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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington,, D.C. 20549

__________________________
Form 10-K

__________________________
(Mark One)

☒

xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

2021

☐

¨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 1-36756

__________________________
Lamar Advertising Company

__________________________
Commission File Number 1-12407

__________________________
Lamar Media Corp.

(Exact names of registrants as specified in their charters)

__________________________

Delaware

Delaware

72-1449411

72-1205791

Delaware

47-0961620
Delaware72-1205791
(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

5321 Corporate Blvd., Baton Rouge, LA

70808

(Address of principal executive offices)

(Zip Code)

Registrants’ telephone number, including area code: (225) 926-1000

SECURITIES OF LAMAR ADVERTISING COMPANY

REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock, $0.001 par value

LAMR

The NASDAQ Stock Market, LLC

SECURITIES OF LAMAR ADVERTISING COMPANY

REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

None

SECURITIES OF LAMAR MEDIA CORP.

REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

None

SECURITIES OF LAMAR MEDIA CORP.

REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None

None

Indicate by check mark if Lamar Advertising Company is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☒x    No  ☐¨

Indicate by check mark if Lamar Advertising Company is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes  ☐¨    No  ☒x

Indicate by check mark if Lamar Media Corp. is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐¨    No  ☒x

Indicate by check mark if Lamar Media Corp. is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes  ☒x    No  ☐¨

Indicate by check mark whether each 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 by check mark whether each registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒x    No  ☐¨

Indicate by check mark whether Lamar Advertising Company is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “accelerated filer”, “large accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

x

☒

Accelerated filer

☐

¨

Non-accelerated filer

¨

☐

Smaller reporting company

☐

¨

Emerging growth company

¨

☐

If an emerging growth company, indicate by check mark if Lamar Advertising Company has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐¨

Indicate by check mark whether Lamar Advertising Company has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x
Indicate by check mark whether Lamar Media Corp. is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “accelerated filer”, “large accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

¨

☐

Accelerated filer

☐

¨

Non-accelerated filer

x

☒

Smaller reporting company

☐

¨

Emerging growth company

¨

☐

If an emerging growth company, indicate by check mark if Lamar Media Corp. has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐¨

Indicate by check mark whether Lamar Media Corp. has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark if either registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐¨    No  ☒x

The aggregate market value of the voting stock held by nonaffiliates of Lamar Advertising Company was $6,880,025,403$8,936,171,502 based on $80.71$104.42 per share as reported at the close of trading on the NASDAQ Global Select Market on June 28, 2019,30, 2021, the last business day of the registrant’s most recently completed second fiscal quarter.

As of June 28, 2019,30, 2021, the aggregate market value of the voting stock held by nonaffiliates of Lamar Media Corp. was $0.

Indicate the number of shares outstanding of each of the issuers’ classes of common stock, as of the latest practicable date.

Class

ClassOutstanding at February 1, 2020

2022

Lamar Advertising Company Class A common stock, $0.001 par value per share

86,095,00086,852,821 shares

Lamar Advertising Company Class B common stock, $0.001 par value per share

14,420,085 shares

Lamar Media Corp. common stock, $0.001 par value per share

100 shares

DOCUMENTS INCORPORATED BY REFERENCE

Document

DocumentParts into Which Incorporated

Proxy Statement for the Annual Meeting of Stockholders scheduled to be held on May 28, 202019, 2022 (Proxy Statement)

Part III

This combined Form 10-K is separately filed by (i) Lamar Advertising Company and (ii) Lamar Media Corp. (which is a wholly owned subsidiary of Lamar Advertising Company). Lamar Media Corp. meets the conditions set forth in general instruction I(1) (a) and (b) of Form 10-K and is, therefore, filing this form with the reduced disclosure format permitted by such instruction.


Table of Contents
TABLE OF CONTENTS

PART I

PART I
Special Note Regarding Forward-Looking Statements

Business5

5

General

General5

5

Corporate History

5

Operating Strategies

6

Capital Allocation Strategy

6

Company Operations

7

Competition

Competition9

9

Geographic Diversification

10

Taxable REIT Subsidiaries

11

10

Advertising Tenants

11

Regulation

Regulation11

11

Legal Proceedings

12

Real Estate Portfolio

12

Contract Expirations

13

Human Capital Resources

Employees13

13

Inflation

Inflation14

13

Seasonality

Seasonality14

13

Available Information

14

14

15

21

24

Properties24

21

21

24

21

24

PART II

PART II

22

25

ITEM 6.

Selected Financial Data25

23

24

26

Lamar Advertising Company

24

26

Overview

Overview26

24

Non-GAAP Financial Measures

24

27

Results of Operations: Years Ended December 31, 20192021 and 20182020

26

28

Liquidity and Capital Resources

31
Critical Accounting Estimates
37
Accounting Standards and Regulatory Update
38
Lamar Media
38
Results of Operations: Years Ended December 31, 20182021 and 2017

2020

28

38

31

Critical Accounting Estimates

37

Accounting Standards and Regulatory Update

38

Lamar Media

39

Results of Operations: Years Ended December 31, 2019 and 2018

39

Results of Operations: Years Ended December 31, 2018 and 2017

42

ITEM 7A.

44

42

45

43

104

102

104

102

104

103



PART III

104
2
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105

105

104

105

104

105

104

105

104

PART IV

PART IV

105

105

106

117

118



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NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information included in this report is forward-looking in nature within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. This report uses terminology such as “anticipates,” “believes,” “plans,” “expects,” “future,” “intends,” “may,” “will,” “should,” “estimates,” “predicts,” “potential,” “continue” and similar expressions to identify forward-looking statements. Examples of forward-looking statements in this report include statements about: (i) our future financial performance and condition; (ii) our business plans, objectives, prospects, growth and operating strategies; (iii) our future capital expenditures and level of acquisition activity; (iv) our ability to integrate acquired assets and realize operating efficiency from acquisitions; (v) market opportunities and competitive positions; (vi) our future cash flows and expected cash requirements; (vii) expected timing and amount of distributions to our stockholders; (viii) estimated risks; (ix) our ability to maintain compliance with applicable covenants and restrictions included in Lamar Media Corp’s (“Lamar Media”) senior credit facility, Accounts Receivable Securitization Program (as defined herein) and the indentures relating to its outstanding notes; (x) stock price; and (xi) our ability to remain qualified as a real estate investment trust (“REIT”).

Forward-looking statements are subject to known and unknown risks, uncertainties and other important factors, including but not limited to the following, any of which may cause our actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements: (i) the continued impact of the COVID-19 pandemic on our business, financial condition and results of operations and on general economic conditions, including inflationary pressures; (ii) the state of the economy and financial markets generally (including the impact caused by the COVID-19 pandemic) and their effects on the markets in which we operate and the broader demand for advertising; (ii)(iii) the levels of expenditures on advertising in general and outdoor advertising in particular; (iii)(iv) risks and uncertainties relating to our significant indebtedness; (iv)(v) the demand for outdoor advertising and its continued popularity as an advertising medium; (v)(vi) our need for, and ability to obtain, additional funding for acquisitions, operations and debt refinancing; (vi)(vii) increased competition within the outdoor advertising industry; (vii)(viii) the regulation of the outdoor advertising industry by federal, state and local governments; (viii)(ix) our ability to renew expiring contracts at favorable rates; (ix)(x) the integration of businesses and assets that we acquire and our ability to recognize cost savings and operating efficiencies as a result of these acquisitions; (x)(xi) our ability to successfully implement our digital deployment strategy; (xi)(xii) the market for our Class A common stock; (xii)(xiii) changes in accounting principles, policies or guidelines; (xiii)(xiv) our ability to effectively mitigate the threat of and damages caused by hurricanes and other kinds of severe weather; (xiv)(xv) our ability to maintain our status as a REIT; and (xv)(xvi) changes in tax laws applicable to REITs or in the interpretation of those laws.

The forward-looking statements in this report are based on our current good faith beliefs; however, actual results may differ due to inaccurate assumptions, the factors listed above or other foreseeable or unforeseeable factors. Consequently, we cannot guarantee that any of the forward-looking statements will prove to be accurate. The forward-looking statements in this report speak only as of the date of this report, and Lamar Advertising Company and Lamar Media Corp. expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained in this report, except as required by law.

INDUSTRY AND MARKET DATA

The industry and market data presented throughout this report are based on the experience and estimates of our management and the data in reports issued by third-parties, including the OutdoorOut of Home Advertising Association of America (OAAA). In each case, we believe this industry and market data is reasonable. We have not, however, independently verified the industry and market data derived from third-party sources, and no independent source has verified the industry and market data derived from management’s experience and estimates.


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PART I

ITEM 1.

BUSINESS

ITEM 1.    BUSINESS
GENERAL

Lamar Advertising Company is one of the largest outdoor advertising companies in the United States based on number of displays and has operated under the Lamar name since 1902. We operate in a single operating and reporting segment, advertising. We leaserent space for advertising on billboards, buses, shelters, benches, logo plates and in airport terminals. We offer our customers a fully integrated service, satisfying all aspects of their billboard display requirements from ad copy production to placement and maintenance.

We operate three types of outdoor advertising displays: billboards, logo signs and transit advertising displays.

Billboards.As of December 31, 2019,2021, we owned and operated approximately 157,800153,800 billboard advertising displays in 45 states and Canada. We leaserent most of our advertising space on two types of billboards: bulletins and posters.

•

Bulletins are generally large, illuminated advertising structures that are located on major highways and target vehicular traffic.

•

Posters are generally smaller advertising structures that are located on major traffic arteries and city streets•Bulletins are generally large, illuminated advertising structures that are located on major highways and target vehicular and pedestrian traffic.

•Posters are generally smaller advertising structures that are located on major traffic arteries and city streets and target vehicular and pedestrian traffic.
In addition to traditional billboards, we also leaserent space on digital billboards, which are generally located on major traffic arteries and city streets. As of December 31, 2019,2021, we owned and operated over 3,500approximately 3,900 digital billboard advertising displays in 43 states and Canada.

Logo signs.We leaserent advertising space on logo signs located near highway exits.

•

Logo signs generally advertise nearby gas, food, camping, lodging and other attractions.

We are the largest provider of logo signs in the United States, operating 2423 of the 26 privatized state logo sign contracts. As of December 31, 2019,2021, we operated over 151,200137,800 logo sign advertising displays in 2423 states and the province of Ontario, Canada.

Transit advertising displays.We also leaserent advertising space on the exterior and interior of public transportation vehicles, in airport terminals, and on transit shelters and benches in over 80 markets. As of December 31, 2019,2021, we operated over 52,800approximately 46,600 transit advertising displays in 2223 states and Canada.

CORPORATE HISTORY

We have operated under the Lamar name since our founding in 1902 and have been publicly traded on NASDAQ under the symbol “LAMR” since 1996. We completed a reorganization on July 20, 1999 that created a holding company structure. At that time, the operating company (then called Lamar Advertising Company) was renamed Lamar Media Corp., and all of the operating company’s stockholders became stockholders of a new holding company. The new holding company then took the Lamar Advertising Company name, and Lamar Media Corp. became a wholly owned subsidiary of Lamar Advertising Company.

During 2014, we completed a reorganization in order to qualify as a real estate investment trust (a “REIT”) for federal income tax purposes. As part of the plan to reorganize our business operations so that we could elect to qualify as a REIT for the taxable year ended December 31, 2014, we completed a merger with our predecessor that was approved by our stockholders on November 17, 2014. At the time of the merger each outstanding share of our predecessor’s Class A common stock, Class B common stock and Series AA preferred stock was converted into the right to receive an equal number of shares of Class A common stock, Class B common stock and Series AA preferred stock of the surviving corporation, respectively. Accordingly, references herein to our Class A common stock, Class B common stock and Series AA preferred stock refer to our capital stock and the capital stock of our predecessor, as applicable. We hold and operate certain assets through one or more taxable REIT subsidiaries (“TRSs”). The non-REIT qualified businesses that we hold through TRSs include most of our transit and foreign operations.

We may, from time to time, change the election of previously designated TRSs to be treated as qualified REIT subsidiaries or other disregarded entities (“QRSs”), and may reorganize and transfer certain assets or operations from our TRSs to other subsidiaries, including QRSs.


In this Annual Report, unless the context otherwise requires, we refer to Lamar Advertising Company and its consolidated subsidiaries (and its predecessor and its consolidated subsidiaries), as applicable, as the “Company”, “Lamar Advertising” or “we”, and we refer to Lamar Advertising’s wholly owned subsidiary Lamar Media Corp. as “Lamar Media.”

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OPERATING STRATEGIES

We strive to be a leading provider of outdoor advertising services in each of the markets that we serve, and our operating strategies for achieving that goal include:

Continuing to provide high quality local sales and service.We seek to identify and closely monitor the needs of our tenants and to provide them with a full complement of high quality advertising services. Local advertising constituted approximately 76%77% of our outdoor net revenues for the year ended December 31, 2019,2021, which management believes is higher than the industry average. We believe that the experience of our regional, territory and local managers has contributed greatly to our success. For example, our regional managers have been with us for an average of 3431 years. In an effort to provide high quality sales and service at the local level, we employed approximately 1,060930 local account executives as of December 31, 2019.2021. Local account executives are typically supported by additional local staff and have the ability to draw upon the resources of our central office, as well as our offices in other markets, in the event business opportunities or customers’ needs support such an allocation of resources.

Continuing a centralized control and decentralized management structure.Our management believes that, for our particular business, centralized control and a decentralized organization provide for greater economies of scale and are more responsive to local market demands. Therefore, we maintain centralized accounting and financial control over our local operations, but our local managers are responsible for the day-to-day operations in each local market and are compensated according to that market’s financial performance.

Continuing to focus on internal growth.Within our existing markets we seek to increase our revenue and improve cash flow by employing highly-targeted local marketing efforts to improve our display occupancy rates and by increasing advertising rates where and when demand can absorb rate increases. Our local offices spearhead this effort and respond to local customer demands quickly.

In addition, we routinely invest in upgrading our existing displays and constructing new displays. Since January 1, 2009,2012, we have invested approximately $1.1 billion in capitalized expenditures, which include improvements to our existing real estate portfolio and the construction of new locations. Our regular improvement and expansion of our advertising display inventory allows us to provide high quality service to our current tenants and to attract new tenants.

Continuing to pursue other outdoor advertising opportunities.We plan to renew existing logo sign contracts and pursue additional logo sign contracts. Logo sign opportunities arise periodically, both from states initiating new logo sign programs and states converting from government-owned and operated programs to privately-owned and operated programs. Furthermore, we plan to pursue additional tourist oriented directional sign programs in both the United States and Canada and also other motorist information signing programs as opportunities present themselves. In addition, in an effort to maintain market share, we continue to pursue attractive transit advertising opportunities as they become available.

Reinvesting in capital expenditures including digital technology.We have a history of investing in capital expenditures, particularly in our digital platform. We spent approximately $141.0$126.1 million in total capital expenditures in fiscal year 2019,2021, of which approximately $57.5$55.3 million was spent on digital technology. We expect our 20202022 capitalized expenditures to approximate our spending in 2019.be approximately $170.0 million.

CAPITAL ALLOCATION STRATEGY

The objective of our capital allocation strategy is to simultaneously increase adjusted funds from operations and our return on invested capital. To maintain our REIT status, we are required to distribute to our stockholders annually an amount equal to at least 90% of our REIT taxable income, excluding net capital gains. After complying with our REIT distribution requirements, we plan to continue to allocate our available capital among investment alternatives that meet our return on investment criteria. During 2019,2021, we generated $630.7$734.4 million of cash from operating activities, which was used to fund capital expenditures, acquisitions, dividends to our shareholdersstockholders, and partially fund acquisitions.

•

Capital expenditures program. We will continue to reinvest in our existing assets and expand our outdoor advertising display portfolio through new construction. This includes maintenance and growth capital expenditures associated with the construction of new billboard displays, the entrance into and renewal of logo sign and transit contracts, and the purchase of real estate and operating equipment.

a portion of the expenses incurred in connection with financing transactions.

•Capital expenditures program. We will continue to reinvest in our existing assets and expand our outdoor advertising display portfolio through new construction. This includes growth and maintenance capital expenditures associated with the construction of new and existing billboard displays, the entrance into and renewal of logo sign and transit contracts, and the purchase of real estate and operating equipment.

•Acquisitions. We will seek to pursue strategic acquisitions of outdoor advertising businesses and assets. This includes acquisitions in our existing markets and in new markets where we can meet our return on investment

Acquisitions. We will seek to pursue strategic acquisitions of outdoor advertising businesses and assets. This includes acquisitions in our existing markets and in new markets where we can meet our return on investment criteria. When evaluating investments in new markets, our return on investment criteria reflects the additional risks inherent to the particular geographic area.

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criteria. When evaluating investments in new markets, our return on investment criteria reflects the additional risks inherent to the particular geographic area.
COMPANY OPERATIONS

Billboard Advertising

We leaserent most of our advertising space on two types of billboard advertising displays: bulletins and posters. As of December 31, 2019,2021, we owned and operated approximately 157,800153,800 billboard advertising displays in 45 states and Canada.  In 2019,2021, we derived approximately 75%76% of our billboard advertising net revenues from bulletin rentals and 25%24% from poster rentals.

Bulletinsare large, advertising structures (the most common size is fourteen14 feet high by forty-eight48 feet wide, or 672 square feet) consisting of panels on which advertising copy is displayed. We wrap advertising copy printed with computer-generated graphics on a single sheet of vinyl around the structure. To attract more attention, some of the panels may extend beyond the linear edges of the display face and may include three-dimensional embellishments. Because of their greater impact and higher cost, bulletins are usually located on major highways and target vehicular traffic. At December 31, 2019,2021, we operated approximately 76,150 75,100bulletin displays.

We generally leaserent individually-selected bulletin space to advertisers for the duration of the contract (ranging from 4 to 52 weeks). We also leaserent bulletins as part of a rotary plan under which we rotate the advertising copy from one bulletin location to another within a particular market at stated intervals (usually every sixty to ninety days) to achieve greater reach within that market.

Postersare smaller advertising structures (the most common size is eleven11 feet high by twenty-three23 feet wide, or 250253 square feet; we also operate junior posters, which are five5 feet high by eleven11 feet wide, or 55 square feet). Poster panels utilize a single flexible sheet of polyethylene material that inserts onto the face of the panel. Posters are concentrated on major traffic arteries and target vehicular traffic, and junior posters are concentrated on city streets and target hard-to-reach pedestrian traffic and nearby residents. At December 31, 2019,2021, we operated approximately 81,65078,700 poster displays.

We generally leaserent poster space for 4 to 26 weeks;weeks, determined by the advertiser’s campaign needs.  Posters are sold in packages of Target Rating Point (“TRP”) levels, which determine the percentage of a target audience an advertiser needs to reach.  A package may include a combination of poster locations in order to meet reach and frequency campaign goals.

In addition to the traditional static displays, we also rent digital billboards. Digital billboards are large electronic light emitting diode (“LED”) displays (the most common sizes are fourteen14 feet high by forty-eight48 feet wide, or 672 square feet; ten and a half10.5 feet high by thirty six36 feet wide, or 378 square feet; and ten10 feet high by twenty-one21 feet wide, or 210 square feet) that are generally located on major traffic arteries and city streets. Digital billboards are capable of generating over one billion colors and vary in brightness based on ambient conditions. They display completely digital advertising copy from various advertisers in a slide show fashion, rotating each advertisement approximately every 6 to 8 seconds. At December 31, 2019,2021, our inventory included over 3,5003,900 digital display billboards in various markets. These 3,5003,900 digital billboards generated approximately 25%30% of billboard advertising net revenue.

We own the physical structures on which the advertising copy is displayed. We build the structures on locations we either own or lease. In each local office, one employee typically performs site leasing activities for the markets served by that office. See Item 2. — “Properties.”

In the majority of our markets, our local production staffs perform the full range of activities required to create and install billboard advertising displays. Production work includes creating the advertising copy design and layout, coordinating its printing and installing the designs on the displays. Our talented design staff uses state-of-the-art technology to prepare creative, eye-catching displays for our tenants. We can also help with the strategic placement of advertisements throughout an advertiser’s market by using software that allows us to analyze the target audience and its demographics. Our artists also assist in developing marketing presentations, demonstrations and strategies to attract new tenant advertisers.

In marketing billboard displays to advertisers, we compete with other forms of out-of-home advertising and other media. When selecting the media and provider through which to advertise, advertisers consider a number of factors and advertising providers, which are described in the section entitledtitled — “Competition” below.


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Logo Sign Advertising

We entered the logo sign advertising business in 1988 and have become the largest provider of logo sign services in the United States, operating 2423 of the 26 privatized state logo contracts. We erect logo signs, which generally advertise nearby gas, food, camping, lodging and other attractions, and directional signs, which direct vehicle traffic to nearby services and tourist attractions, near highway exits. As of December 31, 2019,2021, we operated approximately 46,17042,100 logo sign structures containing over 151,200137,800 logo advertising displays in the United States and Canada.

We operate the logo sign contracts in the province of Ontario, Canada and in the following states:

Colorado

Georgia

Louisiana

Mississippi

Nebraska

New Mexico

Tennessee

Delaware

Colorado

Georgia

Kansas

Louisiana

Mississippi

Michigan

Nebraska

New Jersey

Missouri(1)

Nevada

Ohio

Utah

South Carolina

Florida

Delaware

Kansas

Kentucky

Michigan

Missouri(1)

Minnesota

Nevada

New Mexico

Montana

New Hampshire

Oklahoma

Virginia

Tennessee

Florida

Kentucky

Minnesota

Montana

New Hampshire

Ohio

Utah

New Jersey

South Carolina

Oklahoma

Wisconsin

(1)

The logo sign contract in Missouri is operated by a 66 2/3% owned partnership.

(1)The logo sign contract in Missouri is operated by a 66 2/3% owned partnership.
We also operate the tourist oriented directional signing (“TODS”) programs for the states of Colorado, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, Ohio, South Carolina, Utah, Virginia and the province of Ontario, Canada, providing approximately 29,65015,900 advertising displays.

Our logo and TODS operations are decentralized. Generally, each office is staffed with an experienced local general manager, local sales and office staff and a local signing sub-contractor. This decentralization allows the management staff of Interstate Logos, L.L.C. (the subsidiary that operates all of the logo and directional sign-related businesses) to travel extensively to the various operations and serve in a technical and management advisory capacity and monitor regulatory and contract compliance. We also run a silk screening operation in Baton Rouge, Louisiana and a display construction company in Atlanta, Georgia.

State logo sign contracts represent the exclusive right to erect and operate logo signs within a state for a period of time. The terms of the contracts vary, but generally range from five to ten years, with additional renewal terms. Each logo sign contract generally allows the state to terminate the contract prior to its expiration and, in most cases, with compensation for the termination to be paid to the Company. When a logo sign contract expires, we transfer ownership of the advertising structures to the state. Depending on the contract, we may or may not be entitled to compensation at that time. Of our 2524 logo sign contracts in place, in the United States and Canada, at December 31, 2019, four2021, five are subject to renewal or expiration in 2020.

2022.

States usually award new logo sign contracts and renew expiring logo sign contracts through an open proposal process. In bidding for new and renewal contracts, we compete against other logo sign providers, as well as local companies based in the state soliciting proposals.

In marketing logo signs to advertisers, we compete with other forms of out-of-home advertising and other media. When selecting the media and provider through which to advertise, advertisers consider a number of factors and advertising providers which are described in the section entitledtitled — “Competition” below.

Transit Advertising

We entered into the transit advertising business in 1993 as a way to complement our existing business and maintain market share in certain markets. Transit contracts are generally with the local municipalities and airport authorities and allow us the exclusive right to rent advertising space to customers in airports and on buses, benches or shelters. The terms of the contracts vary but generally range between 3-15 years, many with renewable options for contract extension. We rent transit advertising displays in airport terminals and on bus shelters, benches and buses in over 80 transit markets, and our production staff provides a full range of creative and installation services to our transit advertising tenants. As of December 31, 2019,2021, we operated over 52,80046,600 transit advertising displays in 2223 states and Canada.

Municipalities usually award new transit advertising contracts and renew expiring transit advertising contracts through an open bidding process. In bidding for new and renewal contracts, we compete against national outdoor advertising providers and local, on-premise sign providers and sign construction companies. Transit advertising operators incur significant start-up costs to build and install the advertising structures (such as transit shelters) upon being awarded contracts.


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In marketing transit advertising displays to advertisers, we compete with other forms of out-of-home advertising and other media. When selecting the media and provider through which to advertise, advertisers consider a number of factors and advertising providers which are described in the section entitledtitled — “Competition” below.

COMPETITION

Although the outdoor advertising industry has encountered a wave of consolidation, the industry remains fragmented. The industry is comprised of several large outdoor advertising and media companies with operations in multiple markets, as well as smaller, local companies operating a limited number of structures in one or a few local markets.

Although we primarily focus on small to mid-size markets where we can attain a strong market share, in each of our markets we compete against other providers of outdoor advertising and other types of media, including:

•

Larger outdoor advertising providers, such as (i) Clear Channel Outdoor Holdings, Inc., which operates billboards, street furniture displays, transit displays and other out-of-home advertising displays and (ii) Outfront Media, Inc. (formerly CBS Outdoor), which operates traditional outdoor, street furniture and transit advertising properties.

•Larger outdoor advertising providers, such as (i) Clear Channel Outdoor Holdings, Inc., which operates billboards, street furniture displays, transit displays and other out-of-home advertising displays and (ii) Outfront Media, Inc. (formerly CBS Outdoor), which operates traditional outdoor, street furniture and transit advertising properties.

Broadcast and cable television, radio, print media, direct mail marketing, the internet, social media and applications used in conjunction with wireless devices.

•Broadcast and cable television, radio, print media, direct mail marketing, the internet, social media and applications used in conjunction with wireless devices.

An increasing variety of out-of-home advertising media, such as advertising displays in shopping centers, malls, airports, stadiums, movie theaters, supermarkets and advertising displays on taxis, trains and buses.

•An increasing variety of out-of-home advertising media, such as advertising displays in shopping centers, malls, airports, stadiums, movie theaters, supermarkets and advertising displays on taxis, trains and buses.
In selecting the form of media through which to advertise, advertisers evaluate their ability to target audiences having a specific demographic profile, lifestyle, brand or media consumption or purchasing behavior or audiences located in, or traveling through, a particular geography. Advertisers also compare the relative costs of available media, evaluating the number of impressions (potential viewings), exposure (the opportunity for advertising to be seen) and circulation (traffic volume in a market), as well as potential effectiveness, quality of related services (such as advertising copy design and layout) and customer service. In competing with other media, we believe that outdoor advertising is relatively more cost-efficient than other media, allowing advertisers to reach broader audiences and target specific geographic areas or demographic groups within markets.

We believe that our strong emphasis on sales and customer service and our position as a major provider of advertising services in each of our primary markets enables us to compete effectively with the other outdoor advertising companies, as well as with other media, within those markets.


9

Table of Contents
GEOGRAPHIC DIVERSIFICATION

Our advertising displays are geographically diversified across the United States and Canada. The following table sets forth information regarding the geographic diversification of our advertising displays, which are listed in order of contributionscontribution to total revenue. Markets with less than 1% of total displays are grouped in the category “all other United States.”

 

Percentage of Revenues for the year ended,

December 31, 2019

 

 

Number of Displays for the year ended,

December 31, 2019

 

Percentage of Revenues for the year ended,
December 31, 2021		Number of Displays for the year ended,
December 31, 2021

Market

 

Static

Billboard

Displays

 

 

Digital

Billboard

Displays

 

 

Transit

Displays

 

 

Logo

Displays

 

 

Total

Displays

 

 

Static

Billboard

Displays

 

 

Digital

Billboard

Displays

 

 

Transit

Displays

 

 

Logo

Displays

 

 

Total

Displays

 

 

Percentage

of Total

Displays

 

MarketStatic
Billboard
Displays		Digital
Billboard
Displays		Transit
Displays		Logo
Displays		Total
Displays		Static
Billboard
Displays		Digital
Billboard
Displays		Transit
Displays		Logo
Displays		Total
Displays		Percentage
of Total
Displays

Las Vegas, NV

 

 

1.8

%

 

 

2.6

%

 

 

15.0

%

 

 

—

 

 

 

3.0

%

 

 

837

 

 

 

64

 

 

 

1,498

 

 

 

—

 

 

 

2,399

 

 

 

0.6

%

New York, NY

 

 

3.2

%

 

 

1.7

%

 

 

—

 

 

 

—

 

 

 

2.5

%

 

 

1,054

 

 

 

37

 

 

 

—

 

 

 

—

 

 

 

1,091

 

 

 

0.3

%

New York, NY2.8 %2.6 %— — 2.5 %973 68 — — 1,041 0.3 %

Pittsburgh, PA

 

 

2.2

%

 

 

3.6

%

 

 

0.4

%

 

 

—

 

 

 

2.3

%

 

 

3,003

 

 

 

56

 

 

 

341

 

 

 

—

 

 

 

3,400

 

 

 

0.9

%

Pittsburgh, PA2.0 %3.0 %0.6 %— 2.1 %2,894 60 339 — 3,293 0.9 %
Las Vegas, NVLas Vegas, NV1.5 %2.0 %7.6 %— 1.9 %786 77 1,504 — 2,367 0.7 %

Seattle, WA

 

 

2.2

%

 

 

1.1

%

 

 

2.1

%

 

 

—

 

 

 

1.9

%

 

 

1,736

 

 

 

18

 

 

 

2,194

 

 

 

—

 

 

 

3,948

 

 

 

1.0

%

Seattle, WA2.1 %1.1 %2.5 %— 1.7 %1,621 19 2,012 — 3,652 1.0 %
Gary, INGary, IN1.7 %2.4 %— — 1.7 %2,118 143 — — 2,261 0.6 %

Cleveland, OH

 

 

1.7

%

 

 

2.7

%

 

 

1.6

%

 

 

—

 

 

 

1.8

%

 

 

2,390

 

 

 

58

 

 

 

2,542

 

 

 

—

 

 

 

4,990

 

 

 

1.3

%

Cleveland, OH1.7 %2.1 %1.6 %— 1.7 %2,284 58 2,475 — 4,817 1.4 %

Gary, IN

 

 

1.6

%

 

 

2.6

%

 

 

—

 

 

 

—

 

 

 

1.6

%

 

 

1,711

 

 

 

118

 

 

 

—

 

 

 

—

 

 

 

1,829

 

 

 

0.5

%

San Bernardino, CA

 

 

1.6

%

 

 

1.9

%

 

 

1.1

%

 

 

—

 

 

 

1.5

%

 

 

782

 

 

 

33

 

 

 

1,273

 

 

 

—

 

 

 

2,088

 

 

 

0.5

%

San Bernardino, CA1.5 %2.2 %1.8 %— 1.6 %643 50 1,102 — 1,795 0.5 %
Nashville, TNNashville, TN1.6 %2.3 %— — 1.6 %2,168 71 — — 2,239 0.6 %

Dallas, TX

 

 

1.8

%

 

 

1.0

%

 

 

1.9

%

 

 

—

 

 

 

1.5

%

 

 

1,374

 

 

 

21

 

 

 

459

 

 

 

—

 

 

 

1,854

 

 

 

0.5

%

Dallas, TX1.8 %0.9 %1.9 %— 1.5 %1,316 23 459 — 1,798 0.5 %

Nashville, TN

 

 

1.4

%

 

 

2.2

%

 

 

—

 

 

 

—

 

 

 

1.4

%

 

 

1,735

 

 

 

61

 

 

 

—

 

 

 

—

 

 

 

1,796

 

 

 

0.5

%

Vancouver, Canada

 

 

—

 

 

 

—

 

 

 

16.7

%

 

 

—

 

 

 

1.4

%

 

 

—

 

 

 

—

 

 

 

6,118

 

 

 

—

 

 

 

6,118

 

 

 

1.6

%

Knoxville, TNKnoxville, TN1.7 %0.9 %— — 1.4 %2,376 48 — — 2,424 0.7 %
Raleigh, NCRaleigh, NC1.6 %0.8 %— — 1.3 %2,626 44 — — 2,670 0.8 %

Atlanta, GA

 

 

1.2

%

 

 

2.5

%

 

 

—

 

 

 

—

 

 

 

1.3

%

 

 

771

 

 

 

56

 

 

 

—

 

 

 

—

 

 

 

827

 

 

 

0.2

%

Atlanta, GA1.1 %2.4 %— — 1.3 %765 75 — — 840 0.2 %
Richmond, VARichmond, VA1.3 %1.9 %— — 1.3 %1,277 46 — — 1,323 0.4 %

Reading, PA

 

 

1.1

%

 

 

2.1

%

 

 

—

 

 

 

—

 

 

 

1.2

%

 

 

1,244

 

 

 

101

 

 

 

—

 

 

 

—

 

 

 

1,345

 

 

 

0.3

%

Reading, PA1.1 %2.2 %— — 1.3 %1,220 103 — — 1,323 0.4 %
Oklahoma City, OKOklahoma City, OK1.3 %1.2 %— — 1.2 %2,094 37 — — 2,131 0.6 %

Hartford, CT

 

 

1.1

%

 

 

2.2

%

 

 

0.1

%

 

 

—

 

 

 

1.2

%

 

 

919

 

 

 

50

 

 

 

100

 

 

 

—

 

 

 

1,069

 

 

 

0.3

%

Hartford, CT1.0 %2.0 %— — 1.2 %849 49 38 — 936 0.3 %

Richmond, VA

 

 

1.3

%

 

 

1.7

%

 

 

—

 

 

 

—

 

 

 

1.2

%

 

 

1,319

 

 

 

38

 

 

 

—

 

 

 

—

 

 

 

1,357

 

 

 

0.3

%

Phoenix, AZ

 

 

0.2

%

 

 

2.5

%

 

 

5.5

%

 

 

—

 

 

 

1.2

%

 

 

142

 

 

 

47

 

 

 

3,481

 

 

 

—

 

 

 

3,670

 

 

 

0.9

%

Phoenix, AZ0.3 %2.4 %7.1 %— 1.2 %146 48 3,018 — 3,212 0.9 %

Oklahoma City, OK

 

 

1.4

%

 

 

1.4

%

 

 

—

 

 

 

—

 

 

 

1.2

%

 

 

2,209

 

 

 

33

 

 

 

—

 

 

 

—

 

 

 

2,242

 

 

 

0.6

%

Knoxville, TN

 

 

1.6

%

 

 

0.7

%

 

 

—

 

 

 

—

 

 

 

1.2

%

 

 

2,226

 

 

 

30

 

 

 

—

 

 

 

—

 

 

 

2,256

 

 

 

0.6

%

Greenville-Spartanburg, SCGreenville-Spartanburg, SC1.3 %1.2 %— — 1.1 %1,870 49 — — 1,919 0.5 %
Indianapolis, INIndianapolis, IN1.3 %1.0 %— — 1.1 %2,227 22 — — 2,249 0.6 %

Birmingham, AL

 

 

1.2

%

 

 

1.2

%

 

 

0.3

%

 

 

—

 

 

 

1.1

%

 

 

1,581

 

 

 

32

 

 

 

318

 

 

 

—

 

 

 

1,931

 

 

 

0.6

%

Birmingham, AL1.1 %1.2 %0.5 %— 1.0 %1,506 35 318 — 1,859 0.5 %

Raleigh, NC

 

 

1.4

%

 

 

0.9

%

 

 

—

 

 

 

—

 

 

 

1.1

%

 

 

2,889

 

 

 

41

 

 

 

—

 

 

 

—

 

 

 

2,930

 

 

 

0.8

%

Baton Rouge, LABaton Rouge, LA1.1 %1.1 %— — 1.0 %1,399 42 — — 1,441 0.4 %

Austin, TX

 

 

1.5

%

 

 

0.4

%

 

 

—

 

 

 

—

 

 

 

1.0

%

 

 

952

 

 

 

5

 

 

 

—

 

 

 

—

 

 

 

957

 

 

 

0.2

%

Austin, TX1.4 %0.3 %— — 1.0 %914 7 — — 921 0.3 %
Providence, RIProvidence, RI1.0 %1.6 %— — 1.0 %534 31 — — 565 0.2 %

Cincinnati, OH

 

 

1.0

%

 

 

1.8

%

 

 

—

 

 

 

—

 

 

 

1.0

%

 

 

1,176

 

 

 

31

 

 

 

—

 

 

 

—

 

 

 

1,207

 

 

 

0.3

%

Cincinnati, OH0.9 %1.5 %— — 1.0 %1,133 34 — — 1,167 0.3 %

Columbus, OH

 

 

1.0

%

 

 

1.6

%

 

 

—

 

 

 

—

 

 

 

1.0

%

 

 

1,771

 

 

 

60

 

 

 

—

 

 

 

—

 

 

 

1,831

 

 

 

0.5

%

Providence, RI

 

 

1.0

%

 

 

1.7

%

 

 

—

 

 

 

—

 

 

 

1.0

%

 

 

582

 

 

 

31

 

 

 

—

 

 

 

—

 

 

 

613

 

 

 

0.2

%

Baton Rouge, LA

 

 

1.1

%

 

 

1.2

%

 

 

—

 

 

 

—

 

 

 

1.0

%

 

 

1,483

 

 

 

39

 

 

 

—

 

 

 

—

 

 

 

1,522

 

 

 

0.4

%

Buffalo, NY

 

 

0.9

%

 

 

1.1

%

 

 

2.4

%

 

 

—

 

 

 

1.0

%

 

 

933

 

 

 

28

 

 

 

1,690

 

 

 

—

 

 

 

2,651

 

 

 

0.7

%

Indianapolis, IN

 

 

1.2

%

 

 

0.9

%

 

 

—

 

 

 

—

 

 

 

1.0

%

 

 

2,395

 

 

 

20

 

 

 

—

 

 

 

—

 

 

 

2,415

 

 

 

0.6

%

Greenville-Spartanburg, SC

 

 

1.1

%

 

 

1.2

%

 

 

—

 

 

 

—

 

 

 

1.0

%

 

 

1,958

 

 

 

45

 

 

 

—

 

 

 

—

 

 

 

2,003

 

 

 

0.5

%

All US Logo

Programs*

 

 

—

 

 

 

—

 

 

 

—

 

 

 

93.4

%

 

 

4.9

%

 

 

—

 

 

 

—

 

 

 

—

 

 

 

165,103

 

 

 

165,103

 

 

 

42.1

%

All US Logo Programs*— — — 90.9 %4.5 %— — — 142,817 142,817 40.4 %

All Other United

States

 

 

63.1

%

 

 

55.5

%

 

 

43.1

%

 

 

—

 

 

 

56.3

%

 

 

114,961

 

 

 

2,366

 

 

 

28,334

 

 

 

—

 

 

 

145,661

 

 

 

37.1

%

All Other United States65.8 %59.7 %53.0 %— 60.2 %113,992 2,691 25,084 — 141,767 40.0 %

All Other Canada*

 

 

0.1

%

 

 

—

 

 

 

9.8

%

 

 

6.6

%

 

 

1.2

%

 

 

136

 

 

 

2

 

 

 

4,453

 

 

 

15,762

 

 

 

20,353

 

 

 

5.1

%

All Other Canada*— — 23.4 %9.1 %1.6 %119 2 10,205 10,900 21,226 6.0 %

Total

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

154,269

 

 

 

3,521

 

 

 

52,801

 

 

 

180,865

 

 

 

391,456

 

 

 

100.0

%

Total100.0 %100.0 %100.0 %100.0 %100.0 %149,850 3,932 46,554 153,717 354,053 100.0 %

Total Revenue

(in millions)

 

$

1,145.4

 

 

$

392.1

 

 

$

131.9

 

 

$

84.2

 

 

$

1,753.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue (in millions)$1,153.4 $460.1 $95.7 $78.2 $1,787.4 

* Logo displays at December 31, 2019 include 29,649 displays related to the tourist oriented direction signing ("TODS") programs.

 


* Logo displays at December 31, 2021 include 15,886 displays related to the tourist oriented direction signing ("TODS") programs.

TAXABLE REIT SUBSIDIARIES

We hold and operate certain of our assets that cannot be held and operated directly by a REIT through taxable REIT subsidiaries, or TRSs. A TRS is a subsidiary of a REIT that pays corporate taxes on its taxable income. The assets held in our TRSs primarily consist of our transit advertising business, advertising services business and our foreign operations. We may, from time to time, change the election of previously designated TRSs to be treated as qualified REIT subsidiaries (“QRSs”) or other disregarded entities, and may reorganize and transfer certain assets or operations from our TRSs to other subsidiaries, including QRSs.
Our TRS assets and operations will continue to be subject, as applicable, to U.S. federal and state corporate income taxes. Furthermore, our assets and operations outside the United States will continue to be subject to foreign taxes in the jurisdictions in which those assets and operations are located. Net income from our TRSs will either be retained by our TRSs and used to fund their operations, or distributed to us, where it will be reinvested in our business or be available for distribution to Lamar Advertising’s stockholders. As of December 31, 2019,2021, the annual revenue generated by our TRSs in the aggregate was approximately $323.7$180.6 million.

10
Table of Contents
ADVERTISING TENANTS

Our tenant base is diverse. The table below sets forth the ten industries from which we derived most of our billboard advertising revenues for the year ended December 31, 2019,2021, as well as the percentage of billboard advertising revenues attributable to the advertisers in those industries. The individual advertisers in these industries accounted for approximately 76%73% of our billboard advertising net revenues in the year ended December 31, 2019.2021. No individual tenant accounted for more than 2.0%2% of our billboard advertising net revenues in that period.

Categories

CategoriesPercentage of Net


Billboard


Advertising Revenues

Service

13 

14

%

Health Care

12 

11

%

Restaurants

10 

11

%

Retailers

8 

9

%

Automotive

5 %
Insurance5 %
Gaming5 %
Amusement — Entertainment/Sports

4 

7

%

Automotive

5

%

Financial — Banks, Credit Unions

4 

4

%

Gaming

Education

4 

4

%

Education

Real Estate

3 

4

%

Insurance

73 

4

%

Real Estate

3

%

76

%

REGULATION

Outdoor advertising is subject to governmental regulation at the federal, state and local levels. Regulations generally restrict the size, spacing, lighting and other aspects of advertising structures and pose a significant barrier to entry and expansion in many markets.  Federal law, principally the Highway Beautification Act of 1965 (the “HBA”), regulates outdoor advertising on Federal — Aid Primary, Interstate and National Highway Systems roads. The HBA requires states, through the adoption of individual Federal/State agreements, to “effectively control” outdoor advertising along these roads, and mandates a state compliance program and state standards regarding size, spacing and lighting. These state standards, or their local and municipal equivalents, may be modified over time in response to legal challenges or otherwise, which may have an adverse effect on our business. The HBA requires any state or political subdivision that compels the removal of a lawful billboard along a Federal — Aid Primary or Interstate highway to pay just compensation to the billboard owner.

All states have passed billboard control statutes and regulations at least as restrictive as the federal requirements, including laws requiring the removal of illegal signs at the owner’s expense (and without compensation from the state). Although we believe that the number of our billboards that may be subject to removal as illegal is immaterial, and no state in which we operate has banned billboards entirely, from time to time governments have required us to remove signs and billboards legally erected in accordance with federal, state and local permit requirements and laws. Municipal and county governments generally also have sign controls as part of their zoning laws and building codes. We contest laws and regulations that we believe unlawfully restrict our constitutional or other legal rights and may adversely impact the growth of our outdoor advertising business.


Using federal funding for transportation enhancement programs, state governments have purchased and removed billboards for beautification, and may do so again in the future. Under the power of eminent domain, state or municipal governments have laid claim to property and forced the removal of billboards. Under a concept called amortization by which a governmental body asserts that a billboard operator has earned compensation by continued operation over time, local governments have attempted to force removal of legal but nonconforming billboards (i.e., billboards that conformed with applicable zoning regulations when built but which do not conform to current zoning regulations). Although the legality of amortization is questionable, it has been upheld in some instances. Often, municipal and county governments also have sign controls as part of their zoning laws, with some local governments prohibiting construction of new billboards or allowing new construction only to replace existing structures. Although we have generally been able to obtain satisfactory compensation for those of our billboards purchased or removed as a result of governmental action, there is no assurance that this will continue to be the case in the future.

11
Table of Contents

We have also introduced and intend to continue to expand the deployment of digital billboards that display static digital advertising copy from various advertisers that change every 6 to 8 seconds. We have encountered some existing regulations that restrict or prohibit these types of digital displays but it has not yet materially impacted our digital deployment. Since digital billboards have been developed and introduced relatively recently into the market on a large scale, existing regulations that currently do not apply to them by their terms could be revised or new regulations could be enacted to impose greater restrictions. These regulations may impose greater restrictions on digital billboards due to alleged concerns over aesthetics or driver safety.

Relatively few large scale studies have been conducted to date regarding driver safety issues, if any, related to digital billboards. On December 30, 2013, the results of a study conducted by U.S. Department of Transportation and the Federal Highway Administration that looked at the effect of digital billboards and conventional billboards on driver visual behavior were issued. The conclusions of the report indicated that the presence of digital billboards did not appear to be related to a decrease in looking toward the road ahead and were generally within acceptable thresholds. The report cautioned, however, that it adds to the knowledge base but does not present definitive answers to the research questions investigated. Accordingly, the results of future studies may result in regulations at the federal or state level that impose greater restrictions on digital billboards. Any new restrictions on digital billboards could have a material adverse effect on both our existing inventory of digital billboards and our plans to expand our digital deployment, which could have a material adverse effect on our business, results of operations and financial condition.

LEGAL PROCEEDINGS

From time to time, we are involved in litigation in the ordinary course of business, including disputes involving advertising contracts, site leases, employment claims and construction matters. We are also involved in routine administrative and judicial proceedings regarding billboard permits, fees and compensation for condemnations. We are not a party to any lawsuit or proceeding which, in the opinion of management, is likely to have a material adverse effect on us.

REAL ESTATE PORTFOLIO

Our management headquarters is located in Baton Rouge, Louisiana. We also own 126125 local operating facilities with front office administration and sales office space connected to back-shop poster and bulletin production space. In addition, we lease an additional 130151 operating facilities at an aggregate lease expense for 20192021 of approximately $8.3$8.8 million.

We own over 8,9009,800 parcels of property beneath our advertising displays. As of December 31, 2019,2021, we leased over 74,30069,900 outdoor sites, accounting for an annualized lease expense of approximately $287.6$291.8 million. This amount represented approximately 19%18% of billboard advertising net revenues for that period. These leases are for varying terms ranging from month-to-month to a term of over ten years, and many provide us with renewal options. Our lease agreements generally permit us to use the land for the construction, repair and relocation of outdoor advertising displays, including all rights necessary to access and maintain the site. Approximately 69%74% of our leases will expire or be subject to renewal in the next 5 years, 20%17% will expire or be subject to renewal in 6 to 10 years and 11%9% thereafter. There is no significant concentration of displays under any one lease or subject to negotiation with any one landlord. An important part of our management activity is to manage our lease portfolio and negotiate suitable lease renewals and extensions.

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The following table illustrates the number of leased and owned sites by state as of December 31, 2019,2021, which is sorted from greatest to least in number and percentage of leased sites. States in which we lease less than 2% of our portfolio are grouped in the category “All Other States”States and Canada”.


