<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended March 31, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from
Commission file number 0-20833
LAMAR ADVERTISING COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 72-1205791
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
5551 Corporate Blvd.,
Baton Rouge, LA 70808
(Address of principal (Zip Code)
executive officers)
Registrant's telephone number, including area code (504) 926-1000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Outstanding as of
Class May 5, 1998
----------- -----------------
<S> <C>
Class A Common Stock,$ .001 par value 28,710,156
Class B Common Stock,$ .001 par value 18,762,909
</TABLE>
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
Page
PART I - FINANCIAL INFORMATION
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of
December 31, 1997 and March 31, 1998 1 - 2
Condensed Consolidated Statements of Operations
for the three months ended March 31, 1997
and March 31, 1998 3
Condensed Consolidated Statements of Comprehensive
Income for the three months ended March 31, 1997
and March 31, 1998 4
Condensed Consolidated Statements of Cash Flows
for the three months ended March 31, 1997 and
March 31, 1998 5 - 6
Notes to Condensed Consolidated Financial
Statements 7 - 9
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10 - 13
ITEM 3. Quantitative and Qualitative Disclosures About
Market Risks 13
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 13
Signatures 13
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1.- FINANCIAL STATEMENTS
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
December 31, March 31,
1997 1998
--------- ---------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 7,246 $ 4,041
Receivables
Trade accounts, net 29,854 28,333
Affiliates, related parties
and employees 788 573
Other 1,284 697
--------- ---------
Net receivables 31,926 29,603
Prepaid expenses 9,112 8,971
Other current assets 1,136 4,552
--------- ---------
Total current assets 49,420 47,167
--------- ---------
Property, plant and equipment 429,615 469,207
Less accumulated depreciation
and amortization (113,477) (121,888)
--------- ---------
Net property, plant and equipment 316,138 347,319
--------- ---------
Investment securities 679 329
Intangible assets 278,923 296,571
Receivables - noncurrent 1,625 1,883
Other assets 4,551 6,273
--------- ---------
Total assets 651,336 699,542
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable 3,308 3,749
Accrued expenses 14,804 13,710
Current maturities of long-term
debt 5,109 5,300
Deferred income 7,537 7,976
--------- ---------
Total current liabilities 30,758 30,735
Long-term debt 534,091 582,907
Deferred income 837 968
Other liabilities 2,250 3,591
Deferred tax liability 14,687 13,004
--------- ---------
Total liabilities 582,623 631,205
--------- ---------
</TABLE>
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<PAGE> 4
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS, CONTINUED
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
December 31, March 31,
1997 1998
--------- ---------
STOCKHOLDERS' EQUITY
<S> <C> <C>
Class A preferred stock, par value
$638, $63.80 cumulative dividends,
authorized 10,000 shares; 5,719.49
shares issued and outstanding at
December 31, 1997, and March 31, 1998,
respectively 3,649 3,649
Class A common stock, $.001 par value,
authorized 75,000,000 shares;
issued and outstanding 28,453,805
shares and 28,696,046 shares at
December 31, 1997 and March 31, 1998,
respectively 28 29
Class B common stock, $.001 par value,
authorized 37,500,000 shares; issued
and outstanding 18,762,909 shares at
December 31 1997 and March 31, 1998 19 19
Additional paid in capital 95,691 100,214
Accumulated deficit (30,320) (35,003)
Accumulated other comprehensive income
Unrealized loss on investment
securities net of deferred tax
benefit (354) (571)
--------- ---------
Stockholders' equity 68,713 68,337
--------- ---------
Total liabilities and
stockholders' equity $ 651,336 $ 699,542
========= =========
</TABLE>
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<PAGE> 5
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1997 March 31, 1998
------------ ------------
<S> <C> <C>
Revenues
Outdoor advertising, net $ 37,682 $ 58,291
Other income 165 106
------------ ------------
37,847 58,397
------------ ------------
Operating expenses
Direct advertising expenses 13,467 20,830
