<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
AUGUST 15, 1997
LAMAR ADVERTISING COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 0-20833 72-1205791
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
5551 CORPORATE BOULEVARD, BATON ROUGE, LOUISIANA 70808
(Address of principal executive offices and zip code)
(504) 926-1000
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On August 15, 1997, a wholly-owned subsidiary of Lamar Advertising
Company (the "Company") acquired from Outdoor Systems, Inc. ("OSI"), for a cash
purchase price of approximately $116.0 million (excluding approximately $2.0
million in capitalized costs), certain outdoor advertising assets that OSI had
acquired from National Advertising Company, previously a wholly-owned
subsidiary of Minnesota Mining and Manufacturing Company ("3M"). Pursuant to
this acquisition (the "3M Acquisition"), the Company acquired approximately
1,745 bulletin displays in ten markets in the states of Arizona, California,
Colorado, Georgia, Kentucky, Louisiana, Michigan, Missouri and Texas.
This Form 8-K is being amended to provide the historical financial
statements and related notes for the assets acquired and liabilities assumed in
the 3M Acquisition as well as pro forma financial information of the Company
giving effect to the 3M Acquisition.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
The statement of assets acquired and liabilities assumed by
Lamar Advertising Company of National Advertising Company from
Outdoor Systems, Inc. as of August 14, 1997, as well as the
related statement of revenues and expenses for the years ended
December 31, 1996 and 1995 and the six month period ended June
30, 1997, are filed herewith as Exhibit 99.1 and incorporated
herein by reference.
(b) Pro Forma Financial Statements.
The unaudited consolidated pro forma financial statements of
Lamar Advertising Company giving effect to the 3M Acquisition
are filed herewith as Exhibit 99.2 and incorporated herein by
reference.
(c) Exhibits.
2.1 Asset Purchase Agreement dated as of August 15, 1997
between The Lamar Corporation and Outdoor Systems, Inc.
Previously filed as the same numbered exhibit to the
initial filing of this report.
23.1 Consent of Coopers & Lybrand L.L.P. Filed herewith.
99.1 The statement of assets acquired and liabilities
assumed by Lamar Advertising Company of National
Advertising Company from Outdoor Systems, Inc.
as of August 14, 1997, and the related statement
of revenues and expenses for the years ended
December 31, 1996 and 1995 and the six month
period ended June 30, 1997. Filed herewith.
99.2 Unaudited consolidated pro forma financial statements of
Lamar Advertising Company giving effect to the 3M
Acquisition. Filed herewith.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: October 27, 1997 LAMAR ADVERTISING COMPANY
By: /s/ Keith A. Istre
-------------------------------------
Keith A. Istre
Treasurer and Chief Financial Officer
<PAGE> 4
EXHIBIT INDEX
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NO.
- ------- ----------- ----------
2.1 Asset Purchase Agreement dated as of August 14, 1997
between The Lamar Corporation and Outdoor Systems, Inc.
Previously filed as the same numbered exhibit to the
initial filing of this report.
23.1 Consent of Coopers & Lybrand L.L.P. Filed herewith.
99.1 The statement of assets acquired and liabilities assumed
by Lamar Advertising Company of National Advertising Company
from Outdoor Systems, Inc. as of August 14, 1997, and the
related statement of revenues and expenses for the years
ended December 31, 1996 and 1995 and the six month
period ended June 30, 1997. Filed herewith.
99.2 Unaudited consolidated pro forma financial statements
of Lamar Advertising Company giving effect to the 3M
Acquisition. Filed herewith.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
Lamar Advertising Company on Form S-8 (File No. 333-10337) of our report dated
October 17, 1997 on our audit of the National Advertising Company -- Lamar
Acquisition statement of assets acquired and liabilities assumed as of August
14, 1997 and the related statement of revenues and expenses for the years ended
December 31, 1996 and 1995, which report is included in this Current Report on
Form 8-K/A dated October 27, 1997.
/s/ Coopers & Lybrand L.L.P.
Chicago, Illinois
October 27, 1997
<PAGE> 1
EXHIBIT 99.1
NATIONAL ADVERTISING COMPANY -- LAMAR ACQUISITION
STATEMENT OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
AS OF AUGUST 14, 1997
AND RELATED STATEMENT OF REVENUES AND EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<PAGE> 2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Lamar Advertising Company
We have audited the accompanying statement of assets acquired and liabilities
assumed of National Advertising Company - Lamar Acquisition as of August 14,
1997, and the related statement of revenues and expenses for the years ended
December 31, 1996 and 1995. These financial statements have been prepared on
the basis described in Note 1 and are the responsibility of Outdoor Systems,
Inc.'s ("OSI") and Lamar Advertising Company's ("Lamar") managements. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the aforementioned 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 audit provides a reasonable basis
for our opinion.
