-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IPmwbdYxbaDeew8P36QT6lR2w2DuvzvADyMVzuLBG6KC5LQ5gmvhb9q64QpcMm2S 6wD/aAQKPSC9eSd23x26Yg== 0000950135-97-004247.txt : 19971028 0000950135-97-004247.hdr.sgml : 19971028 ACCESSION NUMBER: 0000950135-97-004247 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970815 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971027 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LAMAR ADVERTISING CO CENTRAL INDEX KEY: 0000899045 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] IRS NUMBER: 721205791 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-12407 FILM NUMBER: 97701503 BUSINESS ADDRESS: STREET 1: 5551 CORPORATE BLVD CITY: BATON ROUGE STATE: LA ZIP: 70808 BUSINESS PHONE: 5049261000 8-K/A 1 LAMAR ADVERTISING FORM 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): AUGUST 15, 1997 LAMAR ADVERTISING COMPANY (Exact name of registrant as specified in its charter) DELAWARE 0-20833 72-1205791 (State or other jurisdiction (Commission File (IRS Employer of incorporation) Number) Identification No.) 5551 CORPORATE BOULEVARD, BATON ROUGE, LOUISIANA 70808 (Address of principal executive offices and zip code) (504) 926-1000 (Registrant's telephone number, including area code) 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On August 15, 1997, a wholly-owned subsidiary of Lamar Advertising Company (the "Company") acquired from Outdoor Systems, Inc. ("OSI"), for a cash purchase price of approximately $116.0 million (excluding approximately $2.0 million in capitalized costs), certain outdoor advertising assets that OSI had acquired from National Advertising Company, previously a wholly-owned subsidiary of Minnesota Mining and Manufacturing Company ("3M"). Pursuant to this acquisition (the "3M Acquisition"), the Company acquired approximately 1,745 bulletin displays in ten markets in the states of Arizona, California, Colorado, Georgia, Kentucky, Louisiana, Michigan, Missouri and Texas. This Form 8-K is being amended to provide the historical financial statements and related notes for the assets acquired and liabilities assumed in the 3M Acquisition as well as pro forma financial information of the Company giving effect to the 3M Acquisition. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements. The statement of assets acquired and liabilities assumed by Lamar Advertising Company of National Advertising Company from Outdoor Systems, Inc. as of August 14, 1997, as well as the related statement of revenues and expenses for the years ended December 31, 1996 and 1995 and the six month period ended June 30, 1997, are filed herewith as Exhibit 99.1 and incorporated herein by reference. (b) Pro Forma Financial Statements. The unaudited consolidated pro forma financial statements of Lamar Advertising Company giving effect to the 3M Acquisition are filed herewith as Exhibit 99.2 and incorporated herein by reference. (c) Exhibits. 2.1 Asset Purchase Agreement dated as of August 15, 1997 between The Lamar Corporation and Outdoor Systems, Inc. Previously filed as the same numbered exhibit to the initial filing of this report. 23.1 Consent of Coopers & Lybrand L.L.P. Filed herewith. 99.1 The statement of assets acquired and liabilities assumed by Lamar Advertising Company of National Advertising Company from Outdoor Systems, Inc. as of August 14, 1997, and the related statement of revenues and expenses for the years ended December 31, 1996 and 1995 and the six month period ended June 30, 1997. Filed herewith. 99.2 Unaudited consolidated pro forma financial statements of Lamar Advertising Company giving effect to the 3M Acquisition. Filed herewith. 3 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 hereunto duly authorized. Date: October 27, 1997 LAMAR ADVERTISING COMPANY By: /s/ Keith A. Istre ------------------------------------- Keith A. Istre Treasurer and Chief Financial Officer 4 EXHIBIT INDEX EXHIBIT SEQUENTIAL NO. DESCRIPTION PAGE NO. - ------- ----------- ---------- 2.1 Asset Purchase Agreement dated as of August 14, 1997 between The Lamar Corporation and Outdoor Systems, Inc. Previously filed as the same numbered exhibit to the initial filing of this report. 23.1 Consent of Coopers & Lybrand L.L.P. Filed herewith. 99.1 The statement of assets acquired and liabilities assumed by Lamar Advertising Company of National Advertising Company from Outdoor Systems, Inc. as of August 14, 1997, and the related statement of revenues and expenses for the years ended December 31, 1996 and 1995 and the six month period ended June 30, 1997. Filed herewith. 