1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): October 29, 1997
(August 15, 1997)
OUTDOOR SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-13275 86-0736400
(State or other jurisdiction of incorporation) (Commission file number) (I.R.S. Employer Identification No.)
2502 N. BLACK CANYON HIGHWAY, PHOENIX, ARIZONA 85009
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (602) 246-9569
NOT APPLICABLE
(Former name or former address, if changed since last report.)
2
In the Current Report on Form 8-K filed on August 29, 1997 (the "Form
8-K"), the Registrant reported that pursuant to an Agreement of Purchase and
Sale dated April 30, 1997 between the Registrant and Minnesota Mining and
Manufacturing Company ("3M"), the Registrant had completed the acquisition (the
"3M Media Acquisition") of all of the issued and outstanding capital stock of
National Advertising Company, a subsidiary of 3M operating 3M's outdoor
advertising assets ("3M Media"). Additionally, the Registrant reported that in
conjunction with the completion of the 3M Media Acquisition, the Registrant sold
certain of the assets acquired from 3M. The Form 8-K did not include the Pro
Forma Consolidated Condensed Financial Data required by Item 7(b). This Form
8-K/A amends Item 7 of the Form 8-K by including the financial information
referred to below
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information.
The following unaudited consolidated pro forma condensed financial
information is included as Annex A hereto:
- Introduction to Unaudited Consolidated Pro Forma Condensed Financial
Information.
- Unaudited Consolidated Pro Forma Condensed Balance Sheet as of June
30, 1997.
- Notes to Unaudited Consolidated Pro Forma Condensed Balance Sheet as
of June 30, 1997.
- Unaudited Consolidated Pro Forma Condensed Statement of Operations
for the year ended December 31, 1996.
- Notes to Unaudited Consolidated Pro Forma Condensed Statement of
Operations for the year ended December 31, 1996.
- Unaudited Consolidated Pro Forma Condensed Statement of Operations
for the six months ended June 30, 1997.
- Notes to Unaudited Consolidated Pro Forma Condensed Statement of
Operations for the six months ended June 30, 1997.
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.
OUTDOOR SYSTEMS, INC.
Date: June 5, 1996 By: /S/ Bill Beverage
-------------------------- --------------------------------------
Bill Beverage, Secretary/Treasurer
4
ANNEX A
UNAUDITED CONSOLIDATED PRO FORMA CONDENSED FINANCIAL INFORMATION
The following unaudited consolidated pro forma condensed statement of
operations combines the historical financial information of the Company and the
businesses acquired in the Acquisitions (as defined below) for the year ended
December 31, 1996 and the six month period ended June 30, 1997 giving effect to
(i) the Bank Financing (as defined below) and (ii) the net reduction in
operating expenses associated with the Acquisitions, as if such events had
occurred at the beginning of the period. The unaudited consolidated pro forma
condensed balance sheet as of June 30, 1997 has been prepared as if the 3M Media
Acquisition and the Bank Financing had occurred on June 30, 1997.
The detailed assumptions used to prepare the unaudited consolidated pro
forma condensed financial information are contained in the notes to unaudited
consolidated pro forma condensed financial information. The unaudited
consolidated pro forma condensed financial information reflects the use of the
purchase method of accounting for the Acquisitions.
Pro forma adjustments for the Acquisitions are based upon preliminary
estimates, available information and certain assumptions that the management of
the Company deems appropriate. Final adjustments may differ from the pro forma
adjustments presented herein. The unaudited consolidated pro forma condensed
financial information does not purport to represent the results of operations or
the financial position of the Company that actually would have resulted had the
Acquisitions occurred as of the dates indicated, nor should it be taken as
indicative of the future results of the operations or future financial position
of the Company. The unaudited consolidated pro forma condensed financial
information should be read in conjunction with the separate historical financial
statements and notes thereto of 3M Media which were filed with the Form 8-K.