As discussed in Note 1, the accompanying financial statements have been prepared
pursuant to the Asset Purchase Agreement described in Note 1, and are not
intended to be a complete presentation of the assets and liabilities and
revenues and expenses applicable to the portion of National Advertising
Company's business acquired by Lamar from OSI.
In our opinion, the financial statements referred to above, present fairly, in
all material respects, the assets acquired and liabilities assumed of National
Advertising Company - Lamar Acquisition as of August 14, 1997, and the revenues
and expenses for the years ended December 31, 1996 and 1995, in conformity with
generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Chicago, Illinois
October 17, 1997
<PAGE> 3
NATIONAL ADVERTISING COMPANY -- LAMAR ACQUISITION
STATEMENT OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
as of August 14, 1997
(in 000's)
ASSETS ACQUIRED
<TABLE>
<CAPTION>
<S> <C>
Current assets:
Trade receivables, less allowance of $156 $ 2,550
Inventories 72
Prepaid land rents, current portion 1,863
Other current assets 93
-------
Total current assets 4,578
Property, plant and equipment, net 13,444
Prepaid land rents, non-current portion 456
-------
Total assets acquired 18,478
-------
LIABILITIES ASSUMED
Current liabilities:
Trade accounts payable $ 227
Accrued payroll and related expenses 93
Deferred revenue 142
Accrued worker's compensation 214
Accrued property taxes 161
Other current liabilities 95
-------
Total liabilities assumed 932
-------
Net assets acquired $17,546
=======
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 4
NATIONAL ADVERTISING COMPANY -- LAMAR ACQUISITION
STATEMENT OF REVENUES AND EXPENSES
for the years ended December 31, 1996 and 1995
(in 000's)
<TABLE>
<CAPTION>
June 30, December 31, December 31,
1997 1996 1995
-------------- ------------ ------------
(unaudited)
<S> <C> <C> <C>
Revenues $12,053 $26,914 $25,155
Agency commissions (1,493) (3,611) (3,386)
------- ------- -------
Net revenues 10,560 23,303 21,769
Operating expenses:
Direct advertising 6,142 13,382 12,472
Selling and marketing 1,222 2,656 2,520
General and administrative 533 1,389 1,273
Depreciation 738 1,333 1,950
------- ------- -------
Revenues in excess of operating expenses 1,925 $ 4,543 $ 3,554
======= ======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 5
NATIONAL ADVERTISING COMPANY -- LAMAR ACQUISITION
NOTES TO FINANCIAL STATEMENTS
(in thousands)
1. BASIS OF PRESENTATION
The statement of assets acquired and liabilities assumed by Lamar Advertising
Company ("Lamar") of the National Advertising Company ("NADCO"), previously a
wholly-owned subsidiary of Minnesota Mining and Manufacturing Company ("3M"),
from Outdoor Systems, Inc. ("OSI") include only those accounts related to the
assets sold to Lamar, pursuant to the Asset Purchase Agreement ("the
Agreement"), dated as of August 15, 1997, between Lamar and OSI. These
acquired assets and liabilities assumed and related revenues and expenses are
hereafter referred to as "Lamar Acquisition."
Lamar Acquisition owns and operates advertising display faces in certain
outdoor media markets in the United States and sells the advertising space to
national, regional and local advertisers throughout the United States.
The accompanying financial statements present the assets acquired and
liabilities assumed and the revenues and expenses of Lamar Acquisition, as
described above, and are presented on the accrual basis of accounting. The
financial statements exclude amounts related to federal and state income
taxes and interest income. Net revenues were specifically identifiable to
the Lamar Acquisition advertising display faces acquired. Certain costs and
expenses, including ground rent and depreciation, are specifically
identifiable to the Lamar Acquisition assets acquired. NADCO's historical
financial statements include allocations of certain costs and expenses from
3M based on services provided by 3M to NADCO. Lamar Acquisition has been
allocated a share of these 3M costs and expenses and other costs and expenses
from NADCO, generally as follows:
-- sales related costs and expenses have been allocated by market area
based on the percentage of Lamar Acquisition's advertising display
faces, by market area, in relation to NADCO's total advertising
display faces, by market area for each respective year; and
-- marketing and general and administrative costs and expenses have been
allocated based on the percentage of Lamar Acquisition's revenues in
relation to NADCO's total revenues, for each respective year.