99.2 Unaudited consolidated pro forma financial statements of Lamar Advertising Company giving effect to the 3M Acquisition. Filed herewith. EX-23.1 2 CONSENT OF COOPERS AND LYBRAND LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the Registration Statement of Lamar Advertising Company on Form S-8 (File No. 333-10337) of our report dated October 17, 1997 on our audit of the National Advertising Company -- Lamar Acquisition statement of assets acquired and liabilities assumed as of August 14, 1997 and the related statement of revenues and expenses for the years ended December 31, 1996 and 1995, which report is included in this Current Report on Form 8-K/A dated October 27, 1997. /s/ Coopers & Lybrand L.L.P. Chicago, Illinois October 27, 1997 EX-99.1 3 STATEMENT OF ASSETS 1 EXHIBIT 99.1 NATIONAL ADVERTISING COMPANY -- LAMAR ACQUISITION STATEMENT OF ASSETS ACQUIRED AND LIABILITIES ASSUMED AS OF AUGUST 14, 1997 AND RELATED STATEMENT OF REVENUES AND EXPENSES FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 2 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Lamar Advertising Company We have audited the accompanying statement of assets acquired and liabilities assumed of National Advertising Company - Lamar Acquisition as of August 14, 1997, and the related statement of revenues and expenses for the years ended December 31, 1996 and 1995. These financial statements have been prepared on the basis described in Note 1 and are the responsibility of Outdoor Systems, Inc.'s ("OSI") and Lamar Advertising Company's ("Lamar") managements. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the aforementioned financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As discussed in Note 1, the accompanying financial statements have been prepared pursuant to the Asset Purchase Agreement described in Note 1, and are not intended to be a complete presentation of the assets and liabilities and revenues and expenses applicable to the portion of National Advertising Company's business acquired by Lamar from OSI. In our opinion, the financial statements referred to above, present fairly, in all material respects, the assets acquired and liabilities assumed of National Advertising Company - Lamar Acquisition as of August 14, 1997, and the revenues and expenses for the years ended December 31, 1996 and 1995, in conformity with generally accepted accounting principles. /s/ Coopers & Lybrand L.L.P. Chicago, Illinois October 17, 1997 3 NATIONAL ADVERTISING COMPANY -- LAMAR ACQUISITION STATEMENT OF ASSETS ACQUIRED AND LIABILITIES ASSUMED as of August 14, 1997 (in 000's) ASSETS ACQUIRED
Current assets: Trade receivables, less allowance of $156 $ 2,550 Inventories 72 Prepaid land rents, current portion 1,863 Other current assets 93 ------- Total current assets 4,578 Property, plant and equipment, net 13,444 Prepaid land rents, non-current portion 456 ------- Total assets acquired 18,478 ------- LIABILITIES ASSUMED Current liabilities: Trade accounts payable $ 227 Accrued payroll and related expenses 93 Deferred revenue 142 Accrued worker's compensation 214 Accrued property taxes 161 Other current liabilities 95 ------- Total liabilities assumed 932 ------- Net assets acquired $17,546 =======
The accompanying notes are an integral part of the financial statements. 2 4 NATIONAL ADVERTISING COMPANY -- LAMAR ACQUISITION STATEMENT OF REVENUES AND EXPENSES for the years ended December 31, 1996 and 1995 (in 000's)
June 30, December 31, December 31, 1997 1996 1995 -------------- ------------ ------------ (unaudited) Revenues $12,053 $26,914 $25,155 Agency commissions (1,493) (3,611) (3,386) ------- ------- ------- Net revenues 10,560 23,303 21,769 Operating expenses: Direct advertising 6,142 13,382 12,472 Selling and marketing 1,222 2,656 2,520 General and administrative 533 1,389 1,273 Depreciation 738 1,333 1,950 ------- ------- ------- Revenues in excess of operating expenses 1,925 $ 4,543 $ 3,554 ======= ======= =======
The accompanying notes are an integral part of the financial statements. 3 5 NATIONAL ADVERTISING COMPANY -- LAMAR ACQUISITION NOTES TO FINANCIAL STATEMENTS (in thousands) 1. BASIS OF PRESENTATION The statement of assets acquired and liabilities assumed by Lamar Advertising Company ("Lamar") of the National Advertising Company ("NADCO"), previously a wholly-owned subsidiary of Minnesota Mining and Manufacturing Company ("3M"), from Outdoor Systems, Inc. ("OSI") include only those accounts related to the assets sold to Lamar, pursuant to the Asset Purchase Agreement ("the Agreement"), dated as of August 15, 1997, between Lamar and OSI. These acquired assets and liabilities assumed and related revenues and expenses are hereafter referred to as "Lamar Acquisition." Lamar