The "Acquisitions" consist of the 3M Media Acquisition and the following
transactions (which are collectively referred to as the "Other Acquisitions"):
- Gannett Outdoor Acquisition. On August 22, 1996, the Company
purchased substantially all of the assets of the outdoor advertising
division ("Gannett Outdoor") of Gannett Co., Inc. ("Gannett"),
including the stock of certain indirect subsidiaries of Gannett, for
approximately $700.0 million in cash (the "Gannett Outdoor
Acquisition"). The Company acquired from Gannett a total of
approximately 40,000 advertising display faces consisting of
bulletins, posters and transit advertising display faces in 15
metropolitan markets in the United States and seven metropolitan
markets in Canada and approximately 125,000 subway advertising
display faces in New York City.
- Houston Acquisition and Denver Disposition. In connection with the
Gannett Outdoor Acquisition, on November 14, 1996, the Company
acquired Gannett's outdoor operations in Houston, Texas (the
"Houston Acquisition") for $10.0 million in cash plus the net book
value of working capital and certain other specified assets. Also in
connection with the Gannett Outdoor Acquisition, on August 8, 1996,
the Company sold substantially all of its then existing billboard
assets in Denver (the "Denver Disposition") to an unrelated party
for $9.2 million consisting of $2,8 million in cash paid at closing
and a ten year 9% promissory note for the balance of the purchase
price.
- CSX Assets Acquisition. On May 22, 1996, the Company acquired
permanent easements for 1,360 plots of land in 17 eastern states for
$21.5 million (plus future consideration estimated to be payable in
2006) from CSX Realty Development Corporation (the "CSX Assets
Acquisition"). Currently, 130 different outdoor advertising
companies have licenses to operate approximately 2,240 advertising
displays on these plots of land. As a result of this purchase, the
Company has the right to collect the proceeds from these licenses.
5
- Villepigue Acquisition. On January 9, 1997, the Company completed
the acquisition of Villepigue Outdoor Advertising (the "Villepigue
Acquisition") and related entities, consisting of approximately 110
bulletin display faces in the New York metropolitan area, for a
purchase price of approximately $27.0 million in cash, subject to
working capital adjustments.
- Scadron Acquisition. On February 14, 1997, the Company purchased a
portion of the assets of Scadron Enterprises (the "Scadron
Acquisition") consisting of approximately 100 wall and bulletin
display faces in the Chicago metropolitan area, for a purchase price
of approximately $24.5 million in cash, subject to working capital
adjustments. In addition, the Company agreed to acquire certain
other assets of Scadron Enterprises for aggregate additional
consideration of up to $3.5 million upon the satisfaction of certain
conditions, which may or may not be satisfied.
- Reynolds Acquisition. On February 28, 1997, the Company acquired the
assets of Reynolds Outdoor, L.P. (the "Reynolds Acquisition") and
certain related joint ventures, consisting of approximately 325
bulletin faces in the Dallas/Ft. Worth metropolitan area, for a
purchase price of approximately $31.6 million in cash, subject to
working capital adjustments.
- Burlington Northern and Santa Fe Assets Acquisition. On March 26,
1997, the Company purchased from The Burlington Northern and Santa
Fe Railway Company (the "Burlington Northern and Santa Fe Assets
Acquisition") permanent easements for approximately 1,350 plots of
land located in 26 western and midwestern states and the rights to
signboard licenses with respect to advertising displays located on
the plots of land covered by the easements. The purchase price for
the assets consisted of approximately $29.5 million in cash.
- Van Wagner Acquisition. On May 22, 1997, the Company purchased the
stock (the "Van Wagner Acquisition") of Van Wagner Communications,
Inc. ("Van Wagner") for approximately $170.0 million in cash. The
Van Wagner operations include approximately 50 "Spectacular" signs
in Times Square, as well as 105 bulletins and 172 posters and eight
wall murals in New York City, 372 bulletins and 16 wall murals in
Los Angeles, four bulletins in San Francisco, and additional transit
displays and transit management agreements in New York, Los Angeles,
Northern California and Las Vegas.
