LAMAR ADVERTISING CO, 424B5, 1998-12-22

LAMAR ADVERTISING CO
424B5, 1998-12-22
ADVERTISING AGENCIES

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<PAGE> 1

Filed pursuant to Rule 424(b)(5)
Registration No. 333-50559

PROSPECTUS SUPPLEMENT
(To Prospectus dated April 28, 1998)

6,000,000 Shares

Lamar Advertising Company
CLASS A COMMON STOCK
---------------------

LAMAR ADVERTISING COMPANY IS OFFERING 6,000,000 SHARES OF ITS CLASS A COMMON
STOCK.
---------------------
LAMAR ADVERTISING COMPANY'S CLASS A COMMON STOCK IS LISTED ON THE NASDAQ
NATIONAL MARKET UNDER THE SYMBOL "LAMR". ON DECEMBER 17, 1998, THE REPORTED LAST
SALE PRICE OF THE CLASS A COMMON STOCK ON THE NASDAQ NATIONAL MARKET WAS $35 PER
SHARE.
---------------------
LAMAR ADVERTISING COMPANY HAS TWO CLASSES OF COMMON STOCK: CLASS A COMMON STOCK
AND CLASS B COMMON STOCK. THE CLASS A COMMON STOCK AND THE CLASS B COMMON STOCK
HAVE THE SAME RIGHTS AND POWERS, EXCEPT THAT A SHARE OF CLASS A COMMON STOCK
ENTITLES THE HOLDER TO ONE VOTE AND A SHARE OF CLASS B COMMON STOCK ENTITLES THE
HOLDER TO TEN VOTES. A PARTNERSHIP CONTROLLED BY AN EXECUTIVE OFFICER OF LAMAR
ADVERTISING COMPANY IS THE BENEFICIAL OWNER OF ALL THE OUTSTANDING SHARES OF
CLASS B COMMON STOCK, REPRESENTING APPROXIMATELY 83.3% OF THE TOTAL VOTING POWER
OF THE COMMON STOCK.
---------------------
INVESTING IN THE CLASS A COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE S-8.
---------------------

PRICE $32 1/2 A SHARE
---------------------

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY
------------------- ------------------- -------------------
<S> <C> <C> <C>
Per Share............................... $32.50 $.65 $31.85
Total................................... $195,000,000 $3,900,000 $191,100,000
</TABLE>

The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus
supplement or the accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.

Lamar Advertising Company has granted the underwriter the right to purchase up
to an additional 900,000 shares of Class A common stock to cover
over-allotments. Morgan Stanley & Co. Incorporated expects to deliver the shares
of Class A common stock to purchasers on December 23, 1998.
---------------------

MORGAN STANLEY DEAN WITTER
December 18, 1998
<PAGE> 2

You may rely only on the information contained or incorporated by reference
in this prospectus supplement and the accompanying prospectus. We have not
authorized anyone to provide information different from that contained or
incorporated by reference in this prospectus supplement or the accompanying
prospectus. Neither the delivery of this prospectus supplement nor the sale of
Class A common stock means that information contained or incorporated by
reference in this prospectus supplement or the accompanying prospectus is
correct after the date of this prospectus supplement. This prospectus supplement
is not an offer to sell or solicitation of an offer to buy these shares of Class
A common stock in any circumstance under which the offer or solicitation is
unlawful.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Lamar Advertising Company................................... S-3
Recent Developments......................................... S-4
The Offering................................................ S-6
Selected Consolidated Historical Financial and Operating
Data...................................................... S-7
Risk Factors................................................ S-8
Use of Proceeds............................................. S-13
Capitalization.............................................. S-14
Business.................................................... S-15
Management.................................................. S-20
Underwriting................................................ S-21
Legal Matters............................................... S-22

BASE PROSPECTUS
Available Information....................................... 3
Incorporation of Certain Documents by Reference............. 3
Note Regarding Forward-Looking Statements................... 4
Risk Factors................................................ 5
The Company................................................. 9
Use of Proceeds............................................. 10
Ratio of Earnings to Fixed Charges and Preferred Stock
Dividends................................................. 10
General Description of Offered Securities................... 10
Description of Debt Securities.............................. 10
Description of Preferred Stock.............................. 18
Description of Class A Stock................................ 19
Description of Warrants..................................... 20
Plan of Distribution........................................ 22
Legal Matters............................................... 23
Experts..................................................... 23
</TABLE>

S-2
<PAGE> 3

LAMAR ADVERTISING COMPANY

Lamar Advertising Company is one of the largest and most experienced owners
and operators of outdoor advertising structures in the United States. We conduct
a business that has operated under the Lamar name since 1902. As of November 1,
1998, we operated approximately 70,400 displays in 36 states. We also operate
the largest logo sign business in the United States. Logo signs are signs
located near highway exits which deliver brand name information on gas, food,
lodging and camping services. As of November 1, 1998, we maintained over 73,500
logo sign displays in 18 states. We also operate transit advertising displays on
bus shelters, bus benches and buses in several markets.

Lamar's principal executive office is located at 5551 Corporate Boulevard,
Baton Rouge, Louisiana 70808 and our telephone number at that location is (225)
926-1000.

