<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
SEPTEMBER 15, 1999
LAMAR ADVERTISING COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 0-30242 72-1449411
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
</TABLE>
LAMAR MEDIA CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 001-12407 72-1205791
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
</TABLE>
5551 CORPORATE BOULEVARD, BATON ROUGE, LOUISIANA 70808
(Address of principal executive offices and zip code)
(225) 926-1000
(Registrants' telephone number, including area code)
<PAGE> 2
EXPLANATORY NOTE
On July 20, 1999, Lamar Advertising Company completed a corporate
reorganization to create a new holding company structure. The reorganization
was accomplished through a merger under section 251(g) of the Delaware General
Corporation Law. At the effective time of the merger, all stockholders of Lamar
Advertising Company became stockholders in a new holding company and Lamar
Advertising Company became a wholly-owned subsidiary of the new holding
company. The new holding company took the Lamar Advertising Company name and
the old Lamar Advertising Company was renamed Lamar Media Corp. In the merger,
all outstanding shares of old Lamar Advertising Company's capital stock were
converted into shares of the new holding company with the same voting powers,
designations, preference and rights, and the same qualifications, restrictions
and limitations, as the shares of old Lamar Advertising Company. Following the
restructuring, the Class A common stock of the new holding company trades
under the symbol "LAMR" on the Nasdaq National Market with the same CUSIP
number as the old Lamar Advertising Company's Class A common stock.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 15, 1999, Lamar Media Corp. acquired all of the
outstanding capital stock of Chancellor Media Outdoor Corporation and Chancellor
Media Whiteco Outdoor Corporation (collectively "Chancellor Outdoor") for
consideration consisting of approximately $700 million of cash and 26,227,273
shares of Lamar Advertising Company Class A Common Stock valued at approximately
$947 million. As a result of this acquisition, Lamar Media Corp. acquired
outdoor advertising assets consisting of approximately 42,700 outdoor
advertising display faces. Funds for the acquisition were provided from
borrowings under Lamar Media Corp.'s revolving credit facility with a group of
banks led by The Chase Manhattan Bank. The nature and amount of the
consideration paid in the acquisition were determined by negotiation between
Lamar Advertising Company and Chancellor Media Corporation of Los Angeles and
Chancellor Mezzanine Holdings Corporation, the parent entities of Chancellor
Outdoor, following a bidding process in which Chancellor Media Corporation of
Los Angeles and Chancellor Mezzanine Holdings Corporation solicited proposals
from potential acquirers. Prior to the acquisition there was no material
relationship between Chancellor Outdoor or their respective parent corporations,
on the one hand, and Lamar Advertising Company or any of its affiliates,
directors or officers, or any associate of any such director or officer, on the
other hand.
ITEM 5. OTHER EVENTS.
Lamar Advertising Company and Lamar Media Corp. are also filing this
report to provide updated historical financial statements and related notes for
Chancellor Outdoor as well as to include updated pro forma financial information
of Lamar Advertising Company giving effect to the acquisition.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 Unaudited consolidated balance sheet of Chancellor
Media Outdoor Corporation as of June 30, 1999 and
unaudited consolidated statement of operations,
stockholders' deficit and cash flow for the
six-month period ended June 30, 1999. Filed herewith.
99.2 Unaudited condensed consolidated pro forma statement
of earnings (loss) of Lamar Advertising Company
giving effect to the Chancellor Outdoor acquisition
for the year ended December 31, 1998 and the six
months ended June 30, 1999 and unaudited condensed
consolidated pro forma balance sheet of Lamar
Advertising Company giving effect to the Chancellor
Outdoor acquisition at June 30, 1999. Filed herewith.
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
each registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 22, 1999 LAMAR ADVERTISING COMPANY
By: /s/ KEITH A. ISTRE
--------------------------------
Keith A. Istre
Treasurer and Chief Financial Officer
Date: November 22, 1999 LAMAR MEDIA CORP.