- Other Completed Transactions. In addition to these acquisitions, the
Company has acquired certain outdoor advertising assets in Denver,
Chicago, Atlanta, Louisville, Toronto, Montreal, and Halifax for
aggregate consideration of approximately $20.4 million.
The "1997 Acquisitions" means the Acquisitions consummated following
December 31, 1996, including the 3M Media Acquisition.
The term "Bank Financing" refers to borrowings by the Company under its
senior credit facility (the "Senior Credit Facility") used to finance in part
the purchase price of the 3M Media Acquisition. The term "1996 Notes" refers to
the Company's outstanding $250.0 million aggregate principal amount of 9 3/8%
Senior Subordinated Notes due 2006, and the term "1997 Notes" refers to the
Company's outstanding $500.0 million aggregate principal amount of 8 7/8% Senior
Subordinated Notes due 2007.
6
OUTDOOR SYSTEMS, INC.
UNAUDITED CONSOLIDATED PRO FORMA CONDENSED BALANCE SHEET
AS OF JUNE 30, 1997
(DOLLARS IN THOUSANDS)
ASSETS
HISTORICAL
------------------------ PRO FORMA
3M MEDIA ACQUISITION TOTAL
COMPANY ACQUISITION ADJUSTMENTS PRO FORMA
----------- ----------- ----------- -----------
CURRENT ASSETS $ 415,673 $ 47,359 $ (300,000) $ 158,454
(4,578)
PROPERTY AND EQUIPMENT - Net 1,005,458 128,291 539,088 1,581,658
(91,179)
INTANGIBLE ASSETS - Net 91,341 275,000 366,341
DEFERRED FINANCING COSTS 34,440 6,185 40,625
OTHER ASSETS 12,298 2,070 (456) 13,912
----------- --------- ---------- -----------
TOTAL $ 1,559,210 $ 177,720 $ 424,060 $ 2,160,990
=========== ========= ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES $ 41,437 $ 17,988 $ (2,282) $ 61,018
3,875
LONG-TERM DEBT 831,176 582,199 1,413,375
OTHER LONG-TERM LIABILITIES 3,924 3,924
DEFERRED INCOME TAXES 9,763 (9,763)
----------- --------- ---------- -----------
Total liabilities 876,537 27,751 574,029 1,478,317
----------- --------- ---------- -----------
NET ASSETS (LIABILITIES) ACQUIRED 149,969 (149,969)
----------- --------- ---------- -----------
COMMON STOCKHOLDERS' EQUITY 682,673 682,673
----------- --------- ---------- -----------
TOTAL $ 1,559,210 $ 177,720 $ 424,060 $ 2,160,990
=========== ========= ========== ===========
7
OUTDOOR SYSTEMS, INC.
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA
CONDENSED BALANCE SHEET
AS OF JUNE 30, 1997
(DOLLARS IN THOUSANDS)
The following explanations describe the assumptions used in determining the
pro forma adjustments necessary to present the pro forma condensed financial
position of the Company after giving effect to the 3M Media Acquisition and the
Bank Financing.