Our strategy is to be the leading provider of outdoor advertising in the
markets we serve. We have focused historically on providing a full range of
outdoor advertising services in middle markets. Important elements of our
strategy are our decentralized management structure and our focus on providing
high quality local sales and service. In order to be more responsive to local
market demands, we offer a full complement of outdoor advertising services
coupled with local production facilities, management and account executives
through our local offices. Local advertising constituted approximately 80% of
our outdoor advertising net revenues in calendar 1997, which our management
believes is higher than the industry average. While maintaining our local focus,
we seek to expand our operations within existing and contiguous markets. We also
pursue expansion opportunities, including acquisitions, in additional markets.
In the logo sign business, our strategy is to maintain our position as the
largest operator of logo signs in the United States by pursuing new service
contracts for logo signs and, potentially, through acquisitions. We may also
pursue expansion opportunities in transit and other out-of-home media if we
believe we can leverage our management skills and market position.

We believe that the experience of our senior and local managers has
contributed greatly to our success. Our regional managers have been with us, on
average, for 24 years. We emphasize decentralized local management of operations
with centralized support and financial and accounting controls. As a result of
this local operating focus, we maintain an extensive local presence within our
markets and, as of November 1, 1998, employed a total of 362 local account
executives. 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.

S-3
<PAGE> 4

RECENT DEVELOPMENTS

COMPLETED ACQUISITIONS

Since January 1, 1998, we have completed numerous purchases of
complementary outdoor advertising assets and businesses. We believe that these
acquisitions allow us to capitalize on operating efficiencies and cross-market
sales opportunities.

The OCI Acquisition

On October 1, 1998, we purchased all of the outstanding stock of Outdoor
Communications, Inc. for $385.0 million. The purchase price included
approximately $235.0 million in cash, the assumption of approximately $105.0
million of debt and the issuance of $45.0 million of notes to certain OCI
stockholders. In this acquisition, we acquired approximately 14,700 displays in
12 states.

The Rainier Evergreen Acquisition

On May 29, 1998, we entered into an agreement to purchase from Rainier
Evergreen, Inc. or through its affiliates (i) all of the issued and outstanding
common stock of American Signs, Inc., (ii) the assets of Rainier's Sun Media
division and (iii) the assets of Sun Media of the Rockies, Inc. The asset
purchases were completed on that date, while the stock purchase was completed in
September 1998. The total purchase price was $26.5 million. This acquisition
gave us a presence in Tacoma, Washington with approximately 500 displays.

The Northwest Acquisition

On April 30, 1998, we acquired the assets of Northwest Outdoor Advertising,
L.L.C. for a cash purchase price of $68.5 million. In this acquisition, we
acquired approximately 2,500 posters and 1,400 bulletin displays in the states
of Washington, Montana, Oregon, Idaho, Wyoming, Nebraska, Nevada and Utah.

The Robinson Displays Acquisition

On December 1, 1998, we purchased 100% of the outstanding stock of Robinson
Displays, Inc. for a cash purchase price of approximately $14.0 million. In this
acquisition we acquired approximately 551 outdoor advertising displays in
Missouri, Tennessee and Illinois.

Other Completed Acquisitions

From January 1, 1998 to December 1, 1998, we completed 37 additional
acquisitions of outdoor advertising assets, for an aggregate price of
approximately $133.3 million. These acquisitions included approximately 9,100
displays.

PENDING ACQUISITIONS

We have entered into agreements relating to several acquisitions which are
pending and have not been completed. These acquisitions are subject to various
conditions including, in some cases, the expiration of the waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the satisfaction of
other customary closing conditions. We cannot be sure whether these acquisitions
will be completed or, if completed, of the timing of their completion.

The Imperial Outdoor Acquisition

On October 29, 1998, we entered into an agreement to purchase the outdoor
advertising assets of Imperial Outdoor Advertising for a cash purchase price of
approximately $42.5 million. This acquisition would add approximately 1,500
outdoor advertising displays in Lincoln and Omaha, Nebraska. We currently expect
that this acquisition will be completed in February 1999.

S-4
<PAGE> 5

The American Displays Acquisition

On September 28, 1998, we entered into an agreement to purchase the outdoor
advertising assets of American Displays, Inc. for a cash purchase price of
approximately $16.0 million. This acquisition would add approximately 81 outdoor
advertising displays in Grand Rapids, Michigan. We expect that this acquisition
will be completed in January 1999.

S-5
<PAGE> 6

THE OFFERING

Class A common stock
offered by Lamar........... 6,000,000 shares(1)

Common stock to be
outstanding after the
offering................. 42,160,400 shares of Class A common stock(1)(2)
17,999,997 shares of Class B common stock
60,160,397 total shares of common stock(1)(2)

Over-allotment option...... 900,000 shares

Use of proceeds............ For general corporate purposes, including repayment
of outstanding debt. See "Use of Proceeds" on page
S-13.

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), 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 to a person
or entity other than a Permitted Transferee (as
defined under "Description of Class A
Stock -- Voting Rights; Conversion of Class B
Stock" on page 19 in the accompanying Base
Prospectus). The Class A common stock and the Class
B common stock otherwise have identical rights.

Nasdaq National Market
symbol................... LAMR
- ---------------

(1) This number assumes no exercise of the over-allotment option.

(2) This number does not include 2,246,043 shares of Class A common stock
issuable under outstanding options granted pursuant to the Company's 1996
Equity Incentive Plan.