Selling, general and
administrative expenses 9,253 13,216
Depreciation and amortization 6,750 17,605
------------ ------------
29,470 51,651
------------ ------------
Operating income 8,377 6,746
------------ ------------
Other expense (income)
Interest income (1,121) (107)
Interest expense 6,944 13,326
Loss (gain) on disposition of assets 447 (337)
Other expenses 13 20
------------ ------------
6,283 12,902
------------ ------------
Earnings (loss) before income taxes 2,094 (6,156)
Income tax expense (benefit) 798 (1,565)
------------ ------------
Net earnings (loss) 1,296 (4,591)
============ ============
Preferred stock dividends 91 91
------------ ------------
Net earnings (loss) applicable to
common stock 1,205 (4,682)
============ ============
Net earnings (loss) per common
share (basic) .03 (.10)
============ ============
Net earnings (loss) per common
share (diluted) .03 (.10)
============ ============
Weighted average common shares
outstanding 46,993,572 47,350,919
Incremental common shares from
dilutive stock options 430,868 --
------------ ------------
Weighted average common shares
assuming dilution 47,424,440 47,350,919
============ ============
</TABLE>
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<PAGE> 6
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1997 March 31, 1998
-------------- --------------
<S> <C> <C>
Net earnings (loss) applicable to
common stock $ 1,205 $(4,682)
Other comprehensive income -
unrealized gain (loss) on investment
securities (net of deferred tax
expense (benefit) of $402 and $(133)
for three months ending March 31, 1997
and 1998, respectively) 658 (217)
------- -------
Comprehensive Income 1,863 (4,899)
======= =======
</TABLE>
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<PAGE> 7
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1997 March 31, 1998
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 1,296 (4,591)
Adjustments to reconcile net earnings (loss)
to net cash provided by operating activities:
Depreciation and amortization 6,750 17,605
Loss (gain) on disposition of assets 447 (337)
Deferred taxes 704 (1,550)
Provision for doubtful accounts 405 551
Changes in operating assets and liabilities:
Decrease (Increase) in:
Receivables (601) 2,772
Prepaid expenses (47) (115)
Other assets (716) (2,315)
Increase (Decrease) in:
Trade accounts payable (1,778) (444)
Accrued expenses 2,411 (1,178)
Other liabilities (40) 20
Deferred income 681 570
-------- --------
Net cash provided by operating
activities 9,512 10,988
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in notes receivable -- (250)
Acquisition of new markets (3,974) (54,990)
Capital expenditures (7,382) (11,069)
Proceeds from disposition of assets 427 599
-------- --------
Net cash used in investing activities (10,929) (65,710)
-------- --------
</TABLE>
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<PAGE> 8
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1997 March 31, 1998
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 29 2,601
Principal payments on long-term debt (1,141) (1,063)
Proceeds from issuance of notes payable 34 70
Net borrowings under credit agreements -- 50,000
Dividends (91) (91)
-------- --------
Net cash provided by (used in)
financing activities (1,169) 51,517
-------- --------
Net decrease in cash and cash equivalents (2,586) (3,205)
Cash and cash equivalents at beginning
of period 81,007 7,246
-------- --------
Cash and cash equivalents at end of
period $ 78,421 4,041
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 866 10,783
======== ========
Cash paid for state and
federal income taxes $ 2,184 848
======== ========
</TABLE>
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<PAGE> 9
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
1. Significant Accounting Policies
The information included in the foregoing interim financial statements is
unaudited. In the opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of the Company's
financial position and results of operations for the interim periods presented
have been reflected herein. The results of operations for interim periods are
not necessarily indicative of the results to be expected for the entire year.
These condensed consolidated financial statements should be read in conjunction
with the Company's consolidated financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K.
