------------------------------------------------------- ---------------
<S> <C>
Restaurants.................................................... 14.9%
Retail establishments.......................................... 11.4
Tobacco products............................................... 9.2
Hotels and motels.............................................. 7.3
Entertainment and sports....................................... 5.9
Automotive..................................................... 5.9
Hospitals and medical care..................................... 5.1
Services....................................................... 4.8
Media.......................................................... 4.6
Financial institutions......................................... 4.5
-----
Total................................................ 73.6%
=====
</TABLE>

Beginning in 1992, the leading tobacco companies substantially reduced
their domestic advertising expenditures in response to societal and governmental
pressure and other factors. Because tobacco advertisers tend to occupy displays
in highly desirable locations, the Company historically has been able to attract
substitute advertising for space which has become unoccupied as a result of
reduced tobacco product advertisements, and management believes that the Company
will continue to be able to attract such substitute advertising should tobacco
advertisers further reduce their spending in the future.

Logo Signs

The Company is the largest provider of logo sign services in the United
States and operates over 22,000 logo sign structures containing over 51,000 logo
advertising displays. The Company has been awarded exclusive franchises to erect
and operate logo signs in the states of Florida, Georgia, Michigan, Mississippi,
Nebraska, New Jersey, Ohio, Oklahoma, South Carolina, Texas, Utah, Virginia,
through a 66.7% owned partnership in the state of Missouri and through a 95.0%
owned partnership in the state of Minnesota. In addition, the Company has
recently acquired the logo sign franchises in Tennessee and Kansas and has
entered into an agreement to acquire the logo sign franchises in Kentucky and
Nevada. In addition, in October 1996, the Company was also selected to operate
the tourism signing franchise for the province of Ontario, Canada.

State logo sign franchises represent the exclusive contract right to erect
and operate logo signs within a state. The term of the contracts vary, but
generally range from ten to twenty years, including renewal terms. The logo sign
contracts generally provide for termination by the state prior to the end of the
term of the franchise, in most cases with compensation to be paid to the
Company. Typically, at the end of the term of the franchise, ownership of the
structures is transferred to the state without compensation to the Company. None
of the Company's logo sign franchises terminates in the next two years and only
two are subject to renewal during that period. In one of those cases, the state
authority has verbally agreed to the renewal of the term for five years. The
Company expects to be able to compete effectively for retention of franchises
when their terms expire.

The Company also designs and produces logo sign plates for customers
throughout the country, including for use in states which have not yet
privatized their logo sign programs.

51
<PAGE> 53

EMPLOYEES

The Company employed approximately 815 persons at September 30, 1996. Of
these, 44 were engaged in overall management and general administration at the
Company's management headquarters and the remainder were employed in the
Company's operating offices. Of these, approximately 110 were direct sales and
marketing personnel.

The Company has three local offices covered by collective bargaining
agreements, consisting of painters, billposters and construction personnel. A
union is organized in one other local office, but this union is currently
operating without a collective bargaining agreement. The Company believes that
its relations with its employees, including its 26 unionized employees, are
good, and the Company has never experienced a strike or other labor dispute.

The Company believes its employee retention record evidences its good
employee relations. The average tenure for the Company's employees is six years.
The Company offers most employees a range of benefits including a profit
sharing/401(k) plan and life, health and dental insurance.

FACILITIES

The Company's 53,500 square foot management headquarters is located in
suburban Baton Rouge, Louisiana. The Company occupies approximately 30% of the
space in this facility and leases the remaining space. The Company owns 26 local
operating facilities with front office administration and sales office space
connected to back-shop poster and bulletin production space, and leases an
additional 24 operating facilities at an aggregate lease expense in 1995 of
approximately $775,000.

The Company owns approximately 450 parcels of property beneath outdoor
structures. As of October 31, 1995, the Company had approximately 12,000 active
outdoor site leases accounting for a total annual lease expense of $14.2
million. This amount represented 15.4% of total net outdoor advertising revenues
for that period, which is consistent with the Company's historical lease expense
experience. The Company's leases are for varying terms ranging from
month-to-month to in some cases a term of over ten years, and many provide the
Company with renewal options. There is no significant concentration of displays
under any one lease or subject to negotiation with any one landlord. The Company
believes that an important part of its management activity is to manage its
lease portfolio and negotiate suitable lease renewals and extensions.

COMPETITION

Outdoor Advertising

The Company competes in each of its markets with other outdoor advertisers
as well as other media, including broadcast and cable television, radio, print
media and direct mail marketers. In addition, the Company also competes with a
wide variety of out-of-home media, including advertising in shopping centers,
malls, airports, stadiums, movie theaters and supermarkets, as well as on taxis,
trains and buses. Advertisers compare relative costs of available media and
cost-per-thousand impressions, particularly when delivering a message to
customers with distinct demographic characteristics. In competing with other
media, outdoor advertising relies on its relative cost efficiency and its
ability to reach a broad segment of the population in a specific market or to
target a particular geographic area or population with a particular set of
demographic characteristics within that market.

The outdoor advertising industry is highly fragmented, consisting of
several large outdoor advertising and media companies with operations in
multiple markets as well as smaller and local companies operating a limited
number of structures in single or a few local markets. Although some
consolidation has occurred over the past few years, according to the OAAA there
are approximately 1,000 companies in the outdoor advertising industry operating
approximately 396,000 billboard displays. In several of its markets, the Company
encounters direct competition from other major outdoor media companies,
including Outdoor Systems, Inc., Eller Media, Inc. (formerly Patrick Media
Group) and 3M National Advertising Co. (a division of Minnesota Mining and
Manufacturing Company), each of which has a larger national network and greater
total resources than the Company. The Company believes that its strong emphasis
on sales and

52
<PAGE> 54

customer service and its position as a major provider of advertising services in
each of its primary markets enables it to compete effectively with the other
outdoor advertising companies, as well as other media, within those markets. See
"Risk Factors -- Competition."

Logo Signs

The Company faces competition in obtaining new logo sign franchises and in
bidding for renewals of expiring franchises. The Company faces competition from
four other national providers of logo signs in seeking logo franchises. In
addition, local companies within each of the states which solicit bids will
compete against the Company in the open-bid process. Competition from these
sources is also encountered at the end of each contract period. The Company
believes its operations model, which includes local sales offices, comprehensive
databases of information and strategic alliances and its knowledge of the
industry, should provide a competitive advantage in pursuing future franchises.

In marketing logo signs to advertisers, the Company competes with other
forms of out-of-home advertising. The Company believes, however, that logo sign
advertising offers an effective, low-cost directional advertising service, which
makes it attractive to potential advertisers.

REGULATION

Outdoor advertising is subject to governmental regulation at the federal,
state and local levels. Federal law, principally the Highway Beautification Act
of 1965 (the "HBA") regulates outdoor advertising on federally aided primary and
interstate highways. The HBA requires, as a condition to federal highway
assistance, states to restrict billboards on such highways to commercial and
industrial areas, and requires certain additional size, spacing and other
limitations. All states have passed state billboard control statutes and
regulations at least as restrictive as the federal requirements, including
removal at the owner's expense and without compensation of any illegal signs on
such highways. The Company believes that the number of its billboards that may
be subject to removal as illegal is immaterial. No state in which the Company
operates has banned billboards, but some have adopted standards more restrictive
than the federal requirements. Municipal and county governments generally also
have sign controls as part of their zoning laws. Some local governments prohibit
construction of new billboards and some allow new construction only to replace
existing structures, although most allow construction of billboards subject to
restrictions on zones, size, spacing and height.

Federal law does not require removal of existing lawful billboards, but
does require payment of compensation if a state or political subdivision compels
the removal of a lawful billboard along a federally aided primary or interstate
highway. State governments have purchased and removed legal billboards for
beautification in the past, using federal funding for transportation enhancement
programs, and may do so in the future. Governmental authorities from time to
time use the power of eminent domain to remove billboards. Thus far, the Company
has been able to obtain satisfactory compensation for any of its billboards
purchased or removed as a result of governmental action, although there is no
assurance that this will continue to be the case in the future. Local
governments do not generally purchase billboards for beautification, but some
have attempted to force removal of legal but nonconforming billboards
(billboards which conformed with applicable zoning regulations when built but
which do not conform to current zoning regulations) after a period of years
under a concept called "amortization," by which the governmental body asserts
that just compensation is earned by continued operation over time. Although
there is some question as to the legality of amortization under federal and many
state laws, amortization has been upheld in some instances. The Company
generally has been successful in negotiating settlements with applicable
localities for billboards required to be removed. Restrictive regulations also
limit the Company's ability to rebuild or replace nonconforming billboards.

In recent years, bills have been introduced in Congress that would affect
billboard advertising of tobacco or alcohol products. No bills have become law
except those requiring the familiar health hazard warnings appearing on
cigarette packages and advertisements. It is uncertain whether such regulation
will be enacted in the future, what such regulation might provide or what impact
such regulation might have on the Company's business. Federal law generally
prevents state or local restrictions on the content of billboard advertisements.

53
<PAGE> 55

In August 1996, President Clinton signed an executive order adopting rules
proposed by the U.S. Food and Drug Administration regulating the advertising of
certain tobacco products. These rules, which will become effective on August 22,
1997, prohibit the placement of tobacco products advertising within 1,000 feet
of playgrounds and primary and secondary schools and limit such advertising to a
format consisting of black text on a white background. Certain advertising
industry and tobacco industry organizations have filed lawsuits challenging
these regulations, seeking an injunction to keep them from going into effect. In
addition, some members of Congress have indicated that they may sponsor
legislation to prevent the regulations from going into effect. If these
regulations are not modified or nullified by legislative or judicial action, the
Company's outdoor advertising revenues could be adversely affected.

To date, however, regulations in the Company's markets have not materially
adversely affected its operations. However, the outdoor advertising industry is
heavily regulated and at various times and in various markets can be expected to
be subject to varying degrees of regulatory pressure affecting the operation of
advertising displays. Accordingly, although the Company's experience to date is
that the regulatory environment can be managed, no assurance can be given that
existing or future laws or regulations will not materially and adversely affect
the Company.

LITIGATION

The Company from time to time is involved in litigation in the ordinary
course of business, including disputes involving advertising contracts, site
leases, employment claims and construction matters. The Company is also involved
in routine administrative and judicial proceedings regarding billboard permits,
fees and compensation for condemnations. The Company is not a party to any
lawsuit or proceeding which, in the opinion of management, is likely to have a
material adverse effect on the Company.

54
<PAGE> 56

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company as of October 1, 1996
were as follows:

<TABLE>
<CAPTION>
YEARS WITH
NAME AGE TITLE THE COMPANY
- ------------------------------ --- ------------------------------------- -----------
<S> <C> <C> <C>
Kevin P. Reilly, Jr........... 42 Chairman, President, Chief Executive 18
Officer and Director
Keith A. Istre................ 44 Chief Financial Officer, Treasurer 18
and Director
Charles W. Lamar, III......... 48 General Counsel, Secretary and 20
Director
Gerald H. Marchand............ 65 Vice President, Regional Manager of 38
Baton Rouge Region, and Director
T. Everett Stewart, Jr........ 42 President of Interstate Logos, Inc., 16
a subsidiary of the Company, and
Director
Robert E. Campbell............ 48 Vice President, Regional Manager of 24
Central Region
Phillip C. Durant............. 50 Vice President, Regional Manager of 19
Eastern Region
Myron A. LaBorde.............. 47 Vice President, Regional Manager of 25
Florida Region
Thomas F. Sirmon.............. 41 Vice President, Regional Manager of 17
Mobile Region
Robert B. Switzer............. 43 Vice President of Operations 20
Dudley W. Coates*............. 65 Director --
Jack S. Rome, Jr.*............ 48 Director --
William R. Schmidt*........... 45 Director --
</TABLE>

- ---------------

* Outside directors

Kevin P. Reilly, Jr. has served as the Company's President and Chief
Executive Officer since February 1989 and as a director of the Company since
February 1984. Mr. Reilly served as President of the Company's Outdoor Division
from 1984 to 1989. Mr. Reilly, an employee of the Company since 1978, has also
served as Assistant and General Manager of the Company's Baton Rouge Region and
Vice President and General Manager of the Louisiana Region. Mr. Reilly received
a B.A. from Harvard University in 1977.

Keith A. Istre has been Chief Financial Officer of the Company since
February 1989 and a director of the Company since February 1991. Mr. Istre
joined the Company as Controller in 1978 and became Treasurer in 1985. Prior to
joining the Company, Mr. Istre was employed by a public accounting firm in Baton
Rouge from 1975 to 1978. Mr. Istre graduated from the University of Southwestern
Louisiana in 1974 with a degree in accounting.

Charles W. Lamar, III joined the Company in 1982 as General Counsel and has
been a director of the Company since June 1973. Prior to joining the Company,
Mr. Lamar maintained his own law practice and was employed by a law firm in
Baton Rouge. Mr. Lamar received a B.A. in Philosophy from Harvard University in
1971, a M.A. in Economics from Tufts University in 1972 and a J.D. from Boston
University in 1975.

Gerald H. Marchand has been Regional Manager of the Baton Rouge Region,
which encompasses operations in Louisiana, Mississippi and Texas, since 1988 and
a director of the Company since 1978. He

55
<PAGE> 57

began his career with the Company in leasing and went on to become President of
the Outdoor Division. He has served as General Manager of the Lake Charles and
Mobile operations. Mr. Marchand received a Masters in Education from Louisiana
State University in 1955.

T. Everett Stewart, Jr. has been President of Interstate Logos, Inc. since
1988, and has recently been named a director. He served as Regional Manager of
the Company's Baton Rouge Region from 1984 to 1988. Previously, he served the
Company as Sales Manager in Montgomery and General Manager of the Monroe and
Alexandria operations. Before joining the Company in 1979, Mr. Stewart was
employed by the Lieutenant Governor of the State of Alabama and by a United
States Senator from the State of Alabama. Mr. Stewart received a B.S. in Finance
from Auburn University in 1976.

Robert E. Campbell has been Regional Manager of the Central Region, which
encompasses operations in Alabama, Colorado, Kentucky, Ohio, Texas and Virginia,
since 1983. Mr. Campbell served from 1972 to 1983 as Sales Manager of the
Company's Mobile operation and as General Manager of the Company's Midland and
Mobile operations. Mr. Campbell received a B.A. in Political Science and History
from the University of South Alabama in 1971.

Phillip C. Durant joined the Company in 1974 in Pensacola, Florida and is
currently the Regional Manager of the Eastern Region, which encompasses
operations in Tennessee and West Virginia. Previously he served as Sales Manager
in Pensacola and General Manager of Monroe, Alexandria, Lake Charles and
Lafayette, Louisiana and Nashville.

Myron A. LaBorde joined the Company in 1972 as an account executive in
Baton Rouge and is currently the Regional Manager of the Florida Region and
General Manager of the Shreveport, Louisiana operation. Previously he served as
General Manager of the Company's Lake Charles, Louisiana and Tallahassee,
Florida operations. Mr. LaBorde received a degree in Marketing from the
University of Southwestern Louisiana.

Thomas F. Sirmon has served the Company as Regional Manager of the Mobile
Region, which encompasses operations in Alabama, Florida and Georgia, since
1990. He began his career with the Company as an Account Executive in the Mobile
operation in 1979. In 1981, he was appointed General Manager in Augusta; in
1984, General Manager in Nashville; and in 1988, General Manager in Mobile. Mr.
Sirmon received a degree in Marketing from the University of South Alabama in
1978.

Robert B. Switzer has been Vice President of Operations of the Company
since 1984. In 1976, he joined the Company as Posting Superintendent in Mobile
and became Operations Manager in Pensacola. Since 1991, he has also served as
General Manager of the Pensacola operation and, since 1993, as General Manager
of the Fort Walton operation. Mr. Switzer received a B.S. in Zoology from the
University of South Florida in 1975.

Dudley W. Coates has been a director of the Company since 1973. Mr. Coates
received a Liberal Arts degree from Yale University in 1953, and, since that
time, has been an investment broker with the firm of Legg Mason, Inc.

Jack S. Rome, Jr. has been a director of the Company since 1974. Since
1988, Mr. Rome has been President of No Fault Industries, Inc., a construction
company specializing in outdoor recreational facilities. Mr. Rome has also
served as President of Jack Rome, Jr. & Associates, Inc., a management
consulting company, since October 1987. Mr. Rome served the Company in various
capacities from 1975 to 1986. Mr. Rome received his B.S. in accounting from
Southeastern Louisiana University in 1971.

William R. Schmidt became a director of the Company in 1994. He is an
Assistant Vice President for Pacific Mutual Life Insurance Company in its
Securities Department, where he has been employed since 1990. He has a B.S. in
Finance from Pennsylvania State University and an MBA from the Amos Tuck School
of Business at Dartmouth College.

Kevin P. Reilly, Jr., Charles W. Lamar, III and Robert B. Switzer are
cousins.

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<PAGE> 58

BOARD COMMITTEES

The Board of Directors has a Compensation Committee, which makes
recommendations concerning salaries for employees and consultants to the
Company, and an Audit Committee, which reviews the results of the Company's
audit and other services provided by the Company's independent auditors. The
Compensation Committee and the Audit Committee currently consist of Dudley
Coates, Jack S. Rome, Jr. and William R. Schmidt. During fiscal year 1995, the
Compensation Committee consisted of Jack S. Rome, Jr., Mary Lee Lamar Dixon and
Carolyn Sample Abshire, who were directors. Mr. Rome was employed by the Company
from 1975 to 1985.

The Executive Committee, which has authority to operate the affairs of the
Company between Board meetings, currently consists of Kevin P. Reilly, Jr.,
Gerald H. Marchand, Keith A. Istre and Charles W. Lamar, III.

BOARD COMPENSATION

All directors of the Company hold office until the next annual meeting of
stockholders of the Company or until their successors are duly elected and
qualified. Directors who are not employed by the Company receive a fee of $2,500
for each Board meeting attended and are reimbursed for travel expenses incurred
to attend Board meetings. Executive officers of the Company are elected by the
Board of Directors on an annual basis and serve at the discretion of the Board
of Directors.

EXECUTIVE COMPENSATION

The following table sets forth certain compensation information for the
Chief Executive Officer and each of the four most highly compensated executive
officers of the Company for the fiscal year ended October 31, 1995.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1)
-------------------------------------- ---- --------- -------- ------------------
<S> <C> <C> <C> <C>
Kevin P. Reilly, Jr................... 1995 120,000 200,000 5,500
President and Chief 1994 120,000 150,000 5,000
Executive Officer 1993 120,000 100,000
Gerald H. Marchand.................... 1995 106,000 156,543 50,000
Vice President, Regional 1994 106,000 197,443 50,000
Manager of Baton Rouge Region 1993 106,000 75,000
Robert E. Campbell.................... 1995 90,000 96,984 7,500
Vice President, Regional 1994 90,000 73,208 7,500
Manager of Central Region 1993 84,000 61,000
T. Everett Stewart.................... 1995 80,000 116,500 4,500
President of Interstate Logos, Inc. 1994 80,000 65,000 4,000
1993 80,000 50,000
Hollis T. Wood(2)..................... 1995 90,000 93,862 6,500
Vice President, Regional 1994 90,000 89,638 6,000
Manager of Knoxville Region 1993 90,000 40,000
</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.

57
<PAGE> 59

EMPLOYMENT AGREEMENTS

The Company does not have employment contracts with any of its officers or
employees.

The Company had a consulting agreement with Kevin P. Reilly, Sr., its
former Chairman, which expired on January 15, 1996. Under that agreement, Mr.
Reilly, Sr. received $120,000 in annual consulting fees and was eligible for a
$100,000 annual bonus, which was paid for the fiscal year ended October 31,
1995. The Company continued to pay Mr. Reilly, Sr. his consulting fee on a
month-to-month basis until July 1, 1996. Effective July 1, 1996, the Lamar Texas
Limited Partnership, a subsidiary of the Company, and Reilly Consulting Company,
L.L.C., of which Mr. Reilly, Sr. is the manager and, with his wife, the sole
members, entered into a replacement consulting agreement. This new consulting
agreement has a ten year term and provides for a $120,000 annual consulting fee.
The agreement contains a non-disclosure provision and a noncompetition
restriction which extends for two years beyond the termination of the agreement.

STOCK OPTION PLANS

The Company's 1996 Equity Incentive Plan (the "1996 Plan") was adopted by
the Board of Directors in July 1996. The purpose of the 1996 Plan is to attract
and retain key employees and consultants of the Company, to provide an incentive
for them to achieve long-range performance goals, and to enable them to
participate in the long-term growth of the Company.

The 1996 Plan authorizes the grant of stock options (incentive and
nonstatutory), stock appreciation rights ("SARs") and restricted stock to
employees and consultants of the Company capable of contributing to
the Company's performance. The Company has reserved an aggregate of 2.0 million
shares (subject to adjustment for stock splits and similar capital changes) of
Class A Common Stock for awards under the 1996 Plan. Stock options and SARs may
not be granted at less than fair market value of the Class A Common Stock and
not more than 200,000 shares may be granted in any calendar year to any
participant. Incentive stock options may be granted only to persons eligible to
receive them under the Internal Revenue Code of 1996, as amended. The Company
has granted options to purchase approximately 1.2 million shares of Class A
Common Stock since the IPO.

The Board of Directors has appointed the Compensation Committee (the
"Committee") to administer the 1996 Plan. Awards under the 1996 Plan contain
such terms and conditions not inconsistent with the 1996 Plan as the Committee
in its discretion approves. The Committee has discretion to administer the 1996
Plan in the manner which it determines, from time to time, is in the best
interest of the Company. For example, the Committee will fix the terms of stock
options, SARs and restricted stock grants and determine whether, in the case of
options and SARs, they may be exercised immediately or at a later date or dates.
Awards may be granted subject to conditions relating to continued employment and
restrictions on transfer. The Committee may provide, at the time an award is
made or at any time thereafter, for the acceleration of a participant's rights
or cash settlement upon a change in control of the Company. The terms and
conditions of awards need not be the same for each participant. The foregoing
examples illustrate, but do not limit, the manner in which the Committee may
exercise its authority in administering the 1996 Plan. In addition, all
questions of interpretation of the 1996 Plan are determined by the Committee.

58
<PAGE> 60

CERTAIN TRANSACTIONS

The Company has from time to time made various personal loans to the
persons listed below. The loans bear interest at a rate equal to 100 basis
points above the rate applicable to United States Treasury six-month bills.

<TABLE>
<CAPTION>
LARGEST OUTSTANDING
BALANCE SINCE APPROXIMATE
BEGINNING OF LAST BALANCE OUTSTANDING AS OF
NAME FISCAL YEAR OCTOBER 31, 1996
------------------------------------------- ------------------- -------------------------
<S> <C> <C>
Jack S. Rome(1)............................ $ 147,230 $ 123,314
Robert B. Switzer(2)....................... 80,592 50,592
Kevin P. Reilly, Sr.(3)(4)................. 154,586 34,030
T. Everett Stewart, Jr.(1)(2).............. 75,000 25,000
Wendell S. Reilly(3)....................... 500,000 0
Anna Reilly Cullinan(3).................... 80,000 0
Gerald H. Marchand(2)...................... 175,000 0
Kevin P. Reilly, Jr.(1)(2)(3).............. 135,000 0
Sean E. Reilly(2).......................... 73,945 0
</TABLE>

- ---------------
(1) The named individual is a director of the Company.
(2) The named individual is an executive officer of the Company.
(3) Member of the Reilly family.
(4) Kevin P. Reilly, Sr. was President and Chairman of the Board of the Company
until January 1992.

In October 1995 and in March 1996, the Company repurchased 3.6% and 12.9%,
respectively, of its then outstanding common stock (1,220,500 and 3,617,884
shares, respectively, after giving effect to the 778.9 for 1 split of the
Company's then-existing common stock and recapitalization occurring after such
dates) from certain of its existing stockholders for an aggregate purchase price
of approximately $4.0 million. The terms of the March 1996 repurchase entitled
the selling stockholders to receive additional consideration from the Company in
the event that the Company consummated a public offering of its common stock at
a higher price within 24 months of the repurchase. In satisfaction of that
obligation, upon completion of the IPO in August 1996, the Company paid the
selling stockholders an aggregate of $5.0 million in cash from the proceeds of
the IPO and issued to them $20.0 million aggregate principal amount of ten-year
subordinated notes. Of the total $25.0 million paid on account of the common
stock repurchased, $6.3 million was paid to the Company's executive officers,
directors, beneficial owners of 5% or more of the Company's common stock and
their respective affiliates.

On December 31, 1995, the Company issued 5,719.49 shares of its Class A
Preferred Stock with an aggregate liquidation preference of $3.6 million to
certain of its stockholders in exchange for an equal number of shares of its
then outstanding common stock. See "Description of Capital Stock -- Class A
Preferred Stock." Of the Class A Preferred Stock so issued, 3,134.80 shares were
issued to the Reilly Family Limited Partnership, 1,500 shares to Charles W.
Lamar, III and 1,084.69 shares to Mary Lee Lamar Dixon and trusts for her
children. See "Description of Capital Stock -- Class A Preferred Stock."

In 1993, the Company acquired LHC shares from certain members of the Reilly
family, Charles W. Lamar, III, Mary Lee Lamar Dixon and Robert B. Switzer in
exchange for 8.0% of the then outstanding shares of common stock of the Company.
In 1994, in connection with the Company's acquisition of the interest in LHC
which it did not already own, certain officers and directors of the Company who
were stockholders of LHC received approximately $226,000 from the proceeds of
the transaction.

In May 1993, the Company purchased the outstanding stock of Lamar
Advertising of Wichita Falls, Inc., which was substantially owned by Kevin P.
Reilly, Sr., Kevin P. Reilly, Jr., Charles W. Lamar, III, Gerald H. Marchand and
certain of their relatives. The total consideration for the stock purchase was
approximately $1.2 million, which approximated the book value of the underlying
assets.

In 1993, the Company purchased a building from a joint venture whose
principals included Kevin P. Reilly, Sr., Kevin P. Reilly, Jr., and Charles W.
Lamar, III for $740,000.

The Company has made investments totalling $1.25 million in Wireless One,
Inc., a publicly-held company in the wireless cable business, of which Sean E.
Reilly, a member of the Reilly family and a former director, is Chief Executive
Officer. The current market value of these investments, which are restricted
from sale by the Company until October 1997, exceeds the Company's cost.

59
<PAGE> 61

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the ownership
of the Company's capital stock as of October 1, 1996, as adjusted to reflect the
sale of the shares offered hereby, (i) by each person known by the Company to
own beneficially five percent or more of any class of the Company's capital
stock, (ii) by each director of the Company, (iii) by each executive officer of
the Company, (iv) by all directors and executive officers as a group and (v) by
each Selling Stockholder. The capital stock of the Company is owned
substantially by members of four related families.

<TABLE>
<CAPTION>
AMOUNT OF
BENEFICIAL OWNERSHIP AMOUNT OF BENEFICIAL
PRIOR TO THIS OWNERSHIP AFTER THIS
OFFERING(1) OFFERING(1)
-------------------- ---------------------
PERCENT SHARES PERCENT
DIRECTORS, OFFICERS NUMBER OF OF BEING NUMBER OF OF
AND 5% STOCKHOLDERS CLASS(2) SHARES CLASS OFFERED(2) SHARES CLASS
- ---------------------------------- ---------- ----------- ------- ---------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
The Reilly Family Limited Common 13,791,389 47.90% 335,841 13,455,548 43.41%
Partnership(3) Preferred 3,134.80 54.81% 0 3,134.80 54.81%
c/o The Lamar Corporation
5551 Corporate Blvd.
Baton Rouge, LA 70808
Charles W. Lamar, III(4) Common 4,470,782 15.53% 109,347 4,361,435 14.07%
c/o The Lamar Corporation Preferred 1,500.00 26.23% 0 1,500.00 26.23%
5551 Corporate Blvd.
Baton Rouge, LA 70808
Mary Lee Lamar Dixon(5) Common 2,087,444 7.25% 51,055 2,036,389 6.57%
c/o The Lamar Corporation Preferred 1,084.69 18.96% 0 1,084.69 18.96%
5551 Corporate Blvd.
Baton Rouge, LA 70808
Dudley W. Coates(6) Common 163,564 * 0 163,564 *
Phillip C. Durant(7) Common 10,000 * 0 10,000 *
Keith A. Istre(8) Common 20,625 * 0 20,625 *
Myron LaBorde(7) Common 11,000 * 0 11,000 *
Gerald H. Marchand Common 155,775 * 0 155,775 *
Jack S. Rome, Jr. Common 1,500 * 0 1,500 *
William R. Schmidt Common 500 * 0 500 *
Robert S. Switzer(9) Common 743,635 2.58% 18,188 725,447 2.34%
Robert E. Campbell(8) Common 21,250 * 0 21,250 *
Thomas F. Sirmon(8) Common 21,875 * 0 21,875 *
T. Everett Stewart(10) Common 25,851 * 0 25,851 *
All Directors and Executive Common 19,437,746 67.27% 463,376 18,974,370 61.02%
Officers
as a Group (13 Persons)(11) Preferred 4,634.80 81.04% 0 4,634.80 81.04%
Charles L. Switzer(12) Common 646,275 2.24% 15,807 630,468 2.03%
John Switzer Common 694,956 2.41% 20,851 674,105 2.17%
Allison Lamar Common 254,306 * 6,048 248,258 *
Kevin P. Reilly, Sr. Common 221,428 * 32,778 188,650 *
Albert Lamar Common 101,260 * 10,085 91,175 *
</TABLE>

- ---------------
* Less than 1%
(1) The persons and entities named in the table have sole voting and investment
power with respect to all shares beneficially owned by them, except as
noted below.
(2) Common shares refer to Class A Common Stock, except with respect to shares
of the Reilly Family Limited Partnership, which refer to shares of Class B
Common Stock. Preferred shares refer to Class A Preferred Stock. Upon the
sale of any shares of Class B Common Stock to a person other than to a
Permitted Transferee (as defined herein), such shares will automatically
convert into shares of Class A Common Stock. See "Description of Capital
Stock." "Shares Being Offered" does not include shares that may be

60
<PAGE> 62

sold pursuant to the Underwriters' over-allotment option. The Selling
Stockholders have granted the Underwriters a 30-day over-allotment option
to purchase an additional shares of Class A Common Stock.
(3) These shares are owned by the Reilly Family Limited Partnership. Kevin P.
Reilly, Jr. is the managing general partner of the Reilly Family Limited
Partnership; Wendell S. Reilly, Sean E. Reilly and Anna R. Cullinan are
each general partners; and Kevin P. Reilly, Sr. holds all of the
outstanding preferred interests in the partnership.
(4) Includes shares of Class A Common Stock held in trust for Mr. Lamar's three
children, of which Mr. Lamar is considered the beneficial owner. 1,335,775
shares are currently held by such trusts and 17,483 of such shares are
being offered hereby.
(5) Includes 545,214 shares of Class A Common Stock and 700 shares of Class A
Preferred Stock held in a trust, of which LaBanc & Co. is the nominee of
the trustee, for the benefit of Mrs. Dixon.
(6) Consists of shares which are held in trust for Mr. Coates' three children,
as to which he disclaims beneficial ownership.
(7) Includes 10,000 shares of Class A Common Stock subject to stock options
exercisable within 60 days of October 1, 1996.
(8) Includes 20,000 shares of Class A Common Stock subject to stock options
exercisable within 60 days of October 1, 1996.
(9) Includes 76,336 shares of Class A Common Stock held by Mr. Switzer's wife,
as to which he disclaims beneficial ownership, and 257,028 shares of Class
A Common Stock currently held by Mr. Switzer as custodian for his three
children. 2,797 shares of Class A Common Stock held for each child (8,392
shares in the aggregate) are being offered hereby.
(10) Includes 19,600 shares of Class A Common Stock subject to stock options
exercisable within 60 days of October 1, 1996.
(11) Includes 99,600 shares of Class A Common Stock subject to stock options
exercisable within 60 days of October 1, 1996. Also includes 1,499,339
shares of Class A Common Stock held in trust for the benefit of the
children of directors and officers of the Company, 76,336 shares of Class A
Common Stock held by the wife of an officer of the Company, and 257,028
shares of Class A Common Stock held by an officer of the Company as
custodian for his three children.
(12) Includes 160,840 shares of Class A Common Stock held by Mr. Switzer's
children.