By: /s/ KEITH A. ISTRE
--------------------------------
Keith A. Istre
Treasurer and Chief Financial Officer
3
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
99.1 Unaudited consolidated balance sheet of Chancellor Media
Outdoor Corporation as of June 30, 1999 and unaudited
consolidated statement of operations, stockholders' deficit
and cash flow for the six-month period ended June 30, 1999.
Filed herewith.
99.2 Unaudited condensed consolidated pro forma statement of
earnings (loss) of Lamar Advertising Company giving effect to
the Chancellor Outdoor acquisition for the year ended December
31, 1998 and the six months ended June 30, 1999 and unaudited
condensed consolidated pro forma balance sheet of Lamar
Advertising Company, giving effect to the Chancellor Outdoor
acquisition at June 30, 1999. Filed herewith.
</TABLE>
<PAGE> 1
EXHIBIT 99.1
CHANCELLOR MEDIA OUTDOOR CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF CHANCELLOR MEDIA CORPORATION OF LOS ANGELES)
CONSOLIDATED BALANCE SHEET
UNAUDITED
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30,
1999
-----------
<S> <C>
ASSETS
Current assets:
Cash ......................................................... $ 726
Accounts receivable, net of allowance for uncollectible
accounts of $6,353 ......................................... 33,795
Prepaid land rent ............................................ 12,308
Deferred tax asset ........................................... 2,711
Inventories .................................................. 3,557
Other current assets ......................................... 4,751
------------
Total current assets ............................... 57,848
------------
Property and equipment:
Land ......................................................... 18,514
Advertising structures ....................................... 1,191,399
Buildings and improvements ................................... 10,257
Equipment and vehicles ....................................... 10,925
Construction-in-progress ..................................... 17,090
------------
Total cost ......................................... 1,248,185
Accumulated depreciation ....................................... (74,442)
------------
Net property and equipment ..................................... 1,173,743
------------
Intangible assets:
Goodwill ..................................................... 477,402
Other ........................................................ 32,727
------------
Total cost ......................................... 510,129
Accumulated amortization ....................................... (14,558)
------------
Net intangible assets ........................................ 495,571
------------
Prepaid land rent, non-current ................................. 134
------------
Total assets ....................................... $ 1,727,296
============
LIABILITIES AND EQUITY
Current liabilities:
Notes payable, current ....................................... $ 645
Accounts payable ............................................. 3,020
Accrued payroll and employee benefits ........................ 5,549
Other accrued liabilities .................................... 5,259
------------
Total current liabilities .......................... 14,473
Commitments and contingencies .................................. --
Deferred tax liabilities ....................................... 93,526
Notes payable, long-term ....................................... 1,753
Equity ......................................................... 1,617,544
------------
Total liabilities and equity ....................... $ 1,727,296
============
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 2
CHANCELLOR MEDIA OUTDOOR CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF CHANCELLOR MEDIA CORPORATION OF LOS ANGELES)
CONSOLIDATED STATEMENT OF OPERATIONS
UNAUDITED
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JUNE 30,
1999
--------------
<S> <C>
Revenues .................................................. $ 120,107
Less: agency commissions ................................. 9,218
------------
Net revenues ........................................ 110,889
Operating expenses ........................................ 58,734
Corporate general and administrative expenses ............. 5,884
Depreciation and amortization ............................. 63,527
------------
Loss from operations ................................ (17,256)
Other (income) expense .................................... 69
Interest expense .......................................... 126
------------
Loss before taxes ................................... (17,451)
Income tax expense (benefit) .............................. (4,823)
------------
Net loss ............................................ $ (12,628)
============
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 3
CHANCELLOR MEDIA OUTDOOR CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF CHANCELLOR MEDIA CORPORATION OF LOS ANGELES)
CONSOLIDATED STATEMENT OF EQUITY
