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Filed pursuant to Rule 424(b)(3)
Registration Nos. 333-35313 and 333-35081
957,985 Shares
LAMAR ADVERTISING COMPANY
Class A Common Stock
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This Prospectus relates to the offer and sale of up to 957,985 shares
(the "Shares") of Class A Common Stock, $0.001 par value per share ("Class A
Common Stock"), of Lamar Advertising Company (the "Company") by the Reilly
Family Limited Partnership, an existing stockholder of the Company (the "Selling
Stockholder" or the "RFLP"). The Company's authorized capital stock includes the
shares of 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. The RFLP owns all of the outstanding
shares of Class B Common Stock and will be selling shares of such Class B Common
Stock, which will convert automatically, on a one-for-one basis, into shares of
Class A Common Stock upon such sale. The Shares will be offered to or through
BT Alex. Brown Incorporated who may act solely as agent or who may acquire
Shares as principal. The distribution of the Shares may be effected in one or
more transactions that may take place on the Nasdaq Stock Market ("Nasdaq"),
including block trades or ordinary broker's transactions, or through privately
negotiated transactions or sales to one or more brokers or dealers for resale
of such securities as principals, at market prices prevailing at the time of
sale, or otherwise at prices related to such prevailing market prices or at
negotiated prices. Usual and customary or specifically negotiated brokerage
fees, underwriting discounts or commissions may be paid by the Selling
Stockholder in connection with such sales. In connection with such sales, the
Selling Stockholder and BT Alex. Brown Incorporated and any participating
brokers, dealers or agents may be deemed "underwriters" as such term is defined
in the Securities Act of 1933, as amended (the "Securities Act") and the
commissions paid or discounts allowed to any of such underwriters, brokers,
dealers or agents, in addition to any profits received on resale of the Shares
if any such underwriters, brokers, dealers or agents should purchase any Shares
as a principal, may be deemed to be underwriting discounts or commissions under
the Securities Act. See "SELLING STOCKHOLDER" and "PLAN OF DISTRIBUTION."
The Class A Common Stock is quoted on The Nasdaq National Market under
the symbol "LAMR." On September 9, 1997, the last reported per share sale
price of Class A Common Stock was $28.00.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 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.
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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.
---------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE SELLING STOCKHOLDER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANY PERSON
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY OFFER OR SALE MADE HEREUNDER SHALL, IN ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
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The date of this Prospectus is September 9, 1997.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
THE COMPANY.......................................................... 1
AVAILABLE INFORMATION................................................ 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...................... 1
RISK FACTORS......................................................... 2
USE OF PROCEEDS...................................................... 7
SELLING STOCKHOLDER.................................................. 7
PLAN OF DISTRIBUTION................................................. 7
LEGAL MATTERS........................................................ 8
EXPERTS.............................................................. 8
</TABLE>
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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. A more
complete description of the business of the Company and its recent activities
can be found in the documents listed in "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE." The principal offices of the Company, a Delaware corporation, are
located at 5551 Corporate Boulevard, Baton Rouge, Louisiana 70808, and its
telephone number at such offices is (504) 926-1000.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files periodic reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission")
relating to its business, financial statements and other matters. Reports and
proxy and information statements filed with the Commission as well as copies of
the Registration Statement, of which this Prospectus is a part, can be inspected
and copied at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and
at the following Regional Offices of the Commission: Midwest Regional Office,
500 West Madison Avenue, Suite 1400, Chicago, Illinois 60661; and Northeast
Regional Office, Seven World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can also be obtained at prescribed rates from the public
reference section of the Commission at its principal office at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. Such reports and other
information can also be reviewed on the Commission's web site
(http://www.sec.gov).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference the
following documents heretofore filed with the Commission (File No. 1-12407)
pursuant to the Exchange Act: (i) the Company's Annual Report on Form 10-K for
the year ended October 31, 1996; (ii) the Company's Transition Report on
Form 10-Q/T for the transition period ended December 31, 1996; (iii) the
Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997
and June 30, 1997; (iv) the Company's Current Reports on Form 8-K filed with the
Commission on November 15 and December 19, 1996 and February 10, April 14 (as
amended on Form 8-K/A filed with the Commission on June 13) and August 27,
1997; and (v) 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 the Commission on July 31,
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 the 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 Lamar Advertising Company, 5551 Corporate Boulevard,
Baton Rouge, Louisiana 70808, Attention: Investor Relations, telephone
(504) 926-1000.
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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 offered hereby.
This Prospectus contains forward-looking statements concerning the
Company's operations, economic performance and financial condition. These
statements are based upon a number of assumptions and estimates that are subject
to significant uncertainties and contingencies, many of which are beyond the
control of the Company, and reflect future business decisions that are subject
to change. The following description of risk factors specifies the principal
contingencies and uncertainties to which the Company believes it is subject.