State# of billboard leased sites% of total# of owned billboard sites% of total
Texas5,179 7.4 %1,015 10.3 %
Pennsylvania4,806 6.9 %1,586 16.1 %
California4,520 6.5 %151 1.5 %
Ohio4,143 5.9 %583 5.9 %
North Carolina3,915 5.6 %273 2.8 %
Tennessee3,021 4.3 %444 4.5 %
Louisiana2,950 4.2 %509 5.2 %
Alabama2,944 4.2 %501 5.1 %
Georgia2,600 3.7 %262 2.7 %
Wisconsin2,599 3.7 %337 3.4 %
Florida2,392 3.4 %423 4.3 %
South Carolina2,326 3.3 %140 1.4 %
New York2,100 3.0 %218 2.2 %
Missouri1,989 2.8 %272 2.8 %
Indiana1,932 2.8 %311 3.2 %
Michigan1,929 2.8 %271 2.7 %
Mississippi1,861 2.7 %396 4.0 %
Oklahoma1,721 2.5 %135 1.4 %
Virginia1,583 2.3 %174 1.8 %
Illinois1,474 2.1 %332 3.4 %
All Other States and Canada13,982 19.9 %1,526 15.3 %
69,966 100.0 %9,859 100.0 %

State

 

# of billboard leased sites

 

 

% of total

 

 

# of owned billboard sites

 

 

% of total

 

Texas

 

 

5,669

 

 

 

7.6

%

 

 

962

 

 

 

10.7

%

Pennsylvania

 

 

5,264

 

 

 

7.1

%

 

 

1,459

 

 

 

16.3

%

California

 

 

4,564

 

 

 

6.1

%

 

 

130

 

 

 

1.5

%

Ohio

 

 

4,511

 

 

 

6.1

%

 

 

533

 

 

 

6.0

%

North Carolina

 

 

4,261

 

 

 

5.7

%

 

 

249

 

 

 

2.8

%

Tennessee

 

 

3,252

 

 

 

4.4

%

 

 

415

 

 

 

4.6

%

Louisiana

 

 

3,164

 

 

 

4.3

%

 

 

481

 

 

 

5.4

%

Alabama

 

 

3,067

 

 

 

4.1

%

 

 

433

 

 

 

4.8

%

Wisconsin

 

 

2,807

 

 

 

3.8

%

 

 

291

 

 

 

3.3

%

Georgia

 

 

2,751

 

 

 

3.7

%

 

 

249

 

 

 

2.8

%

Florida

 

 

2,652

 

 

 

3.6

%

 

 

376

 

 

 

4.2

%

South Carolina

 

 

2,513

 

 

 

3.4

%

 

 

131

 

 

 

1.5

%

New York

 

 

2,331

 

 

 

3.1

%

 

 

188

 

 

 

2.1

%

Missouri

 

 

2,242

 

 

 

3.0

%

 

 

213

 

 

 

2.4

%

Michigan

 

 

2,000

 

 

 

2.7

%

 

 

264

 

 

 

2.9

%

Mississippi

 

 

1,949

 

 

 

2.6

%

 

 

358

 

 

 

4.0

%

Indiana

 

 

1,859

 

 

 

2.5

%

 

 

266

 

 

 

3.0

%

Oklahoma

 

 

1,827

 

 

 

2.5

%

 

 

129

 

 

 

1.4

%

Virginia

 

 

1,651

 

 

 

2.2

%

 

 

160

 

 

 

1.8

%

Illinois

 

 

1,560

 

 

 

2.1

%

 

 

311

 

 

 

3.5

%

All Other States

 

 

14,470

 

 

 

19.4

%

 

 

1,355

 

 

 

15.0

%

 

 

 

74,364

 

 

 

100.0

%

 

 

8,953

 

 

 

100.0

%

CONTRACT EXPIRATIONS

We derive revenues primarily from renting advertising space to customers on our advertising displays. Our contracts with customers generally cover periods ranging from one week to one year and are generally billed every four weeks. Since contract terms are short-term in nature, we do not consider revenues by year of contract expiration to be meaningful.

EMPLOYEES

HUMAN CAPITAL RESOURCES
Our People.We employed approximately 3,6003,350 people as of December 31, 2019.2021. Approximately 250290 employees were engaged in overall management and general administration at our managementcorporate headquarters in Baton Rouge, Louisiana, and the remainder, including approximately 1,060930 local account executives, were employed in our operating offices.

Fifteen of our local offices employ billposters and construction personnel who are covered by collective bargaining agreements. We believe that our relationship with our employees, including our approximately 12095 unionized employees, is good,favorable, and we have never experienced a strike or work stoppage.

As Lamar’s business continues to grow, so does the Company’s strong commitment to recruiting a work force with diverse talents, as well as to developing and retaining the successful members of our sales and management teams. Our 930 local account executives and approximately 170 local management employees have been with the Company for an average of 11 years. We regularly provide on-site training and remote sales training videos to enhance the skills of our sales and management team members.
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We employ approximately 1,100 operations employees, including operations management. These employees are responsible for installing advertising copy, maintaining our billboard inventory and ensuring our billboards, logos and transit displays are in safe operating condition. We empower these employees to have a safety-first mentality, which includes the authority to stop an installation or other work job for any safety concern. We also provide training and certification to our operations employees, including training for crane operations and climbing safety. Our management regularly conducts scheduled safety meetings and unscheduled job observations to ensure that we maintain a safety mindset every day.
Diversity and inclusion. We recognize that our organization grows stronger as we are able to draw on the skills of employees with a variety of backgrounds and life experiences, particularly as the audiences that we serve become more diverse. We want to embrace Lamar employees’ unique differences of race, gender and gender identity, religion, sexual orientation, ethnicity, nationality, socioeconomic status, language, ability, age, religious commitment, veteran status, or political perspective. As such, we are committed to cultivating a culture where all employees see the opportunity to show up to work as their most authentic selves.
As of December 31, 2021, approximately 36% of our work force was female and 16% of our employees identified themselves as minorities, while 33% of our Board of Directors was female and one of our nine directors was a member of a minority group.
We have established several initiatives aimed at further diversifying our work force, including establishing an alliance with a hiring network that helps bring us a more diverse pool of candidates and creating an internal women’s leadership network that provides our female leaders with tools and a supportive community to help them develop into senior-level managers. Our Executive Vice President of Human Resources, who also serves as our Chief Diversity Officer, is charged with providing training that reinforces our commitment to treat all of our employees with dignity and respect.
Health and wellness. Due to the continuing effects of the ongoing COVID-19 pandemic, we have maintained a number of health and safety precautions for our employees. These precautions include maintaining proper social distancing, mask requirements due to possible exposure, additional office cleaning and contact tracing in the event of a positive COVID-19 case. We also monitor updates from the Centers for Disease Control and Prevention and state and local government guidelines to ensure our health and safety precautions stay up to date.
INFLATION

In the last three years, inflation has not had a significant impact on us.

our business. While we have recently seen and expect continued wage pressure and increased costs for capital expenditures, we cannot determine the exact impact inflation will have on our business. However, we believe any increases in costs will be mitigated by increases in advertising rates on our advertising displays.

SEASONALITY

Our revenues and operating results are subject to seasonality. Typically, we experience our strongest financial performance in the summer and fall, and our weakest financial performance in the first quarter of the calendar year, partly because retailers cut back their advertising spending immediately following the holiday shopping season. We expect this trend to continue in the future. Because a significant portion of our expenses is fixed, a reduction in revenues in any quarter is likely to result in a period-to-period decline in operating performance and net earnings.


AVAILABLE INFORMATION

We make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports available free of charge through our website, www.lamar.com, as soon as reasonably practicable after filing them with, or furnishing them to, the Securities and Exchange Commission. Information contained on theour website is not part of this Annual Report.

ITEM 1A.

RISK FACTORS

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ITEM 1A.    RISK FACTORS
Risks Related to Our Capital Structure
The Company’s substantial debt may adversely affect its business, financial condition and financial results.

The Company has borrowed substantially in the past and will continue to borrow in the future. At December 31, 2019,2021, Lamar Advertising Company’s wholly owned subsidiary, Lamar Media, had approximately $2.980$3.01 billion of total debt outstanding, net of deferred financing costs, consisting of approximately $1.118 billion$764.4 million in bank debt outstanding under Lamar Media’s senior credit facility, $531.8 million in senior subordinated notes, $1.153$2.07 billion in various series of senior notes, $174.2$174.4 million under the Accounts Receivable Securitization Program and $3.1$2.4 million in other seller notes. Despite the level of debt presently outstanding, the terms of the indentures governing Lamar Media’s notes and the terms of the senior credit facility and Accounts Receivable Securitization Program allow Lamar Media to incur substantially more debt, including approximately $387.3$562.6 million available for borrowing under the revolving credit facility as of December 31, 2019 under the revolving senior credit facility. Furthermore, on February 6, 2020, Lamar Media completed a comprehensive refinancing transaction, which included an amendment and restatement of its credit facility that, among other things, increased the borrowing capacity under the revolving portion of its credit facility by $200.0 million.

2021.

The Company’s substantial debt and its use of cash flow from operations to make principal and interest payments on its debt may, among other things:

•

make it more difficult for the Company to comply with the financial covenants in its senior credit facility and in its Accounts Receivable Securitization Program, which could result in a default and an acceleration of all amounts outstanding under the facility or under the Accounts Receivable Securitization Program;

•make it more difficult for the Company to comply with the financial covenants in its senior credit facility and in its Accounts Receivable Securitization Program, which could result in a default and an acceleration of all amounts outstanding under the facility or under the Accounts Receivable Securitization Program;

limit the cash flow available to fund the Company’s working capital, capital expenditures, acquisitions or other general corporate requirements;

•

limit the cash flow available to fund the Company’s ability to obtain additional financing to fund future dividend distributions, working capital, capital expenditures, acquisitions or other general corporate requirements;

•limit the Company’s ability to obtain additional financing to fund future dividend distributions, working capital, capital expenditures or other general corporate requirements;

place the Company at a competitive disadvantage relative to those of its competitors that have less debt;

•

force the Company to seek and obtain alternate or additional sources of funding, which may be unavailable, or may be on•place the Company at a competitive disadvantage relative to those of its competitors that have less favorable terms, or may require the Company to obtain the consent of lenders under its senior credit facility or the holders of its other debt;

•force the Company to seek and obtain alternate or additional sources of funding, which may be unavailable, or may be on less favorable terms, or may require the Company to obtain the consent of lenders under its senior credit facility or the holders of its other debt;

limit the Company’s flexibility in planning for, or reacting to, changes in its business and industry; and

•limit the Company’s flexibility in planning for, or reacting to, changes in its business and industry; and

increase the Company’s vulnerability to general adverse economic and industry conditions.

•increase the Company’s vulnerability to general adverse economic and industry conditions.
Lamar Media has variable rate debt outstanding under the senior credit facility and its Accounts Receivable Securitization Program. Increases in the interest rates applicable to these borrowings would result in increased interest expense and a reduction in the Company's net income. Interest rates may increase as a result of macroeconomic factors outside of our control. In the event of an increase in interest rates, the Company may take actions to mitigate its exposure, however, it cannot guarantee that the actions that it takes to mitigate these risks will be effective.
Any of these problems could adversely affect the Company’s business, financial condition and financial results.

The Company may be unable to generate sufficient cash flow to satisfy its significant debt service obligations.
The Company’s ability to generate cash flow from operations to make principal and interest payments on its debt will depend on its future performance, which will be affected by a range of economic, competitive and business factors. The Company cannot control many of these factors, including general economic conditions (including, but not limited to, the impact of the ongoing COVID-19 pandemic on the general economy), its customers’ allocation of advertising expenditures among available media and the amount spent on advertising in general, and its business would be negatively impacted if the general economy were to deteriorate in the future. If its operations do not generate sufficient cash flow from operations to satisfy its debt service obligations, the Company may need to borrow additional funds to make these payments or undertake alternative financing plans, such as refinancing or restructuring its debt, or reducing or delaying capital investments and acquisitions. The Company cannot guarantee that such additional funds or alternative financing will be available on favorable terms, if at all. The Company’s inability to generate sufficient cash flow from operations or obtain additional funds or alternative financing on acceptable terms could have a material adverse effect on our business, financial condition and results of operations.
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Restrictions in the Company’s and Lamar Media’s debt agreements reduce operating flexibility and contain covenants and restrictions that create the potential for defaults, which could adversely affect the Company’s business, financial condition and financial results.

The terms of Lamar Media’s senior credit facility and the indentures relating to Lamar Media’s outstanding notes restrict the ability of the Company and Lamar Media to, among other things:

•

incur or repay debt;

•incur or repay debt;

dispose of assets;

•dispose of assets;

create liens;

•create liens;

make investments;

•make investments;

enter into affiliate transactions; and

•enter into affiliate transactions; and

pay dividends and make inter-company distributions.


•pay dividends and make inter-company distributions.

At December 31, 2019,2021, the terms of Lamar Media’s senior credit facility and of ourits Accounts Receivable Securitization Program also restrict the Company from exceeding a specified secured debt ratio.  Lamar Media is also subject to certain other financial covenants relating to the incurrence of additional debt. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” for a description of the specific financial ratio requirements under the senior credit facility.

The Company’s ability to comply with the financial covenants in the senior credit facility, Accounts Receivable Securitization Program and the indentures governing Lamar Media’s outstanding notes (and to comply with similar covenants in any future agreements) depends on its operating performance, which in turn depends significantly on prevailing economic, financial and business conditions and other factors that are beyond the Company’s control. Therefore, despite its best efforts and execution of its strategic plan, the Company may be unable to comply with these financial covenants in the future.

The Company is currently in compliance with all financial covenants. However, if in the future there are economic declines the Company can make no assurance that these declines will not negatively impact the Company’s financial results and, in turn, its ability to meet these financial covenant requirements. If Lamar Media fails to comply with its financial covenants, Lamar Media could be in default under the senior credit facility and the Accounts Receivable Securitization Program (which could result in an event of default under the indentures governing its outstanding notes). In the event of such a default under the senior credit facility, the lenders under the senior credit facility could accelerate all of the debt outstanding, could elect to institute foreclosure proceedings against Lamar Media’s assets, and it could be forced into bankruptcy or liquidation. Any of these events could adversely affect Lamar Media’s business, financial condition and financial results. In the event of such a default under the Accounts Receivable Securitization Program, the lenders under the Accounts Receivable Securitization Program could accelerate all of the debt outstanding, which would create serious financial problemscould elect to institute foreclosure proceedings against the assets of the Special Purpose Subsidiaries (as defined herein), and the Special Purpose Subsidiaries could lead to a default under the indentures governing Lamar Media’s outstanding notes.be forced into bankruptcy or liquidation. Any of these events could adversely affect the Company’s business, financial condition and financial results.

In addition, these restrictions reduce the Company’s operating flexibility and could prevent the Company from exploiting investment, acquisition, marketing, or other time-sensitive business opportunities.

The Company’s revenues are sensitiveCompany is controlled by significant stockholders who have the power to determine the outcome of all matters submitted to the statestockholders for approval and whose interest in the Company may be different than yours.
As of December 31, 2021, members of the economy and the financial markets generally and other external events beyondReilly family, including Kevin P. Reilly, Jr., the Company’s control.

The Company rents advertising space on outdoor structuresExecutive Chairman, and Sean Reilly, the Company’s President and Chief Executive Officer, and their affiliates, owned in the aggregate approximately 15% of the Company’s outstanding common stock, assuming the conversion of all Class B common stock to generate revenues. Advertising spending is particularly sensitive to changes in economic conditions.

Additionally,Class A common stock. As of that date, their combined holdings represented approximately 63% of the occurrencevoting power of Lamar Advertising’s outstanding capital stock, which would give the Reilly family and their affiliates the power to:

•elect the Company’s entire Board of Directors;
•control the Company’s management and policies; and
•determine the outcome of any corporate transaction or other matter requiring stockholder approval, including charter amendments, mergers, consolidations, financings and asset sales.
The Reilly family may have interests that are different than yours in making these decisions.
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Table of the following external events could further depress the Company’s revenues:

•

a widespread reallocation of advertising expenditures to other available media by significant renters of the Company’s displays; and

Contents

•

a decline in the amount spent on advertising in general or outdoor advertising in particular.

Risks Related to Our Business

The Company’s growth through acquisitions may be difficult, which could adversely affect our future financial performance. In addition, if we are unable to successfully integrate any completed acquisitions, our financial performance would also be adversely affected.

The Company has historically grown through acquisitions. During the year ended December 31, 2019,2021, we completed acquisitions for a total cash purchase price of approximately $226.3$312.3 million. We intend to continue to evaluate strategic acquisition opportunities as they arise.

The future success of our acquisition strategy could be adversely affected by many factors, including the following:

•

the pool of suitable acquisition candidates is dwindling, and we may have a more difficult time negotiating acquisitions on favorable terms;

•the pool of suitable acquisition candidates is dwindling, and we may have a more difficult time negotiating acquisitions on favorable terms;

we may face increased competition for acquisition candidates from other outdoor advertising companies, some of which have greater financial resources than we do, which may result in higher prices for those businesses and assets;

•we may face increased competition for acquisition candidates from other outdoor advertising companies, some of which may have greater financial resources than we do, which may result in higher prices for those businesses and assets;

we may not have access to the capital needed to finance potential acquisitions and may be unable to obtain any required consents from our current lenders to obtain alternate financing;

•we may not have access to the capital needed to finance potential acquisitions and may be unable to obtain any required consents from our current lenders to obtain alternate financing;

compliance with REIT requirements may hinder our ability to make certain investments and may limit our acquisition opportunities;

•compliance with REIT requirements may hinder our ability to make certain investments and may limit our acquisition opportunities;

we may be unable to integrate acquired businesses and assets effectively with our existing operations and systems as a result of unforeseen difficulties that could divert significant time, attention and effort from management that could otherwise be directed at developing existing business;

•we may be unable to integrate acquired businesses and assets effectively with our existing operations and systems as a result of unforeseen difficulties that could divert significant time, attention and effort from management that could otherwise be directed at developing existing business;

we may be unable to retain key personnel of acquired businesses;


•we may be unable to retain key personnel of acquired businesses;

•

we may not realize the benefits and cost savings anticipated in our acquisitions; and

•

as the industry consolidates further, larger mergers and acquisitions may face substantial scrutiny under antitrust laws.

These obstacles to our opportunistic acquisition strategy may have an adverse effect on our future financial results.

The Company could suffer losses due to asset impairment charges for goodwill and other intangible assets.

The Company tested goodwill for impairment on December 31, 2019.2021. Based on the Company’s review at December 31, 2019,2021, no impairment charge was required. The Company continues to assess whether factors or indicators become apparent that would require an interim impairment test between our annual impairment test dates. For instance, if our market capitalization is below our equity book value for a period of time without recovery, we believe there is a strong presumption that would indicate a triggering event has occurred and it is more likely than not that the fair value of one or both of our reporting units areis below theirthe carrying amount. This would require us to test the reporting units for impairment of goodwill. If this presumption cannot be overcome a reporting unit could be impaired under ASC 350 “Goodwill and Other Intangible Assets” and a non-cash charge would be required. Any such charge could have a material adverse effect on the Company’s net earnings.

The Company’s logo sign contracts are subject to state award and renewal.
In 2021, the Company generated approximately 4% of its revenues from state-awarded logo sign contracts. In bidding for these contracts, the Company competes against other national logo sign providers as well as numerous smaller local logo sign providers. As a logo sign provider, the Company incurs significant start-up costs upon being awarded a new contract. These contracts generally have a term of five to ten years, with additional renewal periods. Some states reserve the right to terminate a contract early, and most contracts require the state to pay compensation to the Company as a logo sign provider for early termination. At the end of the contract term, the Company, as a logo sign provider, transfers ownership of the logo sign structures to the state. Depending on the contract, the logo provider may or may not be entitled to compensation for the structures at the end of the contract term.
Of the Company’s 24 logo sign contracts in place at December 31, 2021, five are subject to renewal or expiration in 2022. The Company may be unable to renew its expiring contracts. The Company may also lose the bidding on new contracts.
17
If the Company’s contingency plans relating to hurricanes and other natural disasters fail, the resulting losses could hurt the Company’s business.
The Company has determined that it is uneconomical to insure against losses resulting from hurricanes and other natural disasters. Although the Company has developed contingency plans designed to mitigate the threat posed by hurricanes and other forms of inclement weather to its real estate portfolio (e.g., removing advertising faces at the onset of a storm, when possible, which better permits the structures to withstand high winds during the storm), these plans could fail and significant losses could result.
Our cash distributions are not guaranteed and may fluctuate.
A REIT generally is required to distribute at least 90% of its REIT taxable income to its stockholders. The Company may have available net operating loss (“NOL”) carry forwards that could reduce or substantially eliminate its REIT taxable income, and thus it may not be required to distribute material amounts of cash to qualify for taxation as a REIT. The Company expects that, for the foreseeable future, it may utilize available NOL carry forwards to reduce its REIT taxable income.
The Board of Directors of the Company, in its sole discretion, will determine on a quarterly basis the amount of cash to be distributed to its stockholders based on a number of factors including, but not limited to, the Company’s results of operations, cash flow and capital requirements, economic conditions, tax considerations, borrowing capacity and other factors, including debt covenant restrictions that may impose limitations on cash payments, future acquisitions and divestitures, any stock repurchase program, and general market demand for its advertising space available for rent. Consequently, the Company’s distribution levels may fluctuate.
The Lamar Advertising charter, the Lamar Advertising bylaws and Delaware law may inhibit a takeover that stockholders consider favorable and could also limit the market price of Lamar Advertising stock.
Provisions of the Lamar Advertising charter, the Lamar Advertising bylaws and applicable provisions of Delaware law may make it more difficult for or prevent a third party from acquiring control of Lamar Advertising without the approval of the Board of Directors. These provisions:
•impose restrictions on ownership and transfer of Lamar Advertising common stock that are intended to facilitate the Company’s compliance with certain REIT rules relating to share ownership;
•limit who may call a special meeting of stockholders;
•establish advance notice and informational requirements and time limitations on any director nomination or proposal that a stockholder wishes to make at a meeting of stockholders;
•do not permit cumulative voting in the election of its directors, which would otherwise permit less than a majority of stockholders to elect directors; and
•provide the Board of Directors the ability to issue additional classes and shares of preferred stock and to set voting rights, preferences and other terms of the preferred stock without stockholder approval.
In addition, Section 203 of the DGCL generally limits the Company’s ability to engage in any business combination with certain persons who own 15% or more of its outstanding voting stock or any of its associates or affiliates who at any time in the past three years have owned 15% or more of its outstanding voting stock.
These provisions may have the effect of entrenching the Company’s management team and may deprive the Company’s stockholders of the opportunity to sell their shares to potential acquirers at a premium over prevailing prices. This potential inability to obtain a control premium could reduce the price of Lamar Advertising common stock.
Risks Related to Our Industry
The Company’s revenues are sensitive to the state of the economy and the financial markets generally and other external events beyond the Company’s control.
The Company rents advertising space on outdoor structures to generate revenues. Advertising spending is particularly sensitive to changes in economic conditions.
Additionally, the occurrence of any of the following external events could further depress the Company’s revenues:
•a widespread reallocation of advertising expenditures to other available media by significant renters of the Company’s displays; and
18
•a decline in the amount spent on advertising in general or outdoor advertising in particular.
The Company faces competition from larger and more diversified outdoor advertisers and other forms of advertising that could hurt its performance.

While the Company enjoys a significant market share in many of its small and medium-sized markets, the Company faces competition from other outdoor advertisers and other media in all of its markets. Although the Company is one of the largest companies focusing exclusively on outdoor advertising in a relatively fragmented industry, it competes against larger companies with diversified operations, such as television, radio and other broadcast media. These diversified competitors have the advantage of cross-selling complementary advertising products to advertisers.

The Company also competes against an increasing variety of out-of-home advertising media, such as advertising displays in shopping centers, malls, airports, stadiums, movie theaters and supermarkets, and on taxis, trains and buses. To a lesser extent, the Company also faces competition from other forms of media, including radio, newspapers, direct mail advertising, telephone directories and the Internet. The industry competes for advertising revenue along the following dimensions: exposure (the number of “impressions” an advertisement makes), advertising rates (generally measured in cost-per-thousand impressions), ability to target specific demographic groups or geographies, effectiveness, quality of related services (such as advertising copy design and layout) and customer service. The Company may be unable to compete successfully along these dimensions in the future, and the competitive pressures that the Company faces could adversely affect its profitability or financial performance.

Federal, state and local regulation impact the Company’s operations, financial condition and financial results.

Outdoor advertising is subject to governmental regulation at the federal, state and local levels. Regulations generally restrict the size, spacing, lighting and other aspects of advertising structures and pose a significant barrier to entry and expansion in many markets.  Federal law, principally the Highway Beautification Act of 1965, or the HBA, regulates outdoor advertising on Federal — Aid Primary, Interstate and National Highway Systems roads. The HBA requires states, through the adoption of individual Federal/State Agreements, to “effectively control” outdoor advertising along these roads, and mandates a state compliance program and state standards regarding size, spacing and lighting. These state standards, or their local and municipal equivalents, may be modified over time in response to legal challenges or otherwise, which may have an adverse effect on our business.  The HBA requires any state or political subdivision that compels the removal of a lawful billboard along a Federal — Aid Primary or Interstate highway to pay just compensation to the billboard owner.

All states have passed billboard control statutes and regulations at least as restrictive as the federal requirements, including laws requiring the removal of illegal signs at the owner’s expense (and without compensation from the state). Although the Company believes that the number of our billboards that may be subject to removal as illegal is immaterial, and no state in which we operate has banned billboards entirely, from time to time governments have required us to remove signs and billboards legally erected in accordance with federal, state and local permit requirements and laws. Municipal and county governments generally also have sign controls as part of their zoning laws and building codes. We contest laws and regulations that we believe unlawfully restrict our constitutional or other legal rights and may adversely impact the growth of our outdoor advertising business.


Using federal funding for transportation enhancement programs, state governments have purchased and removed billboards for beautification, and may do so again in the future. Under the power of eminent domain, state or municipal governments have laid claim to property and forced the removal of billboards. Under a concept called amortization by which a governmental body asserts that a billboard operator has earned compensation by continued operation over time, local governments have attempted to force removal of legal but nonconforming billboards (i.e., billboards that conformed to applicable zoning regulations when built but which do not conform to current zoning regulations). Although the legality of amortization is questionable, it has been upheld in some instances. Often, municipal and county governments also have sign controls as part of their zoning laws, with some local governments prohibiting construction of new billboards or allowing new construction only to replace existing structures. Although we have generally been able to obtain satisfactory compensation for those of our billboards purchased or removed as a result of governmental action, there is no assurance that this will continue to be the case in the future.

We have also introduced and intend to expand the deployment of digital billboards that display static digital advertising copy from various advertisers that change every 6 to 8 seconds. We have encountered some existing regulations that restrict or prohibit these types of digital displays but it has not yet materially impacted our digital deployment. Since digital billboards have been developed and introduced relatively recently into the market on a large scale, however, existing regulations that currently do not apply to them by their terms could be revised or new regulations could be enacted to impose greater restrictions. These regulations may impose greater restrictions on digital billboards due to alleged concerns over aesthetics or driver safety.

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Relatively few large scale studies have been conducted to date regarding driver safety issues, if any, related to digital billboards. On December 30, 2013, the results of a study conducted by the U.S. Department of Transportation and the Federal Highway Administration that looked at the effect of digital billboards and conventional billboards on driver visual behavior were issued. The conclusions of the report indicated that the presence of digital billboards did not appear to be related to a decrease in looking toward the road ahead and were generally within acceptable thresholds. The report cautioned, however, that it adds to the knowledge base but does not present definitive answers to the research questions investigated. Accordingly, the results of future studies may result in regulations at the federal or state level that impose greater restrictions on digital billboards. Any new restrictions on digital billboards could have a material adverse effect on both our existing inventory of digital billboards and our plans to expand our digital deployment, which could have a material adverse effect on our business, results of operations and financial condition.

Pandemics or disease outbreaks, such as COVID-19, have affected and may materially affect our business, results of operations and financial condition in the future.
Any outbreaks of contagious diseases and other adverse public health developments could have a significant adverse effect on our business, results of operations and financial condition. The outbreak of COVID-19 in 2020 resulted in the implementation of significant governmental measures to control the spread of the virus. Such restrictions had an adverse impact on the audience for out-of-home advertising in certain jurisdictions. The restrictions also negatively affected the financial condition of numerous advertising customer segments, and caused certain of our advertisers to decrease or eliminate the amount they spend on advertising. The Company’s logo sign contracts are subject to state awardbusiness was adversely effected as a result.
While economic conditions and renewal.

In 2019, the Company generated approximately 5% of its revenues from state-awarded logo sign contracts. In bidding for these contracts, the Company competes against other national logo sign providersCompany’s business have improved significantly as well as numerous smaller local logo sign providers. A logo sign provider incurs significant start-up costs upon being awarded a new contract. These contracts generally have a term of five to ten years, with additional renewal periods. Some states reserve the right to terminate a contract early, and most contracts require the state to pay compensationcompared to the logo sign provider for early termination. At the endonset of the contract term,COVID-19 pandemic, the logo sign provider transfers ownershipcontinuing effects of the logo sign structurespandemic are unknown.Future COVID-19 variants may cause disruptions in our industry. Additionally, macro-economic factors related to the state. Depending on the contract, the logo providerongoing pandemic, like inflation and overall market volatility, may or may not be entitled to compensation for the structures at the endnegatively impact our business and financial results, and heighten many of the contract term.

Ofother risks described in this “Risk factors” section.

Our business and operations could suffer in the Company’s 25 logo sign contracts in place at December 31, 2019, fourevent of cybersecurity breaches and we may incur significant legal and financial exposure.
The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusions, has generally increased and become more sophisticated over time. Although we have implemented physical and electronic security measures designed to protect against the loss, misuse and alteration of our websites, digital assets, proprietary business information and any personal identifiable information (“PII”) that we collect, no security measures are subject to renewal or expiration in 2020. The Companyimpenetrable and we and outside parties we interact with may be unable to renew its expiring contracts. The Company may also lose the bidding on new contracts.

The Company is controlled by significant stockholders who have the power to determine the outcome of all matters submittedanticipate or prevent unauthorized access. A security breach could occur due to the stockholders for approval and whose interestactions of outside parties, employee error, malfeasance or a combination of these or other actions. An increase in the Companynumber of our employees and outside parties with which we do business working remotely may increase the risk of a cybersecurity incident, which has required us to modify our security measures.

If an actual or perceived breach of our security were to occur, proprietary or competitive information may be different than yours.

As of December 31, 2019, membersmisappropriated, and we could experience disruptions in our business operations, information processes and internal controls. In addition,the public perception of the Reilly family, including Kevin P. Reilly, Jr.,effectiveness of our security measures may be harmed and adversely affect our competitive position. In the Company’s Chairman and President, and Sean Reilly, the Company’s Chief Executive Officer, and their affiliates, owned in the aggregate approximately 15% of the Company’s outstanding common stock, assuming the conversion of all Class B common stock to Class A common stock. As of that date, their combined holdings represented approximately 63% of the voting power of Lamar Advertising’s outstanding capital stock, which would give the Reilly family and their affiliates the power to:

•

elect the Company’s entire board of directors;

•

control the Company’s management and policies; and

•

determine the outcome of any corporate transaction or other matter requiring stockholder approval, including charter amendments, mergers, consolidations, financings and asset sales.

The Reilly family may have interests that are different than yours in making these decisions.


If the Company’s contingency plans relating to hurricanes and other natural disasters fail, the resulting losses could hurt the Company’s business.

The Company has determined that it is uneconomical to insure against losses resulting from hurricanes and other natural disasters. Although the Company has developed contingency plans designed to mitigate the threat posed by hurricanes and other forms of inclement weather to its real estate portfolio (e.g., removing advertising faces at the onsetevent of a storm, when possible,security breach, we could suffer significant legal and financial exposure in connection with remediation efforts, investigations and legal proceedings, which better permitscould lead to the structuresneed for additional resources in our security and system protection measures.

We have been and expect to withstand high winds duringcontinue to be the storm), these plans could failtarget of fraudulent activities and significant losses could result.

security breaches; however, to date they have not had a material impact on our business, results of operations or financial condition.

Risks Related to Our Status as a REIT
If Lamar Advertising fails to remain qualified as a REIT, both Lamar Advertising and Lamar Media would be taxed as regular C corporations and would not be able to deduct distributions to the stockholders of Lamar Advertising when computing their taxable income.

Lamar Advertising elected to qualify as a REIT for U.S. federal income tax purposes starting with its taxable year ended December 31, 2014 and for each subsequent taxable year thereafter. REIT qualification involves the application of highly technical and complex provisions of the U.S. Internal Revenue Code of 1986, as amended, (the “Code”) to Lamar Advertising’s assets and operations as well as various factual determinations concerning matters and circumstances not entirely within our control. There are limited judicial or administrative interpretations of these provisions. Although Lamar Advertising plans to operate in a manner consistent with the REIT qualification rules, the Company cannot assure you that it will so qualify or remain so qualified. Lamar Media is treated as a qualified REIT subsidiary of Lamar Advertising that is disregarded as separate from its parent REIT for U.S. federal income tax purposes.

If, in any taxable year, Lamar Advertising fails to qualify for taxation as a REIT, and is not entitled to relief under the Code:

•

it will not be allowed a deduction for distributions to its stockholders in computing its taxable income;

•it will not be allowed a deduction for distributions to its stockholders in computing its taxable income;

it and its subsidiaries, including Lamar Media, will be subject to applicable federal and state income tax, including any applicable state-level alternative minimum tax, on its taxable income at regular corporate rates; and

•

it would be disqualified from REIT tax treatment for the four taxable years following the year during which it was so disqualified.

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•it and its subsidiaries, including Lamar Media, will be subject to applicable federal and state income tax, including any applicable state-level alternative minimum tax, on its taxable income at regular corporate rates; and
•it would be disqualified from REIT tax treatment for the four taxable years following the year during which it was so disqualified.
Any such corporate tax liability could be substantial and would reduce the amount of cash available for distributions to Lamar Advertising’s stockholders, may require it to borrow funds (under Lamar Media’s senior credit facility or otherwise) or liquidate some investments to pay any such additional tax liability. This adverse impact could last for five or more years because, unless it is entitled to relief under certain statutory provisions, it will be taxable as a corporation, beginning in the year in which the failure occurs, and it will not be allowed to re-elect to be taxed as a REIT for the following four years.

Even if it qualifies as a REIT, certain of Lamar Advertising’s and its subsidiaries’ business activities will be subject to U.S. and foreign taxes which will continue to reduce its cash flows, and it will have potential deferred and contingent tax liabilities.

Even if it qualifies as a REIT, Lamar Advertising may be subject to certain U.S. federal, state and local taxes and foreign taxes on its income and assets, including any applicable state-level alternative minimum taxes, taxes on any undistributed income, and state, local or foreign income, franchise, property and transfer taxes. In addition, the Company could in certain circumstances be required to pay an excise or penalty tax, which could be significant in amount, in order to utilize one or more relief provisions under the Code to maintain qualification for taxation as a REIT.

In order to maintain its qualification as a REIT, the Company holds certain of its non-qualifying REIT assets and receives certain non-qualifying items of income through one or more TRSs. These non-qualifying REIT assets consist principally of the Company’s advertising services business and its transit advertising business. Those TRS assets and operations will continue to be subject, as applicable, to U.S. federal and state corporate income taxes. Furthermore, the Company’s assets and operations outside the United States are subject to foreign taxes in the jurisdictions in which those assets and operations are located. In addition, the Company may incur a 100% excise tax on transactions with a TRS if they are not conducted on an arm’s-length basis. Any of these taxes would decrease the Company’s earnings and its cash available for distributions to stockholders.

The Company was subject to a U.S. federal income tax at the highest regular corporate rate (currently 21%) on all or a portion of the gain recognized from a sale of assets occurring within five years after the effective date of our REIT conversion, to the extent of the built-in gain based on the fair market value of those assets held by the Company on the effective date of REIT conversion in excess of the Company’s then tax basis in those assets. Such five-year period has expired with respect to the Company but certain tax years for which this rule applied remain open such that additional taxes could be assessed with respect to sales in those tax years. The same rules apply to any assets we acquire from a “C” corporation in a carry-over basis transaction with built-in gain at the time of the acquisition by us. Gain from a sale of an asset occurring after the specified period ends will not be subject to this corporate level tax.



Dividends payable by REITs generally do not qualify for the reduced tax rates on dividend income from non-REIT corporations.

Qualified dividend income payable to U.S. stockholders that are individuals, trusts and estates are generally subject to tax at reduced rates. Dividends payable by REITs, however, generally are not eligible for the reduced qualified dividend rates. For taxable years beginning before January 1, 2026, non-corporate taxpayers may generally deduct 20% of certain pass-through business income, including “qualified REIT dividends” (generally, dividends received by a REIT shareholder that are not designated as capital gain dividends or qualified dividend income), subject to certain limitations. Although this deduction reduces the effective tax rate applicable to certain dividends paid by REITs, such tax rate may still be higher than the tax rate applicable to regular corporate qualified dividends. This may cause investors to view REIT investments as less attractive than investments in non-REIT corporations, which in turn may adversely affect the value of the stock of REITs, including our stock.

Gain on disposition of assets deemed held for sale in the ordinary course of business is subject to 100% tax.

If we sell any of our assets, the IRS may determine that the sale is a disposition of an asset held primarily for sale to customers in the ordinary course of a trade or business. Gain from this kind of sale will generally be subject to a 100% tax. Whether an asset is held "primarily for sale to customers in the ordinary course of a trade or business" depends on the particular
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facts and circumstances of the sale. Although we will attempt to comply with the terms of safe-harbor provisions in the Internal Revenue Code prescribing when asset sales will not be so characterized, we cannot assure you that we will be able to do so.

Failure to make sufficient distributions would jeopardize Lamar Advertising’s qualification as a REIT and/or would subject it to U.S. federal income and excise taxes.

As a REIT, Lamar Advertising is required to distribute to its stockholders with respect to each taxable year at least 90% of its REIT taxable income (excluding capital gains and net of any available net operating lossNOL carry forwards) in order to qualify as a REIT, and 100% of its REIT taxable income (excluding capital gains and net of any available net operating lossNOL carry forwards) in order to avoid U.S. federal income and excise taxes. For these purposes, Lamar Advertising’s subsidiaries that are not TRSs, including Lamar Media, will be treated as part of the REIT and therefore Lamar Advertising also will be required to distribute out their taxable income.

Because the REIT distribution requirements will prevent us from retaining earnings, we may be required to refinance debt at maturity with additional debt or equity, which may not be available on acceptable terms, or at all.


Covenants specified in our existing and future debt instruments may limit Lamar Advertising’s ability to make required REIT distributions.

Lamar Media’s senior credit facility and the indentures relating to Lamar Media’s outstanding notes contain certain covenants that could limit Lamar Advertising’s distributions to its stockholders. If these limits prevent Lamar Advertising from satisfying its REIT distribution requirements, it could fail to qualify for taxation as a REIT. If these limits do not jeopardize itsLamar Advertising’s qualification for taxation as a REIT but do nevertheless prevent it from distributing 100% of its REIT taxable income, it will be subject to U.S. federal corporate income tax, and potentially a nondeductible excise tax, on the retained amounts.

Lamar Advertising and its subsidiaries may be required to borrow funds, sell assets, or raise equity to satisfy its REIT distribution requirements or maintain the asset tests.

In order to meet the REIT distribution requirements and maintain its qualification and taxation as a REIT and avoid corporate income taxes, Lamar Advertising and/or its subsidiaries, including Lamar Media, may need to borrow funds, sell assets or raise equity, even if the then-prevailing market conditions are not favorable for these borrowings, sales or offerings. Any insufficiency of its cash flows to cover Lamar Advertising’s REIT distribution requirements could require it to raise short- and long-term debt, to sell assets, or to offer equity securities in order to fund distributions required to maintain its qualification and taxation as a REIT and avoid corporate income taxes. Furthermore, the REIT distribution requirements may increase the financing Lamar Advertising needs to fund capital expenditures, future growth and expansion initiatives. This would increase its total leverage.

In addition, if Lamar Advertising fails to comply with certain asset tests at the end of any calendar quarter, it must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing its REIT qualification. As a result, it may be required to liquidate otherwise attractive investments. These actions may reduce its income and amounts available for distribution to its stockholders.

Our cash distributions are not guaranteed and may fluctuate.

A REIT generally is required to distribute at least 90% of its REIT taxable income to its stockholders. The Company may have available NOLs that could reduce or substantially eliminate its REIT taxable income, and thus it may not be required to distribute material amounts of cash to qualify for taxation as a REIT. The Company expects that, for the foreseeable future, it may utilize available NOLs to reduce its REIT taxable income.

The board of directors of the Company, in its sole discretion, will determine on a quarterly basis the amount of cash to be distributed to its stockholders based on a number of factors including, but not limited to, the Company’s results of operations, cash flow and capital requirements, economic conditions, tax considerations, borrowing capacity and other factors, including debt covenant restrictions that may impose limitations on cash payments, future acquisitions and divestitures, any stock repurchase program, and general market demand for its advertising space available for lease. Consequently, the Company’s distribution levels may fluctuate.

Complying with REIT requirements may cause Lamar Advertising, its subsidiaries (other than TRSs) to forego otherwise attractive opportunities.

To qualify as a REIT for U.S. federal income tax purposes, Lamar Advertising must continually satisfy tests concerning, among other things, the sources of its income, the nature and diversification of its assets, the amounts it distributes to its stockholders and the ownership of Lamar Advertising common stock. For these purposes, Lamar Advertising is treated as owning the assets of and receiving or accruing the income of its subsidiaries (other than TRSs). Thus, compliance with these tests will require Lamar Advertising and its subsidiaries to refrain from certain activities and may hinder their ability to make certain attractive investments, including investments in the businesses to be conducted by TRSs, and to that extent limit their opportunities. Furthermore, acquisition opportunities in domestic and international markets may be adversely affected if Lamar Advertising needs or requires the target company to comply with certain REIT requirements prior to closing.


Ownership limitations contained in the Lamar Advertising charter may restrict stockholders from acquiring or transferring certain amounts of shares.

In order for Lamar Advertising to remain qualified as a REIT, no more than 50% of the value of the outstanding shares of its stock may be owned, directly or indirectly or through application of certain attribution rules, by five or fewer “individuals” (as defined in the Code) at any time during the last half of a taxable year (other than the first taxable year for
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which an election to be a REIT has been made). To preserve its REIT qualification, the Lamar Advertising charter generally prohibits any person or entity from owning actually and by virtue of the applicable constructive ownership provisions more than 5% of the outstanding shares of Lamar Advertising common stock. These ownership limitations could restrict stockholders from acquiring or transferring certain amounts of shares of its stock. The Lamar Advertising charter also provides a separate share ownership limitation for certain members of the Reilly family and their affiliates that allows them to own actually and by virtue of the applicable constructive ownership provisions no more than 19% of the outstanding shares of Lamar Advertising common stock and, during the second half of any taxable year other than its first taxable year as a REIT, no more than 33% in value of the aggregate of the outstanding shares of all classes and series of its stock, in each case excluding any shares of its stock that are not treated as outstanding for federal income tax purposes.

The Lamar Advertising charter, the Lamar Advertising bylaws and Delaware law may inhibit a takeover that stockholders consider favorable and could also limit the market price of Lamar Advertising stock.

Provisions of the Lamar Advertising charter, the Lamar Advertising bylaws and applicable provisions of Delaware law may make it more difficult for or prevent a third party from acquiring control of Lamar Advertising without the approval of the board of directors. These provisions:

•

impose restrictions on ownership and transfer of Lamar Advertising common stock that are intended to facilitate the Company’s compliance with certain REIT rules relating to share ownership;

•

limit who may call a special meeting of stockholders;

•

establish advance notice and informational requirements and time limitations on any director nomination or proposal that a stockholder wishes to make at a meeting of stockholders;

•

do not permit cumulative voting in the election of its directors, which would otherwise permit less than a majority of stockholders to elect directors; and

•

provide the board of directors the ability to issue additional classes and shares of preferred stock and to set voting rights, preferences and other terms of the preferred stock without stockholder approval.

In addition, Section 203 of the DGCL generally limits the Company’s ability to engage in any business combination with certain persons who own 15% or more of its outstanding voting stock or any of its associates or affiliates who at any time in the past three years have owned 15% or more of its outstanding voting stock.

These provisions may have the effect of entrenching the Company’s management team and may deprive you of the opportunity to sell your shares to potential acquirers at a premium over prevailing prices. This potential inability to obtain a control premium could reduce the price of Lamar Advertising common stock.

Changes to the Code, such as theThe Tax Cuts and Jobs Act could have a negative effect on Lamar Advertising and its subsidiaries including Lamar’s ability to deduct the full amount of its significant interest expense.

CARES Act, as well as any future tax legislation, may impact the Company’s business and security holders.  

On December 22, 2017, President Trump signed into law H.R. 1, informally titled the Tax Cuts and Jobs Act (the “TCJA”). was signed into law. The TCJA makesmade major changes to the Code, including a number of provisions of the Code that affect the taxation of REITs and their stockholders. Among the changes made by the TCJA are permanently reducing the generally applicable corporate tax rate, generally reducing the tax rate applicable to individuals and other non-corporate taxpayers for tax years beginning after December 31, 2017 and before January 1, 2026, eliminating or modifying certain previously allowed deductions (including substantially limiting interest deductibility and, for individuals, the deduction for non-business state and local taxes). On March 27, 2020, legislation intended to support the economy during the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), was signed into law. The CARES Act made technical corrections, or temporary modifications, to certain of the provisions of the TCJA, also imposes new limitationsincluding, without limitation, the provisions of the TCJA concerning NOLs and interest expense deductions. Certain CARES Act related interest expense deduction changes are discussed in the following subsection. With respect to NOLs, effective for taxable years beginning on or after January 1, 2018, the TCJA limited the deduction for NOL carryforwards to 80% of net operating losses, whichtaxable income (before the deduction) and eliminated NOL carrybacks for individuals and non-REIT corporations (NOL carrybacks did not apply to REITs under prior law), but allows for indefinite NOL carryforwards. The CARES Act repealed such 80% limitation for carryforwards to taxable years beginning before January 1, 2021. The CARES Act also allows a five-year carryback for NOLs arising in 2018, 2019, or 2020. The TCJA’s NOL limitations (even as modified by the CARES Act) may result in Lamar Advertising having to make additional distributions in order to comply with REIT distribution requirements or avoid taxes on retained income and gains.
The effectindividual and collective impact of the significant changes made by the TCJA is highlyand the CARES Act on REITs and their security holders are uncertain and administrative guidance will be required in order to fully evaluate the effectmay not become evident for some period of many provisions.time. The effect of any technical corrections with respect to the TCJA and the CARES Act could have an adverse effect on us, Lamar Advertising, and its subsidiaries, and shareholders.


Additionally,holders of its securities. It is also possible additional tax legislation could be enacted in the TCJAfuture, as a result of the COVID-19 pandemic or otherwise, which could have an adverse effect on Lamar Advertising, its subsidiaries, and holders of its securities.

Lamar Advertising may potentially limit Lamar Advertising’s abilitybe unable to deduct the full amount of its interest expense.  expense pursuant to the TCJA and the CARES Act.
For taxable years beginning after December 31, 2017, interest deductions for businesses with average annual gross receipts of over $25 million are capped at 30% of the business’ “adjusted taxable income” plus business interest income pursuant to the TCJA. In calculating “adjusted taxable income” forFor these purposes, for taxable years beginning after December 31, 2017 and before January 1, 2022, this“adjusted taxable income” is computed without regard to deductions allowable for depreciation, amortization, or depletion (EBITDA).depletion. The CARES Act increased the aforementioned 30% limitation to 50% for taxable years beginning in 2019 or 2020 and permitted an entity to elect to use its 2019 adjusted taxable income to calculate the applicable limitation for its 2020 taxable year. For taxable years beginning after December 31, 2021, “adjusted taxable income” is calculated by taking deductions allowable for depreciation, amortization, or depletion into account (EBIT).account. This limitation, however, does not apply to an “electing real property trade or business.” As a REIT, Lamar Advertising would generally constitute a real property trade or businesses, and thus would retain the ability to fully deduct interest expenses if it makes such an election. However, an entity making such an election must use a longer depreciation cost recovery period for its property. Lamar Advertising has not made such anelection to date and has not yet determined whether it will make such election at this time but may do so in the future.

Further legislativea later date.

Legislative changes or other actions affecting REITs could have a negative effect on Lamar Advertising and its subsidiaries.

At any time, the U.S. federal income tax laws governing REITs or the administrative and judicial interpretations of those laws may be amended or interpreted in a different manner. Federal and state tax laws are constantly under review by persons involved in the legislative process, the IRS, the U.S. Department of the Treasury, and state taxing authorities. Additional changes to the tax laws, regulations and administrative and judicial interpretations, which may have retroactive application, could adversely affect Lamar Advertising and its subsidiaries. The Company cannot predict with certainty whether,
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when, in what forms, or with what effective dates, the tax laws, regulations and administrative and judicial interpretations applicable to Lamar Advertising may be changed. Accordingly, the Company cannot assure you that any such change will not significantly affect Lamar Advertising’s ability to qualify for taxation as a REIT or the U.S. federal income tax consequences to it of such qualification.

The ability of the boardBoard of directorsDirectors of Lamar Advertising to revoke its REIT election, without stockholder approval, may cause adverse consequences to its stockholders.

The Lamar Advertising charter provides that the boardBoard of directorsDirectors may revoke or otherwise terminate the REIT election, without the approval of its stockholders, if the board determines that it is no longer in the Company’s best interest to continue to qualify as a REIT. If the Company ceases to be a REIT, it will be subject to U.S. federal income tax at regular corporate rates and applicable state and local corporate taxes, which may have adverse consequences on its total return to its stockholders.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

ITEM 1B.    UNRESOLVED STAFF COMMENTS
None.

ITEM 2.

PROPERTIES

ITEM 2.    PROPERTIES
Our management headquarters is located in Baton Rouge, Louisiana. We also own 126125 local operating facilities with front office administration and sales office space connected to back-shop poster and bulletin production space. In addition, the Company leases an additional 130151 operating facilities at an aggregate lease expense for 20192021 of approximately $8.3$8.8 million.