Earnings per share are computed in accordance with SFAS No. 128, "Earnings Per
Share." SFAS No. 128 requires the replacement of previously reported primary and
fully diluted earnings per share required by Accounting Principles Board Opinion
No. 15 with earnings per share and diluted earnings per share. The calculations
of earnings per share excludes any dilutive effect of stock options, while
diluted earnings per share includes the dilutive effect of stock options. Per
share amounts for all periods presented have been restated to conform to the
requirements of SFAS No. 128.
Certain amounts in the prior year's consolidated financial statements have been
reclassified to conform with the current year presentation. These
reclassifications had no effect on previously reported net earnings.
New Accounting Pronouncements
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-5, Reporting on the Costs of Start-Up
Activities. SOP 98-5 is effective for financial statements for fiscal years
beginning after December 15, 1998, and requires that the costs of start-up
activities, including organizational costs, be expensed as incurred. At March
31, 1998, the Company estimates that $1,456 of such capitalized costs are
included in intangible assets on the Company's balance sheet.
Effective January 1, 1998, the Company adopted the Statement of Financial
Accounting Standards (SFAS) No. 130 "Reporting Comprehensive Income", which
requires disclosure, in financial statement format, all non-owner changes in
equity. Adoption of this statement requires the presentation of comprehensive
income, which includes the unrealized gain or loss on investment securities.
2. Acquisitions
On January 2, 1998, the Company purchased all the outdoor advertising assets of
Ragan Outdoor Advertising Company, Ragan Outdoor Advertising Company of Cedar
Rapids, and Ragan Outdoor Advertising Company of Rockford, L.L.C. for a cash
purchase price of $25,000. The acquisition consisted of displays located in
Rockford, Illinois, Cedar Rapids, Iowa and Davenport, Iowa.
-7-
<PAGE> 10
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
On January 30, 1998, the Company acquired all of the outdoor advertising assets
of three related outdoor advertising companies (Pioneer Advertising Company,
Superior Outdoor Advertising Company and Overland Outdoor Advertising Company,
Inc.) located in Missouri and Arkansas for a cash purchase price of $19,200.
During the three months ended March 31, 1998, the Company completed six
additional acquisitions of outdoor advertising assets, none of which were
individually significant, for an aggregate cash purchase price of approximately
$10,622.
Each of these acquisitions were accounted for under the purchase method of
accounting, and accordingly, the accompanying financial statements include the
results of operations of each acquired entity from the date of acquisition. The
acquisition costs have been allocated to assets acquired and liabilities assumed
based on fair market value at the dates of acquisition. The following is a
summary of the allocation of the acquisition costs in the above transactions.
<TABLE>
<S> <C>
Current assets 1,080
Property, plant and equipment 30,173
Intangible assets 24,413
Current liabilities 969
</TABLE>
Summarized below are certain unaudited pro forma statement of operations data
for the three months ended March 31, 1997 and March 31, 1998 as if each of the
above acquisitions and the acquisitions occurring in 1997, which are discussed
in the Company's December 31, 1997 Consolidated Financial Statements, had been
consummated as of January 1, 1997. This pro forma information does not purport
to represent what the Company's results of operations actually would have been
had such transactions occurred on the date specified or to project the Company's
results of operations for any future periods.
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1997 March 31, 1998
-------------- --------------
<S> <C> <C>
Revenues, net $ 55,181 $ 58,773
Net loss applicable to
common stock (3,981) (4,797)
Net loss per common share - basic (.08) (.10)
Net loss per common share - diluted (.08) (.10)
</TABLE>
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<PAGE> 11
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
3. Summarized Financial Information of Subsidiaries
Separate financial statements of each of the Company's direct or indirect wholly
owned subsidiaries that have guaranteed the Company's obligations with respect
to the 1996 Notes and 1997 Notes (collectively, the "Guarantors") are not
included herein because the Guarantors are jointly and severally liable under
the guarantees, and the aggregate assets, liabilities, earnings and equity of
the Guarantors are substantially equivalent to the assets, liabilities, earnings
and equity of the Company on a consolidated basis.