Acquisition owns and operates advertising display faces in certain outdoor media markets in the United States and sells the advertising space to national, regional and local advertisers throughout the United States. The accompanying financial statements present the assets acquired and liabilities assumed and the revenues and expenses of Lamar Acquisition, as described above, and are presented on the accrual basis of accounting. The financial statements exclude amounts related to federal and state income taxes and interest income. Net revenues were specifically identifiable to the Lamar Acquisition advertising display faces acquired. Certain costs and expenses, including ground rent and depreciation, are specifically identifiable to the Lamar Acquisition assets acquired. NADCO's historical financial statements include allocations of certain costs and expenses from 3M based on services provided by 3M to NADCO. Lamar Acquisition has been allocated a share of these 3M costs and expenses and other costs and expenses from NADCO, generally as follows: -- sales related costs and expenses have been allocated by market area based on the percentage of Lamar Acquisition's advertising display faces, by market area, in relation to NADCO's total advertising display faces, by market area for each respective year; and -- marketing and general and administrative costs and expenses have been allocated based on the percentage of Lamar Acquisition's revenues in relation to NADCO's total revenues, for each respective year. The accompanying financial statements may not necessarily be indicative of the assets acquired and liabilities assumed and revenues and expenses of Lamar Acquisition in the future or what the assets acquired and liabilities assumed and revenues and expenses would have been had Lamar Acquisition been operated as a separate, independent entity during the periods presented. 4 6 NATIONAL ADVERTISING COMPANY -- LAMAR ACQUISITION NOTES TO FINANCIAL STATEMENTS (in thousands) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REVENUE RECOGNITION Lamar Acquisition's revenues are generated from contracts with advertisers generally covering periods ranging from one to thirty-six months. Lamar Acquisition recognizes revenues ratably over the contract term and defers customer prepayment of rental fees. PREPAID LAND RENT Most of Lamar Acquisition's advertising structures are located on leased land. Land rents are generally paid in advance for periods ranging from one to twelve months. Prepaid rents are expensed ratably over the related rent term. INVENTORIES Inventories consist principally of parts and materials for the construction and replacement of outdoor signage. Inventories are stated at the lower of cost or market, cost being determined using the first-in, first-out (FIFO) method. PROPERTY, PLANT AND EQUIPMENT Property, plant, and equipment are stated at cost. Depreciation is recorded using the straight-line method over estimated useful lives of the assets. Repairs and maintenance are charged to expense when incurred. Expenditures for significant improvements are capitalized. IMPAIRMENT OF LONG-LIVED ASSETS Lamar Acquisition assesses the impairment of its long-lived assets, including property and equipment, whenever economic events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. Long-lived assets are considered to be impaired when the sum of the expected future operating cash flows, undiscounted and without interest charges, is less than the carrying amounts of the related assets. PENSION AND POSTRETIREMENT PLANS NADCO employees participated in 3M pension and postretirement plans. NADCO has accounted for its participation in the 3M plans as a participation in multi-employer plans. Accordingly, the statement of revenues and expenses includes an allocation from 3M for these costs that is comparable to Lamar Acquisition's required contribution to the plans for the periods presented. Additionally, no assets and liabilities have been reflected in the statement of assets acquired and liabilities assumed related to the overall 3M pension and postretirement plans since it is not practicable to segregate the amounts applicable to Lamar Acquisition. 5 7 NATIONAL ADVERTISING COMPANY -- LAMAR ACQUISITION NOTES TO FINANCIAL STATEMENTS, CONTINUED (in thousands) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED ESTIMATES 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 acquired and liabilities assumed and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. 3. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment at August 14, 1997 consists of the following: Signs, principally outdoor advertising structures $35,992 Land 287 Buildings and leasehold improvements 1,075 Machinery and equipment 396 Furniture and fixtures 776 ------- 38,526 Accumulated depreciation and amortization (25,082) ------- Property, plant and equipment, net $13,444 =======