We own over 8,9009,800 parcels of property beneath our outdoor advertising structures. As of December 31, 2019,2021, we leased over 74,30069,900 active outdoor sites, accounting for a total annual lease expense of approximately $287.6$291.8 million. This amount represented approximately 19%18% of billboard advertising net revenues for that period.the year ended December 31, 2021. These leases are for varying terms ranging from month-to-month to a term of over ten years, and many provide the Company with renewal options. There is no significant concentration of displays under any one lease or subject to negotiation with any one landlord. An important part of our management activity is to manage our lease portfolio and negotiate suitable lease renewals and extensions.

ITEM 3.

ITEM 3.    LEGAL PROCEEDINGS
The Company from time to time is involved in litigation in the ordinary course of business, including disputes involving advertising contracts, site leases, employment claims and construction matters. The Company is also involved in routine administrative and judicial proceedings regarding billboard permits, fees and compensation for condemnations. The Company is not a party to any lawsuit or proceeding which, in the opinion of management, is likely to have a material adverse effect on the Company.

ITEM 4.

MINE SAFETY DISCLOSURES

ITEM 4.    MINE SAFETY DISCLOSURES
Not applicable.


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PART II

ITEM 5.

MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

ITEM 5.    MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The Company’s Class A common stock has been publicly traded since August 2, 1996 and is currently listed on the NASDAQ Global Select Market under the symbol “LAMR.” As of December 31, 2019,2021, the Class A common stock was held by 99 shareholders87 stockholders of record. The Company believes, however, that the actual number of beneficial holders of the Class A common stock may be substantially greater than the stated number of holders of record because a substantial portion of the Class A common stock is held in street name.

The Company’s Class B common stock is not publicly traded and is held of record by members of the Reilly family and their affiliated entities, including the Reilly Family, LLC (the “RFLLC”), formerly the Reilly Family Limited Partnership. Kevin P. Reilly, Jr., our President andExecutive Chairman of the Board, is the executive manager of the RFLLC and Sean E. Reilly, our President and Chief Executive Officer, and Wendell Reilly and Anna Reilly, each of whom is a member of our boardBoard of directorsDirectors are also managers of the RFLLC.

The Company’s Series AA preferred stock is entitled to preferential dividends, in an annual aggregate amount of $364,904, before any dividends may be paid on the common stock. All dividends related to the Company’s preferred stock are paid on a quarterly basis. In addition, the Company’s senior credit facility and other indebtedness have terms restricting the payment of dividends.

Dividends

As a REIT, we must annually distribute to our common stockholders an amount equal to at least 90% of our REIT taxable income (determined before the deduction for distributed earnings and excluding any net capital gain). Generally, we expect to distribute all or substantially all of our REIT taxable income to avoid being subject to income tax or excise tax on undistributed REIT taxable income. The amount, timing and frequency of future distributions will be at the sole discretion of our Board of Directors and will be declared based upon various factors, a number of which may be beyond our control, including our financial condition and operating cash flows, the amount required to maintain REIT status and reduce any income and excise taxes that we otherwise would be required to pay, limitations on distributions in our existing and future debt instruments, our ability to utilize net operating losses (“NOLs”) to offset our distribution requirements, limitations on our ability to fund distributions using cash generated through our TRSs and other factors that our Board of Directors may deem relevant.

Issuer Purchases of Equity Securities

On March 16, 2020, the Company’s Board of Directors authorized the repurchase of up to $250.0 million of the Company’s Class A common stock. On September 20, 2021, the Board of Directors authorized the extension of the repurchase program through March 31, 2023. There were no repurchases under the program as of December 31, 2021. The Company’s management may opt not to make any repurchases under the program, or may make aggregate purchases less than the total amount authorized.
The following table sets forth shares of Class A common stock withheld by the Company to satisfy withholding obligations arising upon the vestingin connection with stock awards to employees:
PeriodTotal Number of Shares PurchasedAverage Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
October 1 through October 31, 20212,391 $116.86 — $250,000,000 
November 1 through November 30, 2021— — — $250,000,000 
December 1 through December 31, 2021— — — $250,000,000 
Total2,391 $116.86 
ITEM 6.    [RESERVED]
25
Table of restricted stock awards: 

(a)

Shares purchased consists of shares withheld by the Company for the payment of taxes resulting from the vesting of a restricted stock award made to Jay L. Johnson pursuant to the Company’s 1996 Equity Incentive Plan, as amended.


ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 6.

SELECTED FINANCIAL DATA

Lamar Advertising Company

The selected consolidated statement of income, statement of cash flows and balance sheet data presented below are derived from the year ended December 31 audited consolidated financial statements of the Company, which are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The data presented below should be read in conjunction with the audited consolidated financial statements, related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included herein.

 

 

2019

 

 

2018

 

 

2017

 

 

2016

 

 

2015

 

 

 

(Dollars in Thousands)

 

Statement of Income Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

$

1,753,644

 

 

$

1,627,222

 

 

$

1,541,260

 

 

$

1,500,294

 

 

$

1,353,396

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct advertising expenses

 

 

590,078

 

 

 

561,848

 

 

 

540,880

 

 

 

525,597

 

 

 

473,760

 

General and administrative expenses

 

 

403,038

 

 

 

372,324

 

 

 

338,573

 

 

 

345,789

 

 

 

313,941

 

Depreciation and amortization

 

 

250,028

 

 

 

225,261

 

 

 

211,104

 

 

 

204,958

 

 

 

191,433

 

(Gain) loss on disposition of assets

 

 

(7,241

)

 

 

7,233

 

 

 

(4,664

)

 

 

(15,095

)

 

 

(8,765

)

Total operating expenses

 

 

1,235,903

 

 

 

1,166,666

 

 

 

1,085,893

 

 

 

1,061,249

 

 

 

970,369

 

Operating income

 

 

517,741

 

 

 

460,556

 

 

 

455,367

 

 

 

439,045

 

 

 

383,027

 

Other expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on extinguishment of debt

 

 

—

 

 

 

15,429

 

 

 

71

 

 

 

3,198

 

 

 

—

 

Interest income

 

 

(764

)

 

 

(534

)

 

 

(6

)

 

 

(6

)

 

 

(34

)

Interest expense

 

 

150,616

 

 

 

129,732

 

 

 

128,396

 

 

 

123,688

 

 

 

98,433

 

Total other expense

 

 

149,852

 

 

 

144,627

 

 

 

128,461

 

 

 

126,880

 

 

 

98,399

 

Income before income taxes

 

 

367,889

 

 

 

315,929

 

 

 

326,906

 

 

 

312,165

 

 

 

284,628

 

Income tax (benefit) expense

 

 

(4,222

)

 

 

10,697

 

 

 

9,230

 

 

 

13,356

 

 

 

22,058

 

Net income

 

 

372,111

 

 

 

305,232

 

 

 

317,676

 

 

 

298,809

 

 

 

262,570

 

Preferred stock dividends

 

 

365

 

 

 

365

 

 

 

365

 

 

 

365

 

 

 

365

 

Net income applicable to common stock

 

$

371,746

 

 

$

304,867

 

 

$

317,311

 

 

$

298,444

 

 

$

262,205

 

Net income per share basic

 

$

3.71

 

 

$

3.09

 

 

$

3.24

 

 

$

3.07

 

 

$

2.72

 

Net income per share diluted

 

$

3.71

 

 

$

3.08

 

 

$

3.23

 

 

$

3.05

 

 

$

2.72

 

Cash dividends declared per common share

 

$

3.84

 

 

$

3.65

 

 

$

3.32

 

 

$

3.02

 

 

$

2.75

 

Statement of Cash Flow Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows provided by operating activities

 

$

630,865

 

 

$

564,846

 

 

$

507,016

 

 

$

521,823

 

 

$

477,650

 

Cash flows used in investing activities

 

$

362,034

 

 

$

584,148

 

 

$

400,066

 

 

$

680,983

 

 

$

253,880

 

Cash flows (used in) provided by financing activities

 

$

(264,357

)

 

$

(73,563

)

 

$

(28,641

)

 

$

171,908

 

 

$

(224,808

)

Balance Sheet Data(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

26,188

 

 

$

21,494

 

 

$

115,471

 

 

$

35,530

 

 

$

22,327

 

Working capital

 

 

(362,639

)

 

 

(91,366

)

 

 

94,525

 

 

 

36,929

 

 

 

44,902

 

Total assets

 

 

5,941,155

 

 

 

4,544,641

 

 

 

4,214,345

 

 

 

3,898,884

 

 

 

3,363,744

 

Total debt (including current maturities)

 

 

2,980,118

 

 

 

2,888,688

 

 

 

2,556,690

 

 

 

2,349,183

 

 

 

1,891,450

 

Total long-term obligations

 

 

4,088,041

 

 

 

2,957,822

 

 

 

2,784,858

 

 

 

2,552,032

 

 

 

2,105,855

 

Stockholders’ equity

 

 

1,180,306

 

 

 

1,131,784

 

 

 

1,103,493

 

 

 

1,069,528

 

 

 

1,021,059

 

(1)

Certain balance sheet reclassifications were made in order to be comparable to the current year presentation.


ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report contains forward-looking statements. These statements are subject to risks and uncertainties including those described in Item 1A under the heading “Risk Factors,” and elsewhere in this Annual Report, that could cause actual results to differ materially from those projected in these forward-looking statements. The Company cautions investors not to place undue reliance on the forward-looking statements contained in this document. These statements speak only as of the date of this document, and the Company undertakes no obligation to update or revise the statements, except as may be required by law.

LAMAR ADVERTISING COMPANY

The following is a discussion of the consolidated financial condition and results of operations of the Company for the years ended December 31, 2019, 20182021 and 2017.2020. This discussion should be read in conjunction with the consolidated financial statements of the Company and the related notes.

Discussion of our results of operations for the years ended December 31, 2020 and 2019 can be found in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020.
OVERVIEW

The Company’s net revenues are derived primarily from the rental of advertising space on outdoor advertising displays owned and operated by the Company. Revenue growth is based on many factors that include the Company’s ability to increase occupancy of its existing advertising displays; raise advertising rates; and acquire new advertising displays and its operating results are therefore affected by general economic conditions, as well as trends in the advertising industry. Advertising spending is particularly sensitive to changes in general economic conditions, which affect the rates the Company is able to charge for advertising on its displays and its ability to maximize advertising sales or occupancy on its displays.

Impact of the COVID-19 Pandemic
The unprecedented and rapid spread of COVID-19 and the related government-imposed restrictions and social distancing measures implemented throughout the world negatively affected our business in 2020. During the year ended December 31, 2021, our business has generally improved as the economy has recovered. While some of our corporate, front office and sales workforce continue to work from home, a large majority have returned to their offices while adhering to the Centers for Disease Control and Prevention and state and local governmental guidelines and recommendations. The impacts of working from home have been minimal on productivity. Also, while working from home has minimally impacted our processes, there have been no material impacts to our internal control environment.
We continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state or local authorities, or that we determine are in the best interests of our employees, customers, partners and stockholders.
Acquisitions and capital expenditures
Historically, the Company has made strategic acquisitions of outdoor advertising assets to increase the number of outdoor advertising displays it operates in existing and new markets. The Company continues to evaluate and pursue strategic acquisition opportunities as they arise. The Company has financed its historical acquisitions and intends to finance any future acquisition activity from available cash, borrowings under itsthe senior credit facility or the issuance of debt or equity securities. See “Liquidity and Capital Resources-SourcesResources- Sources of Cash,” for more information. During the year ended December 31, 2019,2021, the Company completed multiple acquisitions for a total cash purchase price of approximately $226.3$312.3 million.  See “Uses of Cash-Acquisitions,” for more information.

26
The Company’s business requires expenditures for maintenance and capitalized costs associated with the construction of new billboard displays, the entrance into and renewal of logo sign and transit contracts, and the purchase of real estate and operating equipment. The following table presents a breakdown of capitalized expenditures for the past threetwo years:

 

2019

 

 

2018

 

 

2017

 

20212020

 

(In thousands)

 

(In thousands)

Billboard — Traditional

 

$

48,194

 

 

$

37,905

 

 

$

36,015

 

Billboard — Traditional$31,894 $11,131 

Billboard — Digital

 

 

57,519

 

 

 

45,938

 

 

 

40,218

 

Billboard — Digital55,285 22,618 

Logos

 

 

10,762

 

 

 

11,438

 

 

 

9,614

 

Logos12,926 13,108 

Transit

 

 

2,308

 

 

 

5,364

 

 

 

2,863

 

Transit2,514 3,212 

Land and buildings

 

 

13,453

 

 

 

8,420

 

 

 

13,690

 

Land and buildings14,077 6,303 

PP&E

 

 

8,720

 

 

 

8,573

 

 

 

6,929

 

PP&E9,394 5,900 

Total capital expenditures

 

$

140,956

 

 

$

117,638

 

 

$

109,329

 

Total capital expenditures$126,090 $62,272 

We expect our 20202022 capital expenditures to approximate our 2019 spending.

be approximately $170.0 million.

NON-GAAP FINANCIAL MEASURES

Our management reviews our performance by focusing on several key performance indicators not prepared in conformity with Generally Accepted Accounting Principles in the United States (“GAAP”). We believe these non-GAAP performance indicators are meaningful supplemental measures of our operating performance and should not be considered in isolation of, or as a substitute for, their most directly comparable GAAP financial measures.

Included in our analysis of our results of operations are discussions regarding earnings before interest, taxes, depreciation and amortization (“Adjustedadjusted EBITDA”), Funds From Operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts, Adjusted Funds From Operations (“AFFO”) and acquisition-adjusted net revenue.


We define Adjustedadjusted EBITDA as net income before income tax expense (benefit), interest expense (income), equity in (earnings) loss of investee, loss (gain) on extinguishment of debt and investments, stock-based compensation, depreciation and amortization, gain or loss on disposition of assets and investments, and the impact of the adoption of ASU  NO. 2016-2, “Leases (Codified as ASC 842).”

capitalized contract fulfillment costs, net.

FFO is defined as net income before gains or losses from the sale or disposal of real estate assets and investments and real estate related depreciation and amortization and including adjustments to eliminate unconsolidated affiliates and non-controlling interest.

We define AFFO as FFO before (i) straight-line revenueincome and expense; (ii) impact of ASC 842 adoption;capitalized contract fulfillment costs, net, (iii) stock-based compensation expense; (iv) non-cash portion of tax expense (benefit); (v) non-real estate related depreciation and amortization; (vi) amortization of deferred financing and debt issuance costs, (vii) loss on extinguishment of debt; (viii) non-recurring infrequent or unusual losses (gains); (ix) less maintenance capital expenditures; and (x)(xi) an adjustment for unconsolidated affiliates and non-controlling interest.

Acquisition-adjusted net revenue adjusts our net revenue for the prior period by adding to it the net revenue generated by the acquired assets before our acquisition of these assets for the same time frame that those assets were owned in the current period. In calculating acquisition-adjusted revenue, therefore, we include revenue generated by assets that we did not own in the period but acquired in the current period. We refer to the amount of pre-acquisition revenue generated by the acquired assets during the prior period that corresponds with the current period in which we owned the assets (to the extent within the period to which this report relates) as “acquisition net revenue”. In addition, we also adjust the prior period to subtract revenue generated by the assets that have been divested since the prior period and, therefore, no revenue derived from those assets is reflected in the current period.

Adjusted EBITDA, FFO, AFFO and acquisition-adjusted net revenue are not intended to replace net income or any other performance measures determined in accordance with GAAP. Neither FFO nor AFFO represent cash flows from operating activities in accordance with GAAP and, therefore, these measures should not be considered indicative of cash flows from operating activities as a measure of liquidity or of funds available to fund our cash needs, including our ability to make cash distributions. Rather, Adjustedadjusted EBITDA, FFO, AFFO and acquisition-adjusted net revenue are presented as we believe each is a useful indicator of our current operating performance. We believe that these metrics are useful to an investor in evaluating our operating performance because (1) each is a key measure used by our management team for purposes of decision
27
Table of Contents
making and for evaluating our core operating results; (2) Adjustedadjusted EBITDA is widely used in the industry to measure operating performance as depreciation and amortization may vary significantly among companies depending upon accounting methods and useful lives, particularly where acquisitions and non-operating factors are involved; (3) acquisition-adjusted net revenue is a supplement to net revenue to enable investors to compare period over period results on a more consistent basis without the effects of acquisitions and divestures,divestitures, which reflects our core performance and organic growth (if any) during the period in which the assets were owned and managed by us; (4) Adjustedadjusted EBITDA, FFO and AFFO each provides investors with a meaningful measure for evaluating our period-to-period operating performance by eliminating items that are not operational in nature; and (5) each provides investors with a measure for comparing our results of operations to those of other companies.

Our measurement of Adjustedadjusted EBITDA, FFO, AFFO and acquisition-adjusted net revenue may not, however, be fully comparable to similarly titled measures used by other companies. Reconciliations of Adjustedadjusted EBITDA, FFO, AFFO and acquisition-adjusted net revenue to net income, the most directly comparable GAAP measure, have been included herein.

RESULTS OF OPERATIONS

The following table presents certain items in the Consolidated Statements of Income as a percentage of net revenues for the years ended December 31, 2019, 20182021 and 2017:

2020:

 

Year Ended December 31,

 

Year Ended December 31,

 

2019

 

 

2018

 

 

2017

 

20212020

Net revenues

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

Net revenues100.0 %100.0 %

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

Direct advertising expenses

 

 

33.6

%

 

 

34.5

%

 

 

35.1

%

Direct advertising expenses32.3 %35.5 %

General and administrative expenses

 

 

18.2

%

 

 

17.8

%

 

 

17.9

%

General and administrative expenses18.3 %18.3 %

Corporate expenses

 

 

4.8

%

 

 

5.1

%

 

 

4.0

%

Corporate expenses5.2 %4.5 %

Depreciation and amortization

 

 

14.3

%

 

 

13.8

%

 

 

13.7

%

Depreciation and amortization15.2 %16.0 %

Operating income

 

 

29.5

%

 

 

28.3

%

 

 

29.5

%

Operating income29.2 %26.1 %

Loss on extinguishment of debt

 

 

—

 

 

 

0.9

%

 

 

—

 

Loss on extinguishment of debt1.2 %1.6 %

Interest expense

 

 

8.6

%

 

 

8.0

%

 

 

8.3

%

Interest expense6.0 %8.8 %

Income tax (benefit) expense

 

 

-0.2

%

 

 

0.7

%

 

 

0.6

%

Income tax expenseIncome tax expense0.5 %0.3 %

Net income

 

 

21.2

%

 

 

18.8

%

 

 

20.6

%

Net income21.7 %15.5 %


Year ended December 31, 20192021 compared to Year ended December 31, 2018

2020

Net revenues increased $126.4$218.5 million or 7.8%13.9% to $1.754$1.79 billion for the year ended December 31, 20192021 from $1.627$1.57 billion for the same period in 2018.2020. This increase was primarily attributable primarily to an increase in billboard and transit net revenues of $124.6$210.3 million or 8.8%and $13.0 million, respectively, offset by a decrease in logo net revenues of $4.8 million over the prior period, which is primarily related to the integration of outdoor assets acquired during 2018 and 2019, and the addition of approximately 330 digital displays during the year ended December 31, 2019.  In addition, transit revenue increased $2.1 million, which represents an increase of 1.6% over the prior period.

year.

Net revenues for the year ended December 31, 2019,2021, as compared to acquisition-adjusted net revenues for the comparable period in 2018,2020, increased $45.7$217.0 million, or 2.7%13.8%. The $45.7$217.0 million increase in revenuenet revenues is primarily consisted ofdue to a $41.7$202.9 million and $15.1 million increase in billboard revenue primarily due to increases in digital revenue and a $4.1 milliontransit net revenues, respectively, over the prior year. The increase in billboard and transit revenue over the acquisition-adjusted net revenue for the comparable periodrevenues was slightly offset by a decrease of $0.9 million in 2018.logo net revenues. See “Reconciliations” below.

Total operating expenses, exclusive of depreciation and amortization and (gain) lossgain on disposition of assets, increased $58.9$80.6 million, or 6.3%8.8% to $993.1$997.0 million for the year ended December 31, 20192021 from $934.2$916.5 million in the same period in 2018.2020. The $58.9$80.6 million increase over the prior year is primarily comprised of an increase in total direct, general and administrative and corporate expenses (excluding stock-based compensation) of $58.7$62.0 million primarily related to the operations ofan increase in our outdoor advertising assets.

variable billboard lease costs and transit and airport franchise costs, as well as increases in our workforce.

Depreciation and amortization expense increased $24.8$20.0 million to $250.0$271.3 million for the year ended December 31, 20192021 as compared to $225.3$251.3 million for the same period in 2018,2020. The increase is primarily relateddue to the additionrevision in the cost estimate included in the calculation of approximately $516.2 millionasset retirement obligations during the period.
28
Table of depreciable assets acquired through acquisitions and $258.6 million in capitalized expenditures during fiscal years 2018 and 2019.

Contents

For the year ended December 31, 2019,2021, the Company recognized a gain on disposition of assets of $7.2$2.1 million primarily resulting from an amendmentas compared to a gain on disposition of a transit contract in the first quarterassets of 2019.  The gain in 2019 represents an increase of $14.5$9.0 million overfor the same period in 2018, largely due2020. The gain on disposition of assets for the year ended December 31, 2021 was primarily from transactions related to the gain in 2019 coupled with the Company’s loss recognized in 2018 on the sale of its Puerto Rico assets in April 2018 of $7.8 million.

billboard locations and displays.

Due primarily to the above factors, operating income increased $57.2$111.1 million to $517.7$521.2 million for the year ended December 31, 20192021 compared to $460.6$410.1 million for the same period in 2018.

2020.

During the year ended December 31, 2018,2021, the Company recorded a $15.4$21.6 million loss on debt extinguishment related to Lamar Media’s prepaymentMedia's repayment of its 5 7/8%3/4% Senior Subordinated Notes due 2022.  The $15.4 million loss is comprised of a cash redemption premium of $9.8 million and a non-cash write off of unamortized deferred financing costs of approximately $5.6 million.  See “Uses of Cash” for more information.  There were no transactions resulting in a loss on debt extinguishment in fiscal year 2019.

Notes.

Interest expense increased $20.9decreased $31.2 million for the year ended December 31, 20192021 to $150.6$106.4 million as compared to $129.7$137.6 million for the year ended December 31, 2018.2020. The increasedecrease in interest expense is primarily related to the increasedCompany’s debt outstandingtransactions completed in 2020 and 2021.
Equity in earnings of investee was $3.4 million for the year ended December 31, 2021 as compared toa result of the same periodinvestment in 2018.

Vistar Media that occurred in July 2021. There was no equity in earnings of investee for the year ended December 31, 2020.

The increase in operating income, as well as the decrease in interest expense and the decrease in loss on extinguishment of debt offset by the increase in interest expense over the comparable period in 2018,2020, resulted in a $52.0$149.3 million increase in net income before income taxes.

The Company recorded an income tax benefitexpense of $4.2$9.3 million for the year ended December 31, 20192021 as compared to income tax expense of $10.7$4.7 million for the same period in 2018.2020. The $4.2 million income tax benefit is comprised of a $17.0 million non-cash tax benefit resulting from REIT converted assets offset by income tax expense of $12.8 million.  The $12.8$9.3 million tax expense equates to an effective tax rate for the year ended December 31, 20192021 of approximately 3.5%2.3%, which differs from the federal statutory rate primarily due to our qualification for taxation as a REIT and adjustments for foreign items.

REIT.

As a result of the above factors, the Company recognized net income for the year ended December 31, 20192021 of $372.1$388.1 million, as compared to net income of $305.2$243.4 million for the same period in 2018.

2020.

Reconciliations:

Because acquisitions occurring after December 31, 20172019 have contributed to our net revenue results for the periods presented, we provide 20182020 acquisition-adjusted net revenue, which adjusts our 20182020 net revenue for the year ended December 31, 20182020 by adding to or subtracting from it the net revenue generated by the acquired or divested assets prior to our acquisition or divestiture of these assets for the same time frame that those assets were owned in the year ended December 31, 2019.

2021.

Reconciliations of 20182020 reported net revenue to 20182020 acquisition-adjusted net revenue for the year ended December 31, 20182020 as well as a comparison of 20182020 acquisition-adjusted net revenue to 20192021 reported net revenue for the year ended December 31, 2019,2021, are provided below:

Reconciliation and Comparison of Reported Net Revenue to Acquisition-Adjusted Net Revenue

 

Year ended

December 31,

 

Year ended
December 31,

 

2019

 

 

2018

 

20212020

 

(in thousands)

 

(in thousands)

Reported net revenue

 

$

1,753,644

 

 

$

1,627,222

 

Reported net revenue$1,787,401 $1,568,856 

Acquisition net revenue

 

 

—

 

 

 

80,745

 

Acquisition net revenue— 1,524 

Adjusted totals

 

$

1,753,644

 

 

$

1,707,967

 

Adjusted totals$1,787,401 $1,570,380 

29
Table of Contents
Key Performance Indicators

Net Income/Adjusted EBITDA

(in thousands)

 

Year Ended December 31,

 

 

Amount of

Increase

 

 

Percent

Increase

 

Year Ended December 31,Amount of Increase (Decrease)Percent Increase (Decrease)

 

2019

 

 

2018

 

 

(Decrease)

 

 

(Decrease)

 

20212020

Net income

 

$

372,111

 

 

$

305,232

 

 

$

66,879

 

 

 

21.9

%

Net income$388,090 $243,386 $144,704 59.5 %

Income tax (benefit) expense

 

 

(4,222

)

 

 

10,697

 

 

 

(14,919

)

 

 

 

 

Income tax expenseIncome tax expense9,256 4,660 4,596 

Loss on extinguishment of debt

 

 

—

 

 

 

15,429

 

 

 

(15,429

)

 

 

 

 

Loss on extinguishment of debt21,604 25,235 (3,631)

Interest expense (income), net

 

 

149,852

 

 

 

129,198

 

 

 

20,654

 

 

 

 

 

Interest expense (income), net105,621 136,826 (31,205)

(Gain) loss on disposition of assets

 

 

(7,241

)

 

 

7,233

 

 

 

(14,474

)

 

 

 

 

Equity in earnings of investeeEquity in earnings of investee(3,384)— (3,384)
Gain on disposition of assetsGain on disposition of assets(2,115)(9,026)6,911 

Depreciation and amortization

 

 

250,028

 

 

 

225,261

 

 

 

24,767

 

 

 

 

 

Depreciation and amortization271,294 251,296 19,998 

Impact of ASC 842 adoption

 

 

(5,292

)

 

 

—

 

 

 

(5,292

)

 

 

 

 

Capitalized contract fulfillment costs, netCapitalized contract fulfillment costs, net(445)387 (832)

Stock-based compensation expense

 

 

29,647

 

 

 

29,443

 

 

 

204

 

 

 

 

 

Stock-based compensation expense37,368 18,772 18,596 

Adjusted EBITDA

 

$

784,883

 

 

$

722,493

 

 

$

62,390

 

 

 

8.6

%

Adjusted EBITDA$827,289 $671,536 $155,753 23.2 %

Adjusted EBITDA for the year ended December 31, 20192021 increased 8.6%23.2% to $784.9$827.3 million. The increase in Adjustedadjusted EBITDA was primarily attributable to the increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization and the impactcapitalized contract fulfillment costs, net) of ASC 842 adoption) of $92.7$198.9 million, and was partially offset by an increase in general and administrative and corporate expenses of $30.3$43.1 million, excluding the impact of stock-based compensation expense and the impact of ASC 842 adoption.

expense.

Net Income/FFO/AFFO

(in thousands)

 

Year Ended December 31,

 

 

Amount of

Increase

 

 

Percent

Increase

 

Year Ended December 31,Amount of Increase (Decrease)Percent Increase (Decrease)

 

2019

 

 

2018

 

 

(Decrease)

 

 

(Decrease)

 

20212020

Net income

 

$

372,111

 

 

$

305,232

 

 

$

66,879

 

 

 

21.9

%

Net income$388,090 $243,386 $144,704 59.5 %

Depreciation and amortization related to real estate

 

 

235,802

 

 

 

212,457

 

 

 

23,345

 

 

 

 

 

Depreciation and amortization related to real estate259,933 238,932 21,001 

(Gain) loss from disposition of real estate assets and

investments

 

 

(6,775

)

 

 

8,689

 

 

 

(15,464

)

 

 

 

 

Non-cash tax benefit for REIT converted assets

 

 

(17,031

)

 

 

—

 

 

 

(17,031

)

 

 

 

 

Gain from sale or disposal of real estate, net of taxGain from sale or disposal of real estate, net of tax(1,865)(5,790)3,925 

Adjustments for unconsolidated affiliates and

non-controlling interest

 

 

771

 

 

 

648

 

 

 

123

 

 

 

 

 

Adjustments for unconsolidated affiliates and non-controlling interest(2,756)629 (3,385)

FFO

 

$

584,878

 

 

$

527,026

 

 

$

57,852

 

 

 

11.0

%

FFO$643,402 $477,157 $166,245 34.8 %

Straight-line income

 

 

(361

)

 

 

(2,036

)

 

 

1,675

 

 

 

 

 

Impact of ASC 842 adoption

 

 

(5,292

)

 

 

—

 

 

 

(5,292

)

 

 

 

 

Straight-line expenseStraight-line expense2,443 3,597 (1,154)
Capitalized contract fulfillment costs, netCapitalized contract fulfillment costs, net(445)387 (832)

Stock-based compensation expense

 

 

29,647

 

 

 

29,443

 

 

 

204

 

 

 

 

 

Stock-based compensation expense37,368 18,772 18,596 

Non-cash portion of tax provision

 

 

2,901

 

 

 

660

 

 

 

2,241

 

 

 

 

 

Non-cash portion of tax provision1,574 (797)2,371 
Gain from one-time sale of non-real estate assetsGain from one-time sale of non-real estate assets— (3,197)3,197 

Non-real estate related depreciation and amortization

 

 

14,226

 

 

 

12,804

 

 

 

1,422

 

 

 

 

 

Non-real estate related depreciation and amortization11,361 12,364 (1,003)

Amortization of deferred financing costs

 

 

5,365

 

 

 

4,920

 

 

 

445

 

 

 

 

 

Amortization of deferred financing costs5,877 5,909 (32)

Loss on extinguishment of debt

 

 

—

 

 

 

15,429

 

 

 

(15,429

)

 

 

 

 

Loss on extinguishment of debt21,604 25,235 (3,631)

Capital expenditures – maintenance

 

 

(49,155

)

 

 

(43,108

)

 

 

(6,047

)

 

 

 

 

Capital expenditures – maintenance(58,196)(24,028)(34,168)

Adjustments for unconsolidated affiliates and

non-controlling interest

 

 

(771

)

 

 

(648

)

 

 

(123

)

 

 

 

 

Adjustments for unconsolidated affiliates and non-controlling interest2,756 (629)3,385 

AFFO

 

$

581,438

 

 

$

544,490

 

 

$

36,948

 

 

 

6.8

%

AFFO$667,744 $514,770 $152,974 29.7 %

FFO for the year ended December 31, 20192021 was $584.9$643.4 million as compared to FFO of $527.0$477.2 million for the same period in 2018.2020. AFFO for the year ended December 31, 20192021 increased 6.8%29.7% to $581.4$667.7 million as compared to $544.5$514.8 million for the same period in 2018.2020. The increase in AFFO growth was primarily attributable to the increase in our gross margin (net revenue
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less direct advertising expense, exclusive of depreciation and amortization and the impact of ASC 842 adoption)capitalized contract fulfillment costs, net), partially offset by increasesan increase in total general and administrative and corporate expenses (excluding the effect of stock based compensation expense and the impact of ASC 842 adoption).

Year ended December 31, 2018 compared to Year ended December 31, 2017

Net revenues increased $86.0 million or 5.6% to $1.627 billion for the year ended December 31, 2018 from $1.541 billion for the same period in 2017. This increase was attributable primarily to an increase in billboard net revenues of $72.6 million or 5.4% over the prior period, which is primarily related to the integration of outdoor assets acquired during 2017 and 2018, and the addition of over 250 digital displays during the year ended December 31, 2018.  In addition, logo sign revenue increased $1.5 million, which represents an increase of 1.8% over the prior period.  Transit revenue increased $11.9 million, which represents an increase of 10.1% over the prior period, primarily due to several new transit and airport markets acquired in 2017 and 2018.

Net revenues for the year ended December 31, 2018, as compared to acquisition-adjusted net revenues for the comparable period in 2017, increased $53.1 million, or 3.4%. The $53.1 million increase in revenue primarily consisted of a $45.1 million increase in billboard revenue primarily due to increases in digital and political revenue, a $1.1 million increase in logo revenue and a $6.8 million increase in transit revenue over the acquisition-adjusted net revenue for the comparable period in 2017. See “Reconciliations” below.

Total operating expenses, exclusive of depreciation and amortization and loss (gain) on disposition of assets, increased $54.7 million, or 6.2% to $934.2 million for the year ended December 31, 2018 from $879.5 million in the same period in 2017. The $54.7 million increase over the prior year is comprised of a $19.8 million increase in stock-based compensation expense and a $34.9 million increase in total direct, general and administrative and corporate expenses (excluding stock-based compensation) primarily related to the operations of our outdoor advertising assets.

Depreciation and amortization expense increased $14.2 million to $225.3 million for the year ended December 31, 2018 as compared to $211.1 million for the same period in 2017, primarily related to the addition of approximately $774.7 million of assets acquired through acquisitions during fiscal years 2017 and 2018.


For the year ended December 31, 2018, the Company recognized a loss on disposition of assets of $7.2 million primarily related to the $7.8 million loss recognized on the sale of our Puerto Rico assets which closed on April 16, 2018.

Due primarily to the above factors, operating income increased $5.2 million to $460.6 million for the year ended December 31, 2018 compared to $455.4 million for the same period in 2017.

During the year ended December 31, 2018, the Company recorded a $15.4 million loss on debt extinguishment related to Lamar Media’s prepayment of its 5 7/8% Senior Subordinated Notes due 2022.  The $15.4 million loss is comprised of a cash redemption premium of $9.8 million and a non-cash write off of unamortized deferred financing costs of approximately $5.6 million.  See “Uses of Cash” for more information.

Interest expense increased $1.3 million for the year ended December 31, 2018 to $129.7 million as compared to $128.4 million for the year ended December 31, 2017.  The increase in interest expense is primarily related to the increased debt outstanding as compared to the same period in 2017.

The increase in operating income offset by the increases in loss on extinguishment of debt and interest expense over the comparable period in 2017, resulted in a $11.0 million decrease in net income before income taxes. The Company recognized $10.7 million in income tax expense for the year ended December 31, 2018. The effective tax rate for the year ended December 31, 2018 is approximately 3.4%, which differs from the federal statutory rate primarily due to our qualification for taxation as a REIT and adjustments for foreign items.

As a result of the above factors, the Company recognized net income for the year ended December 31, 2018 of $305.2 million, as compared to net income of $317.7 million for the same period in 2017.

Reconciliations:

Because acquisitions occurring after December 31, 2016 have contributed to our net revenue results for the periods presented, we provide 2017 acquisition-adjusted net revenue, which adjusts our 2017 net revenue for the year ended December 31, 2017 by adding to or subtracting from it the net revenue generated by the acquired or divested assets prior to our acquisition or divestiture of these assets for the same time frame that those assets were owned in the year ended December 31, 2018.

Reconciliations of 2017 reported net revenue to 2017 acquisition-adjusted net revenue for the year ended December 31, 2017 as well as a comparison of 2017 acquisition-adjusted net revenue to 2018 reported net revenue for the year ended December 31, 2018, are provided below:

Reconciliation and Comparison of Reported Net Revenue to Acquisition-Adjusted Net Revenue

 

 

Year ended

December 31,

 

 

 

2018

 

 

2017

 

 

 

(in thousands)

 

Reported net revenue

 

$

1,627,222

 

 

$

1,541,260

 

Acquisition net revenue

 

 

—

 

 

 

32,898

 

Adjusted totals

 

$

1,627,222

 

 

$

1,574,158

 


Key Performance Indicators

Net Income/Adjusted EBITDA

(in thousands)

 

 

Year Ended December 31,

 

 

Amount of

Increase

 

 

Percent

Increase

 

 

 

2018

 

 

2017

 

 

(Decrease)

 

 

(Decrease)

 

Net income

 

$

305,232

 

 

$

317,676

 

 

$

(12,444

)

 

 

(3.9

)%

Income tax expense

 

 

10,697

 

 

 

9,230

 

 

 

1,467

 

 

 

 

 

Loss on extinguishment of debt

 

 

15,429

 

 

 

71

 

 

 

15,358

 

 

 

 

 

Interest expense (income), net

 

 

129,198

 

 

 

128,390

 

 

 

808

 

 

 

 

 

Loss (gain) on disposition of assets

 

 

7,233

 

 

 

(4,664

)

 

 

11,897

 

 

 

 

 

Depreciation and amortization

 

 

225,261

 

 

 

211,104

 

 

 

14,157

 

 

 

 

 

Stock-based compensation expense

 

 

29,443

 

 

 

9,599

 

 

 

19,844

 

 

 

 

 

Adjusted EBITDA

 

$

722,493

 

 

$

671,406

 

 

$

51,087

 

 

 

7.6

%

Adjusted EBITDA for the year ended December 31, 2018 increased 7.6% to $722.5 million. The increase in Adjusted EBITDA was primarily attributable to the increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization) of $65.0 million, and was partially offset by an increase in general and administrative and corporate expenses of $13.9 million, excluding the impact of stock-based compensation expense.

Net Income/FFO/AFFO

(in thousands)

 

 

Year Ended December 31,

 

 

Amount of

Increase

 

 

Percent

Increase

 

 

 

2018

 

 

2017

 

 

(Decrease)

 

 

(Decrease)

 

Net income

 

$

305,232

 

 

$

317,676

 

 

$

(12,444

)

 

 

(3.9

)%

Depreciation and amortization related to real estate

 

 

212,457

 

 

 

198,630

 

 

 

13,827

 

 

 

 

 

Loss (gain) from disposition of real estate assets and

   investments

 

 

8,689

 

 

 

(4,185

)

 

 

12,874

 

 

 

 

 

Adjustments for unconsolidated affiliates and

   non-controlling interest

 

 

648

 

 

 

839

 

 

 

(191

)

 

 

 

 

FFO

 

$

527,026

 

 

$

512,960

 

 

$

14,066

 

 

 

2.7

%

Straight-line income

 

 

(2,036

)

 

 

(754

)

 

 

(1,282

)

 

 

 

 

Stock-based compensation expense

 

 

29,443

 

 

 

9,599

 

 

 

19,844

 

 

 

 

 

Non-cash portion of tax provision

 

 

660

 

 

 

804

 

 

 

(144

)

 

 

 

 

Non-real estate related depreciation and amortization

 

 

12,804

 

 

 

12,474

 

 

 

330

 

 

 

 

 

Amortization of deferred financing costs

 

 

4,920

 

 

 

5,120

 

 

 

(200

)

 

 

 

 

Loss on extinguishment of debt

 

 

15,429

 

 

 

71

 

 

 

15,358

 

 

 

 

 

Capital expenditures – maintenance

 

 

(43,108

)

 

 

(43,119

)

 

 

11

 

 

 

 

 

Adjustments for unconsolidated affiliates and

   non-controlling interest

 

 

(648

)

 

 

(839

)

 

 

191

 

 

 

 

 

AFFO

 

$

544,490

 

 

$

496,316

 

 

$

48,174

 

 

 

9.7

%

FFO for the year ended December 31, 2018 was $527.0 million as compared to FFO of $513.0 million for the same period in 2017. AFFO for the year ended December 31, 2018 increased 9.7% to $544.5 million as compared to $496.3 million for the same period in 2017. AFFO growth was primarily attributable to the increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization), offset by increases in general and administrative and corporate expenses (excluding the effect of stock based compensation expense).


LIQUIDITY AND CAPITAL RESOURCES

Overview

The Company has historically satisfied its working capital requirements with cash from operations and borrowings under its senior credit facility. The Company’s wholly owned subsidiary, Lamar Media Corp., is the principal borrower under the senior credit facility and maintains all corporate operating cash balances. Any cash requirements of the Company, therefore, must be funded by distributions from Lamar Media.

Sources of Cash

Total Liquidity at December 31, 2019.Liquidity. As of December 31, 20192021 we had approximately $413.5$662.4 million of total liquidity, which is comprised of approximately $26.2$99.8 million in cash and cash equivalents and approximately $387.3$562.6 million of availability under the revolving portion of Lamar Media’sthe senior credit facility. On February 6, 2020, Lamar Media completed a comprehensive refinancing transaction, which included an amendment and restatement ofWe expect our total liquidity to be adequate for the Company to meet its credit facility that, among other things, increasedoperational requirements for the borrowing capacity under the revolving portion of its credit facility by $200.0 million.next twelve months. We are currently in compliance with the maintenance covenant included in the senior credit facility, and we would remain in compliance after giving effect to borrowing the full amount available to us under the revolving portion of the senior credit facility.

As of December 31, 20192021 and 2018,2020, the Company had a working capital deficit of $362.6$274.4 million and $91.4$167.3 million, respectively. The increase in the working capital deficit of $271.3 millionfor the year ended December 31, 2021 is primarily duerelated to the impact of the new lease accounting standard (see Note 3. Leases to the Consolidated Financial Statements), which resulted$198.3 million in the recognition of short-termcurrent operating lease liabilities andwhich has a reclassification of prepaid leases to operating leasecorresponding right of use assetsasset recorded in long term assets. We expect to have enough cash on hand and availability under our Consolidated Balance Sheet.

revolving credit facility to meet our operating needs for the next twelve months.

Cash Generated by Operations.For the years ended December 31, 2019, 20182021, 2020 and 20172019 our cash provided by operating activities was $630.9$734.4 million, $564.8$569.9 million and $507.0$630.9 million, respectively. The increase in cash provided by operating activities for the year ended December 31, 20192021 over the same period in 20182020 relates to an increase in revenues offset by increasesan increase in operating expenses (excluding depreciation and amortization) and a net decrease in operating assets and liabilities.. We generatedexpect to generate cash flows from operations during 20192022 in excess of our cash needs for operations, and capital expenditures and dividends, as described herein. We used the excess cash generated principally to pay dividends and fund our acquisitions. See — “Cash Flows
” for more information.

Accounts Receivable Securitization Program.  On December 18, 2018, we entered into the Accounts Receivable Securitization Program. The Accounts Receivable Securitization Program provides up to $175.0 million in borrowing capacity, plus an accordion feature that would permit the borrowing capacity to be increased by up to $125.0 million. Borrowing capacity under the Accounts Receivable Securitization Program is limited to the availability of eligible accounts receivable collateralizing the borrowings under the agreements governing the Accounts Receivable Securitization Program. In connection with the Accounts Receivable Securitization Program, Lamar Media and certain of its subsidiaries (such subsidiaries, the “Subsidiary Originators”) sell and/or contribute their existing and future accounts receivable and certain related assets to one of two special purpose subsidiaries, Lamar QRS Receivables, LLC (the “QRS SPV”) and Lamar TRS Receivables, LLC (the “TRS SPV” and together with the QRS SPV the “Special Purpose Subsidiaries”), each of which is a wholly-owned subsidiary of Lamar Media. Existing and future accounts receivable relating to Lamar Media and its qualified REIT subsidiaries will be sold and/or contributed to the QRS SPV and existing and future accounts receivable relating to Lamar Media’s taxable REIT subsidiariesTRSs will be sold and/or contributed to the TRS SPV.  Each of the Special Purpose Subsidiaries has granted the lenders party to the Accounts Receivable Securitization Program a security interest in all of its assets, which consist of the accounts receivable and related assets sold or contributed to them, as described above, in order to secure the obligations of the Special Purpose Subsidiaries under the agreements governing the Accounts Receivable Securitization Program. Pursuant to the Accounts Receivable Securitization Program, Lamar Media has agreed to service the accounts receivable on behalf of the two Special Purpose Subsidiaries for a fee. Lamar Media has also agreed to guaranty its performance in its capacity as servicer and originator, as well as the performance of the Subsidiary Originators, of their obligations under the agreements governing the AccountAccounts Receivable Securitization Program. None of Lamar Media, the Subsidiary Originators or the Special Purpose Subsidiaries guarantees the collectability of the receivables under the Accounts Receivable Securitization Program. In addition, each of the Special Purpose Subsidiaries is a separate legal entity with its own separate creditors who will be entitled to access the assets of such Special Purpose Subsidiary before the assets become available to Lamar Media. Accordingly, the assets of the Special Purpose Subsidiaries are not available to pay creditors of Lamar Media or any of its subsidiaries, although collections from receivables in excess of the amounts required to repay the lenders and the other creditors of the Special Purpose Subsidiaries may be remitted to Lamar Media.

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On May 24, 2021, Lamar Media and the Special Purpose Subsidiaries entered into the Fifth Amendment (the "Fifth Amendment") to the Accounts Receivable Securitization Program, as amended. The Fifth Amendment extends the maturity date of the Accounts Receivable Securitization Program to July 21, 2024. Additionally, the Fifth Amendment decreases the Minimum Funding Threshold which, as amended, requires the Special Purpose Subsidiaries to maintain minimum borrowings under the Accounts Receivable Securitization Program on any day equal to the lesser of (i) 50.00% of the aggregate Commitment of all Lenders or (ii) the Borrowing Base, provided that the Minimum Funding Threshold shall be zero on any day that is a Minimum Funding Threshold Holiday which, as amended, provides for an annual holiday from the requirement of up to sixty days per year. The Fifth Amendment also provides for updated LIBOR replacement procedures. Lamar Media may amend the facility to extend the maturity date, enter into a new securitization facility with a different maturity date, or refinance the indebtedness outstanding under the Accounts Receivable Securitization Program using borrowings under its senior credit facility or from other financing sources.
As of December 31, 2019,2021, there werewas $175.0 million of outstanding aggregate borrowings under the Accounts Receivable Securitization Program at a borrowing rate of approximately 3.3%1.1%.

Lamar Media has no additional availability under the Accounts Receivable Securitization Program as of December 31, 2021. The Accounts Receivable Securitization Program will mature on July 21, 2024.

“At-the-Market” Offering Program.On May 1, 2018, the Company entered into an equity distribution agreement (the “Sales Agreement”) with J.P. Morgan Securities LLC, Wells Fargo Securities LLC and SunTrust Robinson Humphrey, Inc. as our sales agents (each a “Sales Agent”, and collectively, the “Sales Agents”).agents. Under the terms of the Sales Agreement, the Company could have, from time to time, issued and sold shares of its Class A common stock, having an aggregate offering price of up to $400.0 million through the sales agents as either agents or principals. The Sales Agreement expired by its terms on May 1, 2021. The Company did not issue any shares under this program in 2020 and 2021.

On June 21, 2021, the Company entered into a new equity distribution agreement (the "2021 Sales Agreement"), with J.P. Morgan Securities LLC, Wells Fargo Securities LLC, Truist Securities, Inc., SMBC Nikko Securities America, Inc. and Scotia Capital (USA) Inc. as our sales agents (each a "Sales Agent", and collectively, the "Sales Agents"), which replaced the prior Sales Agreement with substantially similar terms. Under the terms of the 2021 Sales Agreement, the Company may, from time to time, issue and sell shares of its Class A common stock, par value $.001 per share (the “Class A Common Stock”), having an aggregate offering price of up to $400.0 million through the Sales Agents as either agents or principals. Sales of the Class A Common Stock,common stock, if any, may be made in negotiated transactions or transactions that are deemed to be “at-the-market offerings”"at-the-market offerings" as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made directly on or through the Nasdaq Global Select Market and any other existing trading market for the Class A Common Stock,common stock, or sales made to or through a market maker other than on an exchange. The Company has no obligation to sell any of the Class A Common Stockcommon stock under the 2021 Sales Agreement and may at any time suspend solicitations and offers under the 2021 Sales Agreement. The Company intends to use the net proceeds, if any, from the sale of the Class A Common Stockcommon stock pursuant to the 2021 Sales Agreement for general corporate purposes, which may include the repayment, refinancing, redemption or repurchase of existing indebtedness, working capital, capital expenditures, acquisition of outdoor advertising assets and businesses and other related investments. During the year ended December 31, 2019, the Company received gross proceeds of approximately $21.4 million, resulting in net proceeds of approximately $21.2 million, in exchange for ‎issuing 266,410 shares of its Class A common stock under this program. During the year ended December 31, 2019, the aggregate ‎commissions paid to the sales agent was approximately $0.2 million. ‎ The Company did not offerissue any shares of its Class A common stock under this program during the quarter endedfrom its inception through December 31, 2019.  

2021.