Kevin P. Reilly, Jr. is the Managing General Partner of the Reilly Family
Limited Partnership, owner of all of the issued and outstanding Class B Common
Stock of the Company. The other general partners of the partnership, Mr.
Reilly's three siblings, may by unanimous vote, remove Mr. Reilly and replace
him with one of his siblings.

DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 50,000,000 shares of
Class A Common Stock, $0.001 par value per share, 25,000,000 shares of Class B
Common Stock, $0.001 par value per share, 10,000 shares of Class A Preferred
Stock, $638 par value per share, and 1,000,000 additional shares of Preferred
Stock, the terms and provisions of which may be designated by the Board of
Directors in the future. The following summary of the Company's capital stock is
qualified in its entirety by reference to the Company's Amended and Restated
Certificate of Incorporation (the "Certificate of Incorporation") and By-Laws
(the "By-Laws"), each of which is incorporated by reference into the
registration statement of which this Prospectus is a part.

COMMON STOCK

Following this Offering, 17,539,031 shares of Class A Common Stock will be
issued and outstanding and 13,455,548 shares of Class B Common Stock will be
issued and outstanding. See "Capitalization."

Except for voting rights, the rights of the holders of the Class A Common
Stock and the Class B Common Stock are substantially identical. The holders of
the Class A Common Stock and the holders of the Class B Common Stock vote
together as a single class (except as may otherwise be required by Delaware
law), with the holders of the Class A Common Stock entitled to one vote per
share and the holders of Class B Common Stock entitled to ten votes per share,
on all matters on which the holders of Common Stock are entitled to vote. Each
share of Class B Common Stock is convertible at the option of its holder into
one share of Class A Common Stock at any time. In addition, each share of Class
B Common Stock converts automatically into one share of Class A Common Stock
upon the sale or other transfer of such share of Class B Common Stock to a
person who, or entity which, is not a Permitted Transferee. Permitted
Transferees include (i) Kevin P. Reilly, Sr.; (ii) a descendant of Kevin P.
Reilly, Sr.; (iii) a spouse or surviving spouse (even if remarried) of any
individual named or described in (i) or (ii) above; (iv) any estate, trust,
guardianship, custodianship, curatorship or other fiduciary arrangement for the
primary benefit of any one or more of the individuals named or described in (i),
(ii) and (iii) above; and (v) any corporation, partnership, limited liability
company or other business organization controlled by and substantially all of
the interests in which are owned, directly or indirectly, by any one or more of
the individuals and entities named or described in (i), (ii), (iii) and (iv)
above.

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<PAGE> 63

All of the outstanding shares of Common Stock are, and all of the shares of
Class A Common Stock sold in this Offering will be, when issued and paid for,
fully paid and nonassessable. In the event of the liquidation or dissolution of
the Company, following any required distribution to the holders of outstanding
shares of Preferred Stock, the holders of Common Stock are entitled to share pro
rata in any balance of the corporate assets available for distribution to them.
The Company may pay dividends if, when and as declared by the Board of Directors
from funds legally available therefor, subject to the restrictions set forth in
the Company's existing and future debt instruments. Subject to the preferential
rights of the holders of any class of preferred stock, holders of shares of
Common Stock are entitled to receive such dividends as may be declared by the
Company's Board of Directors out of funds legally available for such purpose. No
dividend may be declared or paid in cash or property on any share of either
class of Common Stock unless simultaneously the same dividend is declared or
paid on each share of the other class of Common Stock, provided that, in the
event of stock dividends, holders of a specific class of Common Stock shall be
entitled to receive only additional shares of such class. See "Dividend Policy."

Under Delaware law, the affirmative vote of the holders of a majority of
the outstanding shares of any class of common stock is required to approve any
amendment to the Certificate of Incorporation that would increase or decrease
the par value of such class, or modify or change the powers, preferences or
special rights of the shares of any class so as to affect such class adversely.
The Certificate of Incorporation provides that no such separate class vote shall
be available for increases or decreases in the number of authorized shares of
Class A Common Stock.

The Common Stock is redeemable in the manner and on the conditions
permitted under Delaware law and as may be authorized by the Board of Directors.
Holders of Common Stock have no preemptive rights.

CLASS A PREFERRED STOCK

All outstanding shares of the Company's Class A Preferred Stock are fully
paid and nonassessable. For information regarding ownership of the issued and
outstanding shares of Class A Preferred Stock, see "Principal and Selling
Stockholders."

Rank. The Class A Preferred Stock, with respect to dividends and upon
liquidation, ranks senior to Class A and Class B Common Stock.

Dividends. Holders of shares of Class A Preferred Stock are entitled to
receive, when and if declared by the Board of Directors out of funds legally
available therefor, cash dividends at a rate of $15.95 per share per quarter.
Dividends accrue and are cumulative from the date of the issuance of shares. As
of the date of this Prospectus, all accrued dividends have been paid. The
Company intends to continue paying dividends on the Class A Preferred Stock.

Dissolution or Liquidation. In the case of voluntary or involuntary
dissolution or liquidation of the Company, subject to the rights of holders of
any additional Preferred Stock issued in the future, the holders of the Class A
Preferred Stock are entitled to receive out of the assets of the Company the sum
of the par value of the Class A Preferred Stock ($638 per share) and any accrued
and unpaid dividends thereon before any payment may be made or any assets
distributed to the holders of Common Stock. Upon any distribution or
liquidation, whether voluntary or involuntary, if the assets distributed among
the holders of the Class A Preferred Stock are insufficient to permit the
payment to a stockholder of the full preferential amounts, subject to the rights
of holders of any additional Preferred Stock issued in the future, the entire
assets of the Company to be distributed will be distributed ratably among the
holders of the Class A Preferred Stock and, after payment of such preferential
amounts and any preferential amounts due holders of additional Preferred Stock,
if any, the holders of Common Stock will be entitled to receive ratably all the
remaining assets. A merger or consolidation of the Company with or into any
other corporation or corporations, will not, however, be deemed to be a
dissolution or liquidation.

Voting Rights. Holders of Class A Preferred Stock have no voting rights
with respect to general corporate matters except as provided by law. Under
Delaware law, holders of the Class A Preferred Stock are entitled to vote as a
class upon any proposed amendment, whether or not entitled to vote thereon by
the Certificate of

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<PAGE> 64

Incorporation, if such amendment would increase or decrease the par value of the
shares of such class, or alter or change the powers, preferences, or special
rights of the shares of such class so as to affect them adversely.

ADDITIONAL PREFERRED STOCK

Additional Preferred Stock may be issued from time to time by the Board of
Directors as shares of one or more classes or series. Subject to the provisions
of the Company's Certificate of Incorporation, including those regarding the
rights of the holders of Class A Preferred Stock, and limitations prescribed by
law, the Board of Directors is expressly authorized to adopt resolutions to
issue the shares, to fix the number of shares and to change the number of shares
constituting any series, and to provide for or change the voting powers,
designations, preferences, and relative participating, optional or other special
rights, qualifications, limitations or restrictions thereof, including dividend
rights, sinking fund provisions, redemption prices conversion rights and
liquidation preferences of the shares constituting any class or series of this
additional Preferred Stock, in each case without any further action or vote by
the stockholders. The Company has no current plans to issue any shares of
additional Preferred Stock of any class or series.

One of the effects of undesignated additional Preferred Stock may be to
enable the Board of Directors to render more difficult or to discourage an
attempt to obtain control of the Company by means of a tender offer, proxy
contest, merger or otherwise, and thereby to protect the continuity of the
Company's management. The issuance of shares of additional Preferred Stock
pursuant to the Board of Directors' authority described above may adversely
affect the rights of the holders of Common Stock. For example, additional
Preferred Stock issued by the Company may rank prior to the Common Stock as to
dividend rights, liquidation preference or both, may have full or limited voting
rights and may be convertible into shares of Common Stock. Accordingly, the
issuance of shares of additional Preferred Stock may discourage bids for the
Common Stock or may otherwise adversely affect the market price of the Class A
Common Stock.

SPECIAL PROVISIONS OF THE CERTIFICATE OF INCORPORATION, BY-LAWS AND DELAWARE LAW

Certain provisions of the Company's Certificate of Incorporation and
By-Laws as well as certain provisions of Delaware law may be deemed to have an
anti-takeover effect or may delay, defer or prevent a tender offer or takeover
attempt that a stockholder might consider in such stockholder's best interest,
including those attempts that might result in a premium over the market price
for the shares held by a stockholder. These provisions are in addition to the
anti-takeover effect of the substantial ownership and voting power of the
controlling stockholders of the Company.

Delaware Anti-Takeover Law. Section 203 of the Delaware General Corporation
Law ("Section 203") generally provides that a person who, together with
affiliates and associates owns, or within three years did own, 15% or more of
the outstanding voting stock of a corporation, but less than 85% of such stock
(an "Interested Stockholder"), may not engage in certain business combinations
with the corporation for a period of three years after the date on which the
person became an Interested Stockholder unless (i) prior to such date, the
corporation's board of directors approved either the business combination or the
transaction in which the stockholder became an Interested Stockholder or (ii)
subsequent to such date, the business combination is approved by the
corporation's board of directors and authorized at a stockholders' meeting by a
vote of at least two-thirds of the corporation's outstanding voting stock not
owned by the Interested Stockholder. Section 203 defines the term "business
combination" to encompass a wide variety of transactions with or caused by an
Interested Stockholder, including mergers, asset sales, and other transactions
in which the Interested Stockholder receives or could receive a benefit on other
than a pro rata basis with other stockholders.

The provisions of Section 203, coupled with the Board's authority to issue
Preferred Stock without further stockholder action and the fact that, after
giving effect to the Offering, 88.5% of the voting power of the Common Stock
will be held by the Reilly Family Limited Partnership, could delay or frustrate
the removal of incumbent directors or a change in control of the Company. The
provisions also could discourage, impede or prevent a merger, tender offer or
proxy contest, even if such event would be favorable to the interests of
stockholders. The Company's stockholders, by adopting an amendment to the
Certificate of Incorporation, may elect not to be governed by Section 203 which
election would be effective twelve months after such

63
<PAGE> 65

adoption. Such a change in the Company's Certificate of Incorporation could not
be made without the affirmative vote of shares held by the Reilly Family Limited
Partnership. Neither the Certificate of Incorporation nor the By-Laws exclude
the Company from the restrictions imposed by Section 203. These restrictions
will not apply to stockholders who were interested stockholders prior to the
date of this Offering.

Notice Provisions. The By-Laws provide that only business or proposals,
properly brought before an annual meeting of stockholders may be conducted at
such meeting. In order to bring business or a proposal before an annual meeting,
a stockholder is required to provide written notice to the Company at least 45
days prior to the annual meeting which described the business or proposal to be
brought before the annual meeting, the name and address of the stockholder
proposing the business, the class and number of shares of stock held by such
stockholder, and any material interest of the stockholder in the business to be
brought before the meeting. These procedures may operate to limit the ability of
stockholders to bring business before the annual meeting or consider any
transaction that could result in a change of control of the Company. In
addition, the By-Laws provide that in order for a stockholder to nominate a
candidate for election to the Board of Directors, the stockholder must provide
written notice of intent to nominate a candidate at least 45 days prior to the
meeting of stockholders called for the election of directors. Such written
notice is required to contain the name and address of the stockholder, a
representation that the stockholder is a holder of record of the Company's
voting stock and intends to appear in person or by proxy at the meeting to
nominate the persons specified in the notice, such information regarding each
nominee as would have been required to have been included in a proxy statement
filed pursuant to Regulation 14A of the rules and regulations of the Securities
and Exchange Commission (the "Commission") under the Securities Exchange Act of
1934, as amended (the "Exchange Act") had proxies been solicited with respect to
such nominee by the Board of Directors, a description of all arrangements or
other understandings among the stockholder and any other person pursuant to
which such nominations are to be made by the stockholder and the written consent
of each nominee to serve as a director of the Company if elected. These
requirements will limit the ability of stockholders to nominate candidates for
election to the Board of Directors to the extent that the notice requirements
are not satisfied.

Procedures for Special Meeting of Stockholders. The By-Laws provide for
special meetings of stockholders only upon the direction of the Chairman of the
Board of Directors, the President, or a majority of the Board of Directors.

Exculpation and Indemnification. The Company's Certificate of Incorporation
provides that no director of the Company shall be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director, except for liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or that involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which the director derived an improper personal benefit. The
effect of these provisions is to eliminate the rights of the Company and its
stockholders (through stockholders' derivative suits on behalf of the Company)
to recover monetary damages against a director for breach of fiduciary duty as a
director (including breaches resulting from grossly negligent behavior), except
in the situations described above. The Commission has taken the position that
the provision will have no effect on claims arising under federal securities
law.

The Company's By-Laws provide that the Company will indemnify its directors
and officers to the fullest extent permissible under Delaware law. These
indemnification provisions require the Company to indemnify such persons against
certain liabilities and expenses to which they may become subject by reason of
their service as a director or officer of the Company. The provisions also set
forth certain procedures, including the advancement of expenses, that apply in
the event of a claim for indemnification.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Class A Common Stock is Chase
Mellon Shareholder Services, L.L.C.

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<PAGE> 66

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the IPO, there was no public market for the Common Stock of the
Company. No prediction can be made as to the effect, if any, that market sales
of shares of Common Stock or the availability of shares of Common Stock for sale
will have on the market price prevailing from time to time. Nevertheless, sales
of substantial amounts of Common Stock of the Company in the public market after
the restrictions described below lapse could adversely affect the prevailing
market price of the Common Stock and the ability of the Company to raise equity
capital in the future.

Upon completion of this Offering, the Company will have 30,994,579
outstanding shares of Common Stock (excluding shares of Class A Common
Stock issuable upon the exercise of the Underwriters' over-allotment option).
See "Capitalization." Of these shares, the 2,200,000 shares ( shares if
the Underwriters' overallotment option is exercised in full) of Class A Common
Stock sold in this Offering will be freely tradable without restriction under
the Securities Act except for any shares purchased by "affiliates," as that term
is defined in the Securities Act, of the Company. The 5,445,250 shares issued in
connection with the IPO are freely tradeable, to the extent not owned by
affiliates of the Company. The remaining 22,749,329 shares are "restricted
securities" within the meaning of Rule 144 adopted under the Securities Act (the
"Restricted Shares"). The Restricted Shares generally may not be sold unless
they are registered under the Securities Act or are sold pursuant to an
exemption from registration, such as the exemption provided by Rule 144.

The Company's executive officers and directors and certain stockholders of
the Company have agreed that, for a period of 90 days from the date of this
Prospectus (the "Lock-up Period"), they will not, without the prior written
consent of Smith Barney Inc., offer, sell, contract to sell, or otherwise
dispose of any shares of Common Stock of the Company. See "Underwriting."
Following the Lock-up Period, the Restricted Shares will not be eligible for
sale in the public market without registration unless such sales meet the
conditions and restrictions of Rule 144 as described below.

In general, under Rule 144, as currently in effect, any person (or persons
whose shares are aggregated), including an affiliate, who has beneficially owned
shares for a period of at least two years (as computed under Rule 144) is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of (i) 1% of the then-outstanding shares of Common Stock
(approximately 309,946 shares after giving effect to this Offering) and (ii) the
average weekly trading volume in the Company's Common Stock during the four
calendar weeks immediately preceding the date on which the notice of such sale
on Form 144 is filed with the Commission. Sales under Rule 144 are also subject
to certain provisions relating to notice and manner of sale and the availability
of current public information about the Company. In addition, a person (or
persons whose shares are aggregated) who has not been an affiliate of the
Company at any time during the 90 days immediately preceding a sale, and who has
beneficially owned the shares for at least three years (as computed under Rule
144), would be entitled to sell such shares under Rule 144(k) without regard to
the volume limitation and other conditions described above. The foregoing
summary of Rule 144 is not intended to be a complete description thereof. In
addition, the Commission has proposed reducing the two-year and three-year
periods referred to above to one and two years, respectively.

On August 16, 1996, the Company filed a registration statement under the
Securities Act to register the 2,000,000 shares of Class A Common Stock
available for issuance pursuant to its 1996 Equity Incentive Plan. Shares issued
pursuant to such plan will be available for sale in the open market subject to
the Lock-up Period and, for affiliates of the Company, subject to certain
conditions and restrictions of Rule 144.

DESCRIPTION OF INDEBTEDNESS

The following is a description of the principal agreements governing the
indebtedness of the Company and the terms of the principal agreements that would
be entered into in connection with the Transactions. The following summaries are
qualified in their entirety by reference to the credit and security agreements
and indenture to which each summary relates, copies of which are exhibits to the
Registration Statement of which

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<PAGE> 67

this Prospectus is a part. Defined terms used below and not defined herein have
meanings set forth in the respective agreements.

EXISTING CREDIT AGREEMENT

The Company expects to replace the Existing Credit Agreement with the New
Credit Agreement. If the New Credit Agreement is not executed, the Existing
Credit Agreement will remain in effect.

Primary Facility and New Logo Facility. The Company presently has two
syndicated bank credit facilities under the Existing Credit Agreement, both of
which are agented by Chase Manhattan Bank (National Association): (i) a
revolving credit facility (the "Primary Facility") providing for a reducing
revolving credit facility with a maximum borrowing availability of $50 million
and (ii) a revolving credit facility (the "New Logo Facility") with a maximum
borrowing availability of $15 million. The proceeds of the Primary Facility may
be used for general corporate purposes, including working capital requirements
of the Company and its subsidiaries in the outdoor advertising and logo sign
business created prior to October 31, 1995. The proceeds of the New Logo
Facility may be used for start-up and construction costs in connection with the
logo sign business of subsidiaries created after October 31, 1995 (the "New Logo
Subsidiaries"). The Primary Facility and New Logo Facility are collectively
referred to herein as the "Existing Credit Agreement."

Interest. Borrowings under the Existing Credit Agreement bear interest
computed as a margin over either Chase's "Base Rate" or the London Interbank
Offered Rate (the "LIBOR Rate"). The margins range from 0 to 75 basis points and
from 125 (100, upon execution of the Proposed Amendment) to 200 basis points
over the Base Rate and LIBOR Rate, respectively, depending on the Company's
current leverage ratio, as such ratio is defined under the subheading
"Covenants."

Reductions in Commitments; Amortization. The Primary Facility and the New
Logo Facility, both of which mature October 31, 2001 (a recent amendment
shortens the maturity of the Primary Facility to April 30, 1997), provide for
reductions in revolving credit commitments and amortization of term loans as
follows:

<TABLE>
<CAPTION>
NEW LOGO FACILITY
REVOLVING CREDIT TERM LOAN REVOLVING CREDIT
FISCAL YEAR REDUCTION AMORTIZATION(1) REDUCTION(2)
---------------------------------------- ---------------- --------------- -----------------
<S> <C> <C> <C>
1996 (after 4/30/96).................... -- $ 1,000,000 --
1997.................................... -- $ 4,000,000 $ 2,000,000
1998.................................... -- $ 8,000,000 $ 3,000,000
1999.................................... $ 3,000,000 $11,000,000 $ 4,000,000
2000.................................... $ 5,000,000 $12,000,000 $ 6,000,000
2001.................................... $ 12,000,000 $ 2,250,000 --
</TABLE>

- ---------------

(1) A recent amendment eliminates revolving credit commitment reductions for the
Primary Facility.

(2) The term loan amortizes quarterly, and the New Logo Facility revolving
credit commitment is reduced quarterly.

Guarantees; Security. The obligations of the Company under the Primary
Facility are guaranteed by all of the Company's Restricted Subsidiaries with the
exception of Missouri Logos, a partnership, and, subject to the approval of the
Primary Facility Banks, any joint ventures that may be formed hereafter between
Restricted Logo Subsidiaries and entities not affiliated or related to the
Company or any Restricted Subsidiary. The obligations under the Primary Facility
and the guarantees in respect thereto are secured, on an equal and ratable basis
with the subsidiary guarantees and Company obligations in respect of the
Existing Notes, by a pledge of the capital stock of all of the Company's
Restricted Subsidiaries with the exception of the New Logo Subsidiaries.

The obligations of the Company under the New Logo Facility are guaranteed
by the New Logo Subsidiaries. Such obligations and guarantees are secured by a
pledge of the capital stock, and security interest in the assets, of the New
Logo Subsidiaries.

Covenants. The Existing Credit Agreement places certain restrictions upon
the ability of the Company and its Restricted Subsidiaries that are parties
thereto, to among other things, (i) incur indebtedness,

66
<PAGE> 68

(ii) incur liens or guarantee obligations, (iii) declare dividends and make
other distributions, (iv) make investments and enter into joint ventures, (v)
make capital expenditures, (vi) dispose of assets and (vii) engage in
transactions with affiliates except on an arms-length basis. In addition, the
Existing Credit Agreement requires the Company and its Restricted Subsidiaries
which are parties thereto to maintain (a) a minimum leverage ratio, defined as
Total Debt to Operating Cash Flow, of between 4.5 to 1 and 3.0 to 1 under the
Primary Facility and from 6.0 to 1 and 4.0 to 1 under the New Logo Facility; (b)
an interest coverage ratio, defined as pro forma Operating Cash Flow for the
period of 12 months most recently ended to total accrued cash interest expense
for such period, of at least 2.0 to 1; and (c) a fixed charge coverage ratio,
defined as pro forma Operating Cash Flow for the period of 12 months most
recently ended to total projected payments of principal and interest on debt to
be made in the succeeding four fiscal quarters plus (i) capital expenditures
(excluding logo contract expenditures) and (ii) income and franchise tax
payments and stock dividends and redemptions during such period, of at least 1.1
to 1.

Change of Control. A change of control of the Company constitutes an event
of default, permitting the banks under the Existing Credit Agreement to
accelerate the indebtedness and terminate the Existing Credit Facilities. Such a
change in control would occur if Kevin P. Reilly, Sr. and his immediate family
(including grandchildren) and certain entities under their control cease to own
at least 20% of the total amount of voting stock of the Company.

NEW CREDIT AGREEMENT

The Company expects to enter into the New Credit Agreement with a syndicate
of financial institutions and the agent under the Existing Credit Agreement
providing the Company with a committed reducing revolving credit facility in the
amount of $225 million and a $75 million incremental facility funded at the
discretion of the lenders. The New Credit Agreement would replace the Existing
Credit Agreement and substantially increase the Company's borrowing
availability.

The New Credit Agreement is expected to bear interest computed as a margin
over "Base Rate" or the LIBOR Rate, with the loan commitment reducing over a
period from 1999 to 2003. The obligations of the Company under the New Credit
Facility are expected to be guaranteed by its subsidiaries and secured by a
pledge of the capital stock of the Company's subsidiaries in a manner similar to
the Existing Credit Agreement. The New Credit Agreement will also have
restrictive covenants covering similar matters as the Existing Credit Agreement
and a change of control event of default comparable to that under the Existing
Credit Agreement.

EXISTING NOTES

On October 17, 1996, the Company commenced a cash tender offer for all of
the Existing Notes and a solicitation of consents to (i) eliminate substantially
all of the restrictive covenants described below (other than a less restrictive
covenant with respect to the incurrence of indebtedness) and the change of
control repurchase option described below, (ii) release the security for the
Existing Notes and (iii) release the Subsidiary Guarantors from their
obligations as guarantors of the Existing Notes. See "The Transactions -- The
Tender Offer." Consummation of the Tender Offer is subject to the valid tender
of a majority in principal amount of the outstanding Existing Notes and certain
other conditions. As of November 19, 1996, the holders representing over a
majority in principal amount of the Existing Notes have validly tendered their
Existing Notes and delivered their consents. Any Existing Notes not validly
tendered and accepted for payment pursuant to the Tender Offer will remain
outstanding. The terms and conditions of the Existing Notes are set forth below.

General. On May 15, 1993, the Company issued the $100 million aggregate
principal amount of 11% Senior Secured Notes due May 15, 2003 pursuant to an
indenture between the Company, as issuer, its Restricted Subsidiaries, as
"Subsidiary Guarantors," and State Street Bank and Trust Company, as Trustee.
The Existing Notes are senior secured obligations of the Company and Restricted
Subsidiaries ranking pari passu with all present and future indebtedness of the
Company and the Subsidiary Guarantors that by its terms is not subordinated to
the obligations represented by the Existing Notes. Upon consummation of the
Tender Offer the Subsidiary Guarantors will be released from their obligations
as guarantors.

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<PAGE> 69

Interest. The Existing Notes bear interest at 11% per annum. Interest is
payable semi-annually on each May 15 and November 15.

Security. The Existing Notes and the Guarantees in respect thereof are
secured, on an equal and ratable basis with the Company obligations and
subsidiary guarantees in respect of the Primary Facility, by a pledge of the
capital stock of all the Company's Restricted Subsidiaries with the exception of
the New Logo Subsidiaries. Upon consummation of the Tender Offer all of the
foregoing security will be released and any remaining Existing Notes not validly
tendered and accepted for payment in the Tender Offer will be unsecured
obligations of the Company.

Redemption. The securities may be redeemed at the election of the Company,
as a whole or from time-to-time in part, at any time after May 15, 1998 at
redemption prices declining from 105.5% of the principal amount for the twelve
months after May 15, 1998 to 102.75% of such amount for the twelve months after
May 15, 1999, and thereafter at a redemption price equal to 100.0% of such
principal amount, plus in each case accrued in unpaid interest to the applicable
redemption date.

Covenants. The Existing Note Indenture places certain restrictions on the
ability of the Company and its Restricted Subsidiaries to (i) incur liens or
guaranty obligations, (ii) make restricted payments (dividends, redemptions and
certain other payments), (iii) engage in transactions with affiliates except on
an arms-length basis, (iv) dispose of assets and (v) enter into mergers,
consolidations or acquisitions. Upon consummation of the Tender Offer the
foregoing covenants will be eliminated and the existing indebtedness covenant
will be replaced with a covenant that would restrict the Company from incurring
any indebtedness unless the ratio of the Company's consolidated indebtedness to
consolidated operating cash flow would be less than 7.5 to 1.

Change of Control. Upon a Change of Control (as defined below), each holder
of an Existing Note may require the Company to repurchase all or portions of
such holder's Existing Notes at a purchase price equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase. A "Change of Control" occurs if (a) any person or group, other than
stockholders of the Company as of May 15, 1993 and related and affiliated
persons ("Permitted Holder") beneficially owns at least 30% of the aggregate
voting power of all classes of voting stock of the Company or (b) any person or
group other than Permitted Holders succeed in electing a majority of the Board
of Directors of the Company. Upon consummation of the Tender Offer, the
foregoing Change of Control provision will be eliminated.

THE NOTES

The Company intends to issue $225 million aggregate principal amount of
Notes pursuant to the Note Offering. The Notes will be issued pursuant to the
Indenture and will be general unsecured obligations of the Company subordinated
in right of payment to all existing and future senior indebtedness of the
Company, including the New Credit Agreement and any Existing Notes that are not
tendered in the Tender Offer, pari passu in right of payment to any future
senior subordinated indebtedness of the Company and senior in right of payment
to all existing and any future subordinated indebtedness of the Company. The
Notes will not be redeemable by the Company for the first five years after the
date of their original issuance and will be redeemable thereafter at a premium
until the eighth year after the date of original issuance after which they will
be redeemable at par. The Notes will bear interest at a rate to be determined at
the time of issuance and will mature approximately ten years after issuance.

The Indenture will contain covenants covering matters similar to those
covered under the Existing Note Indenture and will contain a change of control
repurchase option comparable to that under the Existing Note Indenture. This
Prospectus does not constitute an offer to sell or the solicitation of an offer
to buy any Notes which will be done only pursuant to a prospectus for the Notes.

SUBORDINATED NOTES

The Company will have outstanding three classes of subordinated notes: (i)
8% Series A Unsecured Subordinated Discount Debentures due 2001 ($2.3 million
outstanding at October 31, 1996); (ii) 12% Series A Unsecured Subordinated
Debentures due 1997 ($0.2 million outstanding at October 31, 1996); and (iii)
ten-year subordinated notes ($19.7 million outstanding at October 31, 1996). The
Series A debentures referred to in clauses (i) and (ii) of the preceding
sentence were issued in consideration of stock redemptions

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<PAGE> 70

occurring in 1993 and 1994. The ten-year subordinated notes referred to in
clause (iii) were issued as a portion of the consideration paid on account of
stock redemptions occurring in October 1995 and March 1996, bear interest at an
annual rate of 8% and amortize monthly until their maturity in 2006. See
"Certain Transactions."