6 8 NATIONAL ADVERTISING COMPANY -- LAMAR ACQUISITION NOTES TO FINANCIAL STATEMENTS, CONTINUED (in thousands) 4. OPERATING LEASES Rental expense for operating leases totaled $5,637 and $5,054, including contingent rental payments of $364 and $303 for the years ended December 31, 1996 and 1995, respectively. Contingent payments are primarily based on related signage revenues. Land leases are generally entered into for terms of 10 years or less. Minimum future lease commitments at December 31, 1996 for the next five years are as follows:
Land Leases ------- 1997 $ 5,086 1998 5,086 1999 5,086 2000 5,086 2001 5,086 ------- Total minimum lease payments $25,430 =======
The total minimum lease payments for land leases assumes that Lamar Acquisition will continue to renew, at current lease rates, its existing leases which may expire during the five years presented. The amounts of minimum lease commitments were not available as of August 14, 1997; however, such amounts would be similar to the amounts as of December 31, 1996 adjusted for normal lease activity including acquisitions, renewals and terminations. 5. EMPLOYEE BENEFITS PENSION PLANS Substantially all of NADCO employees participated in defined benefit pension plans sponsored by 3M. 3M's pension benefits are based principally on an employee's years of service and compensation near retirement. The pension expense allocated to Lamar Acquisition was approximately $210 and $185 in 1996 and 1995, respectively. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS Under various 3M plans, NADCO provided health care and life insurance benefits to substantially all employees who reached retirement age while employed by 3M, their covered dependents and beneficiaries. Postretirement benefit expense has been allocated to Lamar Acquisition for approximately $106 and $83 in 1996 and 1995, respectively. 7 9 NATIONAL ADVERTISING COMPANY -- LAMAR ACQUISITION NOTES TO FINANCIAL STATEMENTS, CONTINUED (in thousands) 5. EMPLOYEE BENEFITS, CONTINUED DEFINED CONTRIBUTION PLANS Employees of NADCO also participated in a 3M sponsored Employee Savings Plan under section 401(k) of the Internal Revenue Code. Under this plan, 3M matched employee contributions of up to 6 percent of compensation at rates ranging from 10 to 85 percent depending upon 3M financial performance. 3M's matching contributions to the employee savings plan were funded through an employee stock ownership plan. Lamar Acquisition's allocation of expense related to the Employee Savings Plan was approximately $54 and $46 in 1996 and 1995, respectively. 6. TRANSACTIONS WITH RELATED PARTIES 3M provided NADCO with various services, including certain corporate accounting, finance and administration, facility management, human resource and legal. The cost allocations to Lamar Acquisition for such services were approximately $1,028 and $978 for 1996 and 1995, respectively. The amounts allocated are based on historical or actual usage of services relative to the usage of the other participating affiliated businesses. Additionally, 3M allocated charges to NADCO for its share of the annual self-insurance expense, consisting of workers' compensation, auto and general liability claims. This expense allocation is based upon the ratio of the NADCO claims and loss development to the total amount of 3M claims and loss development. The self-insurance expense allocated to Lamar Acquisition was approximately $720 and $674 for 1996 and 1995, respectively. NADCO also rented its corporate headquarters and was charged for the use of other 3M facilities. The expense allocated to Lamar Acquisition was approximately $585 and $462 for 1996 and 1995, respectively. Personnel of NADCO used certain automobiles owned by 3M. Lamar Acquisition recognized approximately $111 and $100 in allocated rental expense during 1996 and 1995, respectively, related to the use of these assets. 8 10 NATIONAL ADVERTISING COMPANY -- LAMAR ACQUISITION NOTES TO FINANCIAL STATEMENTS, CONTINUED (in thousands) 7. LITIGATION AND CLAIMS Various legal actions and claims are pending or may be instituted or asserted against Lamar Acquisition in the future, including those arising out of condemnation matters, permit appeals, property owner disputes, lease disputes and property tax issues. Liabilities have been recorded for these matters to the extent that it is probable that Lamar Acquisition will be found liable and the minimum amount of liability is determinable. Management believes that the ultimate outcome of all pending litigation, after considering recorded liabilities, would not have a material adverse effect on Lamar Acquisition's assets and liabilities or revenues and expenses. 