Shelf Registration Statement. On August 6, 2018, we filed an automatically effective shelf registration statement (No. 333-226614) that registered the offer and sale of an indeterminate amount of additional shares of our Class A common stock.stock which expired by its term in August 2021. On August 23, 2018, weJune 21, 2021, the Company filed a prospectus supplement to thenew automatically effective shelf registration statement relating(No. 333-257243) that allows Lamar Advertising to the offer and resalesell an indeterminate amount of 163,137additional shares of its Class A common stock previously issued in connection with an acquisition.on similar terms as the prior registration statement. During the year ended 2019,December 31, 2021, the Company did not issue any shares under thiseither shelf registration, however, we may issue additional shares under the shelf registration statement in the future in connection with future acquisitions or for other general corporate purposes.registration.

Sale of Puerto Rico Operations.

On April 16, 2018, the Company sold substantially all of its operating assets in Puerto Rico to B-Billboard BB LLC and B-Billboard BG LLC which resulted in a loss on disposition of assets of approximately $7.8 million.

Credit Facilities. On February 6, 2020, Lamar Media entered into a Fourth Amended and Restated Credit Agreement (the “Fourth Amended and Restated Credit Agreement”) with certain of Lamar Media’s subsidiaries as guarantors, JPMorgan Chase Bank, N.A. as administrative agent and the lenders party thereto, under which the parties agreed to amend and restate Lamar Media’s existing senior credit facility. The Fourth Amended and Restated Credit Agreement amended and restated the Third Amended and Restated Credit Agreement dated as of May 15, 2017, as amended2017.

On July 2, 2021, Lamar Media entered into Amendment No. 1 (the “Third"Amendment"), to the Fourth Amended and Restated Credit Agreement”).

AsAgreement. The Amendment amends the definition of December 31, 2019,"Subsidiary" to exclude each of Lamar Media’s senior credit facility (the “senior credit facility”Partnering Sponsor LLC and Lamar Partnering Corporation and any of their subsidiaries (collectively, the "Lamar Partnering Entities") consistedsuch that, after the giving effect to the Amendment, none of (i) a $550.0 million revolving credit facility, (ii) a $450.0 million Term A loan facility, (iii) a $600.0 million Term B loan facilitythe Lamar Partnering Entities are subject to the Fourth Amended and (iv) an incremental facility (the “Incremental Facility”) pursuant to whichRestated Credit Agreement covenants and reporting requirements, but any investment by Lamar Media may incur additional term loan tranches or increase its revolving credit facilityin any of the Lamar Partnering Entities would be subject to pro forma compliancethe Fourth Amended and Restated Credit Agreement covenants. The Amendment also

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amends the definition of "EBITDA" to replace the existing calculation with a secured debt ratio financial maintenance covenant.  Asnet income-based calculation, which excludes the income of December 31, 2019,non-Subsidiary entities such as the aggregate balance outstanding underLamar Partnering Entities, except to the senior credit facility was $1.12 billion, consistingextent that income of $386.3 million outstanding in Term A loans, $584.2 million in Term B loans and $147.5 million of revolving credit loans under the revolving credit facility.  In addition, at December 31, 2019,such entities is received by Lamar Media had approximately $387.3 millionin the form of unused capacity under the revolving credit facility.

dividends or distributions.

The new senior credit facility, as established by the Fourth Amended and Restated Credit Agreement (the “new senior“senior credit facility”), consists of (i) a new $750.0 million senior secured revolving credit facility which will mature on February 6, 2025 (the “revolving credit facility”), (ii) a new $600.0 million Term B loan facility (the “new Term“Term B loans”)  which will mature on February 6, 2027, and (iii) an incremental facility (the “Incremental Facility”) pursuant to which Lamar Media may incur additional term loan tranches or increase its revolving credit facility subject to a pro forma secured debt ratio calculated as described under “Restrictions under Senior Credit Facility” of 4.50 to 1.00.1.00, as well as certain other conditions, including lender approval.  Lamar Media borrowed all $600.0 million in new Term B loans on February 6, 2020.  The entire amount of the new Term B loans will be payable at maturity.
The net proceeds from the Term B loans together with borrowing underbear interest at rates based on the Adjusted LIBO Rate (“Eurodollar term loans”) or the Adjusted Base Rate (“Base Rate term loans”), at Lamar Media’s option. Eurodollar term loans bear interest at a rate per annum equal to the Adjusted LIBO Rate plus 1.50%. Base Rate term loans bear interest at a rate per annum equal to the Adjusted Base Rate plus 0.50%. The revolving portioncredit facility bears interest at rates based on the Adjusted LIBO Rate (“Eurodollar revolving loans”) or the Adjusted Base Rate (“Base Rate revolving loans”), at Lamar Media’s option. Eurodollar revolving loans bear interest at a rate per annum equal to the Adjusted LIBO Rate plus 1.50% (or the Adjusted LIBO Rate plus 1.25% at any time the Total Debt Ratio is less than or equal to 3.25 to 1). Base Rate revolving loans bear interest at a rate per annum equal to the Adjusted Base Rate plus 0.50% (or the Adjusted Base Rate plus 0.25% at any time the total debt ratio is less than or equal to 3.25 to 1). The guarantees, covenants, events of default and other terms of the senior credit facility apply to the Term B loans and a portionrevolving credit facility.
As of December 31, 2021, the proceeds of the issuance of the 3 3/4% Senior Notes due 2028 and 4% Senior Notes due 2030 (both as described below), were used to repay allaggregate balance outstanding amounts under the Third Amendedsenior credit facility was $775.0 million, consisting of $600.0 million in Term B loans aggregate principal balance and Restated Credit Agreement, and all$175.0 million outstanding borrowings under our revolving commitments under that facility were terminated.

Note Offerings. On February 1, 2019,credit facility. Lamar Media issued $250.0had approximately $562.6 million in aggregate principle amount of 5 3/4% Senior Notes due 2026 through an institutional private placement (the “New Notes”).  The New Notes were issued as additional notes to the existing $400.0 million aggregate principal amount of 5 3/4% Senior Notes due 2026 that Lamar Media issued on January 28, 2016.  The net proceeds after underwriting fees and expenses, was approximately $251.5 million and were used to repay a portion of the borrowings outstandingunused capacity under the revolving credit facility.

Note Offerings.


On February 6, 2020,January 22, 2021, Lamar Media issued, through an institutional private placement, $1.0 billion in aggregate principal amount of new senior notes consisting of $600.0$550.0 million in aggregate principal amount of 3 3/4%5/8% Senior Notes due 20282031 (the “3 3/4%5/8% Senior Notes”) and $400.0 million in aggregate principal amount. The issuance of 4%the 3 5/8% Senior Notes due 2030 (the “4% Senior Notes”).resulted in net proceeds to Lamar Media of approximately $542.5 million. Lamar Media used the proceeds of this offering, together with cash on hand and borrowings under the revolving credit facility and Accounts Receivable Securitization Program, to repayredeem all of its existing Term Loan A loans, redeem in full all $510.0outstanding $650.0 million in aggregate principal amount of its outstanding 5 3/8%4% Senior Notes due 2024 and partially repay borrowings under its revolving credit facility.2026. See See Uses of Cash-Note Redemptionfor more information.

Factors Affecting Sources of Liquidity

Internally Generated Funds.The key factors affecting internally generated cash flow are general economic conditions, specific economic conditions in the markets where the Company conducts its business and overall spending on advertising by advertisers. We expect to generate cash flows from operations during 2022 in excess of our cash needs for operations, capital expenditures and dividends, as described herein.

Credit Facilities and Other Debt Securities.The Company and Lamar Media must comply with certain covenants and restrictions related to the senior credit facility, its outstanding debt securities and its Accounts Receivable Securitization Program.

Restrictions under Debt Securities. The Company and Lamar Media must comply with certain covenants and restrictions related to its outstanding debt securities. As of December 31, 2019,2021, Lamar Media hadhas outstanding $535.0 million 5% Senior Subordinated Notes issued in October 2012 (the “5% Senior Subordinated Notes”), $510.0 million 5 3/8% Senior Notes issued in January 2014 (the “5 3/8% Senior Notes”) and the $650.0 million 5 3/4% Senior Notes issued in January 2016 and February 2019 (the “5 3/4% Senior Notes”).  On February 6, 2020, Lamar Media issuedall of the 3 3/4% Senior Notes, and the 4% Senior Notes, the 4 7/8% Senior Notes and the 3 5/8% Senior Notes.

The indentures relating to Lamar Media’s outstanding notes restrict its ability to incur additional indebtedness but permit the incurrence of indebtedness (including indebtedness under the senior credit facility), (i) if no default or event of default would result from such incurrence and (ii) if after giving effect to any such incurrence, the leverage ratio (defined as the sum of (x) total consolidated debt plus (y) the aggregate liquidation preference of any preferred stock of Lamar Media’s restricted subsidiaries to trailing four fiscal quarter EBITDA (as defined in the indentures)) would be less than 7.0 to 1.1.0. Currently, Lamar Media is not in default under the indentures of any of its outstanding notes and, therefore, would be permitted to incur additional indebtedness subject to the foregoing provision.

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In addition to debt incurred under the provisions described in the preceding paragraph, the indentures relating to Lamar Media’s outstanding notes permit Lamar Media to incur indebtedness pursuant to the following baskets:

•

up to $1.5 billion (or up to $2.0 billion in the case of the indentures governing the 3 3/4% Senior Notes and the 4% Senior Notes) of indebtedness under the senior credit facility;

•up to $2.0 billion of indebtedness under the senior credit facility;

indebtedness outstanding on the date of the indentures or debt incurred to refinance outstanding debt;

•indebtedness outstanding on the date of the indentures or debt incurred to refinance outstanding debt;

inter-company debt between Lamar Media and its restricted subsidiaries or between restricted subsidiaries;

•inter-company debt between Lamar Media and its restricted subsidiaries or between restricted subsidiaries;

certain purchase money indebtedness and capitalized lease obligations to acquire or lease property in the ordinary course of business that cannot exceed the greater of $50 million or 5% of Lamar Media’s net tangible assets; and

•certain purchase money indebtedness and capitalized lease obligations to acquire or lease property in the ordinary course of business that cannot exceed the greater of $50.0 million or 5% of Lamar Media’s net tangible assets;

•additional debt not to exceed $75.0 million; and
•up to $500.0 million of permitted securitization financings.
•

additional debt not to exceed $75.0 million.

Restrictions under Senior Credit Facility. Lamar Media is required to comply with certain covenants and restrictions under the senior credit facility. If the Company or Lamar Media fails to comply with these tests, the lenders under the senior credit facility will be entitled to exercise certain remedies, including the termination of the lending commitments and the acceleration of the debt payments under the senior credit facility. At December 31, 2019,2021 we were, and currently, we wereare in compliance with all such tests under the senior credit facility.

Lamar Media must maintain a secured debt ratio, defined as total consolidated secured debt of Lamar Advertising, Lamar Media and its restricted subsidiaries (including capital lease obligations), minus the lesser of (x) $150$150.0 million and (y) the aggregate amount of unrestricted cash and cash equivalents of Lamar Advertising, Lamar Media and its restricted subsidiaries (other(other than the Special Purpose Subsidiaries (as defined above under “Sources“Sources of Cash-Accounts Receivable Securitization Program)Program)) to EBITDA, as defined below, for the period of four consecutive fiscal quarters then ended, of less than or equal to 3.54.5 to 1.0. The Fourth Amended and Restated Credit Agreement increased the secured debt ratio covenant to 4.5 to 1.0.  

Lamar Media is restricted from incurring additional indebtedness subject to exceptions, one of which is that it may incur additional indebtedness not exceeding the greater of $250.0 million and 6% of its total assets.


Lamar Media is also restricted from incurring additional unsecured senior indebtedness under certain circumstances unless, after giving effect to the incurrence of such indebtedness, it is in compliance with the secured debt ratio covenant and its senior debt ratio, defined as (a) total consolidated debt (excluding subordinated debt) of Lamar Advertising, Lamar Media and its restricted subsidiaries as of any date minus the lesser of (i) $150 million and (ii) the aggregate amount of unrestricted cash and cash equivalents of Lamar Advertising, Lamar Media and its restricted subsidiaries (other than the Special Purpose Subsidiaries (as defined above under “Sources of Cash-Accounts Receivable Securitization Program)) to (b) EBITDA, as defined below, for the most recent four fiscal quarters then ended is less than 4.5 to 1.0. The Fourth Amended and Restated Credit Agreement amended this provision to permit the incurrence of additional unsecured senior indebtedness if, after giving effect to the incurrence of such indebtedness, Lamar Media would have a total debt ratio, defined as (a)(x) total consolidated debt (including subordinated debt) of Lamar Advertising, Lamar Media and its restricted subsidiaries as of any date minus the lesser of (i) $150$150.0 million and (ii) the aggregate amount of unrestricted cash and cash equivalents of Lamar Advertising, Lamar Media and its restricted subsidiaries (other than the Special Purpose Subsidiaries) to (b)(y) EBITDA, as defined below, for the most recent four fiscal quarters then ended, isof less than 7.0 to 1. 

1.0. 

Lamar Media is also restricted from incurring additional subordinated indebtedness under certain circumstances unless, after giving effect to the incurrence of such indebtedness, it is in compliance with the secured debt ratio covenant and its total debt ratio is less than 6.57.0 to 1.0. The Fourth Amended and Restated Credit Agreement amended this provision to remove the requirement that Lamar Media be in pro forma compliance with the secured debt ratio covenant and to increase the pro forma total debt ratio requirement to 7.0 to 1.

Under the senior credit facility, as amended, “EBITDA” means, for any period, operatingnet income, plus (a) to the extent deducted in determining net income for Lamar Advertising, Lamar Media and its restricted subsidiaries (determined on a consolidated basissuch period, the sum determined without duplication and in accordance with GAAP) for such period (calculated (A) beforeGAAP, of (i) taxes, (ii) interest expense, (iii) depreciation, (iv) amortization, (v) any other non-cash income or charges accrued for such period, (vi) charges and expenses in connection with the senior credit facility, any actual or proposed acquisition, disposition or investment (excluding, in each case, purchases and sales of advertising space and operating assets in the ordinary course of business) and any actual or proposed offering of securities, incurrence or repayment of indebtedness (or amendment to any agreement relating to indebtedness), including any refinancing thereof, or recapitalization, and (vii) any loss or gain relating to amounts paid or earned in cash prior to the stated settlement date of any swap agreement that has been reflected in operating income for such period), and for purposes of calculating EBITDA under the Fourth Amended and Restated Credit Agreement, (viii) any loss on sales of receivables and related assets to a Securitization Entitysecuritization entity in connection with a Permitted Securitization Financing) and (B) after giving effect topermitted securitization financing, plus (b) the amount of cost savings, operating expense reductions and other operating improvements or synergies projected by Lamar Media in good faith to be realized as a result of any acquisition, investment, merger, amalgamation or disposition within 18 months of any such acquisition, investment, merger, amalgamation or disposition, net of the amount of actual benefits realized during such period from such action; provided,, (a) (A) the aggregate amount for all such cost savings, operating expense reductions and other operating improvements or synergies will not exceed an amount equal to 15% of EBITDA for the applicable four quarter period and (b)(B) any such adjustment to EBITDA pursuant to this clause (b) may only take into account cost savings, operating expense reductions and other operating improvements or synergies that are (I) directly attributable to such acquisition, investment, merger, amalgamation or disposition, (II) expected to have a continuing impact on Lamar Media and its restricted subsidiaries and (III) factually supportable, in each case all as certified by the chief financial officerChief Financial Officer of Lamar Media) on behalf of Lamar Media, and excluding (exceptminus (c) to the extent received or paidincluded in cash by Lamar Advertising, Lamar Media or anynet
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Table of its restricted subsidiaries Contents
income or loss attributable to equity in affiliates for such period), excludingperiod (determined without duplication and in accordance with GAAP) (i) any extraordinary and unusual gains or losses during such period, and excluding(ii) the proceeds of any casualty events and dispositions. For purposes hereof,of this EBITDA definition, the effect thereon of any adjustments required under Statement of Financial Accounting Standards No. 141R shall be excluded.  If during any period for which EBITDA is being determined, Lamar Media has consummated any acquisition or disposition, EBITDA will be determined on a pro forma basis as if such acquisition or disposition had been made or consummated on the first day of such period.

Under the senior credit facility, "net income" means for any period, the consolidated net income (or loss) of Lamar Advertising, Lamar Media, and its restricted subsidiaries, determined on a consolidated basis in accordance with GAAP; provided that the following is excluded from net income: (a) the income (or deficit) of any person accrued prior to the date it becomes a restricted subsidiary or is merged into or consolidated with Lamar Advertising, Lamar Media or any of its restricted subsidiaries, and (b) the income (or deficit) of any person (other than any of our restricted subsidiaries) in which Lamar Advertising, Lamar Media or any of its subsidiaries has an ownership interest, except to the extent that any such income is received by Lamar Advertising, Lamar Media or any of its restricted subsidiaries in the form of dividends or similar distributions.
The Company believes that its current level of cash on hand, availability under the senior credit facility and future cash flows from operations are sufficient to meet its operating needs through fiscal year 2020.for the next twelve months. All debt obligations are reflected on the Company’s balance sheet.

Restrictions under Accounts Receivable Securitization Program. The agreements governing the Accounts Receivable Securitization Program contain customary representations and warranties, affirmative and negative covenants, and termination event provisions, including but not limited to those providing for the acceleration of amounts owed under the Accounts Receivable Securitization Program if, among other things, the Special Purpose Subsidiaries fail to make payments when due, Lamar Media, the Subsidiary Originators or the Special Purpose Subsidiaries become insolvent or subject to bankruptcy proceedings or certain judicial judgments, breach certain representations and warranties or covenants or default under other material indebtedness, a change of control occurs, or if Lamar Media fails to maintain the maximum secured debt ratio of 3.54.5 to 1.0 required under Lamar Media’sthe senior credit facility. On February 6, 2020, we entered into an amendment to the Accounts Receivable Securitization Program that increased the maximum secured debt ratio thereunder to 4.5 to 1.0.


Uses of Cash

Capital Expenditures.Capital expenditures, excluding acquisitions, were approximately $141.0$126.1 million for the year ended December 31, 2019.2021. We anticipate our 20202022 total capital expenditures will closely approximate our 2019 spending.be approximately $170.0 million.

Acquisitions. During the year ended December 31, 2019,2021, the Company completed approximately 3045 acquisitions for a total cash purchase price of approximately $226.3 million, which included the acquisition of more than 3,000 billboard displays across various markets.$312.3 million. The acquisitions occurring during the year ended December 31, 20192021 were financed using available cash on hand, borrowings under the revolving credit facility and borrowings under Lamar Media’s revolving credit facility.on the Accounts Receivable Securitization Program.

Note Redemption.

Investments. On March 19, 2018,July 12, 2021, Lamar acquired a minority stake in Vistar Media ("Vistar"), a leading global provider of programmatic technology for the digital out-of-home sector. Management believes that Lamar's investment of $30.0 million will help Vistar strengthen its balance sheet, expand its research and development and extend its reach into new markets. Lamar received a seat on Vistar's Board of Directors.
Note Redemption. On February 3, 2021, the Company usedredeemed in full all $650.0 million aggregate principal amount 5 3/4% Senior Notes due 2026. The 5 3/4% Senior Notes redemption was completed using the proceeds received from the Term B loans under the senior credit facility,3 5/8% Senior Notes offering completed on January 22, 2021, together with cash on hand to redeem in full all $500.0 million in aggregate principal amount of Lamar Media’s 5 7/8% Senior Subordinated Notes due 2022 and repay a portion ofborrowings under the borrowings outstanding under Lamar Media’s revolving credit facility.facility and Accounts Receivable Securitization Program. The notes were redeemed at a redemption price equal to 101.958%102.875% of the aggregate principal amount of the outstanding notes, plus accrued and unpaid interest up to (but not including) the redemption date. TheDuring the year ended December 31, 2021, the Company recorded a loss on debt extinguishment of $15.4$21.6 million related to this redemption which is comprised of a $9.8 million prepayment penalty and a $5.6 million non-cash write off of unamortized deferred financing costs.the note redemption. See Sources of Cash-Credit FacilityCash- Note Offerings for more information.

On February 20, 2020, the Company used a portion of the proceeds from the 3 3/4% Senior Notes and 4% Senior Notes to redeem in full all $510.0 million in aggregate principal amount of Lamar Media’s 5 3/8% Senior Notes.  The notes were redeemed at a redemption price equal to 101.792% of the aggregate principal amount of the outstanding notes, plus accrued and unpaid interest up to the redemption date.  The Company expects to record a loss on debt extinguishment of approximately $18.5 million in the first quarter of 2020 related to this redemption.  

See Sources of Cash-Note OfferingDividends. for more information.

Term Loans. The Term A loans existing as of December 31, 2019 under the Third Amended and Restated Credit Agreement were set to mature on May 15, 2022 and the Term B loans existing as of December 31, 2019 under the Third Amended and Restated Credit Agreement were set to mature on March 16, 2025. As of December 31, 2019, had the term loans remained outstanding, the remaining quarterly installments scheduled to be paid on each March 31, June 30, September 30 and December 31 were as follows:

Principal Payment Date

 

Term A

 

 

Term B

 

March 31, 2020-June 30, 2020

 

$

8,438

 

 

$

1,500

 

September 30, 2020-March 31, 2022

 

$

16,875

 

 

$

1,500

 

Term A Loan Maturity May 15, 2022

 

$

253,125

 

 

$

—

 

June 30, 2022-December 31, 2024

 

$

—

 

 

$

1,500

 

Term B Loan Maturity March 16, 2025

 

$

—

 

 

$

559,500

 

The Term Loans bore interest at rates based on the Adjusted LIBO Rate (“Eurodollar term loans”) or the Adjusted Base Rate (“Base Rate term loans”), at Lamar Media’s option. Eurodollar term loans bore interest at a rate per annum equal to the Adjusted LIBO Rate plus 1.75%; (or the Adjusted LIBO Rate plus 1.50% at any time the Total Debt Ratio is less than or equal to 3.25 to 1 for Term A loans only). Base Rate  term loans bore interest at a rate per annum equal to the Adjusted Base Rate plus 0.75% (or the Adjusted Base Rate plus 0.50% at any time the Total Debt Ratio is less than or equal to 3.25 to 1 for Term A loans only). The revolving credit facility under the Third Amended and Restated Credit Agreement bore interest at rates based on the Adjusted LIBO Rate (“Eurodollar revolving loans”) or the Adjusted Base Rate (“Base Rate revolving loans”), at Lamar Media’s option. Eurodollar revolving loans bear interest at a rate per annum equal to the Adjusted LIBO Rate plus 2.25% (or the Adjusted LIBO Rate plus 2.00% at any time the Total Debt Ratio is less than or equal to 4.25 to 1; or the Adjusted LIBO Rate plus 1.75% at any time the Total Debt Ratio is less than or equal to 3.00 to 1). Base Rate revolving loans bore interest at a rate per annum equal to the Adjusted Base Rate plus 1.25% (or the Adjusted Base Rate plus 1.0% at any time the total debt ratio is less than or equal to 4.25 to 1, or the Adjusted Base Rate plus 0.75% at any time the Total Debt Ratio is less than or equal to 3.00 to 1). The guarantees, covenants, events of default and other terms of the senior credit facility applied to the Term A and B loans and revolving credit facility.

On February 6, 2020, Lamar Media paid in full all of the existing outstanding Term A loan and Term B loan under the Third Amended and Restated Credit Agreement using the proceeds from the $1.0 billion note offering and the proceeds from its new Term B loan.  See Sources of Cash-Note Offering and Credit Facility for more information.

Dividends.During the year ended December 31, 2019,2021, the Company declared and paid distributions of $384.8$404.8 million, or $3.84$4.00 per share of common stock. During the year ended December 31, 2020, the Company declared and paid distributions of $251.9 million, or $2.50 per share of common stock.On February 24, 2022, the Company’s Board of Directors approved a dividend of $1.10 per common share to be paid on March 31, 2022. Subject to the approval of the boardCompany’s Board of directors,Directors, the Company expects aggregate quarterly distributions to stockholders in 20202022 will be $4.00$4.40 per common share.


Duringshare, including the year ended Decemberdividend payable on March 31, 2018,2022.

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As a REIT, the Company declared distributions of $361.1 million or $3.65 per share of common stock.  The Company paid distributions of $442.6 million during the year ended December 31, 2018, which includes the January 2, 2018 distribution declared in November 2017.

The Company must annually distribute to its stockholders an amount equal to at least 90% of its REIT taxable income (determined before the deduction for distributed earnings and excluding any net capital gain). The amount, timing and frequency of future distributions will be at the sole discretion of the Board of Directors and will be declared based upon various factors, a number of which may be beyond the Company’s control, including financial condition and operating cash flows, the amount required to maintain REIT status and reduce any income and excise taxes that the Company otherwise would be required to pay, limitations on distributions in our existing and future debt instruments, the Company’s ability to utilize net operating losses to offset, in whole or in part, the Company’s distribution requirements, limitations on its ability to fund distributions using cash generated through its TRSs, the impact of COVID-19 on the Company's operations and other factors that the Board of Directors may deem relevant.

Debt Service

Special Purpose Acquisition Company. On April 6, 2021, Lamar Partnering Corporation ("LPC"), a newly formed special purpose acquisition company and Contractual Obligations.indirect wholly-owned subsidiary of the Company, filed a Registration Statement on Form S-1, with the Securities and Exchange Commission. Subject to market conditions, LPC's proposed public offering is expected to have a base offering size of $300.0 million, or up to $345.0 million if the underwriters' over-allotment is exercised in full. The Company, through an indirect wholly-owned subsidiary, would own approximately 20% of LPC's issued and outstanding ordinary shares upon the consummation of the proposed offering. The Company intends to commit to acquire up to $100.0 million of forward purchase units in a forward purchase agreement that would close concurrently with LPC's consummation of an initial business combination. As of December 31, 2019, we had outstanding debt2021, the Company incurred $1.0 million in deferred offering costs related to the proposed offering, which is included in other assets on our Condensed Consolidated Balance Sheet.
Stock and Debt Repurchasing Program. On March 16, 2020, the Company’s Board of approximately $2.980 billion. InDirectors authorized the future,repurchase of up to $250.0 million of the Company's Class A common stock. Additionally, the Board of Directors has authorized Lamar Media has principal reduction obligationsto repurchase up to $250.0 million in outstanding senior or senior subordinated notes and revolver commitment reductionsother indebtedness outstanding from time to time under the senior credit facility. In addition, it has fixed commercial commitments. These commitmentsOn September 20, 2021, the Board of Directors authorized the extension of the repurchase program through March 31, 2023. There were no repurchases under the program as of December 31, 2021. The Company's management may opt not to make any repurchases under the program, or may make aggregate purchases less than the total amount authorized.
Material Cash Requirements
Our expected material cash requirements for the twelve months ended December 31, 2022 and thereafter are detailedcomprised of contractual obligations, required annual distributions and other opportunistic expenditures.
Debt and Contractual Obligations. The following table summarizes our future debt maturities, interest payment obligations, and contractual obligations including required payments under operating and financing leases as of December 31, 2021 (in millions):
2022Thereafter
Debt maturities(1)
$174.8 $2,838.8 
Interest obligations on long-term debt(2)
98.0 597.9 
Contractual obligations, including operating and financing leases267.3 1,480.0 
Total payments due$540.1 $4,916.7 
(1)Debt maturities assume there is no refinancing prior to the existing maturity date.
(2)Interest rates on our variable rate instruments assume rates at the December 2021 levels.
Required Annual Distributions. As a contractual basis as follows:REIT, the Company must annually distribute to its stockholders an amount equal to at least 90% of its REIT taxable income (determined before the deduction for distributed earnings and excluding any net capital gain). On February 24, 2022, the Company’s Board of Directors approved a dividend of $1.10 per common share to be paid on March 31, 2022. Our Board of Directors will continue to evaluate future dividends in order to continue to satisfy the requirements needed to maintain our REIT status.

 

 

 

 

 

 

Payments Due by Period

 

Contractual Obligations

 

Total

 

 

Less Than

1 Year

 

 

1 - 3 Years

 

 

3 - 5 Years

 

 

After

5 Years

 

 

 

(In millions)

 

Long-Term Debt

 

$

2,980.1

 

 

$

226.5

 

 

$

490.6

 

 

$

1,053.3

 

 

$

1,209.7

 

Interest obligations on long term debt(1)

 

 

614.0

 

 

 

144.9

 

 

 

265.2

 

 

 

158.1

 

 

 

45.8

 

Billboard site, transit and other operating leases

 

 

1,786.6

 

 

 

261.1

 

 

 

405.4

 

 

 

317.9

 

 

 

802.2

 

Total payments due

 

$

5,380.7

 

 

$

632.5

 

 

$

1,161.2

 

 

$

1,529.3

 

 

$

2,057.7

 

(1)

Interest rates on our variable rate instruments are assuming rates at the December 2019 levels.

 

 

 

 

 

 

Amount of Expiration Per Period

 

Other Commercial Commitments

 

Total Amount

Committed

 

 

Less Than 1

Year

 

 

1 - 3 Years

 

 

3 - 5 Years

 

 

After

5 Years

 

 

 

(In millions)

 

Revolving Bank Facility(2)

 

$

550.0

 

 

$

—

 

 

$

550.0

 

 

$

—

 

 

$

—

 

Standby Letters of Credit(3)

 

$

12.7

 

 

$

12.2

 

 

$

0.5

 

 

$

—

 

 

$

—

 

(2)

Lamar Media had $150.0 million outstanding under the revolving facility at December 31, 2019.

(3)Opportunistic Expenditures. As part of our capital allocation strategy, we plan to continue to allocate our available capital among investment alternatives that meet our return on investment criteria. We will continue to reinvest in our existing assets and expand our outdoor advertising display portfolio through new construction. We will also continue to pursue strategic acquisitions of outdoor advertising businesses and assets. This includes acquisitions in our existing markets and in new markets where we can meet our return on investment criteria.

The standby letters of credit are issued under Lamar Media’s revolving credit facility and reduce the availability of the facility by the same amount.

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Cash Flows

The Company’s cash flows provided by operating activities increased by $66.0$164.5 million from $569.9 million in 2020 to $734.4 million for the year ended December 31, 2019,2021, primarily resulting from an increase in revenues of approximately $126.4$218.5 million and a decrease in operating net assets of $16.7 million, offset by increasesan increase in operating expenses (excluding stock-based compensation, gain on disposition of assets, and depreciation and amortization) of approximately $58.7$62.0 million, as compared to the comparable period in 2018.

2020.

Cash flows used in investing activities decreased $222.1increased $364.9 million from $584.1$96.9 million in 20182020 to $362.0$461.8 million in 20192021 primarily due to a net decreaseincrease in the amount of assets acquired through acquisitions, investments and capital expenditures of $227.8$360.5 million, as compared to the same period in 2018.

2020.

The Company’s cash flows used in financing activities were $264.4$294.5 million for the year ended December 31, 20192021 as compared to $73.6$377.9 million in 2018.2020. This increasedecrease in cash used in financing activities of $190.8$83.4 million for the year ended December 31, 20192021 is primarily due to financing transactions during the year 2020, offset by decreasesan increase in cash paid for dividends and distributions over the comparable period in 2018.

2020.

CRITICAL ACCOUNTING ESTIMATES

Our discussion and analysis of our results of operations and liquidity and capital resources are based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we evaluate our estimates and judgments, including those related to intangible assets, goodwill impairment and asset retirement obligations. We base our estimates on historical and anticipated results and trends and on various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events and, where applicable, established valuation techniques. These estimates form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results may differ from our estimates. We believe that the following significant accounting policies and assumptions may involve a higher degree of judgment and complexity than others.

Goodwill Impairment.

The Company has a significant amount of goodwill on its consolidated balance sheet and must perform an impairment test of goodwill annually or on a more frequent basis if events and circumstances indicate that the asset might be impaired. We have identified two reporting units (Logo operations and Billboard operations) in accordance with Accounting Standards Codification (“ASC”) 350 and no changes have been made to our reporting units from the prior period.

In our annual or interim measurement for impairment of goodwill, the Company conducts a qualitative assessment by examining relevant events and circumstances that could have a negative impact on the Company’s goodwill, which include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, reporting unit dispositions and acquisitions, the market capitalization of the Company and other relevant events specific to the Company. If, after assessing the totality of events or circumstances described above, the Company determines that it is more likely than not that the fair value of either of the Company's reporting units is less than its carrying amount, the Company will perform a quantitative impairment test. If impairment is indicated as a result of the quantitative impairment test, a goodwill impairment charge would be recorded to write the goodwill down to its implied fair value.  Based on the goodwill impairment analysis performed on December 31, 2019, we determined that the fair value of each reporting unit exceeded the carrying value and no impairment charge was recorded.

Asset Retirement Obligations.The Company had an asset retirement obligation of $226.1$269.4 million as of December 31, 2019.2021. This liability relates to the Company’s obligation upon the termination or non-renewal of a lease to dismantle and remove its billboard structures from the leased land and to reclaim the site to its original condition. The Company records the present value of obligations associated with the retirement of tangible long-lived assets in the period in which they are incurred. The liability is capitalized as part of the related long-lived asset’s carrying amount. Over time, accretion of the liability is recognized as an operating expense and the capitalized cost is depreciated over the expected useful life of the related asset. In calculating the liability, the Company calculates the present value of the estimated cost to dismantle using an average cost to dismantle, adjusted for inflation and market risk.

This calculation includes 100% of the Company’s billboard structures on leased land (which currently consist of approximately 74,50069,900 structures). The Company uses a 15-year retirement period based on historical operating experience in its core markets, including the actual time that billboard structures have been located on leased land in such markets and the actual length of the leases in the core markets, which includes the initial term of the lease, plus consideration of any renewal period. Historical third-party cost information is used to estimate the cost of dismantling of the structures and the reclamation of the site. The interest rate used to calculate the present value of such costs over the retirement period is based on the Company’s historical credit-adjusted risk free rate.

Acquisitions. The Company accounts for transactions that meet the definition of a business and group asset purchases as acquisitions. For transactions that meet the definition of a business combination, the Company allocates the purchase price, including any contingent consideration, to the assets acquired and the liabilities assumed at their estimated fair values as of the date of the acquisition with any excess of the purchase price paid over the estimated fair value of net assets acquired recorded as goodwill. For transactions that meet the definition of a business, the determination of the final purchase price and the acquisition-date fair value of identifiable assets acquired and liabilities assumed may extend over more than one period and result in adjustments to the preliminary estimate recognized in the prior period financial statements. For transactions that meet the definition of asset group purchases, the Company allocates the purchase price to the assets acquired and the liabilities assumed at their estimated relative fair values as of the date of the acquisition.  If a transaction is determined to be a group of assets, any direct acquisition costs are capitalized. Transaction costs for transactions determined to be a business combination are expensed as incurred.

The fair value of the assets acquired and liabilities assumed is typically determined by using either estimates of replacement costs or discounted cash flow valuation methods. When determining the fair value of tangible assets acquired, the
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Company must estimate the cost to replace the asset with a new asset, adjusted for an estimated reduction in fair value due to age of the asset, and the economic useful life. When determining the fair value of intangible assets acquired, the Company must estimate the applicable discount rate and the timing and amount of future cash flows.


Lease liabilitiesLiabilities and right-of-use assets:Right of Use Assets. On January 1, 2019, the Company adopted ASU No. 2016-02, “Leases (Codified as ASC 842),” which resulted in recording operating lease liabilities and right-of-useright of use assets on our consolidated balance sheet. Our operating lease liabilities (including short-term liabilities) and right-of-useright of use asset balances were $1.265$1.19 billion and $1.321$1.22 billion as of December 31, 2019,2021, respectively. The balance is recorded based on the present value of the remaining minimum rental payments under the leasing standard for our existing operating leases. The key estimates for our leases include (1) the discount rate used to discount the unpaid lease payments to present value and (2) lease term. Our leases generally do not include a readily determinable implicit rate, therefore, using a portfolio approach, we determine our collateralized incremental borrowing rate to discount the lease payments based on the information available at lease commencement. Our lease terms include the noncancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonable certain to exercise, or an option to extend the lease controlled by the lessor. The Company has determined we are not reasonably certain to exercise renewals or termination options, and as a result we use the lease’s initial stated term as the lease term for our lease population.

ACCOUNTING STANDARDS AND REGULATORY UPDATE

Leases

In February 2016, the FASB established Topic 842, Leases, by issuing

See Note 21, "New Accounting Pronouncements" to our consolidated financial statements included in Part II, Item 8 of this report for a discussion of our Accounting Standards Update (ASU) No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10 and ASU No. 2019-01, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

We adopted the new standard effective January 1, 2019 using a modified retrospective transition approach, applying the new standard to all leases existing at the date of initial application. An entity was permitted to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. Consequently, financial information was not updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019.

The new standard provided a number of optional practical expedients in transition. We elected the ‘package of practical expedients’, which permitted us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We elected the practical expedient pertaining to land easements.  We also elected the short-term lease recognition exemption for certain of our vehicle agreements. This means, for those leases that qualify, we will not recognize ROU assets or lease liabilities.

Upon adoption, we recognized additional operating liabilities of $1.2 billion, with corresponding ROU assets of the same amount based on the present value of the remaining minimum rental payments under current leasing standards for our existing operating leases. In addition to the increase to the operating lease liabilities and right-of-use assets, Topic 842 also resulted in reclassifying the presentation of prepaid and deferred rent to operating lease right-of-use assets. The Company did not have any changes to its opening balance of retained earnings for the adoption of this update.

Other recently released pronouncements

In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and other (Topic 350): Simplifying the test for goodwill impairment. The update simplifies how a company completes its goodwill impairment test by eliminating the two-step process, which requires determining the fair value of assets acquired or liabilities assumed in a business combination. The update requires completing the goodwill impairment test by comparing the difference between the reporting unit’s carrying value and fair value.  Goodwill charges, if any, would be determined by reducing the goodwill balance by the excess of the reporting unit’s carrying value over its fair value.  The update is effective for annual and interim fiscal periods beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on or after January 1, 2017.  The Company adopted this update beginning with its December 31, 2017 goodwill impairment test.

Regulatory Update.

In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808). The update is to clarify when certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 and when the collaborative arrangement participant is a customer in the context of a unit of account. The update also adds unit-of-account guidance in Topic 808 and requires that a collaborative arrangement participant that is not directly related to sales to a third party, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer. The update is effective for annual and interim fiscal periods beginning after December 15, 2019 with early adoption permitted.  The adoption of this update did not have a material effect on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments (“CECL”). The new guidance modifies how entities measure credit losses on most financial instruments. Topic 326 replaces the current “incurred loss” model with an “expected credit loss” model that requires consideration of a broader range of information to estimate expected credit losses over the lifetime of the asset. The new guidance is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted. The Company adopted this guidance on January 1, 2020 using the modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date. The adoption did not have a material impact to the consolidated financial statements.

LAMAR MEDIA CORP.

The following is a discussion of the consolidated financial condition and results of operations of Lamar Media for the years ended December 31, 2019, 20182021 and 2017.2020. This discussion should be read in conjunction with the consolidated financial statements of Lamar Media and the related notes.

RESULTS OF OPERATIONS

The following table presents certain items in the Consolidated Statements of Income as a percentage of net revenues for the years ended December 31, 2019, 20182021 and 2017:

2020:

 

Year Ended December 31,

 

Year Ended December 31,

 

2019

 

 

2018

 

 

2017

 

20212020

Net revenues

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

Net revenues100.0 %100.0 %

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

Direct advertising expenses

 

 

33.6

%

 

 

34.5

%

 

 

35.1

%

Direct advertising expenses32.3 %35.5 %

General and administrative expenses

 

 

18.2

%

 

 

17.8

%

 

 

17.9

%

General and administrative expenses18.3 %18.3 %

Corporate expenses

 

 

4.8

%

 

 

5.1

%

 

 

4.0

%

Corporate expenses5.2 %4.5 %

Depreciation and amortization

 

 

14.3

%

 

 

13.8

%

 

 

13.7

%

Depreciation and amortization15.2 %16.0 %

Operating income

 

 

29.5

%

 

 

28.3

%

 

 

29.6

%

Operating income29.2 %26.2 %

Loss on extinguishment of debt

 

 

—

 

 

 

0.9

%

 

 

—

 

Loss on extinguishment of debt1.2 %1.6 %

Interest expense

 

 

8.6

%

 

 

8.0

%

 

 

8.3

%

Interest expense6.0 %8.8 %

Income tax (benefit) expense

 

 

-0.2

%

 

 

0.7

%

 

 

0.6

%

Income tax expenseIncome tax expense0.5 %0.3 %

Net income

 

 

21.2

%

 

 

18.8

%

 

 

20.6

%

Net income21.8 %15.5 %

Year ended December 31, 20192021 compared to Year ended December 31, 2018

2020

Net revenues increased $126.4$218.5 million or 7.8%13.9% to $1.754$1.79 billion for the year ended December 31, 20192021 from $1.627$1.57 billion for the same period in 2018.2020. This increase was attributable primarily to an increase in billboard and transit net revenues of $124.6$210.3 million or 8.8%and $13.0 million, respectively, offset by a decrease in logo net revenues of $4.8 million over the prior period, which is primarily related to the integration of outdoor assets acquired during 2018 and 2019, and the addition of approximately 330 digital displays during the year ended December 31, 2019.  In addition, transit revenue increased $2.1 million, which represents an increase of 1.6% over the prior period.

year.


Net revenues for the year ended December 31, 2019,2021, as compared to acquisition-adjusted net revenues for the comparable period in 2018,2020, increased $45.7$217.0 million, or 2.7%13.8%. The $45.7$217.0 million increase in revenuenet revenues is primarily consisted ofdue to a $41.7$202.9 million and $15.1 million increase in billboard revenue primarily due to increases in digital revenue and a $4.1 million increase in transit revenuenet revenues, respectively over the acquisition-adjustedprior year. The increase
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in billboard and transit net revenue for the comparable periodrevenues was slightly offset by a decrease of $0.9 million in 2018.logo net revenues. See “Reconciliations”“Reconciliations” below.

Total operating expenses, exclusive of depreciation and amortization and (gain) lossgain on disposition of assets, increased $58.9$80.2 million, or 6.3%8.8% to $992.7$996.2 million for the year ended December 31, 20192021 from $933.8$916.0 million in the same period in 2018.2020. The $58.9$80.2 million increase over the prior year is primarily comprised of an increase in total direct, general and administrative and corporate expenses (excluding stock-based compensation) of $58.7$61.6 million primarily related to the operations ofan increase in our outdoor advertising assets.

variable billboard lease costs, transit and airport franchise costs, as well as increases in our workforce.

Depreciation and amortization expense increased $24.8$20.0 million to $250.0$271.3 million for the year ended December 31, 20192021 as compared to $225.3$251.3 million for the same period in 2018,2020. The increase is primarily relateddue to the additionrevision in the cost estimate included in the calculation of approximately $516.2 million of depreciable assets acquired through acquisitions and $258.6 million in capitalized expendituresasset retirement obligations during fiscal years 2018 and 2019.

the period.

For the year ended December 31, 2019,2021, Lamar Media recognized a gain on disposition of assets of $7.2$2.1 million primarily resulting from an amendmentas compared to a gain on disposition of a transit contract in the first quarterassets of 2019.  The gain in 2019 represents an increase of $14.5$9.0 million overfor the same period in 2018, largely due2020. The gain on disposition of assets for the year ended December 31, 2021 was primarily from transactions related to the gain in 2019 coupled with Media’s loss recognized in 2018 on the sale of its Puerto Rico assets in April of 2018 of $7.8 million.

billboard locations and displays.

Due primarily to the above factors, operating income increased $57.2$111.4 million to $518.2$522.0 million for the year ended December 31, 20192021 compared to $461.0$410.6 million for the same period in 2018.

2020.

During the year ended December 31, 2018,2021, Lamar Media recorded a $15.4$21.6 million loss on debt extinguishment related to Lamar Media’s prepaymentthe repayment of its 5 7/8%3/4% Senior Subordinated Notes due 2022.  The $15.4 million loss is comprised of a cash redemption premium of $9.8 million and a non-cash write off of unamortized deferred financing costs of approximately $5.6 million.Notes.  See “Uses of Cash” for more information.  There were no transactions resulting in a loss on debt extinguishment in fiscal year 2019.

Interest expense increased $20.9decreased $31.2 million for the year ended December 31, 20192021 to $150.6$106.4 million as compared to $129.7$137.6 million for the year ended December 31, 2018.2020.  The increasedecrease in interest expense is primarily related toLamar Media’s debt transactions completed in 2020 and 2021.
Equity in earnings of investee was $3.4 million for the increased debt outstandingyear ended December 31, 2021 as compared toa result of the same periodinvestment in 2018.

Vistar Media that occurred in July 2021. There was no equity in earnings of investee for the year ended December 31, 2020.

The increase in operating income, as well as the decrease in interest expense and the decrease in loss on extinguishment of debt offset by the increase in interest expense over the comparable period in 2018,2020, resulted in a $52.0$149.6 million increase in net income before income taxes.

Lamar Media recorded an income tax benefitexpense of $4.2$9.3 million for the year ended December 31, 20192021 as compared to an income tax expense of $10.7$4.7 million for the same period in 2018.2020. The $4.2 million benefit is comprised of a $17.0 million non-cash tax benefit resulting from REIT converted assets offset by income tax expense of $12.8 million.  The $12.8$9.3 million tax expense equates to an effective tax rate for the year ended December 31, 20192021 of approximately 3.5%2.3%, which differs from the federal statutory rate primarily due to our qualification for taxation as a REIT and adjustments for foreign items.

REIT.

As a result of the above factors, Lamar Media recognized net income for the year ended December 31, 20192021 of $372.5$388.9 million, as compared to net income of $305.6$243.9 million for the same period in 2018.

2020.

Reconciliations:

Because acquisitions occurring after December 31, 20172019 have contributed to our net revenue results for the periods presented, we provide 20182020 acquisition-adjusted net revenue, which adjusts our 20182020 net revenue for the year ended December 31, 20182020 by adding to or subtracting from it the net revenue generated by the acquired or divested assets prior to our acquisition or divestiture of these assets for the same time frame that those assets were owned in the year ended December 31, 2019.

2021.

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Reconciliations of 20182020 reported net revenue to 20182020 acquisition-adjusted net revenue for the year ended December 31, 20182020 as well as a comparison of 20182020 acquisition-adjusted net revenue to 20192021 reported net revenue for the year ended December 31, 2019,2021, are provided below:

Reconciliation and Comparison of Reported Net Revenue to Acquisition-Adjusted Net Revenue

 

Year ended December 31,

 

Year ended December 31,

 

2019

 

 

2018

 

20212020

 

(in thousands)

 

(in thousands)

Reported net revenue

 

$

1,753,644

 

 

$

1,627,222

 

Reported net revenue$1,787,401 $1,568,856 

Acquisition net revenue

 

 

—

 

 

 

80,745

 

Acquisition net revenue— 1,524 

Adjusted totals

 

$

1,753,644

 

 

$

1,707,967

 

Adjusted totals$1,787,401 $1,570,380 


Key Performance Indicators

Net Income/Adjusted EBITDA

(in thousands)

 

Year Ended December 31,

 

 

Amount of

Increase

 

 

Percent

Increase

 

Year Ended December 31,Amount of Increase (Decrease)Percent Increase (Decrease)

 

2019

 

 

2018

 

 

(Decrease)

 

 

(Decrease)

 

20212020

Net income

 

$

372,540

 

 

$

305,631

 

 

$

66,909

 

 

 

21.9

%

Net income$388,908 $243,873 $145,035 59.5 %

Income tax (benefit) expense

��

 

(4,222

)

 

 

10,697

 

 

 

(14,919

)

 

 

 

 

Income tax expenseIncome tax expense9,256 4,660 4,596 

Loss on extinguishment of debt

 

 

—

 

 

 

15,429

 

 

 

(15,429

)

 

 

 

 

Loss on extinguishment of debt21,604 25,235 (3,631)

Interest expense, net

 

 

149,852

 

 

 

129,198

 

 

 

20,654

 

 

 

 

 

Interest expense, net105,621 136,826 (31,205)

(Gain) loss on disposition of assets

 

 

(7,241

)

 

 

7,233

 

 

 

(14,474

)

 

 

 

 

Equity in earnings of investeeEquity in earnings of investee(3,384)— (3,384)
Gain on disposition of assetsGain on disposition of assets(2,115)(9,026)6,911 

Depreciation and amortization

 

 

250,028

 

 

 

225,261

 

 

 

24,767

 

 

 

 

 

Depreciation and amortization271,294 251,296 19,998 

Impact of ASC 842 adoption

 

 

(5,292

)

 

 

—

 

 

 

(5,292

)

 

 

 

 

Capitalized contract fulfillment costs, netCapitalized contract fulfillment costs, net(445)387 (832)

Stock-based compensation expense

 

 

29,647

 

 

 

29,443

 

 

 

204

 

 

 

 

 

Stock-based compensation expense37,368 18,772 18,596 

Adjusted EBITDA

 

$

785,312

 

 

$

722,892

 

 

$

62,420

 

 

 

8.6

%

Adjusted EBITDA$828,107 $672,023 $156,084 23.2 %

Adjusted EBITDA for the year ended December 31, 20192021 increased 8.6%23.2% to $785.3$828.1 million. The increase in Adjustedadjusted EBITDA was primarily attributable to the increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization and the impactcapitalized contract fulfillment costs, net) of ASC 842 adoption) of $92.7$198.9 million, and was partially offset by an increase in general and administrative and corporate expenses of $30.3$42.8 million, excluding the impact of stock-based compensation expense and the impactexpense.
40
Table of ASC 842 adoption.