The accompanying financial statements may not necessarily be indicative of
the assets acquired and liabilities assumed and revenues and expenses of
Lamar Acquisition in the future or what the assets acquired and liabilities
assumed and revenues and expenses would have been had Lamar Acquisition been
operated as a separate, independent entity during the periods presented.
4
<PAGE> 6
NATIONAL ADVERTISING COMPANY -- LAMAR ACQUISITION
NOTES TO FINANCIAL STATEMENTS
(in thousands)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Lamar Acquisition's revenues are generated from contracts with advertisers
generally covering periods ranging from one to thirty-six months. Lamar
Acquisition recognizes revenues ratably over the contract term and defers
customer prepayment of rental fees.
PREPAID LAND RENT
Most of Lamar Acquisition's advertising structures are located on leased
land. Land rents are generally paid in advance for periods ranging from one
to twelve months. Prepaid rents are expensed ratably over the related rent
term.
INVENTORIES
Inventories consist principally of parts and materials for the construction
and replacement of outdoor signage. Inventories are stated at the lower of
cost or market, cost being determined using the first-in, first-out (FIFO)
method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant, and equipment are stated at cost. Depreciation is recorded
using the straight-line method over estimated useful lives of the assets.
Repairs and maintenance are charged to expense when incurred. Expenditures
for significant improvements are capitalized.
IMPAIRMENT OF LONG-LIVED ASSETS
Lamar Acquisition assesses the impairment of its long-lived assets, including
property and equipment, whenever economic events or changes in circumstances
indicate that the carrying amounts of the assets may not be recoverable.
Long-lived assets are considered to be impaired when the sum of the expected
future operating cash flows, undiscounted and without interest charges, is
less than the carrying amounts of the related assets.
PENSION AND POSTRETIREMENT PLANS
NADCO employees participated in 3M pension and postretirement plans. NADCO
has accounted for its participation in the 3M plans as a participation in
multi-employer plans. Accordingly, the statement of revenues and expenses
includes an allocation from 3M for these costs that is comparable to Lamar
Acquisition's required contribution to the plans for the periods presented.
Additionally, no assets and liabilities have been reflected in the statement
of assets acquired and liabilities assumed related to the overall 3M pension
and postretirement plans since it is not practicable to segregate the amounts
applicable to Lamar Acquisition.
5
<PAGE> 7
NATIONAL ADVERTISING COMPANY -- LAMAR ACQUISITION
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(in thousands)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
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 acquired and liabilities assumed
and disclosure of contingent assets and liabilities at the dates of the
financial statements and the reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those estimates.
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at August 14, 1997 consists of the following:
<TABLE>
<S> <C>
Signs, principally outdoor advertising structures $35,992
Land 287
Buildings and leasehold improvements 1,075
Machinery and equipment 396
Furniture and fixtures 776
-------
38,526
Accumulated depreciation and amortization (25,082)
-------
Property, plant and equipment, net $13,444
=======
</TABLE>
6
<PAGE> 8
NATIONAL ADVERTISING COMPANY -- LAMAR ACQUISITION
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(in thousands)
4. OPERATING LEASES
Rental expense for operating leases totaled $5,637 and $5,054, including
contingent rental payments of $364 and $303 for the years ended December 31,
1996 and 1995, respectively. Contingent payments are primarily based on
related signage revenues. Land leases are generally entered into for terms of
10 years or less.
Minimum future lease commitments at December 31, 1996 for the next five years
are as follows:
<TABLE>
<CAPTION>
Land
Leases
-------
<S> <C>
1997 $ 5,086
1998 5,086
1999 5,086
2000 5,086
2001 5,086
-------
Total minimum lease payments $25,430
=======
</TABLE>
The total minimum lease payments for land leases assumes that Lamar
Acquisition will continue to renew, at current lease rates, its existing
leases which may expire during the five years presented.
The amounts of minimum lease commitments were not available as of August 14,
1997; however, such amounts would be similar to the amounts as of
December 31, 1996 adjusted for normal lease activity including acquisitions,
renewals and terminations.