9 EX-99.2 4 UNAUDITED PRO FORMA STATEMENT 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 the Company. The unaudited pro forma condensed consolidated statements of earnings for the year ended October 31, 1996 and for the six month period ended June 30, 1997 give effect to (i) the acquisitions of FKM Advertising Co., Inc. ("FKM"), Outdoor East, L.P. ("Outdoor East") and Penn Advertising, Inc. ("Penn") (the "Recent Acquisitions"), (ii) the Company's initial public equity offering in August 1996 (the "IPO") and the application of the net proceeds therefrom, (iii) the Company's November 1996 public offerings of 2,530,000 shares of Class A Common Stock and $255 million of 9.625% Senior Subordinated Notes due 2006 (the "1996 Notes") and the application of the net proceeds therefrom, (iv) the tender offer that retired in November 1996 approximately $98.8 million of the $100 million outstanding 11% Senior Secured Notes due 2003 (the "Transactions"), (v) the 3M Acquisition and (vi) the issuance in September 1997 (the "1997 Note Offering") of $200 million of 8.625% Senior Subordinated Notes due 2007 (the "1997 Notes"), as if each had occurred on November 1, 1995. For purposes of the pro forma financial information (i) the statement of earnings (loss) of the Company for its fiscal year ended October 31, 1996 has been combined with the statements of earnings of Outdoor East and FKM for the twelve months ended September 30, 1996, the statement of earnings of Penn for its fiscal year ended December 31, 1996 and the statement of revenues and direct expenses for the assets acquired in the 3M Acquisition for the twelve month period ended December 31, 1996, (ii) the statement of earnings of the Company for the six months ended June 30, 1997 has been combined with the statement of earnings of Penn for the three months ended March 31, 1997 (the period prior to the acquisition) and the statement of revenues and direct expenses for the assets acquired in the 3M Acquisition for the six month period ended June 30, 1997 and (iii) the balance sheet of the Company as of June 30, 1997 has been combined with the statement of assets acquired and liabilities assumed in the 3M Acquisition and the application of net proceeds of the 1997 Note Offering. The unaudited pro forma condensed consolidated financial statements give effect to the Recent Acquisitions and the 3M Acquisition under the purchase method of accounting. 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 transactions 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 notes thereto. 2 LAMAR ADVERTISING COMPANY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS) YEAR ENDED OCTOBER 31, 1996 (dollars in thousands, except per share data)
RECENT ACQUISITIONS IPO AND THE ------------------------------------ ACQUISITION LAMAR TRANSACTIONS PENN FKM O/D EAST ADJUSTMENTS ---------- ------------ --------- ------------ -------- ----------- Revenues Outdoor advertising, net $ 119,900 $ $ 32,814 $ 7,376 $ 12,142 $ (3,405)(4) Other income 702 47 109 100 (209)(4)(5) ---------- --------- --------- --------- --------- --------- 120,602 0 32,861 7,485 12,242 (3,614) ---------- --------- --------- --------- --------- --------- Direct advertising expenses 41,184 9,575 2,214 3,942 2,671 (4)(6) General and administrative expenses 29,466 10,730 1,632 3,510 (6,768)(4)(6) Depreciation and Amortization 15,549 125 (1) 3,221 2,453 2,941 8,398 (7) ---------- --------- --------- --------- --------- --------- 86,199 125 23,526 6,299 10,393 4,301 ---------- --------- --------- --------- --------- --------- Operating income 34,403 (125) 9,335 1,186 1,849 (7,915) ---------- --------- --------- --------- --------- --------- Other expense (income) Interest income (240) 0 (24)(4) Interest expense 15,441 11,740 (2)(3) 4,360 1,965 2,672 (5,450)(8) Loss on disposition of assets 1,012 0 4 281 (4) Other expenses 242 1,064 10 985 (1,780)(4)(11) ---------- --------- --------- --------- --------- --------- 16,455 11,740 5,424 1,979 3,657 (6,973) ---------- --------- --------- --------- --------- --------- Earnings (loss) before income taxes 17,948 (11,865) 3,911 (793) (1,808) (942) Income tax expense (benefit) 7,099 (4,746)(12) 1,117 (157) 0 1,339 (12) ---------- --------- --------- --------- --------- --------- Net earnings (loss) $ 10,849 $ (7,119) $ 2,794 $ (636) $ (1,808) $ (2,281) ========= ========= ========= ========= ========= Preferred