UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the period ended April 30, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _______ to _______
Commission file number 33-59624
LAMAR ADVERTISING COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 72-1205791
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
5551 Corporate Blvd.,
Baton Rouge, LA 70808 70806
(Address of principal (Zip Code)
executive officers)
Registrant's telephone number, including area code (504) 926-1000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding as of
Class June 11, 1996
Voting Class A Common Stock,
no par value 31,432.46
CONTENTS
Page
PART I - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
April 30, 1996 (unaudited) and October
31, 1995 1 - 2
Condensed Consolidated Statements of Earnings
Three Months ending April 30, 1996 and
1995 and Six Months ending April 30, 1996 and
1995 (unaudited) 3
Condensed Consolidated Statements of Cash Flows
Six Months ending April 30, 1996 and 1995
(unaudited) 4 - 5
Notes to Condensed Consolidated Financial
Statements 6 - 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 - 10
PART II - OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders 11
ITEM 6. Exhibits and Reports on Form 8-K 11
Signatures 11
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
LAMAR ADVERTISING COMPANY AND
SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
April 30, October 31,
1996 1995
(Unaudited)
ASSETS
Cash and cash equivalents $ 1,752 5,886
Receivables
Trade accounts 14,000 11,292
Affiliates, related parties
and employees 450 583
Other 81 109
Less allowance for doubtful accounts ( 872) ( 551)
Net receivables 13,659 11,433
Prepaid expenses 1,145 1,247
Other current assets 1,689 1,266
Total current assets 18,245 19,832
Property, plant and equipment 183,270 168,402
Less accumulated depreciation
and amortization ( 81,888) ( 77,524)
Net property, plant and equipment 101,382 90,878
Intangible assets 14,548 13,406
Receivables 806 918
Deferred taxes 4,043 5,951
Other assets 3,336 2,900
$142,360 133,885
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Trade accounts payable $ 2,191 2,435
Accrued expenses 7,014 9,733
Current maturities of long- term
debt 4,617 3,479
Deferred income 3,259 2,448
Total current liabilities 17,081 18,095
Long term debt 151,673 142,572
Deferred income 754 749
Other liabilities 1,140 623
Total liabilities 170,648 162,039
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LAMAR ADVERTISING COMPANY AND
SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
April 30, October 31,
1996 1995
(Unaudited)
STOCKHOLDERS' DEFICIT
Class A preferred stock, par
value $638, 63.80 cumulative,
authorized 10,000 shares issued
and outstanding, 5,719.49 shares
and 0 shares at April 30, 1996
and October 31, 1995, respectively 3,649 0
Class A common stock, no par
value, $10 stated value.
Authorized 100,000 shares;
issued and outstanding 31,432.46
shares and 41,599.36 shares
outstanding at April 30, 1996
and October 31, 1995, respectively 315 416
Class B common stock, no par
value, $10 stated value.
Authorized 100,000 shares;
issued and outstanding 0 shares
and 198 shares at April 30, 1996
and October 31, 1995, respectively 0 2
Accumulated deficit ( 32,252) ( 28,572)
Stockholders' Deficit ( 28,288) ( 28,154)
Total liabilities and
stockholders' deficit $142,360 133,885
======= =======
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LAMAR ADVERTISING COMPANY AND
SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
Three Months Six Months
Ending April 30, Ended April 30,
1996 1995 1996 1995
Revenues
Net advertising revenue $28,838 25,390 56,261 49,686
Rental income 180 154 354 298
Management fees 15 7 30 15
29,033 25,551 56,645 49,999
Operating expenses
Outdoor advertising:
Direct advertising
expenses 10,049 9,043 20,893 18,184
Selling, general and
administrative expenses 7,004 6,667 14,695 13,243
Depreciation and amortization 3,641 3,609 7,028 6,768
20,694 19,319 42,616 38,195
Operating income 8,339 6,232 14,029 11,804
Non-operating income
(expense):
Interest income 48 40 101 81
Interest expense ( 4,025) ( 3,957) ( 7,852)( 7,857)
Loss on disposition
of assets ( 493) ( 635) ( 581)( 816)
Other expenses ( 94) ( 138) ( 246)( 410)
( 4,564) ( 4,690) ( 8,578)( 9,002)
Earnings before
income taxes 3,775 1,542 5,451 2,802
Income tax(expense)benefit ( 1,515) 751 ( 2,190) 1,767
Net earnings $ 2,260 2,293 3,261 4,569
======= ======= ======= =======
Preferred stock dividends ( 91) 0 ( 182) 0
Net income applicable to
common stock 2,169 2,293 3,079 4,569
======= ======= ======= =======
Earnings per common
share, Primary $ 65.76 52.88 84.53 105.36
======= ======= ======= =======
Weighted average common
shares outstanding 32,981 43,364 36,429 43,364
======= ======= ======= =======
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LAMAR ADVERTISING COMPANY AND
SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
Six Months Ending
April 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings: $ 3,261 4,569
Adjustments to reconcile net earnings
to net cash provided by
operating activities:
Depreciation and amortization 7,028 6,768
Loss on disposition of assets 581 816
Deferred taxes 1,908 ( 2,208)
Provision for doubtful accounts 621 203