5. EMPLOYEE BENEFITS
PENSION PLANS
Substantially all of NADCO employees participated in defined benefit pension
plans sponsored by 3M. 3M's pension benefits are based principally on an
employee's years of service and compensation near retirement. The pension
expense allocated to Lamar Acquisition was approximately $210 and $185 in
1996 and 1995, respectively.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Under various 3M plans, NADCO provided health care and life insurance
benefits to substantially all employees who reached retirement age while
employed by 3M, their covered dependents and beneficiaries. Postretirement
benefit expense has been allocated to Lamar Acquisition for approximately
$106 and $83 in 1996 and 1995, respectively.
7
<PAGE> 9
NATIONAL ADVERTISING COMPANY -- LAMAR ACQUISITION
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(in thousands)
5. EMPLOYEE BENEFITS, CONTINUED
DEFINED CONTRIBUTION PLANS
Employees of NADCO also participated in a 3M sponsored Employee Savings
Plan under section 401(k) of the Internal Revenue Code. Under this plan, 3M
matched employee contributions of up to 6 percent of compensation at rates
ranging from 10 to 85 percent depending upon 3M financial performance. 3M's
matching contributions to the employee savings plan were funded through an
employee stock ownership plan. Lamar Acquisition's allocation of expense
related to the Employee Savings Plan was approximately $54 and $46 in 1996
and 1995, respectively.
6. TRANSACTIONS WITH RELATED PARTIES
3M provided NADCO with various services, including certain corporate
accounting, finance and administration, facility management, human resource
and legal. The cost allocations to Lamar Acquisition for such services were
approximately $1,028 and $978 for 1996 and 1995, respectively. The amounts
allocated are based on historical or actual usage of services relative to the
usage of the other participating affiliated businesses.
Additionally, 3M allocated charges to NADCO for its share of the annual
self-insurance expense, consisting of workers' compensation, auto and general
liability claims. This expense allocation is based upon the ratio of the
NADCO claims and loss development to the total amount of 3M claims and loss
development. The self-insurance expense allocated to Lamar Acquisition was
approximately $720 and $674 for 1996 and 1995, respectively.
NADCO also rented its corporate headquarters and was charged for the use of
other 3M facilities. The expense allocated to Lamar Acquisition was
approximately $585 and $462 for 1996 and 1995, respectively.
Personnel of NADCO used certain automobiles owned by 3M. Lamar Acquisition
recognized approximately $111 and $100 in allocated rental expense during
1996 and 1995, respectively, related to the use of these assets.
8
<PAGE> 10
NATIONAL ADVERTISING COMPANY -- LAMAR ACQUISITION
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(in thousands)
7. LITIGATION AND CLAIMS
Various legal actions and claims are pending or may be instituted or asserted
against Lamar Acquisition in the future, including those arising out of
condemnation matters, permit appeals, property owner disputes, lease disputes
and property tax issues. Liabilities have been recorded for these matters to
the extent that it is probable that Lamar Acquisition will be found liable
and the minimum amount of liability is determinable.
Management believes that the ultimate outcome of all pending litigation,
after considering recorded liabilities, would not have a material adverse
effect on Lamar Acquisition's assets and liabilities or revenues and
expenses.
9
<PAGE> 1
EXHIBIT 99.2
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, 1996 and for
the six month period ended June 30, 1997 give effect to (i) the acquisitions of
FKM Advertising Co., Inc. ("FKM"), Outdoor East, L.P. ("Outdoor East") and Penn
Advertising, Inc. ("Penn") (the "Recent Acquisitions"), (ii) the Company's
initial public equity offering in August 1996 (the "IPO") and the application of
the net proceeds therefrom, (iii) the Company's November 1996 public offerings
of 2,530,000 shares of Class A Common Stock and $255 million of 9.625% Senior
Subordinated Notes due 2006 (the "1996 Notes") and the application of the net
proceeds therefrom, (iv) the tender offer that retired in November 1996
approximately $98.8 million of the $100 million outstanding 11% Senior Secured
Notes due 2003 (the "Transactions"), (v) the 3M Acquisition and (vi) the
issuance in September 1997 (the "1997 Note Offering") of $200 million of 8.625%
Senior Subordinated Notes due 2007 (the "1997 Notes"), as if each had occurred
on November 1, 1995.