Some of these assumptions will not materialize and unanticipated events may
occur that may affect the Company's results of operations.
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.
POTENTIAL ELIMINATION OR REDUCTION OF TOBACCO ADVERTISING
Approximately 10% of the Company's outdoor advertising net revenues and
8% of consolidated net revenues in fiscal 1996 came from the tobacco products
industry, compared to 9% for fiscal 1995, 7% for fiscal 1994 and 1993, 12% for
fiscal 1992 and 17% for fiscal 1991. 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.
In June 1997 several of the major tobacco companies in the United States
and numerous state attorneys general reached agreement on a proposed settlement
of litigation between such parties. The terms of this proposed settlement
include a ban on all outdoor advertising of tobacco products commencing nine
months after finalization of the settlement. The settlement, however, is subject
to numerous conditions, the most notable of which is the enactment of
legislation by the federal government. At this time, it is uncertain when a
definitive settlement will be reached, if at all, or what the terms of any such
settlement will be. A reduction in billboard advertising by the tobacco industry
could cause an immediate reduction in the Company's outdoor advertising revenues
and may simultaneously increase the Company's available inventory. An increase
in available inventory could result in the Company reducing its rates or
limiting its ability to raise rates for some period of time. If the tobacco
litigation settlement were to be finalized in its current form and if the
Company were unable to replace revenues from tobacco advertising with revenues
from other sources, such settlement could have a material adverse effect on the
Company's results of operations.
In addition, the states of Florida and Mississippi have entered into
separate settlements of litigation with the tobacco industry. These settlements
are not conditioned on federal government approval and provide for the
elimination of all outdoor advertising of tobacco products by February 1998.
The Company operates approximately 4,200 outdoor advertising displays in seven
markets in Florida and approximately 8.5% of its net
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revenues in Florida for the fiscal year ended October 31, 1996 were attributable
to tobacco advertising. The Company operates approximately 2,600 outdoor
advertising displays in three markets in Mississippi and approximately 7.8% of
its net revenues in Mississippi for the fiscal year ended October 31, 1996 were
attributable to tobacco advertising. Although the Company believes that it will
be able to replace a substantial portion of these revenues, there can be no
assurance that it will be able to do so. Further, the settlement of tobacco-
related claims and litigation in other jurisdictions may also adversely affect
outdoor advertising revenues.
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
"-- Potential Elimination or Reduction of Tobacco Advertising" for a discussion
of recent developments concerning tobacco advertising.
RESTRICTIVE COVENANTS IN DEBT INSTRUMENTS
The Company's credit facility with a syndicate of commercial banks (the
"Senior Credit Facility") and indenture relating to the Company's $255 million
outstanding 9 5/8% Senior Subordinated Notes due 2006 (the "Indenture") contain
covenants that restrict, among other things, the ability of the Company to
dispose of assets, incur or repay debt, create liens, and make certain
investments. In addition, the Senior Credit Facility requires the Company to
maintain specified financial ratios and levels including cash interest coverage,
fixed charge coverage, senior debt 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.
SUBSTANTIAL INDEBTEDNESS OF THE COMPANY
The Company presently has substantial indebtedness (approximately
$529.5 million at August 31, 1997). Additionally, as of August 31, 1997, 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 a cumulative
preferential dividend of $364,903 annually. The Company's ratio of total debt
to earnings before interest, taxes, depreciation and amortization (EBITDA) for
the fiscal year ended October 31, 1996 (on a pro forma basis after giving
effect to the Company's acquisitions of FKM Advertising Co., Inc., Outdoor
East, L.P. and Penn Advertising, Inc., and disposition of assets to Universal
Outdoor, Inc.) was 4.96x. 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
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were to decrease from present levels, the Company could experience difficulty in
meeting its debt service obligations without additional financing. Furthermore,
the Company may incur additional indebtedness in order to achieve its growth
objectives. There can be no assurance that, in the event the Company were to
require or desire additional financing, such additional financing would be
available or, if available, would be available on favorable terms. In addition,
any such additional financing may require the consent of lenders under the
Senior Credit Facility or holders of other debt of the Company. Certain of the
Company's competitors operate on a less leveraged basis and may have greater
operating and financial flexibility than the Company.
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 October 31, 1996, the Company has completed the acquisition of 15
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 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 any future acquisitions will be consummated.
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 two 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.
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 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
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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 the Company suffered no
significant structural damage as result of hurricanes in 1996. 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. Although none of the Company's logo sign franchises is due to
terminate in the next two years, three are subject to renewal during that
period. 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 six 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.
CONTROLLING STOCKHOLDER
Upon sale of all the Shares offered hereby, the RFLP, 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 (the "Common
Stock") having approximately 87.5% 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
provision's 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 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 sale of all the Shares offered hereby, the Company's officers,
directors and their respective affiliates other than the RFLP, will beneficially
own shares of the Company's Common Stock having approximately 2.1% of the total
voting power of the Company's Common Stock. Therefore, purchasers of the 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.