Increase in receivables ( 2,608) ( 2,854)
(Increase) Decrease in prepaid
expenses 67 ( 192)
(Increase) decrease in other assets ( 323) ( 296)
Increase (decrease) in trade
accounts payable ( 243) 1
Decrease in accrued expenses ( 2,718) ( 1,880)
Increase (decrease) in other
liabilities 95 ( 1)
Increase in deferred income 817 51
Net cash provided by operating
activities 8,486 4,977
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in notes receivable ( 206) ( 4)
Outdoor acquisitions ( 7,043) ( 2,329)
Capital expenditures ( 10,557) ( 5,044)
Proceeds from disposition of assets 236 558
Purchase of intangible assets ( 833) ( 211)
Net cash used in investing
activities ($18,403) ($ 7,030)
- 4 -
LAMAR ADVERTISING COMPANY AND
SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
Six Months Ending
April 30,
1996 1995
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt ($ 1,821) ( 3,605)
Proceeds from issuance of notes
payable to banks 16,000 1,000
Principal payments on notes payable to
banks ( 5,000) 0
Stock redemption ( 2,964) 0
Dividends ( 432) ( 250)
Net cash provided by (used in)
financing activities 5,783 ( 2,855)
Net decrease in cash and cash
equivalents ( 4,134) ( 4,908)
Cash and cash equivalents at beginning
of year 5,886 8,016
Cash and cash equivalents at end of
period $ 1,752 3,108
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 7,917 7,879
======== =======
Cash paid for state and
federal income taxes $ 542 490
======== =======
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LAMAR ADVERTISING COMPANY AND
SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICY
The information included in the foregoing interim financial
statements is unaudited. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, necessary
for a fair presentation of financial position and results of
operations for the interim periods presented have been reflected
herein. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the entire
year.
Certain amounts in the prior periods consolidated financial
statements have been reclassified to conform with the current year
presentation. These reclassifications had no effect on previously
reported net earnings.
Separate financial statements of the guarantor subsidiaries are
not included because such subsidiaries are jointly and severally
liable, and that the aggregate assets, liabilities, earnings and
equity of the guarantor subsidiaries are substantially equivalent
to the assets, liabilities, earnings and equity of the parent on a
consolidated basis.
2. INCOME TAXES
Lamar Advertising Company files a consolidated Federal income
tax return which includes all of its qualifying subsidiaries.
Income tax expense for the period is based on the estimates of the
Company's annual effective tax rate applied to net income for the
period.
3. STOCK TRANSACTIONS
On December 30, 1995, the Certificate of Incorporation of the
Company was amended to authorize 10,000 shares of Class A preferred
stock with a par value of $638 and no voting rights. The Class A
preferred stock dividends are cumulative and are priority to Class
A and Class B common stock dividends at the rate of $15.95 per
share per quarter.
As of December 30, 1995, 5,719.49 shares of Class A common
stock with a $10 per share stated value were converted into
5,719.49 shares of Class A preferred stock with a $638 per share
par value. This conversion resulted in a $3.6 million charge to
accumulated deficit.
On March 1, 1996, 4,447.41 shares of Class A common stock and
198 shares of Class B common stock, $10 stated value, were redeemed
at a price of $638 per share. This redemption resulted in a $3.0
million charge to accumulated deficit.
- 6 -
4. SUBSEQUENT EVENTS
The Company is preparing for an initial public offering and on
June 7, 1996, as required under the Securities Act of 1933, filed
a Registration Statement on Form S-1 with the Securities and
Exchange Commission.
-7-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended April 30, 1996, net cash provided by
operating activities was $8.5 million, a $3.5 million increase from
$5.0 million in the corresponding period of 1995. The increase was
due primarily to a $4.1 million increase in deferred taxes due to
the benefit of the Company's net operating loss carryforward having
been fully recognized at year end October 31, 1995, and a $0.8
million increase in accrued expenses offset by a $1.3 million
decrease in net earnings for the six months ended April 30, 1996
compared to the same period in fiscal 1995. Net cash used in
investing activities increased $11.4 million for the six months
ended April 30, 1996 as compared to the same period in 1995 due to
a $5.5 million increase in capital expenditures, a $4.7 million
increase in purchase of new markets and a $0.6 million increase in
purchase of intangible assets. Net cash provided by financing
activities increased $8.6 million for the six months ended April
30, 1996 as compared to the same period in 1995. The increase was
due to the increase in borrowings of $10.0 million under revolving
credit facilities to finance capital expenditures, purchase new
markets and meet seasonal operating requirements. A $1.8 million
decrease in principal payments on long-term debt was partially
offset by a $3.0 million stock redemption.