For purposes of the pro forma financial information (i) the statement of
earnings (loss) of the Company for its fiscal year ended October 31, 1996 has
been combined with the statements of earnings of Outdoor East and FKM for the
twelve months ended September 30, 1996, the statement of earnings of Penn for
its fiscal year ended December 31, 1996 and the statement of revenues and direct
expenses for the assets acquired in the 3M Acquisition for the twelve month
period ended December 31, 1996, (ii) the statement of earnings of the Company
for the six months ended June 30, 1997 has been combined with the statement of
earnings of Penn for the three months ended March 31, 1997 (the period prior to
the acquisition) and the statement of revenues and direct expenses for the
assets acquired in the 3M Acquisition for the six month period ended June 30,
1997 and (iii) the balance sheet of the Company as of June 30, 1997 has been
combined with the statement of assets acquired and liabilities assumed in the 3M
Acquisition and the application of net proceeds of the 1997 Note Offering.
The unaudited pro forma condensed consolidated financial statements give
effect to the Recent Acquisitions and the 3M Acquisition 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 notes thereto.
<PAGE> 2
LAMAR ADVERTISING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
YEAR ENDED OCTOBER 31, 1996
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
RECENT
ACQUISITIONS
IPO AND THE ------------------------------------ ACQUISITION
LAMAR TRANSACTIONS PENN FKM O/D EAST ADJUSTMENTS
---------- ------------ --------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Outdoor advertising, net $ 119,900 $ $ 32,814 $ 7,376 $ 12,142 $ (3,405)(4)
Other income 702 47 109 100 (209)(4)(5)
---------- --------- --------- --------- --------- ---------
120,602 0 32,861 7,485 12,242 (3,614)
---------- --------- --------- --------- --------- ---------
Direct advertising expenses 41,184 9,575 2,214 3,942 2,671 (4)(6)
General and administrative expenses 29,466 10,730 1,632 3,510 (6,768)(4)(6)
Depreciation and Amortization 15,549 125 (1) 3,221 2,453 2,941 8,398 (7)
---------- --------- --------- --------- --------- ---------
86,199 125 23,526 6,299 10,393 4,301
---------- --------- --------- --------- --------- ---------
Operating income 34,403 (125) 9,335 1,186 1,849 (7,915)
---------- --------- --------- --------- --------- ---------
Other expense (income)
Interest income (240) 0 (24)(4)
Interest expense 15,441 11,740 (2)(3) 4,360 1,965 2,672 (5,450)(8)
Loss on disposition of assets 1,012 0 4 281 (4)
Other expenses 242 1,064 10 985 (1,780)(4)(11)
---------- --------- --------- --------- --------- ---------
16,455 11,740 5,424 1,979 3,657 (6,973)
---------- --------- --------- --------- --------- ---------
Earnings (loss) before income taxes 17,948 (11,865) 3,911 (793) (1,808) (942)
Income tax expense (benefit) 7,099 (4,746)(12) 1,117 (157) 0 1,339 (12)
---------- --------- --------- --------- --------- ---------
Net earnings (loss) $ 10,849 $ (7,119) $ 2,794 $ (636) $ (1,808) $ (2,281)
========= ========= ========= ========= =========
Preferred stock dividends 365
----------
Net earnings (loss) applicable to
common stock $ 10,484
==========
Net earnings (loss) per common share $0.38
==========
Weighted average number of shares
outstanding 27,562,564 5,843,543
========== =========
<CAPTION>
PRO FORMA
3M COMBINED ADJUSTMENTS PRO FORMA
PRO FORMA ACQUISITION AS ADJUSTED FOR 1997 NOTE COMBINED
COMBINED 3M ADJUSTMENTS FOR 3M OFFERING AS ADJUSTED
---------- --------- ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Outdoor advertising, net $ 168,827 $ 23,303 $ $ 192,130 $ $ 192,130
Other income 749 749 749
---------- --------- --------- ---------- --------- ----------
169,576 23,303 0 192,879 0 192,879
---------- --------- --------- ---------- --------- ----------
Direct advertising expenses 59,586 16,038 (3,271)(15) 72,353 72,353
General and administrative expenses 38,570 1,389 (1,389)(15) 38,570 38,570
Depreciation and Amortization 32,687 1,333 7,701 (16) 41,721 525 (10) 42,246
---------- --------- --------- ---------- --------- ----------
130,843 18,760 3,041 152,644 525 153,169
---------- --------- --------- ---------- --------- ----------