UNAUDITED
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JUNE 30,
1999
--------------
<S> <C>
Beginning balance .................................. $ 1,614,526
Contributions from parent, net ..................... 15,646
Net loss ........................................... (12,628)
------------
$ 1,617,544
============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
CHANCELLOR MEDIA OUTDOOR CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF CHANCELLOR MEDIA CORPORATION OF LOS ANGELES)
CONSOLIDATED STATEMENT OF CASH FLOW
UNAUDITED
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JUNE 30,
1999
--------------
<S> <C>
Net loss ................................................. $ (12,628)
------------
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation ................................. 54,165
Amortization of intangibles .................. 9,362
Deferred tax benefit ......................... (6,072)
Changes in assets and liabilities:
Accounts receivable .................... (7,358)
Other assets ........................... (2,734)
Accounts payable and accrued expenses .. (8,445)
------------
Total adjustments .......................... 38,918
------------
Net cash provided by operating activities .. 26,290
------------
Cash flows from investing activities:
Purchases of property and equipment and construction
of advertising structures .......................... (16,419)
------------
Net cash used in investing activities ...... (16,419)
------------
Cash flows from financing activities:
Distributions to parent ................................ (10,903)
Principal payments on note payable ..................... (265)
------------
Net cash used in financing activities ...... (11,168)
------------
Net increase in cash ..................................... (1,297)
Cash, at beginning of period ............................. 2,023
------------
Cash, at end of period ................................... $ 726
============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
CHANCELLOR MEDIA OUTDOOR CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF CHANCELLOR MEDIA CORPORATION OF LOS ANGELES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. ORGANIZATION AND SIGNIFICANT ACQUISITIONS
The Chancellor Media Outdoor Corporation (the "Company"), a wholly-owned
subsidiary of Chancellor Media Corporation of Los Angeles ("CMCLA"), operated
approximately 38,000 outdoor advertising display faces in 37 states as of
December 31, 1998. The Company was formed on July 22, 1998; however, the Company
held no assets until the acquisition of Martin Media, Martin & MacFarlane and
certain affiliated companies on July 31, 1998 and the Company had no results of
operations until August 1, 1998. On June 1, 1999, Chancellor Media Corporation
("CMC"), the indirect parent of CMCLA, announced that it had entered into a
definitive agreement to sell the Company (see Note 8). The accompanying
consolidated financial statements do not include any effects related to the
proposed transaction.
On July 31, 1998, CMCLA acquired Martin Media L.P., Martin & MacFarlane and
certain affiliated companies ("Martin") for a total purchase price of $615,117,
which consisted of $612,848 in cash and included various other direct
acquisition costs and the assumption of notes payable of $2,270. As part of the
Martin transaction, CMCLA acquired an asset purchase agreement with Kunz &
Company and paid an additional $6,000 in cash for a purchase option deposit
previously paid in by Martin. Martin operated 13,700 billboards and outdoor
displays in 12 states serving 23 markets.
On November 13, 1998, CMCLA acquired approximately 1,000 billboards and
outdoor display faces from Kunz & Company for $40,264 in cash, of which $6,000
was previously paid as a purchase option deposit in connection with the Martin
acquisition on July 31, 1998. The Company had previously been operating these
properties under a management agreement effective July 31, 1998.
On December 1, 1998, CMCLA acquired the assets and working capital of the
outdoor advertising division of Whiteco Industries, Inc. ("Whiteco"), which
operated approximately 22,500 billboards and outdoor displays in 34 states, for
$981,698 in cash, including various other direct acquisition costs.
Between September and December 1998, CMCLA acquired approximately 670
additional billboards and outdoor displays in various markets for approximately
$23,582 in cash.
On January 21, 1999 and February 9, 1999, CMCLA acquired approximately
4,500 outdoor display faces from Triumph Outdoor Holdings and certain affiliated
companies for $37,006 in cash including working capital and direct acquisition
costs ("the Triumph Acquisition"). In connection with the Triumph Acquisition,
CMCLA paid approximately $1,000 to an entity controlled by James A. McLaughlin,
the President and Chief Operating Officer of the Company. An additional $700
that may be paid to such entity is currently held in escrow, subject to
satisfaction of indemnity claims, if any.
