<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 033-72810
UNIVERSAL OUTDOOR, INC.
ILLINOIS 36-2827496
(STATE OR OTHER JURISDICTION (IRS EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
311 SOUTH WACKER DRIVE, SUITE 6400, CHICAGO, ILLINOIS 60606
REGISTRANT'S TELEPHONE NUMBER: (312) 431-0822
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
-------- -------
THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK, $0.01 PAR
VALUE, AS OF NOVEMBER 11, 1997 WAS 10,000 SHARES.
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
UNIVERSAL OUTDOOR, INC.
(a wholly owned subsidiary of Universal Outdoor Holdings, Inc.)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in thousands)
September 30, December 31,
1997 1996
------------- -------------
ASSETS
Current assets:
Cash and equivalents $ 17,762 $ 11,631
Cash held in escrow - 9,455
Accounts receivable, less allowance
for doubtful accounts of $2,509 and $2,849 33,309 20,927
Accounts receivable - Parent 253 2,708
Other receivables 2,498 1,445
Prepaid land leases 7,466 4,010
Prepaid insurance and other 5,289 4,173
------------- -------------
Total current assets 66,577 54,349
------------- -------------
Property and equipment, net 596,602 382,555
Goodwill and intangible assets, net 240,240 219,009
Other assets, net 18,534 25,114
------------- -------------
Total assets $ 921,953 $681,027
============= =============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable 953 3,373
Accrued expenses 33,488 26,544
------------- -------------
Total current liabilities 34,441 29,917
------------- -------------
Long-term debt and other obligations 502,747 347,941
Other long-term liabilities 931 485
Long-term deferred income tax liabilities 79,961 71,700
Commitments and contingencies - -
Stockholder's equity:
Common stock, $.01 par value, 1,000,000 shares authorized;
10,000 shares issued and outstanding - -
Additional paid in capital 345,503 274,821
Accumulated deficit (41,630) (43,837)
------------- -------------
Total stockholder's equity 303,873 230,984
------------- -------------
Total liabilities and stockholder's equity $921,953 $681,027
============= =============
See accompanying notes to consolidated financial statements.
-1-
<PAGE>
UNIVERSAL OUTDOOR, INC.
(a wholly owned subsidiary of Universal Outdoor Holdings, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ -------------------------
1997 1996 1997 1996
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Revenues $ 61,434 $ 20,942 $ 167,611 $ 50,308
Less agency commissions 5,799 2,299 14,863 5,426
--------- --------- ---------- ---------
Net revenues 55,635 18,643 152,748 44,882
--------- --------- ---------- ---------
Operating expenses:
Direct cost of revenues 21,685 6,512 59,789 16,032
General and administrative
expenses 4,400 1,709 13,949 4,785
Depreciation and amortization 15,901 4,532 42,989 9,207
--------- --------- ---------- ---------
41,986 12,753 116,727 30,024
--------- --------- ---------- ---------
Operating income 13,649 5,890 36,021 14,858
Other (income) expenses:
Interest expense 11,897 2,808 32,830 8,679
Interest expense - amortization
of deferred financing costs 483 - 1,448 215
Other, net 50 5 (464) 1,678
--------- --------- ---------- ---------
Total other expense 12,430 2,813 33,814 10,572
--------- --------- ---------- ---------
Net income $ 1,219 $ 3,077 $ 2,207 $ 4,286
--------- --------- ---------- ---------
--------- --------- ---------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
-2-
<PAGE>
UNIVERSAL OUTDOOR, INC.
(a wholly owned subsidiary of Universal Outdoor Holdings, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 2,207 $ 4,286
Depreciation and amortization 42,989 7,759
Amortization of deferred financing costs 1,448 215
Costs related to acquisition - 1,750
Changes in assets and liabilities, net of effects
from acquisitions:
Accounts receivable and other receivables (12,307) (1,856)
Prepaid land leases, insurance and other (3,534) (678)
Accounts payable, accrued expense and other (6,265) 4,781
Accounts receivable/payable - Parent (383) 52,593
------ ------
Net cash from operating activities 24,155 68,850
------ ------
Cash flows used in investing activities:
Capital expenditures (14,024) (4,313)
Payments for acquisitions, net of cash acquired (237,225) (124,035)
Acquisition costs - (74)
Other payments - (2)
------ ------
Net cash used in investing activities (251,249) (128,424)
------ ------
Cash flows from (used in) financing activities:
Net borrowings under credit agreements 155,400 2,822
Proceeds from issuance of long term debt - 75,000
Long-term debt repayments (1,162) (47,329)
Deferred financing costs (1,150) -
Additional paid in capital 70,682 30,000
Other - (90)
------ ------
Net cash from financing activities 223,770 60,403
------ ------
Net increase (decrease) in cash and equivalents (3,324) 829
Cash and equivalents, at beginning of period 21,086 19
------ ------
Cash and equivalents, at end of period $ 17,762 $ 848
------ ------
------ ------
Supplemental cash flow information:
Interest paid during the period $ 23,637 $ 6,943
------ ------
------ ------
</TABLE>
See accompanying notes to consolidated financial statements.