S-6
<PAGE> 7

SELECTED CONSOLIDATED HISTORICAL FINANCIAL
AND OPERATING DATA

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED OCTOBER 31, YEAR ENDED SEPTEMBER 30,
--------------------------------------- DECEMBER 31, -------------------
1993 1994 1995 1996 1997(1) 1997 1998
------- ------- -------- -------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues............................ $66,524 $84,473 $102,408 $120,602 $201,062 $143,440 $201,600
Operating Expenses
Direct advertising expenses........... 23,830 28,959 34,386 41,184 63,390 45,461 64,696
General and administrative expenses... 19,504 24,239 27,057 29,466 45,368 32,635 43,178
Depreciation and amortization......... 8,924 11,352 14,090 15,549 48,037 31,785 57,053
------- ------- -------- -------- -------- -------- --------
Total operating expenses........ 52,258 64,550 75,533 86,199 156,795 109,881 164,927
------- ------- -------- -------- -------- -------- --------
Operating income........................ 14,266 19,923 26,875 34,403 44,267 33,559 36,673
------- ------- -------- -------- -------- -------- --------
Interest expense........................ 11,502 13,599 15,783 15,441 38,230 25,760 39,357
Earnings (loss) before income taxes and
extraordinary items................... 1,677 5,227 8,308 17,948 7,495 8,482 (3,216)
Income tax expense (benefit)(2)......... 476 (2,072) (2,390) 7,099 4,654 4,594 816
Net earnings (loss)(3).................. (653) 7,299 10,698 10,849 2,841 3,888 (4,032)
OTHER DATA:
EBITDA(4)............................... 23,190 31,275 40,965 49,952 92,304 65,344 93,726
EBITDA margin........................... 35% 37% 40% 41% 46% 46% 46%
Capital expenditures:
Outdoor advertising................... 2,374 4,997 6,643 12,530 23,445 15,623 32,621
Logos................................. 2,009 2,761 1,567 13,268 10,354 6,796 5,078
Number of outdoor advertising
displays(5)........................... 17,659 22,369 22,547 24,792 43,343 42,984 54,728
Number of logo advertising
displays(5)........................... 13,820 18,266 24,219 52,414 68,700 68,700 71,990
Cumulative contracts for logo
signs(5).............................. 7 7 11 15 18 18 19
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
------------------------
ACTUAL AS ADJUSTED(6)
------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... 6,224 6,224
Working capital............................................. 16,151 16,151
Total assets................................................ 866,538 866,538
Total debt (including current maturities)................... 566,293 375,293
Total long-term obligations................................. 577,027 386,027
Stockholders' equity........................................ 252,123 443,123
</TABLE>

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

(1) In December 1996, we changed our fiscal year from October 31 to December 31.

(2) The benefit of our net operating loss carryforward was fully recognized as
of October 31, 1995, resulting in the income tax expense shown for the year
ended October 31, 1996 and the year ended December 31, 1997.

(3) Includes, in 1993, an extraordinary loss on debt extinguishment, net of an
income tax benefit of $1.9 million.

(4) "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 our
operating performance or to net cash provided by operating activities as a
measure of liquidity. Not all companies calculate EBITDA in the same manner,
and therefore the information provided may not be comparable to similarly
titled information of other companies.

(5) As of the end of the period.

(6) Adjusted to give effect to the purchase by the underwriter of the 6,000,000
shares of Class A common stock offered hereby at a purchase price of $31.85
per share less offering expenses of $100,000.

S-7
<PAGE> 8

RISK FACTORS

If you purchase shares of Lamar Class A common stock, you will take on
financial risk. In deciding whether to invest, you should carefully consider the
following factors, the information contained in this prospectus supplement and
base prospectus and the other information that we have referred you to.

It is especially important to keep these risk factors in mind when you read
forward-looking statements. These are statements that relate to future periods
and include statements about our:

- expected operating results

- market opportunities

- acquisition opportunities

- ability to compete and

- stock price.

Generally, the words "anticipates," "believes," "expects," "intends" and
similar expressions identify such forward-looking statements. Forward-looking
statements involve risks and uncertainties, and our actual results could differ
materially from the results discussed in the forward-looking statements because
of these and other factors.

SIGNIFICANT FIXED PAYMENTS ON OUR DEBT INCREASES UNCERTAINTY AND REDUCES
FLEXIBILITY IN OPERATIONS

We have borrowed substantial amounts of money in the past and may borrow
more money in the future. At December 1, 1998, we had approximately $980 million
of debt outstanding consisting of approximately $350 million in bank debt, $560
million in various series of senior subordinated notes and $70 million in
various other short-term and long-term debt.

A large part of our cash flow from operations must be used to make
principal and interest payments on our debt. If our operations make less money
in the future, we may need to borrow to make these payments. In addition, we
finance most of our acquisitions through borrowings under our bank credit
facility which has a total committed amount of $500 million in term and
revolving credit loans. As of December 1, 1998, we only had approximately $100
million available to borrow under this credit facility. Since our borrowing
capacity under our credit facility is limited, we may not be able to continue to
finance future acquisitions at our historical rate with borrowings under our
credit facility. We may need to borrow additional amounts or seek other sources
of financing to fund future acquisitions. We cannot guarantee that such
additional financing will be available or available on favorable terms. We also
may need the consent of the banks under our credit facility, or the holders of
other indebtedness, to borrow additional money.

Some of our competitors may have less debt and, therefore, may have more
flexibility to operate their businesses and use their cash flow from operations.

RESTRICTIONS IN DEBT AGREEMENTS REDUCE OPERATING FLEXIBILITY AND CREATE
POTENTIAL FOR DEFAULTS

The terms of our credit facility and the indentures relating to our
outstanding notes restrict, among other things, our ability to:

- dispose of assets

- incur or repay debt

- create liens and

- make investments.

Under our credit facility we must maintain specified financial ratios and
levels including:

- cash interest coverage

- fixed charge coverage

- senior debt ratios and

- total debt ratios.