Contents

Net Income/FFO/AFFO

(in thousands)

 

Year Ended December 31,

 

 

Amount of

Increase

 

 

Percent

Increase

 

Year Ended December 31,Amount of Increase (Decrease)Percent Increase (Decrease)

 

2019

 

 

2018

 

 

(Decrease)

 

 

(Decrease)

 

20212020

Net income

 

$

372,540

 

 

$

305,631

 

 

$

66,909

 

 

 

21.9

%

Net income$388,908 $243,873 $145,035 59.5 %

Depreciation and amortization related to real estate

 

 

235,802

 

 

 

212,457

 

 

 

23,345

 

 

 

 

 

Depreciation and amortization related to real estate259,933 238,932 21,001 

(Gain) loss from disposition of real estate assets and

investments

 

 

(6,775

)

 

 

8,689

 

 

 

(15,464

)

 

 

 

 

Non-cash tax benefit for REIT converted assets

 

 

(17,031

)

 

 

—

 

 

 

(17,031

)

 

 

 

 

Gain from sale or disposal of real estate, net of taxGain from sale or disposal of real estate, net of tax(1,865)(5,790)3,925 

Adjustments for unconsolidated affiliates and

non-controlling interest

 

 

771

 

 

 

648

 

 

 

123

 

 

 

 

 

Adjustments for unconsolidated affiliates and non-controlling interest(2,756)629 (3,385)

FFO

 

$

585,307

 

 

$

527,425

 

 

$

57,882

 

 

 

11.0

%

FFO$644,220 $477,644 $166,576 34.9 %

Straight-line income

 

 

(361

)

 

 

(2,036

)

 

 

1,675

 

 

 

 

 

Impact of ASC 842 adoption

 

 

(5,292

)

 

 

—

 

 

 

(5,292

)

 

 

 

 

Straight-line expenseStraight-line expense2,443 3,597 (1,154)
Capitalized contract fulfillment costs, netCapitalized contract fulfillment costs, net(445)387 (832)

Stock-based compensation expense

 

 

29,647

 

 

 

29,443

 

 

 

204

 

 

 

 

 

Stock-based compensation expense37,368 18,772 18,596 

Non-cash portion of tax provision

 

 

2,901

 

 

 

660

 

 

 

2,241

 

 

 

 

 

Non-cash portion of tax provision1,574 (797)2,371 
Gain from one-time sale of non-real estate assetsGain from one-time sale of non-real estate assets— (3,197)3,197 

Non-real estate related depreciation and amortization

 

 

14,226

 

 

 

12,804

 

 

 

1,422

 

 

 

 

 

Non-real estate related depreciation and amortization11,361 12,364 (1,003)

Amortization of deferred financing costs

 

 

5,365

 

 

 

4,920

 

 

 

445

 

 

 

 

 

Amortization of deferred financing costs5,877 5,909 (32)

Loss on extinguishment of debt

 

 

—

 

 

 

15,429

 

 

 

(15,429

)

 

 

 

 

Loss on extinguishment of debt21,604 25,235 (3,631)

Capital expenditures – maintenance

 

 

(49,155

)

 

 

(43,108

)

 

 

(6,047

)

 

 

 

 

Capital expenditures – maintenance(58,196)(24,028)(34,168)

Adjustments for unconsolidated affiliates and

non-controlling interest

 

 

(771

)

 

 

(648

)

 

 

(123

)

 

 

 

 

Adjustments for unconsolidated affiliates and non-controlling interest2,756 (629)3,385 

AFFO

 

$

581,867

 

 

$

544,889

 

 

$

36,978

 

 

 

6.8

%

AFFO$668,562 $515,257 $153,305 29.8 %

FFO for the year ended December 31, 20192021 was $585.3$644.2 million as compared to FFO of $527.4$477.6 million for the same period in 2018.2020. AFFO for the year ended December 31, 20192021 increased 6.8%29.8% to $581.9$668.6 million as compared to $544.9$515.3 million for the same period in 2018.2020. The increase in AFFO growth was primarily attributable to the increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization and the impact of ASC 842 adoption), offset by increases in general and administrative and corporate expenses (excluding the effect of stock based compensation expense and the impact of ASC 842 adoption).


Year ended December 31, 2018 compared to Year ended December 31, 2017

Net revenues increased $86.0 million or 5.6% to $1.627 billion for the year ended December 31, 2018 from $1.541 billion for the same period in 2017. This increase was attributable primarily to an increase in billboard net revenues of $72.6 million or 5.4% over the prior period, which is primarily related to the integration of outdoor assets acquired during 2017 and 2018, and the addition of over 250 digital displays during the year ended December 31, 2018.  In addition, logo sign revenue increased $1.5 million, which represents an increase of 1.8% over the prior period.  Transit revenue increased $11.9 million, which represents an increase of 10.1% over the prior period, primarily due to several new transit and airport markets acquired in 2017 and 2018.

Net revenues for the year ended December 31, 2018, as compared to acquisition-adjusted net revenues for the comparable period in 2017, increased $53.1 million, or 3.4%. The $53.1 million increase in revenue primarily consisted of a $45.1 million increase in billboard revenue primarily due to increases in digital and political revenue, a $1.1 million increase in logo revenue and a $6.8 million increase in transit revenue over the acquisition-adjusted net revenue for the comparable period in 2017. See “Reconciliations” below.

Total operating expenses, exclusive of depreciation and amortization and loss (gain) on disposition of assets, increased $54.7 million, or 6.2% to $933.8 million for the year ended December 31, 2018 from $879.1 million in the same period in 2017. The $54.7 million increase over the prior year is comprised of a $19.8 million increase in stock-based compensation expense and a $34.9 million increase in total direct, general and administrative and corporate expenses (excluding stock-based compensation) primarily related to the operations of our outdoor advertising assets.

Depreciation and amortization expense increased $14.2 million to $225.3 million for the year ended December 31, 2018 as compared to $211.1 million for the same period in 2017, primarily related to the addition of approximately $774.7 million of assets acquired through acquisitions during fiscal years 2017 and 2018.

For the year ended December 31, 2018, Lamar Media recognized a loss on disposition of assets of $7.2 million primarily related to the $7.8 million loss recognized on the sale of its Puerto Rico assets which closed on April 16, 2018.

Due primarily to the above factors, operating income increased $5.2 million to $461.0 million for the year ended December 31, 2018 compared to $455.7 million for the same period in 2017.

During the year ended December 31, 2018, Lamar Media recorded a $15.4 million loss on debt extinguishment related to the prepayment of its 5 7/8% Senior Subordinated Notes due 2022.  The $15.4 million loss is comprised of a cash redemption premium of $9.8 million and a non-cash write off of unamortized deferred financingcapitalized contract fulfillment costs, of approximately $5.6 million.  See “Uses of Cash” for more information.

Interest expense increased $1.3 million for the year ended December 31, 2018 to $129.7 million as compared to $128.4 million for the year ended December 31, 2017.  The increase in interest expense is primarily related to the increased debt outstanding as compared to the same period in 2017.

The increase in operating income offset by the increases in loss on extinguishment of debt and interest expense over the comparable period in 2017, resulted in a $11.0 million decrease in net income before income taxes. Lamar Media recognized $10.7 million in income tax expense for the year ended December 31, 2018. The effective tax rate for the year ended December 31, 2018 is approximately 3.4%net), which differs from the federal statutory rate primarily due to our qualification for taxation as a REIT and adjustments for foreign items.

As a result of the above factors, Lamar Media recognized net income for the year ended December 31, 2018 of $305.6 million, as compared to net income of $318.1 million for the same period in 2017.

Reconciliations:

Because acquisitions occurring after December 31, 2016 have contributed to our net revenue results for the periods presented, we provide 2017 acquisition-adjusted net revenue, which adjusts our 2017 net revenue for the year ended December 31, 2017 by adding to or subtracting from it the net revenue generated by the acquired or divested assets prior to our acquisition or divestiture of these assets for the same time frame that those assets were owned in the year ended December 31, 2018.

Reconciliations of 2017 reported net revenue to 2017 acquisition-adjusted net revenue for the year ended December 31, 2017 as well as a comparison of 2017 acquisition-adjusted net revenue to 2018 reported net revenue for the year ended December 31, 2018, are provided below:


Reconciliation and Comparison of Reported Net Revenue to Acquisition-Adjusted Net Revenue

 

 

Year ended December 31,

 

 

 

2018

 

 

2017

 

 

 

(in thousands)

 

Reported net revenue

 

$

1,627,222

 

 

$

1,541,260

 

Acquisition net revenue

 

 

—

 

 

 

32,898

 

Adjusted totals

 

$

1,627,222

 

 

$

1,574,158

 

Key Performance Indicators

Net Income/Adjusted EBITDA

(in thousands)

 

 

Year Ended December 31,

 

 

Amount of

Increase

 

 

Percent

Increase

 

 

 

2018

 

 

2017

 

 

(Decrease)

 

 

(Decrease)

 

Net income

 

$

305,631

 

 

$

318,058

 

 

$

(12,427

)

 

 

(3.9

)%

Income tax expense

 

 

10,697

 

 

 

9,230

 

 

 

1,467

 

 

 

 

 

Loss on extinguishment of debt

 

 

15,429

 

 

 

71

 

 

 

15,358

 

 

 

 

 

Interest expense (income), net

 

 

129,198

 

 

 

128,390

 

 

 

808

 

 

 

 

 

Loss (gain) on disposition of assets

 

 

7,233

 

 

 

(4,664

)

 

 

11,897

 

 

 

 

 

Depreciation and amortization

 

 

225,261

 

 

 

211,104

 

 

 

14,157

 

 

 

 

 

Stock-based compensation expense

 

 

29,443

 

 

 

9,599

 

 

 

19,844

 

 

 

 

 

Adjusted EBITDA

 

$

722,892

 

 

$

671,788

 

 

$

51,104

 

 

 

7.6

%

Adjusted EBITDA for the year ended December 31, 2018 increased 7.6% to $722.9 million. The increase in Adjusted EBITDA was primarily attributable to the increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization) of $65.0 million, and was partially offset by an increase in general and administrative and corporate expenses of $13.9 million, excluding the impact of stock-based compensation expense.

Net Income/FFO/AFFO

(in thousands)

 

 

Year Ended December 31,

 

 

Amount of

Increase

 

 

Percent

Increase

 

 

 

2018

 

 

2017

 

 

(Decrease)

 

 

(Decrease)

 

Net income

 

$

305,631

 

 

$

318,058

 

 

$

(12,427

)

 

 

(3.9

)%

Depreciation and amortization related to real estate

 

 

212,457

 

 

 

198,630

 

 

 

13,827

 

 

 

 

 

Loss (gain) from disposition of real estate assets and

   investments

 

 

8,689

 

 

 

(4,185

)

 

 

12,874

 

 

 

 

 

Adjustments for unconsolidated affiliates and

   non-controlling interest

 

 

648

 

 

 

839

 

 

 

(191

)

 

 

 

 

FFO

 

$

527,425

 

 

$

513,342

 

 

$

14,083

 

 

 

2.7

%

Straight-line income

 

 

(2,036

)

 

 

(754

)

 

 

(1,282

)

 

 

 

 

Stock-based compensation expense

 

 

29,443

 

 

 

9,599

 

 

 

19,844

 

 

 

 

 

Non-cash portion of tax provision

 

 

660

 

 

 

804

 

 

 

(144

)

 

 

 

 

Non-real estate related depreciation and amortization

 

 

12,804

 

 

 

12,474

 

 

 

330

 

 

 

 

 

Amortization of deferred financing costs

 

 

4,920

 

 

 

5,120

 

 

 

(200

)

 

 

 

 

Loss on extinguishment of debt

 

 

15,429

 

 

 

71

 

 

 

15,358

 

 

 

 

 

Capital expenditures – maintenance

 

 

(43,108

)

 

 

(43,119

)

 

 

11

 

 

 

 

 

Adjustments for unconsolidated affiliates and

   non-controlling interest

 

 

(648

)

 

 

(839

)

 

 

191

 

 

 

 

 

AFFO

 

$

544,889

 

 

$

496,698

 

 

$

48,191

 

 

 

9.7

%


FFO for the year ended December 31, 2018 was $527.4 million as compared to FFO of $513.3 million for the same period in 2017. AFFO for the year ended December 31, 2018 increased 9.7% to $544.9 million as compared to $496.7 million for the same period in 2017. AFFO growth was primarily attributable to the increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization), offset by increases intotal general and administrative and corporate expenses (excluding the effect of stock based compensation expense).

41
Table of Contents

ITEM 7A.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Lamar Advertising Company and Lamar Media Corp.

Lamar Advertising Company is exposed to interest rate risk in connection with variable rate debt instruments issued by its wholly owned subsidiary Lamar Media Corp. The information below summarizes the Company’s interest rate risk associated with its principal variable rate debt instruments outstanding at December 31, 2019,2021, and should be read in conjunction with Note 9 of the Notes to the Company’s Consolidated Financial Statements.

Lamar Media Corp. has variable rate debt outstanding under itsthe senior credit facility and its Accounts Receivable Securitization Program. Because interest rates may increase or decrease at any time, the Company is exposed to market risk as a result of the impact that changes in interest rates may have on the applicable borrowings outstanding. Increases in the interest rates applicable to these borrowings would result in increased interest expense and a reduction in the Company’s net income.

At December 31, 20192021 there was approximately $1.292 billion$948.7 million of indebtedness outstanding under the senior credit facility and Accounts Receivable Securitization Program, or approximately 46.9%31.1% of the Company’s outstanding long-term debt (including current maturities) on that date, bearing interest at variable rates. The aggregate interest expense for 20192021 with respect to borrowings under the senior credit facility and the Accounts Receivable Securitization Program was $54.6$13.2 million, and the weighted average interest rate applicable to these borrowings during 20192021 was 4.0%1.4%. Assuming that the weighted average interest rate was 200 basis points higher (that is 6.0%3.4% rather than 4.0%1.4%), then the Company’s 20192021 interest expense would have increased by approximately $26.8$15.1 million for the year ended December 31, 2019.

2021.

The Company attemptedattempts to mitigate the interest rate risk resulting from its variable interest rate long-term debt instruments by issuing fixed rate long-term debt instruments and maintaining a balance over time between the amount of the Company’s variable rate and fixed rate indebtedness. In addition, the Company has the capability under the senior credit facility to fix the interest rates applicable to its borrowings at an amount equal to Adjusted LIBO Rate or Adjusted Base Rate plus the applicable margin for periods of up to twelve months (in certain cases with the consent of the lenders), which would allow the Company to mitigate the impact of short-term fluctuations in market interest rates. In the event of an increase in interest rates, the Company may take further actions to mitigate its exposure. The Company cannot guarantee, however, that the actions that it may take to mitigate this risk will be feasible or that, if these actions are taken, that they will be effective.


42
Table of Contents
ITEM 8.    FINANCIAL STATEMENTS
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES

ITEM 8.

FINANCIAL STATEMENTS

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

46

44

47

45

48

46

50

48

51

49

52

50

53

51

54-79

52

80

78

81

79



43
Table of Contents
Management’s Report on Internal Control Over Financial Reporting

The management of Lamar Advertising Company is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act.

Lamar Advertising’s management assessed the effectiveness of Lamar Advertising’s internal control over financial reporting as of December 31, 2019.2021. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on this assessment, Lamar Advertising’s management has concluded that, as of December 31, 2019,2021, Lamar Advertising’s internal control over financial reporting is effective based on those criteria. The effectiveness of Lamar Advertising’s internal control over financial reporting as of December 31, 20192021 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report, which is included in Item 8 to this Annual Report.


44

Table of Contents
Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Lamar Advertising Company:


Opinion on Internal Control Over Financial Reporting


We have audited Lamar Advertising Company and subsidiaries’subsidiaries' (the Company) internal control over financial reporting as of December 31, 2019,2021, based on criteria established inInternal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019,2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.


We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 20192021 and 2018,2020, the related consolidated statements of income and comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019,2021, and the related notes and financial statement schedules II to III (collectively, the consolidated financial statements), and our report dated February 20, 202025, 2022 expressed an unqualified opinion on those consolidated financial statements.


Basis for Opinion


The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’sManagement's Report on Internal Control Over Financial Reporting.Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.


Definition and Limitations of Internal Control Over Financial Reporting


A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

KPMG LLP

Baton Rouge, Louisiana

February 20, 2020

25, 2022

45


Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Lamar Advertising Company:

Opinion on the ConsolidatedFinancial Statements


We have audited the accompanying consolidated balance sheets of Lamar Advertising Company and subsidiaries (the Company) as of December 31, 20192021 and 2018,2020, the related consolidated statements of income and comprehensive income, stockholders’ equity, and cash flows for each of the years in the three‑yearthree-year period ended December 31, 2019,2021, and the related notes and financial statement schedules II to III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20192021 and 2018,2020, and the results of its operations and its cash flows for each of the years in the three‑yearthree-year period ended December 31, 2019,2021, in conformity with U.S. generally accepted accounting principles.


We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019,2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 20, 202025, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for revenue recognition as of January 1, 2018, due to the adoption of Accounting Standards Codification Topic 606, reportingRevenue from Contracts with Customers..

As discussed in Note 7 to the consolidated financial statements, the Company changed its method of accounting for leases as of January 1, 2019, due to the adoption of Accounting Standards Codification Topic 842, Leases.

Basis for Opinion


These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Matter


The critical audit mattersmatter communicated below are mattersis a matter arising from the current period audit of the consolidated financial statements that werewas communicated or required to be communicated to the audit committee and that: (1) relaterelates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit mattersmatter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit mattersmatter below, providing a separate opinionsopinion on the critical audit mattersmatter or on the accounts or disclosures to which they relate.

it relates.

Assessment of the accounting lease term for the portfolio of billboard land leases

As discussed in Note 7 to the consolidated financial statements, a lessee determines the lease term at the commencement date by identifying the non-cancellable period of the lease and then adding any periods for which it is reasonably certain to exercise a renewal option (or not to exercise a termination option). The Company has over 74,000 operating69,000 billboard land leases infor which they determined the lease term using a portfolio approach, in accordance with which the portfolio approach.

negotiated stated initial lease term for each billboard land lease was concluded to be the lease term under Accounting Standards Codification Topic 842, Leases (ASC 842).


We identified the assessment of the initial lease term for the portfolio of billboard land leases, which affects the discount rate for the lease as well as the measurement of the lease liability and right of use asset, as a critical audit matter. In the
46

Company’s operatingbillboard land leases, the Company typically has both unilateral renewal and termination options. Determining the lease term involved a high degree of subjectivity as to whether the lease term should or should not include renewal period(s)periods (including periods after an optional termination date).

, the evaluation of which required subjective auditor judgment.


The following are the primary procedures we performed to address thethis critical audit matter includedmatter. We evaluated the following. Wedesign and tested the operating effectiveness of certain internal controls over the Company’s billboard land lease process, including determinationcontrols over the qualifications and experience of individuals negotiating the stated initial lease term, reconciliation of inputs into the system, approval of operatingbillboard land lease contracts, and annual evaluation of the renewals and terminations exercised by the Company during the year. We evaluated the competence, capabilities, and objectivity of the Company’s real estate team that negotiates the operating lease terms and thatconditions, and whether the team considers economic factors that are consistent with those enumerated in ASC 842 when negotiating the stated initial lease term and associated renewal and termination options. We inspected the Company’s assessment and conclusion ofabout using the portfolio approach for its operatingbillboard land leases. We tested a sample of the Company’s operatingbillboard land lease population and obtained the underlying documentation used in the determination of the lease term to assess thatevaluate whether the leases entered into are similar in relation toterms of the lease agreement creation process, purpose for the lease (i.e. to host a Company billboard), and lease term considerations. We evaluatedassessed the impact of billboard land leases with early terminations and renewals beyond the stated initial term to assessevaluate the Company’s assertions about andassertion that use of the portfolio approach forstated initial lease term as the lease term.

Evaluating the fair value of site locations acquired in the Fairway Outdoor Advertising business combination

As discussed in Note 3 to the consolidated financial statements, the Company completed the acquisition of Fairway Outdoor Advertisingterm for its billboard land leases on December 21, 2018, for an aggregate purchase price of $418.5 million. The Company finalized the fair value allocation in 2019. The Company acquired multiple intangible and tangible assets, the most significant of whicha portfolio basis was the site locations intangible asset. The acquisition date fair value allocation for the site locations asset was $153.4 million.

We identified the evaluation of the initial measurement of the site locations intangible asset acquired in the Fairway Outdoor Advertising transaction as a critical audit matter. There was a high degree of subjectivity in the forecasted financial data used in the discounted cash flow model to estimate the acquisition date fair value of the intangible asset. The discounted cash flow model included the following internally-developed assumptions for which there was limited observable market information, and the estimated fair value of such asset was sensitive to possible changes to these assumptions:

- Forecasted revenue;

- Forecasted earnings before interest, taxes, depreciation and amortization (EBITDA); and

- Company-specific risk premium utilized as an input to the discount rate.

The primary procedures we performed to address this critical audit matter included the following. We tested certain controls over the Company’s acquisition date valuation process to develop the relevant assumptions, as listed above, including controls related to the analysis of the assumptions based on market participants’ views. We compared the Company’s forecasted revenue and EBITDA assumptions to those of the Company’s peers using data publicly available. We assessed the assumptions for comparison to those of a market participant, including consideration of recent similar market transactions. We compared the Company’s forecasted revenue and EBITDA assumptions to both actual results and historical results to assess the Company’s ability to accurately forecast. We involved a valuation professional with specialized skills and knowledge to assist in the evaluation of the company-specific risk premium utilized as an input to the discount rate, considering the risk surrounding the forecasted revenue and EBITDA.

appropriate.

/s/ KPMG LLP

KPMG LLP

We have served as the Company’s auditor since 1999.

Baton Rouge, Louisiana

February 20, 2020

25, 2022

47

Table of Contents
LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 20192021 and 2018

2020

(In thousands, except share and per share data)

 

2019

 

 

2018

 

20212020

ASSETS

 

 

 

 

 

 

 

 

ASSETS

Current assets:

 

 

 

 

 

 

 

 

Current assets:

Cash and cash equivalents

 

$

26,188

 

 

$

21,494

 

Cash and cash equivalents$99,788 $121,569 

Receivables, net of allowance for doubtful accounts of $13,185 and $11,161

as of 2019 and 2018, respectively

 

 

254,930

 

 

 

235,576

 

Prepaid lease and contract expenses

 

 

—

 

 

 

80,684

 

Receivables, net of allowance for doubtful accounts of $11,195 and $14,946 as of 2021 and 2020, respectivelyReceivables, net of allowance for doubtful accounts of $11,195 and $14,946 as of 2021 and 2020, respectively269,917 240,854 

Other current assets

 

 

29,051

 

 

 

25,915

 

Other current assets18,902 18,147 

Total current assets

 

 

310,169

 

 

 

363,669

 

Total current assets388,607 380,570 

Property, plant and equipment (note 5)

 

 

3,660,311

 

 

 

3,525,725

 

Property, plant and equipment (note 5)3,782,288 3,615,505 

Less accumulated depreciation and amortization

 

 

(2,311,196

)

 

 

(2,230,677

)

Less accumulated depreciation and amortization(2,445,014)(2,333,656)

Net property, plant and equipment

 

 

1,349,115

 

 

 

1,295,048

 

Net property, plant and equipment1,337,274 1,281,849 

Operating lease right of use assets

 

 

1,320,779

 

 

 

—

 

Operating lease right of use assets1,224,672 1,222,013 
Financing lease right of use assetsFinancing lease right of use assets16,890 19,670 

Goodwill (note 6)

 

 

1,912,274

 

 

 

1,919,386

 

Goodwill (note 6)1,936,426 1,912,328 

Intangible assets, net (note 6)

 

 

992,244

 

 

 

915,453

 

Intangible assets, net (note 6)1,045,177 914,446 

Other assets

 

 

56,574

 

 

 

51,085

 

Other assets98,448 60,565 

Total assets

 

$

5,941,155

 

 

$

4,544,641

 

Total assets$6,047,494 $5,791,441 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

 

 

 

 

 

 

 

 

Current liabilities:

Trade accounts payable

 

$

14,974

 

 

$

21,246

 

Trade accounts payable$16,429 $12,017 

Current maturities of long-term debt, net of deferred financing costs of $6,081 and

$5,245 in 2019 and 2018, respectively (note 9)

 

 

226,514

 

 

 

204,120

 

Current maturities of long-term debt, net of deferred financing costs of $585 and $445 in 2021 and 2020, respectively (note 9)Current maturities of long-term debt, net of deferred financing costs of $585 and $445 in 2021 and 2020, respectively (note 9)174,778 122,434 

Current operating lease liabilities (note 7)

 

 

196,841

 

 

 

—

 

Current operating lease liabilities (note 7)198,286 195,439 
Current financing lease liabilities (note 7)Current financing lease liabilities (note 7)1,331 1,331 

Accrued expenses (note 8)

 

 

107,225

 

 

 

122,467

 

Accrued expenses (note 8)135,038 105,288 

Deferred income

 

 

127,254

 

 

 

107,202

 

Deferred income137,103 111,363 

Total current liabilities

 

 

672,808

 

 

 

455,035

 

Total current liabilities662,965 547,872 

Long-term debt, net of deferred financing costs of $18,333 and $20,619 in 2019 and

2018, respectively (note 9)

 

 

2,753,604

 

 

 

2,684,568

 

Long-term debt, net of deferred financing costs of $36,274 and $39,672 in 2021 and 2020, respectively (note 9)Long-term debt, net of deferred financing costs of $36,274 and $39,672 in 2021 and 2020, respectively (note 9)2,838,817 2,764,082 

Operating lease liabilities (note 7)

 

 

1,068,181

 

 

 

—

 

Operating lease liabilities (note 7)995,356 993,776 
Financing lease liabilities (note 7)Financing lease liabilities (note 7)17,277 18,608 

Deferred income tax liabilities (note 12)

 

 

5,713

 

 

 

20,734

 

Deferred income tax liabilities (note 12)6,416 4,854 

Asset retirement obligation (note 10)

 

 

226,137

 

 

 

222,989

 

Asset retirement obligation (note 10)269,367 222,876 

Other liabilities

 

 

34,406

 

 

 

29,531

 

Other liabilities40,207 36,605 

Total liabilities

 

 

4,760,849

 

 

 

3,412,857

 

Total liabilities4,830,405 4,588,673 

Stockholders’ equity (note 14):

 

 

 

 

 

 

 

 

Stockholders’ equity (note 14):

Series AA preferred stock, par value $.001, $63.80 cumulative dividends, authorized

5,720 shares; 5,720 shares issued and outstanding at 2019 and 2018

 

 

—

 

 

 

—

 

Class A common stock, par value $.001, 362,500,000 shares authorized, 86,596,498

and 85,551,595 shares issued and 86,093,300 and 85,162,692 outstanding at 2019

and 2018, respectively

 

 

87

 

 

 

86

 

Class B common stock, par value $.001, 37,500,000 shares authorized,

14,420,085 shares issued and outstanding at 2019 and 2018

 

 

14

 

 

 

14

 

Series AA preferred stock, par value $0.001, $63.80 cumulative dividends, authorized 5,720 shares; 5,720 shares issued and outstanding at 2021 and 2020Series AA preferred stock, par value $0.001, $63.80 cumulative dividends, authorized 5,720 shares; 5,720 shares issued and outstanding at 2021 and 2020— — 
Class A common stock, par value $0.001, 362,500,000 shares authorized, 87,540,838 and 87,111,327 shares issued and 86,852,821 and 86,491,646 outstanding at 2021 and 2020, respectivelyClass A common stock, par value $0.001, 362,500,000 shares authorized, 87,540,838 and 87,111,327 shares issued and 86,852,821 and 86,491,646 outstanding at 2021 and 2020, respectively88 87 
Class B common stock, par value $0.001, 37,500,000 shares authorized, 14,420,085 shares issued and outstanding at 2021 and 2020Class B common stock, par value $0.001, 37,500,000 shares authorized, 14,420,085 shares issued and outstanding at 2021 and 202014 14 

Additional paid-in-capital

 

 

1,922,222

 

 

 

1,852,421

 

Additional paid-in-capital2,001,399 1,963,850 

Accumulated comprehensive income

 

 

685

 

 

 

12

 

Accumulated comprehensive income855 934 

Accumulated deficit

 

 

(708,408

)

 

 

(695,337

)

Accumulated deficit(734,415)(717,331)

Cost of shares held in treasury, 503,198 and 388,903 shares in 2019 and 2018,

respectively

 

 

(34,294

)

 

 

(25,412

)

Cost of shares held in treasury, 688,017 and 619,681 shares in 2021 and 2020, respectivelyCost of shares held in treasury, 688,017 and 619,681 shares in 2021 and 2020, respectively(50,852)(44,786)

Stockholders’ equity

 

 

1,180,306

 

 

 

1,131,784

 

Stockholders’ equity1,217,089 1,202,768 

Total liabilities and stockholders’ equity

 

$

5,941,155

 

 

$

4,544,641

 

Total liabilities and stockholders’ equity$6,047,494 $5,791,441 

See accompanying notes to consolidated financial statements.


48

Table of Contents
LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Consolidated Statements of Income and Comprehensive Income

Years Ended December 31, 2019, 20182021, 2020 and 2017

2019

(In thousands, except share and per share data)

 

2019

 

 

2018

 

 

2017

 

 202120202019

Statements of Income

 

 

 

 

 

 

 

 

 

 

 

 

Statements of Income

Net revenues (note 2)

 

$

1,753,644

 

 

$

1,627,222

 

 

$

1,541,260

 

Net revenues (note 2)$1,787,401 $1,568,856 $1,753,644 

Operating expenses (income):

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses (income):

Direct advertising expenses (exclusive of depreciation and amortization)

 

 

590,078

 

 

 

561,848

 

 

 

540,880

 

Direct advertising expenses (exclusive of depreciation and amortization)576,507 557,661 590,078 

General and administrative expenses (exclusive of depreciation

and amortization)

 

 

318,380

 

 

 

289,428

 

 

 

276,229

 

 General and administrative expenses (exclusive of depreciation and amortization)326,951 287,874 318,380 

Corporate expenses (exclusive of depreciation and amortization)

 

 

84,658

 

 

 

82,896

 

 

 

62,344

 

Corporate expenses (exclusive of depreciation and amortization)93,577 70,944 84,658 

Depreciation and amortization (note 11)

 

 

250,028

 

 

 

225,261

 

 

 

211,104

 

Depreciation and amortization (note 11)271,294 251,296 250,028 

(Gain) loss on disposition of assets

 

 

(7,241

)

 

 

7,233

 

 

 

(4,664

)

Gain on disposition of assetsGain on disposition of assets(2,115)(9,026)(7,241)

 

 

1,235,903

 

 

 

1,166,666

 

 

 

1,085,893

 

1,266,214 1,158,749 1,235,903 

Operating income

 

 

517,741

 

 

 

460,556

 

 

 

455,367

 

Operating income521,187 410,107 517,741 

Other expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

Other expense (income):

Loss on extinguishment of debt

 

 

—

 

 

 

15,429

 

 

 

71

 

Loss on extinguishment of debt21,604 25,235 — 

Interest income

 

 

(764

)

 

 

(534

)

 

 

(6

)

Interest income(763)(797)(764)

Interest expense

 

 

150,616

 

 

 

129,732

 

 

 

128,396

 

Interest expense106,384 137,623 150,616 
Equity in earnings of investeeEquity in earnings of investee(3,384)— — 

 

 

149,852

 

 

 

144,627

 

 

 

128,461

 

123,841 162,061 149,852 

Income before income tax expense

 

 

367,889

 

 

 

315,929

 

 

 

326,906

 

Income tax (benefit) expense (note 12)

 

 

(4,222

)

 

 

10,697

 

 

 

9,230

 

Income before income tax expense (benefit)Income before income tax expense (benefit)397,346 248,046 367,889 
Income tax expense (benefit) (note 12)Income tax expense (benefit) (note 12)9,256 4,660 (4,222)

Net income

 

 

372,111

 

 

 

305,232

 

 

 

317,676

 

Net income388,090 243,386 372,111 

Preferred stock dividends

 

 

365

 

 

 

365

 

 

 

365

 

Preferred stock dividends365 365 365 

Net income applicable to common stock

 

$

371,746

 

 

$

304,867

 

 

$

317,311

 

Net income applicable to common stock$387,725 $243,021 $371,746 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

Basic earnings per share

 

$

3.71

 

 

$

3.09

 

 

$

3.24

 

Basic earnings per share$3.83 $2.41 $3.71 

Diluted earnings per share

 

$

3.71

 

 

$

3.08

 

 

$

3.23

 

Diluted earnings per share$3.83 $2.41 $3.71 

Cash dividends declared per share of common stock

 

$

3.84

 

 

$

3.65

 

 

$

3.32

 

Cash dividends declared per share of common stock$4.00 $2.50 $3.84 

Weighted average common shares used in computing earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares used in computing earnings per share:

Weighted average common shares outstanding basic

 

 

100,130,721

 

 

 

98,817,525

 

 

 

97,930,555

 

Weighted average common shares outstanding basic101,133,269 100,756,361 100,130,721 

Weighted average common shares outstanding diluted

 

 

100,320,574

 

 

 

99,086,160

 

 

 

98,369,865

 

Weighted average common shares outstanding diluted101,349,865 100,902,700 100,320,574 

Statements of Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

Statements of Comprehensive Income

Net income

 

$

372,111

 

 

$

305,232

 

 

$

317,676

 

Net income$388,090 $243,386 $372,111 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive (loss) income, net of taxOther comprehensive (loss) income, net of tax

Foreign currency translation adjustments

 

 

673

 

 

 

(1,290

)

 

 

1,926

 

Foreign currency translation adjustments(79)249 673 

Comprehensive income

 

$

372,784

 

 

$

303,942

 

 

$

319,602

 

Comprehensive income$388,011 $243,635 $372,784 

See accompanying notes to consolidated financial statements.


49

Table of Contents
LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

Years Ended December 31, 2019, 20182021, 2020 and 2017

2019

(In thousands, except share and per share data)

 

 

Series AA

PREF

Stock

 

 

Class A

CMN

Stock

 

 

Class B

CMN

Stock

 

 

Treasury

Stock

 

 

Add’l

Paid in

Capital

 

 

Accumulated

Comprehensive

Income

(Loss)

 

 

Accumulated

Deficit

 

 

Total

 

Balance, December 31, 2016

 

$

—

 

 

 

83

 

 

 

15

 

 

 

(12,303

)

 

 

1,713,312

 

 

 

(624

)

 

 

(630,955

)

 

 

1,069,528

 

Non-cash compensation

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,012

 

 

 

—

 

 

 

—

 

 

 

4,012

 

Issuance of 150,259 shares of

  common stock through stock awards

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

18,491

 

 

 

 

 

 

 

 

 

 

 

18,491

 

Exercise of 554,049 shares of stock

   options

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

20,306

 

 

 

—

 

 

 

—

 

 

 

20,306

 

Issuance of 107,978 shares of common

   stock through employee purchase plan

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6,378

 

 

 

—

 

 

 

—

 

 

 

6,378

 

Conversion of 190,280 shares of Class B

   common stock to Class A common stock

 

 

—

 

 

 

1

 

 

 

(1

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Purchase of 115,196 shares of

   treasury stock

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(8,997

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(8,997

)

Foreign currency translation

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,926

 

 

 

—

 

 

 

1,926

 

Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

317,676

 

 

 

317,676

 

Dividends/distributions to common

   shareholders ($3.32 per common

   share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(325,462

)

 

 

(325,462

)

Dividends ($63.80 per preferred

   share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(365

)

 

 

(365

)

Balance, December 31, 2017

 

$

—

 

 

 

84

 

 

 

14

 

 

 

(21,300

)

 

 

1,762,499

 

 

 

1,302

 

 

 

(639,106

)

 

 

1,103,493

 

Non-cash compensation

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,012

 

 

 

—

 

 

 

—

 

 

 

4,012

 

Issuance of 150,259 shares of

  common stock through stock awards

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

11,012

 

 

 

—

 

 

 

—

 

 

 

11,012

 

Exercise of 361,618 shares of stock

   options

 

 

—

 

 

 

1

 

 

 

—

 

 

 

—

 

 

 

13,432

 

 

 

—

 

 

 

—

 

 

 

13,433

 

Issuance of 126,012 shares of common

   stock through employee purchase plan

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

7,115

 

 

 

—

 

 

 

—

 

 

 

7,115

 

Issuance of 576,002 shares of common

   stock for cash

 

 

—

 

 

 

1

 

 

 

—

 

 

 

—

 

 

 

42,069

 

 

 

—

 

 

 

—

 

 

 

42,070

 

Issuance of 163,137 shares of common

   stock for purchase of assets

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

12,282

 

 

 

—

 

 

 

—

 

 

 

12,282

 

Purchase of 57,619 shares of

   treasury stock

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(4,112

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(4,112

)

Foreign currency translation

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,290

)

 

 

—

 

 

 

(1,290

)

Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

305,232

 

 

 

305,232

 

Dividends/distributions to common

   shareholders ($3.65 per common

   share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(361,098

)

 

 

(361,098

)

Dividends ($63.80 per preferred

   share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(365

)

 

 

(365

)

Balance, December 31, 2018

 

$

—

 

 

 

86

 

 

 

14

 

 

 

(25,412

)

 

 

1,852,421

 

 

 

12

 

 

 

(695,337

)

 

 

1,131,784

 

Non-cash compensation

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,604

 

 

 

 

 

 

 

 

 

 

 

4,604

 

Issuance of 302,507 shares of

  common stock through stock awards

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

20,956

 

 

 

—

 

 

 

—

 

 

 

20,956

 

Exercise of 340,684 shares of stock

   options

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

14,984

 

 

 

—

 

 

 

—

 

 

 

14,984

 

Issuance of 129,972 shares of common

   stock through employee purchase plan

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

8,060

 

 

 

—

 

 

 

—

 

 

 

8,060

 

Issuance of 266,410 shares of common

   stock for cash

 

 

—

 

 

 

1

 

 

 

—

 

 

 

—

 

 

 

21,197

 

 

 

—

 

 

 

—

 

 

 

21,198

 

Purchase of 114,295 shares of

   treasury stock

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(8,882

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(8,882

)

Foreign currency translation

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

673

 

 

 

—

 

 

 

673

 

Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

372,111

 

 

 

372,111

 

Dividends/distributions to common

   shareholders ($3.84 per common

   share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(384,817

)

 

 

(384,817

)

Dividends ($63.80 per preferred

   share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(365

)

 

 

(365

)

Balance, December 31, 2019

 

$

—

 

 

 

87

 

 

 

14

 

 

 

(34,294

)

 

 

1,922,222

 

 

 

685

 

 

 

(708,408

)

 

 

1,180,306

 

Series AA
PREF
Stock		Class A
CMN
Stock		Class B
CMN
Stock		Treasury
Stock		Add’l
Paid in
Capital		Accumulated
Comprehensive
Income
(Loss)		Accumulated
Deficit		Total
Balance, December 31, 2018$— 86 14 (25,412)1,852,421 12 (695,337)1,131,784 
Non-cash compensation— — — — 4,604 — — 4,604 
Issuance of 302,507 shares of common stock through stock awards— — — — 20,956 — — 20,956 
Exercise of 340,684 shares of stock options— — — — 14,984 — — 14,984 
Issuance of 129,972 shares of common stock through employee purchase plan— — — — 8,060 — — 8,060 
Issuance of 266,410 shares of common stock for cash— 1 — — 21,197 — — 21,198 
Purchase of 114,295 shares of treasury stock— — — (8,882)— — — (8,882)
Foreign currency translation— — — — — 673 — 673 
Net income— — — — — — 372,111 372,111 
Dividends/distributions to common shareholders ($3.84 per common share)— — — — — — (384,817)(384,817)
Dividends ($63.80 per preferred share)— — — — — — (365)(365)
Balance, December 31, 2019$— 87 14 (34,294)1,922,222 685 (708,408)1,180,306 
Non-cash compensation— — — — 4,669 4,669 
Issuance of 298,124 shares of common stock through stock awards— — — — 25,811 — — 25,811 
Exercise of 61,949 shares of stock options— — — — 3,138 — — 3,138 
Issuance of 154,756 shares of common stock through employee purchase plan— — — — 8,010 — — 8,010 
Purchase of 116,483 shares of treasury stock— — — (10,492)— — — (10,492)
  Foreign currency translation— — — — — 249 — 249 
  Net income— — — — — — 243,386 243,386 
Dividends/distributions to common shareholders ($2.50 per common share)— — — — — — (251,944)(251,944)
Dividends ($63.80 per preferred share)— — — — — — (365)(365)
Balance, December 31, 2020$— 87 14 (44,786)1,963,850 934 (717,331)1,202,768 
   Non-cash compensation— — — — 4,942 4,942 
Issuance of 158,985 shares of common stock through stock awards— 1 — — 13,565 — — 13,566 
Exercise of 156,491 shares of stock options— — — — 10,170 — — 10,170 
Issuance of 114,035 shares of common stock through employee purchase plan— — — — 8,872 — — 8,872 
Purchase of 68,336 shares of treasury stock— — — (6,066)— — — (6,066)
  Foreign currency translation— — — — — (79)— (79)
  Net income— — — — — — 388,090 388,090 
Dividends/distributions to common shareholders ($4.00 per common share)— — — — — — (404,809)(404,809)
Dividends ($63.80 per preferred share)— — — — — — (365)(365)
Balance, December 31, 2021$— 88 14 (50,852)2,001,399 855 (734,415)1,217,089 

See accompanying notes to consolidated financial statements.


50

Table of Contents
LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years Ended December 31, 2019, 20182021, 2020 and 2017

2019

(In thousands)

 

 

2019

 

 

2018

 

 

2017

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

372,111

 

 

$

305,232

 

 

$

317,676

 

Adjustments to reconcile net income to net cash provided by

   operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

250,028

 

 

 

225,261

 

 

 

211,104

 

Stock-based compensation

 

 

29,647

 

 

 

29,443

 

 

 

9,599

 

Amortization included in interest expense

 

 

5,365

 

 

 

4,920

 

 

 

5,120

 

(Gain) loss on disposition of assets and investments

 

 

(7,241

)

 

 

7,233

 

 

 

(4,664

)

Loss on extinguishment of debt

 

 

—

 

 

 

15,429

 

 

 

71

 

Deferred income tax (benefit) expense

 

 

(14,130

)

 

 

1,538

 

 

 

804

 

Provision for doubtful accounts

 

 

10,608

 

 

 

7,985

 

 

 

6,762

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

(Increase) decrease in:

 

 

 

 

 

 

 

 

 

 

 

 

Receivables

 

 

(28,357

)

 

 

(33,292

)

 

 

(17,524

)

Prepaid expenses

 

 

275

 

 

 

(5,433

)

 

 

309

 

Other assets

 

 

(11,257

)

 

 

2,828

 

 

 

(8,410

)

Increase (decrease) in:

 

 

 

 

 

 

 

 

 

 

 

 

Trade accounts payable

 

 

700

 

 

 

1,366

 

 

 

309

 

Accrued expenses

 

 

(1,597

)

 

 

(6,292

)

 

 

(9,508

)

Operating lease liabilities

 

 

9,102

 

 

 

—

 

 

 

—

 

Other liabilities

 

 

15,611

 

 

 

8,628

 

 

 

(4,632

)

Cash flows provided by operating activities

 

 

630,865

 

 

 

564,846

 

 

 

507,016

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(140,956

)

 

 

(117,638

)

 

 

(109,329

)

Acquisitions

 

 

(226,278

)

 

 

(477,389

)

 

 

(297,305

)

(Increase) decrease in notes receivable

 

 

(448

)

 

 

9

 

 

 

515

 

Proceeds received from property insurance claims

 

 

210

 

 

 

4,222

 

 

 

—

 

Proceeds from disposition of assets and investments

 

 

5,438

 

 

 

6,648

 

 

 

6,053

 

Cash flows used in investing activities

 

 

(362,034

)

 

 

(584,148

)

 

 

(400,066

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net proceeds from issuance of common stock

 

 

44,262

 

 

 

62,662

 

 

 

26,684

 

Cash used for purchase of treasury shares

 

 

(8,882

)

 

 

(4,112

)

 

 

(8,997

)

Proceeds received from revolving credit facility

 

 

495,000

 

 

 

563,000

 

 

 

495,000

 

Payments on revolving credit facility

 

 

(625,000

)

 

 

(481,000

)

 

 

(477,000

)

Principal payments on long-term debt

 

 

(34,471

)

 

 

(27,328

)

 

 

(16,993

)

Proceeds received from senior credit facility term loans

 

 

—

 

 

 

599,250

 

 

 

450,000

 

Proceeds received from accounts receivable securitization program

 

 

9,000

 

 

 

175,000

 

 

 

—

 

Payments on accounts receivable securitization program

 

 

(9,000

)

 

 

—

 

 

 

—

 

Debt issuance costs

 

 

(4,463

)

 

 

(7,616

)

 

 

(4,941

)

Proceeds received from note offering

 

 

255,000

 

 

 

—

 

 

 

—

 

Redemption of senior subordinated notes

 

 

—

 

 

 

(509,790

)

 

 

—

 

Payment on senior credit facility term loans

 

 

—

 

 

 

—

 

 

 

(247,500

)

Distributions to non-controlling interest

 

 

(621

)

 

 

(541

)

 

 

(693

)

Dividends/distributions

 

 

(385,182

)

 

 

(443,088

)

 

 

(244,201

)

Cash flows used in financing activities

 

 

(264,357

)

 

 

(73,563

)

 

 

(28,641

)

Effect of exchange rate changes in cash and cash equivalents

 

 

220

 

 

 

(1,112

)

 

 

1,632

 

Net increase (decrease) in cash and cash equivalents

 

 

4,694

 

 

 

(93,977

)

 

 

79,941

 

Cash and cash equivalents at beginning of period

 

 

21,494

 

 

 

115,471

 

 

 

35,530

 

Cash and cash equivalents at end of period

 

$

26,188

 

 

$

21,494

 

 

$

115,471

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

139,585

 

 

$

136,711

 

 

$

123,213

 

Cash paid for state and federal income taxes

 

$

14,449

 

 

$

8,563

 

 

$

12,640

 

202120202019
Cash flows from operating activities:
Net income$388,090 $243,386 $372,111 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization271,294 251,296 250,028 
Stock-based compensation37,368 18,772 29,647 
Amortization included in interest expense5,877 5,909 5,365 
Gain on disposition of assets(2,115)(9,026)(7,241)
Loss on extinguishment of debt21,604 25,235 — 
Equity in earnings of investee(3,384)— — 
Deferred income tax expense (benefit)1,574 (797)(14,130)
Provision for doubtful accounts4,527 12,729 10,608 
Changes in operating assets and liabilities:
(Increase) decrease in:
Receivables(24,684)1,287 (28,357)
Prepaid expenses(5,493)591 275 
Other assets5,030 7,629 (11,257)
Increase (decrease) in:
Trade accounts payable1,308 841 700 
Accrued expenses9,553 10,052 (1,597)
Operating lease liabilities3,819 24,549 9,102 
Other liabilities20,049 (22,580)15,611 
Cash flows provided by operating activities734,417 569,873 630,865 
Cash flows from investing activities:
Capital expenditures(126,090)(62,272)(140,956)
Acquisitions(312,257)(45,584)(226,278)
Payment for investments in equity securities(30,000)— — 
Decrease (increase) in notes receivable107 — (448)
Proceeds received from property insurance claims— — 210 
Proceeds from disposition of assets and investments6,480 10,968 5,438 
Cash flows used in investing activities(461,760)(96,888)(362,034)
Cash flows from financing activities:
Net proceeds from issuance of common stock19,042 11,148 44,262 
Cash used for purchase of treasury shares(6,066)(10,492)(8,882)
Proceeds received from revolving credit facility200,000 725,000 495,000 
Payments on revolving credit facility(25,000)(875,000)(625,000)
Principal payments on long-term debt(378)(9,112)(34,471)
Borrowings on long-term debt— 8,750 — 
Principal payments on financing leases(1,331)— — 
Proceeds received from senior credit facility term loans— 598,500 — 
Payments on senior credit facility term loans— (978,097)— 
Proceeds received from accounts receivable securitization program180,000 122,500 9,000 
Payments on accounts receivable securitization program(127,500)(175,000)(9,000)
Proceeds received from note offering550,000 1,549,250 255,000 
Redemption of senior notes and senior subordinated notes(668,688)(1,058,596)— 
Debt issuance costs(8,823)(32,950)(4,463)
Distributions to non-controlling interest(601)(1,509)(621)
Dividends/distributions(405,174)(252,309)(385,182)
Cash flows used in financing activities(294,519)(377,917)(264,357)
Effect of exchange rate changes in cash and cash equivalents81 313 220 
Net (decrease) increase in cash and cash equivalents(21,781)95,381 4,694 
Cash and cash equivalents at beginning of period121,569 26,188 21,494 
Cash and cash equivalents at end of period$99,788 $121,569 $26,188 
Supplemental disclosures of cash flow information:
Cash paid for interest$112,080 $130,864 $139,585 
Cash paid for state and federal income taxes$8,388 $4,033 $14,449 
See accompanying notes to consolidated financial statements.