Summarized financial information for Missouri Logos, a Partnership, a 66 2/3%
owned subsidiary of the Company and the only subsidiary of the Company that is
not a Guarantor, is set forth below:
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------
(Unaudited)
Balance Sheet Information: 1998 1997
------ -----
<S> <C> <C>
Current assets 252 242
Total assets 308 298
Total liabilities -- 12
Venturers' equity 308 286
Income Statement Information:
Revenues 264 236
Net income 162 122
</TABLE>
4. Subsequent Events
On May 1, 1998 the Company purchased all of the outdoor advertising assets of
Northwest Outdoor Advertising, L.L.C. for a cash purchase price of $68,500.
-9-
<PAGE> 12
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the consolidated financial condition and
results of operations of the Company for the three months ended March 31, 1998
and 1997. This discussion should be read in conjunction with the consolidated
financial statements of the Company and the related notes.
The following discussion is a summary of the key factors management considers
necessary in reviewing the Company's results of operations, liquidity and
capital resources. The future operating results of the Company may differ
materially from the results described below. Please refer to Exhibit 99.1 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 for a
discussion of certain factors which may affect the Company's future operating
performance.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31,1997
Net revenues increased $20.6 million or 54.3% to $58.4 million for the three
months ended March 31, 1998 as compared to the same period in 1997. This
increase was the result of a (i) $20.0 million increase in billboard net
revenues, of which $16.6 million is attributable to the Company's acquisitions
since August, 1996, with the remaining $3.4 million attributable to existing
operations, and a (ii) $.8 million increase in logo sign revenue due to the
completion and development of the new state logo sign franchises awarded and
acquired in 1997 and the continued expansion of the Company's existing logo sign
franchises.
Operating expenses, exclusive of depreciation and amortization, increased $11.3
million or 49.9% for the three months ended March 31, 1998 as compared to the
same period in 1997. This was primarily the result of the additional operating
expenses related to acquired outdoor advertising assets and the newly developed
and acquired logo sign franchises.
Depreciation and amortization expense increased $10.9 million or 160.8% from
$6.8 million for the three months ended March 31, 1997 to 17.6 million for the
three months ended March 31, 1998 as a result of an increase in capitalized
assets resulting from the Company's recent acquisition activity.
Due to the above factors, operating income decreased $1.6 million or 19.5% to
$6.7 million for three months ended March 31, 1998 from $8.4 million for the
same period in 1997.
Interest income decreased $1.0 million as a result of earnings on excess cash
investments made during the three months ended March 31, 1997 as compared to the
same period in 1998. Interest expense increased $6.4 million from $6.9 million
for the three months ended March 31, 1997 to $13.3 million for the same period
in 1998 as a result of interest expense on the 1997 Notes issued by the company
in September, 1997 and additional borrowings under the Bank Credit Facility.
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<PAGE> 13
Income tax expense decreased $2.4 million creating a tax benefit of $1.6 million
for the three months ended March 31,1998 as compared to the same period in 1997.
The effective tax rate for the three months ended March 31, 1998 is 25.4% which
is less than the Company's historical effective tax rate due to permanent
differences resulting from non-deductible amortization of goodwill.
As a result of the above factors, the Company recognized a net loss for the
three months ended March 31, 1998 of $4.6 million, as compared to net earnings
of $1.3 million for the same period in 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically satisfied its working capital requirements with
cash from operations and revolving credit borrowings. Its acquisitions have been
financed primarily with borrowed funds.