Failure to comply with these tests may cause all amounts outstanding under
the credit facility to become immediately due. If this were to occur, it would
create serious financial problems for us. Our ability to comply with these
restrictions, and any similar restrictions in future agreements, depends on our
operating performance. Because our performance is subject to prevailing
economic, financial and business conditions and other factors that are beyond
our control, we may be unable to comply with these restrictions in the future.

S-8
<PAGE> 9

CHANGES IN ECONOMIC AND ADVERTISING TRENDS COULD HURT OUR BUSINESS

We sell advertising space to generate revenues. A decrease in demand for
advertising space could adversely affect our business. General economic
conditions and trends in the advertising industry affect the amount of
advertising space purchased. A reduction in money spent on our displays could
result from:

- a general decline in economic conditions

- a decline in economic conditions in particular markets where we conduct
business

- a reallocation of advertising expenditures to other available media by
significant users of our displays or

- a decline in the amount spent on
advertising in general.

ELIMINATION OF TOBACCO ADVERTISING WILL REDUCE OUR REVENUES

In November 1998, the U.S. tobacco companies and attorneys general of 8
states agreed to the terms of a new national tobacco settlement. This new
proposed settlement, unlike the previous proposed settlement which collapsed in
June 1998 after Congress failed to enact the required legislation, does not
require federal government approval. A total of forty-six states, the District
of Columbia and five territories have agreed to sign on to this new proposed
settlement. Under its terms, tobacco companies will discontinue all advertising
on billboards and buses in these jurisdictions. The remaining four states have
already reached separate settlements of litigation with the tobacco industry. We
have already removed all of our tobacco billboards and advertising in these
states in compliance with the settlement deadlines.

When the latest settlement is finalized, we estimate that all of our
current revenues from tobacco advertising will come to an end in April 1999. Our
revenues from tobacco advertising totaled $17.7 million for 1997 and $16.5
million for the ten-month period ended October 31, 1998. Management currently
estimates based on available information that approximately $18 to $19 million
in tobacco advertising revenues will be lost in 1999 as a result of this
settlement.

When fully implemented, the ban on outdoor advertising of tobacco products
provided in the settlement will decrease our outdoor advertising revenues and
increase our available inventory. An increase in available inventory could cause
us to reduce our rates or limit our ability to raise rates. If we are unable to
replace our revenues from tobacco advertising before the tobacco settlement is
fully implemented, this settlement will have an adverse effect on our results of
operations.

REGULATION OF OUTDOOR ADVERTISING IMPACTS OUR OPERATIONS

Our operations are significantly impacted by federal, state and local
government regulation of the outdoor advertising business.

The federal government conditions federal highway assistance on states
imposing location restrictions on the placement of billboards on primary and
interstate highways. Federal laws also impose 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. Some local governments have enacted ordinances
which require removal of billboards by a future date. Others prohibit the
construction of new billboards and the reconstruction of significantly damaged
billboards, or allow new construction only to replace existing structures.

Local laws which mandate removal of billboards at a future date often do
not provide for payment to the owner for the loss of structures that are
required to be removed. Certain federal and state laws require payment of
compensation in such circumstances. Local laws that require the removal of a
billboard without compensation have been challenged in state and federal courts
with conflicting results. Accordingly, we may not be successful in negotiating
acceptable arrangements when our displays have been subject to removal under
these types of local laws.

Additional regulations 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. Additional regulations or
changes in the current laws regulating and affecting outdoor adverting at the
federal, state or local level may have a material adverse effect on our results
of operations.
S-9
<PAGE> 10

CONTINUING TO GROW BY ACQUISITIONS MAY BECOME MORE DIFFICULT AND INVOLVES COSTS
AND UNCERTAINTIES

We have substantially increased our inventory of advertising displays
through acquisitions. Our operating strategy involves making purchases in
markets where we currently compete as well as in new markets. However, the
following factors may affect our ability to continue to pursue this strategy
effectively.

- The outdoor advertising market has been consolidating, and this may
adversely affect our ability to find suitable candidates for purchase.

- We are also likely to face increased competition from other outdoor
advertising companies for the companies or assets we wish to purchase.
Increased competition may lead to higher prices for outdoor advertising
companies and assets and decrease those we are able to purchase.

- We do not know if we will have sufficient capital resources to make
purchases, obtain any required consents from our lenders, or find
acquisition opportunities with acceptable terms.

- From January 1, 1997 to December 1, 1998, we completed 64 transactions
involving the purchase of complementary outdoor advertising assets, the
most significant of which was the acquisition on October 1, 1998 of
Outdoor Communications, Inc. for $385.0 million. We must integrate these
acquired assets and businesses into our existing operations. This process
of integration may result in unforeseen difficulties and could require
significant time and attention from our management that would otherwise
be directed at developing our existing business. Further, we cannot be
certain that the benefits and cost savings that we anticipate from these
purchases will develop.

COMPETITION FROM LARGER OUTDOOR ADVERTISERS AND OTHER FORMS OF ADVERTISING COULD
HURT OUR PERFORMANCE

We cannot be sure that in the future we will compete successfully against
the current and future sources of outdoor advertising competition and
competition from other media. The competitive pressure that we face could
adversely affect our profitability or financial performance. We face competition
from other outdoor advertising companies, some of which may be larger and better
financed than we are, as well as from other forms of media, including
television, radio, newspapers and direct mail advertising. We must also compete
with an increasing variety of other out-of-home advertising media that include
advertising displays in shopping centers, malls, airports, stadiums, movie
theaters and supermarkets, and on taxis, trains and buses.