51

Table of Contents
LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)


(1)Description of the Business and Significant Accounting Policies

(a)Nature of Business

Lamar Advertising Company (the Company) is engaged in the outdoor advertising business, operating approximately 157,800153,800 billboard advertising displays in 45 states and Canada. The Company’s operating strategy is to be the leading provider of outdoor advertising services in the markets it serves.

In addition, the Company operates a logo sign business in 2423 states throughout the United States and the province of Ontario, Canada and operates approximately 52,80046,600 transit advertising displays in 2223 states and Canada. Logo signs are erected pursuant to state-awarded service contracts on public rights-of-way near highway exits and deliver brand name information on available gas, food, lodging and camping services. Included in the Company’s logo sign business are tourism signing contracts. The Company provides transit advertising in airport terminals, on bus shelters, benches and buses in the markets it serves.

The Company operates as a Real Estate Investment Trust (“REIT”) for U.S. federal income tax purposes and generally will not be subject to federal income taxes on its income and gains that the Company distributes to its stockholders, including the income derived from advertising rental revenue. However, even as a REIT, the Company will remain obligated to pay income taxes on earnings from the assets of its taxable REIT subsidiaries (“TRSs”). In addition, the Company’s foreign assets and operations continue to be subject to taxation in the foreign jurisdictions where those assets are held or those operations are conducted.

(b)Principles of Consolidation

The accompanying consolidated financial statements include Lamar Advertising Company, its wholly owned subsidiary, Lamar Media Corp. (Lamar Media), and its majority-owned subsidiaries. All inter-company transactions and balances have been eliminated in consolidation.

An operating segment is a component of an enterprise:

•

that engages in business activities from which it may earn revenues and incur expenses;

•that engages in business activities from which it may earn revenues and incur expenses;

whose operating results are regularly reviewed by the enterprise’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance; and

•whose operating results are regularly reviewed by the enterprise’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance; and

for which discrete financial information is available.

•for which discrete financial information is available.
We define the term ‘chief operating decision maker’ to be our executive management group, which consist of our Executive Chairman, President and Chief Executive Officer, President and Chief Financial Officer. Currently, all operations are reviewed on a consolidated basis for budget and business plan performance by our executive management group. Additionally, operational performance at the end of each reporting period is viewed in the aggregate by our management group. Any decisions related to changes in invested capital, personnel, operational improvement or training, or to allocate other company resources are made based on the combined results.

We operate in a single operating and reporting segment, advertising. We rent advertising space on billboards, buses, shelters, benches, logo plates and in airport terminals.

(c)Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets.

(d)Goodwill and Intangible Assets

Goodwill is subject to an annual impairment test. The Company designated December 31 as the date of its annual goodwill impairment test. The Company is required to identify its reporting units and determine the carrying value of each reporting unit. The Company has identified 2 reporting units, Billboard operations and Logo operations, by assigning the
52
Table of Contents
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
assets and liabilities, including the existing goodwill and intangible assets, to those reporting units. The Company is required to determine the fair value of each reporting unit and compare it to the carrying amount of the reporting unit. To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit, the Company would be required to book an impairment loss.

54

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

The Company conducts a qualitative assessment by examining relevant events and circumstances which could have a negative impact on the Company’s goodwill, which includes macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, reporting unit dispositions and acquisitions, the market capitalization of the Company and other relevant events specific to the Company. If, after assessing the totality of events or circumstances described above, the Company determines that it is more likely than not that the fair value of either of the Company's reporting units is less than its carrying amount, the Company will perform a quantitative impairment test.  If industry and economic conditions deteriorate, the Company may be required to assess goodwill impairment before the next annual test, which could result in impairment charges.

The Company performed its annual measurement for impairment of the goodwill of its reporting units and concluded the fair value of each reporting unit exceeded its carrying amount at its annual impairment test date on December 31, 20192021 and 2018;2020; therefore, the Company was not required to recognize an impairment loss.

Intangible assets, consisting primarily of site locations, customer lists and contracts, and non-competition agreements are amortized using the straight-line method over the assetsassets' estimated useful lives, generally from 2 to 15 years.

(e)Impairment of Long-Lived Assets

Long-lived assets, such as property, plant and equipment, lease right of use assets and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset or asset group before interest expense. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset or asset group. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet.

(f)Acquisitions

The Company accounts for transactions that meet the definition of a business and group asset purchases as acquisitions.  For transactions that meet the definition of a business combination, the Company allocates the purchase price, including any contingent consideration, to the assets acquired and the liabilities assumed at their estimated fair values as of the date of the acquisition with any excess of the purchase price paid over the estimated fair value of net assets acquired recorded as goodwill. The determination of the final purchase price and the acquisition-date fair value of identifiable assets acquired and liabilities assumed may extend over more than one period and result in adjustments to the preliminary estimate recognized in the prior period financial statementsstatements. For transactions that meet the definition of asset group purchases, the Company proportionally allocates the purchase price to the assets based on relative fair value acquired and the liabilities assumed at their estimated fair values as of the date of the acquisition. If a transaction is determined to be a group of assets, any direct acquisition costs are capitalized. Transaction costs for transactions determined to be a business combination are expensed as incurred.

The fair value of the assets acquired and liabilities assumed is typically determined by using either estimates of replacement costs or discounted cash flow valuation methods. When determining the fair value of tangible assets acquired, the Company must estimate the cost to replace the asset with a new asset, adjusted for an estimated reduction in fair value due to age of the asset, and the economic useful life. When determining the fair value of intangible assets acquired, the Company must estimate the applicable discount rate and the timing and amount of future cash flows.

(g) Lease liabilities

On January 1, 2019, the Company adopted ASC 842,

Leases
, using a modified retrospective transition with January 1, 2019 as the effective date
53
Table of our initial application. We also elected the package of practical expedients, which permitted us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We also elected the practical expedient pertaining to land easements, which allows the Company not to reassess its accounting treatment for our previously existing land easements as to whether they qualify as a lease under ASC 842.

55

Contents

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)


(g)Lease Liabilities
The Company is party to various operating leases for production facilities, vehicles and sites upon which advertising structures are built, including our billboard land leases, leases of logo structures and leases of transit advertising space. The leases expire at various dates, have varying options to renew and cancel, and may contain escalation provisions. We expense our non-variable lease payments ratably over the lease term. Also, certain of our leases contain variable lease payments based on percentage of revenue or consumer price index or other inflation-based indices. The variable lease costs are expensed in the period incurred. Due to our election not to reassess conclusions about lease identification as part of the adoption of ASC 842,

Leases, our transit agreements were accounted for as leases on January 1, 2019. As we enter into new or renew current transit agreements, those agreements will not likely meet the criteria of a lease under ASC 842, therefore they will no longer be accounted for as a lease.

Financing lease right of use assets are amortized over the life of the lease which is recorded in depreciation and amortization on the consolidated statements of income and comprehensive income. Interest related to financing lease liabilities is recorded in interest expense on the consolidated statements of income and comprehensive income.
The key estimates for our leases include (1) the discount rate used to discount the unpaid lease payment to present value and (2) lease term. Our leases generally do not include a readily determinable implicit rate, therefore, using a portfolio approach, we determine our collateralized incremental borrowing rate to discount the lease payment based on the information available at lease commencement. Our lease terms include the noncancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend the lease controlled by the lessor. The Company has determined we are not reasonably certain to exercise renewals or termination options, and as a result we use the lease’s initial stated term as the lease term for our lease population.

(h)Deferred Income

Deferred income consists principally of advertising revenue invoiced in advance. Deferred advertising revenue is recognized in income over the term of the contract.

(i)Revenue Recognition

The Company recognizes outdoor advertising revenue on an accrual basis ratably over the term of the contracts. Production revenue and the related expense for the advertising copy are recognized upon satisfaction of its performance obligation.

The Company engages in barter transactions where the Company trades advertising space for goods and services. The Company recognizes revenues and expenses from barter transactions at fair value, which is determined based on the Company’s own historical practice of receiving cash for similar advertising space from buyers unrelated to the party in the barter transaction. The amount of revenue and expense recognized for advertising barter transactions is as follows:

 

2019

 

 

2018

 

 

2017

 

202120202019

Net revenues

 

$

9,636

 

 

$

8,955

 

 

$

8,469

 

Net revenues$7,718 $8,088 $9,636 

Direct advertising expenses

 

$

3,982

 

 

$

3,633

 

 

$

3,603

 

Direct advertising expenses$4,014 $3,971 $3,982 

General and administrative expenses

 

$

4,986

 

 

$

4,758

 

 

$

4,332

 

General and administrative expenses$3,112 $3,144 $4,986 

(j)Income Taxes

As a REIT, the Company is generally not subject to federal income taxes on income and gains distributed to the Company’s stockholders. However, the Company remains obligated to pay income taxes on earnings from domestic TRSs. In addition, the Company’s foreign assets and operations continue to be subject to taxation in the foreign jurisdictions where those assets are held or where those operations are conducted, including those designated as Qualified REIT Subsidiaries, or QRSs, for federal income tax purposes. Accordingly, the consolidated financial statements reflect provisions for federal, state, local and foreign income taxes. The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective
54
Table of Contents
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
tax basis, as well as operating loss and tax credit carryforwards. The Company measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carry forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities as a result of a change in tax rates is recognized in income in the period that includes the enactment date.

56

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

(k)Dividends/Distributions

As a REIT, the Company must annually distribute to its stockholders an amount equal to at least 90% of its REIT taxable income (determined before the deduction for distributed earnings and excluding any net capital gain). During the yearyears ended December 31, 2021, 2020 and 2019, the Company declared and paid distributions of its REIT taxable income of $404,809 or $4.00 per share, $251,944 or $2.50 per share and $384,817 or $3.84 per share. During the year ended December 31, 2018, the Company paid cash distributions of its REIT taxable income in an aggregate amount of $442,632 or $4.48 per share. The distributions paid during 2018 include distributions declared and accrued as of December 31, 2017 of $81,534 or $0.83 per share. During the year ended December 31, 2017, the Company declared distributions of $325,462 or $3.32 per share, including paid distributions of $243,928 or $2.49 per share.respectively. The amount, timing and frequency of future distributions will be at the sole discretion of the Board of Directors and will be declared based upon various factors, a number of which may be beyond the Company’s control, including the financial condition and operating cash flows, the amount required to maintain REIT status and reduce any income and excise taxes that the Company otherwise would be required to pay, limitations on distributions in its existing and future debt instruments, the Company’s ability to utilize net operating losses (“NOLs”) to offset, in whole or in part, the Company’s distribution requirements, limitations on its ability to fund distributions using cash generated through its TRSs and other factors that the Board of Directors may deem relevant. During each of the yearyears ended December 31, 2021, 2020 and 2019, the Company paid dividend distributions to holders of its Series AA Preferred Stock of $365 or $63.80 per share. During the year ended December 31, 2018, the Company paid cash dividend distributions to holders of its Series AA Preferred Stock in an aggregate amount of $456 or $79.75 per share, including $91, or $15.95 per share, related to distributions accrued for in 2017. During the year ended December 31, 2017 the Company paid cash dividend distributions to holders of its Series AA Preferred Stock of $274 or $47.85 per share.

(l)Earnings Per Share

The calculation of basic earnings per share excludes any dilutive effect of stock options, while diluted earnings per share includes the dilutive effect of stock options. For the years ended December 31, 2019, 20182021, 2020 and 20172019 there were 0no dilutive shares excluded from the calculation.

(m)Stock Based Compensation

Compensation expense for share-based awards is recognized based on the grant date fair value of those awards. Stock-basedStock based compensation expense includes an estimate for pre-vesting forfeitures and is recognized over the requisite service periods of the awards on a straight-line basis, which is generally commensurate with the vesting term. Non-cash compensation expense recognized during the years ended December 31, 2021, 2020, and 2019 2018,were $37,368, $18,772 and 2017 were $29,647, $29,443 and $9,599, respectively. The $29,647$37,368 expensed during the year ended December 31, 20192021 consists of (i) $4,226$4,348 related to stock options and the employee stock purchase plan, (ii) $25,005$31,776 related to stock grants made under the Company’s performance-based stock incentive program in 20192021, (iii) $622 related to non-performance restricted stock awards and (iii) $416(iv) $622 related to restricted stock awards to directors. See Note 15 for information on the assumptions used to calculate the fair value of stock-based compensation.

(n)Cash and Cash Equivalents

The Company considers all highly-liquid investments with original maturities of three months or less to be cash equivalents.

(o)Credit Losses
The Company estimates credit losses on financial instruments based on amounts expected to be collected. The allowance for doubtful accounts is estimated based on historical collections, accounts receivable aging, economic indicators, and expected future trends.
(p)Foreign Currency Translation

Local currencies generally are considered the functional currencies outside the United States. Assets and liabilities for operations in local-currency environments are translated at year-end exchange rates. Income and expense items are translated at average rates of exchange prevailing during the year. Foreign currency translation adjustments are recorded as a component of other comprehensive income (loss) in the Consolidated Statements of Income and Comprehensive Income and as a component of accumulated comprehensive income (loss) in the Consolidated Statements of Stockholders’ Equity.

(p)


55
Table of Contents
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(q)Asset Retirement Obligations

The Company is required to record the fair value of obligations associated with the retirement of tangible long-lived assets in the period in which it is incurred. The liability is capitalized as part of the related long-lived asset’s carrying amount. Over time, accretion of the liability is recognized as an operating expense and the capitalized cost is depreciated over the expected useful life of the related asset. The Company’s asset retirement obligations relate primarily to the dismantlement, removal, site reclamation and similar activities of its leased properties.

57

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

(q)

(r)Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(r)

(s)Comprehensive Income

Total comprehensive income is presented in the Consolidated Statements of Income and Comprehensive Income and the components of accumulated comprehensive income (loss) are presented in the Consolidated Statements of Stockholders’ Equity. Comprehensive income (loss) is composed of foreign currency translation effects.

(s)

(t)Fair Value Measurements

The Company determines the fair value of its financial instruments using the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

(t)

(u)    Investments
On July 12, 2021, Lamar invested $30,000 to acquire a 20% minority interest in Vistar Media, a leading global provider of programmatic technology for the digital out-of-home sector. This investment is accounted for as an equity method investment and is included in other assets on the Consolidated Balance Sheet. For the year ended December 31, 2021, the Company recorded $3,384 in equity in earnings of investee on the Consolidated Statement of Income and Comprehensive Income.
(v)    Subsequent Events

The Company has performed an evaluation of subsequent events through the date on which the financial statements are issued.

(2) Revenue

On January 1, 2018, we adopted FASB Accounting Standards Update (“ASU”) No. 2014-09 (Codified as ASC 606), Revenue from Contracts with Customers using the cumulative effect transition method applied to those contracts which were not completed as of January 1, 2018 and are not accounted for under ASC 840, 

Revenue Recognition
LeasesAdvertising revenues: .  Results for reporting periods beginning after January 1, 2018 are presented under ASC 606 or 840, while comparative information has not been adjusted and continues to be reported under ASC 605.

AThe majority of our revenues are derived from contracts for advertising space on billboard, logo and transit space contracts are accounted for under ASC 840 and continued to be accounted for under the topic until January 1, 2019, our adoption date of ASU No. 2016-02 (Codified as ASC 842), Leases.displays. Contracts which begin prior to January 1, 2019 and are accounted for under ASC 840 continued to be accounted for as a lease until the contract ends or is modified. Contracts beginning or modified on or after January 1, 2019 which do not meet the criteria of a lease under ASC 842, are accounted for under ASC 606, Revenue from Contracts with Customers. The majority of our advertising space contracts do not meet the definition of a lease under ASC 842.

Due to the transition of our advertising space contracts into842 and are therefore accounted for under ASC 606 we606. The contract revenues are now required to capitalize our costsrecognized ratably over their contract life. Costs to fulfill a contract, and expense the costs over the contract period.  These costswhich include our costs to install advertising copy onto billboards. These costs were expensed as incurred under ASC 840.billboards, are capitalized and amortized to direct advertising expenses (exclusive of depreciation and amortization) in the Consolidated Statements of Income and Comprehensive Income. During the yearyears ended December 31, 2019,2021 and 2020, we capitalized $24,920$25,642 and $22,698, respectively, of costs to fulfill a contractcontracts, which is included in other current assets on the Consolidated Balance Sheets, net of expensed costs of $15,734. The expensed costs are recorded in direct advertising expenses (exclusive of depreciation$25,197 and amortization) in the Consolidated Statements of Income and Comprehensive Income.

Revenue Recognition$23,085, respectively.

Advertising revenues:  The majority of our revenues are derived from contracts for advertising space on billboard, logo and transit displays and were accounted for under ASC 840, Leases prior to January 1, 2019.  Upon the Company’s adoption of ASC 842, Leases on January 1, 2019 the majority of our contracts for advertising space transitioned to being accounted for under ASC 606, Revenue. The contract revenues, under both ASC 840, Leases and ASC 606, Revenue, are recognized ratably over their contract life.

58

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

Other revenues:Our other component of revenue primarily consists of production services which includes creating and printing the advertising copy. On and after January 1, 2018 revenueRevenue for production contracts are recognized under ASC 606, Revenue.606. Contract revenues for production services are recognized upon satisfaction of the contract which is typically less than one week.

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Table of Contents
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
Arrangements with multiple performance obligations: Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on the relative standalone selling price. We determine standalone selling prices based on the prices charged to customers using expected cost plus margin.

Deferred revenues: We record deferred revenues when cash payments are received or due in advance of our performance obligation. The term between invoicing and when a payment is due is not significant. For certain services we require payment before the product or services are delivered to the customer. The balance of deferred income is considered short-term and will be recognized in revenue within twelve months.

Practical expedients and exemptions: Upon our transition to ASC 606 from ASC 840, theThe Company utilizedis utilizing the following practical expedients and exemptions from ASC 606. We generally expense sales commissions when incurred because the amortization period is one year or less. These costs are recorded within direct advertising expense (exclusive of depreciation and amortization). We do not disclose the value of unsatisfied performance obligations as the majority of our contracts with customers have an original expected length of less than one year. For contracts with customers which exceed one year, the future amount to be invoiced to the customer corresponds directly with the value to be received by the customer.

The following table presents our disaggregated revenue by source including revenues accounted for under ASC 840, ASC 842 and ASC 606 for the years ended December 31, 2019, 20182021, 2020 and 2017.

2019.

 

2019

 

 

2018

 

 

2017

 

202120202019

Billboard Advertising

 

$

1,537,542

 

 

$

1,412,978

 

 

$

1,340,422

 

Billboard Advertising$1,613,554 $1,403,239 $1,537,542 

Logo Advertising

 

 

84,201

 

 

 

84,424

 

 

 

82,936

 

Logo Advertising78,180 82,944 84,201 

Transit Advertising

 

 

131,901

 

 

 

129,820

 

 

 

117,902

 

Transit Advertising95,667 82,673 131,901 

Net Revenues

 

$

1,753,644

 

 

$

1,627,222

 

 

$

1,541,260

 

Net Revenues$1,787,401 $1,568,856 $1,753,644 

(3)Acquisitions

Year Ended December 31, 2019

2021

During the twelve monthsyear ended December 31, 2019,2021, the Company completed several acquisitions of outdoor and transit advertising assets for a total cash purchase price of $226,278,$312,257, net of cash acquired cash of $1,508. This amount includes $227,588 of outdoor advertising assets purchased in 2019, offset by $1,310 in post-closing adjustments to acquired working capital related to the purchase of Fairway Outdoor Advertising (“Fairway”) in 2018.

$1,419.

Each of these acquisitions was accounted for under the acquisition method of accounting, and, accordingly, the accompanying consolidated financial statements include the results of operations of each acquired entity from the date of acquisition. The acquisition purchase price has been allocated to assets acquired and liabilities assumed based on fair market value estimates at the dates of acquisition.

59

As of December 31, 2021, our fair value allocation of the assets acquired and liabilities assumed in a business combination completed December 3, 2021 is considered preliminary and is subject to revision, which may result in adjustments to this allocation. The aggregate purchase price of this business combination was $75,000. We expect to finalize these amounts as soon as possible but not later than the end of 2022. In order to develop our preliminary fair values, the Company utilized asset information received from the acquired company and fair value allocation benchmarks from similar completed transactions. Our preliminary allocation of these assets includes property, plant and equipment, intangibles and goodwill of $6,022, $53,775 and $9,506, respectively.
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Table of Contents
LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

The following is a summary of the allocation of the purchase price in the above transactions, which includes the final fair value allocation of the asset acquired and liabilities assumed inpreliminary values for a business combination completed on July 15, 2019, for an aggregate purchase price of $127,000.

December 3, 2021.

 

 

Total

 

Property, plant and equipment

 

$

37,988

 

Site locations

 

 

131,208

 

Non-competition agreements

 

 

240

 

Customer lists and contracts

 

 

23,032

 

Asset acquisition costs

 

 

756

 

Other intangibles

 

 

3,115

 

Goodwill

 

 

29,360

 

Current assets

 

 

1,860

 

Current liabilities

 

 

(832

)

Operating right of use assets

 

 

23,934

 

Operating lease liabilities

 

 

(21,573

)

Other liabilities

 

 

(1,500

)

 

 

$

227,588

 

Total
Property, plant and equipment$38,289 
Goodwill24,089 
Site locations206,734 
Non-competition agreements3,120 
Customer lists and contracts31,101 
Other intangibles721 
Asset acquisition costs523 
Current assets9,310 
Current liabilities(4,406)
Operating lease right of use assets32,487 
Operating lease liabilities(30,197)
Other assets486 
$312,257 

Total acquired intangible assets for the year ended December 31, 20192021 were $187,711,$266,288, of which $29,360$24,089 was assigned to goodwill. Goodwill is not amortized for financial statement purposes and 0$14,584 of goodwill related to 20192021 acquisitions is expected to be deductible for tax purposes. The remaining $158,351 of acquired intangible assets have a weighted average useful life of approximately 14 years. The intangible assets include customer lists and contracts of $23,032$31,101 (7 year weighted average useful life) and site locations of $131,208$206,734 (15 year weighted average useful life). The aggregate amortization expense related to the 20192021 acquisitions for the year ended December 31, 20192021 was approximately $7,570.

As of December 31, 2019, we have finalized our fair value allocation of the assets acquired and liabilities assumed from Fairway on December 21, 2018. Our updated fair value allocation of Fairway during 2019 includes property, plant and equipment, intangibles and goodwill of $96,840, $188,400 and $145,534, respectively. During the period ended December 31, 2019, goodwill was adjusted $36,583 due to updates from the original preliminary purchase price allocation provided as of December 31, 2018. The updated allocation resulted in prior and current period changes to depreciation and amortization. These changes were considered immaterial and recorded during the year ended December 31, 2019. During the year ended December 31, 2019, assets purchased from Fairway, which were initially placed into our taxable REIT subsidiary, were transferred to our qualifying REIT subsidiary. As a result, the Company recorded an income tax benefit of $17,031 in deferred tax liabilities assumed from our purchase.

$4,335.

The following unaudited pro forma financial information for the Company gives effect to the 20192021 and 20182020 acquisitions as if they had occurred on January 1, 2018.2020. These pro forma results do not purport to be indicative of the results of operations which actually would have resulted had the acquisitions occurred on such date or to project the Company’s results of operations for any future period.

 

2019

 

 

2018

 

20212020

 

(unaudited)

 

(unaudited)

Net revenues

 

$

1,764,493

 

 

$

1,724,821

 

Net revenues$1,826,448 $1,615,855 

Net income applicable to common stock

 

$

369,300

 

 

$

292,012

 

Net income applicable to common stock$379,874 $230,035 

Net income per common share — basic

 

$

3.69

 

 

$

2.96

 

Net income per common share — basic$3.76 $2.28 

Net income per common share — diluted

 

$

3.68

 

 

$

2.95

 

Net income per common share — diluted$3.75 $2.28 

Year Ended December 31, 2018

2020

During the twelve monthsyear ended December 31, 2018,2020, the Company completed several acquisitions of outdoor advertising assets for a total purchase price of $489,671, net$46,160, of acquiredwhich $45,584 was in cash of $8,554. The total purchase price consisted of the issuance of 163,137 shares of its Class A common stock for $12,282 and cash of $477,389. The purchases included the acquisition of assets$576 in 5 U.S markets from Fairway Outdoor Advertising (“Fairway”) on December 21, 2018 for an aggregate purchase price of $418,500.

60

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

As of December 31, 2018, our fair value allocation of the assets acquired and liabilities assumed from Fairway was considered preliminary and subject to revision, which could result in adjustments to this allocation. In order to develop our preliminary fair values, the Company utilized asset information received from Fairway and fair value allocation benchmarks from similar completed transactions. Our preliminary allocation of Fairway included property, plant and equipment, intangibles and goodwill of $91,173, $156,319 and $182,117, respectively. As discussed above, we finalized the Fairway fair value allocation during 2019.

non-cash consideration.

Each of these acquisitions was accounted for under the acquisition method of accounting, and, accordingly, the accompanying consolidated financial statements include the results of operations of each acquired entity from the date of acquisition. The acquisition costs havepurchase price has been proportionally allocated to assets based on relative fair value acquired and liabilities assumed based on fair market value at the dates of acquisition.

58
Table of Contents
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
The following is a summary of the allocation of the acquisition costspurchase price in the above transactions, excluding the preliminary allocation of Fairway.

transactions.

 

 

Total

 

Property, plant and equipment

 

$

8,648

 

Site locations

 

 

57,105

 

Non-competition agreements

 

 

342

 

Customer lists and contracts

 

 

6,521

 

Asset acquisition costs

 

 

336

 

Current assets

 

 

1,041

 

Current liabilities

 

 

(355

)

 

 

$

73,638

 

Total
Property, plant and equipment$13,376 
Site locations27,902 
Non-competition agreements140 
Customer lists and contracts3,979 
Asset acquisition costs154 
Current assets3 
Current liabilities(295)
Operating right of use assets7,269 
Operating lease liabilities(6,368)
$46,160 

Total acquired intangible assets for the year ended December 31, 2018 were $402,740, of which $182,117 was assigned to goodwill. Goodwill is not amortized for financial statement purposes, and 0 goodwill related to 2018 acquisitions is expected to be deductible for tax purposes.

The remaining $220,623total amount of acquired intangible assets have a weighted average useful life of approximately 14 years. The intangible assets include customer lists and contracts of $33,310$3,979 (7 year weighted average useful life) and site locations of $186,635$27,902 (15 year weighted average useful life). The aggregate amortization expense related to the 20182020 acquisitions for the year ended December 31, 20182020 was approximately $2,681.

The following unaudited pro forma financial information for the Company gives effect to the 2018 and 2017 acquisitions as if they had occurred on January 1, 2017. These pro forma results do not purport to be indicative of the results of operations which actually would have resulted had the acquisitions occurred on such date or to project the Company’s results of operations for any future period.

$1,356.

 

 

2018

 

 

2017

 

 

 

(unaudited)

 

Net revenues

 

$

1,699,052

 

 

$

1,647,445

 

Net income applicable to common stock

 

$

299,493

 

 

$

306,900

 

Net income per common share — basic

 

$

3.03

 

 

$

3.13

 

Net income per common share — diluted

 

$

3.02

 

 

$

3.12

 


(4)Non-cash Financing and Investing Activities

For the yearyears ended December 31, 2021, 2020 and 2019, there were 0no significant non-cash investing activities. For the year ended December 31, 2018,2020, the Company had non-cash investing activities for the issuance of 163,137 shares of its Class A common stock related to acquisition purchases. The issuance had an approximate value of $12,282. For the year ended December 31, 2017, the Company had $2,879 non-cash investingfinancing activities related to acquisitionsfinancing lease liabilities of outdoor advertising assets.$19,891. There were 0no significant non-cash financing activities during the years ended December 31, 20192021 and 2018. During the year ended December 31, 2017, the Company had non-cash financing activities related to declared distributions of $81,625 which were paid to shareholders in January 2018.

61

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

2019.

(5)Property, Plant and Equipment

Major categories of property, plant and equipment at December 31, 20192021 and 20182020 are as follows:

 

Estimated Life

(Years)

 

 

2019

 

 

2018

 

Estimated Life
(Years)		20212020

Land

 

 

—

 

 

$

406,884

 

 

$

384,264

 

Land—$428,849 $413,257 

Building and improvements

 

10 — 39

 

 

 

181,797

 

 

 

173,306

 

Building and improvements10 — 39206,870 187,921 

Advertising structures

 

5 — 15

 

 

 

2,926,706

 

 

 

2,817,170

 

Advertising structures5 — 153,010,769 2,880,521 

Automotive and other equipment

 

3 — 7

 

 

 

144,924

 

 

 

150,985

 

Automotive and other equipment3 — 7135,800 133,806 

 

 

 

 

 

$

3,660,311

 

 

$

3,525,725

 

$3,782,288 $3,615,505 


59
Table of Contents
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(6)Goodwill and Other Intangible Assets

The following is a summary of intangible assets at December 31, 20192021 and 2018:

2020:

 

Estimated

 

 

2019

 

 

2018

 

Estimated
Life
(Years)		20212020

 

Life

(Years)

 

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

Gross Carrying
Amount		Accumulated
Amortization		Gross Carrying
Amount		Accumulated
Amortization

Amortizable Intangible Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortizable Intangible Assets:

Customer lists and contracts

 

7 — 10

 

 

$

641,714

 

 

$

539,405

 

 

$

610,376

 

 

$

514,928

 

Customer lists and contracts7 — 10$676,846 $587,056 $645,739 $563,135 

Non-competition agreements

 

3 — 15

 

 

 

66,014

 

 

 

64,379

 

 

 

65,771

 

 

 

64,119

 

Non-competition agreements3 — 1569,276 64,941 66,156 64,647 

Site locations

 

 

15

 

 

 

2,384,520

 

 

 

1,509,335

 

 

 

2,228,767

 

 

 

1,422,794

 

Site locations152,619,531 1,680,333 2,412,745 1,593,805 

Other

 

2 — 15

 

 

 

49,864

 

 

 

36,749

 

 

 

45,992

 

 

 

33,612

 

Other2 — 1551,261 39,407 50,018 38,625 

 

 

 

 

 

$

3,142,112

 

 

$

2,149,868

 

 

$

2,950,906

 

 

$

2,035,453

 

$3,416,914 $2,371,737 $3,174,658 $2,260,212 

Unamortizable Intangible Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unamortizable Intangible Assets:

Goodwill

 

 

 

 

 

$

2,165,810

 

 

$

253,536

 

 

$

2,172,922

 

 

$

253,536

 

Goodwill$2,189,962 $253,536 $2,165,864 $253,536 

The changes in the gross carrying amount of goodwill for the years ended December 31, 20192021 and 20182020 are as follows:

Balance as of December 31, 2017

 

$

1,993,990

 

Goodwill acquired during the year

 

 

182,117

 

Purchase price adjustments and other

 

 

(3,185

)

Impairment losses

 

 

—

 

Balance as of December 31, 2018

 

$

2,172,922

 

Goodwill acquired during the year

 

 

29,360

 

Purchase price adjustments and other

 

 

(36,472

)

Impairment losses

 

 

—

 

Balance as of December 31, 2019

 

$

2,165,810

 

Balance as of December 31, 2019$2,165,810 
Purchase price adjustments and other54 
Balance as of December 31, 2020$2,165,864 
Goodwill acquired during the year24,089 
Purchase price adjustments and other9 
Balance as of December 31, 2021$2,189,962 

Amortization expense for the years ended December 31, 2021, 2020 and 2019 2018was $114,319, $110,201 and 2017 was $113,679, $95,010 and $85,257, respectively. The following is a summary of the estimated amortization expense for future years:

2020

 

$

108,323

 

2021

 

 

104,332

 

2022

 

 

99,480

 

2022$120,629 

2023

 

 

88,649

 

2023110,005 

2024

 

 

84,835

 

2024106,111 
20252025102,658 
2026202694,667 

Thereafter

 

 

506,625

 

Thereafter511,107 

Total

 

$

992,244

 

Total$1,045,177 

62

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

(7) Leases

On January 1, 2019 the Company adopted ASC 842, Leases, using a modified retrospective transition with January 1, 2019 as the effective date of our initial application. We also elected the package of practical expedients, which permitted us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We also elected the practical expedient pertaining to land easements, which allows the Company not to reassess its accounting treatment for our previously existing land easements as to whether they qualify as a lease under ASC 842.

The Company is party to various operating leases for production facilities, vehicles and sites upon which advertising structures are built, including our billboard land leases, leases of logo structures and leases of transit advertising space. The leases expire at various dates, have varying options to renew and cancel, and may contain escalation provisions. We expense our non-variable lease payments ratably over the lease term. Also, certain of our leases contain variable lease payments based on percentage of revenue or consumer price index or other inflation-based indices. The variable lease costs are expensed in the period incurred. Due to our election not to reassess conclusions about lease identification, as noted above,part of the adoption of ASC 842, our transit agreements were accounted for as leases on January 1, 2019. As we enter into new or renew current transit agreements, those agreements will not likely meet the criteria of a lease under ASC 842, therefore they will no longer be accounted for as a lease.
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Table of Contents

LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
Financing lease right of use assets are amortized over the life of the lease which is recorded in depreciation and amortization on the Consolidated Statements of Income and Comprehensive Income. Interest related to financing lease liabilities is recorded in interest expense on the Consolidated Statements of Income and Comprehensive Income.
The key estimates for our leases include (1) the discount rate used to discount the unpaid lease payment to present value and (2) lease term. Our leases generally do not include a readily determinable implicit rate, therefore, using a portfolio approach, we determine our collateralized incremental borrowing rate to discount the lease payment based on the information available at lease commencement. Our lease terms include the noncancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend the lease controlled by the lessor. The Company has determined we are not reasonably certain to exercise renewals or termination options, and as a result we use the lease’s initial stated term as the lease term for our lease population.
During the year ended December 31, 2021, we had base operating lease costs of $290,036 and variable operating lease costs of $98,682, for a total operating lease cost of $388,718. During the year ended December 31, 2020, we had base operating lease costs of $298,135 and variable operating lease costs of $69,242, for a total operating lease cost of $367,377. During the year ended December 31, 2019, we had base operating lease costs of $312,883 and variable operating lease costs of $76,492, for a total operating lease cost of $389,375. DuringVariable operating lease costs above include non-lease transit payments of $47,054, $25,670 and $27,086 for the years ended December 31, 20182021, 2020 and 2017 we had total operating lease costs of $381,890 and $366,892,2019, respectively. Our operating lease costs are recorded in direct advertising expenses (exclusive of depreciation and amortization). Also, for the yearyears ended December 31, 2021, 2020 and 2019, we recorded a loss (gain) of $241, ($451) and ($4,061) respectively, in gain of $4,061 in (gain) loss ofon disposition of assets related to the amendment and termination of lease agreements. Cash payments of $296,460, $286,575 and $316,527 were made reducing our operating lease liabilities for the yearyears ended December 31, 2021, 2020 and 2019, respectively, and are included in cash flows provided by operating activities in the Consolidated Statements of Cash Flows.

We elected the short-term lease exemption which applies to certain of our vehicle agreements. This election allows the Company to not recognize lease right of use assets (ROU assets) or lease liabilities for agreements with a term of twelve months or less. We recorded $6,184, $4,953 and $4,691 in direct advertising expenses (exclusive of depreciation and amortization) for these agreements during the yearyears ended December 31, 2019.

2021, 2020 and 2019, respectively.

Our operating leases have a weighted-average remaining lease term of 12.0 years. The weighted-average discount rate of our operating leases is 4.8%4.5%. Also, duringDuring the yearyears ended December 31, 2019,2021 and 2020, we obtained $35,813$49,927 and $25,264, respectively, of leased assets in exchange for new operating lease liabilities, which includes liabilities obtained through acquisitions.

Lease terminations during the year resulted in a $5,697 and $23,173 reduction to operating lease liabilities for the years ended December 31, 2021 and 2020, respectively.

The following is a summary of the maturities of our operating lease liabilities as of December 31, 2019:2021:
2022$229,824 
2023183,407 
2024163,324 
2025138,088 
2026115,165 
Thereafter758,339 
Total undiscounted operating lease payments1,588,147 
Less: Imputed interest(394,505)
Total operating lease liabilities$1,193,642 
During the year ended December 31, 2020, we obtained $19,891 of leased assets in exchange for new financing lease liabilities. Our financing leases have a weighted-average remaining lease term of 5.9 years and a weighted-average discount rate of 3.1%. For the years ended December 31, 2021 and 2020, amortization expense of $2,853 and $222 was recorded within depreciation and amortization, respectively, and interest expense of $585 and $47 was recorded within interest expense, respectively, on the Consolidated Statements of Income and Comprehensive Income in relation to these financing lease
61
Table of Contents

2020

 

$

240,438

 

2021

 

 

196,099

 

2022

 

 

175,598

 

2023

 

 

152,470

 

2024

 

 

135,234

 

Thereafter

 

 

800,876

 

Total undiscounted operating lease payments

 

 

1,700,715

 

Less: Imputed interest

 

 

(435,693

)

Total operating lease liabilities

 

$

1,265,022

 

63

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

The following is a summary

liabilities. Cash payments of minimum annual rental payments required under$1,331 were made reducing our operatingfinancing lease that have original or remaining lease terms in excess of oneliabilities for the year as ofended December 31, 2018:2021 and are included in cash flows used in financing activities in the Consolidated Statements of Cash Flows. We had no cash payments related to financing lease liabilities for the years ended December 31, 2020 and 2019. We had no expenses relating to the financing lease liabilities for the year ended December 31, 2019.
(8)

2019

 

$

254,866

 

2020

 

$

188,138

 

2021

 

$

165,642

 

2022

 

$

144,814

 

2023

 

$

122,814

 

Thereafter

 

$

819,004

 

(8) Accrued Expenses

The following is a summary of accrued expenses at December 31, 20192021 and 2018:

2020:

 

2019

 

 

2018

 

20212020

Payroll

 

$

20,223

 

 

$

20,667

 

Payroll$36,531 $17,034 

Interest

 

 

32,734

 

 

 

27,067

 

Interest22,009 33,583 

Insurance benefits

 

 

11,554

 

 

 

12,633

 

Insurance benefits11,205 12,499 

Accrued variable lease and contract expense

 

 

12,559

 

 

 

36,158

 

Accrued variable lease and contract expense21,487 19,274 

Stock-based compensation

 

 

23,297

 

 

 

19,211

 

Stock-based compensation30,450 11,589 

Other

 

 

6,858

 

 

 

6,731

 

Other13,356 11,309 

 

$

107,225

 

 

$

122,467

 

$135,038 $105,288 

64


(9) Long-term Debt
Long-term debt consists of the following at December 31, 2021 and 2020:
 December 31, 2021
 DebtDeferred
financing costs		Debt, net of
deferred
financing costs
Senior Credit Facility$773,717 $9,306 $764,411 
Accounts Receivable Securitization Program175,000 585 174,415 
3 3/4% Senior Notes600,000 7,036 592,964 
3 5/8% Senior Notes550,000 7,711 542,289 
4% Senior Notes549,359 7,208 542,151 
4 7/8% Senior Notes400,000 5,013 394,987 
Other notes with various rates and terms2,378 — 2,378 
 3,050,454 36,859 3,013,595 
Less current maturities(175,363)(585)(174,778)
Long-term debt, excluding current maturities$2,875,091 $36,274 $2,838,817 
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Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

(9) Long-term Debt

Long-term debt consists of the following at December 31, 2019 and 2018:

 

December 31, 2019

 

 

Debt

 

 

Deferred

financing costs

 

 

Debt, net of

deferred

financing costs

 

Senior Credit Facility

 

$

1,127,069

 

 

$

9,077

 

 

$

1,117,992

 

Accounts Receivable Securitization Program

 

 

175,000

 

 

 

846

 

 

 

174,154

 

5% Senior Subordinated Notes

 

 

535,000

 

 

 

3,237

 

 

 

531,763

 

5 3/8% Senior Notes

 

 

510,000

 

 

 

3,502

 

 

 

506,498

 

5 3/4% Senior Notes

 

 

654,345

 

 

 

7,752

 

 

 

646,593

 

Other notes with various rates and terms

 

 

3,118

 

 

 

—

 

 

 

3,118

 

 

 

3,004,532

 

 

 

24,414

 

 

 

2,980,118

 

Less current maturities

 

 

(232,595

)

 

 

(6,081

)

 

 

(226,514

)

Long-term debt, excluding current maturities

 

$

2,771,937

 

 

$

18,333

 

 

$

2,753,604

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

December 31, 2020

 

Debt

 

 

Deferred

financing costs

 

 

Debt, net of

deferred

financing costs

 

DebtDeferred
financing costs		Debt, net of
deferred
financing costs

Senior Credit Facility

 

$

1,291,088

 

 

$

11,576

 

 

$

1,279,512

 

Senior Credit Facility$598,466 $11,569 $586,897 

Accounts Receivable Securitization Program

 

 

175,000

 

 

 

1,168

 

 

 

173,832

 

Accounts Receivable Securitization Program122,500 445 122,055 

5% Senior Subordinated Notes

 

 

535,000

 

 

 

4,104

 

 

 

530,896

 

5 3/8% Senior Notes

 

 

510,000

 

 

 

4,262

 

 

 

505,738

 

3 3/4% Senior Notes3 3/4% Senior Notes600,000 8,031 591,969 
4% Senior Notes4% Senior Notes549,280 7,911 541,369 
4 7/8% Senior Notes4 7/8% Senior Notes400,000 5,586 394,414 

5 3/4% Senior Notes

 

 

400,000

 

 

 

4,754

 

 

 

395,246

 

5 3/4% Senior Notes653,631 6,575 647,056 

Other notes with various rates and terms

 

 

3,464

 

 

 

—

 

 

 

3,464

 

Other notes with various rates and terms2,756 — 2,756 

 

 

2,914,552

 

 

 

25,864

 

 

 

2,888,688

 

2,926,633 40,117 2,886,516 

Less current maturities

 

 

(209,365

)

 

 

(5,245

)

 

 

(204,120

)

Less current maturities(122,879)(445)(122,434)

Long-term debt, excluding current maturities

 

$

2,705,187

 

 

$

20,619

 

 

$

2,684,568

 

Long-term debt, excluding current maturities$2,803,754 $39,672 $2,764,082 

Long-term debt contractual maturities are as follows:

 

Debt

 

 

Deferred

financing costs

 

 

Debt, net of

deferred

financing costs

 

2020

 

$

232,595

 

 

$

6,081

 

 

$

226,514

 

2021

 

$

74,487

 

 

$

6,205

 

 

$

68,282

 

DebtDeferred
financing costs		Debt, net of
deferred
financing costs

2022

 

$

426,971

 

 

$

4,677

 

 

$

422,294

 

2022$363 $— $363 

2023

 

$

541,989

 

 

$

3,480

 

 

$

538,509

 

2023$381 $— $381 

2024

 

$

517,008

 

 

$

2,216

 

 

$

514,792

 

2024$175,400 $585 $174,815 

Later years

 

$

1,211,482

 

 

$

1,755

 

 

$

1,209,727

 

20252025$175,420 $3,371 $172,049 
20262026$442 $— $442 
ThereafterThereafter$2,698,448 $32,903 $2,665,545 

Senior Credit Facility

On February 6, 2020, Lamar Media entered into a Fourth Amended and Restated Credit Agreement (the “Fourth Amended and Restated Credit Agreement”) with certain of Lamar Media’s subsidiaries as guarantors, JPMorgan Chase Bank, N.A. as administrative agent and the lenders party thereto, under which the parties agreed to amend and restate Lamar Media’s existing senior credit facility. The Fourth Amended and Restated Credit Agreement amended and restated the Third Amended and Restated Credit Agreement dated as of May 15, 2017, (asas amended (the “Third Amended and Restated Credit Agreement”).
The senior credit facility, as established by the Fourth Amended and Restated Credit Agreement (the “senior credit facility”) originally consisted, consists of (i) a $450,000$750,000 senior secured revolving credit facility which will mature on May 15, 2022February 6, 2025 (the “revolving credit facility”), (ii) a $450,000$600,000 Term AB loan facility (the “Term AB loans”) which will mature on May 15, 2022,February 6, 2027, and (iii) an incremental facility (the “Incremental Facility”) pursuant to which Lamar Media may incur additional term loan tranches or increase its revolving credit facility subject to a pro forma compliance with the secured debt ratio financial maintenance covenant (the “Incremental Facility”).of 4.50 to 1.00, as well as certain other conditions including lender approval. Lamar Media borrowed all $450,000$600,000 in Term AB loans on May 15, 2017.February 6, 2020. The entire amount of the Term B loans will be payable at maturity. The net proceeds offrom the Term AB loans, together with borrowingborrowings under the revolving portion of the senior credit facility and cash on hand,a portion of the proceeds of the issuance of the 3 3/4% Senior Notes due 2028 and 4% Senior Notes due 2030 (both as described below), were used to repay all outstanding amounts under the existing senior credit facility,Third Amended and Restated Credit Agreement, and all revolving commitments under that facility were terminated.

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Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

On March 16, 2018, Lamar Media entered into Amendment No. 1 to the Third Amended and Restated Credit Agreement dated May 15, 2017, which amended the existing senior As a result of refinancing our credit facility to establishthe Company incurred a new $600,000 Term B Loan Facility (the “Term B loan”), which will matureloss on March 16, 2025.  Lamar Media borroweddebt extinguishment of $5,608 for the full amount of the Term B loan on March 16, 2018.  The proceeds from the Term B loan, together with available cash on hand were used to redeem in full Lamar Media’s 5 7/8% Senior Subordinated Notes due 2022.

On January 17, 2019, Lamar Media entered into an incremental amendment to the senior credit facility to include $100,000 in additional revolving commitments, thereby increasing the total borrowing capacity under the revolving credit facility to $550,000.

As ofyear ended December 31, 2019, the senior credit facility consisted of (i) the revolving credit facility, (ii) the Term A loans, (iii) the Term B loans and (iv) the Incremental Facility.  

2020.

The Term A loans mature on May 15, 2022 and the Term B loans mature on March 16, 2025.February 6, 2027 with no required amortization payments. The remaining quarterly installments are scheduled to be paid on each March 31, June 30, September 30 and December 31 as follows:

Principal Payment Date

 

Term A

 

 

Term B

 

March, 31 2020-June 30, 2020

 

$

8,438

 

 

$

1,500

 

September 30, 2020-March 31, 2022

 

$

16,875

 

 

$

1,500

 

Term A Loan Maturity May 15, 2022

 

$

253,125

 

 

$

—

 

June 30, 2022-December 31, 2024

 

$

—

 

 

$

1,500

 

Term B Loan Maturity March 16, 2025

 

$

—

 

 

$

559,500

 

The Term B loans bear interest at rates based on the Adjusted LIBO Rate (“Eurodollar term loans”) or the Adjusted Base Rate (“Base Rate term loans”), at Lamar Media’s option. Eurodollar term loans bear interest at a rate per annum equal to the Adjusted LIBO Rate plus 1.75%; (or the Adjusted LIBO Rate plus 1.50% at any time the Total Debt Ratio is less than or equal to 3.25 to 1 for Term A loans only). Base Rate term loans bear interest at a rate per annum equal to the Adjusted Base Rate plus 0.75% (or the Adjusted Base Rate plus 0.50% at any time the Total Debt Ratio is less than or equal.