-3-
<PAGE>
UNIVERSAL OUTDOOR, INC.
(a wholly owned subsidiary of Universal Outdoor Holdings, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
NOTE 1 - BASIS OF PRESENTATION OF UNAUDITED FINANCIAL STATEMENTS:
The interim financial statements contained herein have been prepared by
management and are unaudited. The financial statements should be read in
conjunction with the financial statements and the notes thereto included in
the Annual Report on Form 10-K of Universal Outdoor, Inc. ("Universal") for
the year ended December 31, 1996.
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments, which were of a normal recurring nature, necessary
to present fairly the financial position of Universal as of September 30,
1997, and the results of its operations and its cash flows for the periods
presented herein.
Earnings per share calculations have not been presented because Universal is
a wholly owned subsidiary of Universal Outdoor Holdings, Inc. (the "Holding
Company").
NOTE 2 - CHANGES IN STOCKHOLDER'S EQUITY (DEFICIT):
<TABLE>
<CAPTION>
Total
Additional Stockholder's
Shares of Paid In Accumulated Equity
Common Stock Capital Deficit (Deficit)
------------ ---------- ----------- ------------
<S> <C> <C> <C> <C>
Balance at December 31, 1996 10,000 $274,821 $(43,837) $230,984
Capital contributions from Parent - 70,682 - 70,682
Net income for the nine months
ended September 30, 1997 - - 2,207 2,207
------ -------- -------- --------
Balance at September 30, 1997 10,000 $345,503 $(41,630) $303,873
====== ======== ======== ========
</TABLE>
NOTE 3 - ACQUISITIONS:
In January 1997, Universal acquired a total of approximately 2,018
advertising display faces located in and around Memphis, Tennessee. The
purchase price was approximately $71 million plus 100,000 shares of common
stock of the Holding Company issued on January 2, 1997 at market value.
-4-
<PAGE>
In January 1997, Universal acquired a total of approximately 1,035
advertising display faces located in three markets in the east coast of the
United States, including Metro New York, Northern New Jersey and Hudson
Valley, for approximately $40 million in cash.
In February 1997, Universal acquired a total of approximately 135 advertising
display faces located in and around Evansville, Indiana for approximately
$5.5 million in cash. Universal also acquired 12 existing advertising
display faces and 35 in process display faces in New Jersey for approximately
$5.3 million in cash.
In March 1997, Universal acquired a total of approximately 600 transit
advertising panels in and around Memphis, Tennessee for approximately $8.5
million in cash.
In March 1997, Universal acquired $600,000 of outdoor advertising properties
in Florida in exchange for 20,000 shares of the Holding Company's stock.
In June 1997, Universal acquired approximately 1,450 advertising display
faces in the Baltimore metropolitan area for $46.5 million in cash.
In July 1997, Universal acquired 143 display faces in and around Memphis,
Tennessee for $2.4 million in cash. Also in July, Universal acquired 90
advertising display faces in and around New York, New York for approximately
$51.0 million in cash.
In September 1997, Universal acquired 325 display faces in and around
Chattanooga, Tennessee for approximately $2.4 million in cash.
All completed acquisitions have been accounted for under the purchase method
of accounting and accordingly, the operating results of the acquired
businesses are included in Universal's consolidated financial statements from
the respective dates of acquisition.
The following unaudited pro forma financial information includes the results
of operations of the 1996 and 1997 acquisitions, as noted in Universal's
Annual Report on Form 10-K and the notes included herein, as if the
transactions had been consummated as of the beginning of the period presented
after including the impact of certain adjustments such as depreciation of
advertising structures, amortization of goodwill and other intangibles,
reduction of corporate expenses relating to the elimination of certain
duplicate corporate expenses, principally relating to employee costs and
other corporate activities and interest expense on debt assumed to have been
incurred to complete the transactions.