In our logo sign business, we currently face competition for state-awarded
service contracts from two other logo sign providers as well as local companies.
Initially, we compete for state-awarded service contracts as they are
privatized. Because these contracts expire after a limited time, we must compete
to keep our existing contracts each time they are up for renewal.

POTENTIAL LOSSES RESULTING FROM THE FAILURE OF OUR CONTINGENCY PLANS RELATING TO
HURRICANES COULD HURT OUR BUSINESS

Although we have developed contingency plans designed to deal with the
threat posed to our advertising structures by hurricanes, we cannot guarantee
that these plans will work. If these plans fail, significant losses could
result.

A significant portion of our structures is 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, we have incurred
significant losses due to severe storms. These losses resulted from structural
damage, overtime compensation, loss of billboards that could not be replaced
under applicable laws and reduced occupancy because billboards were out of
service.

We have determined that it is not economical to obtain insurance against
losses from hurricanes and other storms. Instead, we have developed contingency
plans to deal with the threat of hurricanes. For example, we attempt to remove
the advertising faces on billboards at the onset of a storm, when possible,
which permits the structures to better withstand high winds during a storm. We
then replace these advertising faces after the storm has passed. However, these
plans may not be effective in the future and, if they are not, significant
losses may result.
S-10
<PAGE> 11

LOGO SIGN CONTRACTS ARE SUBJECT TO STATE AWARD AND RENEWAL

A growing portion of our revenues and operating income come from our
state-awarded service contracts for logo signs. We cannot predict what remaining
states, if any, will start logo sign programs or convert state-run logo sign
programs to privately operated programs. We compete with many other parties for
new state-awarded service contracts for logo signs. Even when we are awarded
such a contract, the award may be challenged under state contract bidding
requirements. If an award is challenged, we may incur delays and litigation
costs.

Generally, state-awarded logo sign contracts have a term, including renewal
options, of ten to twenty years. States may terminate a contract early, but in
most cases must pay compensation to the logo sign provider for early
termination. Typically, at the end of the term of the contract, ownership of the
structures is transferred to the state without compensation to the logo sign
provider. Of our current logo sign contracts, one is due to terminate in
September 1999 and two are subject to renewal over the next two years, one in
May 1999 and another in June 2000. We cannot guarantee that we will be able to
obtain new logo sign contracts or renew our existing contracts. In addition,
after we receive a new state-awarded logo contract, we generally incur
significant start-up costs. We cannot guarantee that we will continue to have
access to the capital necessary to finance those costs.

LOSS OF KEY EXECUTIVES COULD AFFECT OUR OPERATIONS

Our success depends to a significant extent upon the continued services of
our executive officers and other key management and sales personnel. Kevin P.
Reilly, Jr., our Chief Executive Officer, our six regional managers and the
manager of our logo sign business, in particular, are essential to our continued
success. Although we have designed our incentive and compensation programs to
retain key employees, we have no employment contracts with any of our employees
and none of our executive officers have signed non-compete agreements. We do not
maintain key man insurance on our executives. If any of our executive officers
or other key management and sales personnel stopped working with us in the
future, it could have an adverse effect on our business.

CONTROLLING STOCKHOLDER CAN CONTROL VOTE TO EXCLUSION OF PURCHASERS OF CLASS A
COMMON STOCK

Purchasers of the Class A common stock offered under this prospectus
supplement and base prospectus will be minority stockholders. They will have no
control over the management or business practices of the company. Kevin P.
Reilly, Jr., our Chief Executive Officer, is the managing general partner of the
Reilly Family Limited Partnership. On the date of this prospectus supplement,
this partnership beneficially owns all of the outstanding shares of Class B
common stock, which shares represent approximately 83.3% total voting power of
the common stock as of November 30, 1998. As a result, Mr. Reilly, or his
successor as managing general partner, controls the outcome of matters requiring
a stockholder vote. These matters include electing directors, amending our
certificate of incorporation or by-laws, adopting or preventing certain mergers
or other similar transactions, such as a sale of substantially all of our
assets. Mr. Reilly would also decide the outcome of transactions that could give
the holders of our Class A common stock the opportunity to realize a premium
over the then-prevailing market price for their shares.

Further, subject to contractual restrictions and general fiduciary
obligations, we are not prohibited from engaging in transactions with management
or our principal stockholders or with entities in which members of management or
our principal stockholders have an interest. Our certificate of incorporation
does not provide for cumulative voting in the election of directors and,
consequently, the Reilly Family Limited Partnership can elect all the directors.

CERTAIN ANTI-TAKEOVER PROVISIONS MAY MAKE IT HARDER TO SELL THE COMPANY OR
AFFECT THE MARKET PRICE OF CLASS A COMMON STOCK

Certain provisions of our certificate of incorporation and by-laws may
discourage a third party from offering to purchase the company. These
provisions, therefore, inhibit actions that would result in a change in control
of the company. Some of these actions would otherwise give the holders of the
Class A common stock the opportunity to realize a premium over the
then-prevailing market price of their stock.

These provisions may also adversely affect the market price of the Class A
common stock. For example, under our certificate of incorporation we

S-11
<PAGE> 12

can issue "blank check" preferred stock with such designations, rights and
preferences as our board of directors determines from time to time. If it is
issued, this type of preferred stock could be used as a method of discouraging,
delaying or preventing a change in control of the company. In addition, if we
issue preferred stock, it may adversely affect the voting and dividend rights,
rights upon liquidation and other rights of the holders of Class A common stock.
We do not currently intend to issue any shares of this type of preferred stock,
but we retain the right to do so in the future.