stock dividends 365 ---------- Net earnings (loss) applicable to common stock $ 10,484 ========== Net earnings (loss) per common share $0.38 ========== Weighted average number of shares outstanding 27,562,564 5,843,543 ========== ========= PRO FORMA 3M COMBINED ADJUSTMENTS PRO FORMA PRO FORMA ACQUISITION AS ADJUSTED FOR 1997 NOTE COMBINED COMBINED 3M ADJUSTMENTS FOR 3M OFFERING AS ADJUSTED ---------- --------- ----------- ----------- ------------- ------------ Revenues Outdoor advertising, net $ 168,827 $ 23,303 $ $ 192,130 $ $ 192,130 Other income 749 749 749 ---------- --------- --------- ---------- --------- ---------- 169,576 23,303 0 192,879 0 192,879 ---------- --------- --------- ---------- --------- ---------- Direct advertising expenses 59,586 16,038 (3,271)(15) 72,353 72,353 General and administrative expenses 38,570 1,389 (1,389)(15) 38,570 38,570 Depreciation and Amortization 32,687 1,333 7,701 (16) 41,721 525 (10) 42,246 ---------- --------- --------- ---------- --------- ---------- 130,843 18,760 3,041 152,644 525 153,169 ---------- --------- --------- ---------- --------- ---------- Operating income 38,733 4,543 (3,041) 40,235 (525) 39,710 ---------- --------- --------- ---------- --------- ---------- Other expense (income) Interest income (264) (264) (264) Interest expense 30,728 8,550 (17) 39,278 5,251 (9) 44,529 Loss on disposition of assets 1,297 1,297 1,297 Other expenses 521 521 521 ---------- --------- --------- ---------- --------- ---------- 32,282 0 8,550 40,832 5,251 46,083 ---------- --------- --------- ---------- --------- ---------- Earnings (loss) before income taxes 6,451 4,543 (11,591) (597) (5,776) (6,373) Income tax expense (benefit) 4,652 (2,819)(12) 1,832 (2,310)(12) (478) ---------- --------- --------- ---------- --------- ---------- Net earnings (loss) $ 1,799 $ 4,543 $ (8,772) $ (2,429) $ (3,466) $ (5,895) ========= ========= ========= Preferred stock dividends 365 365 365 ---------- ---------- ---------- Net earnings (loss) applicable to common stock $ 1,434 $ (2,794) $ (6,260) ========== ========== ========== Net earnings (loss) per common share $ 0.04 $ (0.08) $ (0.19) ========== ========== ========== Weighted average number of shares outstanding 33,406,107 33,406,107 33,406,107 ========== ========== ==========
3 LAMAR ADVERTISING COMPANY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS) SIX MONTHS ENDED JUNE 30, 1997 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
ACQUISITION PRO FORMA LAMAR PENN ADJUSTMENTS COMBINED 3M ---------- ---------- ----------- ---------- ---------- Revenues Outdoor advertising, net $ 87,644 $ 6,480 $ (639)(4) $ 93,485 $ 10,560 Other income 311 20 (4)(4) 327 ---------- ---------- ---------- ---------- ---------- 87,955 6,500 (643) 93,812 10,560 ---------- ---------- ---------- ---------- ---------- Direct advertising expenses 28,950 2,412 488 (4)(6) 31,850 7,364 General and administrative expenses 20,081 2,240 (1,195)(4)(6) 21,126 533 Depreciation and Amortization 17,727 727 1,709 (7) 20,163 738 ---------- ---------- ---------- ---------- ---------- 66,758 5,379 1,002 73,139 8,635 ---------- ---------- ---------- ---------- ---------- Operating income 21,197 1,121 (1,645) 20,673 1,925 ---------- ---------- ---------- ---------- ---------- Other expense (income) Interest income (1,421) 1,045 (4)(13) (376) Interest expense 15,404 976 (93)(8) 16,287 Loss on disposition of assets 742 0 3 (4) 745 Other expenses 177 287 (287)(4) 177 ---------- ---------- ---------- ---------- ---------- 14,902 1,263 668 16,833 0 ---------- ---------- ---------- ---------- ---------- Earnings (loss) before income taxes 6,295 (142) (2,313) 3,840 1,925 Income tax expense (benefit) 3,414 (50) (483)(12) 2,881 ---------- ---------- ---------- ---------- ---------- Net earnings (loss) $ 2,881 $ (92) $ (1,830) $ 959 $ 1,925 ========== ========== ========== Preferred stock dividends 274 274 ---------- ---------- Net earnings (loss) applicable to common stock $ 2,607 $ 685 ========== ========== Net earnings (loss) per common share $ 0.08 $ 0.02 ========== ========== Weighted average number of shares outstanding 31,840,641 31,840,641 ========== ========== PRO FORMA 3M COMBINED ADJUSTMENTS PRO FORMA ACQUISITION AS ADJUSTED FOR 1997 NOTE COMBINED ADJUSTMENTS FOR 3M OFFERING AS ADJUSTED ---------- ----------- ----------- ----------- Revenues Outdoor advertising, net $ $ 104,045 $ $ 104,045 Other income 327 327 ---------- ---------- ---------- --------- 0 104,372 0 104,372 ---------- ---------- ---------- --------- Direct advertising expenses (1,539)(15) 37,675 37,675 General and administrative expenses (533)(15) 21,126 