Change in current assets:
Cash used for 3M Media Acquisition $(300,000)
Less divested current assets (4,578)
Change in long-term assets resulting from allocation of purchase price:
Property and equipment, net of deposit paid 539,088
Less divested property and equipment (91,179)
Intangibles 275,000
Increase in deferred financing costs 6,185
Divested other assets (456)
Change in current liabilities:
Estimated acquisition costs (3,875)
Less divested current liabilities 2,282
Increase in Senior Credit Facility (582,199)
Elimination of deferred income taxes due to 338(h)(10) election 9,763
Elimination of historical net assets of the 3M Media Acquisition 149,969
---------
$ 0
=========
8
UNAUDITED CONSOLIDATED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
OTHER ACQUISITIONS PURCHASE
VAN WAGNER OTHER 3M MEDIA ACCOUNTING
COMPANY ACQUISITION TRANSACTIONS(1)ACQUISITION ADJUSTMENTS TOTAL
------------- ----------- ----------- --------- ----------- -----------
REVENUES:
Outdoor advertising - net 172,265 13,663 2,353 101,809 290,090
Other income 7,379 737 1,147 9,263
------------- ----------- ----------- --------- ----------- -----------
Net revenues 179,644 14,400 3,500 101,809 299,353
------------- ----------- ----------- --------- ----------- -----------
OPERATING EXPENSES:
Direct advertising 97,516 8,245 1,621 66,051 173,433
General and administrative 12,884 2,445 1,158 5,123 21,610
Depreciation and amortization 25,164 1,240 118 7,695 16,842 (2) 51,059
------------- ----------- ----------- --------- ----------- -----------
Total operating expenses 135,564 11,930 2,897 78,869 16,842 246,102
------------- ----------- ----------- --------- ----------- -----------
OPERATING INCOME 44,080 2,470 603 22,940 (16,842) 53,251
INTEREST EXPENSE (INCOME) 32,029 1,490 91 (865) 29,626 (3) 62,371
------------- ----------- ----------- --------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY LOSS 12,051 980 512 23,805 (46,468) (9,120)
INCOME TAXES (BENEFIT) 5,001 (8,468)(4) (3,467)
------------- ----------- ----------- --------- ----------- -----------
INCOME (LOSS) BEFORE EXTRAORDINARY LOSS 7,050 980 512 23,805 (38,000) (5,653)
EXTRAORDINARY LOSS 6,773 6,773
------------- ----------- ----------- --------- ----------- -----------
NET (LOSS) INCOME 277 980 512 23,805 (38,000) (12,426)
============= =========== =========== ========= =========== ===========
NET (LOSS) INCOME PER COMMON
AND EQUIVALENT SHARE:
Income (loss) before extraordinary loss 0.10 (0.08)
Extraordinary loss (0.09) (0.09)
NET (LOSS) INCOME PER COMMON SHARE 0.01 (0.17)
============= ===========
WEIGHTED AVERAGE NUMBER OF SHARES 73,506,851 73,506,851
============= ===========
SUPPLEMENTAL ADJUSTMENTS
OTHER 3M MEDIA
ACQUISITIONS ACQUISITION PRO FORMA
----------- ------------ -----------------
REVENUES:
Outdoor advertising - net (10,560)(5) 279,530
Other income 9,263
----------- ------------ -----------------
Net revenues (10,560) 288,793
----------- ------------ -----------------
OPERATING EXPENSES:
Direct advertising (2,390)(6) (7,364)(5) 146,575
(17,104)(6)
General and administrative (2,102)(6) (533)(5) 15,237
(3,738)(6)
Depreciation and amortization (738)(5) 50,321
----------- ------------ -----------------
Total operating expenses (4,492) (29,477) 212,133
----------- ------------ -----------------
OPERATING INCOME 4,492 18,917 76,660
INTEREST EXPENSE (INCOME) 62,371
----------- ------------ -----------------
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY LOSS 4,492 18,917 14,289
INCOME TAXES (BENEFIT) 1,797 (7) 7,567 (7) 5,897
----------- ------------ -----------------
INCOME (LOSS) BEFORE EXTRAORDINARY LOSS 2,695 11,350 8,392
EXTRAORDINARY LOSS 6,773
----------- ------------ -----------------
NET (LOSS) INCOME 2,695 11,350 1,619
=========== ============ =================
NET (LOSS) INCOME PER COMMON
AND EQUIVALENT SHARE:
Income (loss) before extraordinary loss 0.11
Extraordinary loss (0.09)
NET (LOSS) INCOME PER COMMON SHARE 0.02
================
WEIGHTED AVERAGE NUMBER OF SHARES 73,506,851
================
9
OUTDOOR SYSTEMS, INC.