-5-
<PAGE>
For the Nine Months Ended
1996 1997
----------- ----------
Pro Forma Pro Forma
----------- ----------
(unaudited) (unaudited)
Net revenues $144,637 $156,038
Depreciation and amortization 43,525 44,842
Operating income 27,131 35,848
Interest expense 39,456 36,254
Net income (loss) before income taxes ($ 12,325) ($ 406)
These unaudited pro forma results are not necessarily indicative of what
actually would have occurred if the acquisitions had been in effect for the
entire periods presented and are not intended to project future results.
NOTE 4 - RELATED-PARTY TRANSACTIONS:
Transactions occur between Universal and the Holding Company and the
receivable and payable balances fluctuate accordingly. As of September 30,
1997, Universal has a $253 receivable from the Holding Company.
NOTE 5 - COMMITMENTS AND CONTINGENCIES:
Universal, as the successor to Outdoor Advertising Holdings, Inc. and POA
Acquisition Company ("POA"), was a defendant in a case in the United States
District Court, Middle District of Florida. The plaintiffs alleged that POA,
among others, conspired to restrain trade and to monopolize the market for
leases for land on which outdoor advertising structures can be erected. The
case was settled in 1997 with no significant adverse financial effect.
Universal is subject to various other claims and routine litigation arising
in the ordinary course of business. Such litigation includes claims by
municipalities that certain outdoor advertising structures should be removed.
The ultimate outcome of current and future litigation cannot be presently
determined. Management believes the outcome of current litigation will not
have a significant impact on Universal.
NOTE 6 - INCOME TAXES:
In arriving at a determination not to provide for income taxes, Universal
considered its past operating history as well as the anticipated effect of
acquisitions on its expected full year results, statutory restrictions on the
use of operating losses from acquisitions, available tax planning strategies
and its expectation of the level of timing of future taxable income.
NOTE 7 - COMMON STOCK OFFERING:
On August 15, 1997 the Holding Company completed an offering of 5,912,500
shares of Common Stock of which 2,109,105 were primary shares and 3,803,395
were secondary shares (the "August Offering"). Proceeds to the Holding
Company from the August Offering totaled approximately $70.7 million. All of
the proceeds were used to reduce outstanding indebtedness.
-6-
<PAGE>
In October 1997, Universal acquired 25 display faces in and around the New
York metropolitan area for $15.8 million in cash. Also in October 1997,
Universal acquired 178 display faces in the Tampa, Florida area for $4.5
million in cash and 85 display faces in the Chicago, IL area for $4.0 million
in cash.
In October 1997, the Holding Company announced an agreement to merge with
Clear Channel Communications, Inc., a San Antonio based diversified media
company.
-7-
<PAGE>
Item 2. Management's Discussion and Analyses of Financial Condition and
Results of Operations.
RESULTS OF OPERATIONS
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
Universal Outdoor, Inc. (the "Company") is a wholly owned subsidiary of
Universal Outdoor Holdings, Inc. (the "Parent"). The Company and its
consolidated subsidiaries constitute the operating subsidiaries of the
Parent. As used herein, references to the "Company" include the subsidiaries
of the Company, unless the context otherwise requires.
This quarterly report contains forward-looking statements that involve
risks and uncertainties. When used in this quarterly report, the words
"anticipate," "believe," "estimate," "expect" and similar expressions as they
relate to the Company and its management are intended to identify such
forward-looking statements. The Company's actual results, performance, or
achievements could differ materially from the results expressed in, or
implied by, such forward-looking statements. Factors that could effect such
results, performance or achievement are set forth in "Risk Factors" in
Amendment No.1 in the Parent's Registration Statement on Form S-3 (File No.
333-32607).
Net revenues increased 240.1% to $152.7 million during the first nine
months of 1997 compared to $44.9 million in the corresponding 1996 period.
This increase was a result of inclusion of approximately $6.9 million of
revenues from the first three months of 1997 from the Minneapolis (MN) and
Jacksonville (FL) markets (the "Naegele Markets") which were acquired from
NOA Holding Company ("Naegele") in April 1996 (the "Naegele Acquisition").