21,126 Depreciation and Amortization 3,817 (16) 24,718 262 (10) 24,980 ---------- ---------- ---------- --------- 1,745 83,519 262 83,781 ---------- ---------- ---------- --------- Operating income (1,745) 20,853 (262) 20,591 ---------- ---------- ---------- --------- Other expense (income) Interest income (376) (376) Interest expense 4,275 (17) 20,562 1,770 (9) 22,332 Loss on disposition of assets 745 745 Other expenses 177 177 ---------- ---------- ---------- --------- 4,275 21,108 1,770 22,878 ---------- ---------- ---------- --------- Earnings (loss) before income taxes (6,020) (255) (2,032) (2,287) Income tax expense (benefit) (1,638)(12) 1,243 (813)(12) 430 ---------- ---------- ---------- --------- Net earnings (loss) $ (4,382) $ (1,498) $ (1,219) $ (2,717) ========== ========== ========== ========= Preferred stock dividends 274 274 ---------- --------- Net earnings (loss) applicable to common stock $ (1,772) $ (2,991) ========== ========= Net earnings (loss) per common share $ (0.06) $ ($0.09) ========== ========== Weighted average number of shares outstanding 31,840,641 31,840,641 ========== ==========
4 LAMAR ADVERTISING COMPANY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET JUNE 30, 1997 (DOLLARS IN THOUSANDS)
ADJUSTMENTS PRO FORMA PRO FORMA PRO FORMA FOR 1997 NOTE COMBINED AS LAMAR 3M ADJUSTMENTS COMBINED OFFERING ADJUSTED ------- -------------- ----------- --------- ------------- ----------- Cash $ 7,748 $ $(4,000)(18) $ 3,748 $ (574)(18) $ 3,174 Net receivables 25,840 2,550 28,390 28,390 Other current assets 8,757 1,958 10,713 10,713 -------- ------- ------- -------- ------- -------- Total current assets 42,345 4,506 (4,000) 42,851 (574) 42,277 -------- ------- ------- -------- ------- -------- Property, plant and equipment, net 280,603 13,516 13,932 (19) 308,051 308,051 -------- ------- ------- -------- ------- -------- Investment securities 870 870 870 Intangibles 195,874 86,522 (20) 282,396 5,250(20) 287,646 Other assets 5,093 456 5,549 5,549 -------- ------- ------- -------- ------- -------- Total assets $524,785 $18,478 $96,454 $639,717 $ 4,676 $644,393 ======== ======= ======= ======== ======= ======== Current maturities of long-term debt $ 4,161 $ $ $ 4,161 $ $ 4,161 Other current liabilities 19,431 932 20,363 20,363 -------- ------- ------- -------- ------- -------- 23,592 932 0 24,524 0 24,524 -------- ------- ------- -------- ------- -------- Long-term debt 412,982 114,000 (21) 526,982 4,676(21) 531,658 Deferred income - Long term 827 827 827 Other liabilities 2,147 2,147 2,147 Deferred tax liability 19,498 19,498 19,498 -------- ------- ------- -------- ------- -------- Total Liabilities 459,046 932 114,000 573,978 4,676 578,654 -------- ------- ------- -------- ------- -------- Net assets acquired 17,546 (17,546)(22) -------- ------- ------- -------- ------- -------- Stockholders' equity 65,739 65,739 65,739 -------- ------- ------- -------- ------- -------- Total liabilities and stockholders' equity $524,785 $18,478 $96,454 $639,717 $ 4,676 $644,393 ======== ======= ======= ======== ======= ========
5 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands) For purposes of determining the pro forma effect of the Transactions, the Recent Acquisitions, the 3M Acquisition and the 1997 Note Offering on the Company's unaudited Condensed Consolidated Statements of Earnings for the year ended October 31, 1996 and the six months ended June 30, 1997, the following adjustments have been made:
YEAR ENDED SIX MONTHS OCTOBER 31, 1996 JUNE 30, 1997 ---------------- ------------- (1) To record the net effect on amortization expense related to the debt issuance fees for the November 1996 Note Offering and the elimination of amortization expense related to the November 1996 Tender Offer $ 125 (2) To eliminate historical interest expense related to the Senior Secured Notes and record interest expense on the 1996 Notes: Interest expense on 1996 Notes 24,544 Interest expense related to Senior Secured Notes (10,870) 13,674 ------- (3) To record incremental interest expense on the $20 million ten-year subordinated notes issued to existing shareholders at the time of the IPO in order to give effect as if the transaction had taken place at the beginning of the period and eliminate historical interest expense related to the Company's credit facility that was paid off at the time of the IPO (1,934) (4) To reclassify amounts in order to conform to the Company's presentation: Outdoor advertising, net $(3,405) $(639) Other income (109) (4) Direct expenses 2,946 559 General and administrative expenses (5,653) (914) Interest income (24) (4) Loss on disposition of assets 281 3 Other expenses (1,064) (287) (5) To eliminate management fee income on Outdoor East historical financial statements that would not have been earned had the Outdoor East acquisition been consummated on November 1, 1995 (100) (6) To eliminate management fees charged by Penn's former parent company included in the historical financial statements that would not have existed had the transaction taken place in the beginning of the period: Direct expenses (275) (71) General and administrative (1,115) (281)