In January 1998, the Company financed the Ragan Outdoor and Derby Outdoor
acquisitions with a $26.0 million draw under the Revolving Facility, and in
February 1998 the Company financed the acquisition of Pioneer Outdoor with a
$19.0 million draw under the Revolving Facility. At March 31, 1998, following
these acquisitions, the Company had $115 million available under the Revolving
Facility and $75 million available but not committed under the Incremental
Facility. In April 1998, the Company financed the Northwest Outdoor and Farrar
Outdoor acquisitions with draws totaling $70 million under the Revolving
Facility. The Company currently has $35 million available under the Revolving
Facility and $75 million available but not committed under the Incremental
Facility. The Company expects to pursue a policy of continued growth through
acquisitions. As a result, the Company will be required to raise additional
funds to finance additional acquisition activity, which may require an
additional equity or debt offering or a combination of these.
The Company's net cash provided by operating activities increased to $11.0
million for the three months ended March 31, 1998 due primarily to an increase
in noncash items of $8.0 million, which includes an increase in depreciation and
amortization of $10.9 million offset by a decrease in deferred tax expense of
$2.3 million. The increase in noncash items was offset by a decrease in net
earnings of $5.9 million, a decrease in accrued expenses of $3.6 million and an
increase in other assets of $1.6 million. There was also a decrease in
receivables of $3.4 million and an increase in trade accounts payable of $1.3
million. Net cash used in investing activities increased $54.8 million from
$10.9 million for the three months ended March 31, 1997 to $65.7 million for the
same period in 1998. This increase was due to a $51.0 million increase in
purchase of new markets and a $3.7 million increase in capital expenditures. Net
cash provided by financing activities increased $52.7 million for the three
months ended March 31, 1998 due to a $50.0 million increase in net borrowings
under credit agreements due to additional borrowings under the Revolving Credit
facility to finance acquisitions and a $2.6 million increase in net proceeds
from issuance of common stock.
The Company believes that internally generated funds and funds available for
borrowing under the Bank Credit Agreement will be sufficient for the foreseeable
future to satisfy all debt service obligations and to finance its current
operations.
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<PAGE> 14
Regulation of Tobacco Advertising
Approximately 9% of the Company's outdoor advertising net revenues and 8% of
consolidated net revenues in fiscal 1997 came from the tobacco products
industry, compared to 10% of billboard advertising net revenues for fiscal 1996,
9% for fiscal 1995, 7% for fiscal 1994 and 1993, and 12% for fiscal 1992. The
tobacco percentage for the three months ended March 31, 1998 was approximately
9%. Manufacturers of tobacco products, principally cigarettes, were historically
major users of outdoor advertising displays. Beginning in 1992, the leading
tobacco companies substantially reduced their domestic advertising expenditures
in response to societal and governmental pressures and other factors. Although
the Company has attempted to replace tobacco advertising by diversifying its
customer base and increasing sales to local advertisers, 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
regulations or as to what affect any such reduction may have on the Company.
In June 1997 several of the major tobacco companies in the U.S. 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, may
simultaneously increase the Company's available inventory, and could have a
material adverse effect on the Company's results of operations. The Company
believes, however, that it would be able to replace a substantial portion of
revenues from tobacco advertising that would be eliminated due to such a
settlement with revenues from other sources.
In addition, the states of Florida, Mississippi and Texas have entered into
separate settlements of litigation with the tobacco industry. None of these
settlements are conditioned on federal government approval. The Florida and
Mississippi settlements provided for the elimination of all outdoor advertising
of tobacco products by February 1998 in such states and at such time all of the
Company's tobacco billboards were removed. The Texas settlement requires the
elimination of all outdoor advertising of tobacco products by June, 1998. The
Company operates approximately 3,300 outdoor advertising displays in six markets
in Texas and approximately $.3 million of its approximate $3.2 million in net
revenues in Texas for the three months ended March 31, 1998 were attributable to
tobacco advertising. Further, the settlement of tobacco-related claims and
litigation in other jurisdictions may also adversely affect outdoor advertising
revenues.
New Accounting Pronouncements
The FASB has issued SFAS No. 131, "Disclosures About Segments of an Enterprise
and Related Information", which established a new accounting principle for
reporting information about operating segments in annual financial statements
and interim financial reports. It also established standards for related
disclosures about products and services, geographic areas and major customers.