Between January and May 1999, CMCLA acquired approximately 250 additional
billboards and outdoor displays in various transactions for approximately
$11,900 in cash.
5
<PAGE> 6
CHANCELLOR MEDIA OUTDOOR CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF CHANCELLOR MEDIA CORPORATION OF LOS ANGELES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
The above acquisitions were accounted for under the purchase method of
accounting. After acquisition, CMCLA pushed down the applicable stock, assets
and/or liabilities of the acquired entities to the Company as non-cash
contributions. The contributions were made at cost and therefore no related gain
or loss was recognized by CMCLA. These acquisitions are non-cash transactions
that are not reflected in the consolidated statement of cash flows. The
accompanying consolidated financial statements include the results of operations
of the acquired entities from their respective date of acquisition.
A summary of net assets acquired during 1998 follows:
<TABLE>
<S> <C>
Cash ......................................... $ 6,716
Accounts receivable, net ..................... 25,908
Other current assets ......................... 14,747
Property and equipment ....................... 1,221,858
Intangible assets ............................ 499,044
Other assets ................................. 1,195
Accounts payable and accrued expenses ........ (10,752)
Deferred tax liabilities ..................... (98,042)
Other liabilities ............................ (13)
-----------
Total net assets acquired ........... 1,660,661
===========
Less:
Cash acquired ............................. 6,716
Notes payable ............................. 2,268
-----------
Cash paid for acquisitions by CMCLA .......... $ 1,651,677
===========
</TABLE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles. All significant
intercompany balances and transactions have been eliminated in consolidation.
Corporate overhead costs related to the Company are included as expenses in the
accompanying financial statements. Management considers the inclusion of such
expenses reasonable. The corporate overhead expenses may not necessarily be
indicative of expenses that would have been incurred if the Company had operated
as a separate entity.
Interim Financial Statements
The financial information as of June 30, 1999 and with respect to the six
months then ended is unaudited. In the opinion of management, the financial
statements contain all adjustments, consisting of normal recurring accruals,
necessary for the fair presentation of the results for such period. The
information is not necessarily indicative of the results of operations to be
expected for the fiscal year end.
Advertising Contracts and Revenue Recognition
Outdoor advertising revenue is derived from contracts with advertisers for
the rental of outdoor advertising space and is recognized on an accrual basis
ratably over the terms of the contracts, which generally cover periods
6
<PAGE> 7
CHANCELLOR MEDIA OUTDOOR CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF CHANCELLOR MEDIA CORPORATION OF LOS ANGELES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
of one month up to five years. Costs associated with the outdoor advertising
operations, including contract costs and land rental, are expensed over the
related contract term.
Prepaid Land Leases
The majority of the Company's outdoor advertising structures are located on
leased land. Land rent is typically paid in advance for periods ranging from one
to twelve months. Prepaid land leases are expensed ratably over the related
rental term.
Property and Equipment
Property and equipment are stated at cost. Depreciation of property and
equipment is computed using the straight-line method over the estimated useful
lives of the assets. Estimated useful lives are as follows:
<TABLE>
<S> <C>
Advertising structures ................. 15 years
Building and improvements .............. 35 years
Equipment and vehicles ................. 5-10 years
</TABLE>
Repair and maintenance costs are charged to expense as incurred.
Goodwill and Other Intangible Assets
Intangible assets consist of goodwill, non-compete agreements, municipal
contracts and franchise agreements. Intangible assets resulting from
acquisitions are valued based upon estimated fair values. The Company amortizes
such intangible assets using the straight-line method over estimated useful
lives of 40 years for goodwill, five years for non-compete agreements and ten
years for municipal contracts and franchise agreements. The Company evaluates
the propriety of the carrying amount of intangible assets and related
amortization periods to determine whether current events or circumstances
warrant adjustments to the carrying value and/or revised estimates of
amortization periods. These evaluations consist of the projection of
undiscounted cash flows over the remaining amortization periods of the related
intangible assets.