Operating income 38,733 4,543 (3,041) 40,235 (525) 39,710
---------- --------- --------- ---------- --------- ----------
Other expense (income)
Interest income (264) (264) (264)
Interest expense 30,728 8,550 (17) 39,278 5,251 (9) 44,529
Loss on disposition of assets 1,297 1,297 1,297
Other expenses 521 521 521
---------- --------- --------- ---------- --------- ----------
32,282 0 8,550 40,832 5,251 46,083
---------- --------- --------- ---------- --------- ----------
Earnings (loss) before income taxes 6,451 4,543 (11,591) (597) (5,776) (6,373)
Income tax expense (benefit) 4,652 (2,819)(12) 1,832 (2,310)(12) (478)
---------- --------- --------- ---------- --------- ----------
Net earnings (loss) $ 1,799 $ 4,543 $ (8,772) $ (2,429) $ (3,466) $ (5,895)
========= ========= =========
Preferred stock dividends 365 365 365
---------- ---------- ----------
Net earnings (loss) applicable to
common stock $ 1,434 $ (2,794) $ (6,260)
========== ========== ==========
Net earnings (loss) per common share $ 0.04 $ (0.08) $ (0.19)
========== ========== ==========
Weighted average number of shares
outstanding 33,406,107 33,406,107 33,406,107
========== ========== ==========
</TABLE>
<PAGE> 3
LAMAR ADVERTISING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
SIX MONTHS ENDED JUNE 30, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ACQUISITION PRO FORMA
LAMAR PENN ADJUSTMENTS COMBINED 3M
---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenues
Outdoor advertising, net $ 87,644 $ 6,480 $ (639)(4) $ 93,485 $ 10,560
Other income 311 20 (4)(4) 327
---------- ---------- ---------- ---------- ----------
87,955 6,500 (643) 93,812 10,560
---------- ---------- ---------- ---------- ----------
Direct advertising expenses 28,950 2,412 488 (4)(6) 31,850 7,364
General and administrative expenses 20,081 2,240 (1,195)(4)(6) 21,126 533
Depreciation and Amortization 17,727 727 1,709 (7) 20,163 738
---------- ---------- ---------- ---------- ----------
66,758 5,379 1,002 73,139 8,635
---------- ---------- ---------- ---------- ----------
Operating income 21,197 1,121 (1,645) 20,673 1,925
---------- ---------- ---------- ---------- ----------
Other expense (income)
Interest income (1,421) 1,045 (4)(13) (376)
Interest expense 15,404 976 (93)(8) 16,287
Loss on disposition of assets 742 0 3 (4) 745
Other expenses 177 287 (287)(4) 177
---------- ---------- ---------- ---------- ----------
14,902 1,263 668 16,833 0
---------- ---------- ---------- ---------- ----------
Earnings (loss) before income taxes 6,295 (142) (2,313) 3,840 1,925
Income tax expense (benefit) 3,414 (50) (483)(12) 2,881
---------- ---------- ---------- ---------- ----------
Net earnings (loss) $ 2,881 $ (92) $ (1,830) $ 959 $ 1,925
========== ========== ==========
Preferred stock dividends 274 274
---------- ----------
Net earnings (loss) applicable to
common stock $ 2,607 $ 685
========== ==========
Net earnings (loss) per common share $ 0.08 $ 0.02
========== ==========
Weighted average number of shares
outstanding 31,840,641 31,840,641
========== ==========
<CAPTION>
PRO FORMA
3M COMBINED ADJUSTMENTS PRO FORMA
ACQUISITION AS ADJUSTED FOR 1997 NOTE COMBINED
ADJUSTMENTS FOR 3M OFFERING AS ADJUSTED
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues
Outdoor advertising, net $ $ 104,045 $ $ 104,045
Other income 327 327
---------- ---------- ---------- ---------
0 104,372 0 104,372
---------- ---------- ---------- ---------
Direct advertising expenses (1,539)(15) 37,675 37,675
General and administrative expenses (533)(15) 21,126 21,126
Depreciation and Amortization 3,817 (16) 24,718 262 (10) 24,980
---------- ---------- ---------- ---------
1,745 83,519 262 83,781
---------- ---------- ---------- ---------
Operating income (1,745) 20,853 (262) 20,591
---------- ---------- ---------- ---------
Other expense (income)
Interest income (376) (376)
Interest expense 4,275 (17) 20,562 1,770 (9) 22,332
Loss on disposition of assets 745 745
Other expenses 177 177
---------- ---------- ---------- ---------
4,275 21,108 1,770 22,878
---------- ---------- ---------- ---------
Earnings (loss) before income taxes (6,020) (255) (2,032) (2,287)
Income tax expense (benefit) (1,638)(12) 1,243 (813)(12) 430
---------- ---------- ---------- ---------