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<PAGE> 71

UNDERWRITING

Upon the terms and subject to the conditions stated in the Underwriting
Agreement dated , 1996, each of the underwriters named below (the
"Underwriters"), for whom Smith Barney Inc., Alex. Brown & Sons Incorporated and
Prudential Securities Incorporated are acting as representatives (the
"Representatives"), has severally agreed to purchase, and the Company has agreed
to sell to each such Underwriter, the number of shares of Class A Common Stock
set forth opposite the name of such Underwriter.

[CAPTION]
<TABLE>
<CAPTION>
<S> <C>
NUMBER OF
NAME SHARES
-------------------------------------------------------------------------- ---------
<S> <C>
Smith Barney Inc. ........................................................
Alex. Brown & Sons Incorporated...........................................
Prudential Securities Incorporated........................................

---------
Total........................................................... 2,800,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares are subject to
approval of certain legal matters by counsel and to certain other conditions.
The Underwriters are obligated to take and pay for all shares of Class A Common
Stock offered hereby (other than those covered by the over-allotment option
described below) if any such shares are taken.

The Underwriters initially propose to offer part of the shares directly to
the public at the public offering price set forth on the cover page of this
Prospectus and part of the shares to certain dealers at a price which represents
a concession not in excess of $ per share below the public offering
price. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of $ per share to certain other dealers. After the
initial public offering of the shares to the public, the public offering price
and such concessions may be changed by the Underwriters.

The Company and certain of the Selling Stockholders have granted to the
Underwriters an option, exercisable for thirty days from the date of this
Prospectus, to purchase up to an aggregate of additional shares of
Class A Common Stock ( from the Company and from the Selling
Stockholders) at the public offering price set forth on the cover page of this
Prospectus less the underwriting discounts and commissions. The Underwriters may
exercise such option solely for the purpose of covering over-allotments, if any,
in connection with this Offering.

The Company, its officers and directors, and certain stockholders of the
Company have agreed that, for a period of 90 days from the date of this
Prospectus, they will not, without the prior written consent of Smith Barney
Inc., offer, sell, contract to sell, or otherwise dispose of, any shares of
Common Stock of the Company or any securities convertible into, or exercisable
or exchangeable for, Common Stock of the Company.

In connection with this Offering, the Representatives and certain of the
Underwriters and selling group members (if any) and their respective affiliates
may engage in passive market making transactions on the Nasdaq National Market
in accordance with Rule 10b-6A under the Exchange Act during a period before
commencement of offers or sales of the shares of Class A Common Stock offered
hereby. The passive market making transactions must comply with the applicable
volume and price limits and be identified as such.

Smith Barney Inc. is the dealer manager for the Tender Offer and is acting
as an underwriter in connection with the Note Offering.

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<PAGE> 72

The Company, the Selling Stockholders and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act of 1933.

CERTAIN LEGAL MATTERS

The validity of the issuance of the shares of Class A Common Stock will be
passed upon for the Company by Palmer & Dodge LLP, Boston, Massachusetts.
Chadbourne & Parke LLP, New York, New York will pass on certain legal matters
for the Underwriters in connection with this Offering.

EXPERTS

The consolidated financial statements of Lamar Advertising Company and
Subsidiaries as of October 31, 1994 and 1995, and for each of the years in the
three-year period ended October 31, 1995, included in this Prospectus and
Registration Statement have been included herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, appearing elsewhere herein, and upon the authority
of such firm as experts in accounting and auditing.

The consolidated financial statements of Outdoor East, L.P. as of December
31, 1994 and 1995 and for each of the years in the three-year period ended
December 31, 1995 have been included herein and in the Registration Statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, appearing elsewhere herein, and upon the authority of said firm as
experts in accounting and auditing.

The financial statements of FKM Advertising Co., Inc., as of December 31,
1994 and 1995 and for the years then ended, have been included herein and in the
registration statement in reliance upon the report of McGrail, Merkel, Quinn and
Associates, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.

ADDITIONAL INFORMATION

The Company files reports and other information with the Commission
pursuant to the informational requirements of the Exchange Act.

The Company has filed with the Commission a Registration Statement (which
term shall include all amendments thereto) on Form S-3 under the Securities Act
with respect to the Class A Common Stock offered hereby. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement and reference is made to the
Registration Statement and the exhibits thereto for further information with
respect to the Company and the Class A Common Stock. Such reports, the
Registration Statement and the exhibits thereto may be inspected, without
charge, at the offices of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at its regional offices at Seven World Trade Center, New York,
New York 10048, and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such materials may be obtained from the public reference
section of the Commission at its Washington address upon payment of the
prescribed fee. Such reports and other information can also be reviewed through
the Commission's Web site (http://www.sec.gov).

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<PAGE> 73

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company hereby incorporates in this Prospectus by reference the
following documents heretofore filed with the Commission pursuant to the
Exchange Act: (i) the Company's Annual Report on Form 10-K for the year ended
October 31, 1995, as amended by Amendments No. 1 and 2 thereto on Form 10-K/A,
filed with the Commission on January 26, 1996, March 28, 1996 and August 1,
1996, respectively; (ii) the Company's Quarterly Report on Form 10-Q for the
quarter ended January 31, 1996, as amended by Amendment No. 1 thereto on Form
10-Q/A, filed with the Commission on March 15, 1996 and May 20, 1996,
respectively; (iii) the Company's Quarterly Report on Form 10-Q for the quarter
ended April 30, 1996, filed with the Commission on June 13, 1996; (iv) the
Company's Quarterly Report on Form 10-Q for the quarter ended July 31, 1996,
filed with the Commission on September 12, 1996; (v) the Company's Current
Reports on Form 8-K dated October 17, 1996 and November 1, 1996, filed with the
Commission on October 25, 1996 and November 15, 1996, respectively; (vi) the
description of the Class A Common Stock contained in the Company's Registration
Statement on Form 8-A, filed with the Commission on June 7, 1996, as amended by
Form 8-A/A, filed with Commission on July 31, 1996; and (vii) the description of
the Notes contained in the Company's Registration Statement on Form 8-A, filed
with the Commission on November 4, 1996.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
termination of this Offering made hereby shall be deemed to be incorporated in
this Prospectus by reference and to be a part hereof from the respective dates
of the filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any subsequently filed document which also is,
or is deemed to be, incorporated by reference herein, modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute part of this Prospectus.

The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, upon the written or oral
request of any such person, a copy of any and all of the documents referred to
above which have been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents which are not specifically incorporated by
reference into such documents. Requests for such copies should be directed to
the executive offices of the Company, 5551 Corporate Boulevard, Baton Rouge,
Louisiana 70808, Attention: Investor Relations, telephone (504) 926-1000.

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<PAGE> 74

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
LAMAR ADVERTISING COMPANY AND SUBSIDIARIES
Independent Auditors' Report.......................................................... F-2
Consolidated Balance Sheets as of October 31, 1994 and 1995, and July 31, 1996 pro
forma and actual (unaudited)........................................................ F-3
Consolidated Statements of Earnings (Loss) for the years ended October 31, 1993, 1994
and 1995, and the nine months ended July 31, 1995 and 1996 (unaudited).............. F-4
Consolidated Statements of Stockholders' Deficit for the years ended October 31, 1993,
1994 and 1995 and the nine months ended July 31, 1996 (unaudited)................... F-5
Consolidated Statements of Cash Flows for the years ended October 31, 1993, 1994 and
1995 and the nine months ended July 31, 1995 and 1996 (unaudited)................... F-6
Notes to Consolidated Financial Statements............................................ F-7
FKM ADVERTISING CO., INC.
Independent Auditor's Report.......................................................... F-19
Balance Sheets as of December 31, 1994 and 1995, and September 30, 1996 (unaudited)... F-20
Statements of Operations for the years ended December 31, 1994 and 1995, and the nine
months ended September 30, 1995 and 1996 (unaudited)................................ F-21
Statements of Changes of Stockholders' Equity for the years ended December 31, 1994
and 1995, and the nine months ended September 30, 1995 and 1996 (unaudited)......... F-22
Statements of Cash Flows for the years ended December 31, 1994 and 1995, and the nine
months ended September 30, 1995 and 1996 (unaudited)................................ F-23
Notes to Financial Statements......................................................... F-24
OUTDOOR EAST, L.P.
Independent Auditors' Report.......................................................... F-33
Balance Sheets as of December 31, 1994 and 1995 and September 30, 1996 (unaudited).... F-34
Statements of Operations for the years ended December 31, 1993, 1994 and 1995 and the
nine months ended September 30, 1995 and 1996 (unaudited)........................... F-35
Statements of Partners' Deficit for the years ended December 31, 1993, 1994 and 1995,
and the nine months ended September 30, 1996 (unaudited)............................ F-36
Statements of Cash Flows for the years ended December 31, 1993, 1994 and 1995 and the
nine months ended September 30, 1996 (unaudited).................................... F-37
Notes to Financial Statements......................................................... F-38
</TABLE>

F-1
<PAGE> 75

INDEPENDENT AUDITORS' REPORT

Board of Directors
Lamar Advertising Company:

We have audited the accompanying consolidated balance sheets of Lamar
Advertising Company and subsidiaries as of October 31, 1994 and 1995, and the
related consolidated statements of earnings (loss), 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, 1994 and 1995, 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 notes 12 and 14,
which are as of October 17, 1996

F-2
<PAGE> 76

LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

ASSETS

<TABLE>
<CAPTION>
OCTOBER 31 JULY 31, 1996
-------------------- ---------------------
PRO FORMA
1994 1995 ACTUAL (NOTE 14)
-------- -------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents......................... $ 8,016 $ 5,886 $ 1,965 $ 1,965
Receivables (note 3):
Trade accounts, less allowance for doubtful
accounts of $1,046 (unaudited) in 1996 and
$551 in 1995 and 1994......................... 9,963 10,741 14,527 14,527
Affiliates, related parties and employees....... 560 583 531 531
Other........................................... 68 109 433 433
-------- -------- -------- --------
10,591 11,433 15,491 15,491
Prepaid expenses.................................. 1,200 1,247 1,112 1,112
Other current assets.............................. 1,287 1,266 1,793 1,793
-------- -------- -------- --------
Total current assets....................... 21,094 19,832 20,361 20,361
-------- -------- -------- --------
Property, plant and equipment (note 4).............. 159,707 168,402 189,115 189,115
Less accumulated depreciation and amortization.... (70,884) (77,524) (83,930) (83,930)
-------- -------- -------- --------
88,823 90,878 105,185 105,185
-------- -------- -------- --------
Intangible assets (note 5).......................... 14,062 13,406 16,891 16,891
Receivables -- noncurrent (note 3).................. 751 918 751 751
Deferred taxes (note 10)............................ 2,650 5,951 3,680 3,680
Other assets........................................ 2,628 2,900 3,399 3,399
-------- -------- -------- --------
Total assets............................... $130,008 $133,885 $150,267 $150,267
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Trade accounts payable............................ 1,123 2,435 3,115 3,115
Current maturities of long-term debt (note 9)..... 7,054 3,479 5,326 7,326
Accrued expenses (note 8)......................... 9,647 9,733 5,575 10,575
Deferred income................................... 1,579 2,448 4,866 4,866
-------- -------- -------- --------
Total current liabilities.................. 19,403 18,095 18,882 25,882
Long-term debt (note 9)............................. 146,875 142,572 154,681 172,681
Deferred income..................................... 668 749 779 779
Other liabilities................................... 414 623 1,214 1,214
-------- -------- -------- --------
167,360 162,039 175,556 200,556
-------- -------- -------- --------
Stockholders' equity (deficit) (note 12):
Class A preferred stock, par value $638, $63.80
cumulative, 10,000 shares authorized, 5,719.49
(unaudited) shares issued and outstanding in
1996............................................ $ -- $ -- 3,649 3,649
Class A common stock, par value $.001, 50,000,000
shares authorized, 10,180,483 (unaudited),
15,657,623 and 16,504,263 shares issued and
outstanding in 1996, 1995 and 1994,
respectively.................................... 17 16 10 10
Class B common stock, par value $.001, 25,000,000
shares authorized, 14,301,537 (unaudited),
16,897,379 and 17,271,240 shares issued and
outstanding in 1996, 1995 and 1994,
respectively.................................... 17 17 14 14
Accumulated deficit............................... (37,386) (28,187) (28,962) (53,962)
-------- -------- -------- --------
Stockholders' equity (deficit)............. (37,352) (28,154) (25,289) (50,289)
Commitments and contingencies (notes 7 and 13)
-------- -------- -------- --------
Total liabilities and stockholders'
deficit.................................. $130,008 $133,885 $150,267 $150,267
======== ======== ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE> 77

LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED OCTOBER 31, JULY 31,
------------------------------------ -----------------
1993 1994 1995 1995 1996
----------- ----------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Outdoor advertising, net.................. $65,365 $83,627 $101,871 $76,295 $87,647
Management fees from related and
affiliated parties..................... 595 334 31 23 45
Rental income............................. 564 512 506 408 473
------- ------- -------- ------- -------
66,524 84,473 102,408 76,726 88,165
------- ------- -------- ------- -------
Operating expenses:
Direct advertising expenses............... 23,830 28,959 34,386 26,564 30,969
General and administrative expenses....... 19,504 24,239 27,057 20,636 22,842
Depreciation and amortization............. 8,924 11,352 14,090 9,954 10,568
------- ------- -------- ------- -------
52,258 64,550 75,533 57,154 64,379
------- ------- -------- ------- -------
Operating income.................. 14,266 19,923 26,875 19,572 23,786
------- ------- -------- ------- -------
Other expense (income):
Interest income........................... (218) (194) (199) (133) (140)
Interest expense.......................... 11,502 13,599 15,783 11,948 11,957
Loss on disposition of assets............. 729 675 2,328 1,004 818
Other expenses............................ 576 616 655 684 254
------- ------- -------- ------- -------
12,589 14,696 18,567 13,503 12,889
------- ------- -------- ------- -------
Earnings before income taxes and
extraordinary item.............. 1,677 5,227 8,308 6,069 10,897
Income tax expense (benefit) -- (note 10)... 476 (2,072) (2,390) (2,480) 4,420
------- ------- -------- ------- -------
Earnings before extraordinary
item............................ 1,201 7,299 10,698 8,549 6,477
------- ------- -------- ------- -------
Extraordinary loss on debt extinguishment,
net of income tax benefit of $98 (note
9)........................................ (1,854) -- -- -- --
------- ------- -------- ------- -------
Net earnings (loss)............... (653) 7,299 10,698 8,549 6,477
Preferred stock dividends................... -- -- -- -- 274
------- ------- -------- ------- -------
Net earnings (loss) applicable to common
stock..................................... $ (653) $ 7,299 $ 10,698 $ 8,549 $ 6,203
======= ======= ======== ======= =======
Earnings per common share before
extraordinary item........................ $ .03 $ .21 $ .32 $ .26 $ .23
======= ======= ======== ======= =======
Net earnings (loss) per common share........ $ (.02) $ .21 $ .32 $ .26 $ .23
======= ======= ======== ======= =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE> 78

LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
CLASS A CLASS A CLASS B ADDITIONAL
PREFERRED COMMON COMMON PAID-IN ACCUMULATED
STOCK STOCK STOCK CAPITAL DEFICIT TOTAL
--------- ------- ------- ---------- ----------- --------
<S> <C> <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)
Conversion of 4,454,779 shares of common stock
to 5,719 shares preferred stock
(unaudited)................................. 3,649 (2) (2) -- (3,645) --
Redemption of 3,618,203 shares of common stock,
(unaudited)................................. -- (4) (1) -- (2,958) (2,963)
Net earnings (unaudited)....................... -- -- -- -- 6,477 6,477
Dividends ($.004 per common share at January
1996, $.005 per common share at April 1996,
$15.95 per preferred
share) -- (unaudited)....................... -- -- -- -- (649) (649)
------ --- --- ------ --------- --------
Balance, July 31, 1996, (unaudited).............. $3,649 $10 $14 $ -- $ (28,962) $(25,289)
====== === === ====== ========= ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE> 79

LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED OCTOBER 31, JULY 31,
-------------------------------- --------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss)............................ $ (653) $ 7,299 $ 10,698 $ 8,549 $ 6,477
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Depreciation and amortization................ 8,924 11,352 14,090 9,954 10,568
Loss on disposition of assets................ 729 675 2,328 1,004 818
Deferred taxes............................... -- (2,650) (3,301) (3,312) 2,271
Provision for doubtful accounts.............. 471 508 502 330 550
Changes in operating assets and liabilities:
Increase in receivables.................... (1,998) (1,391) (1,344) (2,062) (3,988)
(Increase) decrease in prepaid expenses.... 4 (321) (47) (198) 97
(Increase) decrease in other assets........ 34 (1,640) (418) (965) (282)
Increase (decrease) in trade accounts
payable................................. (502) (69) 1,312 384 680
Increase (decrease) in accrued expenses.... 4,817 1,356 86 (3,475) (4,157)
Increase (decrease) in deferred income..... 596 (113) 950 517 2,448
Increase (decrease) in other liabilities... (11) 208 209 26 113
-------- -------- -------- -------- --------
Net cash provided by operating
activities.............................. 12,411 15,214 25,065 10,752 15,595
-------- -------- -------- -------- --------
Cash flows from investing activities:
Capital expenditures........................... (7,550) (13,357) (14,046) (8,780) (17,653)
Purchase of new markets........................ -- (40,482) (2,885) (2,353) (9,445)
Proceeds from sale of property and equipment... 396 733 717 629 500
Purchase of intangible assets.................. (2,352) (463) (1,603) (545) (1,525)
Investments in and advances to affiliated
companies.................................... (558) -- -- -- --
Increase in notes receivable................... -- -- -- -- (675)
-------- -------- -------- -------- --------
Net cash used in investing activities...... (10,064) (53,569) (17,817) (11,049) (28,798)
-------- -------- -------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of long-term debt....... 105,611 44,515 -- -- 15,500
Principal payments on long-term debt........... (97,453) (5,966) (7,878) (5,376) (2,605)
Redemption of common stock..................... (901) (903) (1,000) -- (2,964)
Dividends...................................... (455) (499) (500) (375) (649)
-------- -------- -------- -------- --------
Net cash provided by (used in) financing
activities.............................. 6,802 37,147 (9,378) (5,751) 9,282
-------- -------- -------- -------- --------
Net increase (decrease) in cash and cash
equivalents............................. 9,149 (1,208) (2,130) (6,048) (3,921)
Cash and cash equivalents at beginning of
year.................................... 75 9,224 8,016 8,016 5,886
-------- -------- -------- -------- --------
Cash and cash equivalents at end of year... $ 9,224 $ 8,016 $ 5,886 $ 1,968 $ 1,965
======== ======== ======== ======== ========
Supplemental disclosures of cash flow
information:
Cash paid for interest......................... $ 6,994 $ 13,461 $ 15,825 $ 14,728 $ 14,744
======== ======== ======== ======== ========
Cash paid for income taxes..................... $ 295 $ 267 $ 1,028 $ 803 $ 1,991
======== ======== ======== ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE> 80

LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

OCTOBER 31, 1993, 1994 AND 1995
(INFORMATION AS OF JULY 31, 1996 AND FOR
THE NINE MONTHS ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)

(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.

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 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.

F-7
<PAGE> 81

LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(INFORMATION AS OF JULY 31, 1996 AND FOR
THE NINE MONTHS ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)

(g) Earnings Per Share

Earnings per common share are computed by dividing net earnings applicable
to common stock by the weighted average number of common shares outstanding
during each period presented. (35,470,837 shares, 35,089,188 shares and
33,772,107 shares, respectively for the years ended October 31, 1993, 1994 and
1995 and 33,775,222 shares and 27,068,544 shares for the nine-month periods
ended July 31, 1995 and 1996 respectively.) 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 year's consolidated financial statements have
been reclassified to conform with the current year presentation. These
reclassifications had no effect on previously reported net earnings.

(j) Unaudited Interim Financial Statements

The unaudited interim financial statements include all adjustments,
consisting of normal recurring adjustments, which are, in the opinion of
management, necessary for a fair presentation of the financial position and the
results of operations of the Company.

(2) NONCASH FINANCING AND INVESTING ACTIVITIES

A summary of significant noncash financing and investing activities
follows:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
JULY 31,
----------------
1993 1994 1995 1995 1996
------ ---- ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Noncash dispositions of assets.............. $ 336 $445 $3,788 $3,788 $ --
Noncash acquisitions of assets.............. 1,817 -- 4,341 4,341 1,113
Common stock issued in exchange for
investment in affiliate................... 630 -- -- -- --
Noncash issuance of preferred stock in
exchange for common stock................. -- -- -- -- 3,649
</TABLE>

F-8
<PAGE> 82

LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES

(3) RECEIVABLES

The following is a summary of accounts and notes receivable as of October
31:

<TABLE>
<CAPTION>
1994 1995
--------------------- ---------------------
CURRENT NONCURRENT CURRENT NONCURRENT
------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Trade accounts receivable, net.............. $ 9,963 $ -- $10,741 $ --
Related parties............................. 291 -- 452 --
Employees, other than related parties....... 269 -- 131 --
Other....................................... 68 751 109 918
------- ---- ------- ----
$10,591 $751 $11,433 $918
======= ==== ======= ====
</TABLE>

(4) PROPERTY, PLANT AND EQUIPMENT

Major categories of property, plant and equipment at October 31, 1994 and
1995 are as follows:

<TABLE>
<CAPTION>
ESTIMATED
LIFE (YEARS) 1994 1995
------------ -------- --------
<S> <C> <C> <C>
Land................................................. - $ 7,739 $ 7,826
Building and improvements............................ 10-32 15,132 15,553
Advertising structures............................... 15 123,592 131,071
Automotive and other equipment....................... 3-7 13,244 13,952
-------- --------
$159,707 $168,402
======== ========
</TABLE>

(5) INTANGIBLE ASSETS

The following is a summary of intangible assets at October 31:

<TABLE>
<CAPTION>
ESTIMATED
LIFE (YEARS) 1994 1995
------------ ------- -------
<S> <C> <C> <C>
Debt issuance costs.................................. 10 $ 3,604 $ 3,180
Customer lists and unexpired contracts............... 7 7,581 7,103
Non-compete agreements............................... 7-15 1,296 1,036
Organization costs................................... 5 219 673
Loan fees............................................ 7-10 1,027 1,051
Other................................................ 7-10 335 363
-------
$14,062 $13,406
=======
Cost................................................. 18,870 20,473
Accumulated amortization............................. 4,808 7,067
-------
Net intangible assets...................... $14,062 $13,406
=======
</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.

F-9
<PAGE> 83

LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES

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.

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 1993 and 1994, 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,
-------------------
1993 1994
------- -------
(UNAUDITED)
<S> <C> <C>
Revenues......................................................... $81,303 $92,480
======= =======
Net income (loss) before extraordinary item...................... $(1,856) $ 6,265
======= =======
Net income (loss)................................................ $(3,710) $ 6,265
======= =======
Earnings (loss) per share before extraordinary item.............. $ (.05) $ .18
======= =======
Earnings (loss) per share........................................ $ (.10) $ .18
======= =======
</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:

Rental expense related to the Company's operating leases was $10,983,
$14,999 and $17,053 for the years ended October 31, 1993, 1994 and 1995,
respectively.

F-10
<PAGE> 84

LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES

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>
1994 1995
------- -------
<S> <C> <C>
Land........................................................... $ 47 $ 53
Buildings...................................................... 2,454 1,892
Less accumulated depreciation.................................. (1,754) (1,124)
------- -------
$ 747 $ 821
======= =======
</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>
1994 1995
------ ------
<S> <C> <C>
Payroll............................................................ $2,084 $2,134
Interest........................................................... 5,442 5,400
Insurance benefits................................................. 1,374 1,457
Other.............................................................. 747 742
------ ------
$9,647 $9,733
====== ======
</TABLE>

F-11
<PAGE> 85

LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES

(9) LONG-TERM DEBT

Long-term debt consists of the following at October 31 and July 31, 1996:

<TABLE>
<CAPTION>
JULY 31,
1994 1995 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Senior Secured Notes................................ $100,000 $100,000 $100,000
Note payable to a bank group........................ 43,000 39,250 37,750
1993 Series A Line of Credit, payable to bank....... 2,000 -- 6,000
1995 Series B Line of Credit, payable to bank....... -- -- 9,500
8% Series A unsecured subordinated discount
debentures, maturing through 2001 (11.5% effective
yield)............................................ 3,095 2,706 2,409
5% to 10% notes payable to banks and others with
varying maturities secured by plant and
equipment......................................... 4,960 3,713 3,974
10% to 12% Series A unsecured subordinated
debentures maturing in 1996 and 1997.............. 372 372 372
Other notes with various rates and terms............ 502 10 2
-------- -------- --------
153,929 146,051 160,007
Less current maturities............................. (7,054) (3,479) (5,326)
-------- -------- --------
Long term debt, excluding current maturities........ $146,875 $142,572 $154,681
======== ======== ========
</TABLE>

Long term debt matures as follows:

<TABLE>
<S> <C>
1996...................................................... $ 3,479
1997...................................................... 5,465
1998...................................................... 9,235
1999...................................................... 12,154
2000...................................................... 12,516
Later years............................................... 103,202
--------
$146,051
========
</TABLE>

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 $0.05 for the year ended October 31, 1993.

F-12
<PAGE> 86

LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES

The indenture contains certain restrictive financial covenants, including
the following:

- Limitation on outstanding debt of the Company and any of its restricted
subsidiaries;

- Limitation of the payment of cash dividends and other restricted
payments;

- Limitation on sale and leaseback transactions, and

- 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 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 of 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:

- Maintaining specific ratios of cash flow to debt service and total debt;

- Limitation of the payment of dividends;

- Limitation on investments and joint ventures,

- Limitation on capital expenditures, and

- 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
$314 and $238 at October 31, 1994 and 1995, respectively.

(10) INCOME TAXES

LAC files a consolidated federal income tax return which includes all of
its qualifying subsidiaries.

Total income tax expense (benefit) for the years ended October 31, 1993,
1994 and 1995 is allocated as follows:

<TABLE>
<CAPTION>
1993 1994 1995
---- ------- -------
<S> <C> <C> <C>
Income from continuing operations........................ $476 $(2,072) $(2,390)
Extraordinary item....................................... (98) -- --
---- ------- -------
$378 $(2,072) $(2,390)
==== ======= =======
</TABLE>

F-13
<PAGE> 87

LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES

Income tax expense (benefit) attributable to continuing operations for the
years ended October 31, 1993, 1994 and 1995 consists of:

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -------
<S> <C> <C> <C>
1993:
U.S. federal......................................... 155 -- 155
State and local...................................... 321 -- 321
---- ------- -------
$476 $ -- $ 476
==== ======= =======
1994:
U.S. federal......................................... 165 (2,650) (2,485)
State and local...................................... 413 -- 413
---- ------- -------
$578 $(2,650) $(2,072)
==== ======= =======
1995:
U.S. federal......................................... $290 $(3,301) $(3,011)
State and local...................................... 621 -- 621
---- ------- -------
$911 $(3,301) $(2,390)
==== ======= =======
</TABLE>

Income taxes attributable to continuing operations in 1994 and 1995 include
adjustments to the beginning-of-the-year valuation allowance on the Company's
deferred tax assets in the amount of $3,882 and $5,939, 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.

Income tax expense (benefit) for 1993, 1994 and 1995, 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>
1993 1994 1995
----- ------- -------
<S> <C> <C> <C>
Computed "expected" tax expense........................... $ 570 $ 1,777 $ 2,825
Increase (reduction) in income taxes resulting from:
Change in beginning of the year balance of the
valuation allowance for deferred tax assets........ (217) (3,882) (5,939)
State and local income taxes, net of federal income
tax benefit........................................ 214 273 410
Other differences, net............................... (91) (240) 314
----- ------- -------
Actual income tax expense (benefit)............. $ 476 $(2,072) $(2,390)
===== ======= =======
</TABLE>

F-14
<PAGE> 88

LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at October 31,
1994 and 1995 are presented below:

<TABLE>
<CAPTION>
1994 1995
------- -------
<S> <C> <C>
Deferred tax liabilities:
Plant and equipment, principally due to differences in
depreciation................................................ $(5,411) $(4,656)
Intangibles, due to differences in amortizable lives........... (569) (594)
------- -------
Deferred tax liabilities............................... $(5,980) $(5,250)
======= =======
Deferred tax assets:
Receivables, principally due to allowance for doubtful accounts
and accounts written off.................................... $ 187 $ 193
Plant and equipment, due to additional costs capitalized for
tax purposes pursuant to the Tax Reform Act of 1986......... 641 764
Plant and equipment, due to basis differences on acquisitions
of assets................................................... 4,276 4,064
Investment in affiliates and plant and equipment due to gains
previously recognized for tax purposes and deferred for
financial reporting purposes................................ 1,357 1,719
Net operating loss carryforwards............................... 6,512 2,262
Investment tax credit carryforwards............................ 982 929
Other, net..................................................... 614 1,270
------- -------
Gross deferred tax assets.............................. 14,569 11,201
Less valuation allowance....................................... (5,939) --
------- -------
Deferred tax assets.................................... $ 8,630 $11,201
======= =======
Net deferred taxes..................................... $ 2,650 $ 5,951
======= =======
</TABLE>

The valuation allowance for deferred tax assets as of November 1, 1993 was
$9,821.

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.

F-15
<PAGE> 89

LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES

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 ending October 31:

<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Revenues:
Management fee income....................................... $595 $334 $ 31
Rental income............................................... 209 -- --
Interest income............................................. 75 59 8
Production of logo plates................................... 341 143 143
Expenses:
Interest expense............................................ 390 308 296
Rent expense................................................ 143 71 --
</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 1993,
1994 and 1995. Additionally, the Company paid consulting fees of $110 to this
individual in 1995.