SFAS No. 131 is effective for fiscal years beginning after December 15, 1997.
The Company is
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<PAGE> 15
currently evaluating the applicability of this standard. However, the Company
does not expect a material impact on disclosures in the Company's financial
statements.
The AICPA has issued SOP 98-5, "Reporting on the Costs of Start-Up Activities",
which requires costs of start-up activities and organization costs to be
expensed as incurred. The statement is effective for financial statements for
fiscal years beginning after December 15, 1998. At March 31, 1998, the Company
estimates that $1.5 million of such capitalized costs are included in intangible
assets on the Company's balance sheet.
Impact of Year 2000
The Company has conducted an assessment of its software and related systems and
believes they are year 2000 compliant.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Not applicable
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 10.1 Amendment No. 4 to Credit Agreement dated as of
March 31, 1998 between Lamar Advertising Company,
certain of its subsidiaries, the lenders party
thereto and The Chase Manhattan Bank, as
administrative agent. Filed herewith.
Exhibit 27.1 Financial Data Schedule. Filed herewith.
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LAMAR ADVERTISING COMPANY
DATED: May 7, 1998 BY: /s/Keith Istre
----------------------------------
Keith A. Istre
Chief Financial and Accounting
Officer and Director
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<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibits Description
-------- -----------
<S> <C>
10.1 Amendment No. 4 to Credit Agreement dated as of
March 31, 1998 between Lamar Advertising Company,
certain of its subsidiaries, the lenders party
thereto and The Chase Manhattan Bank, as
administrative agent. Filed herewith.
27.1 Financial Data Schedule. Filed herewith.
</TABLE>
<PAGE> 1
EXHIBIT 10.1
Execution Copy
Amendment No. 4
AMENDMENT NO. 4 to Credit Agreement ("Amendment No. 4") dated
as of March 31, 1998, between Lamar Advertising Company (the "Borrower"), the
Subsidiary Guarantors party hereto and The Chase Manhattan Bank, as
Administrative Agent (in such capacity, the "Administrative Agent").
The Borrower, the Subsidiary Guarantors, the lenders party
thereto (the "Lenders") and the Administrative Agent are parties to a Credit
Agreement dated as of December 18, 1996 (as modified and supplemented and in
effect on the date hereof, the "Credit Agreement"). The Borrower, the Subsidiary
Guarantors and the Administrative Agent with the consent of the Required Lenders
(as defined in the Credit Agreement) wish to amend the Credit Agreement in
certain respects and, accordingly, the parties hereto hereby agree as follows:
Section 1. Definitions. Except as otherwise defined in this
Amendment No. 4, terms defined in the Credit Agreement (as amended hereby) are
used herein as defined therein.
Section 2. Amendments to the Credit Agreement. Subject to the
due execution and delivery by the Borrower, the Subsidiary Guarantors, the
Required Lenders and the Administrative Agent of this Amendment No. 4, but
effective as of the date hereof, the Credit Agreement shall be amended as
follows:
2.01. References in the Credit Agreement (including references
to the Credit Agreement as amended hereby) to "this Agreement" (and indirect
references such as "hereunder", "hereby", "herein" and "hereof") shall be deemed
to be references to the Credit Agreement as amended hereby.
2.02. The table in the definition of "Applicable Margin" in
Section 1.01 of the Credit Agreement is amended to read as follows:
<TABLE>
<CAPTION>
"Range Applicable Margin (% p.a.)