Net earnings (loss) $ (4,382) $ (1,498) $ (1,219) $ (2,717)
========== ========== ========== =========
Preferred stock dividends 274 274
---------- ---------
Net earnings (loss) applicable to
common stock $ (1,772) $ (2,991)
========== =========
Net earnings (loss) per common share $ (0.06) $ ($0.09)
========== ==========
Weighted average number of shares
outstanding 31,840,641 31,840,641
========== ==========
</TABLE>
<PAGE> 4
LAMAR ADVERTISING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS PRO FORMA
PRO FORMA PRO FORMA FOR 1997 NOTE COMBINED AS
LAMAR 3M ADJUSTMENTS COMBINED OFFERING ADJUSTED
------- -------------- ----------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Cash $ 7,748 $ $(4,000)(18) $ 3,748 $ (574)(18) $ 3,174
Net receivables 25,840 2,550 28,390 28,390
Other current assets 8,757 1,958 10,713 10,713
-------- ------- ------- -------- ------- --------
Total current assets 42,345 4,506 (4,000) 42,851 (574) 42,277
-------- ------- ------- -------- ------- --------
Property, plant and equipment, net 280,603 13,516 13,932 (19) 308,051 308,051
-------- ------- ------- -------- ------- --------
Investment securities 870 870 870
Intangibles 195,874 86,522 (20) 282,396 5,250(20) 287,646
Other assets 5,093 456 5,549 5,549
-------- ------- ------- -------- ------- --------
Total assets $524,785 $18,478 $96,454 $639,717 $ 4,676 $644,393
======== ======= ======= ======== ======= ========
Current maturities of long-term debt $ 4,161 $ $ $ 4,161 $ $ 4,161
Other current liabilities 19,431 932 20,363 20,363
-------- ------- ------- -------- ------- --------
23,592 932 0 24,524 0 24,524
-------- ------- ------- -------- ------- --------
Long-term debt 412,982 114,000 (21) 526,982 4,676(21) 531,658
Deferred income - Long term 827 827 827
Other liabilities 2,147 2,147 2,147
Deferred tax liability 19,498 19,498 19,498
-------- ------- ------- -------- ------- --------
Total Liabilities 459,046 932 114,000 573,978 4,676 578,654
-------- ------- ------- -------- ------- --------
Net assets acquired 17,546 (17,546)(22)
-------- ------- ------- -------- ------- --------
Stockholders' equity 65,739 65,739 65,739
-------- ------- ------- -------- ------- --------
Total liabilities and
stockholders' equity $524,785 $18,478 $96,454 $639,717 $ 4,676 $644,393
======== ======= ======= ======== ======= ========
</TABLE>
<PAGE> 5
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
For purposes of determining the pro forma effect of the Transactions, the
Recent Acquisitions, the 3M Acquisition and the 1997 Note Offering on the
Company's unaudited Condensed Consolidated Statements of Earnings for the year
ended October 31, 1996 and the six months ended June 30, 1997, the following
adjustments have been made:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
OCTOBER 31, 1996 JUNE 30, 1997
---------------- -------------
<S> <C> <C> <C>
(1) To record the net effect on amortization expense related
to the debt issuance fees for the November 1996 Note
Offering and the elimination of amortization expense
related to the November 1996 Tender Offer $ 125
(2) To eliminate historical interest expense related to the
Senior Secured Notes and record interest expense on the
1996 Notes:
Interest expense on 1996 Notes 24,544
Interest expense related to
Senior Secured Notes (10,870) 13,674
-------
(3) To record incremental interest expense on the $20 million
ten-year subordinated notes issued to existing
shareholders at the time of the IPO in order to give
effect as if the transaction had taken place at the
beginning of the period and eliminate historical interest
expense related to the Company's credit facility that was
paid off at the time of the IPO (1,934)
(4) To reclassify amounts in order to conform to the
Company's presentation:
Outdoor advertising, net $(3,405) $(639)
Other income (109) (4)
Direct expenses 2,946 559
General and administrative expenses (5,653) (914)
Interest income (24) (4)
Loss on disposition of assets 281 3
Other expenses (1,064) (287)
(5) To eliminate management fee income on Outdoor East
historical financial statements that would not have been
earned had the Outdoor East acquisition been consummated
on November 1, 1995 (100)
(6) To eliminate management fees charged by Penn's former
parent company included in the historical financial