As of October 31, 1994 and 1995, debentures totaling $3,600 and $2,950,
respectively, are owned by shareholders, directors and employees.

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 $1,200, 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. In connection with the Initial Public Offering (the "IPO") referred
to in Note 14, 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 are equal in all respects, except holders
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 will convert automatically
into Class A common stock upon the sale or transfer to persons other than
permitted transferees. All share information has been adjusted to reflect the
recapitalization.

(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

F-16
<PAGE> 90

LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES

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 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
$313, $230 and $512 for the years ended October 31, 1993, 1994 and 1995,
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 $101, $442 and $240 to the Plan during 1993, 1994 and 1995,
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.

(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 par value were converted into 5,719.49 shares of Class A
preferred stock with a $638 per share par value. This conversion resulted in a
$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 par value, were redeemed at a price of
$0.82 per share. This redemption resulted in a $3,000 charge to accumulated
deficit. In connection with the redemption, the Company agreed, contingent upon
completion of the IPO 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 resulted in an additional charge to stockholders' equity of $25,000. The
accompanying pro forma financial information gives effect to the additional
consideration paid upon completion of the IPO, but does not give effect to the
IPO proceeds.

F-17
<PAGE> 91

LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES

Subsequent to April 30, 1996, the Company advanced $450 to a stockholder.
The loan was paid on or before October 31, 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 August, 1996, the Company consummated an initial public offering of
4,294,041 shares of Class A Common Stock, $.001 par value per share. In
connection with the IPO, the Company effected the recapitalization referred to
in Note 12.

Also in connection with the IPO, the Company adopted the 1996 Equity
Incentive Plan (the "1996 Plan"). The purpose of the 1996 Plan is to attract and
retain key employees and consultants of the Company. The 1996 Plan authorizes
the grant of stock options, stock appreciation rights and restricted stock to
employees and consultants of the Company capable of contributing to the
Company's performance. The Company has reserved an aggregate of 2,000,000 shares
of Class A Common Stock for awards under the 1996 Plan.

In September, 1996 the Company agreed to acquire all of the outstanding
capital stock of FKM for a cash purchase price of $40.0 million and
substantially all of the assets of Outdoor East for a cash purchase price of
approximately $60.0 million. These acquisitions will be accounted for under the
purchase method of accounting.

On October 8, 1996, the Board of Directors of the Company authorized a Note
Offering of $225 million aggregate principal amount of Notes that would be
subordinate to amounts borrowed under the New Credit Agreement. The Board of
Directors also authorized the offering of up to $100 million of Class A $.001
par value Common Stock. The filings will be registered with the Securities and
Exchange Commission pursuant to the Securities Act of 1933.

On October 17, 1996, the Company commenced a tender offer for all of its
$100,000 outstanding 11% Senior Secured Notes Due May 15, 2003, together with a
consent solicitation to effect certain amendments to the indenture under which
the Notes were issued and the related pledge agreement. The tender offer is
expected to be financed through the New Credit Agreement.

F-18
<PAGE> 92

INDEPENDENT AUDITOR'S REPORT

Board of Directors and Shareholders
FKM Advertising Co., Inc.
Allentown, Pennsylvania

We have audited the accompanying balance sheets of FKM Advertising Co.,
Inc. as of December 31, 1994 and 1995, and the related statements of operations,
changes in stockholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these 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 our audits 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 financial statements referred to above present fairly,
in all material respects, the financial position of FKM Advertising Co., Inc. as
of December 31, 1994 and 1995, and the results of its operations and cash flows
for the years then ended in conformity with generally accepted accounting
principles.

MCGRAIL, MERKEL, QUINN & ASSOCIATES

Scranton, Pennsylvania
March 14, 1996

F-19
<PAGE> 93

FKM ADVERTISING CO., INC.

BALANCE SHEETS
DECEMBER 31, 1994 AND 1995, AND SEPTEMBER 30, 1996 (UNAUDITED)

ASSETS

<TABLE>
<CAPTION>
SEPTEMBER 30,
1994 1995 1996
----------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Current assets
Cash..................................................................... $ 27,483 $ 164,643 $ 80,631
Accounts receivable, net of an allowance for doubtful accounts
of $55,000 in 1994 and $33,500 in 1995 and $69,900 in 1996
(unaudited)............................................................ 317,039 686,350 593,700
Note receivable -- shareholder........................................... 63,072 69,296 73,704
Prepaid expenses......................................................... 399,215 469,262 554,336
Other current assets..................................................... 23,100 41,150 66,015
----------- ----------- -----------
Total current assets............................................... 829,909 1,430,701 1,368,386
----------- ----------- -----------
Property and equipment
Land..................................................................... 26,413 126,413 144,763
Buildings................................................................ -- 175,000 175,000
Advertising structures................................................... 5,160,587 7,785,370 8,090,801
Furniture and fixtures................................................... 54,648 56,640 84,502
Equipment................................................................ 118,752 403,785 467,917
Vehicles................................................................. 101,764 118,142 118,142
----------- ----------- -----------
5,462,164 8,665,350 9,081,125
Less: Accumulated depreciation........................................... 1,021,410 1,379,025 1,872,442
----------- ----------- -----------
Net property and equipment......................................... 4,440,754 7,286,325 7,208,683
----------- ----------- -----------
Other assets
Deposits................................................................. 6,400 8,400 7,400
Deferred taxes........................................................... 1,369,940 1,562,383 1,682,383
Intangibles, net of amortization......................................... 4,860,953 10,114,870 8,675,513
----------- ----------- -----------
Total other assets................................................. 6,237,293 11,685,653 10,365,296
----------- ----------- -----------
Total assets....................................................... $11,507,956 $20,402,679 $18,942,365
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt........................................ $ 1,451,989 $ 1,214,613 $ 1,489,788
Accounts payable......................................................... 87,612 159,912 37,917
Accrued severance expense................................................ 28,846 -- --
Accrued interest expense................................................. -- 88,743 174,209
Accrued expenses -- other................................................ 160,072 276,477 156,132
Deferred revenue......................................................... 10,311 9,435 17,672
----------- ----------- -----------
Total current liabilities.......................................... 1,738,830 1,749,180 1,875,718
----------- ----------- -----------
Other liabilities
Long-term accrued expenses............................................... 142,713 -- -
Long-term debt, net of current portion................................... 7,257,867 16,812,828 15,747,553
----------- ----------- -----------
Total other liabilities............................................ 7,400,580 16,812,828 15,747,553
----------- ----------- -----------
Total liabilities.................................................. 9,139,410 18,562,008 17,623,271
----------- ----------- -----------
Stockholders' equity
Preferred stock, $0.01 par value, 619,972 shares authorized, issued and
outstanding............................................................ 6,200 6,200 6,200
Common stock -- Class A, $0.01 par value, 1,000,132 shares authorized,
shares issued -- 220,160 in 1994, 270,160 in 1995 and 270,160 in 1996
(unaudited)............................................................ 2,202 2,702 2,702
Common stock -- Class B, $0.01 par value, 170,000 shares authorized,
shares issued -- 160,000 in 1994, 110,000 in 1995 and 110,000 in 1996
(unaudited)............................................................ 1,600 1,100 1,100
Additional paid-in capital............................................... 4,992,036 4,992,036 4,992,036
Additional paid-in capital from the sale of treasury stock............... 16,140 16,140 16,140
Deficit.................................................................. (2,644,532) (3,172,407) (3,693,984)
Treasury stock -- 30,000 shares of common -- Class B, at cost............ (5,100) (5,100) (5,100)
----------- ----------- -----------
Total stockholders' equity......................................... 2,368,546 1,840,671 1,319,094
----------- ----------- -----------
Total liabilities and stockholders' equity......................... $11,507,956 $20,402,679 $18,942,365
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these Financial Statements.

F-20
<PAGE> 94

FKM ADVERTISING CO., INC.

STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994 AND 1995, AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1995 AND 1996 (UNAUDITED)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
----------------------- -------------------------
1994 1995 1995 1996
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenue
Billboard rentals, net............................................ $4,702,698 $4,955,918 $3,503,686 $5,924,160
Interest income................................................... -- 11,735 7,204 19,961
Other income...................................................... 2,115 44,753 39,498 79,680
---------- ---------- ---------- ----------
Total revenue............................................... 4,704,813 5,012,406 3,550,388 6,023,801
---------- ---------- ---------- ----------
Costs and expenses
Production........................................................ 742,801 909,560 619,827 1,087,111
Lease expense..................................................... 538,481 603,452 423,180 656,790
Sales and marketing............................................... 405,918 359,062 253,495 482,291
General and administrative........................................ 891,906 759,707 584,723 869,633
---------- ---------- ---------- ----------
Total costs and expenses.................................... 2,579,106 2,631,781 1,881,225 3,095,825
---------- ---------- ---------- ----------
Income from operations before depreciation and
amortization.............................................. 2,125,707 2,380,625 1,669,163 2,927,976
---------- ---------- ---------- ----------
Depreciation and amortization
Depreciation...................................................... 385,441 430,922 289,944 493,417
Amortization...................................................... 2,032,353 1,391,606 1,054,106 1,481,574
---------- ---------- ---------- ----------
Total depreciation and amortization......................... 2,417,794 1,822,528 1,344,050 1,974,991
---------- ---------- ---------- ----------
(Loss) income from operations............................... (292,087) 558,097 325,113 952,985
---------- ---------- ---------- ----------
Other expenses
Employee severance expense........................................ 8,654 577 577 --
Interest expense.................................................. 868,561 1,038,807 663,170 1,588,947
Commitment fees................................................... 4,285 6,270 1,575 5,615
Loss on sale and disposal of fixed assets......................... 4,434 232,761 228,602 --
---------- ---------- ---------- ----------
Total other expenses........................................ 885,934 1,278,415 893,924 1,594,562
---------- ---------- ---------- ----------
Net loss before income tax benefit.......................... (1,178,021) (720,318) (568,811) (641,577)
Income tax benefit.................................................. 439,969 192,443 155,000 120,000
---------- ---------- ---------- ----------
Net loss.................................................... $ (738,052) $ (527,875) (413,811) (521,577)
========== ========== ========== ==========
Net loss per common share................................... $ (1.94) $ (1.39) $ (1.09) $ (1.37)
========== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these Financial Statements.

F-21
<PAGE> 95

FKM ADVERTISING CO., INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994 AND 1995, AND THE NINE MONTHS
ENDED SEPTEMBER 30, 1996 (UNAUDITED)

<TABLE>
<CAPTION>
ADDITIONAL
COMMON COMMON PAID-IN
STOCK STOCK ADDITIONAL CAPITAL FROM
PREFERRED CLASS CLASS PAID-IN THE SALE OF TREASURY
STOCK A B CAPITAL TREASURY STOCK DEFICIT STOCK TOTAL
--------- ------ ------ ---------- -------------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993... $ 6,200 $2,102 $1,700 $4,992,036 $ -- $(1,865,405) $ -- $3,136,633
Purchase of stock:
Preferred stock (15,517
shares).................... -- -- -- -- -- -- (144,576) (144,576)
Common stock -- Class A
(5,260 shares)............. -- -- -- -- -- -- (20,024) (20,024)
Common stock -- Class B
(120,000 shares)........... -- -- -- -- -- -- (20,400) (20,400)
Stock issued:
Preferred stock (15,517
shares).................... -- -- -- -- -- (37,083) 144,576 107,493
Common stock -- Class A
(5,260 shares)............. -- -- -- -- -- (3,992) 20,024 16,032
Common stock -- Class B
(90,000 shares)............ -- -- -- -- 16,140 -- 15,300 31,440
Conversion of 10,000 shares of
common stock -- Class B to
Class A...................... -- 100 (100 ) -- -- -- -- --
Net loss, 1994................. -- -- -- -- -- (738,052) -- (738,052)
------- ------ ------ ---------- -------- ----------- --------- ----------
Balance at December 31, 1994... 6,200 2,202 1,600 4,992,036 16,140 (2,644,532) (5,100) 2,368,546
Conversion of 50,000 shares of
common stock -- Class B to
Class A...................... -- 500 (500 ) -- -- -- -- --
Net loss, 1995................. -- -- -- -- -- (527,875) -- (527,875)
------- ------ ------ ---------- -------- ----------- --------- ----------
Balance at December 31, 1995... $ 6,200 $2,702 $1,100 $4,992,036 $ 16,140 $(3,172,407) $ (5,100) $1,840,671
Net loss (unaudited)........... -- -- -- -- -- (521,577) -- (521,577)
------- ------ ------ ---------- -------- ----------- --------- ----------
Balance at September 30, 1996
(unaudited).................. $ 6,200 $2,702 $1,100 $4,992,036 $ 16,140 $(3,693,984) $ (5,100) $1,319,094
======= ====== ====== ========== ======== =========== ========= ==========
</TABLE>

The accompanying notes are an integral part of these Financial Statements.

F-22
<PAGE> 96

FKM ADVERTISING CO., INC.

STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994 AND 1995, AND THE NINE MONTHS
ENDED SEPTEMBER 30, 1995 AND 1996 (UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------- -----------------------
1994 1995 1995 1996
---------- ------------ ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Operating activities
Net loss.................................... $ (738,052) $ (527,875) $ (413,811) $ (521,577)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization............ 2,417,794 1,822,528 1,344,050 1,974,991
Deferred taxes........................... (439,969) (192,443) (155,000) (120,000)
Bad debt expense......................... 138,714 98,010 98,010 89,353
Loss on sale and disposal of fixed
assets................................. 4,434 232,761 228,602 --
(Increase) decrease in:
Accounts receivable.................... 170,324 (467,321) 24,394 3,297
Notes receivable -- shareholder........ (1,272) (6,224) (4,287) (4,408)
Prepaid expenses....................... (93,863) (70,047) (56,984) (85,074)
Other current assets................... 8,503 (18,050) 5,208 (24,865)
Deposits............................... 2,980 (2,000) -- 1,000
Increase (decrease) in:
Accounts payable....................... 15,017 72,300 (34,207) (121,995)
Accrued severance expense.............. (126,443) (28,846) (28,846) --
Accrued expenses....................... 153,316 62,435 (17,891) (34,879)
Deferred revenue....................... 980 (876) (10,311) 8,237
---------- ------------ ---------- ----------
Net cash provided by operating
activities........................ 1,512,463 974,352 978,927 1,164,080
========== ============ ========== ==========
Investing activities
Acquisition costs........................... -- (6,025,667) (83,073) (42,218)
Loan costs.................................. (393,306) (619,856) -- --
Purchase of fixed assets.................... (285,532) (3,509,254) (313,944) (415,774)
Proceeds from sale of fixed assets.......... 12,500 -- -- --
---------- ------------ ---------- ----------
Net cash used by investing
activities........................ (666,338) (10,154,777) (397,017) (457,992)
---------- ------------ ---------- ----------
Financing activities
Loan proceeds............................... 30,000 10,469,559 -- 22,355
Payments of principal....................... (846,900) (1,151,974) (298,512) (812,455)
Acquisition of treasury stock............... (185,000) -- -- --
Issuance of stock........................... 154,965 -- -- --
---------- ------------ ---------- ----------
Net cash (used) provided by
financing activities.............. (846,935) 9,317,585 (298,512) (790,100)
---------- ------------ ---------- ----------
Net (decrease) increase in cash..... (810) 137,160 283,398 (84,012)
Cash, beginning of year....................... 28,293 27,483 27,483 164,643
---------- ------------ ---------- ----------
Cash, end of year............................. $ 27,483 $ 164,643 $ 310,881 $ 80,631
========== ============ ========== ==========
</TABLE>

The accompanying notes are an integral part of these Financial Statements.

F-23
<PAGE> 97

NOTES TO FINANCIAL STATEMENTS

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of Business

FKM Advertising Co., Inc. ("FKM") is a Delaware Corporation engaged in the
outdoor advertising business. The Company is located in Allentown, Pennsylvania
and Youngstown, Ohio. Advertising structures are primarily located in
Pennsylvania and Ohio.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Revenue Recognition

Outdoor advertising revenues are recorded in the month the billboard is
displayed, based on the terms of the contract. The date the billboard is
actually displayed may vary slightly from the contract date due to scheduling
and other concerns. These variances do not materially affect revenue.

Allowance for Doubtful Accounts

The allowance for doubtful accounts is the amount that, in management's
judgment, is sufficient to absorb any anticipated losses related to the accounts
receivable.

Property and Equipment

Depreciation is computed using the straight-line method over the estimated
useful lives of the related assets.

Earnings Per Share

Intangible Assets and Deferred Costs

The amounts representing the excess of the purchase price over the fair
value of the identifiable assets acquired ("Goodwill") has been recorded as an
intangible asset and is being amortized over a period of fifteen to forty years
using the straight-line method.

Lease rights represent the fair value at acquisition of below market rate
leases assumed in connection with the acquisition referred to above. These lease
rights are being amortized over the average remaining terms of the respective
leases.

Prepaid advertising contracts represent the estimated fair value of
contracts existing at the date of acquisition. The contract values are being
amortized over their remaining lives.

Costs incurred by FKM in securing financing agreements have been recorded
as an asset and amortized over the terms of the agreements using the
straight-line method.

F-24
<PAGE> 98

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Income Taxes

The Company adopted the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109) effective January 1,
1993. SFAS 109 requires an asset and liability approach for accounting and
reporting for income taxes.

Deferred taxes are the result of accounting for certain items differently
for financial reporting purposes than for income tax purposes. These temporary
differences primarily relate to the Company's net operating loss carryover for
Federal income tax purposes, the allowance for doubtful accounts, depreciation
and employee severance expense.

Cash Flow Disclosures

The Company has defined cash as only those amounts included under the
Balance Sheet caption "Cash".

The Company paid interest amounting to $784,499 and $942,458 for the years
ended 1994 and 1995, respectively.

The Company paid no income taxes for the years ended December 31, 1994 and
1995.

Prepaid Expenses

The Company prepays certain costs for land leases and painting of displays
at the inception of the advertising contracts. These costs are deferred and
amortized on a straight-line basis over the period that coincides with the
recognition of income. This period is generally twelve months for land leases
and painting.

Reclassifications

Certain prior year amounts have been reclassified to conform to the 1995
presentation.

Unaudited Interim Financial Statements

The unaudited interim financial statements include all adjustments which
are, in the opinion of management, necessary for a fair presentation of the
financial position and the results of operations of the Company.

NOTE 2 -- ACQUISITIONS

On November 15, 1995, the Company acquired certain assets of Naegele
Outdoor Advertising and Genesis Outdoor Advertising, both located in Youngstown,
Ohio, (the Naegele and Genesis acquisitions) for $8,565,000.

The acquisitions were accounted for as purchases, and the operations are
included in the accompanying financial statements subsequent to the acquisition
date.

The aggregate purchase price of the two acquisitions was allocated to the
assets acquired based upon the fair values at the date of acquisition. The
excess of purchase price over the fair value of assets acquired is recorded as
goodwill and is being amortized over fifteen years using the straight-line
method.

Also, in connection with the Naegele acquisition, the Company acquired real
estate on which potential environmental concerns were identified. The areas of
environmental concern were identified prior to the acquisition date and the
Company has been indemnified against the cost of any environmental remediation
that may be required.

NOTE 3 -- CASH

The current asset caption "Cash" at December 31, 1995 consisted of the
following:

F-25
<PAGE> 99

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<S> <C>
Mahoning National Bank.................................................... $125,785
Ambassador Bank........................................................... 38,383
ABN*AMRO Bank N.V. ....................................................... 75
Petty cash................................................................ 400
--------
$164,643
========
</TABLE>

NOTE 4 -- PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Expenditures for maintenance and
repairs are charged to expense as incurred, while expenditures for renewals or
betterments are capitalized. Depreciation is computed using the straight-line
method over the useful lives of the assets.

At December 31, 1994 and 1995, property and equipment consisted of the
following:

<TABLE>
<CAPTION>
COST
ESTIMATED USEFUL ------------------------
DESCRIPTION LIVES 1994 1995
---------------------------------------------- ---------------- ---------- ----------
<S> <C> <C> <C>
Land.......................................... -- $ 26,413 $ 126,413
Buildings..................................... 40 years -- 175,000
Advertising structures........................ 15 years 5,160,587 7,785,370
Furniture and fixtures........................ 5-10 years 54,648 56,640
Equipment..................................... 3- 5 years 118,752 403,785
Vehicles...................................... 3- 5 years 101,764 118,142
---------- ----------
5,462,164 8,665,350
Less: Accumulated depreciation................ 1,021,410 1,379,025
---------- ----------
$4,440,754 $7,286,325
========== ==========
</TABLE>

Depreciation expense amounted to $385,441 and $430,922 for the years ended
December 31, 1994 and 1995, respectively.

During the current year, management disposed of advertising structures that
were no longer in service. The cost of the structures was $273,755 and the
resulting loss amounted to $232,761.

NOTE 5 -- INTANGIBLE ASSETS

Intangible assets at December 31, 1994 and 1995 consisted of the following:

<TABLE>
<CAPTION>
ESTIMATED USEFUL
DESCRIPTION LIVES 1994 1995
-------------------------------------------- ---------------- ----------- -----------
<S> <C> <C> <C>
Lease rights................................ 7 years $ 2,500,000 $ 2,745,000
Organization costs.......................... 5 years 918,409 918,409
Noncompetition agreements................... 5 years 3,600,000 4,158,775
Loan costs.................................. 10 years 330,050 330,050
Loan costs -- amendments.................... 74-93 months 403,039 1,022,896
Interest cap................................ 30 months 44,550 44,550
Prepaid advertising contracts............... 30 months 2,700,000 2,700,000
Prepaid contracts and permits............... 15 years -- 1,990,021
Goodwill.................................... 15-40 years 1,055,577 4,287,448
----------- -----------
11,551,625 18,197,149
Less: Accumulated amortization.............. 6,690,672 8,082,279
----------- -----------
$ 4,860,953 $10,114,870
=========== ===========
</TABLE>

F-26
<PAGE> 100

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Amortization expense amounted to $2,032,353 and $1,391,606 for the years
ended December 31, 1994 and 1995, respectively.

NOTE 6 -- LONG-TERM DEBT

Long-term debt at December 31, 1994 and 1995 consisted of the following:

SENIOR DEBT

<TABLE>
<CAPTION>
SEPTEMBER 31,
1996
1994 1995 -------------
---------- ----------- (UNAUDITED)
<S> <C> <C> <C>
ABN*AMRO BANK N.V.
Term loan payable. Interest is payable monthly
at the Bank's base rate plus 1 7/8%. Refer
below for principal payments and additional
information. ............................... $8,519,000 $13,500,000 $ 12,700,000
Revolving note payable. Interest is payable
monthly at the Bank's base rate plus 1 7/8%
and all principal is due on December 31,
2001. The maximum borrowing is
$1,500,000. ................................ 150,000 1,000,000 1,000,000
Acquisition loan payable. Interest is payable
monthly at the Bank's base rate plus 1 7/8%
and all principal is due on December 31,
2001. The maximum borrowing is
$1,000,000. ................................ -- -- --
---------- ----------- -----------
8,669,000 14,500,000 13,700,000
========== =========== ===========
SUBORDINATED DEBT
CASCADE COMMUNICATIONS VENTURES, L.P.
Promissory loan dated November 15, 1995.
Interest is payable at a rate of 18%. All
principal is due on June 30, 2002........... -- 1,750,000 1,750,000
COAST MEZZANINE INVESTMENTS, LTD.
Promissory loan dated November 15, 1995.
Interest is payable at a rate of 18%. All
principal is due on June 30, 2002. ......... $ -- $ 1,750,000 $ 1,750,000
---------- ----------- -----------
-- 3,500,000 3,500,000
---------- ----------- -----------
INSTALLMENT DEBT
Note payable at 8.75%, payable in 36
installments of $952 per month, including
principal and interest, secured by a
vehicle, maturing June, 1997. .............. 25,536 15,976 8,197
Note payable at 7.75%, payable in 60
installments of $409 per month, including
principal and interest, secured by a
vehicle, maturing July 1998. ............... 15,320 11,465 8,369
Note payable in 24 monthly installments of
$1,111 per month, including principal and
interest, secured by equipment, maturing
July, 1998. ................................ -- -- 20,775
---------- ----------- -----------
40,856 27,441 37,341
---------- ----------- -----------
Total long-term debt.......................... 8,709,856 18,027,441 17,237,341
Less: Current portion......................... 1,451,989 1,214,613 1,489,788
---------- ----------- -----------
Total long-term debt, net of current
portion........................... $7,257,867 $16,812,828 $ 15,747,553
========== =========== ===========
</TABLE>

F-27
<PAGE> 101

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
- -------------------------
<S> <C> <C>
1996............................................. $ 1,214,613
1997............................................. 1,610,034
1998............................................. 2,002,794
1999............................................. 2,600,000
2000............................................. 3,000,000
Thereafter....................................... 7,600,000
-----------
$18,027,441
===========
</TABLE>

In addition to the above scheduled repayments, the Company is required to
make principal payments in the amount of varying percents of excess cash flow.
Excess cash flow is defined by the agreement, and the payment is due on April
15th of the following year. For the year ended December 31, 1994, additional
principal was due of $238,558 and is reflected in the current portion of
long-term debt. There is no excess cash flow payment due for the year ended
December 31, 1995.

According to the amended and restated Loan Agreement dated November 15,
1995, prepayment of loan principal equal to the percentage of the Company's
excess cash flow for the immediately preceding calendar year commences in 1997
for the calendar year ended December 31, 1996.

SENIOR DEBT

ABN*AMRO BANK N.V.

To finance the acquisition of its original operating assets, the Company
entered into a loan agreement with ABN*AMRO Bank N.V. dated January 17, 1992
(the "ABN Agreement"). The ABN Agreement provided a total loan facility of
$12,000,000 of which $11,000,000 represented a term loan and $1,000,000
represented a revolving line of credit. The ABN Agreement was amended pursuant
to the first and second amendments dated March 31, 1994 and 1993, respectively.
The Amendments primarily changed certain financial covenants, extended the
maturity date and amortization of the term loan and provided for the payment of
a fee to the Bank for its agreement to the second amendment.

During the current year, the Bank agreed to extend additional credit to the
Company for the purpose of making the acquisition referred to in Note 2, to fund
future acquisitions and for other purposes specifically permitted by the
Agreement. The additional credit was made available through an amendment to and
a restatement of the original loan agreement. The amended and restated loan
agreement is dated November 15, 1995.

Under the terms of this credit agreement, the Bank has committed to advance
to the Company the aggregate sum of up to $16,000,000. This commitment includes
a term loan commitment of $13,500,000, a revolver loan commitment of $1,500,000
and an acquisition loan commitment of $1,000,000.

Interest on the term loan and revolving line of credit is based on the
Bank's prime rate plus 1 7/8 percent and is payable monthly. Interest on the
term loan is also subject to the interest rate swap agreement entered into by
the Company and ABN*AMRO Bank N.V. on March 31, 1994. All unpaid principal and
interest is due on the maturity date of the above loans, December 31, 2001.

Covenants contained in the ABN Agreement, which among other things,
restrict the Company from incurring additional debt or capitalized lease
obligations in excess of $200,000 and indebtedness not to exceed $250,000 for
the purpose of acquiring motor vehicles at any one time while the loans are
outstanding; investing in certain types of securities and granting any security
interest in its assets other than permitted liens. The Agreement restricts
declaring or paying any dividends and issuing, distributing, redeeming,
repurchasing, acquiring or selling any stock or debt securities (except under
certain circumstances). The Agreement also

F-28
<PAGE> 102

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

restricts sales and purchases of assets, mergers, and consolidations. Also, the
Company must meet certain financial ratios relating to cash flows and the
relationship of debt to cash flows. In addition, the Company will be in default
of the Agreement if revenue from the advertisement of alcohol and tobacco
products is greater than five percent of gross revenue.

The borrowings under the Agreement are collateralized by the assets, the
capital stock, existing or subsequently acquired assets, including patents,
trademarks, copyrights and licenses, and leases of the Company. In addition, the
Company must maintain life insurance of $2,000,000 on the President of the
Company. The insurance policy is assigned to ABN*AMRO and serves as additional
collateral.

SUBORDINATED DEBT

The proceeds of the subordinated debt listed above was used solely to
partially finance the Naegele and Genesis acquisitions of November 15, 1995.

The principal balance of the subordinated loans is due and payable on the
maturity date, June 30, 2002. Interest accrues on the outstanding principal
balance, including all accrued interest added to the principal of the loans, at
a simple interest rate per annum of 18%. Beginning January 1, 1996 and on the
first day of each calendar quarter until the maturity date, interest is due and
payable at a simple interest rate of 12.5% from the Agreement date through and
including December 31, 1996, and at a simple interest rate of 15.5% for the
period from and after January 1, 1997. Accrued interest, which is not payable
quarterly, shall be added to the outstanding principal amount of the subordinate
loans and is compounded quarterly until paid.

Under the terms of the subordinated agreements, the Company must comply
with all of the covenants (affirmative and negative) as set forth in the Senior
Loan Agreement. Also, if the subordinated loans are accelerated at any time
prior to the third anniversary of the agreement dates, the present value of the
sum of all the interest that would accrue from the acceleration date through and
including the third anniversary date becomes due along with the outstanding
principal and any accrued interest.

NOTE 7 -- REDEEMABLE PREFERRED STOCK

Preferred Stock -- Series A -- The holders of the outstanding Series A
Preferred Stock shall be entitled to receive cumulative dividends at an annual
rate of fifteen percent of the original issue price of $7.00 or $1.05 per share.
Dividends shall accrue from day-to-day on each share from the date of issuance
of each share whether or not earned or declared. Holders of Series A Preferred
Stock can convert their shares at any time into Class A Common Stock on a
share-for-share basis. Upon any conversion of Series A Preferred Stock to Class
A Common Stock all accrued and unpaid cumulative dividends shall be forfeited.
At December 31, 1994 and 1995, dividends on Preferred Stock were in arrears by
$1,924,375 and $2,575,345, respectively.

The Series A Preferred Stock holders have participation rights in any
dividend other than a stock dividend declared and paid on Common Stock of the
Company.