of
Total Debt Ratio Base Rate Loans Eurodollar Loans
---------------- --------------- ----------------
<S> <C> <C>
Greater than or equal
to 5.50 to 1 1.00% 2.25%
Greater than or equal
to 5.00 to 1 but less than
5.50 to 1 .75% 2.00%
Greater than or equal
to 4.50 to 1 but less than
5.00 to 1 .50% 1.75%
</TABLE>
Amendment No. 4
<PAGE> 2
-2-
<TABLE>
<S> <C> <C>
Greater than or equal
to 4.00 to 1 but less than
4.50 to 1 .25% 1.50%
Greater than or equal
to 3.50 to 1 but less than
4.00 to 1 .00% 1.25%
Less than 3.50 to 1 .00% 1.00%"
</TABLE>
2.03. Section 7.09(a) of the Credit Agreement is hereby
amended to read as follows:
"(a) Total Debt Ratio. The Borrower will not permit the Total
Debt Ratio at any time during any period below to exceed the ratio set opposite
such period below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From the Effective Date
through March 30, 1998 5.50 to 1
From March 31, 1998
through June 29, 1998 6.00 to 1
From June 30, 1998
through December 30, 1998 5.25 to 1
From December 31, 1998
through December 30, 1999 5.00 to 1
From December 31, 1999
through December 30, 2000 4.50 to 1
From December 31, 2000
and at all times thereafter 4.00 to 1"
</TABLE>
2.04. Section 7.09(c) of the Credit Agreement is hereby
amended by replacing "to exceed" with "to be less than" therein, and by changing
the references therein of "March 30, 1998" and "March 31, 1998" to "June 29,
1998" and "June 30, 1998", respectively..
Section 3. Representations and Warranties. The Borrower and
each Subsidiary Guarantor represents and warrants to the Lenders that the
representations and warranties set forth in Article IV of the
Amendment No. 4
<PAGE> 3
-3-
Credit Agreement are true and complete on the date hereof as if made on and as
of the date hereof and as if each reference in said Article IV to "this
Agreement" includes reference to this Amendment No. 4.
Section 4. Miscellaneous. Except as herein provided, the
Credit Agreement shall remain unchanged and in full force and effect. This
Amendment No. 4 may be executed in any number of counterparts, all of which
taken together shall constitute one and the same amendatory instrument and any
of the parties hereto may execute this Amendment No. 4 by signing any such
counterpart. This Amendment No. 4 shall be governed by, and construed in
accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 4 to be duly executed and delivered as of the day and year first
above written.
LAMAR ADVERTISING COMPANY
By: /s/ Keith Istre
----------------------------------------
Title: CFO
SUBSIDIARY GUARANTORS
INTERSTATE LOGOS, INC.
THE LAMAR CORPORATION
LAMAR ADVERTISING OF MOBILE, INC.
LAMAR ADVERTISING OF COLORADO
SPRINGS, INC.
LAMAR ADVERTISING OF SOUTH
MISSISSIPPI, INC.
LAMAR ADVERTISING OF JACKSON, INC.
LAMAR TEXAS GENERAL PARTNER, INC.
LAMAR ADVERTISING OF SOUTH GEORGIA, INC.
LAMAR TENNESSEE LIMITED PARTNER, INC.
TLC PROPERTIES, INC.
TLC PROPERTIES II, INC.
LAMAR PENSACOLA TRANSIT, INC.
LAMAR ADVERTISING OF YOUNGSTOWN, INC.
NEBRASKA LOGOS, INC.
OKLAHOMA LOGO SIGNS, INC.
MISSOURI LOGOS, INC.
OHIO LOGOS, INC.
UTAH LOGOS, INC.
TEXAS LOGOS, INC.
MISSISSIPPI LOGOS, INC.
GEORGIA LOGOS, INC.
Amendment No. 4
<PAGE> 4
-4-
SOUTH CAROLINA LOGOS, INC.
VIRGINIA LOGOS, INC.
MINNESOTA LOGOS, INC.
MICHIGAN LOGOS, INC.
NEW JERSEY LOGOS, INC.
FLORIDA LOGOS, INC.
KENTUCKY LOGOS, INC.
NEVADA LOGOS, INC.
TENNESSEE LOGOS, INC.
KANSAS LOGOS, INC.
LAMAR ADVERTISING OF HUNTINGTON -
BRIDGEPORT, INC.