The projections are based on historical trend lines of actual results,
adjusted for expected changes in operating results. At this time, the Company
believes that no impairment of goodwill or other intangible assets has occurred
and that no revisions to the amortization periods are warranted.
Cash Equivalents
The Company considers temporary cash investments purchased with original
maturities of three months or less to be cash equivalents.
Disclosure of Certain Significant Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. In the
opinion of management, credit risk with respect to trade receivables is limited
due to the large number of diversified customers and the geographic
diversification of the Company's customer base. The Company
7
<PAGE> 8
CHANCELLOR MEDIA OUTDOOR CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF CHANCELLOR MEDIA CORPORATION OF LOS ANGELES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
performs ongoing credit evaluations of its customers and believes that adequate
allowances for any uncollectible trade receivables are maintained. At December
31, 1998, no receivable from any customer exceeded 5% of equity and no customer
accounted for more than 10% of net revenues during the period July 22, 1998
through December 31, 1998.
3. CONTINGENCIES
The Company is involved in various claims and lawsuits, which are generally
incidental to its business. The Company is vigorously contesting all of these
matters and believes that the ultimate resolution of these matters will not have
a materially adverse effect on its consolidated financial position, cash flows
or results of operations.
The Company, together with its consolidated subsidiaries, has guaranteed
certain debt obligations issued by CMCLA of approximately $4,096,000. In
addition to the Company, other subsidiaries of CMCLA guarantee the debt.
4. SUBSEQUENT EVENT
On September 15, 1999, CMCLA sold the Company to Lamar Media Corp.
("Lamar") for approximately $1,600,000 in stock and cash. Under the terms of the
agreement, Lamar paid $700,000 in cash and issued approximately 26,227,000
shares of its common stock. Following the transaction, CMCLA owns approximately
30% of Lamar's common stock and will have the right to appoint two members to
Lamar's board of directors, increasing the size of the board to ten members.
8
<PAGE> 1
EXHIBIT 99.2
LAMAR ADVERTISING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following sets forth unaudited pro forma condensed consolidated
financial information for Lamar Advertising Company ("Lamar"). The unaudited pro
forma condensed consolidated statement of operations for the year ended December
31, 1998 gives effect to the acquisition of Outdoor Communications, Inc. (as
filed in Lamar's 8K/A filed June 8, 1999) and the acquisition by Lamar (the
"Stock Purchase") of Chancellor Outdoor as if the transactions had occurred on
January 1, 1998. The unaudited pro forma condensed consolidated statement of
operations for the six months ended June 30, 1999 gives effect to the
acquisition of Chancellor Outdoor as if the transaction had occurred at the
beginning of the period. The unaudited pro forma condensed consolidated balance
sheet as of June 30, 1999 gives effect to the acquisition of Chancellor Outdoor
as if the transaction had occurred on June 30, 1999.
For purposes of the pro forma financial information (i) the pro forma
statement of operations of the Company for the year ended December 31, 1998 (as
adjusted for the OCI acquisition) has been combined with the statement of
operations of Chancellor Outdoor for the period July 22, 1998 (inception) to
December 31, 1998, the statement of operations of Martin Media L.P. ("Martin
Media") for the seven months ended July 31, 1998, the statement of operations of
Martin & Macfarlane, Inc. for the seven months ended July 31, 1998 and the
statement of income of the Outdoor Division of Whiteco Industries ("Whiteco")
the eleven months ended November 30, 1998 (ii) the statement of operations of
the Company for the six month period ended June 30, 1999 has been combined with
the statement of operations of Chancellor Outdoor for the same period and (iii)
the balance sheet of the Company as of June 30, 1999 has been combined with the
balance sheet of Chancellor Outdoor as of June 30, 1999.
The unaudited pro forma condensed consolidated financial statements
give effect to the acquisitions under the purchase method of accounting. The pro
forma adjustments are described in the accompanying notes and are based on
preliminary estimates and certain assumptions that management of the Company
believes reasonable under the circumstances.