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Notes to 3.25 to 1 for Term A loans only). Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
The revolving credit facility bears interest at rates based on the Adjusted LIBO Rate (“Eurodollar revolving loans”) or the Adjusted Base Rate (“Base Rate revolving loans”), at Lamar Media’s option. Eurodollar revolving loans bear interest at a rate per annum equal to the Adjusted LIBO Rate plus 2.25%1.50% (or the Adjusted LIBO Rate plus 2.00%1.25% at any time the Total Debt Ratio is less than or equal to 4.25 to 1; or the Adjusted LIBO Rate plus 1.75% at any time the Total Debt Ratio is less than or equal to 3.003.25 to 1). Base Rate revolving Loansloans bear interest at a rate per annum equal to the Adjusted Base Rate plus 1.25%0.50% (or the Adjusted Base Rate plus 1.0%0.25% at any time the total debt ratio is less than or equal to 4.25 to 1, or the Adjusted Base Rate plus 0.75% at any time the Total Debt Ratio is less than or equal to 3.003.25 to 1). The guarantees, covenants, events of default and other terms of the senior credit facility apply to the Term A and B loans and revolving credit facility.

As of December 31, 2019,2021, there was $150,000were $175,000 in outstanding borrowings under the revolving credit facility. Availability under the revolving credit facility is reduced by the amount of any letters of credit outstanding. Lamar Media had $12,709$12,374 in letters of credit outstanding as of December 31, 20192021 resulting in $387,291$562,626 of availability under itsthe revolving credit facility. Revolving credit loans may be requested under the revolving credit facility at any time prior to its maturity on May 15, 2022.

February 6, 2025.

The terms of Lamar Media’s senior credit facility and the indentures relating to Lamar Media’s outstanding notes restrict, among other things, the ability of Lamar Advertising and Lamar Media to:

•

dispose of assets;

•dispose of assets;

incur or repay debt;

•incur or repay debt;

create liens;

•create liens;

make investments; and

•make investments; and

pay dividends.

•pay dividends.
The senior credit facility contains provisions that would allow Lamar Media to conduct its affairs in a manner that would allowallows Lamar Advertising to qualify and remain qualified as a REIT, including by allowing Lamar Media to make distributions to Lamar Advertising required for the Company to qualify and remain qualified for taxation as a REIT, subject to certain restrictions.

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AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

Lamar Media’s ability to make distributions to Lamar Advertising is also restricted under the terms of these agreements. Under Lamar Media’sthe senior credit facility, the Company must maintain a specified seniorsecured debt ratio at all timesas long as a revolving credit commitment, revolving loan or letter of credit remains outstanding, and in addition, must satisfy a total debt ratio in order to incur debt, make distributions or make certain investments.

Lamar Advertising and Lamar Media were in compliance with all of the terms of their indentures and the applicable senior credit agreementfacility provisions during the periods presented.

Accounts Receivable Securitization Program

On December 18, 2018, Lamar Media entered into a $175,000 Receivable Financing Agreement (the “AR Program”"Receivable Financing Agreement") with its wholly-owned special purpose entities, Lamar QRS Receivables, LLC and Lamar TRS Receivables, LLC (the “Special Purpose Subsidiaries”) maturing on December 17, 2021.(the "Accounts Receivable Securitization Program"). The ARAccounts Receivable Securitization Program is limited to the availability of eligible accounts receivable collateralizing the borrowings under the agreements governing the ARAccounts Receivable Securitization Program.

Pursuant to two separate Purchase and Sale Agreements dated December 18, 2018, each of which is among Lamar Media as initial Servicer, certain of Lamar Media’s subsidiaries and a Special Purpose Subsidiary, the subsidiaries sold substantially all of their existing and future accounts receivable balances to the Special Purpose Subsidiaries. The Special Purpose Subsidiaries use the accounts receivable balances to collateralize loans pursuant to the ARAccounts Receivable Securitization Program. Lamar Media retains the responsibility of servicing the accounts receivable balances pledged as collateral under the ARAccounts Receivable Securitization Program and provides a performance guaranty.
On June 30, 2020, Lamar Media and the Special Purpose Subsidiaries entered into the Third Amendment (the “Third Amendment”) to the Receivables Financing Agreement. The Third Amendment increased the maximum three month average
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Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
Delinquency Ratio, Dilution Ratio and Days’ Sales Outstanding to 11.00% (from 8.00%), 7.00% (from 4.00%) and 75 days (from 65 days), respectively, for each of the months of June, July and August 2020. The Third Amendment did not modify any other financial covenant. Additionally, the Third Amendment established a new Minimum Funding Threshold, which requires the Special Purpose Subsidiaries to maintain minimum borrowings under the  Accounts Receivable Securitization Program on any day equal to the lesser of (i) 50.00% of the aggregate Commitment of all Lenders or (ii) the Borrowing Base, though the Special Purpose Subsidiaries had the right to borrow less than the Minimum Funding Threshold during certain periods prior to December 21, 2020 at their election.
On October 23, 2020, Lamar Media and the Special Purpose Subsidiaries entered into the Fourth Amendment (the “Fourth Amendment”) to the Receivables Financing Agreement.  The Fourth Amendment increased the maximum three month average Delinquency Ratio generally to 13.00% (and up to 16.00% for up to two additional periods upon written notice from Lamar Media), and increased the maximum three month average Dilution Ratio to 5.00% for the remaining term of the Accounts Receivable Securitization Program. Additionally, the Fourth Amendment increased the Minimum Funding Threshold which, as amended, requires the Special Purpose Subsidiaries to maintain minimum borrowings under the Accounts Receivable Securitization Program on any day equal to the lesser of (i) 70.00% of the aggregate Commitment of all Lenders or (ii) the Borrowing Base, though the Special Purpose Subsidiaries had the right to borrow less than the Minimum Funding Threshold during certain periods prior to December 21, 2020 at their election.
On May 24, 2021, Lamar Media and the Special Purpose Subsidiaries entered into the Fifth Amendment (the "Fifth Amendment") to the Receivables Financing Agreement. The Fifth Amendment extended the maturity date of the Accounts Receivable Securitization Program to July 21, 2024. Additionally, the Fifth Amendment decreased the Minimum Funding Threshold which, as amended, requires the Special Purpose Subsidiaries to maintain minimum borrowings under the Accounts Receivable Securitization Program on any day equal to the lesser of (i) 50.00% of the aggregate Commitment of all Lenders or (ii) the Borrowing Base, provided that the Minimum Funding Threshold shall be zero on any day that is a Minimum Funding Threshold Holiday which, as amended, provides for an annual holiday from the requirement of up to sixty days per year. The Fifth Amendment also provides for updated LIBOR replacement procedures.
As of December 31, 20192021, there was $175,000 outstanding onaggregate borrowings under the ARAccounts Receivable Securitization Program. Lamar Media had no additional availability for borrowing under the Accounts Receivable Securitization Program bearing interest at approximately 3.3%. Proceeds from the AR Program were used primarily to repay outstanding amounts under our revolving credit facility.as of December 31, 2021. The commitment feefees based on the amount of unused commitments under the ARAccounts Receivable Securitization Program waswere immaterial in 2019.

during the year ended December 31, 2021.

The ARAccounts Receivable Securitization Program will mature on July 21, 2024. Lamar Media may amend the facility to extend the maturity date, enter into a new securitization facility with a different maturity date, or refinance the indebtedness outstanding under the Accounts Receivable Securitization Program using borrowings under its senior credit facility or from other financing sources.
The Accounts Receivable Securitization Program is accounted for as a collateralized financing activity, rather than a sale of assets, and therefore: (i) accounts receivable balances pledged as collateral are presented as assets and the borrowings are presented as liabilities on our Consolidated Balance Sheets, (ii) our Consolidated Statements of Income and Comprehensive Income reflect the associated charges for bad debt expense (a component of general and administrative expenses) related to the pledged accounts receivable and interest expense associated with the collateralized borrowings and (iii) receipts from customers related to the underlying accounts receivable are reflected as operating cash flows and borrowings and repayments under the collateralized loans are reflected as financing cash flows within our Consolidated Statements of Cash Flows.

5 7/8%

5% Senior Subordinated Notes

On February 9,October 30, 2012, Lamar Media completed an institutional private placement of $500,000$535,000 aggregate principal amount of 5 7/8%5% Senior Subordinated Notes due 20222023 (the “5 7/8% Senior Subordinated“5% Notes”). The institutional private placement resulted in net proceeds to Lamar Media of approximately $489,000. The Company used the proceeds from the Term B loans to redeem all of the 5 7/8% Notes on March 19, 2018 at a redemption price of 101.958% of the$527,100.
On August 31, 2020, Lamar Media redeemed $267,500 in aggregate principal amount of the outstanding 5% Notes at a redemption price of 100.833%, plus accrued and unpaid interest up to but not including the redemption date. On September 16, 2020 Lamar Media redeemed the remaining aggregate principal amount of $267,500 of the outstanding 5% Notes at a redemption price of 100.833%, plus accrued and unpaid interest up to but not including the redemption date. These redemptions
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Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
were funded using cash on hand, borrowings under the revolving credit facility and the Accounts Receivable Securitization Program and proceeds from the additional 4% Senior Notes issued on August 19, 2020. These redemptions combined resulted in a loss on debt extinguishment of $7,051, of which $4,456 was cash, for the year ended December 31, 2020.
5 7/3/8% Senior Notes
On January 10, 2014, Lamar Media completed an institutional private placement of $510,000 aggregate principal amount of 5 3/8% Senior Notes due 2024 (the “5 3/8% Notes”). The institutional private placement resulted in net proceeds to Lamar Media of approximately $502,300. Lamar Media used the proceeds from the 4% Senior Notes (defined below) and 3 3/4% Senior Notes (defined below) to redeem in full all of the 5 3/8% Notes on February 20, 2020 at a redemption price of 101.792% of the aggregate principal amounts of the outstanding 5 3/8% Notes, plus accrued and unpaid interest up to but not including the redemption date. In conjunction with the redemption, the Company recorded a loss on debt extinguishment of $15,429,$12,576, of which $9,790$9,139 was cash, for the year ended December 31, 2018.

5%2020.

5 3/4% Senior Subordinated Notes

On October 30, 2012,January 28, 2016, Lamar Media completed an institutional private placement of $535,000$400,000 aggregate principal amount of 5%5 3/4% Senior Subordinated Notes due 20232026 (the “5% Senior Subordinated“Original 5 3/4 % Notes”). The institutional private placement resulted in net proceeds to Lamar Media of approximately $527,100.

$394,500.

On February 1, 2019, Lamar Media completed an institutional private placement of an additional $250,000 aggregate principal amount under its 5 3/4% Notes (the “Additional 5 3/4% Notes”, and together with the Original 5 3/4% Notes, the "5 3/4% Notes"). Other than with respect to the date of issuance, issue price and CUSIP number, the Additional 5 3/4% Notes have the same terms as the Original 5 3/4% Notes. The net proceeds after underwriting fees and expenses, was approximately $251,500.
On February 3, 2021, Lamar Media redeemed in full all $650,000 aggregate principal amount 5 3/4% Notes. The 5 3/4% Notes redemption was completed using the proceeds received from the 3 5/8% Notes offering completed on January 22, 2021 (as described below), together with cash on hand and borrowings under the revolving credit facility and Accounts Receivable Securitization Program. The 5 3/4% Notes were redeemed at a redemption price equal to 102.875% of the aggregate principal amount of the outstanding notes, plus accrued and unpaid interest to (but not including) the redemption date. During the year ended December 31, 2021, the Company recorded a loss on debt extinguishment of approximately $21,604 related to the note redemption, of which $18,700 was in cash.
4% Senior Notes
On February 6, 2020, Lamar Media completed an institutional private placement of $400,000 aggregate principal amount of 4% Senior Notes due 2030 (the “Original 4% Notes”). The institutional private placement on February 6, 2020 resulted in net proceeds to Lamar Media of approximately $395,000.
On August 19, 2020, Lamar Media completed an institutional private placement of an additional $150,000 aggregate principal amount of its 4% Notes (the “Additional 4% Notes”, and together with the "Original 4% Notes, the "4% Notes"). Other than with respect to the date of issuance and issue price, the Additional 4% Notes have the same terms as the Original 4% Notes. The institutional private placement on August 19, 2020 resulted in net proceeds to Lamar Media of approximately $146,900.
Lamar Media may redeem up to 40% of the aggregate principal amount of the 4% Notes, at any time and from time to time, at a price equal to 104% of the aggregate principal amount redeemed, plus accrued and unpaid interest thereon, with the net cash proceeds of certain public equity offerings completed before February 15, 2023, provided that following the redemption, at least 60% of the 4% Notes that were originally issued remain outstanding and any such redemption occurs within 120 days following the closing of any such public equity offering. At any time prior to February 15, 2025, Lamar Media may redeem some or all of the 4% Notes at a price equal to 100% of the aggregate principal amount, plus accrued and unpaid interest thereon and a make-whole premium. On or after February 15, 2025, Lamar Media may redeem the 5% Senior Subordinated4% Notes, in whole or in part, in cash at redemption prices specified in the 5% Senior Subordinated4% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder’s 5% Senior Subordinated4% Notes at a price equal to 101% of the principal amount of the 5% Senior Subordinated4% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.

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(Dollars in thousands, except share and per share data)

5

3 3/8%4% Senior Notes

On January 10, 2014,February 6, 2020, Lamar Media completed an institutional private placement of $510,000$600,000 aggregate principal amount of 53 3/8%4% Senior Notes due 20242028 (the “5“3 3/8% Senior4% Notes”). The institutional private placement on February 6, 2020 resulted in net proceeds to Lamar Media of approximately $502,300.

$592,500.

Lamar Media may redeem up to 40% of the aggregate principal amount of 3 3/4% Notes, at any time and from time to time, at a price equal to 103.75% of the aggregate principal amount redeemed, plus accrued and unpaid interest thereon, with the net cash proceeds of certain public equity offerings completed before February 15, 2023, provided that following the redemption, at least 60% of the 3 3/4% Notes that were originally issued remain outstanding and any such redemption occurs within 120 days following the closing of any such public equity offering. At any time prior to February 15, 2023, Lamar Media may redeem some or all of the 3 3/4% Notes at a price equal to 100% of the aggregate principal amount, plus accrued and unpaid interest thereon and a make-whole premium. On or after February 15, 2023, Lamar Media may redeem the 53 3/8% Senior4% Notes, in whole or in part, in cash at redemption prices specified in the 53 3/8% Senior4% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder’s 53 3/8% Senior4% Notes at a price equal to 101% of the principal amount of the 53 3/8% Senior4% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.

5 3/4%

4 7/8% Senior Notes

On January 28, 2016,May 13, 2020, Lamar Media completed an institutional private placement of $400,000 aggregate principal amount of 5 3/4% 7/8% Senior Notes due 20262029 (the “5 3/4 % Senior“4 7/8% Notes”). The institutional private placement on May 13, 2020 resulted in net proceeds to Lamar Media of approximately $394,500.

On February 1, 2019, $395,000.

Lamar Media completed an institutional private placementmay redeem up to 40% of an additional $250,000the aggregate principal amount under its 5 3/4% Notes (the “New Notes”). Other than with respect to the date of issuance, issue price and CUSIP number, the New Notes have the same terms as the 5 3/4% Notes. The net proceeds after underwriting fees and expenses, was approximately $251,500 and were used to repay a portion of the borrowings4 7/8% Notes, at any time and from time to time, at a price equal to 104.875% of the aggregate principal amount redeemed, plus accrued and unpaid interest thereon, with the net cash proceeds of certain public equity offerings completed before May 15, 2023, provided that following the redemption, at least 60% of the 4 7/8% Notes that were originally issued remain outstanding underand any such redemption occurs within 120 days following the revolving credit facility.

closing of any such public equity offering. At any time prior to February 1, 2021,January 15, 2024, Lamar Media may redeem some or all of the 5 3/4% Senior4 7/8% Notes at a price equal to 100% of the aggregate principal amount, plus accrued and unpaid interest thereon plusand a make-whole premium. On or after February 1, 2021,January 15, 2024, Lamar Media may redeem the 5 3/4% Senior4 7/8% Notes, in whole or in part, in cash at redemption prices specified in the 5 3/4% Senior4 7/8% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder’s 5 3/4% Senior4 7/8% Notes at a price equal to 101% of the principal amount of the 5 3/4% Senior4 7/8% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.

3 5/8% Senior Notes
On January 22, 2021, Lamar Media completed an institutional private placement of $550,000 aggregate principal amount of 3 5/8% Senior Notes due 2031 (the "3 5/8% Notes"). The institutional private placement on January 22, 2021 resulted in net proceeds to Lamar Media of approximately $542,500.
Lamar Media may redeem up to 40% of the aggregate principal amount of the 3 5/8% Notes, at any time and from time to time, at a price equal to 103.625% of the aggregate principal amount so redeemed, plus accrued and unpaid interest thereon, with the net cash proceeds of certain public equity offerings completed before January 15, 2024 provided that following the redemption, at least 60% of the 3 5/8% Notes that were originally issued remain outstanding and any such redemption occurs within 120 days following the closing of any such public equity offering. At any time prior to January 15, 2026, Lamar Media may redeem some or all of the 3 5/8% Notes at a price equal to 100% of the aggregate principal amount, plus accrued and unpaid interest thereon and a make-whole premium. On or after January 15, 2026, Lamar Media may redeem the 3 5/8% Notes, in whole or in part, in cash at redemption prices specified in the 3 5/8% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder's 3 5/8% Notes at a price equal to 101% of the principal amount of the 3 5/8% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.
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LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
Debt Repurchase Program
On March 16, 2020, the Company’s Board of Directors authorized Lamar Media to repurchase up to $250,000 outstanding senior or senior subordinated notes and other indebtedness outstanding from time to time under its Fourth Amended and Restated Credit Agreement. On September 20, 2021, the Board of Directors authorized the extension of the repurchase program through March 31, 2023. There were no repurchases under the program as of December 31, 2021.
(10)Asset Retirement Obligation

The Company’s asset retirement obligation includes the costs associated with the removal of its structures, resurfacing of the land and retirement cost, if applicable, related to the Company’s outdoor advertising portfolio. The following table reflects information related to our asset retirement obligations:

Balance at December 31, 2017

 

$

215,089

 

Additions to asset retirement obligations

 

 

7,583

 

Accretion expense

 

 

4,404

 

Liabilities settled

 

 

(4,087

)

Balance at December 31, 2018

 

$

222,989

 

Additions to asset retirement obligations

 

 

2,529

 

Accretion expense

 

 

4,260

 

Liabilities settled

 

 

(3,641

)

Balance at December 31, 2019

 

$

226,137

 

Balance at December 31, 2019$226,137 
Additions to asset retirement obligations658 
Accretion expense4,135 
Liabilities settled(8,054)
Balance at December 31, 2020$222,876 
Additions to asset retirement obligations3,662 
Revision in estimates41,644 
Accretion expense4,476 
Liabilities settled(3,291)
Balance at December 31, 2021$269,367 

68

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes

Revision in estimates of $41,644 reflects changes in cost estimates to Consolidated Financial Statements

(Dollarsremove structures and resurface land for structures that reside on leased land in thousands, except share and per share data)

the Company's outdoor advertising portfolio.

(11)Depreciation and Amortization

The Company includes all categories of depreciation and amortization on a separate line in its Consolidated Statements of Income and Comprehensive Income. The amounts of depreciation and amortization expense excluded from the following operating expenses in its Consolidated Statements of Income are:

 

 

Year Ended December 31,

 

 

 

2019

 

 

2018

 

 

2017

 

Direct expenses

 

$

235,544

 

 

$

212,585

 

 

$

196,107

 

General and administrative expenses

 

 

4,416

 

 

 

4,134

 

 

 

4,151

 

Corporate expenses

 

 

10,068

 

 

 

8,542

 

 

 

10,846

 

 

 

$

250,028

 

 

$

225,261

 

 

$

211,104

 

(12)and Comprehensive Income are as follows:

Year Ended December 31,
202120202019
Direct advertising expenses$253,850 $236,054 $235,544 
General and administrative expenses4,691 4,996 4,416 
Corporate expenses12,753 10,246 10,068 
$271,294 $251,296 $250,028 
The increase in the amount of depreciation and amortization expense excluded from direct advertising expense for the year ended December 31, 2021 as compared to the year ended December 31, 2020 is due to the revision in the cost estimate included in the calculation of asset retirement obligations during the period.
(12)Income Taxes

Commencing January 1, 2014, the Company began operating as a REIT for U.S. income tax purposes. Since operating as a REIT, the Company filed, and intends to continue to file, as a REIT, and its TRSs filed, and intend to continue to file, as C corporations. The Company also files tax returns in various states and countries. The Company’s state tax returns reflect different combinations of the Company’s subsidiaries and are dependent on the connection each subsidiary has with a particular state. The following information pertains to the Company’s income taxes on a consolidated basis.

On December 22, 2017, the Tax Cuts

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LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and Jobs Act of 2017 (the “TCJA”) was signed into law, making significant changes to the Internal Revenue Code.  As a result of the TCJA, a tax benefit of $3,372 and $466 was recorded to current tax expense and deferred tax expense, respectively, for the year ended December 31, 2017.

per share data)

Income tax expense (benefit) consists of the following:

 

Current

 

 

Deferred

 

 

Total

 

Year ended December 31, 2019:

 

 

 

 

 

 

 

 

 

 

 

 

CurrentDeferredTotal
Year ended December 31, 2021Year ended December 31, 2021

U.S. federal

 

$

6,045

 

 

$

(13,450

)

 

$

(7,405

)

U.S. federal$4,723 $620 $5,343 

State and local

 

 

2,699

 

 

 

(2,654

)

 

 

45

 

State and local3,958 254 4,212 

Foreign

 

 

1,164

 

 

 

1,974

 

 

 

3,138

 

Foreign(999)700 (299)

 

$

9,908

 

 

$

(14,130

)

 

$

(4,222

)

$7,682 $1,574 $9,256 

Year ended December 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 2020Year ended December 31, 2020

U.S. federal

 

$

4,952

 

 

$

435

 

 

$

5,387

 

U.S. federal$2,997 $(45)$2,952 

State and local

 

 

2,615

 

 

 

(123

)

 

 

2,492

 

State and local1,940 311 2,251 

Foreign

 

 

1,592

 

 

 

1,226

 

 

 

2,818

 

Foreign520 (1,063)(543)

 

$

9,159

 

 

$

1,538

 

 

$

10,697

 

 $5,457 $(797)$4,660 

Year ended December 31, 2017:

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 2019Year ended December 31, 2019

U.S. federal

 

$

4,174

 

 

$

359

 

 

$

4,533

 

U.S. federal$6,045 $(13,450)$(7,405)

State and local

 

 

2,706

 

 

 

(170

)

 

 

2,536

 

State and local2,699 (2,654)45 

Foreign

 

 

1,546

 

 

 

615

 

 

 

2,161

 

Foreign1,164 1,974 3,138 

 

$

8,426

 

 

$

804

 

 

$

9,230

 

 $9,908 $(14,130)$(4,222)

As of December 31, 20192021 and 2018,2020, the Company had income taxes payable of $384$5,915 and $458, respectively.

$4,707, respectively, which was recorded within accrued expenses on the Consolidated Balance Sheets.

The U.S. and foreign components of earnings before income taxes are as follows:

 

2019

 

 

2018

 

 

2017

 

 202120202019

U.S.

 

$

357,445

 

 

$

317,695

 

 

$

332,607

 

U.S.$395,800 $249,714 $357,445 

Foreign

 

 

10,444

 

 

 

(1,766

)

 

 

(5,701

)

Foreign1,546 (1,668)10,444 

Total

 

$

367,889

 

 

$

315,929

 

 

$

326,906

 

Total$397,346 $248,046 $367,889 

69

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

A reconciliation of significant differences between the reported amount of income tax expense (benefit) and the expected amount of income tax expense that would result from applying the U.S. federal statutory income tax rate of 21 percent to income before taxes for the 20192021, 2020 and 20182019 tax years is as follows:
202120202019
Income tax expense at U.S. federal statutory rate$83,443 $52,090 $77,257 
Tax adjustment related to REIT(a)
(83,153)(50,395)(70,619)
State and local income taxes, net of federal income tax benefit2,917 1,222 2,039 
Book expenses not deductible for tax purposes1,893 3,156 4,144 
Stock-based compensation3,555 (2,033)(1,177)
Valuation allowance(b)
(1,564)(1,031)(1,032)
Rate change(c)
— (182)— 
Undistributed earnings of foreign subsidiaries(d)
292 (78)(102)
Deferred tax adjustment due to REIT conversion(e)
— — (17,031)
Other differences, net1,873 1,911 2,299 
Income tax expense (benefit)$9,256 $4,660 $(4,222)
(a)Includes dividend paid deduction of $85,087, $52,985 and 35 percent$76,688 for the 2017 tax year, is as follows:

 

 

2019

 

 

2018

 

 

2017

 

Income tax expense at U.S. federal statutory rate

 

$

77,257

 

 

$

66,345

 

 

$

114,417

 

Tax adjustment related to REIT(a)

 

 

(70,619

)

 

 

(63,669

)

 

 

(109,294

)

State and local income taxes, net of federal income

   tax benefit

 

 

2,039

 

 

 

1,461

 

 

 

1,193

 

Book expenses not deductible for tax purposes

 

 

4,144

 

 

 

1,926

 

 

 

2,635

 

Stock-based compensation

 

 

(1,177

)

 

 

1,090

 

 

 

(121

)

Valuation allowance(b)

 

 

(1,032

)

 

 

3,813

 

 

 

3,953

 

Rate change(c)

 

 

—

 

 

 

(80

)

 

 

(466

)

Undistributed earnings of foreign subsidiaries(d)

 

 

(102

)

 

 

(393

)

 

 

1,363

 

Minimum tax credit refundable(e)

 

 

—

 

 

 

—

 

 

 

(4,108

)

Deferred tax adjustment due to REIT conversion(f)

 

 

(17,031

)

 

 

—

 

 

 

—

 

Other differences, net(g)

 

 

2,299

 

 

 

204

 

 

 

(342

)

Income tax expense

 

$

(4,222

)

 

$

10,697

 

 

$

9,230

 

(a)years ended December 31, 2021, 2020 and 2019, respectively.

Includes dividend paid deduction of $76,688, $69,818 and $110,442 for the tax years ended December 31, 2019, 2018 and 2017, respectively.

(b)

69

For the years ended December 31, 2019, 2018 and 2017, a non-cash valuation allowance of $(1,031), $3,813 and $3,953, respectively, was recorded to income tax expense due to our limited ability to utilize Puerto Rico deferred tax assets in future years.

(c)

Under the TCJA, the U.S. corporate income tax rate was lowered from 35% to 21%.  As a result, a non-cash benefit of $466 to income tax expense was recorded for the reduction of the U.S. net deferred tax liability for the year ended December 31, 2017.

(d)

In periods prior to December 31, 2017, the undistributed earnings of our Canadian subsidiaries were designated as permanently reinvested.  As of December 31, 2017, however, management did not assert that the undistributed earnings of our Canadian subsidiaries will be permanently reinvested.  For the years ended December 31, 2019, 2018 and 2017, we recognized a deferred tax (benefit) charge of $(102), $(393) and $1,363, respectively, for future foreign withholding taxes related to undistributed earnings.

(e)

Under the TCJA, the corporate alternative minimum tax was repealed and any minimum tax carryforwards not utilized become fully refundable in 2021.  The Company does not expect to utilize its minimum tax credit carryforward. As a result, a cash benefit of $4,108 to income tax expense was recorded for the year ended December 31, 2017.

(f)

The income tax provision for the year ended December 31, 2019 is net of the deferred tax benefit of $17,031, which relates to the transfer of assets purchased from Fairway into our qualifying REIT subsidiary on June 28, 2019. The Fairway assets were initially placed in the TRS.

(g)

Upon enactment, the TCJA includes a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings, net of foreign tax credits. As a result, a cash charge of $736 to income tax expense was recorded for the year ended December 31, 2017.

70

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

(b)For the years ended December 31, 2021, 2020 and 2019, a non-cash valuation allowance of ($1,564), ($1,031) and ($1,032), respectively, was recorded to income tax expense (benefit) due to our limited ability to utilize Puerto Rico deferred tax assets in future years.
(c)Under Act 257, the Puerto Rico corporate income tax rate was lowered from 39% to 37.5%.  As a result, a non-cash benefit of $182 to income tax expense (benefit) was recorded for the reduction of the Puerto Rico net deferred tax liability for the year ended December 31, 2020.
(d)Management does not assert that the undistributed earnings of our Canadian subsidiaries will be permanently reinvested. For the years ended December 31, 2021, 2020 and 2019, we recognized a deferred tax expense (benefit) of $292, ($78) and ($102), respectively, for future foreign withholding taxes related to undistributed earnings.
(e)The income tax provision for the year ended December 31, 2019 is net of the deferred tax benefit of $17,031, which relates to the transfer of assets purchased from Fairway into our qualifying REIT subsidiary on June 28, 2019. The Fairway assets were initially placed in the TRS.
The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and (liabilities)liabilities are presented below:

 

2019

 

 

2018

 

20212020

Deferred tax assets:

 

 

 

 

 

 

 

 

Deferred tax assets:

Allowance for doubtful accounts

 

$

499

 

 

$

654

 

Allowance for doubtful accounts$493 $328 

Accrued liabilities not deducted for tax purposes

 

 

3,431

 

 

 

7,022

 

Accrued liabilities not deducted for tax purposes3,071 3,358 

Net operating loss carry forwards

 

 

19,522

 

 

 

34,716

 

Net operating loss carry forwards16,488 18,803 

Tax credit carry forwards

 

 

1,140

 

 

 

320

 

Tax credit carry forwards692 693 

Charitable contributions carry forward

 

 

5

 

 

 

47

 

Charitable contributions carry forward3 4 

Investment in partnerships

 

 

382

 

 

 

—

 

Investment in partnerships228 367 

Gross deferred tax assets

 

 

24,979

 

 

 

42,759

 

Gross deferred tax assets20,975 23,553 

Less: valuation allowance

 

 

(22,902

)

 

 

(23,934

)

Less: valuation allowance(19,433)(20,997)

Net deferred tax assets

 

 

2,077

 

 

 

18,825

 

Net deferred tax assets1,542 2,556 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Deferred tax liabilities:

Intangibles

 

 

(5,898

)

 

 

(6,565

)

Intangibles(5,209)(5,443)

Investment in partnerships

 

 

—

 

 

 

(31,746

)

Property, plant and equipment

 

 

(701

)

 

 

(366

)

Property, plant and equipment(1,765)(911)

Undistributed earnings of foreign subsidiaries

 

 

(1,191

)

 

 

(882

)

Undistributed earnings of foreign subsidiaries(984)(1,056)

Gross deferred tax liabilities

 

 

(7,790

)

 

 

(39,559

)

Gross deferred tax liabilities(7,958)(7,410)

Net deferred tax liabilities

 

$

(5,713

)

 

$

(20,734

)

Net deferred tax liabilities$(6,416)$(4,854)

As of December 31, 2019,2021, we have approximately $244,121$149,212 of U.S. net operating loss carry forwards to offset future taxable income. Of this amount, $47,358$29,496 is subject to Internal Revenue Code §382 limitation but will be available to be fully utilized by no later than 2027. These carry forwards expire between 20262028 through 2037. In addition, we have $2,745$1,205 of various credits available to offset future U.S. federal income tax. Under the TCJA, the corporate alternative minimum tax was repealed and any minimum tax credit carryforwards not utilized become fully refundable in 2021. We do not expect to utilize our minimum tax credit of $2,054 before 2021.

As of December 31, 2019,2021, we have approximately $831,791$1,033,956 of state net operating loss carry forwards before valuation allowances. These state net operating losses are available to reduce future taxable income and expire at various times and amounts. In addition, we have $135$100 of various credits available to offset future state income tax. There was 0The valuation allowance related to state net operating loss carry forwards as of December 31, 20192021 and 2018. There were 02020 was $334 and $321, respectively. The net changes in the total state valuation allowance for the years ended December 31, 20192021 and 2018.   

2020 was an increase of $13 and $320, respectively.

As of December 31, 2019,2021, we had approximately $48,135$4,047 of Canadian net operating loss carry forwards before valuation allowances. These Canadian net operating losses are available to offset future taxable income. These carry forwards expire between 2040 and 2041.
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LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
As of December 31, 2021, we had approximately $39,863 of Puerto Rico net operating loss carry forwards before valuation allowances. These Puerto Rico net operating losses are available to offset future taxable income. These carry forwards expire between 20202022 and 2028.2029. In addition, we have $153$178 of alternative minimum tax credits available to offset future Puerto Rico income tax.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those jurisdictions during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carry back and carry forward periods), projected future taxable income, and tax-planning strategies in making this assessment. In order to fully realize the deferred tax assets, the Company will need to generate future taxable income before the expiration of the carry forwards governed by the tax code. Based on the current level of pretax earnings, the Company will not generate the minimum amount of future taxable income to support the realization of the deferred tax assets. As a result, management has determined that a valuation allowance related to Puerto Rico net operating loss carry forwards and other deferred tax assets is necessary. The valuation allowance for these deferred tax assets as of December 31, 20192021 and 20182020 was $22,902$19,099 and $23,934,$20,676, respectively. The net change in the total valuation allowance for the years ended December 31, 20192021 and 20182020 was an increase (decrease)a decrease of $(1,032)$1,577 and $3,814,$2,226, respectively. The amount of the deferred tax asset considered realizable, however, could be adjusted in the near term if estimates of future taxable income during the carry forward period increase.

71

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

As of December 31, 2019,2021, the Company has accumulated undistributed earnings generated by our foreign subsidiaries of approximately $23,811.$19,682. Management does not designate these earnings as permanently reinvested and has recognized a deferred tax liability of approximately $1,191$984 related to foreign withholding taxes on these earnings. We have recognized a current year tax expensebenefit of $180$77 related to 2019 earnings and a tax benefit of $(170) related to prior year earnings repatriated in 2019.

2021 earnings.

Under ASC 740, Income Taxes, we provide for uncertain tax positions, and the related interest, and adjust recognized tax benefits and accrued interest accordingly. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Balance as of December 31, 2017

 

$

2,067

 

Additions for tax positions related to current year

 

 

932

 

Additions for tax positions related to prior years

 

 

238

 

Reductions for tax positions related to prior years

 

 

—

 

Lapse of statute of limitations

 

 

(30

)

Settlements

 

 

—

 

Balance as of December 31, 2018

 

$

3,207

 

Additions for tax positions related to current year

 

 

974

 

Additions for tax positions related to prior years

 

 

386

 

Reductions for tax positions related to prior years

 

 

—

 

Lapse of statute of limitations

 

 

(117

)

Settlements

 

 

—

 

Balance as of December 31, 2019

 

$

4,450

 

Balance as of December 31, 2019$4,450 
Additions for tax positions related to current year862 
Additions for tax positions related to prior years667 
Lapse of statute of limitations(1,013)
Balance as of December 31, 2020$4,966 
Additions for tax positions related to current year1,166 
Additions for tax positions related to prior years381 
Reductions for tax positions related to prior years(1,388)
Balance as of December 31, 2021$5,125 

Included in the balance of unrecognized benefits at December 31, 20192021 is $4,450$5,125 of tax benefits that, if recognized in future periods, would impact our effective tax rate. During the years ended December 31, 20192021 and 2018,2020, we recognized interest and penalties of $334($42) and $411,$173, respectively, as a component of income tax expense (benefit) in connection with our liabilities related to uncertain tax positions.

Within the next twelve months, we expect to decrease our unrecognized tax benefits by approximately $970$1,389 as a result of the expiration of statute of limitations.

We are subject to income taxes in the U.S. and nearly all states. In addition, the Company is subject to income taxes in Canada and the Commonwealth of Puerto Rico. We are no longer subject to U.S federal income tax examinations by tax authorities for years prior to 2016,2018, or for any U.S. state income tax audit prior to 2013.2015. With respect to Canada and Puerto Rico, we are no longer subject to income tax audits for years before 20162018 and 2015,2017, respectively.

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LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(13)Related Party Transactions

Affiliates, as used within these statements, are persons or entities that are affiliated with Lamar Advertising Company or its subsidiaries through common ownership and directorate control.

The Company had receivables from employees of $80 at December 31, 2018. There were 0 receivables from employees at December 31, 2019. These receivables are primarily relocation loans for employees. The Company does not have any receivables from its current executive officers.

RTC Holdings, LLC (“RTC”), a telecommunications company, is 100% owned by entities owned by members of the Reilly family. Entities owned by Sean E. Reilly, President and Chief Executive Officer of the Company; Kevin P. Reilly, Jr., Executive Chairman of the Board of Directors and President of the Company;Directors; and members of their respective immediate families hold a majority stake in RTC of approximately 89%. The Reilly Family, LLC, which is owned by Sean E. Reilly, Kevin P. Reilly, Jr., members of our directorsBoard of Directors Anna Reilly and Wendell Reilly, and entities owned by each of them and members of their respective immediate families, holds the remaining minority stake in RTC of approximately 11%. On May 31, 2019, RTC acquired EATELCORP, LLC (“EATEL”) and its subsidiaries. EATEL provides phone and internet services to consumers and businesses in Louisiana. EATEL also provides data back-up and recovery services to businesses. During the yearyears ended December 31, 2019,2021 and 2020, the Company was a customer of EATEL for data back-up and recovery services. The aggregate amount paid by the Company to EATEL for such services was $302$315 and $311 for the yearyears ended December 31, 2019.2021 and 2020, respectively. The Company was also contracted by EATEL to provide advertising services in the aggregate amount of $137$139 and $134 for the years ended December 31, 2021 and 2020, respectively.
The Company had $1,066 and no receivables from employees or executive officers at December 31, 2021 and 2020, respectively.
On July 12, 2021, Lamar invested $30,000 to acquire a 20% minority interest in Vistar Media, a leading global developer of programmatic technology for the digital out-of-home sector. For the year ended December 31, 2021, the Company recognized revenue of $10,586 from advertisements generated through Vistar's programmatic technology platform. We also incurred expenses of $880 related to these advertisements for the year ended December 31, 2019.2021.
(14)

72

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

(14) Stockholders’ Equity

On July 16, 1999, the Board of Directors designated 5,720 shares of the 1,000,000 shares of previously undesignated preferred stock, par value $.001, as Series AA preferred stock, which shares were subsequently exchanged on a one for one basis in the REIT conversion. The Series AA preferred stock ranks senior to the Class A common stock and Class B common stock with respect to dividends and upon liquidation. Holders of Series AA preferred stock are entitled to receive, on a pari passu basis, dividends at the rate of $15.95 per share per quarter when, as and if declared by the Board of Directors. The Series AA preferred stock is entitled to receive, on a pari passu basis, $638 plus a further amount equal to any dividend accrued and unpaid to the date of distribution before any payments are made or assets distributed to the Class A common stock or Class B stock upon voluntary or involuntary liquidation, dissolution or winding up of the Company. The liquidation value of the outstanding Series AA preferred stock at December 31, 20192021 was $3,649. The Series AA preferred stock is entitled to one vote per share.

All of the outstanding shares of common stock are fully paid and nonassessable. In the event of the liquidation or dissolution of the Company, following any required distribution to the holders of outstanding shares of preferred stock, the holders of common stock are entitled to share pro rata in any balance of the corporate assets available for distribution to them. The Company may pay dividends if, when and as declared by the Board of Directors from funds legally available therefore, subject to the restrictions set forth in the Company’s existing indentures and the senior credit facility. Subject to the preferential rights of the holders of any class of preferred stock, holders of shares of common stock are entitled to receive such dividends as may be declared by the Company’s Board of Directors out of funds legally available for such purpose. No dividend may be declared or paid in cash or property on any share of either class of common stock unless simultaneously the same dividend is declared or paid on each share of the other class of common stock, provided that, in the event of stock dividends, holders of a specific class of common stock shall be entitled to receive only additional shares of such class.

The rights of the Class A and Class B common stock are equal in all respects, except holders of Class B common stock have ten votes per share on all matters in which the holders of common stock are entitled to vote and holders of Class A common stock have one vote per share on such matters. The Class B common stock will convert automatically into Class A common stock upon the sale or transfer to persons other than permitted transferees (as defined in the Company’s certificate of incorporation, as amended).

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Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
On May 1, 2018, the Company entered into an equity distribution agreement (the “Sales Agreement”) with J.P. Morgan Securities LLC, Wells Fargo Securities LLC, and SunTrust Robinson Humphrey, Inc. as its sales agents (each a “Sales Agent”, and collectively, the “Sales Agents”).agents. Under the terms of the Sales Agreement, the Company could have, from time to time, issued and sold shares of its Class A common stock, having an aggregate offering price of up to $400,000, through the sales agents party thereto as either agents or principals. The Sales Agreement expired by its terms on May 1, 2021 and as of that date, 842,412 shares of our Class A common stock were sold under the Sales Agreement.
On June 21, 2021, the Company entered into a new equity distribution agreement (the "2021 Sales Agreement") with J.P. Morgan Securities LLC, Wells Fargo Securities LLC, Truist Securities, Inc., SMBC Nikko Securities America, Inc. and Scotia Capital (USA) Inc. as our sales agents (each a "Sales Agent", and collectively, the "Sales Agents"), which replaced the prior Sales Agreement with substantially similar terms. Under the terms of the 2021 Sales Agreement, the Company may, from time to time, issue and sell shares of its Class A common stock, par value $0.001 per share (the “Class A Common Stock”), having an aggregate offering price of up to $400,000, through the Sales Agents as either agents or principals. As of December 31, 2019, 842,412 shares of our Class A Common Stock have been sold under the Sales Agreement and accordingly $336,668 remains available to be sold under the Sales Agreement.

Sales of the Class A Common Stock, if any, may be made in negotiated transactions or transactions that are deemed to be “at-the-market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made directly on or through the Nasdaq Global Select Market and any other existing trading market for the Class A Common Stock, or sales made to or through a market maker other than on an exchange. The Company has no obligation to sell any of the Class A Common Stockcommon stock under the 2021 Sales Agreement and may at any time suspend solicitations and offers under the 2021 Sales Agreement.

As of December 31, 2021, no shares of our Class A common stock have been sold under the 2021 Sales Agreement and accordingly $400,000 remained available to be sold under the 2021 Sales Agreement as of December 31, 2021.
On August 6, 2018, the Company filed an automatically effective shelf registration statement that registered the offer and sale of an indeterminate amount of additional shares of our Class A common stock. During the year ended December 31, 2018, the Company issued 163,137 shares of its Class A common stock, which expired in connection with acquisitions occurring during the period. The Company filed a prospectus supplement to the shelf registration statement relating to the offer and resale of such shares of Class A common stock.August 2021. There were 0no shares issued under this shelf registration during the year ended December 31, 2019.

2021. On June 21, 2021, the Company filed a new automatically effective shelf registration statement that allows Lamar Advertising to offer and sell an indeterminate amount of additional shares of its Class A common stock on similar terms as the prior registration statement. As of December 31, 2021, the Company did not issue any shares under this shelf registration.

On March 16, 2020, the Company’s Board of Directors authorized the repurchase of up to $250,000 of the Company’s Class A common stock. On September 20, 2021, the Board of Directors authorized the extension of the repurchase program through March 31, 2023. There were no repurchases under the program as of December 31, 2021.
(15)Stock Compensation Plans

Equity Incentive Plan.Lamar’s 1996 Equity Incentive Plan, as amended, (the “1996 Plan”) has reserved 17.5 million shares of Class A common stock for issuance to directors and employees, including shares underlying granted options granted and common stock reserved for issuance under its performance-based incentive program. Options granted under the 1996 Plan expire ten years from the grant date with vesting terms ranging from three to five years which primarily includes 1) options that vest in one-fifth increments beginning on the grant date and continuing on each of the first four anniversaries of the grant date and 2) options that cliff-vest on the fifth anniversary of the grant date. All grants are made at fair market value based on the closing price of our Class A common stock as reported on the NASDAQNasdaq Global Select Market on the date of grant.

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Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

In February 2013, the 1996 Plan was amended to eliminate the provision that limited the amount of Class A common stock, including shares retained from an award, that could be withheld to satisfy tax withholding obligations to the minimum tax obligations required by law (except with respect to option awards). In accordance with ASC 718, Compensation – Stock Compensation, the Company is required to classify the awards affected by the amendment as liability-classified awards at fair value each period prior to their settlement. As of December 31, 20192021 and 2018,2020, the Company recorded a liability, in accrued expenses, of $23,297$30,450 and $19,211,$11,589, respectively, related to its equity incentive awards affected by this amendment.

We use a Black-Scholes-Merton option pricing model to estimate the fair value of share-based awards. The Black-Scholes-Merton option pricing model incorporates various highly subjective assumptions, including expected term and
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LAMAR ADVERTISING COMPANY
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Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
expected volatility. We have reviewed our historical pattern of option exercises and have determined that meaningful differences in option exercise activity existed among vesting schedules. Therefore, for all stock options granted after January 1, 2006, we have categorized these awards into two groups of vesting 1) 5-year cliff vest and 2) 4-year graded vest, for valuation purposes. We have determined there were no meaningful differences in employee activity under our ESPP due to the nature of the plan.

We estimate the expected term of options granted using an implied life derived from the results of a hypothetical mid-point settlement scenario, which incorporates our historical exercise, expiration and post-vesting employment termination patterns, while accommodating for partial life cycle effects. We believe these estimates will approximate future behavior.

We estimate the expected volatility of our Class A common stock at the grant date using a blend of 90% historical volatility of our Class A common stock and 10% implied volatility of publicly traded options with maturities greater than six months on our Class A common stock as of the option grant date. Our decision to use a blend of historical and implied volatility was based upon the volume of actively traded options on our common stock and our belief that historical volatility alone may not be completely representative of future stock price trends.

Our risk-free interest rate assumption is determined using the Federal Reserve nominal rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued. We assumed an expected dividend yield of 5%.

We estimate option forfeitures at the time of grant and periodically revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We record stock-basedstock based compensation expense only for those awards expected to vest using an estimated forfeiture rate based on our historical forfeiture data.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used:

Grant Year

 

Dividend

Yield

 

 

Expected

Volatility

 

 

Risk Free

Interest Rate

 

 

Expected

Lives

 

Grant YearDividend
Yield		Expected
Volatility		Risk Free
Interest Rate		Expected
Lives
202120215%45%2%6
202020205%45%2%6

2019

 

5%

 

 

46%

 

 

2%

 

 

 

6

 

20195%46%2%6

2018

 

5%

 

 

46%

 

 

2%

 

 

 

6

 

2017

 

5%

 

 

45%

 

 

2%

 

 

 

6

 

Information regarding the 1996 Plan for the year ended December 31, 20192021 is as follows:

 

Shares

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Contractual

Life

 

 SharesWeighted
Average
Exercise
Price		Weighted
Average
Contractual
Life

Outstanding, beginning of year

 

 

836,859

 

 

$

49.65

 

 

 

 

 

Outstanding, beginning of year598,926 $60.34 

Granted

 

 

117,000

 

 

 

76.92

 

 

 

 

 

Granted76,500 103.88 

Exercised

 

 

(340,684

)

 

 

43.98

 

 

 

 

 

Exercised(156,491)64.99 

Forfeited

 

 

(4,800

)

 

 

61.23

 

 

 

 

 

Expired

 

 

—

 

 

 

—

 

 

 

 

 

Outstanding, end of year

 

 

608,375

 

 

 

57.97

 

 

 

5.71

 

Outstanding, end of year518,935 $65.36 5.00

Exercisable at end of year

 

 

401,375

 

 

 

50.64

 

 

 

4.31

 

Exercisable at end of year353,035 $56.32 3.48

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Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

At December 31, 20192021 there was $3,173$2,785 of unrecognized compensation cost related to stock options granted which is expected to be recognized over a weighted-average period of 1.771.78 years.

Shares available for future stock option and restricted share grants to employees and directors under existing plans were 2,669,4712,268,181 at December 31, 2019.2021. The aggregate intrinsic value of options outstanding as of December 31, 20192021 was $19,034,$29,032, and the aggregate intrinsic value of options exercisable was $15,502.$22,941. Total intrinsic value of options exercised was $12,433$5,572 for the year ended December 31, 2019.

2021.

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Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
Stock Purchase Plan. Lamar Advertising’s 2009 Employee Stock Purchase Plan (the “2009 ESPP”) was, approved by our shareholders on May 28, 2009.  The number of shares of Class A common stock available under the 2009, ESPP was automatically increased by 85,162 shares on January 1, 2019 pursuant to the automatic increase provisions of the 2009 ESPP. The 2009 ESPP expired by its terms on June 30, 2019. On May 30, 2019, our shareholders approved Lamar Advertising’s 2019 Employee Stock Purchase Plan (the “2019 ESPP”).  The 2019 ESPP became effective upon the expiration of the 2009 ESPP. The number of shares of Class A common stock available for issuance under the 2019 ESPP consistswas automatically increased by 86,490 shares on January 1, 2021 pursuant to the automatic increase provisions of (1) 300,000 shares of Class A common stock and (2) any shares of Class A common stock available for future purchase under the 2009 ESPP at June 30, 2019.2019 ESPP.