Furthermore, we are subject to Section 203 of the Delaware General
Corporation Law, which may discourage takeover attempts. The Reilly Family
Limited Partnership, furthermore, has the voting power to approve or reject any
takeover proposal.

CHANGES IN OUR STOCK PRICE COULD EXPOSE YOUR INVESTMENT TO LOSS

From time to time, the market price for the Class A common stock may change
dramatically. These changes could occur at any time and could lead to the loss
of a significant amount of your investment.

Our quarterly operating results, changes in earning estimates by analysts,
changes in general conditions in our industry, in the economy, in the financial
markets or other developments that affect us, could cause the market price of
the Class A common stock to fluctuate substantially.

Fluctuations in the market price of the Class A common stock may also occur
because we have some degree of seasonality in our earnings and operating
results. Typically, we experience our strongest financial performance in the
summer and our lowest in the winter. We expect this trend to continue in the
future. Because a significant portion of our expenses is fixed, a decrease in
revenues in any quarter will likely produce a period to period decline in our
operating performance and net earnings.

The stock market has also experienced significant price and volume
fluctuations in recent years. This volatility has had a significant effect on
the market price of securities issued by many companies for reasons unrelated to
operating performance.

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<PAGE> 13

USE OF PROCEEDS

We intend to use the net proceeds from this offering, estimated to be
approximately $191.0 million after deducting estimated fees and expenses, to
repay amounts currently outstanding under our bank credit facility. Of this
amount, $99.0 million will be applied to the outstanding balance of our
revolving credit facility and will increase the amount available for borrowing
under that facility. The remaining $92.0 million will be applied to our term
loan, and we will be asking our banks to agree to add that amount to the amount
available under our revolving credit facility. We cannot guarantee that the
banks will agree to this increase. The indebtedness being repaid under our bank
credit facility was incurred primarily to finance acquisitions. Borrowings under
our credit facility bear interest computed as a margin over either the Chase
Prime Rate or LIBOR. LIBOR is the London Interbank Offered Rate, a commonly used
reference for variable interest rates. The margins range from 0 to 75 basis
points over the Chase Prime Rate and from 75 to 200 basis points over LIBOR,
depending on our current ratio of debt to EBITDA for the preceding twelve
months. We plan to finance the cash portion of the purchase price for
acquisitions by utilizing the borrowing availability under our credit facility.

S-13
<PAGE> 14

CAPITALIZATION

The following table sets forth our capitalization (i) as of September 30,
1998 and (ii) pro forma to reflect our acquisition of Outdoor Communications,
Inc. on October 1, 1998, and as adjusted for the sale of Class A common stock
contemplated by this prospectus supplement and our application of the net
proceeds in the manner described in "Use of Proceeds." This table should be read
in conjunction with the financial statements and notes thereto incorporated by
reference herein.

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1998
------------------------
PRO FORMA
ACTUAL AS ADJUSTED
--------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 6,224 $ 5,724
======== ==========
Current maturities of long-term debt........................ 3,950 3,950
OCI Seller Notes............................................ 0 45,500
-------- ----------
Total current debt................................ 3,950 49,450
Long-term debt, less current maturities
Bank term loan facility................................... 0 132,000
Bank revolving credit facility............................ 88,000 0
11% Senior Secured Notes.................................. 1,173 1,173
8 5/8% Senior Subordinated Notes.......................... 198,762 198,762
9 5/8% Senior Subordinated Notes.......................... 255,000 255,000
9 1/4% Senior Subordinated Notes.......................... 0 105,000
Other long-term debt...................................... 3,575 3,575
Ten-year subordinated notes............................... 15,833 15,833
-------- ----------
Total long-term debt, less current maturities..... 562,343 711,343
-------- ----------
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........... 0 0
Class A common stock, $0.001 par value, 75,000,000 shares
authorized, 35,937,996 actual shares issued and
outstanding, 41,937,996 issued and outstanding, pro
forma, as adjusted..................................... 36 42
Class B common stock, $0.001 par value, 37,500,000 shares
authorized, 18,117,440 actual shares issued and
outstanding, 18,117,440 issued and outstanding, pro
forma, as adjusted..................................... 18 18
Additional paid-in capital................................ 283,137 474,131
Accumulated deficit....................................... (34,717) (34,717)
-------- ----------
Total stockholders' equity (deficit).............. 252,123 443,123
-------- ----------
Total capitalization.............................. $818,416 $1,203,916
======== ==========
</TABLE>

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<PAGE> 15

BUSINESS

Lamar Advertising Company is one of the largest and most experienced owners
and operators of outdoor advertising structures in the United States. We conduct
a business that has operated under the Lamar name since 1902. As of November 1,
1998, we operated approximately 70,400 displays in 36 states. We also operate
the largest logo sign business in the United States. Logo signs are signs
located near highway exits, which deliver brand name information on gas, food,
lodging, and camping services. As of November 1, 1998, we maintained over 73,500
logo sign displays in 18 states. We also operate transit advertising displays on
bus shelters, bus benches and buses in several markets.

OUTDOOR ADVERTISING MARKETS

The following table sets forth certain information as of November 1, 1998
regarding our existing primary outdoor advertising markets listed in order of
net revenue by state and primary market. The number of displays is broken down
into bulletins and posters, the two standardized categories of displays that we
use in our outdoor advertising business. Bulletins are larger panels on which
advertising copy is displayed. Bulletins generally measure approximately 14 feet
high and 48 feet wide (672 square feet) and are usually located along major
highways. Posters are smaller panels on which advertising copy is displayed.
Posters come in two sizes: standardized posters, which generally measure 12 feet
high by 25 feet wide (300 square feet); and junior posters, which generally
measure 6 feet by 12 feet (72 square feet). Standardized posters are usually
located on major traffic arteries, and junior posters are usually located on
city streets and target pedestrian traffic.