The unaudited pro forma condensed consolidated financial statements
have been prepared by the Company's management. The unaudited pro forma data are
not designed to represent and do not represent what the Company's results of
operations or financial position would have been had the aforementioned
acquisition been completed on or as of the dates assumed, and are not intended
to project the Company's results of operations for any future period or as of
any future date. The unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the audited and unaudited
consolidated financial statements and notes of the Company, Chancellor Outdoor,
Martin Media, Martin & Macfarlane, Inc., Whiteco and Outdoor Communications,
Inc., included in the Current Report on Form 8-K filed by Lamar Advertising
Company on July 7, 1999.
1
<PAGE> 2
LAMAR ADVERTISING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
LAMAR CHANCELLOR MARTIN MARTIN &
ADJUSTED OUTDOOR MEDIA MACFARLANE
FOR OCI THE JULY 22, 1998 TO JAN 1, 1998 TO JAN 1, 1998 TO
ACQUISITION DECEMBER 31, 1998 JULY 31, 1998 JULY 31, 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenues, net $ 332,754 47,605 29,655 16,576
---------------- ---------------- ---------------- ----------------
Direct advertising expenses 108,781 23,505 14,364 10,526
General and administrative expenses 69,662 1,981 6,450 4,193
Depreciation and amortization 112,805 25,990 11,223 3,471
---------------- ---------------- ---------------- ----------------
291,248 51,476 32,037 18,190
---------------- ---------------- ---------------- ----------------
Operating income 41,506 (3,871) (2,382) (1,614)
---------------- ---------------- ---------------- ----------------
Other expense (income):
Interest income (762) -- (20) --
Interest expense 80,581 105 8,527 2,244
Loss (gain) on disposition of assets (729) -- -- (465)
Other expenses (income) 314 (156) (473) (537)
---------------- ---------------- ---------------- ----------------
79,404 (51) 8,034 1,242
---------------- ---------------- ---------------- ----------------
Income (Loss) before income taxes (37,898) (3,820) (10,416) (2,856)
Income tax expense (benefit) (6,368) 345 -- 10
---------------- ---------------- ---------------- ----------------
Net Income (loss) (31,530) (4,165) (10,416) (2,866)
================ ================ ================
Preferred stock dividends 365
----------------
Net loss applicable to common stock $ (31,895)
================
Net loss per common share $ (0.62)
================
Weighted average number of shares outstanding 51,361,522
================
<CAPTION>
COMBINED
WHITECO CHANCELLOR
JAN 1, 1998 TO OUTDOOR ACQUISITION PRO FORMA
NOV 30, 1998 12/31/98 ADJUSTMENTS COMBINED
---------------- ---------------- ---------------- ----------------
Revenues, net 119,630 213,466 (9,656)(6) 536,564
---------------- ---------------- ---------------- ----------------
Direct advertising expenses 43,665 92,060 (4,865)(6) 195,976
General and administrative expenses 26,296 38,920 (2,734)(1) 105,848
Depreciation and amortization 10,342 51,026 97,179 (2) 261,010
---------------- ---------------- ---------------- ----------------
80,303 182,006 89,580 562,834
---------------- ---------------- ---------------- ----------------
Operating income 39,327 31,460 (99,236) (26,270)
---------------- ---------------- ---------------- ----------------
Other expense (income):
Interest income (134) (154) 154 (3) (762)
Interest expense 35 10,911 40,032 (4) 131,524
Loss (gain) on disposition of assets (1,418) (1,883) -- (2,612)
Other expenses -- (1,166) -- (852)
---------------- ---------------- ---------------- ----------------
(1,517) 7,708 40,186 127,298
---------------- ---------------- ---------------- ----------------
Income (Loss) before income taxes 40,844 23,752 (139,422) (153,568)
Income tax expense (benefit) -- 355 (42,698)(5) (48,711)
---------------- ---------------- ---------------- ----------------
Net income (loss) 40,844 23,397 (96,724) (104,857)
================ ================ ================
Preferred stock dividends 365
----------------
Net loss applicable to common stock $ (105,222)
================
Net loss per common share $ (1.36)
================
Weighted average number of shares outstanding 26,227,273 77,588,795
================ ================
</TABLE>
2
<PAGE> 3
LAMAR ADVERTISING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CHANCELLOR ACQUISITION PRO FORMA
LAMAR OUTDOOR ADJUSTMENTS COMBINED
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenues, net $ 183,575 110,889 (4,052)(6) 290,412
---------------- ---------------- ---------------- ----------------
