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.
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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
========== ========== ==========
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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
========== ==========
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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
======== ======= ======= ======== ======= ========
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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)
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(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)
====== ======
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(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)
=======