Beginning in 1997, Series A Preferred Stock holders have the right to
redeem their shares based on an optional redemption schedule. The redemption
price shall be the greater of the fair market value per share or $7.00 per share
plus all unaccrued and unpaid cumulative dividends.

Also, upon any event of default, Series A Preferred Stockholders can redeem
all shares outstanding at the redemption price, even prior to the redemption
date of January 1, 1997, at the redemption price.

NOTE 8 -- COMMON STOCK AND WARRANTS

Class A Shares -- Of the authorized shares of Class A Common Stock, 619,972
shares are reserved for the conversion of the Preferred Stock to Class A Common
Stock and 170,000 shares for the conversion of the Class B Common Stock into
Class A Common Stock of the Company.

F-29
<PAGE> 103

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Class B Shares -- Certain stockholders of the Company to whom shares of
Class B Common Stock have been issued will vest their rights in these shares
over the next four years, based upon the Company's ability to achieve various
performance goals and/or the passage of time.

Treasury Stock -- The purchase of the Company's Common Stock is recorded at
cost. At the date of subsequent reissue, the treasury stock account is reduced
by the cost of such stock on the first-in -- first-out basis.

Warrants -- Cascade Communications Ventures, L.P. and Coast Mezzanine
Investments, Ltd., the subordinated lenders referred to in Note 2, were issued
stock purchase warrants during the current year. Effective November 15, 1995,
each Company is entitled to purchase 25,530 shares of Class A Common Stock at an
exercise price of $.02 per share. The exercise period terminates on June 30,
2002. Among other things, the warrant agreements restrict stockholders' equity
transactions that would dilute the value of their warrants.

NOTE 9 -- DEFINED CONTRIBUTION PLAN

The Company sponsors a defined contribution profit sharing plan. The plan
was established by adopting a New England Mutual Life Company 401(k) prototype
plan. It covers all eligible employees.

The Company contributes to the plan an amount equal to fifty percent of the
participant's salary reduction contributions for the plan year. Employer
matching contributions are further limited to five percent of the participants
compensation. Matching contributions for the current year amounted to $12,753.
For the year ended December 31, 1994, matching contributions amounted to $9,639.

Profit sharing contributions are made by the Company at the discretion of
the Board of Directors. For the years ended December 31, 1994 and 1995,
discretionary contributions of $15,000 were made.

NOTE 10 -- INCOME TAXES

The Company has approximately $4,808,000 of net operating losses available
for Federal income tax purposes which begin to expire in 2007. The Commonwealth
of Pennsylvania provides for the carryover of operating losses up to a maximum
of $1,000,000 per year. Current operating loss carryovers are available through
1997.

The income tax benefits are comprised of the following for the years ended
December 31,

<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Current payable
Federal...................................................... $ -- $ --
State........................................................ -- --
Deferred benefit (provision)
Federal...................................................... 359,165 131,941
State........................................................ 80,804 60,502
-------- --------
Income tax benefit................................... $439,969 $192,443
======== ========
</TABLE>

F-30
<PAGE> 104

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The components of the deferred income tax benefit, which result from
temporary differences, are as follows:

<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Net operating loss (NOL)....................................... $550,909 $243,715
Allowance for doubtful accounts................................ (90,040) (7,327)
Depreciation................................................... (49,524) (32,796)
Employee severance expense..................................... (42,991) (9,809)
Contribution carryover......................................... 3,619 355
Adjustment for enacted changes in state tax laws............... 67,996 (1,695)
-------- --------
Total................................................ $439,969 $192,443
======== ========
</TABLE>

A reconciliation of income taxes at statutory rates to applicable income
taxes reported in the statement of operations and deficit is as follows:

<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Benefit at the expected statutory rates........................ $485,975 $292,403
NOL carryover unallowable for state tax purposes............... (93,372) (19,797)
Adjustment for enacted changes in state tax laws............... 67,996 (1,695)
Non-deductible expenses for tax purposes....................... (13,889) (13,954)
Other reductions, net........................................ (6,741) (64,514)
-------- --------
Total................................................ $439,969 $192,443
======== ========
</TABLE>

Significant components of the Company's deferred tax assets and liabilities
are as follows for the years ended December 31,

<TABLE>
<CAPTION>
1994 1995
---------- ----------
<S> <C> <C>
Deferred tax assets:
Net operating loss (NOL).................................. $1,481,522 $1,948,867
Allowance for doubtful accounts........................... 22,603 12,847
Employee severance expense................................ 12,908 --
Contribution carryover.................................... 4,019 4,325
---------- ----------
Total deferred tax assets......................... 1,521,052 1,966,039
Less valuation allowance.......................... (58,051) (278,935)
---------- ----------
1,463,001 1,687,104
Deferred tax liability -- depreciation...................... (93,061) (124,721)
---------- ----------
Net deferred tax asset...................................... $1,369,940 $1,562,383
========== ==========
</TABLE>

NOTE 11 -- RELATED PARTY TRANSACTIONS

The Company has entered into the following related party transactions:

NOTE RECEIVABLE -- SHAREHOLDER

The Corporation made a loan to a shareholder in the amount of $61,243.
Interest accrues at a rate equal to the variable interest rate which is charged
to the Company under the ABN*AMRO Bank N.V. Loan Agreement. Principal and
interest is payable on demand. If no demand is made, the shareholder shall pay
the amount of unpaid principal and accrued interest as of July 31, 1997, plus
interest thereon, in eight equal quarterly installments commencing August 1,
1997.

F-31
<PAGE> 105

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

CONSULTING AGREEMENT

Brush, Johnsen & Fretty, Inc., is providing the Company with certain
consulting and investment banking services pursuant to an Agreement dated
January 17, 1992. The principals of Brush, Johnsen & Fretty, Inc., are also
shareholders in FKM. The Agreement terminates on January 16, 1999.

EMPLOYMENT AGREEMENT

The Company entered into an Employment Agreement dated May 18, 1994 with a
shareholder of the Company. Under the Agreement, the shareholder was employed as
President of the Company. The Agreement primarily provides for an annual salary,
benefits and a performance bonus arrangement. Additional non-cash compensation
in the form of the Company's Class B Common Stock was also provided to the
President under the terms of the Agreement.

ABN*AMRO BANK

In connection with the second amendment to the loan agreement referred to
in Note 5, the Company agreed to pay the Bank a fee equal to $206,880. On the
amendment date, $25,860 was paid in cash and $181,020 was deferred and terms of
repayment agreed upon. In accordance with section 2.4(d) of the amendment, the
Bank opted to purchase shares of the Company's stock for $154,965 through the
partial liquidation of the deferred fee.

NOTE 12 -- COMMITMENTS AND CONTINGENCIES

Leases

The Company's advertising structures are located on properties leased from
others. The Company also leases its corporate office and plant. Some of the land
leases for advertising structures contain renewal options with varying terms and
escalation clauses which provide, primarily on a yearly basis, for increased
rental. The corporate office and plant lease has a five year term with one five
year renewal term available. For the years ended December 31, 1994 and 1995,
rent expense was $564,262 and $642,344, respectively. Future office and plant
minimum rentals at December 31, 1995 are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, AMOUNT
- ------------ -------
<S> <C> <C>
1996................................................ $38,400
=======
</TABLE>

NOTE 13 -- DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company has a number of financial instruments, none of which are held
for trading purposes. The Company estimates that the fair value of all financial
instruments at December 31, 1995, does not differ materially from the aggregate
carrying values of its financial instruments recorded in the accompanying
Balance Sheet. The estimated fair value amounts have been determined by the
Company using available market information and appropriate valuation
methodologies. Considerable judgment is necessarily required in interpreting
market data to develop the estimates of fair value, and, accordingly, the
estimates are not necessarily indicative of the amounts that the Company could
realize in a current market exchange.

F-32
<PAGE> 106

INDEPENDENT AUDITORS' REPORT

The Partners
Outdoor East, L.P.:

We have audited the accompanying balance sheets of Outdoor East, L.P. as of
December 31, 1994 and 1995, and the related statements of operations, partners'
deficit, and cash flows for each of the years in the three year period ended
December 31, 1995. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Outdoor East, L.P. as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.

KPMG Peat Marwick LLP

March 1, 1996, except for note 8 which
is as of June 13, 1996

F-33
<PAGE> 107

OUTDOOR EAST, L.P.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------- SEPTEMBER
1994 1995 30, 1996
------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents.......................... $ 251,659 485,383 1,026,360
Accounts receivable:
Trade, net of allowance for doubtful accounts of
$52,221 and $25,914 at December 31, 1995 and
1994, respectively, and $48,444 at September
30, 1996...................................... 1,655,990 1,840,843 1,836,483
Other........................................... 130,978 79,814 114,017
Prepaid expenses................................... 874,889 649,083 853,126
------------ ---------- ----------
Total current assets....................... 2,913,516 3,055,123 3,829,986
Property and equipment, at cost, net of accumulated
depreciation (note 2).............................. 17,368,265 16,197,181 15,565,545
Intangible assets, net of accumulated amortization:
Site lease rights.................................. 1,710,467 1,213,698 857,740
Goodwill........................................... 1,878,216 1,743,641 1,644,397
Deferred financing costs and other (note 9)........ 214,589 152,923 1,717,172
------------ ---------- ----------
3,803,272 3,110,262 4,219,309
Other assets (note 9)................................ -- -- 775,472
------------ ---------- ----------
$ 24,085,053 22,362,566 24,390,312
============ ========== ==========
LIABILITIES AND PARTNERS' DEFICIT
Current liabilities:
Current portion of long-term debt (notes 3 and
9).............................................. $ 655,588 21,990,932 866,667
Current portion of notes payable to general
partner......................................... 37,072 45,627 --
Note payable (notes 4 and 9)....................... 445,000 445,000 --
Accounts payable:
Trade........................................... 873,935 430,022 458,092
General partner (note 5)........................ 18,142 -- --
Accrued interest payable........................... 157,418 159,017 522,062
Other accrued liabilities.......................... 172,499 128,419 177,220
Deferred revenue................................... 485,854 483,957 --
------------ ---------- ----------
Total current liabilities.................. 2,845,508 23,682,974 2,024,041
Long-term debt, less current portion (notes 3 and
9)................................................. 22,990,501 998,212 22,942,937
Notes payable to general partner (notes 5 and 9)..... 1,227,377 1,183,273 --
------------ ---------- ----------
Total liabilities.......................... 27,063,386 25,864,459 24,966,978
Partners' deficit:
Partners' capital contributions.................... 23,183,150 23,662,316 28,202,316
Accumulated deficit................................ (26,161,483) (27,164,209) (28,778,982)
------------ ---------- ----------
Total partners' deficit.................... (2,978,333) (3,501,893) (576,666)
------------ ---------- ----------
Commitments and contingencies (notes 3, 6, 7 and 9)
$ 24,085,053 22,362,566 24,390,312
============ ========== ==========
</TABLE>

See accompanying notes to financial statements.

F-34
<PAGE> 108

OUTDOOR EAST, L.P.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------- -----------------------
1993 1994 1995 1995 1996
----------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Revenue:
Advertising.................... $ 9,792,960 10,554,742 10,981,093 8,152,417 8,684,455
Other.......................... 359,515 809,276 526,440 343,113 545,212
----------- ---------- ---------- --------- ----------
10,152,475 11,364,018 11,507,533 8,495,530 9,229,667
----------- ---------- ---------- --------- ----------
Operating expenses:
Technical services............. 3,659,296 4,085,795 3,883,507 2,945,813 3,004,028
Selling, general and
administrative.............. 3,324,964 3,835,728 3,548,336 2,737,045 2,698,636
Executive recruiting and
severance................... 131,913 163,595 -- -- --
Management fees to general
partner (note 5)............ 457,000 249,996 -- -- --
Depreciation and
amortization................ 3,543,531 3,222,131 2,674,826 1,925,540 2,191,614
----------- ---------- ---------- --------- ----------
11,116,704 11,557,245 10,106,669 7,608,398 7,894,278
Operating income (loss)........ (964,229) (193,227) 1,400,864 887,132 1,335,389
----------- ---------- ---------- --------- ----------
Other expenses:
Interest expense............... 2,102,307 2,073,420 2,059,741 1,547,883 2,159,701
Loss on sale of assets......... 190,189 12,027 -- -- --
Other (note 9)................. 59,942 342,045 343,849 148,901 790,461
----------- ---------- ---------- --------- ----------
Net income (loss)...... $(3,316,667) (2,620,719) (1,002,726) (809,652) (1,614,773)
=========== ========== ========== ========= ==========
</TABLE>

See accompanying notes to financial statements.

F-35
<PAGE> 109

OUTDOOR EAST, L.P.

STATEMENTS OF PARTNERS' DEFICIT

<TABLE>
<CAPTION>
PARTNERS'
CAPITAL ACCUMULATED
CONTRIBUTIONS DEFICIT TOTAL
------------- ----------- ----------
<S> <C> <C> <C>
Balances, January 1, 1993............................ $16,233,150 (20,224,097) (3,990,947)
Capital contributions.............................. 6,000,000 -- 6,000,000
Net loss........................................... -- (3,316,667) (3,316,667)
----------- ----------- ----------
Balances, December 31, 1993.......................... $22,233,150 (23,540,764) (1,307,614)
Capital contributions.............................. 950,000 -- 950,000
Net loss........................................... -- (2,620,719) (2,620,719)
----------- ----------- ----------
Balances, December 31, 1994.......................... $23,183,150 (26,161,483) (2,978,333)
Capital contributions.............................. 479,166 -- 479,166
Net loss........................................... -- (1,002,726) (1,002,726)
----------- ----------- ----------
Balances, December 31, 1995.......................... $23,662,316 (27,164,209) (3,501,893)
Capital contributions (Note 9)..................... 4,540,000 -- 4,540,000
Net loss........................................... -- (1,614,773) (1,614,773)
----------- ----------- ----------
Balances, September 30, 1996 (unaudited)............. $28,202,316 (28,778,982) (576,666)
=========== =========== ==========
</TABLE>

See accompanying notes to financial statements.

F-36
<PAGE> 110

OUTDOOR EAST, L.P.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------- ------------------------
1993 1994 1995 1995 1996
----------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Cash flows from operating activities:
Net loss..................................... $(3,316,667) (2,620,719) (1,002,726) (809,652) (1,614,773)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization............. 3,543,531 3,225,367.. 2,674,826 1,925,540 2,191,614
Gain (loss) on sale of assets............. (19,921) 12,027 -- -- --
Loss on disposition of assets............. 261,644 -- -- -- --
Changes in operating assets and
liabilities:
Decrease (increase) accounts receivable,
prepaid expenses and other assets.... (353,900) (315,127) 92,117 30,149 (259,359)
(Decrease) increase in accounts payable,
accrued interest payable, other
accrued liabilities, and deferred
revenue.............................. 317,646 (427,469) (515,633) (415,765) (44,041)
----------- ---------- ---------- --------- -----------
Net cash provided by (used in)
operating activities............... 432,333 (125,921) 1,248,584 730,272 273,441
----------- ---------- ---------- --------- -----------
Cash flows from investing activities:
Purchases of property and equipment.......... (2,281,251) (475,240) (810,732) (607,046) (783,580)
Proceeds from sale of assets................. 27,204 -- -- -- --
----------- ---------- ---------- --------- -----------
Net cash used in investing
activities......................... (2,254,047) (475,240) (810,732) (607,046) (783,580)
----------- ---------- ---------- --------- -----------
Cash flows from financing activities:
Capital contributions........................ 6,000,000 950,000 479,166 479,166 4,540,000
Proceeds from notes payable.................. 213,144 73,600 -- -- 22,750,000
Repayments of notes payable and long-term
debt...................................... (3,970,883) (494,378) (683,294) (509,675) (23,603,440)
Cash deposited in escrow..................... -- -- -- -- (750,000)
Payment of debt issuance costs............... (280,645) -- -- -- (1,885,444)
----------- ---------- ---------- --------- -----------
Net cash provided by (used in)
financing activities............... 1,961,616 529,222 (204,128) (30,509) 1,051,116
----------- ---------- ---------- --------- -----------
Net increase (decrease) in cash and
cash equivalents................... 139,902 (71,939) 233,724 92,717 540,977
Cash and cash equivalents at beginning of
year......................................... 183,696 323,598 251,659 251,659 485,383
----------- ---------- ---------- --------- -----------
Cash and cash equivalents at end of year....... $ 323,598 251,659 485,383 344,376 1,026,360
=========== ========== ========== ========= ===========
Supplemental cash flow information:
Cash paid for interest....................... $ 2,274,370 2,083,743 2,067,342 1,559,241 1,796,710
=========== ========== ========== ========= ===========
Issuance of Note Payable for purchase of fixed
assets (note 6).............................. $ -- 445,000 -- -- --
=========== ========== ========== ========= ===========
</TABLE>

See accompanying notes to financial statements.

F-37
<PAGE> 111

OUTDOOR EAST, L.P.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1995

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Description of Business

Outdoor East, L.P. (the Partnership) is a Delaware limited partnership
which acquires, operates and develops outdoor advertising businesses throughout
the Southeast United States. The managing general partner of the Partnership is
First Carolina Communications, Inc. (FCCI).

The balance sheet as of September 30, 1996, and the statements of
operations, partners' equity, and cash flows for the nine months ended September
30, 1995 and 1996 have been prepared by the Partnership without audit. In the
opinion of management, all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial position,
results of operations and cash flows as of September 30, 1996 and for the nine
months ended September 30, 1995 and 1996, have been included.

(b) Allocation of Profits and Losses

The Partnership agreement generally provides for the allocation of profits
and losses among the partners in proportion to their respective capital
contributions. Profits and losses are allocated to the partners in the following
percentages: 19.8% to the general partner and 80.2% to the limited partners.

For purposes of the statements or cash flows, the Partnership considers
investments with original maturities of three months or less to be cash
equivalents.

(d) Revenue Recognition

The Partnership recognizes advertising revenue as the services are
provided. The revenue is recorded net of advertising agency commission expense.
Allowances for doubtful accounts are provided based on estimated losses.

(e) Property and Equipment

Property and equipment are recorded at cost and depreciation is computed
using various accelerated methods over the estimated useful lives of the assets
as follows: buildings and improvements -- 31.5 years; sign structures -- 15
years; vehicles, shop equipment, leasehold improvements, and office furniture
and equipment -- 5 to 7 years. Maintenance and repairs are expensed as incurred;
and property additions, renewals and improvements are capitalized. When assets
are retired or otherwise disposed of, the related cost and accumulated
depreciation are removed from the respective accounts and any gain or loss is
recognized.

(f) Intangible Assets

The Partnership's display structures are generally located on leased sites
under long-term operating leases providing for monthly rental payments over the
term of the lease, which generally range from 5 to 15 years. The estimated fair
value of leases in place (arising from favorable terms) obtained in business
combinations is allocated to site lease rights and amortized using the
straight-line method over the weighted average remaining life of the leases.
Additionally, direct costs associated with obtaining new site leases are
capitalized and amortized over a period of five years. Accumulated amortization
of site lease rights was approximately $5,299,000 and $5,808,000 at December 31,
1994 and 1995, respectively, and $6,164,000 at September 30, 1996 (unaudited).

F-38
<PAGE> 112

OUTDOOR EAST, L.P.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Goodwill arising from business combinations is amortized using the
straight-line method over a period of 20 years. Accumulated amortization of
goodwill was approximately $765,000 and $896,000 at December 31, 1994 and 1995,
respectively, and $1,002,000 at September 30, 1996 (unaudited).

Direct costs associated with obtaining long-term debt are deferred and
amortized using the straight-line method over the term of the loan agreement.
Accumulated amortization of deferred finance costs was approximately $189,000
and $239,000 at December 31, 1994 and 1995, respectively, and $407,000 at
September 30, 1996 (unaudited).

(g) Income Taxes

The Partnership's profits and losses are reported directly by the partners
for income tax purposes. Accordingly, the Partnership is not liable for federal
or state income taxes.

(h) Use of Estimates

(2) PROPERTY AND EQUIPMENT

Property and equipment are summarized as follows:

<TABLE>
<CAPTION>
SEPTEMBER
30,
1996
1994 1995 -----------
----------- ----------- (UNAUDITED)
<S> <C> <C> <C>
Land........................................ $ 131,173 131,173 131,173
Buildings and leasehold improvements........ 1,191,124 1,205,286 1,218,028
Sign structures............................. 25,453,180 26,162,278 26,760,672
Vehicles.................................... 1,138,059 1,239,132 1,265,351
Shop equipment.............................. 183,766 206,401 221,355
Office furniture and equipment.............. 696,006 876,849 1,008,052
Construction in progress.................... 217,079 -- --
------------ ------------ ------------
29,010,387 29,821,119 30,604,631
Accumulated depreciation.................... (11,642,122) (13,623,938) (15,039,086)
------------ ------------ ------------
$17,368,265 16,197,181 15,565,545
============ ============ ============
</TABLE>

F-39
<PAGE> 113

OUTDOOR EAST, L.P.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Depreciation expense for the years ended December 31, 1995 and 1994 was
approximately $2,059,000 and $1,985,000, respectively, and $1,415,000 at
September 30, 1996 (unaudited).

(3) LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30,
1996
1994 1995 -------------
----------- ----------- (UNAUDITED)
<S> <C> <C> <C>
Term loan facility, secured by pledged
assets and partnership interests, with
interest payable quarterly at LIBOR plus
3.25%..................................... $ -- -- 22,500,000
Revolving line of credit, secured by pledged
assets and partnership interests, with
interest payable at LIBOR plus 3.25%...... -- -- 250,000
Bank credit facility, secured by pledge of
assets, partnership interests and partial
guarantee of majority limited partner,
with interest payable quarterly at
7 7/8%.................................... 22,370,000 21,870,000 --
Note payable, secured by standby letter of
credit, payable in 120 monthly
installments of $6,250 plus interest at
10%, final installment of $750,000 due
June 1, 1999.............................. 1,081,250 1,006,250 950,000
Other....................................... 194,839 112,894 109,604
----------- ----------- ----------
23,646,089.. 22,989,144 23,809,604
Less current portion........................ (655,588) (21,990,932) (866,667)
----------- ----------- ----------
$22,990,501 998,212 22,942,937
=========== =========== ==========
</TABLE>

The bank credit facility is payable in graduated quarterly installments
through December 31, 1999. The Bank Credit Facility Agreement (the "Agreement")
contains restrictive covenants which include the maintenance of certain
financial ratios.

Effective March 28, 1994, the Agreement was amended to waive certain debt
covenant violations and defaults and to revise certain provisions which, among
other things, restrict capital expenditures and management fees. Effective June
15, 1995, the Agreement was further amended to revise certain covenants and to
prohibit payment of management fees to FCCI.

The Partnership failed to meet certain covenant requirements which has
placed the Partnership in technical default. Consequently, the Partnership has
classified the entire outstanding balance of the bank credit facility as a
current liability as of December 31, 1995.

Scheduled maturities of long-term debt are as follows:

F-40
<PAGE> 114

OUTDOOR EAST, L.P.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The Partnership has an open letter of credit with an available balance of
$1,175,000. The Partnership pays an annual fee of 1.5% of the available balance.

See note 9.

(4) NOTE PAYABLE

In 1994, the Partnership acquired $445,000 of signboards from Lamar
Advertising, Inc., a Georgia based company in exchange for the issuance of a
note payable. The note is dated September 30, 1994 and calls for interest at 9%,
payable monthly. The note is due in full on May 1, 1996. See note 9.

(5) RELATED PARTY TRANSACTIONS

FCCI provides management services to the Partnership. During 1994, the
Partnership paid $249,996 in management fees. As is required by a covenant in
the Partnership's Bank Credit Facility Agreement, the Partnership did not pay
management fees to FCCI during 1995.

Accounts payable -- general partner primarily represents unpaid management
fees due to FCCI, and are noninterest bearing.

Notes payable to general partner represent unsecured advances from FCCI,
which bear interest at 7 7/8%, payable in graduated quarterly installments. Any
unpaid principal and interest is due in full on March 31, 2000. See note 9.

(6) COMMITMENTS

In the normal course of business, the Partnership maintains long-term
operating leases for land site locations. The aggregate future minimum lease
payments required under noncancelable operating leases as of December 31, 1995
were as follows:

<TABLE>
<S> <C>
1996............................................. $ 429,421
1997............................................. 389,410
1998............................................. 330,445
1999............................................. 271,513
2000............................................. 199,795
Thereafter....................................... 988,271
----------
$2,608,855
==========
</TABLE>

Total site lease expense was approximately $1,467,000, $1,559,000 and
$1,615,000, respectively, for the years ended December 31, 1993, 1994 and 1995
and approximately $1,218,000 for the nine months ended September 30, 1996
(unaudited).

(7) LITIGATION

On December 19, 1995, COA, Inc., formerly known as Columbia Outdoor
Advertising, Inc. filed suit against Outdoor South, L.P. in the Court of Common
Pleas of Richland County, South Carolina. Outdoor South, L.P. was formerly an
affiliate of the Company and ceased to exist on October 25, 1990 in a
transaction in which the Company succeeded to Outdoor South, L.P.'s assets and
liabilities. The suit alleges that Outdoor South, L.P. is indebted to the
plaintiff in the amount of $101,707 arising out of Outdoor South, L.P.'s
acquisition of the assets of COA, Inc. in 1990. An answer denying liability has
been filed in this action and no further proceedings have yet occurred. No
charge has been made to the Company's income related to this litigation.

F-41
<PAGE> 115

OUTDOOR EAST, L.P.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(8) LIQUIDITY

The Partnership had a negative working capital balance of $20,627,851 as of
December 31, 1995 as a result of its classifying the outstanding balance of the
Bank Credit Facility as a current liability. The Partnership was in technical
default of the Bank Credit Facility Agreement, since it failed to meet certain
covenant requirements contained therein.

On June 13, 1996, the Partnership signed a new Bank Credit Facility (the
"Facility"). The Facility is comprised of a Term Loan Facility ( the "Term
Loan") for $22.5 million and a Revolving Line of Credit (the "LOC") for up to
$7.5 million. Quarterly installment payments on the Term Loan will commence on
June 30, 1997. Outstanding balances under the LOC will be due on June 30, 2003,
the Facility's termination date. Borrowings under the Facility are secured by
the assets of the Partnership and partnership interests. Covenants under the
Facility require the Partnership to maintain certain debt to cash flow ratios.
The Partnership has placed $750,000 of the proceeds in escrow as provided for in
the Facility. The escrow balance has been recorded in other non-current assets
in the accompanying September 30, 1996 balance sheet. The remaining proceeds
from the Facility were used to pay-off the Partnership's existing Bank Credit
Facility, the note payable to Lamar Advertising, Inc., and for general purposes.
In addition, the lenders and others invested $4,540,000 in the Partnership.

(9) SUBSEQUENT EVENTS (UNAUDITED)

In October 1996, the Partnership signed an agreement for the sale of the
assets and liabilities of the Partnership to Lamar Advertising, Inc.

Through September 30, 1996, the Partnership has recorded approximately
$716,000 of cost associated with an initial potential sale and reorganization of
the Partnership as other expenses.

F-42
<PAGE> 116

[PHOTOGRAPH OF POSTER, BULLETIN, HIGHWAY LOGO SIGN AND BUS SHELTER]
<PAGE> 117
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, ANY OF THE SELLING STOCKHOLDERS OR ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES
OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, THOSE TO WHICH IT RELATES IN ANY STATE TO ANY PERSON TO WHOM IT
IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS
AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.

------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 12
The Transactions...................... 17
Use of Proceeds....................... 20
Dividend Policy....................... 20
Price Range of Class A Common Stock... 21
Capitalization........................ 22
Selected Consolidated Historical and
Pro Forma Financial and Operating
Data................................ 23
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 34
Business.............................. 41
Management............................ 55
Certain Transactions.................. 59
Principal and Selling Stockholders.... 60
Description of Capital Stock.......... 61
Shares Eligible for Future Sale....... 65
Description of Indebtedness........... 65
Underwriting.......................... 70
Certain Legal Matters................. 71
Experts............................... 71
Additional Information................ 71
Incorporation of Certain Documents by
Reference........................... 72
Index to Consolidated Historical and
Pro Forma Financial Statements...... F-1
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

2,800,000 SHARES

[LAMAR LOGO]

CLASS A COMMON STOCK

------------

PROSPECTUS

, 1996

------------

SMITH BARNEY INC.

ALEX. BROWN & SONS
INCORPORATED

PRUDENTIAL SECURITIES INCORPORATED

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 118

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following are the estimated expenses of issuance and distribution of
the Class A Common Stock registered hereunder on Form S-3 other than
underwriting discounts and commissions:

<TABLE>
<S> <C>
SEC registration fee.................................................... $ 34,848.48
Nasdaq listing fee...................................................... 17,500.00
NASD filing fee......................................................... 12,011.50
Blue Sky fees and expenses.............................................. 5,000.00
Printing and engraving expenses......................................... 250,000.00
Accounting fees and expenses............................................ 45,000.00
Legal fees and expenses................................................. 125,000.00
Transfer Agent and Registrar fees....................................... 5,000.00
Miscellaneous expenses.................................................. 5,640.02
-----------
Total......................................................... $500,000.00
===========
</TABLE>

All of the above figures, except the SEC registration fee, Nasdaq listing
fee and NASD filing fee, are estimates.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law grants Lamar the power
to indemnify each person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative by reason of the fact
that he is or was a director, officer, employee or agent of Lamar, or is or was
serving at the request of Lamar as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with any
such action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of Lamar, and
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful, provided, however, no indemnification shall be
made in connection with any proceeding brought by or in the right of Lamar where
the person involved is adjudged to be liable to Lamar except to the extent
approved by a court.

Lamar's By-laws provide that any person who is made a party to any action
or proceeding because such person is or was a director or officer of Lamar will
be indemnified and held harmless against all claims, liabilities and expenses,
including those expenses incurred in defending a claim and amounts paid or
agreed to be paid in connection with reasonable settlements made before final
adjudication with the approval of the Board of Directors, if such person has not
acted, or in the judgement or the shareholders or directors of Lamar has not
acted, with willful or intentional misconduct. The indemnification provided for
in Lamar's By-laws is expressly not exclusive of any other rights to which those
seeking indemnification may be entitled as a matter of law.