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA
CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(DOLLARS IN THOUSANDS)
The following explanations describe the assumptions used in determining the
pro forma adjustments necessary to present the pro forma results of operations
of the Company for the six months ended June 30, 1997.
(1) Represents revenues and expenses associated with the 1997 Acquisitions
(other than the Van Wagner Acquisition and the 3M Media Acquisition) prior
to the respective dates of their acquisition.
(2) Entry records the increase in depreciation and amortization expense arising
from purchase accounting adjustments and after giving effect to divestitures
completed in connection with the 3M Media Acquisition as follows:
Amortization
Period
------------
Advertising structures 20 years $ 20,617
Goodwill 30 years 5,278
--------
Total depreciation and amortization expense 25,895
Less amount recorded in historical financial statements (9,053)
--------
Purchase accounting adjustment $ 16,842
========
(3) Entry records interest expense and amortization of deferred financing fees
as if the pro forma capital structure as reflected in the unaudited
consolidated pro forma condensed balance sheet as of June 30, 1997 were in
existence for the six months ended June 30, 1997:
Interest expense:
Senior Credit Facility $ 25,021
1996 Notes 11,718
1997 Notes 22,006
Amortization of deferred financing costs 3,422
Amortization of debt discount 204
--------
Total interest expense 62,371
Less amount recorded in historical financial statements (32,745)
--------
Purchase accounting adjustment $ 29,626
========
(4) Entry records the income tax effect on the income of the Acquisitions and
purchase adjustments at a blended rate of 40% $ (8,468)
==========
(5) Entry records estimated revenues and expenses, after adjusting for pro
forma cost reductions, relating to divested assets:
Net revenues - determined by specific identification $ (10,560)
Direct advertising expenses - determined by specific identification $ (7,364)
of land rent and payroll and percentage allocation of other direct
advertising expenses
General and administrative - determined by specific identification $ (533)
of payroll and percentage allocation of other general and
administrative expenses
Depreciation and amortization - determined by specific identification $ (738)
10
OUTDOOR SYSTEMS, INC.
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA
CONDENSED STATEMENTS OF OPERATIONS
(CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(DOLLARS IN THOUSANDS)
(6) Entry records a) a decrease in payroll and payroll related costs in direct
advertising and general and administrative expense categories due to
termination of employees in the following functions; and b) the elimination
of general corporate allocations not considered attributable to operations
sold, as follows:
Acquisitions
---------------------
Other
Acquisitions 3M Media
------ -------
Direct Advertising:
Elimination of production and sales overhead functions $2,390 $ 7,230
Elimination of national sales and marketing costs -- 7,874
Elimination of general corporate overhead allocation -- 2,000
------ -------
Total direct advertising 2,390 17,104
------ -------
General and Administrative:
Elimination of national office function, accounting and
administrative personnel 2,102 3,188
Elimination of corporate facility rent allocations -- 550
------ -------
Total general and administrative 2,102 3,738
------ -------
Total $4,492 $20,842
====== =======
(7) Entry records the income tax effect of pro forma
adjustments at a blended rate of 40%
Income tax effect $1,797 $7,567
====== =======
11
OUTDOOR SYSTEMS, INC.