LAMAR ADVERTISING OF PENN, INC.
LAMAR ADVERTISING OF MISSOURI, INC.
LAMAR ADVERTISING OF MICHIGAN, INC.
LAMAR ELECTRICAL, INC.
LAMAR ADVERTISING OF SOUTH DAKOTA, INC.
By: /s/ Keith Istre
----------------------------------------
Title: CFO
LAMAR TEXAS LIMITED PARTNERSHIP
By: Lamar Texas General Partner, Inc.,
its general partner
By: /s/ Keith Istre
----------------------------------------
Title: CFO
LAMAR TENNESSEE LIMITED PARTNERSHIP
LAMAR TENNESSEE LIMITED PARTNERSHIP II
By: The Lamar Corporation, their general
partner
By: /s/ Keith Istre
----------------------------------------
Title: CFO
Amendment No. 4
<PAGE> 5
-5-
LAMAR AIR, L.L.C.
By: The Lamar Corporation, its manager
By: /s/ Keith Istre
----------------------------------------
Title: CFO
MINNESOTA LOGOS, A PARTNERSHIP
By: Minnesota Logos, Inc., its general
partner
By: /s/ Keith Istre
----------------------------------------
Title: CFO
TLC PROPERTIES, L.L.C.
By: TLC Properties, Inc., its manager
By: /s/ Keith Istre
----------------------------------------
Title: CFO
LENDERS
THE CHASE MANHATTAN BANK BANK ONE, LOUISIANA,
NATIONAL ASSOCIATION
By: By:
---------------------- ----------------------
Title: Title:
CIBC INC. FLEET BANK, N.A.
By: By:
---------------------- ----------------------
Title: Title:
Amendment No. 4
<PAGE> 6
-6-
ABN AMRO BANK N.V. BANQUE PARIBAS
Houston Agency
By: By:
---------------------- ----------------------
Title: Title:
By: By:
---------------------- ----------------------
Title: Title:
CORESTATES BANK, N.A. BANK OF MONTREAL, CHICAGO
BRANCH
By: By:
---------------------- ----------------------
Title: Title:
THE LONG-TERM CREDIT BANK HIBERNIA NATIONAL BANK
OF JAPAN, LIMITED,
NEW YORK BRANCH
By: By:
---------------------- ----------------------
Title: Title:
MERITA BANK LTD - THE BANK OF NOVA SCOTIA
NEW YORK BRANCH
By: By:
---------------------- ----------------------
Title: Title:
By:
----------------------
Title:
Amendment No. 4
<PAGE> 7
-7-
UNION BANK OF CALIFORNIA BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
By: By:
---------------------- ----------------------
Title: Title:
FIRST UNION NATIONAL BANK STATE STREET BANK AND
OF NORTH CAROLINA TRUST COMPANY
By: By:
---------------------- ----------------------
Title: Title:
CRESTAR BANK
By:
----------------------
Title:
ADMINISTRATIVE AGENT
THE CHASE MANHATTAN BANK,
as Administrative Agent
By:
----------------------
Title:
Amendment No. 4
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 4,041
<SECURITIES> 329
<RECEIVABLES> 31,007
<ALLOWANCES> 1,404
<INVENTORY> 0
<CURRENT-ASSETS> 47,167
<PP&E> 469,207
<DEPRECIATION> 121,888
<TOTAL-ASSETS> 699,542
<CURRENT-LIABILITIES> 30,735
<BONDS> 582,907
0
3,649
<COMMON> 48
<OTHER-SE> 64,640
<TOTAL-LIABILITY-AND-EQUITY> 699,542
<SALES> 58,291
<TOTAL-REVENUES> 58,397
<CGS> 0
<TOTAL-COSTS> 20,830
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 551
<INTEREST-EXPENSE> 13,326
<INCOME-PRETAX> (6,156)
<INCOME-TAX> (1,565)
<INCOME-CONTINUING> (4,591)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,682)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