statements that would not have existed had the
transaction taken place in the beginning of the period:
Direct expenses (275) (71)
General and administrative (1,115) (281)
</TABLE>
<PAGE> 6
<TABLE>
<S> <C> <C> <C>
(7) Represents incremental amortization and depreciation due
to the application of purchase accounting in recording
the Recent Acquisitions. Depreciation and amortization
are calculated using accelerated and straight line
methods over the estimated useful lives of the assets $8,398 $1,709
(8) 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 (5,450) (93)
(9) To eliminate historical interest expense under the Senior
Credit Facility and to record interest expense on the
Notes at an effective rate of 8.725%:
Interest expense on the Initial
Offering 17,334 8,667
Interest expense under the Senior
Credit Facility (12,083) (6,897) 5,251 1,770
------- ------
(10) The increase in amortizing debt issuance costs
associated with the 1997 Note Offering 525 262
(11) To eliminate costs associated with the sale and
reorganization of Outdoor East which would not have been
incurred had the Outdoor East acquisition been
consummated on November 1, 1995 (716)
(12) To record the tax effect on pro forma statements for:
The Transactions (4,746)
Recent Acquisitions 1,339 (483)
3M Acquisition (2,819) (1,638)
The 1997 Note Offering (2,310) (813)
(13) To eliminate interest income on the Company's historical
financial statements that would not have existed had the
Recent Acquisitions taken place at the beginning of the
period 1,049
(14) The accompanying pro forma results of operations do not
give effect to the extraordinary loss on the
extinguishment of debt of $9,526, net of income tax
benefit of $6,351 for the year ended October 31, 1996
(15) To record (a) a decrease in payroll and payroll related
costs in direct advertising and general and
administrative expense categories due to the termination
of employees in the following functions; and (b) the
elimination of general corporate allocations not
considered attributable to assets acquired as follows.
Direct Advertising:
Elimination of production and sales overhead
functions and corporate overhead allocations (2,077) (1,053)
Elimination of national sales and marketing costs (1,194) (486)
------ ------
Total direct advertising (3,271) (1,539)
====== ======
General and Administrative:
Elimination of national office function, accounting and
administrative personnel and corporate allocations (1,389) (533)
====== ======
</TABLE>
<PAGE> 7
<TABLE>
<S> <C> <C>
(16) Represents incremental amortization and depreciation due
to the application of purchase accounting in recording
the 3M acquisition. 7,701 3,817
======= =========
(17) Represents the incremental interest expense resulting
from the borrowing of $114 million used to finance the 3M
Acquisition, as if the transaction had taken place at the
beginning of the period. 8,550 4,275
======= =========
For purposes of determining the pro forma effect of the 3M Acquisition and the 1997 Note Offering
on the Company's unaudited Condensed Consolidated Balance Sheet as of June 30, 1997, the following
adjustments have been made:
<CAPTION>
ADJUSTMENTS
PROFORMA FOR THE
ADJUSTMENTS 1997 NOTE OFFERING
----------- ------------------
<S> <C> <C>
(18) Cash:
Net proceeds from the 1997 Note Offering $ 193,426
To record cash used to pay off loans under the Senior
Credit Facility (194,000)
---------
(574)
=========
To record cash used to finance the 3M Acquisition (4,000)
=======
(19) Property, Plant and Equipment, net
To record the increase in property, plant and
equipment from the allocation of the purchase
price of the 3M Acquisition 13,932
=======
(20) Intangibles:
To record capitalized fees of the Initial Offering 5,250
=========
To record intangibles resulting from the allocation of the
purchase price of the 3M Acquisition 86,522
=======
(21) Long-term debt:
To record payoff of loans under the Senior Credit Facility (194,000)
To record effect of the issuance of the 1997 Notes 198,676
---------
4,676
=========
To record the borrowings under the senior credit facility
used to finance the 3M Acquisition. 114,000
=======
(22) Net assets acquired:
To eliminate historical net assets of 3M. (17,546)
=======
</TABLE>