Additionally, $38.5 million is attributable to markets acquired from Outdoor
Advertising Holdings, Inc. in October of 1996 (the "POA Acquisition"), and
$43.1 million is attributable to markets acquired from Revere Holding Corp.
in December 1996 ( the "Revere Acquisition"), Matthew Outdoor Advertising
Acquisition Co., L.P. in January 1997 (the "Matthew Acquisition"), Lamar
Advertising Company in June 1997 (the "Penn Acquisition"), and Allied Outdoor
Advertising, Inc. in July 1997 (the "Allied Acquisition"). Revenues from
markets located in and around Memphis (TN) and Tunica County (MS) which were
acquired by the Company in January 1997 (the "Memphis/Tunica Acquisition")
and the markets in and around Memphis (TN) which were acquired in July 1997
(the "Swaney Acquisition") contributed $12.6 million. The remaining $6.7
million or 14.9% increase in net revenues was a result of higher advertising
rates and occupancy levels on the Company's signboards and inclusion for the
full nine months of signboard revenues from advertising display faces in the
Des Moines (IA) and Dallas (TX) markets which were acquired in 1996 (the
"Additional Acquisitions"). Overall net revenues from tobacco advertising
increased to $16.7 million in the first nine months of 1997 compared to $5.3
million in the 1996 period. This increase was due mainly to the inclusion of
tobacco revenues from the acquired markets. As a percentage of net revenues,
tobacco advertising sales decreased to 10.9% in the first nine months of 1997
compared to 11.8% in the 1996 period. On a proforma basis, net revenues
increased primarily due to higher rates and occupancy levels.
-8-
<PAGE>
The tobacco industry has recently engaged in negotiations to settle
litigation against such industry. The tobacco companies have reached a
proposed settlement that, upon approval of Congress, will become final and
binding. Such proposed settlement would require a total ban of tobacco
advertising on outdoor billboards and signs. Any such ban may have a
material adverse effect on the Company's revenues at least in the immediate
period following the imposition of such ban while alternate sources of
advertising are secured. There can be no assurance that the Company will
immediately replace such advertising revenue currently attributed to the
tobacco industry in the event of a total ban of tobacco advertising on
outdoor billboards and signs. Furthermore, even in the event the advertising
ban does not take place, state and local governments, including state and
local governments in areas where the Company does business, have recently
proposed and some have enacted regulations restricting or banning outdoor
advertising of tobacco in certain jurisdictions.
Direct cost of revenues increased to $59.8 million in the first nine
months of 1997 compared to $16.0 million in the 1996 period. The Naegele
Markets and the POA Acquisition accounted for $6.3 million and $12.6 of the
increase, respectively. The Revere Acquisition, the Matthew Acquisition, the
Penn Acquisition, the Memphis/Tunica Acquisition, and the Swaney Acquisition
accounted for $24.2 million. As a percentage of net revenues, direct cost of
revenues increased to 39.2% in the first nine months of 1997 compared to
35.6% in the 1996 period.
General and administrative expenses increased to $14.0 million in the
first nine months of 1997 from $4.8 million in the 1996 period. As a
percentage of net revenues, general and administrative expenses decreased to
9.2% in the first nine months of 1997 compared to 10.7% in the 1996 period.
This percentage decrease was due to the addition of the new markets' revenues
without a significant increase in staffing or other corporate overhead
expenses.
Depreciation and amortization expense increased to $43.0 million in the
first nine months of 1997 compared to $9.2 million in the 1996 period. This
increase was due to significant increases in the fixed assets and goodwill as
a result of the acquisitions.
Total interest expense increased to $34.3 million in the first nine
months of 1997 compared to $8.9 million in the 1996 period. The increase
resulted from increased debt outstanding under the Company's revolving credit
facility which was incurred to finance the Revere, Matthew, Memphis/Tunica,
Penn and Allied Acquisitions and from the issuance by the Company of $225
million 9 3/4% Senior Subordinated Notes due 2006 in October 1996 and $100
million 9 3/4% Series B Subordinated Notes due 2006 in December 1996.
Other expenses in 1996 included a $1.8 million charge for expenses
arising out of the Naegele Acquisition.
The foregoing factors contributed to the Company's $2.2 million net
income in the first nine months of 1997 compared to income of $4.3 million in
the 1996 period.