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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
hereby). 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.
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 RFLP, 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.
VOLATILITY OF STOCK PRICE
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.
ABSENCE OF DIVIDENDS
The Company does not anticipate paying dividends on its Common Stock in
the foreseeable future. In addition, as stated above, the Senior Credit
Facility and the Indenture each 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.
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USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares.
SELLING STOCKHOLDER
The RFLP is a family limited partnership which owns all of the
outstanding Class B Common Stock. The Shares offered hereby were contributed to
the RFLP by partners in the RFLP in connection with the formation of the RFLP in
December 1994. The following table provides share ownership data for the RFLP as
of July 31, 1997:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING AFTER OFFERING(2)
------------------------------------------------ --------------------------------------------------
Percent of Percent of
Number Outstanding Number Outstanding
Class(1) Of Shares Shares(1) Class(1) Of Shares Shares(1)
------------ ---------- ----------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
Common Stock 13,716,387 43.8% Common Stock 12,758,402 40.7%
</TABLE>
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(1) Upon the sale of any shares of Class B Common Stock to individuals and
entities other than a limited number of members of the Reilly family, such
shares automatically convert into shares of Class A Common Stock. The
amounts shown under "Percent of Outstanding Shares" assume the conversion
of all shares of Class B Common Stock into Class A Common Stock.
(2) Assumes all 957,985 shares are sold, and no purchases or sales by the
Company were or are made between July 31, 1997 and the completion of such
sales.
All of the Shares offered hereby are being offered by the RFLP. Kevin P.
Reilly, Jr., the Chairman, President and Chief Executive Officer of the Company,
is the managing general partner of the RFLP and Mr. Reilly's three siblings,
Anna Reilly Cullinan, Sean E. Reilly and Wendell S. Reilly are the other general
partners of the RFLP. Sean Reilly is Director of Mergers & Acquisitions and Real
Estate of the Company.
As managing general partner, Kevin Reilly has the ability to vote all
shares of the Company's stock owned by the RFLP and, with the approval of the
partners owning a majority of the general partner interests, to dispose of such
shares. Kevin Reilly and his three siblings each hold equal general partner
interests. If all of the Shares are sold, the RFLP will have approximately 87.5%
of the total voting power of the Common Stock.
PLAN OF DISTRIBUTION
The Shares will be offered to or through BT Alex. Brown Incorporated, as
Placement Agent, who may act as agent, or who may acquire Shares as principal.
The distribution of the Shares through BT Alex. Brown Incorporated may be
effected in one or more transactions that may take place on Nasdaq, including
block trades or ordinary broker's transactions, or through privately negotiated
transactions or sales to one or more brokers or dealers for resale of such
securities as principals, or otherwise at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at negotiated
prices. Usual and customary or specifically negotiated brokerage fees or
commissions may be paid by the Selling Stockholder in connection with such
sales. In connection with such sales, the Selling Stockholder and any
participating brokers or dealers may be deemed "underwriters" as such term is
defined in the Securities Act and the commissions paid or discounts allowed to
any of such underwriters, brokers, dealers or agents, in addition to any
profits received on resale of the Shares if any such underwriters, brokers,
dealers or agents should purchase any Shares as a principal, may be deemed to
be underwriting discounts or commissions under the Securities Act.
The Selling Stockholder has agreed to bear all normal and reasonable costs
(other than costs, fees, discounts or expenses of underwriters) in connection
with the registration of the Shares under the Securities Act for sale by the
Selling Stockholder, compliance with applicable state securities or Blue Sky
laws, and listing the Shares on Nasdaq, estimated to be $20,000 in the
aggregate.
The Company has agreed to indemnify the Selling Stockholder and BT Alex.
Brown Incorporated from certain damages or liabilities arising out of or based
upon any untrue statement of a material fact contained in, or material omission
from, the Registration Statement, except to the extent such untrue statement or
omission was made in the Registration Statement in reliance upon written
information furnished by the Selling Stockholder. BT Alex. Brown Incorporated
may have other business relationships with the Company and its affiliates in
the ordinary course of business.
7
<PAGE> 11
LEGAL MATTERS
The validity of the Shares offered hereby have been passed upon for the
Company by Palmer & Dodge LLP, Boston, Massachusetts.
EXPERTS
The consolidated financial statements of the Company as of October 31,
1996 and 1995 and for each of the years in the three-year period ended October
31, 1996 have been incorporated by reference herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein and upon the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Penn Advertising, Inc. as of
December 31, 1996 and 1995 and for each of the three years in the period ended
December 31, 1996 included in the Company's Form 8-K/A filed with the
Commission on June 13, 1997 and incorporated by reference in this Prospectus,
have been incorporated herein in reliance on the report of Philip R. Friedman &
Associates, independent accountants, given on the authority of such firm as
experts in accounting and auditing.
8