Direct advertising expenses 60,245 58,734 (2,076)(6) 116,903
General and administrative expenses 40,853 5,884 -- 46,737
Depreciation and amortization 64,213 63,527 10,575 (2) 138,315
---------------- ---------------- ---------------- ----------------
165,311 128,145 8,499 301,955
---------------- ---------------- ---------------- ----------------
Operating income 18,264 (17,256) (12,551) (11,543)
---------------- ---------------- ---------------- ----------------
Other expense (income):
Interest income (955) -- -- (955)
Interest expense 36,379 126 25,136(4) 61,641
Gain on disposition of assets (477) -- -- (477)
Other expenses -- 69 -- 69
---------------- ---------------- ---------------- ----------------
34,947 195 25,136 60,278
---------------- ---------------- ---------------- ----------------
Loss before income taxes (16,683) (17,451) (37,687) (71,821)
Income tax expense (benefit) (1,766) (4,823) (15,297)(5) (21,886)
---------------- ---------------- ---------------- ----------------
Loss before cumulative effect of a change in (14,917) (12,628) (22,390) (49,935)
accounting principle ================ ================ ================ ================
Loss before cumulative effect of a change in
accounting principle per common share $ (0.25) $ (0.57)
================ ================
Weighted average number of shares outstanding 61,185,610 26,227,273 87,412,883
================ ================ ================
</TABLE>
3
<PAGE> 4
LAMAR ADVERTISING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CHANCELLOR PROFORMA PRO FORMA
LAMAR OUTDOOR ADJUSTMENTS COMBINED
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cash $ 4,249 726 (3,714)(7) 1,261
Net receivables 46,593 33,795 -- 80,388
Other current assets 15,648 23,327 (2,711)(8) 36,264
------------ ------------ ------------ ------------
Total current assets 66,490 57,848 (6,425) 117,913
------------ ------------ ------------ ------------
Property, plant and equipment, net 546,128 1,173,743 (527,818)(9) 1,192,053
------------ ------------ ------------ ------------
Intangibles 781,217 495,571 582,140 (10) 1,858,928
Other assets 17,099 134 -- 17,233
------------ ------------ ------------ ------------
Total assets $ 1,410,934 1,727,296 47,897 3,186,127
============ ============ ============ ============
Current maturities of long-term debt 4,078 645 -- 4,723
Other current liabilities 38,456 13,828 5,500 (11) 57,784
------------ ------------ ------------ ------------
42,534 14,473 5,500 62,507
------------ ------------ ------------ ------------
Long-term debt 885,306 1,753 700,000 (12) 1,587,059
Deferred income 1,283 -- -- 1,283
Other liabilities 4,833 -- -- 4,833
Deferred tax liability 21,848 93,526 12,949 (13) 128,323
------------ ------------ ------------ ------------
Total Liabilities 955,804 109,752 718,449 1,784,005
------------ ------------ ------------ ------------
Stockholders' equity 455,130 1,617,544 (670,552)(14) 1,402,122
------------ ------------ ------------ ------------
Total liabilities and stockholders' equity $ 1,410,934 1,727,296 47,897 3,186,127
============ ============ ============ ============
</TABLE>
4
<PAGE> 5
For purposes of determining the pro forma effect of the Chancellor
Outdoor acquisition on the Company's Condensed Consolidated Statements of
Operations for the year ended December 31, 1998 and the six months ended
June 30, 1999, the following adjustments have been made:
<TABLE>
<CAPTION>
12/31/98 06/30/99
--------- ---------
<S> <C> <C>
(1) To eliminate expenses in Chancellor Outdoor's combined financial
statement related to management fees that would not have existed
had the transaction taken place at the beginning of the year
General and administrative expenses (2,734) --
========= =========
(2) To record incremental amortization and depreciation due to the
application of purchase accounting. Depreciation and amortization
are calculated using accelerated and straight line methods over
the estimated useful lives of the assets generally from 5-15 years. 97,179 10,575
========= =========
(3) To eliminate historical interest income that would not have
existed had the Stock Purchase taken place on January 1, 1998 154 --
========= =========
(4) To eliminate historical interest expense in Chancellor Outdoor's
combined financial statements and record interest expense related
to the debt acquired and incurred in the acquisition. (A difference
of .125% in the rate of interest would have changed income by $875
and $434 for the year ended December 31, 1998 and six months ended
June 30, 1999, respectively.)