-9-
<PAGE>
COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
Net revenues increased 198.9% to $55.6 million during the three months
ended September 1997 compared to $18.6 million in the corresponding 1996
period. This increase was a result of inclusion of approximately $13.5
million attributable to markets acquired from the POA Acquisition and $18.5
million is attributable to markets acquired from the Revere Acquisition, the
Matthew Acquisition, the Penn Acquisition, and the Allied Acquisition.
Revenues from the Memphis/Tunica and the Swaney Acquisitions contributed $4.1
million. The remaining $0.9 million or 4.8% increase in net revenues was a
result of higher advertising rates and occupancy levels on the Company's
signboards. Overall net revenues from tobacco advertising increased to $6.4
million in the three months ended September 1997 compared to $1.9 million in
the 1996 period. This increase was due mainly to the inclusion of tobacco
revenues from the acquired markets. As a percentage of net revenues, tobacco
advertising sales increased to 11.5% in the three months ended September 1997
compared to 10.2% in the 1996 period.
Direct cost of revenues increased to $21.7 million in the three months
ended September 1997 compared to $6.5 million in the 1996 period. The POA
Acquisition accounted for $4.4 million of the increase. The Revere
Acquisition, the Matthew Acquisition, the Penn Acquisition, the Allied
Acquisition and the Memphis/Tunica Acquisition accounted for $9.3 million. As
a percentage of net revenues, direct cost of revenues increased to 39.0% in
the three months ended September 1997 compared to 34.9% in the 1996 period.
General and administrative expenses increased to $4.4 million in the
three months ended September 1997 from $1.7 million in the 1996 period. As a
percentage of net revenues, general and administrative expenses decreased to
7.9% in the three months ended September 1997 compared to 9.1% in the 1996
period. This percentage decrease was due to the addition of the new markets'
revenues without a significant increase in staffing or other corporate
overhead expenses.
Depreciation and amortization expense increased to $15.9 million in the
three months ended September 1997 compared to $4.5 million in the 1996
period. This increase was due to significant increases in the fixed assets
and goodwill as a result of the acquisitions.
Total interest expense increased to $12.4 million in the three months
ended September 1997 compared to $2.8 million in the 1996 period. The
increase resulted from increased debt outstanding under the Company's
revolving credit facility which was incurred to finance the Revere, Matthew,
Memphis/Tunica, Penn and Allied Acquisitions and from the issuance by the
Company of $225 million 9 3/4% Senior Subordinated Notes due 2006 in October
1996 and $100 million 9 3/4% Series B Subordinated Notes due 2006 in December
1996.
The foregoing factors contributed to the Company's $1.2 million net
income in the three months ended September 1997 compared to income of $3.1
million in the 1996 period.
-10-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
In January 1997, the Company consummated the Memphis/Tunica Acquisition
and as a result acquired 2,018 advertising display faces located in and
around Memphis (TN) and Tunica County (MS) for a purchase price of
approximately $71 million plus 100,000 shares of the Parent's Common Stock.
Additionally, in January 1997, the Company consummated the Matthew
Acquisition and as a result acquired approximately 1,035 advertising display
faces located in and around Metro New York, Northern New Jersey and Hudson
Valley for a purchase price of approximately $40 million in cash.
In February 1997, the Company acquired certain assets of (i) Adcraft,
Inc. (the "Evansville Acquisition") for approximately $5.5 million in cash
and (ii) David Klein Outdoor Advertising (the "New Jersey Acquisition," and
together with the Evansville Acquisition, the "February Acquisitions") for
approximately $5.3 million in cash. As a result of the February
Acquisitions, the Company acquired approximately 135 advertising display
faces located in and around Evansville, Indiana and approximately 12 existing
advertising display faces and 35 in process display faces in New Jersey.
In March 1997, the Company acquired certain assets of TransAd, Inc. (the
"TransAd Acquisition") for approximately $8.5 million in cash. As a result
of the TransAd Acquisition the Company acquired approximately 600 transit
advertising panels in and around Memphis, Tennessee.
In June 1997, the Company acquired the stock of Penn Advertising of
Baltimore from Lamar Advertising, for approximately $46.5 million in cash.
As a result of the Penn Acquisition, the Company acquired approximately 1,450
advertising display faces located in Baltimore, Maryland.
In July 1997, the Company acquired the assets of Swaney Outdoor
Advertising, LLC for approximately $2.4 million in cash. As a result of the
Swaney Acquisition, the Company acquired approximately 143 advertising
display faces in and around Memphis, Tennessee.