During fiscal year 1995, the Company was awarded new state
logo franchises in the following four states: Georgia, Minnesota,
South Carolina and Virginia. In addition, during fiscal 1996, the
state of Texas expanded its existing program, which is currently
run by the Company, and awarded the expansion contract to the
Company. Due to the capital needed in 1996 to fund these new
franchises, the Company amended its existing bank credit agreement
effective October 1995, partially deferring short-term principal
payments. In December 1995, the Company entered into a $15 million
reducing credit line with its bank group. This line may only be
used to finance the cost of new logo franchises awarded to the
Company. As of April 30, 1996, the Company had borrowed
approximately $6.5 million to fund the development of additional
logo franchises in Georgia, Minnesota, South Carolina and Virginia.
-8-
RESULTS OF OPERATIONS
Six Months Ended April 30, 1996 Compared to Six Months Ended April
30, 1995
Net revenues increased $6.6 million or 13.3% to $56.6 million
for the six months ended April 30, 1996 compared to $50.0 million
for the same period in 1995. This increase was primarily a result
of the $4.1 million increase in outdoor advertising net revenues.
In addition, revenues from the logo sign business increased $2.2
million due to the continued development of that program.
Operating expenses, exclusive of depreciation and
amortization, increased $4.2 million or 13.2% for the six months
ended April 30, 1996 as compared to the same period in 1995. This
increase was the result of an increase in health insurance rates,
increases in personnel costs, sign site rent, graphics expense,
other costs related to the increase in revenue and additional
operating expenses related to outdoor asset acquisitions and the
continued development of the logo sign business.
Depreciation and amortization expense increased $0.3 or 3.8%
from $6.8 million for the six months ended April 30, 1995 to $7.0
for six months ended April 30, 1996. Interest expense remained
constant for both periods.
Due to the above factors, operating income increased $2.2
million or 18.8% to $14.0 million for six months ended April 30,
1996 from $11.8 million for the same period in 1995.
Income tax expense for the six months ended April 30, 1996
increased $4.0 million over the same period in 1995. For the past
several years the Company has had a substantial net operating loss
carryforward. The benefit of the Company's net operating loss
carryforward was fully recognized as of October 31, 1995.
As a result of the foregoing factors, net earnings for the
six months ended April 30, 1996 decreased $1.3 million as compared
to the same period in 1995.
-9-
Second Quarter Ended April 30, 1996 Compared to Second Quarter
Ended April 30, 1995
Revenues for the second quarter ended April 30, 1996 increased
$3.5 million or 13.6% to $29.0 million from $25.6 million for the
same period in 1995.
Operating expenses exclusive of depreciation and amortization
for the second quarter ended April 30, 1996 increased $1.3 million
or 8.5% over the same period in 1995.
Due to the above factors, operating income before depreciation
and amortization increased $2.1 million or 21.7% to $11.9 million
compared to $9.8 million for the second quarter ended April 30,
1996 as compared to the same period in 1995.
Interest expense for the period increased $0.1 million over
the same period in 1995.
Income tax expense for the period increased $2.3 million over
the same period in 1995.
As a result of the foregoing factors, net earnings for the
second quarter ended April 30, 1996 remained fairly constant as
compared to the same period in 1995.
The explanation of these results is identical to the
explanation of the results for the six months ended April 30, 1996.
They are due to an increase in outdoor advertising revenue across
the board, an increase in various direct and general and
administrative expenses in order to accommodate the increase in
revenue, the acquisition of additional outdoor assets, the
increased development of the logo program, and an increase in
income tax expense due to the extinguishment of the net operating
loss carryforwards.
-10-
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Resolutions adopted by the Board of Directors of Lamar
Advertising Company dated December 13, 1995 and a unanimous written
consent of action in lieu of a special meeting of the shareholders
of Lamar Advertising Company executed on December 30, 1995 approved
an amendment to the certificate of incorporation of Lamar
Advertising Company. This action created ten thousand (10,000)
shares of Class A preferred stock having a par value of $638 per
share with no voting rights. This action did not change the
authorized number of shares or voting rights of previously
authorized capital stock. The payment of Class A preferred
dividends are cumulative and in priority to Class A and Class B
common stock dividends. In addition, the case of voluntary
dissolution or liquidation of the corporation the holders of Class
A preferred stock are entitled to receive the sum of par value of
their shares plus a further amount equal to any accrued and unpaid
dividends to date before any payment shall be made to the holders
of Class A and Class B common stock. As of the most recent
information available, 5,719 shares of Class A common stock were
converted to Class A preferred stock.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: None
(b) No reports on Form 8-K were filed during the period ended
April 30, 1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
LAMAR ADVERTISING COMPANY
DATED: June 11, 1996 BY s/Keith Istre
Keith A. Istre
Vice President and Chief
Financial Officer, Treasurer
and Assistant Secretary
(Principal Financial Officer)
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