Lamar's Certificate of Incorporation (the "Certificate") provides that
directors of Lamar will not be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
whether or not an individual continues to be a director at the time such
liability is asserted, except for liability (i) for any breach of the director's
duty of loyalty to Lamar or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL, relating to prohibited dividends or
distributions or the repurchase or redemption of stock, or (iv) for any
transaction from which the director derives an improper personal benefit.

The Company carries Directors' and Officers' insurance which covers its
directors and officers against certain liabilities they may incur when acting in
their capacity as directors or officers of the Company.

II-1
<PAGE> 119

ITEM 16. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
1.1 -- Form of Underwriting Agreement. Filed herewith.
3.1 -- Amended and Restated Certificate of Incorporation of the Registrant.
Previously filed as Exhibit 3.1 to the Registrant's Registration
Statement on Form S-1 (File No. 333-05479), and incorporated herein
by reference.
3.2 -- By-Laws of the Registrant, as amended. Previously filed as Exhibit
3.2 to the Registrant'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
Registrant. Previously filed as Exhibit 4.1 to the Registrant'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 Registrant's Registration Statement on Form S-1 (File No.
33-59624), and incorporated herein by reference.
4.3 -- Subsidiary Guarantees dated May 19, 1993. Previously filed as Exhibit
4.2 to the Registrant'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
Registrant's Registration Statement on Form S-1 (File No. 33-59624),
and incorporated herein by reference.
4.5 -- First Supplemental Indenture dated July 30, 1996. Previously filed as
Exhibit 4.5 to the Registrant's Registration Statement on Form S-1
(File No. 333-05479), and incorporated herein by reference.
4.6 -- Form of Second Supplemental Indenture in the form of an Amended and
Restated Indenture dated November 8, 1996. Previously filed as
Exhibit 4.1 to the Company's Current Report on Form 8-K filed on
November 15, 1996 (File No. 0-20833), and incorporated herein by
reference.
4.7 -- Notice of Trustee dated November 8, 1996 with respect to the release
of the security interest in the Trustee on behalf of the holders of
the Company's Senior Secured Notes. Previously filed as Exhibit 4.2
to the Company's Current Report on Form 8-K filed on November 15,
1996 (File No. 0-20833), and incorporated herein by reference.
4.8 -- Pledge Agreement dated May 19, 1993. Previously filed as Exhibit 4.4
to the Registrant's Registration Statement on Form S-1 (File No.
33-59624), and incorporated herein by reference.
4.9 -- Amendment to Pledge Agreement dated July 30, 1996. Previously filed
as Exhibit 4.7 to the Registrant's Registration Statement on Form S-1
(File No. 333-05479), and incorporated herein by reference.
4.10 -- Form of Subordinated Note. Previously filed as Exhibit 4.8 to the
Registrant's Registration Statement on Form S-1 (File No. 333-05479),
and incorporated herein by reference.
4.11 -- Form of Indenture dated as of November , 1996 relating to the
Registrant's Senior Subordinated Notes. Previously filed as Exhibit
4.11 to the Registrant's Registration Statement on Form S-3 (File No.
333-14789), and incorporated herein by reference.
4.12 -- Form of Senior Subordinated Note. Previously filed as Exhibit 4.12 to
the Registrant's Registration Statement on Form S-3 (File No.
333-14789), and incorporated herein by reference.
5.1 -- Opinion of Palmer & Dodge LLP. Filed herewith.
</TABLE>

II-2
<PAGE> 120

<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
10.1 -- Bank Credit Agreement between the Registrant and The Chase Manhattan
Bank (National Association) dated May 19, 1993. Previously filed as
Exhibit 10.1 to the Registrant'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, LLC., of which
Kevin P. Reilly, Sr. is the manager. Previously filed as Exhibit 10.2
to the Registrant'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 the Registrant's
8% Unsecured Subordinated Debentures. Previously filed as Exhibit
10.4 to the Registrant'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 Registrant'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
Registrant and the Chase Manhattan Bank, dated September 30, 1993.
Previously filed as Exhibit 10.6 to the Registrant'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 Registrant
and the Chase Manhattan Bank, dated January 1, 1994. Previously filed
as Exhibit 10.7 to the Registrant'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 Registrant
and the Chase Manhattan Bank, dated May 10, 1994. Previously filed as
Exhibit 10.8 to the Registrant'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 Registrant
and the Chase Manhattan Bank, dated October 31, 1994. Previously
filed as Exhibit 10.9 to the Registrant'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 Registrant
and the Chase Manhattan Bank, dated October 15, 1995. Previously
filed as Exhibit 10.10 to the Registrant'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 Registrant
and the Chase Manhattan Bank, dated July 12, 1996. Previously filed
as Exhibit 10.10 to the Registrant's Registration Statement on Form
S-1 (File No. 333-05479), and incorporated herein by reference.
10.11 -- Trust under The Lamar Corporation, its Affiliates and Subsidiaries
Deferred Compensation Plan dated October 3, 1993. Previously filed as
Exhibit 10.11 to the Registrant'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 Registrant and the Chase Manhattan
Bank (National Association) dated December 22, 1995. Previously filed
as Exhibit 10.12 to the Registrant'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 No. 1 to Bank Credit Agreement between the Registrant and
the Chase Manhattan Bank (National Association) dated July 12, 1996.
Previously filed as Exhibit 10.13 to the Registrant's Registration
Statement on Form S-1 (File No. 333-05479), and incorporated herein
by reference.
</TABLE>

II-3
<PAGE> 121

<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
10.14 -- 1996 Equity Incentive Plan. Previously filed as Exhibit 10.14 to the
Registrant's Registration Statement on Form S-1 (File No. 333-05479),
and incorporated herein by reference.
10.15 -- Seventh Amendment to the Bank Credit Agreement between the Registrant
and the Chase Manhattan Bank, dated October 31, 1996. Previously
filed as Exhibit 10.15 to the Registrant's Registration Statement on
Form S-3 (File No. 333-14789), and incorporated herein by reference.
10.16 -- Contract to Sell and Purchase, dated as of October 9, 1996, between
the Registrant and Outdoor East L.P. Previously filed as the same
numbered exhibit to an earlier amendment to this Registration
Statement.
10.17 -- Stock Purchase Agreement, dated as of September 25, 1996, between the
Registrant and the shareholders of FKM Advertising, Inc. Previously
filed as the same numbered exhibit to an earlier amendment to this
Registration Statement.
23.1 -- Consent of KPMG Peat Marwick LLP, independent accountants of Lamar
Advertising Company. Filed herewith.
23.2 -- Consent of KPMG Peat Marwick LLP, independent accountants of Outdoor
East, L.P. Filed herewith.
23.3 -- Consent of McGrail, Merkel, Quinn and Associates, independent
accountants of FKM Advertising Co., Inc. Filed herewith.
23.4 -- Consent of Palmer & Dodge LLP (included in Exhibit 5.1).
24.1 -- Power of Attorney (included in the signature page to the initial
filing of this Registration Statement).
</TABLE>

ITEM 17. UNDERTAKINGS

(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be a part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-4
<PAGE> 122

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November 19,
1996.

LAMAR ADVERTISING COMPANY

/s/ KEVIN P. REILLY, JR.
------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ KEVIN P. REILLY, JR. Director and Principal November 19, 1996
- --------------------------------------------- Executive Officer
Kevin P. Reilly, Jr.

/s/ KEITH A. ISTRE Director and Principal November 19, 1996
- --------------------------------------------- Financial and Accounting
Keith A. Istre Officer

/s/ DUDLEY W. COATES Director November 19, 1996
- ---------------------------------------------
Dudley W. Coates

/s/ CHARLES W. LAMAR Director November 19, 1996
- ---------------------------------------------
Charles W. Lamar

/s/ GERALD H. MARCHAND Director November 19, 1996
- ---------------------------------------------
Gerald H. Marchand

Director
- ---------------------------------------------
Jack S. Rome, Jr.

Director
- ---------------------------------------------
William R. Schmidt

/s/ T. EVERETT STEWART, JR. Director November 19, 1996
- ---------------------------------------------
T. Everett Stewart, Jr.
</TABLE>

II-5
<PAGE> 123

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
1.1 -- Form of Underwriting Agreement. Filed herewith.
3.1 -- Amended and Restated Certificate of Incorporation of the Registrant.
Previously filed as Exhibit 3.1 to the Registrant's Registration
Statement on Form S-1 (File No. 333-05479), and incorporated herein
by reference.
3.2 -- By-Laws of the Registrant, as amended. Previously filed as Exhibit
3.2 to the Registrant'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
Registrant. Previously filed as Exhibit 4.1 to the Registrant'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 Registrant's Registration Statement on Form S-1 (File No.
33-59624), and incorporated herein by reference.
4.3 -- Subsidiary Guarantees dated May 19, 1993. Previously filed as Exhibit
4.2 to the Registrant'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
Registrant's Registration Statement on Form S-1 (File No. 33-59624),
and incorporated herein by reference.
4.5 -- First Supplemental Indenture dated July 30, 1996. Previously filed as
Exhibit 4.5 to the Registrant's Registration Statement on Form S-1
(File No. 333-05479), and incorporated herein by reference.
4.6 -- Form of Second Supplemental Indenture in the form of an Amended and
Restated Indenture dated November 8, 1996. Previously filed as
Exhibit 4.1 to the Company's Current Report on Form 8-K filed on
November 15, 1996 (File No. 0-20833), and incorporated herein by
reference.
4.7 -- Notice of Trustee dated November 8, 1996 with respect to the release
of the security interest in the Trustee on behalf of the holders of
the Company's Senior Secured Notes. Previously filed as Exhibit 4.2
to the Company's Current Report on Form 8-K filed on November 15,
1996 (File No. 0-20833), and incorporated herein by reference.
4.8 -- Pledge Agreement dated May 19, 1993. Previously filed as Exhibit 4.4
to the Registrant's Registration Statement on Form S-1 (File No.
33-59624), and incorporated herein by reference.
4.9 -- Amendment to Pledge Agreement dated July 30, 1996. Previously filed
as Exhibit 4.7 to the Registrant's Registration Statement on Form S-1
(File No. 333-05479), and incorporated herein by reference.
4.10 -- Form of Subordinated Note. Previously filed as Exhibit 4.8 to the
Registrant's Registration Statement on Form S-1 (File No. 333-05479),
and incorporated herein by reference.
4.11 -- Form of Indenture dated as of November , 1996 relating to the
Registrant's Senior Subordinated Notes. Previously filed as Exhibit
4.11 to the Company's Registration Statement on Form S-3 (File No.
333-14789) and incorporated herein by reference.
4.12 -- Form of Senior Subordinated Note. Previously filed as Exhibit 4.11 to
the Company's Registration Statement on Form S-3 (File No. 333-14789)
and incorporated herein by reference.
5.1 -- Opinion of Palmer & Dodge LLP. Filed herewith.
</TABLE>

<PAGE> 124

<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
10.14 -- 1996 Equity Incentive Plan. Previously filed as Exhibit 10.14 to the
Registrant's Registration Statement on Form S-1 (File No. 333-05479),
and incorporated herein by reference.
10.15 -- Seventh Amendment to the Bank Credit Agreement between the Registrant
and the Chase Manhattan Bank, dated October 31, 1996. Previously
filed as Exhibit 10.15 to the Company's Registration Statement on
Form S-3 (File No. 333-14789) and incorporated herein by reference.
10.16 -- Contract to Sell and Purchase, dated as of October 9, 1996, between
the Registrant and Outdoor East L.P. Previously filed as the same
numbered exhibit to an earlier amendment to this Registration
Statement.
10.17 -- Stock Purchase Agreement, dated as of September 25, 1996, between the
Registrant and the shareholders of FKM Advertising, Inc. Previously
filed as the same numbered exhibit to an earlier amendment to this
Registration Statement.
23.1 -- Consent of KPMG Peat Marwick LLP, independent accountants of Lamar
Advertising Company. Filed herewith.
23.2 -- Consent of KPMG Peat Marwick LLP, independent accountants of Outdoor
East, L.P. Filed herewith.
23.3 -- Consent of McGrail, Merkel, Quinn and Associates, independent
accountants of FKM Advertising Co., Inc. Filed herewith.
23.4 -- Consent of Palmer & Dodge LLP (included in Exhibit 5.1).
24.1 -- Power of Attorney (included in the signature page to the initial
filing of this Registration Statement).
</TABLE>

<PAGE> 1
EXHIBIT 1.1

2,800,000 Shares

LAMAR ADVERTISING COMPANY

Class A Common Stock

UNDERWRITING AGREEMENT
----------------------
November __, 1996

SMITH BARNEY INC.
ALEX. BROWN & SONS INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED

As Representatives of the Several Underwriters

c/o SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013

Dear Sirs:

Lamar Advertising Company, a Delaware corporation (the
"Company"), proposes to issue and sell an aggregate of 2,200,000 shares of its
Class A Common Stock, $0.001 par value per share, to the several Underwriters
named in Schedule II hereto (the "Underwriters"), and the persons named in Part
A of Schedule I hereto (the "Selling Stockholders") propose to sell to the
several Underwriters an aggregate of 600,000 shares of such Class A Common
Stock of the Company. The Company and the Selling Stockholders are hereinafter
sometimes referred to as the "Sellers". The Company's Class A Common Stock,
$0.001 par value, is hereinafter referred to as the "Common Stock" and the
2,200,000 shares of Common Stock to be issued and sold to the Underwriters by
the Company and the 600,000 shares of Common Stock to be sold to the
Underwriters by the Selling Stockholders are hereinafter referred to as the
"Firm Shares". The Company and the Selling Stockholders listed in Part B of
Schedule I hereto also propose to sell to the Underwriters, upon the terms and
conditions set forth in Section 2 hereof, up to an additional 420,000 shares
(the
<PAGE> 2
"Additional Shares") of Common Stock. The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the "Shares".

The Company and the Selling Stockholders wish to confirm as
follows their respective agreements with you (the "Representatives") and the
other several Underwriters on whose behalf you are acting, in connection with
the several purchases of the Shares by the Underwriters.

1. Registration Statement and Prospectus. The Company
has prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance in all material respects with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Act"), a registration statement on
Form S-3 under the Act (the "registration statement"), including a prospectus
subject to completion relating to the Shares. The term "Registration
Statement" as used in this Agreement means the registration statement
(including all financial schedules and exhibits), as amended at the time it
becomes effective, or, if the registration statement became effective prior to
the execution of this Agreement, as supplemented or amended prior to the
execution of this Agreement. If it is contemplated, at the time this Agreement
is executed, that a post-effective amendment to the registration statement will
be filed and must be declared effective before the offering of the Shares may
commence, the term "Registration Statement" as used in this Agreement means the
registration statement as amended by said post-effective amendment. The term
"Registration Statement" shall also include any registration statement relating
to the Shares that is filed pursuant to Rule 462(b) under the Act. The term
"Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement, or, if the prospectus included in the
Registration Statement omits information in reliance on Rule 430A under the Act
and such information is included in a prospectus filed with the Commission
pursuant to Rule 424(b) under the Act, the term

- 2 -
<PAGE> 3
"Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement as supplemented by the addition of the
Rule 430A information contained in the prospectus filed with the Commission
pursuant to Rule 424(b). The term "Prepricing Prospectus" as used in this
Agreement means the prospectus subject to completion in the form included in
the registration statement at the time of the initial filing of the
registration statement with the Commission, and as such prospectus shall have
been amended from time to time prior to the date of the Prospectus. Any
reference in this Agreement to the Registration Statement, Prospectus or any
Prepricing Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein as of the date of any such Registration
Statement, Prospectus or Prepricing Prospectus, as the case may be, and any
reference to any amendment or supplement to the Registration Statement,
Prospectus or any Prepricing Prospectus shall be deemed to refer to and include
any documents filed after such date under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") which, upon filing, are incorporated by
reference therein. As used herein, the term "Incorporated Documents" means
the documents which at the time are incorporated by reference in the
Registration Statement, Prospectus or any Prepricing Prospectus or any
amendment or supplement thereto.

2. Agreements to Sell and Purchase. Subject to such
adjustments in the allocation of Shares between Underwriters as you may
determine in your capacity as Representatives in order to avoid fractional
shares, the Company hereby agrees, subject to all the terms and conditions set
forth herein, to issue and sell to each Underwriter and, upon the basis of the
representations, warranties and agreements of the Company and the Selling
Stockholders herein contained and subject to all the terms and conditions set
forth herein, each Underwriter agrees, severally and not jointly, to purchase
from the Company, at a purchase price of $______ per Share (the "purchase price
per share"), the number of Firm Shares which bears the same

- 3 -
<PAGE> 4
proportion to the aggregate number of Firm Shares to be issued and sold by the
Company as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule II hereto (or such number of Firm Shares increased as
set forth in Section 12 hereof) bears to the aggregate number of Firm Shares to
be sold by the Company and the Selling Stockholders.

Subject to such adjustments in the allocation of Shares
between Underwriters as you may determine in your capacity as Representatives
in order to avoid fractional shares, each Selling Stockholder agrees, subject
to all the terms and conditions set forth herein, to sell to each Underwriter
and, upon the basis of the representations, warranties and agreements of the
Company and the Selling Stockholders herein contained and subject to all the
terms and conditions set forth herein, each Underwriter, severally and not
jointly, agrees to purchase from each Selling Stockholder at the purchase price
per share that number of Firm Shares which bears the same proportion to the
number of Firm Shares set forth opposite the name of such Selling Stockholder
in Schedule I hereto as the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule II hereto (or such number of Firm Shares
increased as set forth in Section 12 hereof) bears to the aggregate number of
Firm Shares to be sold by the Company and the Selling Stockholders.

The Company and the Selling Stockholders listed in Part B of
Schedule I hereto also agree, subject to all the terms and conditions set forth
herein, to sell to the Underwriters, and, upon the basis of the
representations, warranties and agreements of the Company and the Selling
Stockholders herein contained and subject to all the terms and conditions set
forth herein, the Underwriters shall have the right to purchase from the
Company and the Selling Stockholders listed in Part B of Schedule I hereto, at
the purchase price per share, pursuant to an option (the "over-allotment
option") which may be exercised at any time and from time to time prior to 9:00
P.M., New York City

- 4 -
<PAGE> 5
time, on the 30th day after the date of the Prospectus (or, if such 30th day
shall be a Saturday or Sunday or a holiday, on the next business day thereafter
when the New York Stock Exchange is open for trading), up to an aggregate of
___________ Additional Shares from the Company and up to an aggregate of
___________ Additional Shares from the Selling Stockholders listed in Part B of
Schedule I hereto (the maximum number of Additional Shares which each of them
agrees to sell upon the exercise by the Underwriters of the over-allotment
option is set forth opposite their respective names in Part B of Schedule I).
Additional Shares may be purchased only for the purpose of covering over-
allotments made in connection with the offering of the Firm Shares. The number
of Additional Shares which the Underwriters elect to purchase upon any exercise
of the over-allotment option shall be provided by the Company and by each
Selling Stockholder who has agreed to sell Additional Shares in proportion to
the respective maximum numbers of Additional Shares which the Company and each
such Selling Stockholder has agreed to sell. Upon any exercise of the
over-allotment option, each Underwriter, severally and not jointly, agrees to
purchase from each of the Company and each Selling Stockholder who has agreed
to sell Additional Shares the number of Additional Shares (subject to such
adjustments in the allocation of Shares between Underwriters as you may
determine in your capacity as Representatives in order to avoid fractional
shares) which bears the same proportion to the aggregate number of Additional
Shares to be sold by the Company and each Selling Stockholder who has agreed to
sell Additional Shares as the aggregate number of Firm Shares set forth
opposite the name of such Underwriter in Schedule II hereto (or such number of
Firm Shares increased as set forth in Section 12 hereof) bears to the aggregate
number of Firm Shares to be sold by the Company and the Selling Stockholders.

Certificates in transferable form for the Shares (including
any Additional Shares) which each of the Selling Stockholders agrees to sell
pursuant to this Agreement have been placed in custody with the Company (the
"Custodian")

- 5 -
<PAGE> 6
for delivery under this Agreement pursuant to a Custody Agreement and Power of
Attorney (the "Custody Agreement") executed by each of the Selling Stockholders
appointing Kevin P. Reilly, Jr. and Keith A. Istre as agents and
attorneys-in-fact (the "Attorneys-in-Fact"). Each Selling Stockholder agrees
that (i) the Shares represented by the certificates held in custody pursuant to
the Custody Agreement are subject to the interests of the Underwriters, the
Company and each other Selling Stockholder, (ii) the arrangements made by the
Selling Stockholders for such custody are, except as specifically provided in
the Custody Agreement, irrevocable, and (iii) the obligations of the Selling
Stockholders hereunder and under the Custody Agreement shall not be terminated
by any act of such Selling Stockholder or by operation of law, whether by the
death or incapacity of any Selling Stockholder or the occurrence of any other
event. If any Selling Stockholder shall die or be incapacitated or if any
other event shall occur before the delivery of the Shares hereunder,
certificates for the Shares of such Selling Stockholder shall be delivered to
the Underwriters by the Attorneys-in-Fact in accordance with the terms and
conditions of this Agreement and the Custody Agreement as if such death or
incapacity or other event had not occurred, regardless of whether or not the
Attorneys-in-Fact or any Underwriter shall have received notice of such death,
incapacity or other event. Each Attorney-in-Fact is authorized, on behalf of
each of the Selling Stockholders, to execute this Agreement and any other
documents necessary or desirable in connection with the sale of the Shares to
be sold hereunder by such Selling Stockholder, to make delivery of the
certificates for such Shares, to receive the proceeds of the sale of such
Shares, to give receipts for such proceeds, to pay therefrom any expenses to be
borne by such Selling Stockholder in connection with the sale and public
offering of such Shares, to distribute the balance thereof to such Selling
Stockholder, and to take such other action as may be necessary or desirable in
connection with the transactions

- 6 -
<PAGE> 7
contemplated by this Agreement. Each Attorney-in-Fact agrees to perform his
duties under the Custody Agreement.

3. Terms of Public Offering. The Sellers have been
advised by you that the Underwriters propose to make a public offering of their
respective portions of the Shares as soon after the Registration Statement and
this Agreement have become effective as in your judgment is advisable and
initially to offer the Shares upon the terms set forth in the Prospectus.

4. Delivery of the Shares and Payment Therefor.
Delivery to the Underwriters of and payment for the Firm Shares shall be made
at the office of Smith Barney Inc., 388 Greenwich Street, New York, NY 10013,
at 10:00 A.M., New York City time, on November __, 1996 (the "Closing Date").
The place of closing for the Firm Shares and the Closing Date may be varied by
agreement among you, the Company and the Attorneys-in-Fact.

Delivery to the Underwriters of and payment for any Additional
Shares to be purchased by the Underwriters shall be made at the aforementioned
office of Smith Barney Inc. at such time on such date (the "Option Closing
Date"), which may be the same as the Closing Date but shall in no event be
earlier than the Closing Date nor earlier than two nor later than five business
days after the giving of the notice hereinafter referred to, as shall be
specified in a written notice from you on behalf of the Underwriters to the
Company and the Attorneys-in-Fact, of the Underwriters' determination to
purchase a number, specified in such notice, of Additional Shares. The place
of closing for any Additional Shares and the Option Closing Date for such
Shares may be varied by agreement among you, the Company and the
Attorneys-in-Fact.

Certificates for the Firm Shares and for any Additional Shares
to be purchased hereunder shall be registered in such names and in such
denominations as you shall request prior to 9:30 A.M., New York City time, on
the

- 7 -
<PAGE> 8
second business day preceding the Closing Date or any Option Closing Date, as
the case may be. Such certificates shall be made available to you in New York
City for inspection and packaging not later than 9:30 A.M., New York City time,
on the business day next preceding the Closing Date or the Option Closing Date,
as the case may be. The certificates evidencing the Firm Shares and any
Additional Shares to be purchased hereunder shall be delivered to you on the
Closing Date or the Option Closing Date, as the case may be, against payment of
the purchase price therefor in immediately available funds.

5. Agreements of the Company. The Company agrees with
the several Underwriters as follows:

(a) If, at the time this Agreement is executed
and delivered, it is necessary for the Registration Statement or a
post-effective amendment thereto to be declared effective before the offering
of the Shares may commence, the Company will endeavor to cause the Registration
Statement or such post-effective amendment to become effective as soon as
possible and will advise you promptly and, if requested by you, will confirm
such advice in writing, when the Registration Statement or such post-effective
amendment has become effective.

(b) The Company will advise you promptly and, if
requested by you, will confirm such advice in writing: (i) of any request by
the Commission for amendment of or a supplement to the Registration Statement,
any Prepricing Prospectus or the Prospectus or for additional information; (ii)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the suspension of
qualification of the Shares for offering or sale in any jurisdiction or the
initiation of any proceeding for such purpose; and (iii) within the period of
time referred to in paragraph (f) below, of any change in the Company's
condition (financial or other), business, prospects, properties, net worth or
results of operations, or of the happening of any event,

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<PAGE> 9
which makes any statement of a material fact made in the Registration Statement
or the Prospectus (as then amended or supplemented) untrue or which requires
the making of any additions to or changes in the Registration Statement or the
Prospectus (as then amended or supplemented) in order to state a material fact
required by the Act to be stated therein or necessary in order to make the
statements therein not misleading, or of the necessity to amend or supplement
the Prospectus (as then amended or supplemented) to comply in all material
respects with the Act or any state securities law specified in Section 5(g).
If at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible time.

(c) The Company will furnish to you, without
charge, four (4) signed copies (three (3) of which may be photocopies) of the
registration statement as originally filed with the Commission and of each
amendment thereto, including financial statements and all exhibits thereto, and
will also furnish to you, without charge, such number of conformed copies of
the registration statement as originally filed and of each amendment thereto,
but without exhibits and schedules, as you may reasonably request.

(d) The Company will not (i) file any amendment
to the Registration Statement or make any amendment or supplement to the
Prospectus (including the filing of any document which, upon filing, becomes an
Incorporated Document) of which you shall not previously have been advised or
to which you shall reasonably object after being so advised and (ii) so long
as, in the opinion of counsel for the Underwriters, a prospectus is required to
be delivered in connection with sales by any Underwriter or dealer, subject to
the preceding clause (i), file any information, documents or reports pursuant
to the Exchange Act without delivering a copy of such information, documents or
reports to you, as Representatives of the Underwriters, prior to or
concurrently with such filing.

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<PAGE> 10
(e) Prior to the execution and delivery of this
Agreement, the Company has delivered to you, without charge, in such quantities
as you have requested, copies of each form of the Prepricing Prospectus. The
Company consents to the use, in accordance with the provisions of the Act and
with the securities or Blue Sky laws of the jurisdictions within the United
States in which the Shares are offered by the several Underwriters and by
dealers, prior to the date of the Prospectus, of each Prepricing Prospectus so
furnished by the Company.

(f) As soon after the execution and delivery of
this Agreement as possible and thereafter from time to time for such period as
in the opinion of counsel for the Underwriters a prospectus is required by the
Act to be delivered in connection with sales by any Underwriter or dealer, the
Company will expeditiously deliver to each Underwriter and each dealer, without
charge, as many copies of the Prospectus (and of any amendment or supplement
thereto) as you may reasonably request. The Company consents to the use of the
Prospectus (and of any amendment or supplement thereto) in accordance with the
provisions of the Act and with the securities or Blue Sky laws of the
jurisdictions within the United States in which the Shares are offered by the
several Underwriters and by all dealers to whom Shares may be sold, both in
connection with the offering and sale of the Shares and for such period of time
thereafter as the Prospectus is required by the Act to be delivered in
connection with sales by any Underwriter or dealer. If during such period of
time any event shall occur that in the judgment of the Company or in the
opinion of counsel for the Underwriters is required to be set forth in the
Prospectus (as then amended or supplemented) or should be set forth therein in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the Prospectus to comply with the Act or any state securities law
specified in Section 5(g), the Company will forthwith prepare and, subject to
the provisions of paragraph (d) above, file with the Commission

- 10 -
<PAGE> 11
an appropriate supplement or amendment thereto, and will expeditiously furnish
to the Underwriters and dealers designated by you as Representatives for the
Underwriters a reasonable number of copies thereof. Notwithstanding anything
herein to the contrary, after the expiration of nine months after the effective
date of the Registration Statement, the cost of preparing, delivering and
furnishing to the Underwriters any such amended or supplemented prospectus
shall be borne by the Underwriters. In the event that the Company and you, as
Representatives of the several Underwriters, agree that the Prospectus should
be amended or supplemented, the Company, if reasonably requested by you and not
prohibited by law, will promptly issue a press release announcing or disclosing
the matters to be covered by the proposed amendment or supplement.

(g) The Company will cooperate with you and with
counsel for the Underwriters in connection with the registration or
qualification of the Shares for offering and sale by the several Underwriters
and by dealers under the securities or Blue Sky laws of such jurisdictions
within the United States as you may designate and will file such consents to
service of process or other documents necessary or appropriate in order to
effect such registration or qualification; provided that in no event shall the
Company be obligated to qualify to do business in any jurisdiction where it is
not now so qualified or to take any action which would subject it to service of
process in suits, other than those arising out of the offering or sale of the
Shares, in any jurisdiction where it is not now so subject.

(h) The Company will make generally available to
its security holders an earnings statement, which need not be audited, covering
a twelve-month period commencing after the effective date of the Registration
Statement (as defined in Rule 158 under the Act) and ending not later than 15
months thereafter, as soon as practicable after the end of such period, which
earnings statement shall satisfy the provisions of Section 11(a) of the Act.

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<PAGE> 12
(i) During the period of five years hereafter,
the Company will furnish to you promptly after they become available, a copy of
each report of the Company mailed to stockholders or filed with the Commission
(unless the Company has, in good faith, requested confidential treatment with
respect to such filing), and, during the period which is 18 months after the
date hereof, such other information concerning the Company as you may
reasonably request.