In July 1997, the Company acquired the outdoor advertising assets of
Allied Outdoor Advertising, Inc. for approximately $51.0 million in cash. As
a result of the Allied Acquisition, the Company acquired approximately 90
outdoor advertising display faces in and around New York, New York.
In September 1997, the Company acquired the stock of Visual Consultants
Inc. and its subsidiary Visual Outdoor Advertising, Inc. (the "Visual
Acquisition") for approximately $2.4 million in cash. As a result of the
Visual Acquisition, the Company acquired approximately 325 advertising
display faces in and around Chattanooga, Tennessee.
-11-
<PAGE>
In May 1997, the Company increased the total commitment of its revolving
credit facility to $300 million by adding a $75 million term loan which was
drawn by the Company in order to pay down outstanding amounts owned by the
Company under its revolving credit facility. At September 30, 1997 the
Company's credit facility had approximately $175.4 million outstanding.
In August 1997, the Parent completed an offering of 5,912,500 shares of
Common Stock of which 2,109,105 were primary shares and 3,803,395 were
secondary shares (the "August Offering"). Proceeds to the Parent from the
August Offering totaled approximately $70.7 million. All of the proceeds
were used to reduce outstanding indebtedness.
Net cash provided by operating activities decreased to $24.2 million for
the nine months ended September 30, 1997 from $68.9 million for the 1996
period. Net cash provided by operating activities reflects the Company's net
income adjusted for non-cash items and the use or source of cash for the net
change in working capital.
The Company's net cash used in investing activities of $251.2 million
for the nine months ended September 30, 1997 includes cash used for
acquisitions of $128.4 million and other capital expenditures of $14.0
million. Capital expenditures have been made primarily to develop new
structures in each of the markets. The Company intends to continue to
develop new structures in its markets and to consider potential acquisitions
in the Midwest, Midsouth, Florida and East regions and contiguous markets.
Management believes that its internally generated funds, together with
available borrowings under its credit facility, will be sufficient to satisfy
its cash requirements, including anticipated capital expenditures, for the
foreseeable future. However, in the event cash from operations, together
with available funds under the Company's credit facility are insufficient to
satisfy its cash requirements, the Company may obtain funds from additional
sources of indebtedness and/or equity offerings by Parent to finance its
operations including, without limitation, additional acquisitions.
For the nine months ended September 30, 1997, $223.8 million was
provided by financing activities primarily due to the offering of common
stock by the Parent and increased borrowings under the Company's credit
facilities. For the 1996 period, $60.4 million was provided by financing
activities primarily due to the offering of common stock by the Parent and
increased borrowings under the Company's credit facilities.
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 currently evaluating the
applicability of this standard. However, the Company does not expect a
material impact on disclosures in the Company's financial statements.
-12-
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Note 5 to the financial statements of Universal Outdoor, Inc. (the
"Company") included in Part I of this report is hereby incorporated by
reference.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
NUMBER DESCRIPTION
- ------ -----------
2 Agreement and Plan of Merger Among Clear Channel Communications, Inc.,
UH Merger Sub, Inc. and Universal Outdoor Holdings, Inc., dated
October 23, 1997 (filed as Exhibit 2.1 to the Universal Outdoor
Holdings, Inc. Current Report on Form 8-K dated October 30, 1997
(Commission File No. 000-20823) and incorporated herein by reference)
3.1 Third Amended and Restated Articles of Incorporation of the Registrant
(incorporated herein by reference to Exhibit 3.1 of the Company's
Registration Statement on Form S-1 (File No. 333-12427) (the
"Registration Statement"))
3.2 Second Amended and Restated By-Laws of the Registrant (incorporated
herein by reference to Exhibit 3.2 of the Registration Statement)
27 Financial Data Schedule
- ------------------------------------------------------------------------------
(b) REPORTS ON FORM 8-K - The Registrant did not file any reports on Form 8-K
during the quarter ended September 30, 1997.
<PAGE>
SIGNATURE
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.
UNIVERSAL OUTDOOR, INC.
/s/ Brian T. Clingen
------------------------------------------
Brian T. Clingen
Vice President and Chief Financial Officer
/s/ Paul G. Simon
--------------------------------------------
Paul G. Simon
Vice President, Secretary and General Counsel
November 12, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND IN
THE COMPANY'S 10-Q FOR THE YEAR TO DATE AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
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0
0
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