UNAUDITED CONSOLIDATED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
OTHER ACQUISITIONS PURCHASE
VAN WAGNER GANNETT OTHER 3M MEDIA ACCOUNTING
COMPANY ACQUISITION ACQUISITION(1) TRANSACTIONS(2) ACQUISITION ADJUSTMENTS
------- ----------- -------------- --------------- ----------- -----------
REVENUES:
Outdoor advertising - net 167,047 29,894 156,896 23,447 211,310
Other income 6,069 652 201 5,893
------------- ---------- ---------- ------------ ----------- -----------
Net revenues 173,116 30,546 157,097 29,340 211,310
------------- ---------- ---------- ------------ ----------- -----------
OPERATING EXPENSES:
Direct advertising 87,593 18,012 106,205 12,174 139,223
General and administrative 13,458 4,502 22,126 6,942 12,427
Depreciation and amortization 22,384 2,541 11,369 814 15,382 53,336 (3)
------------- ----------- ----------- ------------- ------------ ------------
Total operating expenses 123,435 25,055 139,700 19,930 167,032 53,336
------------- ---------- ---------- ------------ ----------- -----------
GAIN ON DENVER DISPOSITION 7,344
------------- ---------- ---------- ------------ ----------- -----------
OPERATING INCOME 57,025 5,491 17,397 9,410 44,278 (53,336)
INTEREST EXPENSE (INCOME) 32,489 2,792 363 (2,059) 91,158 (4)
------------- ---------- ---------- ------------ ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY LOSS 24,536 2,699 17,397 9,047 46,337 (144,494)
INCOME TAXES (BENEFIT) 10,200 (27,606)(5)
------------- ---------- ---------- ------------ ----------- -----------
INCOME (LOSS) BEFORE EXTRAORDINARY LOSS 14,336 2,699 17,397 9,047 46,337 (116,888)
EXTRAORDINARY LOSS 17,780
------------- ---------- ---------- ------------ ----------- -----------
NET (LOSS) INCOME (3,444) 2,699 17,397 9,047 46,337 (116,888)
LESS STOCK DIVIDENDS, ACCRETIONS AND
DISCOUNT ON REDEMPTIONS 3,461
------------- ---------- ---------- ------------ ----------- -----------
NET (LOSS) INCOME ATTRIBUTABLE TO
COMMON STOCKHOLDERS (6,905) 2,699 17,397 9,047 46,337 (116,888)
============= ========== ========== ============ =========== ===========
NET (LOSS) INCOME PER COMMON
AND EQUIVALENT SHARE:
Income (loss) before extraordinary loss 0.21
Extraordinary loss (0.34)
-------------
NET (LOSS) INCOME PER COMMON SHARE (0.13)
=============
WEIGHTED AVERAGE NUMBER OF SHARES 52,895,004
=============
SUPPLEMENTAL ADJUSTMENTS
OTHER 3M MEDIA
TOTAL ACQUISITIONS ACQUISITION PRO FORMA
----- ------------ ----------- ---------
REVENUES:
Outdoor advertising - net 588,594 (23,303)(6) 565,291
Other income 12,815 12,815
----------- ---------- ---------- ------------
Net revenues 601,409 (23,303) 578,106
----------- ---------- ---------- ------------
OPERATING EXPENSES:
Direct advertising 363,207 (18,836) (7) (16,038)(6) 294,125
(34,208)(7)
General and administrative 59,455 (17,476) (7) (1,389)(6) 33,113
(7,477)(7)
Depreciation and amortization 105,826 (1,333)(6) 104,493
----------- ---------- ---------- ------------
Total operating expenses 528,488 (36,312) (60,445) 431,731
----------- ---------- ---------- ------------
GAIN ON DENVER DISPOSITION 7,344 7,344
----------- ---------- ---------- ------------
OPERATING INCOME 80,265 36,312 37,142 153,719
INTEREST EXPENSE (INCOME) 124,743 124,743
----------- ---------- ---------- ------------
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY LOSS (44,478) 36,312 37,142 28,976
INCOME TAXES (BENEFIT) (17,406) 14,525 (8) 14,857 (8) 11,976
----------- ---------- ---------- ------------
INCOME (LOSS) BEFORE EXTRAORDINARY LOSS (27,072) 21,787 22,285 17,000
EXTRAORDINARY LOSS 17,780 17,780
----------- ---------- ---------- ------------
NET (LOSS) INCOME (44,852) 21,787 22,285 (780)
LESS STOCK DIVIDENDS, ACCRETIONS AND
DISCOUNT ON REDEMPTIONS 3,461 3,461
----------- ---------- ---------- ------------
NET (LOSS) INCOME ATTRIBUTABLE TO
COMMON STOCKHOLDERS (48,313) 21,787 22,285 (4,241)
=========== ========== ========== ============
NET (LOSS) INCOME PER COMMON
AND EQUIVALENT SHARE:
Income (loss) before extraordinary loss (0.42) 0.18
Extraordinary loss (0.24) (0.24)
----------- ------------
NET (LOSS) INCOME PER COMMON SHARE (0.66) (0.06)
=========== ============
WEIGHTED AVERAGE NUMBER OF SHARES 73,145,004 73,145,004
=========== ============
12
OUTDOOR SYSTEMS, INC.