(j) If this Agreement shall terminate or shall be
terminated after execution pursuant to any provisions hereof (otherwise than
pursuant to the second paragraph of Section 12 hereof or by you pursuant to
Section 12 or Section 13 hereof) or if this Agreement shall be terminated by
the Representatives on behalf of the Underwriters because of any failure or
refusal on the part of the Company or the Selling Stockholders to comply in any
material respect with the terms of this Agreement, the Company agrees to
reimburse the Representatives for all out-of-pocket expenses (including
reasonable fees and expenses of counsel for the Underwriters) incurred by you
in connection herewith. If this Agreement shall terminate or be terminated
after execution pursuant to the second paragraph of Section 12 hereof or by you
pursuant to Section 12 or Section 13 hereof, the Company and the Selling
Stockholders shall not then be under any liability to reimburse the
Underwriters, including the Representatives, for any out of pocket expenses
incurred by them in connection herewith, except as provided in Section 11
hereof.

(k) The Company will apply the net proceeds from
the sale of the Shares to be sold by it hereunder substantially in accordance
with the description set forth in the Prospectus.

(l) If Rule 430A of the Act is employed, the
Company will timely file the Prospectus pursuant to Rule

- 12 -
<PAGE> 13
424(b) under the Act and will advise you of the time of such filing.

(m) Except as provided in this Agreement, the
Company will not sell, offer to sell, solicit an offer to buy, contract to
sell, grant any option or warrant to purchase, or otherwise transfer or dispose
of any Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, for a period of 90 days after the date of the
Prospectus, without the prior written consent of Smith Barney Inc.; provided,
however, that the Company may issue shares of Common Stock (i) as consideration
for the acquisition of additional outdoor advertising or logo sign assets
provided that the persons receiving such shares are bound by lock-up provisions
substantially similar to those referred to in clause (n) below and (ii)
pursuant to the Company's 1996 Equity Incentive Plan.

(n) The Company has furnished or will furnish to
you "lock-up" letters, in substantially the form agreed to by you, signed by
each of its current officers and directors and each of its stockholders
reasonably designated by you.

(o) Except as stated in this Agreement and in the
Prepricing Prospectus and Prospectus, the Company has not taken, nor will it
take, directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of the Shares.

(p) The Company will use its best efforts to have
the Common Stock approved for inclusion, subject to notice of issuance, on the
Nasdaq National Market concurrently with the effectiveness of the Registration
Statement.

- 13 -
<PAGE> 14
6. Agreements of the Selling Stockholders. Each of the
Selling Stockholders agrees with the several Underwriters as follows:

(a) Such Selling Stockholder will cooperate to
the extent necessary to cause the Registration Statement or any post-effective
amendment thereto to become effective at the earliest possible time.

(b) On the Closing Date or the Option Closing
Date, as the case may be, all stock transfer or other taxes (other than income
taxes and excise taxes measured by income) that are required to be paid in
connection with the sale or transfer hereunder to the Underwriters by such
Selling Stockholder of the Shares to be sold by such Selling Stockholder to the
several Underwriters hereunder on such date will have been paid or provided for
by such Selling Stockholders.

(c) Such Selling Stockholder will do or perform
all things reasonably required to be done or performed by the Selling
Stockholder prior to the Closing Date or any Option Closing Date, as the case
may be, to satisfy all conditions precedent to the delivery of the Shares
pursuant to this Agreement.

(d) Such Selling Stockholder has executed or will
execute a "lock-up" letter as provided in Section 5(n) above.

(e) Except as stated in this Agreement and in the
Prepricing Prospectus and the Prospectus, such Selling Stockholder will not
take, directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of the Shares.

(f) To the extent such Selling Stockholder is an
executive officer or director of the Company, such Selling Stockholder will
advise you promptly, and if

- 14 -
<PAGE> 15
requested by you, will confirm such advice in writing, within the period of
time referred to in Section 5(f) hereof, of any change in the Company's
condition (financial or other), business, prospects, properties, net worth or
results of operations or of any change in information relating to the Company
or any new information relating to the Company or relating to any matter stated
in the Prospectus or any amendment or supplement thereto which comes to the
attention of such Selling Stockholder that suggests that any statement made in
the Registration Statement or the Prospectus (as then amended or supplemented,
if amended or supplemented) is or may be untrue in any material respect or that
the Registration Statement or Prospectus (as then amended or supplemented, if
amended or supplemented) omits or may omit to state a material fact or a fact
necessary to be stated therein in order to make the statements therein not
misleading in any material respect, or of the necessity to amend or supplement
the Prospectus (as then amended or supplemented, if amended or supplemented) in
order to comply with the Act or any other law.

(g) Such Selling Stockholder will advise you
promptly, and if requested by you, will confirm such advice in writing, within
the period of time referred to in Section 5(f) hereof, of any change in
information relating to such Selling Stockholder that suggests that any
statement made in the Registration Statement or the Prospectus (as then amended
or supplemented, if amended or supplemented) is or may be untrue in any
material respect or that the Registration Statement or Prospectus (as then
amended or supplemented, if amended or supplemented) omits or may omit to state
a material fact or a fact necessary to be stated therein in order to make the
statements therein not misleading in any material respect, or of the necessity
to amend or supplement the Prospectus (as then amended or supplemented, if
amended or supplemented) in order to comply with the Act or any other law.

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<PAGE> 16
(h) Such Selling Stockholder shall provide you
with a United States Treasury Department Form W-9 properly completed or
executed or other evidence satisfactory to you that such Selling Stockholder is
not subject to backup withholding.

7. Representations and Warranties of the Company. The
Company represents and warrants to each Underwriter that:

(a) Each Prepricing Prospectus included as part
of the registration statement as originally filed or as part of any amendment
or supplement thereto, or filed pursuant to Rule 424 under the Act, complied
when so filed in all material respects with the provisions of the Act. The
Commission has not issued any order preventing or suspending the use of any
Prepricing Prospectus.

(b) The Registration Statement in the form in
which it became or becomes effective and also in such form as it may be when
any post-effective amendment thereto shall become effective, complied or will
comply in all material respects with the provisions of the Act and did not or
will not at any such times contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Prospectus and any
supplement or amendment thereto when filed with the Commission under Rule
424(b) under the Act complied or will comply in all material respects with the
provisions of the Act and did not or will not at any such times contain an
untrue statement of material fact or omit to state a material fact necessary in
order to make the statements, in light of the circumstances in which they are
made, not misleading, except that this representation and warranty does not
apply to statements in or omissions from the Registration Statement or the
Prospectus made in conformity with information relating to any Underwriter
furnished to the Company in writing by or on behalf of any Underwriter through
you expressly for use therein.

- 16 -
<PAGE> 17
(c) All the outstanding shares of Common Stock of
the Company (including the Shares to be sold by the Selling Stockholders) have
been duly authorized and validly issued, are fully paid and nonassessable and
are free of any preemptive or similar rights; the Shares to be issued and sold
by the Company have been duly authorized and, when issued and delivered to the
Underwriters against payment therefor in accordance with the terms hereof, will
be validly issued, fully paid and nonassessable and free of any preemptive or
similar rights; and the capital stock of the Company conforms in all material
respects to the description thereof in the Registration Statement and the
Prospectus.

(d) The Company is a corporation duly organized
and validly existing in good standing under the laws of the State of Delaware
with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and the Prospectus, and is duly registered or qualified to conduct
its business and is in good standing in each jurisdiction or place where the
nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify or be in good standing does not, individually or in the aggregate, have
a material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company and the
Subsidiaries (as hereinafter defined) taken as a whole (a "Material Adverse
Effect").

(e) All the Company's consolidated subsidiaries
(collectively, the "Subsidiaries") are listed in Exhibit A hereto. Each
Subsidiary is a corporation or partnership duly organized, validly existing and
in good standing in the jurisdiction of its organization, with full corporate
or partnership power and authority, as the case may be, to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus, and is duly registered or qualified
to conduct its business and is in good standing in

- 17 -
<PAGE> 18
each jurisdiction or place where the nature of its properties or the conduct of
its business requires such registration or qualification, except where the
failure so to register or qualify does not have a material adverse effect on
the condition (financial or other), business, properties, net worth or results
of operations of such Subsidiary; all the outstanding shares of capital stock
or other equity interest of each of the Subsidiaries have been duly authorized
and validly issued, are fully paid and nonassessable, and, except as set forth
in the Registration Statement, are owned by the Company directly, or indirectly
through one of the other Subsidiaries and, except for the liens under, as the
case may be, the Existing Credit Agreement, the Existing Note Indenture and the
New Credit Agreement (each as defined in the Registration Statement), as
described in the Registration Statement and the Prospectus, free and clear of
any lien, adverse claim, security interest, equity or other encumbrance except
for any such lien, adverse claim, security interest equity or other encumbrance
which would not reasonably be expected, individually or in the aggregate, to
materially impair the value of such shares or other equity interests.

(f) There are no legal or governmental
proceedings pending or, to the knowledge of the Company, threatened, against
the Company or any of the Subsidiaries, or to which the Company or any of the
Subsidiaries, or to which any of their respective properties is subject, that
are required to be described in the Registration Statement or the Prospectus
but are not so described as required; and all pending legal or governmental
proceedings to which the Company or any of the Subsidiaries is a party or that
affect any of their respective properties including ordinary routine litigation
incidental to the business, that are not described in the Prospectus and as to
which an adverse determination is not remote, would not, if determined
adversely to the Company or any of the Subsidiaries, individually or in the
aggregate, result in a Material Adverse Effect.

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<PAGE> 19
(g) There are no agreements, contracts,
indentures, leases or other instruments that are required to be described in
the Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement that are not described or filed as required by the
Act.

(h) Neither the Company nor any of the
Subsidiaries is in violation (A) of its certificate or articles of
incorporation or by-laws, or other organizational documents, or (B) of any law,
ordinance, administrative or governmental rule or regulation applicable to the
Company or any of the Subsidiaries, including, without limitation, (i) any
foreign, Federal, state or local law or regulation relating to the protection
of human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) any Federal or
state law relating to discrimination in the hiring, promotion or pay of
employees or any applicable federal or state wages and hours laws, or (iii) any
provisions of the Employee Retirement Income Security Act or the rules and
regulations promulgated thereunder (collectively, "ERISA"), or of any decree of
any court or governmental agency or body having jurisdiction over the Company
or any of the Subsidiaries except for, in the case of the foregoing clause (B),
such violations which would not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

(i) Neither the Company nor any of the
Subsidiaries is in default in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any other agreement, indenture, lease or other instrument to
which the Company or any of the Subsidiaries is a party or by which any of them
or any of their respective properties may be bound, except for such defaults
which would not, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

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<PAGE> 20
(j) Neither the issuance and sale of the Shares,
the execution, delivery or performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby (including,
without limitation, the inclusion in the Registration Statement of the Shares
to be sold by the Selling Stockholders) (A) requires any consent, approval,
authorization or other order of or registration or filing with, any court,
regulatory body, administrative agency or other governmental body, agency or
official (except such as may be required for the registration of the Shares
under the Act, compliance with the securities or Blue Sky laws of various
jurisdictions and compliance with the Conduct Rules of the National Association
of Securities Dealers, Inc. ("NASD"), all of which (except such compliance with
the Conduct Rules of the NASD) have been or will be effected in accordance with
this Agreement) or conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the certificate or articles of
incorporation or bylaws, or other organizational documents, of the Company or
any of the Subsidiaries or (B) conflicts or will conflict with or constitutes
or will constitute a breach of, or a default under, any agreement, indenture,
lease or other instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their respective properties may be
bound, or violates or will violate any statute, law, regulation or filing or
judgment, injunction, order or decree applicable to the Company or any of the
Subsidiaries or any of their respective properties, or will result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of the Subsidiaries pursuant to the terms of any
agreement or instrument to which any of them is a party or by which any of them
may be bound or to which any of the property or assets of any of them is
subject.

(k) KPMG Peat Marwick LLP, who have certified or
shall certify the financial statements of the Company and Outdoor East, L.P.
included in the Registration Statement and the Prospectus (or any amendment or
supplement

- 20 -
<PAGE> 21
thereto) are independent public accountants as required by the Act. McGrail,
Merkel, Quinn & Associates, who have certified or shall certify the financial
statements of FKM Advertising Co., Inc. included in the Registration Statement
and the Prospectus (or any amendment or supplement thereto) are independent
public accountants as required by the Act

(l) The historical and pro forma financial
statements, together with related schedules and notes, included in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), comply as to form in all material respects with the requirements of
the Act; such historical financial statements, together with related schedules
and notes, present fairly the consolidated financial position, results of
operations, cash flows and changes in financial position of the entities to
which they relate on the basis stated in the Registration Statement at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved, except as disclosed therein; such pro forma financial
statements, together with related notes, have been prepared on a basis
consistent with such historical statements, except for pro forma adjustments
specified therein, and give effect to assumptions made on a reasonable basis
and present fairly the historical and proposed transactions contemplated by the
Registration Statement and the Prospectus; and the other financial and
statistical information and data included in the Registration Statement and the
Prospectus (and any amendment or supplement thereto), historical and pro forma,
are accurately presented in all material respects and prepared on a basis
consistent in all material respects with such financial statements and the
books and records of the entities to which to which they relate.

(m) The execution and delivery of, and the
performance by the Company of its obligations under, this Agreement have been
duly and validly authorized by the

- 21 -
<PAGE> 22
Company, and this Agreement has been duly executed and delivered by the Company
and constitutes the valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as rights
to indemnity and contribution hereunder may be limited by federal or state
securities laws.

(n) Except as disclosed in the Registration
Statement and the Prospectus (or any amendment or supplement thereto),
subsequent to the respective dates as of which such information is given in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto), neither the Company nor any of the Subsidiaries has incurred any
liability or obligation, direct or contingent, or entered into any transaction,
not in the ordinary course of business, that is material to the Company and the
Subsidiaries, taken as a whole, and there has not been any change in the
capital stock, or material increase in the short-term debt or long-term debt,
of the Company or any of the Subsidiaries, or any material adverse change, or
any development involving, or which may reasonably be expected to involve, a
prospective material adverse change, in the condition (financial or other),
business, properties, net worth or results of operations of the Company and the
Subsidiaries, taken as a whole.

(o) Each of the Company and the Subsidiaries has
good and marketable title to all property (real and personal) described in the
Prospectus as being owned by it, free and clear of all liens, claims, security
interests or other encumbrances except such as are described in the
Registration Statement and the Prospectus or in a document filed as an exhibit
to the Registration Statement or which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect or
materially impair the value of such property to the Company or such Subsidiary,
as the case may be, and all the property described in the Prospectus as being
held under lease or sublease by each of the Company and the Subsidiaries is
held by it under valid, subsisting and enforceable leases or

- 22 -
<PAGE> 23
subleases with such exceptions as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect or materially impair
the value of such leasehold estate to the Company or such Subsidiary, as the
case may be, and such leases and subleases are in full force and effect;
neither the Company nor any of the Subsidiaries has any notice of any claim of
any sort that has been asserted by anyone adverse to the rights of the Company
or any of the Subsidiaries under any of the leases or subleases mentioned
above, or affecting or questioning the rights of the Company or any of the
Subsidiaries to the continued possession of the leased or subleased premises
under any such lease or sublease, which claim could reasonably be expected
individually or in the aggregate to have a Material Adverse Effect.

(p) The Company has not distributed and, prior to
the later to occur of (i) the Closing Date and (ii) completion of the
distribution of the Shares, will not distribute any offering material in
connection with the offering and sale of the Shares other than the Registration
Statement, the Prepricing Prospectus, the Prospectus or other materials, if
any, permitted by the Act.

(q) The Company and each of the Subsidiaries has
such permits, licenses, franchises and authorizations including, without
limitation, under any applicable Environmental Laws, of governmental or
regulatory authorities ("permits") as are necessary to own its respective
properties and to conduct its business in the manner described in the
Prospectus, subject to such qualifications as may be set forth in the
Prospectus and with such exceptions as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; the
Company and each of the Subsidiaries has fulfilled and performed all its
material obligations with respect to such permits and no event has occurred
which allows, or after notice or lapse of time or both would allow, revocation
or termination thereof or results in any other material impairment of the
rights of the holder of any

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<PAGE> 24
such permit, subject in each case to such qualification as may be set forth in
the Prospectus; and, except as described in the Prospectus, none of such
permits contains any restriction that is materially burdensome to the Company
or any of the Subsidiaries.

(r) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

(s) To the Company's knowledge, neither the
Company nor any of its Subsidiaries nor any employee or agent of the Company or
any Subsidiary has made any payment of funds of the Company or any Subsidiary
or received or retained any funds in violation of any law, rule or regulation,
which payment, receipt or retention of funds is of a character required to be
disclosed in the Prospectus.

(t) The Company and each of the Subsidiaries have
filed all tax returns required to be filed, which returns are complete and
correct in all material respects, and neither the Company nor any Subsidiary is
in default in the payment of any taxes which were payable pursuant to said
returns or any assessments with respect thereto, except for such failures to
file or defaults in payment of a character not required to be disclosed in the
Prospectus and which would not reasonably be expected to have a Material
Adverse Effect.

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<PAGE> 25
(u) No holder of any security of the Company has
any right to require registration of shares of Common Stock or any other
security of the Company because of the filing of the Registration Statement or
consummation of the transactions contemplated by this Agreement.

(v) The Company has not taken, directly or
indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.

(w) The Company and the Subsidiaries own or
possess all patents, trademarks, trademark registrations, service marks,
service mark registrations, trade names, copyrights, licenses, inventions,
trade secrets and rights described in the Prospectus as being owned by them or
any of them or necessary for the conduct of their respective businesses, and
the Company is not aware of any claim to the contrary or any challenge by any
other person to the rights of the Company and the Subsidiaries with respect to
the foregoing.

(x) The Incorporated Documents heretofore filed,
when they were filed (or, if any amendment with respect to any such document was
filed, when such amendment was filed), conformed in all material respects with
the requirements of the Exchange Act and the rules and regulations thereunder,
and any further Incorporated Documents so filed will, when they are filed,
conform in all material respects with the requirements of the Exchange Act and
the rules and regulations thereunder; no such document when it was filed (or,
if an amendment with respect to any such document was filed, when such
amendment was filed), contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading; and no such further document, when it is filed,
will contain an untrue statement of a

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<PAGE> 26
material fact or will omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.

(y) The Company is not now, and after sale of the
Shares to be sold by it hereunder and application of the net proceeds from such
sale as described in the Prospectus under the caption "Use of Proceeds" will
not be, an "investment company" within the meaning of the Investment Company
Act of 1940, as amended.

(z) The Company has complied with all provisions
of Florida Statutes, Section 517.075, relating to issuers doing business with
Cuba.

(aa) Except as disclosed in the Registration
Statement and the Prospectus, there are no outstanding subscriptions, rights,
warrants, options, calls, convertible securities, commitments of sale or liens
related to or entitling any person to purchase or otherwise to acquire any
shares of the capital stock of, or other ownership interest in, the Company or
any Subsidiary thereof.

(bb) No labor problem exists with the employees of
the Company or any of the Subsidiaries or, to the knowledge of the Company, is
imminent that, in either case, could reasonably be expected individually or in
the aggregate to result in any Material Adverse Effect.

(cc) The Company and each of the Subsidiaries
maintain insurance of the types and in the amounts that are reasonable for the
businesses operated by them, including, but not limited to, insurance covering
real and personal property owned or leased by the Company and the Subsidiaries
against theft, damage, destruction, acts of vandalism and liability, all of
which insurance is in full force and effect.

8. Representations and Warranties of the Selling
Stockholders. Each Selling Stockholder represents and warrants to each
Underwriter that:

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<PAGE> 27
(a) Such Selling Stockholder now has, and on the
Closing Date and any Option Closing Date will have, valid and marketable title
to the Shares to be sold by such Selling Stockholder, free and clear of any
lien, claim, security interest or other encumbrance, including, without
limitation, any restriction on transfer, other than as provided is the Custody
Agreement or under any Federal or State securities laws.

(b) Such Selling Stockholder now has, and on the
Closing Date and any Option Closing Date will have, full legal right, power and
authorization, and any approval required by law (except such as may be required
under the Act or such as may be required under state securities or Blue Sky
laws governing the purchase and distribution of the Shares and compliance with
the Conduct Rules of the NASD), to sell, assign transfer and deliver such
Shares in the manner provided in this Agreement, and upon delivery of and
payment for such Shares hereunder, the several Underwriters will acquire valid
and marketable title to such Shares free and clear of any lien, claim, security
interest, or other encumbrance.

(c) This Agreement and the Custody Agreement have
been duly authorized, executed and delivered by or on behalf of such Selling
Stockholder and the Custody Agreement is the valid and binding agreements of
such Selling Stockholder enforceable against such Selling Stockholder in
accordance with its terms.

(d) Neither the execution and delivery of this
Agreement or the Custody Agreement by or on behalf of such Selling Stockholder
nor the consummation of the transactions herein or therein contemplated by or
on behalf of such Selling Stockholder requires any consent, approval,
authorization or order of, or filing or registration with, any court,
regulatory body, administrative agency or other governmental body, agency or
official (except such as may be required under the Act or such as may be
required under state securities or Blue Sky laws governing the purchase and

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<PAGE> 28
distribution of the Shares and compliance with the Conduct Rules of the NASD)
or conflicts or will conflict with or constitutes or will constitute a breach
of, or default under, or violates or will violate, any agreement, indenture or
other instrument to which such Selling Stockholder is a party or by which such
Selling Stockholder is or may be bound or to which any of such Selling
Stockholder's property or assets is subject, or any statute, law, rule,
regulation, ruling, judgment, injunction, order or decree applicable to such
Selling Stockholder or to any property or assets of such Selling Stockholder.

(e) The Registration Statement and the
Prospectus, insofar as they relate to such Selling Stockholder, do not and will
not as of the date it became effective in the case of the Registration
Statement and within the period of time referred to in Section 5(f) in the case
of the Prospectus, contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading.

(f) To the extent such Selling Stockholder is an
executive officer or director of the Company, such Selling Stockholder does not
have any knowledge or any reason to believe that the Registration Statement or
the Prospectus (or any amendment or supplement thereto) contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.

(g) The representations and warranties of such
Selling Stockholder in the Custody Agreement are true and correct.

(h) Such Selling Stockholder has not taken,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of the Shares, except for the

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<PAGE> 29
lock-up arrangements described in the Prospectus and the sales contemplated
herein.

9. Indemnification and Contribution. (a) The Company
agrees to indemnify and hold harmless each of you and each other Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act from and against any
and all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation) arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Prepricing
Prospectus or in the Registration Statement or the Prospectus or in any
amendment or supplement thereto, or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or expenses arise out of
or are based upon any untrue statement or omission or alleged untrue statement
or omission which has been made therein or omitted therefrom and in conformity
with the information furnished in writing to the Company by or on behalf of any
Underwriter through you expressly for use in connection therewith; provided,
however, that the indemnification contained in this paragraph (a) with respect
to any Prepricing Prospectus shall not inure to the benefit of any Underwriter
(or to the benefit of any person controlling such Underwriter) on account of
any such loss, claim, damage, liability or expense arising from the sale of the
Shares by such Underwriter to any person if a copy of the Prospectus shall not
have been delivered or sent to such person within the time required by the Act
and the regulations thereunder, and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in such
Prepricing Prospectus was corrected in the Prospectus, provided that the
Company has delivered the Prospectus to such Underwriter in requisite quantity
on a timely basis to permit such delivery or sending. The foregoing indemnity

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<PAGE> 30
agreement shall be in addition to any liability which the Company or any
Selling Stockholder may otherwise have.

(b) If any action, suit or proceeding shall be
brought against any Underwriter or any person controlling any Underwriter in
respect of which indemnity may be sought against the Company, such Underwriter
or such controlling person shall promptly notify the parties against whom
indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such Underwriter or any such
controlling person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Underwriter
or such controlling person unless (i) the indemnifying parties have agreed in
writing to pay such fees and expenses, (ii) the indemnifying parties have
failed to assume the defense and employ counsel, or (iii) the named parties to
any such action, suit or proceeding (including any impleaded parties) include
both such Underwriter or such controlling person and the indemnifying parties
and such Underwriter or such controlling person shall have been advised in
writing by its counsel that representation of such indemnified party and any
indemnifying party by the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such representation by the
same counsel has been proposed) due to actual or potential differing interests
between them (in which case the indemnifying party shall not have the right to
assume the defense of such action, suit or proceeding on behalf of such
Underwriter or such controlling person). It is understood, however, that the
indemnifying parties shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
only one separate firm of attorneys (in addition to any local counsel) at any
time

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<PAGE> 31
for all such Underwriters and controlling persons not having actual or
potential differing interests with you or among themselves, which firm shall be
designated in writing by Smith Barney Inc., and that all such fees and expenses
shall be reimbursed as they are incurred. The indemnifying parties shall not
be liable for any settlement of any such action, suit or proceeding effected
without their written consent, but if settled with such written consent, or if
there be a final judgment for the plaintiff in any such action, suit or
proceeding, the indemnifying parties agree to indemnify and hold harmless any
Underwriter, to the extent provided in the preceding paragraph, and any such
controlling person from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.

(c) Each Selling Stockholder agrees, severally
and not jointly, to indemnify and hold harmless each of you and each other
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, the
Company, its directors, its officers who sign the Registration Statement, and
any person who controls the Company within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act to the same extent as the foregoing
indemnity from the Company to each Underwriter, but only with respect to the
information furnished in writing by or on behalf of such Selling Stockholder
expressly for use in the Registration Statement, the Prospectus or any
Prepricing Prospectus, or any amendment or supplement thereto provided,
however, that (i) such Selling Stockholder shall not be liable in any such
case, whether for indemnification pursuant to this Section 9(c) or contribution
pursuant to Section 9(e), if any such untrue statement or alleged untrue
statement or omission or alleged omission was contained in or omitted from the
Registration Statement or any Prospectus used after such time as the Company
shall have been advised by or on behalf of such Selling Stockholder of such
untrue statement or alleged untrue statement or omission or alleged omission,
and

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<PAGE> 32
(ii) the obligations and liability of such Selling Stockholder, whether with
respect to indemnification pursuant to this Section 9(c) or contribution
pursuant to Section 9(e), shall not in any event exceed in the aggregate the
amount of net proceeds received by such Selling Stockholder from the sale of
the Shares sold by such Selling Stockholder to the Underwriters pursuant to
this Agreement. If any action, suit or proceeding shall be brought against any
Underwriter, any such controlling person of any Underwriter, the Company, any
of its directors, any such officer, or any such controlling person of the
Company, based on the Registration Statement, the Prospectus or any Prepricing
Prospectus or any amendment or supplement thereto, and in respect of which
indemnity may be sought against any Selling Stockholder pursuant to this
paragraph (c), such Selling Stockholder shall have the rights and duties given
to the Company by paragraph (b) above (except that if the Company shall have
assumed the defense thereof such Selling Stockholder shall not be required to
do so, but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at such Selling
Stockholder's expense), and each Underwriter, each such controlling person of
any Underwriter, the Company, its directors, any such officer, and any such
controlling person of the Company shall have the rights and duties given to the
Underwriters by paragraph (b) above. The foregoing indemnity agreement shall
be in addition to any liability which any Selling Stockholder may otherwise
have.

(d) Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, its directors, its
officers who sign the Registration Statement, each Selling Stockholder, and any
person who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, to the same extent as the foregoing
indemnity from the Company and the Selling Stockholders to each Underwriter,
but only with respect to information furnished in writing by or on behalf of
such Underwriter through you expressly for use in the

- 32 -
<PAGE> 33
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Company, any of its directors, any such officer, any
Selling Stockholder, or any such controlling person based on the Registration
Statement, the Prospectus or any Prepricing Prospectus, or any amendment or
supplement thereto, and in respect of which indemnity may be sought against any
Underwriter pursuant to this paragraph (d), such Underwriter shall have the
rights and duties given to the Company by paragraph (b) above (except that if
the Company shall have assumed the defense thereof such Underwriter shall not
be required to do so, but may employ separate counsel therein and participate
in the defense thereof, but the fees and expenses of such counsel shall be at
such Underwriter's expense), and the Company, its directors, any such officer,
the Selling Stockholder, and any such controlling person shall have the rights
and duties given to the Underwriters by paragraph (b) above. The foregoing
indemnity agreement shall be in addition to any liability which any Underwriter
may otherwise have.

(e) If the indemnification provided for in this
Section 9 is unavailable to an indemnified party under paragraphs (a), (c) or
(d) hereof in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then an indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on the other hand from the offering of the Shares, or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company and the Selling Stockholders on the one hand and the Underwriters on
the other hand in connection with the statements or

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<PAGE> 34
omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on the other hand shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company and the Selling Stockholders bear to the
total underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the Prospectus;
provided that, in the event that the Underwriters shall have purchased any
Additional Shares hereunder, any determination of the relative benefits
received by the Company, the Selling Stockholders or the Underwriters from the
offering of the Shares shall include the net proceeds (before deducting
expenses) received by the Company and the Selling Stockholders, and the
underwriting discounts and commissions received by the Underwriters, from the
sale of such Additional Shares, in each case computed on the basis of the
respective amounts set forth in the notes to the table on the cover page of the
Prospectus. The relative fault of the Company and the Selling Stockholders on
the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the Selling
Stockholders on the one hand or by the Underwriters on the other hand and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. In determining the benefits to,
or the fault of, any particular Selling Stockholder, the benefits to and fault
of each other Selling Stockholder and the Company shall not be taken into
account.

(f) The Company, the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by a pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or

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<PAGE> 35
by any other method of allocation that does not take account of the equitable
considerations referred to in paragraph (e) above. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
and expenses referred to in paragraph (e) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
any claim or defending any such action, suit or proceeding. Notwithstanding
the provisions of this Section 9, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price of the
Shares underwritten by it and distributed to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective numbers of Firm Shares set forth opposite their names in Schedule II
hereto (or such numbers of Firm Shares increased as set forth in Section 12
hereof) and not joint. The obligations of the Selling Stockholders to
contribute pursuant to this Section 9 are several and not joint and no Selling
Stockholder shall in any event be required to contribute any amount which is in
excess of the amount by which the total net proceeds received by such Selling
Stockholder from the sale of the Shares sold by such Selling Stockholder to the
Underwriters pursuant to this Agreement exceeds the amounts that such Selling
Stockholder has otherwise been required to pay by reason of the statements or
omissions which result in such obligation to contribute.