S-15
<PAGE> 16

<TABLE>
<CAPTION>
NUMBER OF DISPLAYS(3)
MARKET ----------------------
STATE/PRIMARY MARKET(1) RANK(2) BULLETINS POSTERS
- ----------------------- ------- --------- -------
<S> <C> <C> <C>
FLORIDA
Pensacola................................................. 123 300 678
Lakeland.................................................. 100 497 399
Fort Myers................................................ 75 144 294
Panama City............................................... 226 299 423
Tallahassee............................................... 165 168 264
Fort Walton............................................... 210 213 227
Daytona Beach............................................. 92 64 294
------ ------
Total............................................. 1,685 2,579
GEORGIA
Atlanta................................................... 12 347 0
Savannah.................................................. 154 255 443
Augusta................................................... 109 264 500
Valdosta.................................................. -- 289 277
Albany.................................................... 246 151 295
Brunswick................................................. -- 136 160
Anderson.................................................. -- 97 334
Athens.................................................... -- 175 715
Rome...................................................... -- 333 404
------ ------
Total............................................. 2,047 3,128
NEW YORK
Buffalo................................................... 41 160 1,219
Rochester................................................. 47 79 593
Syracuse.................................................. 71 74 699
------ ------
Total............................................. 313 2,511
MISSISSIPPI
Corinth................................................... -- 197 348
Columbus.................................................. -- 153 144
Jackson................................................... 118 628 673
Gulfport.................................................. 137 328 380
Meridian.................................................. 266 87 113
Hattiesburg............................................... -- 282 201
------ ------
Total............................................. 1,675 1,859
VIRGINIA
Richmond.................................................. 56 368 1,028
Roanoke................................................... 104 258 758
------ ------
Total............................................. 626 1,786
TEXAS
Brownsville............................................... 62 313 850
Houston................................................... 9 256 0
Beaumont.................................................. 128 199 325
Corpus Christi............................................ 127 305 817
Wichita Falls............................................. 236 165 153
Laredo.................................................... 207 78 355
------ ------
Total............................................. 1,316 2,500
</TABLE>

S-16
<PAGE> 17

MISSOURI
Statewide Highways........................................ N/A 856 0
Springfield............................................... N/A 1,297 608
East Missouri............................................. N/A 591 152
------ ------
Total............................................. 2,744 760
KENTUCKY
Paducah................................................... -- 148 484
Lexington................................................. 108 111 544
Louisville................................................ 52 33 0
------ ------
Total............................................. 292 1,028
NORTH CAROLINA
Statewide Highways........................................ N/A 866 139
Asheville................................................. 176 146 331
------ ------
Total............................................. 1,012 470
</TABLE>

S-17
<PAGE> 18

MINNESOTA
Duluth.................................................... 216 311 359
St. Cloud................................................. 214 376 371
------ ------
Total............................................. 687 730
KANSAS
Kansas City............................................... 26 277 777

ARIZONA
Phoenix................................................... 17 134 0

CALIFORNIA
Sacramento................................................ 27 59 0

MONTANA
Billings.................................................. 242 480 632

WASHINGTON
Spokane................................................... 87 105 664
Tacoma.................................................... 13 104 448
------ ------
Total............................................. 209 1,112
IDAHO
Boise..................................................... 126 264 843

WYOMING
Casper.................................................... 267 482 513

SOUTH DAKOTA
Rapid City................................................ 250 622 279

IOWA
Davenport/Quad Cities..................................... 132 64 759
Cedar Rapids.............................................. 199 31 175
------ ------
Total............................................. 95 934
ILLINOIS
Rockford.................................................. 147 110 347
Decatur................................................... -- 263 332
------ ------
Total............................................. 373 679
TOTAL............................................. 27,257 43,180
====== ======
</TABLE>

S-18
<PAGE> 19

STATE-AWARDED SERVICE CONTRACTS FOR LOGO SIGNS

The following table sets forth certain information regarding our logo sign
business operations.

<TABLE>
<CAPTION>
# OF LOGO
YEAR SIGN
AWARDED SERVICE CONTRACT DISPLAYS
- ------- ---------------- ---------
<C> <S> <C>
1989 Nebraska(4)................. 811
1989 Oklahoma.................... 1,569
1990 Utah........................ 1,864
1991 Missouri(5)................. 8,642
1992 Ohio(4)..................... 6,075
1993 Texas....................... 4,202
1993 Mississippi................. 3,262
1995 Georgia..................... 10,872
1995 Minnesota................... 2,925
1995 South Carolina.............. 3,293
</TABLE>

<TABLE>
<CAPTION>
# OF LOGO
YEAR SIGN
AWARDED SERVICE CONTRACT DISPLAYS
- ------- ---------------- ---------
<C> <S> <C>
1996 Virginia.................... 8,179
1996 Michigan(4)................. 1,505
1996 Tennessee................... 4,676
1996 Kansas...................... 2,374
1996 New Jersey.................. 1,372
1996 Florida..................... 6,103
1996 Kentucky(4)................. 5,116
1996 Nevada...................... 714
1998 Ontario(6).................. 0
------
Total....................... 73,554
======
</TABLE>

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

(1) Includes additional or outlying markets served by the office in the
applicable market.

(2) Indicates the Winter 1998 Arbitron Radio Metro Market ranking for the market
within which the office is located. We believe that Metro Market ranking,
which ranks according to population of persons 12 years or older the largest
267 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.