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA
CONDENSED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
The following explanations describe the assumptions used in determining the
pro forma adjustments necessary to present the pro forma results of operations
of the Company for the year ended December 31, 1996.
(1) Represents the operations of Gannett Outdoor excluding the Houston
Acquisition, for the period from January 1, 1996 through August 23, 1996.
(2) Represents 1996 revenues and expenses associated with the CSX Assets
Acquisition and the Houston Acquisition prior to the respective dates of
their acquisition and the 1996 historical results of the 1997 Acquisitions
(other than the Van Wagner Acquisition and the 3M Media Acquisition) less
revenues and expenses associated with assets sold in the Denver Disposition.
(3) Entry records the increase in depreciation and amortization expense arising
from purchase accounting adjustments and after giving effect to divestitures
completed in connection with the 3M Media Acquisition as follows:
Amortization
Period
------
Advertising structures 20 years $71,449
Goodwill 30 years 11,993
-------
Total depreciation and amortization expense 83,442
Less amount recorded in historical financial statements (30,106)
-------
Purchase accounting adjustment $53,336
=======
(4) Entry records interest expense and amortization of deferred financing fees
as if the pro forma capital structure as reflected in the unaudited
consolidated pro forma condensed balance sheet as of June 30, 1997 were in
existence for the year ended December 31, 1996:
Interest expense:
Senior Credit Facility $ 50,042
1996 Notes 23,438
1997 Notes 44,012
Amortization of deferred financing costs 6,843
Amortization of debt discount 408
--------
Total interest expense 124,743
Less amount recorded in historical financial statements (33,585)
--------
Purchase accounting adjustment $ 91,158
========
(5) Entry records the income tax effect on the income of the Acquisitions and
purchase adjustments at a blended rate of 40% $ (27,606)
==========
(6) Entry records estimated revenues and expenses, after adjusting for pro forma
cost reductions relating to divested assets:
Net revenues - determined by specific identification $ (23,303)
Direct advertising expenses - determined by specific identification $ (16,038)
of land rent and payroll and percentage allocation of other direct
advertising expenses
General and administrative - determined by specific identification $ (1,389)
of payroll and percentage allocation of other general and
administrative expenses
Depreciation and amortization - determined by specific identification $ (1,333)
13
OUTDOOR SYSTEMS, INC.
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA
CONDENSED STATEMENTS OF OPERATIONS
(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
(7) Entry records a) a decrease in payroll and payroll related costs in direct
advertising and general and administrative expense categories due to
termination of employees in the following functions; and b) the elimination
of general corporate allocations not considered attributable to operations
sold, as follows:
Acquisitions
---------------------
Other
Acquisitions 3M Media
------------ --------
Direct Advertising:
Elimination of production and sales overhead functions $17,795 $14,460
Consolidation of Canadian production facility 1,041 --
Elimination of national sales and marketing costs -- 15,748
Elimination of general corporate overhead allocation -- 4,000
------- -------
Total direct advertising 18,836 34,208
------- -------
General and Administrative:
Elimination of national office function, accounting and
administrative personnel 17,476 6,377
Elimination of corporate facility rent allocations -- 1,100
------- -------
Total general and administrative 17,476 7,477
------- -------
Total $36,312 $41,685
======= =======
(8) Entry records the income tax effect of pro forma
adjustments at a blended rate of 40%
Income tax effect $14,525 $14,857
======= =======