Historical interest expense (10,911) (126)
Interest expense on debt acquired and incurred in the Stock Purchase 50,943 25,262
--------- ---------
40,032 25,136
========= =========
(5) To record the tax effect on pro forma statements for the
Stock Purchase (42,698) (15,297)
========= =========
(6) To record the effect on net revenues and direct expenses of the
Chancellor Outdoor divestiture required by the Department of
Justice in May 1999 and the divestiture required by the Department
of Justice as a condition of this Stock Purchase
Net revenues (9,656) (4,052)
========= =========
Direct advertising expenses (4,865) (2,076)
========= =========
</TABLE>
5
<PAGE> 6
The terms of the Stock Purchase Agreement include the issuance of
26,227,273 Class A Common Stock at an average stock price of $36.11 per
share and $704 million in cash for a total purchase price of $1,650,706.
The acquisition will be accounted for under the purchase method of
accounting. The following is a summary of the preliminary allocation of
the purchase price of the acquisition:
<TABLE>
<S> <C>
Current assets $ 55,137
Property, plant and equipment 645,925
Goodwill 287,051
Other intangibles 790,660
Other assets 134
Current liabilities (19,973)
Long-term liabilities (108,228)
---------
1,650,706
=========
</TABLE>
For purposes of determining the pro forma effect of the Chancellor
Outdoor acquisition on the Company's unaudited Condensed Consolidated
Balance Sheet as of June 30, 1999, the following adjustments have been
made:
<TABLE>
<CAPTION>
Pro Forma
Adjustments
-----------
<S> <C>
(7) Cash
To record the net effect on cash as a result of the Stock
Purchase and related divestures. (3,714)
===========
(8) Other current assets
To eliminate historical deferred tax assets not acquired in the
Stock Purchase. (2,711)
===========
(9) Property, Plant and Equipment, net:
To record the decrease in property, plant and equipment
from the allocation of the purchase price for the Stock Purchase. (527,818)
===========
(10) Intangibles:
To record the increase in intangibles resulting from the
allocation of the purchase price of the Stock Purchase. 582,140
===========
(11) Other current liabilities:
To record the accrual of transition costs and other liabilities
assumed in the Stock Purchase. 5,500
===========
</TABLE>
6
<PAGE> 7
<TABLE>
(12) Long-term debt:
<S> <C>
To record the increase in debt related to financing the
Stock Purchase
Borrowings under the Credit Facility 700,000
===========
(13) Deferred Tax Liability:
To record the increase in the deferred tax liability
created as a result of the application of purchase
accounting. 12,949
===========
(14) Stockholders' Equity
To eliminate Chancellor Outdoor's historical stockholders' equity
as a result of the Stock Purchase (1,617,544)
To record the issuance of Class A Common Stock as a result of the
acquisition. 946,992
-----------
(670,552)
===========
</TABLE>
7