(3) The display count is as of September 30, 1998 pro forma for all acquisitions
completed as of November 1, 1998.

(4) Excludes tourist-oriented directional logo signs we operate pursuant to our
state-awarded service contracts.

(5) Service contract held by a 66.7% owned partnership.

(6) We were awarded the contract to provide logo signs in Ontario in November
1998 and have not yet erected any logo signs. We have operated
tourist-oriented directional logo signs in Ontario since 1996, but these
signs are not reflected in this number.

S-19
<PAGE> 20

MANAGEMENT

The executive officers and directors of the Company as of December 1, 1998
were as follows:

<TABLE>
<CAPTION>
NAME AGE TITLE
- ---- --- -----
<S> <C> <C>
Kevin P. Reilly, Jr....................... 44 Chairman, President, Chief Executive
Officer and Director
Keith A. Istre............................ 46 Chief Financial Officer, Treasurer and
Director
Charles W. Lamar, III..................... 50 General Counsel, Secretary and Director
Gerald H. Marchand........................ 68 Vice President, Regional Manager of Baton
Rouge Region, and Director
T. Everett Stewart, Jr. .................. 44 President of Interstate Logos, Inc., a
subsidiary of the Company, and Director
Jack S. Rome, Jr. ........................ 50 Director
William R. Schmidt........................ 47 Director
</TABLE>

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, an 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 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.

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
officer of Pacific 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. and Charles W. Lamar, III are cousins.

S-20
<PAGE> 21

UNDERWRITING

Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof (the "Underwriting Agreement"), Morgan Stanley &
Co. Incorporated as the underwriter has agreed to purchase, and the Company has
agreed to sell to it, 6,000,000 shares of the Company's Class A common stock.

The Underwriting Agreement provides that the obligations of the underwriter
to pay for and accept delivery of the shares of Class A common stock offered by
this prospectus supplement are subject to the approval of certain legal matters
by its counsel and to certain other conditions. The underwriter is obligated to
take and pay for all of the shares of Class A common stock offered by this
prospectus supplement (other than those covered by the underwriter's
over-allotment described below) if any such shares are taken.

The underwriter may sell all or a substantial portion of the shares of
Class A common stock in one or more transactions (which may involve block
transactions) on the Nasdaq National Market, in negotiated transactions or
otherwise. The underwriter may also distribute shares of Class A common stock
from time to time in special offerings, exchange distributions and/or secondary
distributions pursuant to and in accordance with the rules of the Nasdaq
National Market, in the over-the-counter market, in negotiated transactions
through the writing of options on the shares of Class A common stock (whether
such options are listed on an options exchange or otherwise), or in a
combination of such methods at prevailing market prices, at prices related to
prevailing market prices or at negotiated prices. The underwriter may execute
such transactions by selling shares of Class A common stock to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriter and/or the purchasers of such
shares of Class A common stock for whom they may act as agents or to whom they
may sell as principal.

In connection with the sale of the shares of Class A common stock, the
underwriter will receive compensation in the form of commissions or discounts
and may receive compensation from purchasers of the shares of Class A common
stock for whom they may act as agent or to whom they may sell as principal in
the form of commissions or discounts, in each case in amounts which will not
exceed those customary in the types of transactions involved.

Pursuant to the Underwriting Agreement, the Company has granted to the
underwriter an option, exercisable for 30 days from the date of this prospectus
supplement, to purchase up to an aggregate of 900,000 additional shares of Class
A common stock at the public offering price set forth on the cover page hereof,
less underwriting discounts and commissions. The underwriter may exercise such
option solely for the purpose of covering over-allotments, if any, made in
connection with the offering of the shares of Class A common stock offered by
this prospectus supplement. To the extent such option is exercised, the
underwriter will become obligated, subject to certain conditions, to purchase
such additional shares of Class A common stock.

Each of the Company and the directors, executive officers and certain other
stockholders of the Company has agreed that, without the prior written consent
of Morgan Stanley & Co. Incorporated it will not, during the period ending 90
days after the date of this prospectus supplement, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend or
otherwise transfer or dispose of, directly or indirectly, any shares of Class A
common stock or any securities convertible into or exercisable or exchangeable
for Class A common stock or (ii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of the Class A common stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Class A common stock or
such other securities, in cash or otherwise. The restrictions described in this
paragraph do not apply to (a) the sale of shares of Class A common stock to the
underwriter, (b) the issuance by the Company of shares of Class A common stock
upon the exercise of an option or a warrant or the conversion of a security
outstanding on the date of this prospectus supplement of which the underwriter
have been advised in writing, (c) transactions by any person other than the
Company relating to shares of Class A common stock or other securities acquired
in open market transactions after the completion of the offering of the shares
of Class A common stock, (d) bona fide gifts or distributions without
consideration or (e) certain transfers which occur by operation of law.

S-21
<PAGE> 22

In order to facilitate the offering of the Class A common stock, the
underwriter may over-allot in connection with the offering, creating a short
position in the Class A common stock for its own account. In addition, to cover
over-allotments, the underwriters may bid for, and purchase, shares of Class A
common stock in the open market.

These activities may maintain the market price of the Class A common stock
above independent market levels. The underwriter is not required to engage in
these activities, and may end these activities at any time.

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

LEGAL MATTERS

Palmer & Dodge LLP, Boston, Massachusetts, counsel to Lamar, is giving
Lamar an opinion on the validity of the shares covered by this prospectus
supplement. Certain matters will be passed upon for the underwriter by
Chadbourne & Parke LLP, New York, New York.

S-22