(g) No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action, suit or proceeding in respect of which any
indemnified party is or

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<PAGE> 36
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.

(h) Any losses, claims, damages, liabilities or
expenses for which an indemnified party is entitled to indemnification or
contribution under this Section 9 shall be paid by the indemnifying party to
the indemnified party as such losses, claims, damages, liabilities or expenses
are incurred. The indemnity and contribution agreements contained in this
Section 9 and the representations and warranties of the Company and the Selling
Stockholders set forth in this Agreement shall remain operative and in full
force and effect, regardless of (i) any investigation made by or on behalf of
any Underwriter or any person controlling any Underwriter, the Company, its
directors or officers or the Selling Stockholders or any person controlling the
Company, (ii) acceptance of any Shares and payment therefor hereunder, and
(iii) any termination of this Agreement. A successor to any Underwriter or any
person controlling any Underwriter, or to the Company, its directors or
officers, or any person controlling the Company, shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements contained
in this Section 9.

10. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares hereunder are
subject to the following conditions:

(a) If, at the time this Agreement is executed
and delivered, it is necessary for the registration statement or a
post-effective amendment thereto to be declared effective before the offering
of the Shares may commence, the registration statement or such post-effective
amendment shall have become effective not later than 5:30 P.M. (or in the case
of a Registration Statement filed pursuant to Rule 462(b) under the Act, not
later than 10:00 P.M.), New York City time, on the date hereof, or at such

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<PAGE> 37
later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Company or any Underwriter,
threatened by the Commission.

(b) Subsequent to the effective date of this
Agreement, there shall not have occurred (i) any change, or any development
involving a prospective change, in or affecting the condition (financial or
other), business, properties, net worth, or results of operations of the
Company or the Subsidiaries not contemplated by the Prospectus, which in your
reasonable opinion, as Representatives of the several Underwriters, would
materially, adversely affect the market for the Shares, or (ii) any event or
development relating to or involving the Company or any officer or director of
the Company or any Selling Stockholder which makes any material statement made
in the Prospectus untrue in any material respect or which, in the opinion of
the Company and its counsel or you, as Representatives of the several
Underwriters and counsel to the Underwriters, requires the making of any
addition to or change in the Prospectus in order to state a material fact
required by the Act or any other law to be stated therein or necessary in order
to make the statements therein not misleading, if amending or supplementing the
Prospectus to reflect such event or development would, in your opinion, as
Representatives of the several Underwriters, materially adversely affect the
market for the Shares.

(c) You shall have received on the Closing Date,
an opinion of Palmer & Dodge LLP, counsel for the Company dated the Closing
Date and addressed to you, as Representatives of the several Underwriters, to
the effect that:

(i) The Company is a corporation duly
incorporated and validly existing in good standing

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<PAGE> 38
under the laws of the State of Delaware with full corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus
(and any amendment or supplement thereto);

(ii) The Shares to be issued and sold to
the Underwriters by the Company hereunder (A) have been duly
authorized and, when issued and delivered to the Underwriters against
payment therefor in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable and (B) free of any preemptive,
or to the best knowledge of such counsel, similar rights that entitle
or will entitle any person to acquire any shares of Common Stock upon
the issuance thereof by the Company;

(iii) The form of certificates for the
Shares conforms to the requirements of the Delaware General
Corporation Law;

(iv) The Registration Statement has
become effective under the Act and, to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose are pending before or contemplated by the Commission; and any
required filing of the Prospectus pursuant to Rule 424(b) has been
made in accordance with Rule 424(b);

(v) (A) The Company has the corporate
power and authority to enter into this Agreement and to issue, sell
and deliver the Shares to be sold by it to the Underwriters as
provided herein, and (B) this Agreement has been duly authorized,
executed and delivered by the Company;

(vi) Neither the offer, sale or delivery
of the Shares, the execution, delivery or performance of this
Agreement, compliance by the Company with the provisions hereof, nor
consummation by the Company of

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<PAGE> 39
the transactions contemplated hereby constitutes or will constitute a
violation or breach of, or a default under, the certificate of
incorporation or bylaws of the Company or any of the Subsidiaries or
any agreement, indenture, lease or other instrument to which the
Company or any of the Subsidiaries is a party or by which any of them
or any of their respective properties is bound and that is an exhibit
to the Registration Statement, or will result in the creation or
imposition of any lien, charge or encumbrance pursuant to any such
agreement, indenture, lease or other instrument upon any property or
assets of the Company or any of the Subsidiaries, nor will any such
action result in any violation of any existing law, regulation, ruling
(assuming compliance with all applicable state securities and Blue Sky
laws), judgment, injunction, order or decree known to such counsel, to
be applicable to the Company, the Subsidiaries or any of their
respective properties;

(vii) No consent, approval, authorization
or other order of, or registration or filing with, any court,
regulatory body, administrative agency or other governmental body,
agency, or official is required on the part of the Company (except as
have been obtained under the Act and the Exchange Act or such as may
be required under state securities or Blue Sky laws governing the
purchase and distribution of the Shares or such as may be required
under the rules of the NASD) for the valid issuance and sale of the
Shares to the Underwriters as contemplated by this Agreement;

(viii) Each of the Registration Statement,
as of its effective date, and the Prospectus, as of its date, (except
for the financial statements and the notes thereto and the schedules
and other financial and statistical data included therein, as to which
such counsel need not express any opinion) comply as to form in all
material respects with the requirements of the Act; and

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<PAGE> 40
(ix) The Incorporated Documents (other
than the financial statements (including the notes thereto) and
schedules and other financial and statistical data contained or
incorporated by reference therein, as to which such counsel need
express no opinion), when filed, or as amended or supplemented,
complied as to form in all material respects with the requirements of
the Exchange Act.

In rendering their opinion as aforesaid, counsel may rely upon
an opinion or opinions, each dated the Closing Date, of other counsel retained
by them or the Company as to laws of any jurisdiction other than the United
States or the State of Delaware, provided that (1) each such local counsel is
acceptable to the Representatives, (2) such reliance is expressly authorized by
each opinion so relied upon and a copy of each such opinion is delivered to the
Representatives and is, in form and substance reasonably satisfactory to them
and their counsel, and (3) counsel shall state in their opinion that they
believe that they and the Underwriters are justified in relying thereon.

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<PAGE> 41
Incorporated Documents), and any amendment thereto, at the time it became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) that the Prospectus (including the
Incorporated Documents), or any amendment or supplement to the Prospectus, as
of its respective date, and as of the Closing Date or the Option Closing Date,
as the case may be, contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no opinion with
respect to the financial statements and the notes thereto and the schedules and
other financial and statistical data included or incorporated by reference in
the Registration Statement or the Prospectus).

(d) You shall have received on the Closing Date,
an opinion of Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, L.L.P.
counsel to the Company and the Selling Stockholders, dated the Closing Date and
addressed to you, as Representatives of the several Underwriters to the effect
that:

(i) The Company is duly registered and
qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the
conduct of its business requires such registration or qualification,
except where the failure so to register or qualify does not have,
individually or in the aggregate, a material adverse effect on the
condition (financial or other), business, properties, net worth or
results of operations of the Company and the Subsidiaries taken as a
whole;

(ii) Each of the Subsidiaries is a
corporation or partnership duly organized and validly existing in good
standing under the laws of the jurisdiction of its organization, with
full corporate or partnership power and authority, as the case may be,
to own, lease, and operate its properties and to conduct its business
as described in the Registration Statement and the Prospectus (and any
amendment or

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<PAGE> 42
supplement thereto); and all the outstanding shares of capital stock
or other equity interests of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable, and
are owned by the Company, except as disclosed in the Registration
Statement and the Prospectus, directly, or indirectly through one of
the other Subsidiaries free and clear of any perfected security
interest, or, to the best knowledge of such counsel after reasonable
inquiry, any other security interest, lien, adverse claim, equity or
other encumbrance;

(iii) The authorized and outstanding
capital stock of the Company is as set forth under the caption
"Capitalization" in the Prospectus; and the authorized capital stock
of the Company conforms in all material respects as to legal matters
to the description thereof contained in the Prospectus under the
caption "Description of Capital Stock";

(iv) All the shares of capital stock of
the Company outstanding prior to the issuance of the Shares to be
issued and sold by the Company hereunder (including the Shares to be
sold by the Selling Stockholders), have been duly authorized and
validly issued, and are fully paid and nonassessable and free of any
pre-emptive or to the best knowledge of such counsel, similar rights;

(v) To the best knowledge of such
counsel (A) other than as described or contemplated in the Prospectus
(or any supplement thereto), there are no legal or governmental
proceedings pending or threatened against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or
any of their property, is subject, which are required to be described
in the Registration Statement or Prospectus (or any amendment or
supplement thereto) and (B) there are no agreements, contracts,
indentures, leases or other instruments, that are

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<PAGE> 43
required to be described in the Registration Statement or the
Prospectus (or any amendment or supplement thereto) or to be filed as
an exhibit to the Registration Statement that are not described or
filed as required, as the case may be;

(vi) This Agreement and the Custody
Agreement have each been duly executed and delivered by or on behalf
of each of the Selling Stockholders and are valid and binding
agreements of each Selling Stockholder enforceable against each
Selling Stockholder in accordance with their terms, except as
enforcement of rights to indemnity and contribution hereunder may be
limited by Federal or state securities laws or principles of public
policy and subject to the qualification that the enforceability of
each Selling Stockholder's obligations hereunder and thereunder may be
limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles;

(vii) To the knowledge of such counsel,
each Selling Stockholder has full legal right, power and
authorization, and any approval required by law, to sell, assign,
transfer and deliver good and marketable title to the Shares which
such Selling Stockholder has agreed to sell pursuant to this
Agreement;

(viii) The execution and delivery of this
Agreement and the Custody Agreement by the Selling Stockholders and
the consummation of the transactions contemplated hereby and thereby
will not conflict with, violate, result in a breach of or constitute a
default under the terms or provisions of any agreement, indenture,
mortgage or other instrument known to such counsel to which any
Selling Stockholder is a party or by which any of them or any of their
assets or property is bound, or any court order or decree or any law,
rule, or regulation applicable to any Selling

- 43 -
<PAGE> 44
Stockholder or to any of the property or assets of any Selling
Stockholder; and

(ix) Upon delivery of the Shares by the
Selling Stockholders pursuant to this Agreement and payment therefor
as contemplated herein, and assuming that the Underwriters shall have
purchased such Shares in good faith without notice of any adverse
claim, the Underwriters will acquire good and marketable title to such
Shares free and clear of any lien, claim, security interest, or other
encumbrance, restriction on transfer or other defect in title.

In addition to the matters set forth above, such opinion shall
also contain a statement to the effect that, although counsel has not
undertaken, except as otherwise indicated in their opinion, to determine
independently, and does not assume any responsibility for, the accuracy or
completeness of the statements in the Registration Statement, such counsel has
participated in the preparation of the Registration Statement and the
Prospectus, including review and discussion of the contents thereof(including a
review and discussion of the contents of all Incorporated Documents), and
nothing has come to the attention of such counsel that has caused it to believe
(i) that the Registration Statement (including the Incorporated Documents), and
any amendment thereto, at the time it became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) that the Prospectus (including the Incorporated Documents), or any
amendment or supplement to the Prospectus, as of its respective date, and as of
the Closing Date or the Option Closing Date, as the case may be, contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no opinion with respect to the financial
statements and the notes thereto and the

- 44 -
<PAGE> 45
schedules and other financial and statistical data included or incorporated by
reference in the Registration Statement or the Prospectus).

(e) You shall have received on the Closing Date,
an opinion of Charles W. Lamar, III, Esq., general counsel of the Company,
dated the Closing Date and addressed to you, as Representatives of the several
Underwriters, to the effect that:

(i) The Company and each of the
Subsidiaries has full corporate power and authority, and all necessary
governmental authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all governmental
regulatory officials and bodies (except where the failure so to have
any such authorizations, approvals, orders, licenses, certificates,
franchises or permits, individually or in the aggregate, would not
have a material adverse effect on the business, properties, operations
or financial condition of the Company and the Subsidiaries taken as a
whole), to own their respective properties and to conduct their
respective businesses as now being conducted, as described in the
Prospectus;

(ii) To the best of his knowledge, other
than as described or contemplated in the Prospectus (or any supplement
thereto), there are no legal or governmental proceedings pending or
threatened against the Company or any of the Subsidiaries, or to which
the Company or any of the Subsidiaries, or any of their property, is
subject, which are required to be described in the Registration
Statement or Prospectus (or any amendment or supplement thereto);

(iii) To the bests of his knowledge, there
are no agreements, contracts, indentures, leases or other instruments,
that are required to be described in the Registration Statement or the
Prospectus (or any

- 45 -
<PAGE> 46
amendment or supplement thereto) or to be filed as an exhibit to the
Registration Statement that are not described or filed as required, as
the case may be;

(iv) Neither the Company nor any of the
Subsidiaries (A) is in violation of its respective certificate or
articles of incorporation or bylaws, or other organizational
documents, (B) to the best knowledge of such counsel after reasonable
inquiry, is in default in the performance of any material obligation,
agreement or condition contained in any bond, debenture, note or other
evidence of indebtedness, except as may be disclosed in the Prospectus
or (C) is in violation any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of
the Subsidiaries or of any decree of any court or governmental agency
or body having jurisdiction over the Company or any of the
Subsidiaries which default or violation in the case of either clause
(ii) or (iii), either individually or in the aggregate, would be
reasonably likely to have a Material Adverse Effect;

(v) Except as described in the
Prospectus, there are no outstanding options, warrants or other rights
calling for the issuance of, and such counsel does not know of any
commitment, plan or arrangement to issue, any shares of capital stock
of the Company or any security convertible into or exchangeable or
exercisable for capital stock of the Company;

(vi) Except as described in the
Prospectus, there is no holder of any security of the Company or any
other person who has the right, contractual or otherwise, to cause the
Company to sell or otherwise issue to them, or to permit them to
underwrite the sale of, the Shares or the right to have any Common
Stock or other securities of the Company included in the registration
statement or the right, as

- 46 -
<PAGE> 47
a result of the filing of the registration statement, to require
registration under the Act of any shares of Common Stock or other
securities of the Company; and

(vii) The statements in the Prospectus
under the captions "Risk Factors -- Regulation of Outdoor Advertising"
and "Business -- Regulation", insofar as such statements constitute a
summary of regulatory matters relating to the outdoor advertising
industry, fairly describe the regulatory matters relating to such
industry.

In addition to the matters set forth above, such
opinion shall also contain a statement to the effect that nothing has come to
the attention of such counsel that has caused it to believe (i) that the
Registration Statement (including the Incorporated Documents), and any
amendment thereto, at the time it became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) that the Prospectus (including the Incorporated Documents),or any
amendment or supplement to the Prospectus, as of its respective date, and as of
the Closing Date or the Option Closing Date, as the case may be, contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no opinion with respect to the financial
statements and the notes thereto and the schedules and other financial and
statistical data included or incorporated by reference in the Registration
Statement or the Prospectus).

(f) You shall have received on the Closing Date
an opinion of Chadbourne & Parke LLP, counsel for the Underwriters, dated the
Closing Date and addressed to you, as Representatives of the several
Underwriters, with respect to the matters referred to in clauses (ii) (with
respect to paragraph (A) only), (iv), (v) (with respect to paragraph

- 47 -
<PAGE> 48
(B) only) and (viii) of the foregoing paragraph (c) and clause (ix) of the
foregoing paragraph (d) and such other related matters as you may request.

In addition to the matters set forth above, such opinion shall
also contain a statement to the effect that, although such counsel has not
undertaken, except as otherwise indicated in their opinion, to determine
independently, and does not assume any responsibility for, the accuracy or
completeness of the statements in the Registration Statement, such counsel has
participated in the preparation of the Registration Statement and the
Prospectus, including review and discussion of the contents thereof (including
a review and discussion of the contents of all Incorporated Documents), and
nothing has come to the attention of such counsel that has caused it to believe
(i) that the Registration Statement (including the Incorporated Documents), and
any amendment thereto, at the time it became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) that the Prospectus (including the Incorporated Documents), any amendment
or supplement to the Prospectus, as of its respective date, and as of the
Closing Date or the Option Closing Date, as the case may be, contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no opinion with respect to the financial
statements and the notes thereto and the schedules and other financial and
statistical data included or incorporated by reference in the Registration
Statement or the Prospectus).

(g) You shall have received letters addressed to
you, as Representatives of the several Underwriters, and dated the date hereof
and the Closing Date from (i) KPMG Peat Marwick LLP and (ii) McGrail, Merkel,
Quinn & Associates, each independent certified public

- 48 -
<PAGE> 49
accountants, substantially in the forms heretofore approved by you.

(h)(i) No stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there
shall not have been any change in the capital stock of the Company nor any
material increase in the short-term or long-term debt of the Company (other
than in the ordinary course of business) from that set forth or contemplated in
the Registration Statement or the Prospectus (or any amendment or supplement
thereto); (iii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement and the Prospectus (or
any amendment or supplement thereto), except as may otherwise be stated in the
Registration Statement and Prospectus (or any amendment or supplement thereto),
any material adverse change in the condition (financial or other), business,
prospects, properties, net worth or results of operations of the Company and
the Subsidiaries taken as a whole; (iv) the Company and the Subsidiaries shall
not have any liabilities or obligations, direct or contingent (whether or not
in the ordinary course of business), that are material to the Company and the
Subsidiaries, taken as a whole, other than those reflected in the Registration
Statement or the Prospectus (or any amendment or supplement thereto); and (v)
all the representations and warranties of the Company contained in this
Agreement shall be true and correct on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date, and you shall
have received a certificate, dated the Closing Date and signed by the chief
executive officer and the chief financial officer of the Company (or such other
officers as are acceptable to you), to the effect set forth in this Section
10(h) and in Section 10(i) hereof.

- 49 -
<PAGE> 50
(i) The Company shall not have failed at or prior
to the Closing Date to have performed or complied with any of its agreements
herein contained and required to be performed or complied with by it hereunder
at or prior to the Closing Date in any material respect.

(j) All the representations and warranties of the
Selling Stockholders contained in this Agreement shall be true and correct in
all material respects on and as of the date hereof and on and as of the Closing
Date as if made on and as of the Closing Date, and you shall have received a
certificate, dated the Closing Date and signed by or on behalf of the Selling
Stockholders to the effect set forth in this Section 10(j) and in Section 10(k)
hereof.

(k) The Selling Stockholders shall not have
failed at or prior to the Closing Date to have performed or complied with any
of their agreements herein contained and required to be performed or complied
with by them hereunder at or prior to the Closing Date in any material respect.

(l) The Shares shall have been listed or approved
for inclusion upon notice of issuance on the Nasdaq National Market.

(m) The Sellers shall have furnished or caused to
be furnished to you such further certificates and documents as you shall have
reasonably requested.

All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel.

Any certificate or document signed by any officer of the
Company or any Attorney-in-Fact or any Selling Stockholder and delivered to
you, as Representatives of the Underwriters, or to counsel for the
Underwriters, shall be deemed a representation and warranty by the Company, the
Selling Stockholders or the particular Selling Stockholder,

- 50 -
<PAGE> 51
as the case may be, to each Underwriter as to the statements made therein.

The several obligations of the Underwriters to purchase
Additional Shares hereunder are subject to the satisfaction on and as of any
Option Closing Date of the conditions set forth in this Section 10, except
that, if any Option Closing Date is other than the Closing Date, and you so
request, the certificates, opinions and letters referred to in paragraphs (c)
through (j) shall be dated the applicable Option Closing Date and the opinions
called for by paragraphs (c), (d), (e) and (f) shall be revised to reflect the
sale of Additional Shares.

11. Expenses. The Company agrees to pay the following
costs and expenses and all other costs and expenses incident to the performance
by it of its obligations hereunder: (i) the preparation, printing or
reproduction, and filing with the Commission of the Registration Statement
(including financial statements and exhibits thereto), each Prepricing
Prospectus, the Prospectus, and each amendment or supplement to any of them;
(ii) the printing (or reproduction) and delivery (including postage, air
freight charges and charges for counting and packaging) of such copies of the
registration statement, each Prepricing Prospectus, the Prospectus, and all
amendments or supplements to any of them as may be reasonably requested for use
in connection with the offering and sale of the Shares; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the Shares,
including any stamp taxes in connection with the original issuance and sale of
the Shares; (iv) the printing (or reproduction) and delivery of this Agreement,
the preliminary and supplemental Blue Sky Memoranda, the Master Agreement Among
Underwriters and dealer contracts; (v) the registration of the Shares under the
Exchange Act and the listing of the Shares on the Nasdaq National Market; (vi)
the registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the several states as provided in Section 5(g)
hereof (including

- 51 -
<PAGE> 52
the reasonable fees, expenses and disbursements of counsel for the Underwriters
relating to the preparation, printing or reproduction, and delivery of the
preliminary and supplemental Blue Sky Memoranda and such registration and
qualification); (vii) the filing fees in connection with any filings required
to be made with the NASD; (viii) the transportation and other expenses incurred
by or on behalf of Company representatives in connection with presentations to
prospective purchasers of the Shares (excluding any such expenses incurred by
the Underwriters for their representatives); and (ix) the fees and expenses of
the Company's accountants and the fees and expenses of counsel (including local
and special counsel) for the Company and the Selling Stockholders. Except as
provided by this Section 11 or Section 5(j) hereof, the Underwriters will pay
all of their own costs and expenses, including fees of their counsel, taxes on
resales of the Shares by them and any advertising expenses in connection with
any offers they make.

12. Effective Date of Agreement. This Agreement shall
become effective: (i) upon the execution and delivery hereof by the parties
hereto; or (ii) if, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, when
notification of the effectiveness of the Registration Statement or such
post-effective amendment has been released by the Commission. Until such time
as this Agreement shall have become effective, it may be terminated by the
Company, by notifying you, or by you, as Representatives of the several
Underwriters, by notifying the Company and the Selling Stockholders.

If any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters are obligated but fail or refuse to purchase is not
more than one-tenth of the aggregate number of Shares

- 52 -
<PAGE> 53
which the Underwriters are obligated to purchase on the Closing Date, each
non-defaulting Underwriter shall be obligated, severally, in the proportion
which the number of Firm Shares set forth opposite its name in Schedule II
hereto bears to the aggregate number of Firm Shares set forth opposite the
names of all non-defaulting Underwriters or in such other proportion as you may
specify in accordance with Section 20 of the Master Agreement Among
Underwriters of Smith Barney Inc., to purchase the Shares which such defaulting
Underwriter or Underwriters are obligated, but fail or refuse, to purchase. If
any one or more of the Underwriters shall fail or refuse to purchase Shares
which it or they are obligated to purchase on the Closing Date and the
aggregate number of Shares with respect to which such default occurs is more
than one-tenth of the aggregate number of Shares which the Underwriters are
obligated to purchase on the Closing Date and arrangements satisfactory to you
and the Company for the purchase of such Shares by one or more non-defaulting
Underwriters or other party or parties approved by you and the Company are not
made within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Company. In any
such case which does not result in termination of this Agreement, either you or
the Company shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any such
default of any such Underwriter under this Agreement. The term "Underwriter"
as used in this Agreement includes, for all purposes of this Agreement, any
party not listed in Schedule II hereto who, with your approval and the approval
of the Company, purchases Shares which a defaulting Underwriter is obligated,
but fails or refuses, to purchase.

- 53 -
<PAGE> 54
Any notice under this Section 12 may be given by telegram,
telecopy or telephone but, if by telephone, shall be subsequently confirmed in
writing.

13. Termination of Agreement. This Agreement shall be
subject to termination in your absolute discretion, without liability on the
part of any Underwriter to the Company or any Selling Stockholder, by notice to
the Company, if prior to the Closing Date or any Option Closing Date (if
different from the Closing Date and then only as to the Additional Shares), as
the case may be, (i) trading in securities generally on the New York Stock
Exchange, American Stock Exchange or the Nasdaq National Market shall have been
suspended or materially limited, (ii) a general moratorium on commercial
banking activities in New York shall have been declared by either federal or
New York State authorities, or (iii) there shall have occurred any outbreak or
escalation of hostilities or other international or domestic calamity, crisis
or material adverse change in political, financial or economic conditions, the
effect of which on the financial markets of the United States is such as to
make it, in your reasonable judgment, impracticable or inadvisable to commence
or continue the offering of the Shares at the offering price to the public set
forth on the cover page of the Prospectus or to enforce contracts for the
resale of the Shares by the Underwriters. Notice of such termination may be
given to the Company by telegram, telecopy or telephone and, if by telephone,
shall be subsequently confirmed in writing.

14. Information Furnished by the Underwriters. The
statements set forth in the last paragraph on the cover page, the stabilization
and Rule 10b-6A legends on the inside cover page, and the statements in the
first and third paragraphs under the caption "Underwriting" in any Prepricing
Prospectus and in the Prospectus, constitute the only information furnished by
or on behalf of the Underwriters through you as such information is referred to
in Sections 7(b) and 9 hereof.

- 54 -
<PAGE> 55
15. Miscellaneous. Except as otherwise provided in
Sections 5, 12 and 13 hereof, notice given pursuant to any provision of this
Agreement shall be in writing and shall be delivered (i) if to the Company, at
the office of the Company at 5551 Corporate Boulevard, Baton Rouge, Louisiana
70808, Attention: Charles W. Lamar, III, General Counsel; or (ii) if to the
Selling Stockholders, at Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman,
L.L.P., Attention: Ben Miller, or (iii) if to you, as Representatives of the
several Underwriters, care of Smith Barney Inc., 388 Greenwich Street, New
York, New York 10013, Attention: Manager, Investment Banking Division.

This Agreement has been and is made solely for the benefit of
the several Underwriters, the Selling Stockholders, the Company, its directors
and officers, and the other controlling persons referred to in Section 9 hereof
and their respective successors and assigns, to the extent provided herein, and
no other person shall acquire or have any right under or by virtue of this
Agreement. Neither the term "successor" nor the term "successors and assigns"
as used in this Agreement shall include a purchaser from any Underwriter of any
of the Shares in his status as such purchaser.

16. Applicable Law; Counterparts. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York applicable to contracts made and to be performed within the State of New
York.

This Agreement may be signed in various counterparts which
together constitute one and the same instrument.

- 55 -
<PAGE> 56
Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Selling Stockholders and the several
Underwriters.

Very truly yours,

LAMAR ADVERTISING COMPANY

By:
---------------------------
Name:
----------------------
Title:
---------------------

Each of the Selling
Stockholders named in
Schedule I hereto

By:
-----------------------------
Attorney-in-Fact

Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Underwriters named in Schedule II
hereto.

SMITH BARNEY INC.
ALEX. BROWN & SONS INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED

As Representatives of the Several Underwriters

By: SMITH BARNEY INC.

By:
-----------------------------
Name:
----------------------
Title: Managing Director

- 56 -
<PAGE> 57

SCHEDULE I

LAMAR ADVERTISING COMPANY

Part A - Firm Shares

Number of
Selling Stockholders Firm Shares
-------------------- -----------

The Reilly Family Limited Partnership . . . . . . . .
Charles W. Lamar, III . . . . . . . . . . . . . . . .
Mary Lee Lamar Dixon . . . . . . . . . . . . . . . .
Robert S. Switzer . . . . . . . . . . . . . . . . . .
Charles L. Switzer . . . . . . . . . . . . . . . . .
John Switzer . . . . . . . . . . . . . . . . . . . .
Allison Lamar . . . . . . . . . . . . . . . . . . . .
Kevin P. Reilly, Sr. . . . . . . . . . . . . . . . .
Albert Lamar . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . .

Part B - Additional Shares

Number of
Selling Stockholders Firm Shares
-------------------- -----------

<PAGE> 58
SCHEDULE II

LAMAR ADVERTISING COMPANY

Number of Number of
Underwriter Firm Shares Underwriter Firm Shares
- ----------- ----------- ----------- -----------

Smith Barney Inc.
Alex. Brown & Sons Incorporated
Prudential Securities
Incorporated

------------------
Total
==================

<PAGE> 59
EXHIBIT A

Subsidiaries of Lamar Advertising Company

<PAGE> 1
EXHIBIT 5.1

PALMER & DODGE LLP
One Beacon Street
Boston Massachusetts 02108

Telephone: (617) 573-0100 Facsimile: (617) 227-4420

November 19, 1996

Lamar Advertising Company
555 Corporate Boulevard
Baton Rouge, Louisiana 70808

We are rendering this opinion in connection with the Registration
Statement on Form S-3 (the "Registration Statement") filed by Lamar Advertising
Company (the "Company"), a Delaware corporation, with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, on October
23, 1996. The Registration Statement relates to up to 3,220,000 shares of the
Company's Class A Common Stock, $0.001 par value (the "Shares"). We understand
that the Shares are to be offered and sold in the manner described in the
Registration Statement.

We have acted as your counsel in connection with the preparation of the
Registration Statement. We are familiar with the proceedings of the Board of
Directors of the Company in connection with the authorization, issuance and
sale of the Shares. We have examined such other documents as we consider
necessary to render this opinion.

Based upon the foregoing, we are of the opinion that the Shares have
been duly authorized and, when issued and delivered by the Company against
payment therefor at the price to be determined pursuant to the resolutions
adopted by the Board of Directors, will be validly issued, fully paid and
non-assessable.

We hereby consent to the filing of this opinion as a part of the
Registration Statement and to the reference of our firm under the caption
"Certain Legal Matters" in the Prospectus filed as part thereof.

Very truly yours,

/s/ Palmer & Dodge LLP

<PAGE> 1

EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Lamar Advertising Company:

We consent to the use of our report included herein and to the references
to our firm under the headings "Selected Consolidated Historical and Pro Forma
Financial and Operating Data" and "Experts" in the prospectus.

KPMG Peat Marwick LLP

New Orleans, Louisiana

November 19, 1996

<PAGE> 1

EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

The Partners
Outdoor East, L.P.:

We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.

KPMG Peat Marwick LLP

Charlotte, North Carolina

November 19, 1996

<PAGE> 1

EXHIBIT 23.3

INDEPENDENT AUDITORS' CONSENT

November 19, 1996

The Board of Directors
FKM Advertising Co., Inc.:

We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.

McGrail, Merkel, Quinn and Associates