6 (7) Represents incremental amortization and depreciation due to the application of purchase accounting in recording the Recent Acquisitions. Depreciation and amortization are calculated using accelerated and straight line methods over the estimated useful lives of the assets $8,398 $1,709 (8) Represents the net effect on interest expense resulting from (i) additional borrowings assumed in the acquisitions and (ii) the elimination of interest expense on debt not assumed in the acquisitions (5,450) (93) (9) To eliminate historical interest expense under the Senior Credit Facility and to record interest expense on the Notes at an effective rate of 8.725%: Interest expense on the Initial Offering 17,334 8,667 Interest expense under the Senior Credit Facility (12,083) (6,897) 5,251 1,770 ------- ------ (10) The increase in amortizing debt issuance costs associated with the 1997 Note Offering 525 262 (11) To eliminate costs associated with the sale and reorganization of Outdoor East which would not have been incurred had the Outdoor East acquisition been consummated on November 1, 1995 (716) (12) To record the tax effect on pro forma statements for: The Transactions (4,746) Recent Acquisitions 1,339 (483) 3M Acquisition (2,819) (1,638) The 1997 Note Offering (2,310) (813) (13) To eliminate interest income on the Company's historical financial statements that would not have existed had the Recent Acquisitions taken place at the beginning of the period 1,049 (14) The accompanying pro forma results of operations do not give effect to the extraordinary loss on the extinguishment of debt of $9,526, net of income tax benefit of $6,351 for the year ended October 31, 1996 (15) To record (a) a decrease in payroll and payroll related costs in direct advertising and general and administrative expense categories due to the termination of employees in the following functions; and (b) the elimination of general corporate allocations not considered attributable to assets acquired as follows. Direct Advertising: Elimination of production and sales overhead functions and corporate overhead allocations (2,077) (1,053) Elimination of national sales and marketing costs (1,194) (486) ------ ------ Total direct advertising (3,271) (1,539) ====== ====== General and Administrative: Elimination of national office function, accounting and administrative personnel and corporate allocations (1,389) (533) ====== ======
7 (16) Represents incremental amortization and depreciation due to the application of purchase accounting in recording the 3M acquisition. 7,701 3,817 ======= ========= (17) Represents the incremental interest expense resulting from the borrowing of $114 million used to finance the 3M Acquisition, as if the transaction had taken place at the beginning of the period. 8,550 4,275 ======= ========= For purposes of determining the pro forma effect of the 3M Acquisition and the 1997 Note Offering on the Company's unaudited Condensed Consolidated Balance Sheet as of June 30, 1997, the following adjustments have been made:
ADJUSTMENTS PROFORMA FOR THE ADJUSTMENTS 1997 NOTE OFFERING ----------- ------------------ (18) Cash: Net proceeds from the 1997 Note Offering $ 193,426 To record cash used to pay off loans under the Senior Credit Facility (194,000) --------- (574) ========= To record cash used to finance the 3M Acquisition (4,000) ======= (19) Property, Plant and Equipment, net To record the increase in property, plant and equipment from the allocation of the purchase price of the 3M Acquisition 13,932 ======= (20) Intangibles: To record capitalized fees of the Initial Offering 5,250 ========= To record intangibles resulting from the allocation of the purchase price of the 3M Acquisition 86,522 ======= (21) Long-term debt: To record payoff of loans under the Senior Credit Facility (194,000) To record effect of the issuance of the 1997 Notes 198,676 --------- 4,676 ========= To record the borrowings under the senior credit facility used to finance the 3M Acquisition. 114,000 ======= (22) Net assets acquired: To eliminate historical net assets of 3M. (17,546) =======
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