The following is a summary of 2009 and 2019 ESPP share activity for the year ended December 31, 2019:

2021:

Shares

Shares
Available for future purchases, January 1, 2019

2020

369,771 

183,244

Additional shares reserved under 2009 ESPP

85,162

Additional shares reserved under 2019 ESPP

86,490 

300,000

Purchases

(114,035)

(129,972

)

Available for future purchases, December 31, 2019

2021

342,226 

438,434

Performance-based compensation.Unrestricted shares of our Class A common stock may be awarded to key officers, employees and employeesdirectors under our 1996 Plan based on certain Company performance measures for fiscal year 2019.2021. The number of shares to be issued, if any, are dependent on the level of achievement of these performance measures as determined by the Company’s Compensation Committee based on our 20192021 results and wereare issued in the first quarterhalf of 2020.2022. The shares subject to these awards generally can range from a minimum of 0% to a maximum of either 100% of the target number of shares or 150% of a target dollar amount depending on the level at which the goals are attained. Based on the Company’s performance measures achieved through December 31, 2019,2021, the Company has accrued $22,838$29,324 as stock-based compensation expense related to these agreements.

(16)Benefit Plans

The Company sponsors a partially self-insured group health insurance program. The Company is obligated to pay all claims under the program, which are in excess of premiums, up to program limits. The Company is also self-insured with respect to its income disability benefits and against casualty losses on advertising structures. Amounts for expected losses, including a provision for losses incurred but not reported, is included in accrued expenses in the accompanying consolidated financial statements. As of December 31, 2019,2021, the Company maintained $8,091$8,164 in letters of credit with a bank to meet requirements of the Company’s worker’s compensation and general liability insurance carrier.

Savings and Profit Sharing Plan

The Company sponsors The Lamar Corporation Savings and Profit Sharing Plan covering eligible employees who have completed one year of service and are at least 21 years of age. The Company has the option to match 50% of employees’ contributions up to 5% of eligible compensation. Employees can contribute up to 100% of compensation. Full vesting on the Company’s matched contributions occurs after three years for contributions made after January 1, 2002. Annually, at the Company’s discretion, an additional profit sharing contribution may be made on behalf of each eligible employee. The Company matched contributions of $5,688, $4,966$5,811, $5,714 and $4,715$5,688 for the years ended December 31, 2021, 2020 and 2019, 2018 and 2017, respectively.

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Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

Deferred Compensation Plan

The Company sponsors a Deferred Compensation Plan for the benefit of certain of its board-elected officers who meet specific age and years of service and other criteria. Officers that have attained the age of 30 and have a minimum of 10 years of service to the Company and satisfy additional eligibility guidelines are eligible for annual contributions to the plan generally ranging from $3 to $8, depending on the employee’s length of service. The Company’s contributions to the plan are maintained in a rabbi trust and, accordingly, the assets and liabilities of the plan are reflected in the balance sheet of the Company in other assets and other liabilities. Upon termination, death or disability, participating employees are eligible to receive an amount equal to the fair market value of the assets in the employee’s deferred compensation account. For the years ended December 31, 2019, 20182021, 2020 and 2017,2019, the Company contributed $1,540, $1,616 and $1,675, $1,585respectively.
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AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and $1,526, respectively.

per share data)

On December 8, 2005, the Company’s Board of Directors approved an amendment to the Lamar Deferred Compensation Plan in order to (1) to comply with the requirements of Section 409A of the Internal Revenue Code (“Section 409A”) applicable to deferred compensation and (2) to reflect changes in the administration of the plan. The Company’s Board of Directors also approved the adoption of a grantor trust pursuant to which amounts may be set aside, but remain subject to claims of the Company’s creditors, for payments of liabilities under the new plan, including amounts contributed under the old plan. The plan was further amended in August 2007 to make certain amendments to reflect Section 409A regulations issued on April 10, 2007. An additional clarifying amendment was made to the plan in December 2013.

(17)Commitment and Contingencies

Off balance sheet arrangements

Our off-balanceoff balance sheet commitments consist of guaranteed minimum payments to local transit municipalities and airport authorities for agreements which entitle us to rent advertising space to customers, in airports and on buses, benches or shelters. TheseAlso included are other contractual agreements no longerthat occur in the ordinary course of business which do not meet the criteria of a lease under ASC 842, Leases, adopted on January 1, 2019 and are a result from our normal course of business.842. The following is a summary of the minimum payments related to these agreements.

2020

 

$

20,621

 

2021

 

$

16,965

 

2022

 

$

16,702

 

2022$35,641 

2023

 

$

15,614

 

2023$28,865 

2024

 

$

14,624

 

2024$24,526 
20252025$20,397 
20262026$8,498 

Thereafter

 

$

1,289

 

Thereafter$20,051 

Legal matters

The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations, or liquidity.

(18)Distribution Restrictions

Lamar Media’s ability to make distributions to Lamar Advertising is restricted under both the terms of the indentures relating to Lamar Media’s outstanding notes and by the terms of itsthe senior credit facility. As of December 31, 20192021 and 2018,2020, Lamar Media was permitted under the terms of its outstanding senior subordinated and senior notes to make transfers to Lamar Advertising in the form of cash dividends, loans or advances in amounts up to $3,389,763$3,921,979 and $3,156,061,$3,625,712, respectively.

As of December 31, 2019, Lamar Media’s2021, the senior credit facility allows itLamar Media to make transfers to Lamar Advertising in any taxable year up to the amount of Lamar Advertising’s taxable income (without any deduction for dividends paid). In addition, as of December 31, 2019,2021, transfers to Lamar Advertising are permitted under Lamar Media’sthe senior credit facility and as defined therein up to the available cumulative credit, as long as no default has occurred and is continuing and, after giving effect to such distributions, (i) the total debt ratio is less than 6.57.0 to 1 and (ii) the secured debt ratio does not exceed 3.54.5 to 1. As of December 31, 2019,2021, the total debt ratio was less than 6.57.0 to 1 and Lamar Media’s secured debt ratio was less than 3.54.5 to 1, and the available cumulative credit was $2,140,441.

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Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

$2,672,459.

(19)Fair Value of Financial Instruments

At December 31, 20192021 and 2018,2020, the Company’s financial instruments included cash and cash equivalents, marketable securities, accounts receivable, investments, accounts payable and borrowings. The fair values of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings and current portion of long-term debt approximated carrying values because of the short-term nature of these instruments. Investments and initial recognition of asset retirement obligations are reported at fair values. Fair values for investments held at cost are not readily available, but are estimated to approximate fair value. The estimated fair value of the Company’s long termlong-term debt (including current maturities) was $3,064,068,$3,059,961, which is greater than both the gross and carrying amount of $3,004,532$3,050,454 as of December 31, 2019.2021. The majority of the fair value is
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LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
determined using observed prices of publicly traded debt (level 1 in the fair value hierarchy) and the remaining is valued based on quoted prices for similar debt (level 2 in the fair value hierarchy).

(20)Information about Geographic Areas

Revenues from external customers attributable to foreign countries totaled $34,517, $35,146$24,354, $22,819 and $33,424$34,517 for the years ended December 31, 2019, 20182021, 2020 and 2017,2019, respectively. Net carrying value of long livedlong-lived assets located in foreign countries totaled $4,549$11,318 and $2,387$8,727 as of December 31, 20192021 and 2018,2020, respectively. All other revenues from external customers and long livedlong-lived assets relate to domestic operations.

(21) New Accounting Pronouncements

Leases

In February 2016, the FASB established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10 and ASU No. 2019-01, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

We adopted the new standard effective January 1, 2019 using a modified retrospective transition approach, applying the new standard to all leases existing at the date of initial application. An entity was permitted to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. Consequently, financial information was not updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019.

The new standard provided a number of optional practical expedients in transition. We elected the ‘package of practical expedients’, which permitted us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We elected the practical expedient pertaining to land easements.  We also elected the short-term lease recognition exemption for certain of our vehicle agreements. This means, for those leases that qualify, we will not recognize ROU assets or lease liabilities.

Upon adoption, we recognized additional operating liabilities of $1.2 billion, with corresponding ROU assets of the same amount based on the present value of the remaining minimum rental payments under current leasing standards for our existing operating leases.

In addition to the increase to the operating lease liabilities and right-of-use assets, Topic 842 also resulted in reclassifying the presentation of prepaid and deferred rent to operating lease right-of-use assets. The Company did 0t have any changes to its opening balance of retained earnings for the adoption of this update.

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Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

Other recently released pronouncements

In January 2017,December 2019, the FASB issued ASU No. 2017-04, 2019-12, Intangibles – Goodwill and otherIncome Taxes (Topic 350)740): Simplifying the testAccounting for goodwill impairment. Income Taxes,The update which simplifies how a company completes its goodwill impairment testthe accounting for income taxes by eliminatingremoving specific exceptions to the two-step process, which requires determining the fair value of assets acquired or liabilities assumedgeneral principles in a business combination. The update requires completing the goodwill impairment test by comparing the difference between the reporting unit’s carrying value and fair value.  Goodwill charges, if any, would be determined by reducing the goodwill balance by the excess of the reporting unit’s carrying value over its fair value.  The updateTopic 740 - Income Taxes. This guidance is effective for annual and interim fiscal periodsyears beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on or after January 1, 2017.  The Company adopted this update beginning with its December 31, 2017 goodwill impairment test.

In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808). The update is to clarify when certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 and when the collaborative arrangement participant is a customer in the context of a unit of account. The update also adds unit-of-account guidance in Topic 808 and requires that a collaborative arrangement participant that is not directly related to sales to a third party, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer. The update is effective for annual and interim fiscal periods beginning after December 15, 2019 with early adoption permitted.  The adoption of this update did not have a material effect on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments (“CECL”). The new guidance modifies how entities measure credit losses on most financial instruments. Topic 326 replaces the current “incurred loss” model with an “expected credit loss” model that requires consideration of a broader range of information to estimate expected credit losses over the lifetime of the asset. The new guidance is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted.2020. The Company adopted this guidance on January 1, 2020 using2021 and the modified retrospective approach through a cumulative-effect adjustment to retained earnings asimpact of the effective date. The adoption didis not have a material impact to the Company's consolidated financial statements.

(22) Quarterly Financial Data (Unaudited)

The tables below represent

In March 2020, the balances for the selected quarterly financial dataFASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the CompanyEffects of Reference Rate Reform on Financial Reporting which provides optional expedients and exceptions to account for each reporting period incontracts, hedging relationships and other transactions that reference the years ended December 31, 2019 and 2018.

 

 

Year 2019 Quarters

 

 

 

March 31

 

 

June 30

 

 

September 30

 

 

December 31

 

Net revenues

 

$

384,457

 

 

$

448,742

 

 

$

457,786

 

 

$

462,659

 

Net revenues less direct advertising expenses

 

$

243,987

 

 

$

302,352

 

 

$

308,940

 

 

$

308,287

 

Net income applicable to common stock

 

$

51,162

 

 

$

118,305

 

 

$

99,618

 

 

$

102,661

 

Net income per common share basic

 

$

0.51

 

 

$

1.18

 

 

$

0.99

 

 

$

1.02

 

Net income per common share diluted

 

$

0.51

 

 

$

1.18

 

 

$

0.99

 

 

$

1.02

 

 

 

Year 2018 Quarters

 

 

 

March 31

 

 

June 30

 

 

September 30

 

 

December 31

 

Net revenues

 

$

361,026

 

 

$

419,800

 

 

$

418,498

 

 

$

427,898

 

Net revenues less direct advertising expenses

 

$

222,733

 

 

$

279,016

 

 

$

277,799

 

 

$

285,826

 

Net income applicable to common stock

 

$

14,961

 

 

$

100,340

 

 

$

93,965

 

 

$

95,601

 

Net income per common share basic

 

$

0.15

 

 

$

1.02

 

 

$

0.95

 

 

$

0.97

 

Net income per common share diluted

 

$

0.15

 

 

$

1.02

 

 

$

0.95

 

 

$

0.96

 

(23) DivestitureLondon Interbank Offered Rate (“LIBOR”) or another reference rate if certain criteria are met. In January 2021, the FASB clarified the scope of Assets

On April 16, 2018 the Company sold its assets in Puerto Rico for $3,000 in cash and non-cash consideration consisting of a note receivable for $9,250 due April 2024. The Company recorded a loss on the sale of $7,809 for the year ended December 31, 2018. There were 0 significant divestitures of assets for the year ended December 31, 2019.

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Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

(24) Subsequent Events

On February 6, 2020, Lamar Media completed a refinancing transaction involving (i)this guidance with the issuance of an additional $1,000,000 in aggregate principal amountASU 2021-01, Reference Rate Reform: Scope. ASU 2020-04 may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. As of new senior notes, consistingDecember 31, 2021, the Company has not modified any contracts as a result of $600,000 in aggregate principal amountreference rate reform and is evaluating the impact this standard may have on its financial statements.

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Table of 3 3/4Contents% Senior Notes due 2028 and $400,000 in aggregate principal amount of 4% Senior Notes due 2030 and (ii) the entry into the Fourth Amended and Restated Credit Agreement, which amended and restated its existing senior credit facility.  The new senior credit facility created under the Fourth Amended and Restated Credit Agreement consists of (i) a new $750,000 senior secured revolving credit facility, (ii) a new $600,000 Term B loan facility (the “new Term B loans”), and (iii) an incremental facility pursuant to which Lamar Media may incur additional term loan tranches or increase its revolving credit facility subject to a pro forma secured debt ratio.  Lamar Media borrowed all $600,000 of the new Term B loans on February 6, 2020.

Proceeds from the refinancing transactions, after the payment of fees and expenses, were used to (1) redeem Lamar Media’s 5 3/8% Senior Notes on February 20, 2020 and (2) repay amounts outstanding under the Third Amended and Restated Senior Credit Agreement, including the existing Term A loans and Term B loans thereunder.


SCHEDULE II

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Valuation and Qualifying Accounts

Years Ended December 31, 2019, 20182021, 2020 and 2017

2019

(In thousands)

 

Balance at

Beginning

of Period

 

 

Charged to

Costs and

Expenses

 

 

Deductions

 

 

Balance at

End of

Period

 

Balance at
Beginning
of Period		Charged to
Costs and
Expenses		DeductionsBalance at
End of
Period
Year ended December 31, 2021Year ended December 31, 2021
Deducted in balance sheet from trade accounts receivable:Deducted in balance sheet from trade accounts receivable:
Allowance for doubtful accountsAllowance for doubtful accounts$14,946 4,527 8,278 $11,195 
Deducted in balance sheet from deferred tax assets:Deducted in balance sheet from deferred tax assets:
Valuation allowanceValuation allowance$20,997 — 1,564 $19,433 
Year ended December 31, 2020Year ended December 31, 2020
Deducted in balance sheet from trade accounts receivable:Deducted in balance sheet from trade accounts receivable:
Allowance for doubtful accountsAllowance for doubtful accounts$13,185 12,729 10,968 $14,946 
Deducted in balance sheet from deferred tax assets:Deducted in balance sheet from deferred tax assets:
Valuation allowanceValuation allowance$22,902 — 1,905 $20,997 

Year ended December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 2019

Deducted in balance sheet from trade accounts receivable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deducted in balance sheet from trade accounts receivable:

Allowance for doubtful accounts

 

$

11,161

 

 

 

11,608

 

 

 

9,584

 

 

$

13,185

 

Allowance for doubtful accounts$11,161 11,608 9,584 $13,185 

Deducted in balance sheet from deferred tax assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deducted in balance sheet from deferred tax assets:

Valuation allowance

 

$

23,934

 

 

 

—

 

 

 

1,032

 

 

$

22,902

 

Valuation allowance$23,934 — 1,032 $22,902 

Year ended December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deducted in balance sheet from trade accounts receivable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for doubtful accounts

 

$

10,055

 

 

 

8,472

 

 

 

7,366

 

 

$

11,161

 

Deducted in balance sheet from deferred tax assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation allowance

 

$

20,120

 

 

 

3,814

 

 

 

—

 

 

$

23,934

 

Year ended December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deducted in balance sheet from trade accounts receivable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for doubtful accounts

 

$

9,356

 

 

 

6,762

 

 

 

6,063

 

 

$

10,055

 

Deducted in balance sheet from deferred tax assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation allowance

 

$

16,167

 

 

 

3,953

 

 

 

—

 

 

$

20,120

 

 



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SCHEDULE III

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Schedule of Real Estate and Accumulated Depreciation

December 31, 2019, 20182021, 2020 and 2017

2019

(In thousands)

Description(1)

 

Encumbrances

 

 

Initial Cost(2)

 

 

Gross Carrying

Amount(3)

 

 

Accumulated

Depreciation

 

 

Construction

Date

 

Acquisition

Date

 

Useful Lives

391,456 Displays

 

 

—

 

 

 

—

 

 

$

3,333,590

 

 

$

(2,166,579

)

 

Various

 

Various

 

5 to 20 years

(1)

NaN single asset exceeded 5% of the total gross carrying amount at December 31, 2019

(2)

This information is omitted, as it would be impracticable to compile such information on a site-by-site basis

Description(1)
Encumbrances
Initial Cost(2)
Gross Carrying
Amount(3)
Accumulated
Depreciation		Construction
Date		Acquisition
Date		Useful Lives
354,053 Displays— — $3,439,618 $(2,287,590)VariousVarious5 to 20 years

(3)(1)No single asset exceeded 5% of the total gross carrying amount at December 31, 2021

Includes sites under construction

(2)This information is omitted, as it would be impracticable to compile such information on a site-by-site basis
(3)Includes sites under construction
The following table summarizes activity for the Company’s real estate assets, which consists of advertising displays and the related accumulated depreciation.

 

December 31,

 

 

December 31,

 

 

December 31,

 

 

2019

 

 

2018

 

 

2017

 

December 31, 2021December 31, 2020December 31, 2019

Gross real estate assets:

 

 

 

 

 

 

 

 

 

 

 

 

Gross real estate assets:

Balance at the beginning of the year

 

$

3,201,434

 

 

$

3,074,046

 

 

$

2,998,540

 

Balance at the beginning of the year$3,293,778 $3,333,590 $3,201,434 

Capital expenditures on new advertising displays(4)

 

 

59,604

 

 

 

54,151

 

 

 

49,946

 

Capital expenditures on new advertising displays(4)
45,427 21,598 59,604 

Capital expenditures on improvements/redevelopments of existing advertising displays

 

 

25,025

 

 

 

12,781

 

 

 

6,265

 

Capital expenditures on improvements/redevelopments of existing advertising displays21,287 13,021 25,025 

Capital expenditures other recurring(5)

 

 

36,354

 

 

 

34,758

 

 

 

32,523

 

88,697 12,631 36,354 

Land acquisitions(6)

 

 

22,965

 

 

 

15,368

 

 

 

14,904

 

Land acquisitions(6)
17,151 8,980 22,965 

Acquisition of advertising displays(5) (6)

 

 

23,589

 

 

 

82,617

 

 

 

32,109

 

Acquisition of advertising displays(7)
Acquisition of advertising displays(7)
17,662 4,446 23,589 

Assets sold or written-off

 

 

(35,320

)

 

 

(70,494

)

 

 

(61,306

)

Assets sold or written-off(44,466)(100,906)(35,320)

Foreign exchange

 

 

(61

)

 

 

(1,793

)

 

 

1,065

 

Foreign exchange82 418 (61)

Balance at the end of the year

 

$

3,333,590

 

 

$

3,201,434

 

 

$

3,074,046

 

Balance at the end of the year$3,439,618 $3,293,778 $3,333,590 

Accumulated depreciation:

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated depreciation:

Balance at the beginning of the year

 

$

2,082,335

 

 

$

2,025,251

 

 

$

1,973,958

 

Balance at the beginning of the year$2,192,700 $2,166,579 $2,082,335 

Depreciation

 

 

111,531

 

 

 

106,700

 

 

 

102,494

 

Depreciation126,805 111,049 111,531 

Assets sold or written-off

 

 

(27,890

)

 

 

(48,488

)

 

 

(51,976

)

Assets sold or written-off(31,971)(85,267)(27,890)

Foreign exchange

 

 

603

 

 

 

(1,128

)

 

 

775

 

Foreign exchange56 339 603 

Balance at the end of the year

 

$

2,166,579

 

 

$

2,082,335

 

 

$

2,025,251

 

Balance at the end of the year$2,287,590 $2,192,700 $2,166,579 

(4)

Includes non-cash amounts of $554, $446 and $921  at December 31, 2019, 2018 and 2017, respectively

(4)Includes non-cash amounts of $1,541, $621 and $554  at December 31, 2021, 2020 and 2019, respectively
(5)Includes non-cash amounts of $48,848 at December 31, 2021 related to the revision in cost estimate included in the calculation of asset retirement obligations
(6)Includes preliminary allocation of assets acquired during 2021
(7)Includes non-cash amounts of $3,843 and $1,928 at December 31, 2021 and 2019, respectively

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LAMAR MEDIA CORP.
AND SUBSIDIARIES

(5)

Includes non-cash amounts of $1,928, $7,199 and $3,043 at December 31, 2019, 2018 and 2017, respectively

(6)

Includes preliminary allocation of assets acquired from Fairway at December 31, 2018


LAMAR MEDIA CORP.

AND SUBSIDIARIES

Management’s Report on Internal Control Over Financial Reporting

83

81

84

82

85

83

86

85

Consolidated Statements of Income and Comprehensive Income for the years ended December  31, 2019, 20182021, 2020 and 20172019

87

86

88

87

89

88

90-101

89

102

100

103

101



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Management’s Report on Internal Control Over Financial Reporting

The management of Lamar Media Corp. is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act.

Lamar Media Corp.’s management assessed the effectiveness of Lamar Media Corp.’s internal control over financial reporting as of December 31, 2019.2021. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on this assessment, Lamar Media Corp.’s management has concluded that, as of December 31, 2019,2021, Lamar Media Corp.’s internal control over financial reporting is effective based on those criteria. The effectiveness of Lamar Media Corp.’s internal control over financial reporting as of December 31, 20192021 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report, which is included in Item 8 to this Annual Report.


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Report of Independent Registered Public Accounting Firm

To the StockholdersStockholder and Board of Directors

Lamar Media Corp.:

Opinion on Internal Control Over Financial Reporting


We have audited Lamar Media Corp. and subsidiaries’subsidiaries' (the Company) internal control over financial reporting as of December 31, 2019,2021, based on criteria established inInternal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019,2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.


We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 20192021 and 2018,2020, the related consolidated statements of income and comprehensive income, stockholder’s equity, and cash flows for each of the years in the three-year period ended December 31, 2019,2021, and the related notes and financial statement schedules II to III (collectively, the consolidated financial statements), and our report dated February 20, 202025, 2022 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion


The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’sManagement's Report on Internal Control Over Financial Reporting.Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting


A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

KPMG LLP

Baton Rouge, Louisiana

February 20, 2020

25, 2022

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Report of Independent Registered Public Accounting Firm

To the StockholdersStockholder and Board of Directors

Lamar Media Corp.:

Opinion on the ConsolidatedFinancial Statements


We have audited the accompanying consolidated balance sheets of Lamar Media Corp. and subsidiaries (the Company) as of December 31, 20192021 and 2018,2020, the related consolidated statements of income and comprehensive income, stockholder’s equity, and cash flows for each of the years in the three‑yearthree-year period ended December 31, 2019,2021, and the related notes and financial statement schedules II to III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20192021 and 2018,2020, and the results of its operations and its cash flows for each of the years in the three‑yearthree-year period ended December 31, 2019,2021, in conformity with U.S. generally accepted accounting principles.


We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019,2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 20, 202025, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, which refers to Note 2 to the consolidated financial statements of Lamar Advertising Company, the Company changed its method of accounting for revenue recognition as of January 1, 2018, due to the adoption of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers.

As discussed in Note 1 to the consolidated financial statements, which refers to Note 7 to the consolidated financial statements of Lamar Advertising Company, the Company changed its method of accounting for leases as of January 1, 2019, due to the adoption of Accounting Standards Codification Topic 842, Leases.

Basis for Opinion


These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Assessment of the accounting lease term for the portfolio of billboard land leases

As discussed in Note 1 to the consolidated financial statements, which refers to Note 7 to the consolidated financial statements of Lamar Advertising Company, a lessee determines the lease term at the commencement date by identifying the non-cancellable period of the lease and then adding any periods for which it is reasonably certain to exercise a renewal option (or not to exercise a termination option). The Company has over 69,000 billboard land leases for which they determined the lease term using a portfolio approach, in accordance with which the negotiated stated initial lease term for each billboard land lease was concluded to be the lease term under Accounting Standards Codification Topic 842, Leases (ASC 842).

We identified the assessment of the lease term for the portfolio of billboard land leases, which affects the discount rate for the lease as well as the measurement of the lease liability and right of use asset, as a critical audit matter. In the Company’s billboard land leases, the Company typically has both unilateral renewal and termination options.
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Determining the lease term involved a high degree of subjectivity as to whether the lease term should or should not include renewal periods (including periods after an optional termination date), the evaluation of which required subjective auditor judgment.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s billboard land lease process, including controls over the qualifications and experience of individuals negotiating the stated initial lease term, reconciliation of inputs into the system, approval of billboard land lease contracts, and annual evaluation of the renewals and terminations exercised by the Company during the year. We evaluated the competence, capabilities, and objectivity of the Company’s real estate team that negotiates the lease terms and conditions, and whether the team considers economic factors that are consistent with those enumerated in ASC 842 when negotiating the stated initial lease term and associated renewal and termination options. We inspected the Company’s assessment and conclusion about using the portfolio approach for its billboard land leases. We tested a sample of the Company’s billboard land lease population and obtained underlying documentation to evaluate whether the leases entered into are similar in terms of the lease agreement creation process, purpose for the lease (i.e. to host a Company billboard), and lease term considerations. We assessed the impact of billboard land leases with early terminations and renewals beyond the stated initial term to evaluate the Company’s assertion that use of the stated initial lease term as the lease term for its billboard land leases on a portfolio basis was appropriate.

/s/ KPMG LLP

KPMG LLP

We have served as the Company’s auditor since 1992.

Baton Rouge, Louisiana

February 20, 2020

25, 2022

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LAMAR MEDIA CORP.

AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 20192021 and 2018

2020

(In thousands, except share and per share data)

 

2019

 

 

2018

 

20212020

ASSETS

 

 

 

 

 

 

 

 

ASSETS

Current assets:

 

 

 

 

 

 

 

 

Current assets:

Cash and cash equivalents

 

$

25,688

 

 

$

20,994

 

Cash and cash equivalents$99,288 $121,069 

Receivables, net of allowance for doubtful accounts of $13,185 and $11,161 as of

2019 and 2018, respectively

 

 

254,930

 

 

 

235,576

 

Prepaid lease and contract expenses

 

 

—

 

 

 

80,684

 

Receivables, net of allowance for doubtful accounts of $11,195 and $14,946 as of 2021 and 2020, respectivelyReceivables, net of allowance for doubtful accounts of $11,195 and $14,946 as of 2021 and 2020, respectively269,917 240,854 

Other current assets

 

 

29,051

 

 

 

25,915

 

Other current assets18,902 18,147 

Total current assets

 

 

309,669

 

 

 

363,169

 

Total current assets388,107 380,070 

Property, plant and equipment

 

 

3,660,311

 

 

 

3,525,725

 

Property, plant and equipment3,782,288 3,615,505 

Less accumulated depreciation and amortization

 

 

(2,311,196

)

 

 

(2,230,677

)

Less accumulated depreciation and amortization(2,445,014)(2,333,656)

Net property, plant and equipment

 

 

1,349,115

 

 

 

1,295,048

 

Net property, plant and equipment1,337,274 1,281,849 

Operating lease right of use assets

 

 

1,320,779

 

 

 

—

 

Operating lease right of use assets1,224,672 1,222,013 
Financing lease right of use assetsFinancing lease right of use assets16,890 19,670 

Goodwill (note 3)

 

 

1,902,123

 

 

 

1,909,235

 

Goodwill (note 3)1,926,274 1,902,177 

Intangible assets, net (note 3)

 

 

991,776

 

 

 

914,984

 

Intangible assets, net (note 3)1,044,709 913,978 

Other assets

 

 

50,959

 

 

 

45,450

 

Other assets93,105 54,950 

Total assets

 

$

5,924,421

 

 

$

4,527,886

 

Total assets$6,031,031 $5,774,707 

LIABILITIES AND STOCKHOLDER’S EQUITY

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDER’S EQUITY

Current liabilities:

 

 

 

 

 

 

 

 

Current liabilities:

Trade accounts payable

 

$

14,974

 

 

$

21,246

 

Trade accounts payable$16,429 $12,017 

Current maturities of long-term debt, net of deferred financing costs of $6,081 and

�� $5,245 in 2019 and 2018, respectively (note 5)

 

 

226,514

 

 

 

204,120

 

Current maturities of long-term debt, net of deferred financing costs of $585 and $445 in 2021 and 2020, respectively (note 5)Current maturities of long-term debt, net of deferred financing costs of $585 and $445 in 2021 and 2020, respectively (note 5)174,778 122,434 

Current operating lease liabilities

 

 

196,841

 

 

 

—

 

Current operating lease liabilities198,286 195,439 
Current financing lease liabilitiesCurrent financing lease liabilities1,331 1,331 

Accrued expenses (note 4)

 

 

101,266

 

 

 

117,300

 

Accrued expenses (note 4)127,318 98,478 

Deferred income

 

 

127,254

 

 

 

107,202

 

Deferred income137,103 111,363 

Total current liabilities

 

 

666,849

 

 

 

449,868

 

Total current liabilities655,245 541,062 

Long-term debt, net of deferred financing costs of $18,333 and $20,619 in 2019 and

2018, respectively (note 5)

 

 

2,753,604

 

 

 

2,684,568

 

Long-term debt, net of deferred financing costs of $36,274 and $39,672 in 2021 and 2020, respectively (note 5)Long-term debt, net of deferred financing costs of $36,274 and $39,672 in 2021 and 2020, respectively (note 5)2,838,817 2,764,082 

Operating lease liabilities

 

 

1,068,181

 

 

 

—

 

Operating lease liabilities995,356 993,776 
Financing lease liabilitiesFinancing lease liabilities17,277 18,608 

Deferred income tax liabilities

 

 

5,713

 

 

 

20,734

 

Deferred income tax liabilities6,416 4,854 

Asset retirement obligation

 

 

226,137

 

 

 

222,989

 

Asset retirement obligation269,367 222,876 

Other liabilities

 

 

34,406

 

 

 

29,531

 

Other liabilities40,207 36,605 

Total liabilities

 

 

4,754,890

 

 

 

3,407,690

 

Total liabilities4,822,685 4,581,863 

Stockholder’s equity:

 

 

 

 

 

 

 

 

Stockholder’s equity:

Common stock, $.01 par value, authorized 3,000 shares; 100 shares issued and

outstanding at 2019 and 2018

 

 

—

 

 

 

—

 

Common stock, $0.01 par value, authorized 3,000 shares; 100 shares issued and outstanding at 2021 and 2020Common stock, $0.01 par value, authorized 3,000 shares; 100 shares issued and outstanding at 2021 and 2020— — 

Additional paid-in-capital

 

 

2,992,729

 

 

 

2,922,907

 

Additional paid-in-capital3,071,905 3,034,357 

Accumulated comprehensive income

 

 

685

 

 

 

12

 

Accumulated comprehensive income855 934 

Accumulated deficit

 

 

(1,823,883

)

 

 

(1,802,723

)

Accumulated deficit(1,864,414)(1,842,447)

Stockholder’s equity

 

 

1,169,531

 

 

 

1,120,196

 

Stockholder’s equity1,208,346 1,192,844 

Total liabilities and stockholder’s equity

 

$

5,924,421

 

 

$

4,527,886

 

Total liabilities and stockholder’s equity$6,031,031 $5,774,707 

See accompanying notes to consolidated financial statements.


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Table of Contents
LAMAR MEDIA CORP.

AND SUBSIDIARIES

Consolidated Statements of Income and Comprehensive Income

Years Ended December 31, 2019, 20182021, 2020 and 2017

2019

(In thousands)

 

2019

 

 

2018

 

 

2017

 

202120202019

Statements of Income

 

 

 

 

 

 

 

 

 

 

 

 

Statements of Income

Net revenues

 

$

1,753,644

 

 

$

1,627,222

 

 

$

1,541,260

 

Net revenues$1,787,401 $1,568,856 $1,753,644 

Operating expenses (income):

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses (income):

Direct advertising expenses (exclusive of depreciation and amortization)

 

 

590,078

 

 

 

561,848

 

 

 

540,880

 

Direct advertising expenses (exclusive of depreciation and amortization)576,507 557,661 590,078 

General and administrative expenses (exclusive of depreciation and

amortization)

 

 

318,380

 

 

 

289,428

 

 

 

276,229

 

General and administrative expenses (exclusive of depreciation and amortization)326,636 287,874 318,380 

Corporate expenses (exclusive of depreciation and amortization)

 

 

84,229

 

 

 

82,497

 

 

 

61,962

 

Corporate expenses (exclusive of depreciation and amortization)93,074 70,457 84,229 

Depreciation and amortization

 

 

250,028

 

 

 

225,261

 

 

 

211,104

 

Depreciation and amortization271,294 251,296 250,028 

(Gain) loss on disposition of assets

 

 

(7,241

)

 

 

7,233

 

 

 

(4,664

)

Gain on disposition of assetsGain on disposition of assets(2,115)(9,026)(7,241)

 

 

1,235,474

 

 

 

1,166,267

 

 

 

1,085,511

 

1,265,396 1,158,262 1,235,474 

Operating income

 

 

518,170

 

 

 

460,955

 

 

 

455,749

 

Operating income522,005 410,594 518,170 

Other expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

Other expense (income):

Loss on extinguishment of debt

 

 

—

 

 

 

15,429

 

 

 

71

 

Loss on extinguishment of debt21,604 25,235 — 

Interest income

 

 

(764

)

 

 

(534

)

 

 

(6

)

Interest income(763)(797)(764)

Interest expense

 

 

150,616

 

 

 

129,732

 

 

 

128,396

 

Interest expense106,384 137,623 150,616 
Equity in earnings of investeeEquity in earnings of investee(3,384)— — 

 

 

149,852

 

 

 

144,627

 

 

 

128,461

 

123,841 162,061 149,852 

Income before income tax expense

 

 

368,318

 

 

 

316,328

 

 

 

327,288

 

Income tax (benefit) expense

 

 

(4,222

)

 

 

10,697

 

 

 

9,230

 

Income before income tax expense (benefit)Income before income tax expense (benefit)398,164 248,533 368,318 
Income tax expense (benefit)Income tax expense (benefit)9,256 4,660 (4,222)

Net income

 

$

372,540

 

 

$

305,631

 

 

$

318,058

 

Net income$388,908 $243,873 $372,540 

Statements of Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

Statements of Comprehensive Income

Net income

 

$

372,540

 

 

$

305,631

 

 

$

318,058

 

Net income$388,908 $243,873 $372,540 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive (loss) income, net of taxOther comprehensive (loss) income, net of tax

Foreign currency translation adjustments

 

 

673

 

 

 

(1,290

)

 

 

1,926

 

Foreign currency translation adjustments(79)249 673 

Comprehensive income

 

$

373,213

 

 

$

304,341

 

 

$

319,984

 

Comprehensive income$388,829 $244,122 $373,213 

See accompanying notes to consolidated financial statements.


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LAMAR MEDIA CORP.

AND SUBSIDIARIES

Consolidated Statements of Stockholder’s Equity

Years Ended December 31, 2019, 20182021, 2020 and 2017

2019

(In thousands, except share and per share data)

 

Common

Stock

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Comprehensive

Income

(Loss)

 

 

Accumulated

Deficit

 

 

Total

 

Balance, December 31, 2016

 

$

—

 

 

 

2,783,753

 

 

 

(624

)

 

 

(1,726,743

)

 

 

1,056,386

 

Contribution from parent

 

 

—

 

 

 

49,187

 

 

 

—

 

 

 

—

 

 

 

49,187

 

Foreign currency translations

 

 

—

 

 

 

—

 

 

 

1,926

 

 

 

—

 

 

 

1,926

 

Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

318,058

 

 

 

318,058

 

Dividend to parent

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(334,459

)

 

 

(334,459

)

Balance, December 31, 2017

 

$

—

 

 

 

2,832,940

 

 

 

1,302

 

 

 

(1,743,144

)

 

 

1,091,098

 

Contribution from parent

 

 

—

 

 

 

89,967

 

 

 

—

 

 

 

—

 

 

 

89,967

 

Foreign currency translations

 

 

—

 

 

 

—

 

 

 

(1,290

)

 

 

—

 

 

 

(1,290

)

Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

305,631

 

 

 

305,631

 

Dividend to parent

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(365,210

)

 

 

(365,210

)

Common
Stock		Additional
Paid-In
Capital		Accumulated
Comprehensive
Income (Loss)		Accumulated
Deficit		Total

Balance, December 31, 2018

 

$

—

 

 

 

2,922,907

 

 

 

12

 

 

 

(1,802,723

)

 

 

1,120,196

 

Balance, December 31, 2018$— 2,922,907 12 (1,802,723)1,120,196 

Contribution from parent

 

 

—

 

 

 

69,822

 

 

 

—

 

 

 

—

 

 

 

69,822

 

Contribution from parent— 69,822 — — 69,822 

Foreign currency translations

 

 

—

 

 

 

—

 

 

 

673

 

 

 

—

 

 

 

673

 

Foreign currency translations— — 673 — 673 

Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

372,540

 

 

 

372,540

 

Net income— — — 372,540 372,540 

Dividend to parent

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(393,700

)

 

 

(393,700

)

Dividend to parent— — — (393,700)(393,700)

Balance, December 31, 2019

 

$

—

 

 

 

2,992,729

 

 

 

685

 

 

 

(1,823,883

)

 

 

1,169,531

 

Balance, December 31, 2019$— 2,992,729 685 (1,823,883)1,169,531 
Contribution from parentContribution from parent— 41,628 — — 41,628 
Foreign currency translationsForeign currency translations— — 249 — 249 
Net incomeNet income— — — 243,873 243,873 
Dividend to parentDividend to parent— — — (262,437)(262,437)
Balance, December 31, 2020Balance, December 31, 2020$— 3,034,357 934 (1,842,447)1,192,844 
Contribution from parentContribution from parent— 37,548 — — 37,548 
Foreign currency translationsForeign currency translations— — (79)— (79)
Net incomeNet income— — — 388,908 388,908 
Dividend to parentDividend to parent— — — (410,875)(410,875)
Balance, December 31, 2021Balance, December 31, 2021$— 3,071,905 855 (1,864,414)1,208,346 

See accompanying notes to consolidated financial statements.


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Table of Contents
LAMAR MEDIA CORP.

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years Ended December 31, 2019, 20182021, 2020 and 2017

2019

(In thousands)

 

2019

 

 

2018

 

 

2017

 

202120202019

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

Net income

 

$

372,540

 

 

$

305,631

 

 

$

318,058

 

Net income$388,908 $243,873 $372,540 

Adjustments to reconcile net income to net cash provided by operating

activities:

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

 

 

250,028

 

 

 

225,261

 

 

 

211,104

 

Depreciation and amortization271,294 251,296 250,028 

Non-cash compensation

 

 

29,647

 

 

 

29,443

 

 

 

9,599

 

Non-cash compensation37,368 18,772 29,647 

Amortization included in interest expense

 

 

5,365

 

 

 

4,920

 

 

 

5,120

 

Amortization included in interest expense5,877 5,909 5,365 

(Gain) loss on disposition of assets and investments

 

 

(7,241

)

 

 

7,233

 

 

 

(4,664

)

Gain on disposition of assets and investmentsGain on disposition of assets and investments(2,115)(9,026)(7,241)

Loss on extinguishment of debt

 

 

—

 

 

 

15,429

 

 

 

71

 

Loss on extinguishment of debt21,604 25,235 — 

Deferred income tax (benefit) expense

 

 

(14,130

)

 

 

1,538

 

 

 

804

 

Equity in earnings of investeeEquity in earnings of investee(3,384)— — 
Deferred income tax expense (benefit)Deferred income tax expense (benefit)1,574 (797)(14,130)

Provision for doubtful accounts

 

 

10,608

 

 

 

7,985

 

 

 

6,762

 

Provision for doubtful accounts4,527 12,729 10,608 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

(Increase) decrease in:

 

 

 

 

 

 

 

 

 

 

 

 

(Increase) decrease in:

Receivables

 

 

(28,357

)

 

 

(33,292

)

 

 

(17,524

)

Receivables(24,684)1,287 (28,357)

Prepaid expenses

 

 

275

 

 

 

(5,433

)

 

 

309

 

Prepaid expenses(5,493)591 275 

Other assets

 

 

(11,257

)

 

 

3,270

 

 

 

(8,410

)

Other assets5,030 7,629 (11,257)

Increase (decrease) in:

 

 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in:

Trade accounts payable

 

 

700

 

 

 

1,366

 

 

 

309

 

Trade accounts payable1,308 841 700 

Accrued expenses

 

 

(1,597

)

 

 

(6,292

)

 

 

(9,416

)

Accrued expenses9,553 10,052 (1,597)

Operating lease liabilities

 

 

9,102

 

 

 

—

 

 

 

—

 

Operating lease liabilities3,819 24,549 9,102 

Other liabilities

 

 

(10,743

)

 

 

(19,974

)

 

 

(27,882

)

Other liabilities360 (53,911)(10,743)

Cash flows provided by operating activities

 

 

604,940

 

 

 

537,085

 

 

 

484,240

 

Cash flows provided by operating activities715,546 539,029 604,940 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

Capital expenditures

 

 

(140,956

)

 

 

(117,638

)

 

 

(109,329

)

Capital expenditures(126,090)(62,272)(140,956)

Acquisitions

 

 

(226,278

)

 

 

(477,389

)

 

 

(297,305

)

Acquisitions(312,257)(45,584)(226,278)

(Increase) decrease in notes receivable

 

 

(448

)

 

 

9

 

 

 

515

 

Payment for investments in equity securitiesPayment for investments in equity securities(30,000)— — 
Decrease (increase) in notes receivableDecrease (increase) in notes receivable107 — (448)

Proceeds received from property insurance claims

 

 

210

 

 

 

4,222

 

 

 

—

 

Proceeds received from property insurance claims— — 210 

Proceeds from disposition of assets and investments

 

 

5,438

 

 

 

6,648

 

 

 

6,053

 

Proceeds from disposition of assets and investments6,480 10,968 5,438 

Cash flows used in investing activities

 

 

(362,034

)

 

 

(584,148

)

 

 

(400,066

)

Cash flows used in investing activities(461,760)(96,888)(362,034)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

Proceeds received from revolving credit facility

 

 

495,000

 

 

 

563,000

 

 

 

495,000

 

Proceeds received from revolving credit facility200,000 725,000 495,000 

Payments on revolving credit facility

 

 

(625,000

)

 

 

(481,000

)

 

 

(477,000

)

Payments on revolving credit facility(25,000)(875,000)(625,000)

Principal payments on long-term debt

 

 

(34,471

)

 

 

(27,328

)

 

 

(16,993

)

Principal payments on long-term debt(378)(9,112)(34,471)
Borrowings on long term debtBorrowings on long term debt— 8,750 — 
Principal payments on financing leasesPrincipal payments on financing leases(1,331)— — 

Proceeds received from senior credit facility term loans

 

 

—

 

 

 

599,250

 

 

 

450,000

 

Proceeds received from senior credit facility term loans— 598,500 — 

Proceeds received from accounts receivable securitization program

 

 

9,000

 

 

 

175,000

 

 

 

—

 

Proceeds received from accounts receivable securitization program180,000 122,500 9,000 

Payments on accounts receivable securitization program

 

 

(9,000

)

 

 

—

 

 

 

—

 

Payments on accounts receivable securitization program(127,500)(175,000)(9,000)

Debt issuance costs

 

 

(4,463

)

 

 

(7,616

)

 

 

(4,941

)

Debt issuance costs(8,823)(32,950)(4,463)

Proceeds received from note offering

 

 

255,000

 

 

 

—

 

 

 

—

 

Proceeds received from note offering550,000 1,549,250 255,000 

Redemption on senior subordinated notes

 

 

—

 

 

 

(509,790

)

 

 

—

 

Redemption of senior notes and senior subordinated notesRedemption of senior notes and senior subordinated notes(668,688)(1,058,596)— 

Payment on senior credit facility term loans

 

 

—

 

 

 

—

 

 

 

(247,500

)

Payment on senior credit facility term loans— (978,097)— 

Distributions to non-controlling interest

 

 

(621

)

 

 

(541

)

 

 

(693

)

Distributions to non-controlling interest(601)(1,509)(621)

Dividends to parent

 

 

(393,700

)

 

 

(446,744

)

 

 

(252,925

)

Dividends to parent(410,875)(262,437)(393,700)

Contributions from parent

 

 

69,822

 

 

 

89,967

 

 

 

49,187

 

Contributions from parent37,548 41,628 69,822 

Cash flows used in financing activities

 

 

(238,433

)

 

 

(45,802

)

 

 

(5,865

)

Cash flows used in financing activities(275,648)(347,073)(238,433)

Effect of exchange rate changes in cash and cash equivalents

 

 

221

 

 

 

(1,112

)

 

 

1,632

 

Effect of exchange rate changes in cash and cash equivalents81 313 221 

Net increase (decrease) in cash and cash equivalents

 

 

4,694

 

 

 

(93,977

)

 

 

79,941

 

Net (decrease) increase in cash and cash equivalentsNet (decrease) increase in cash and cash equivalents(21,781)95,381 4,694 

Cash and cash equivalents at beginning of period

 

 

20,994

 

 

 

114,971

 

 

 

35,030

 

Cash and cash equivalents at beginning of period121,069 25,688 20,994 

Cash and cash equivalents at end of period

 

$

25,688

 

 

$

20,994

 

 

$

114,971

 

Cash and cash equivalents at end of period$99,288 $121,069 $25,688 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

Cash paid for interest

 

$

139,585

 

 

$

136,711

 

 

$

123,213

 

Cash paid for interest$112,080 $130,864 $139,585 

Cash paid for state and federal income taxes

 

$

14,449

 

 

$

8,563

 

 

$

12,640

 

Cash paid for state and federal income taxes$8,388 $4,033 $14,449 

See accompanying notes to consolidated financial statements.


88

Table of Contents
LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)


(1)Description of the Business and Significant Accounting Policies

(a)Nature of Business

Lamar Media Corp. (“Lamar Media”) is a wholly owned subsidiary of Lamar Advertising Company. Lamar Media is engaged in the outdoor advertising business operating approximately 157,800153,800 outdoor advertising displays in 45 states and Canada. Lamar Media’s operating strategy is to be the leading provider of outdoor advertising services in the markets it serves.

In addition, Lamar Media operates a logo sign business in 2423 states throughout the United States as well as the province of Ontario, Canada. Logo signs are erected pursuant to state-awarded service contracts on public rights-of-way near highway exits and deliver brand name information on available gas, food, lodging and camping services. Included in the Company’s logo sign business are tourism signing contracts. The Company provides transit advertising in airport terminals, on bus shelters, benches and buses in the markets it serves.

Certain footnotes are not provided for the accompanying financial statements as the information in notes 2, 3, 5, 7, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 23 and 2421 and portions of note 1 to the consolidated financial statements of Lamar Advertising Company included elsewhere in this filing are substantially equivalent to that required for the consolidated financial statements of Lamar Media Corp. Earnings per share data is not provided for the operating results of Lamar Media Corp. as it is a wholly owned subsidiary of Lamar Advertising Company.

(b)Principles of Consolidation

The accompanying consolidated financial statements include Lamar Media, its wholly owned subsidiaries, The Lamar Company, L.L.C., Lamar Central Outdoor, LLC, Lamar TRS Holdings, LLC, Lamar Advertising Southwest, Inc., Interstate Logos, L.L.C., Lamar Obie Company, LLC, Lamar Canadian Outdoor Company, Lamar Advertising of Puerto Rico, Inc., Lamar QRS Receivables, LLC, Fairway Media Group, LCC, Ashby Street Outdoor Holdings, LLC and their majority-owned subsidiaries. All inter-company transactions and balances have been eliminated in consolidation.

(2)Non-cash Financing and Investing Activities

There were 0 significant non-cash investing activities for Lamar Media during the years ended December 31, 2019 and 2018. For

During the year ended December 31, 2017,2020, the Company had non-cash investingfinancing activities of $2,879 related to acquisitionsfinancing lease liabilities of outdoor advertising assets.$19,891. There were 0no significant non-cash financing activities during the years ended December 31, 20192021 and 2018. During the year ended December 31, 2017, Lamar Media had non-cash financing activities related to dividends to Lamar Advertising Company of $81,534 which were paid in January 2018.

2019.

(3)Goodwill and Other Intangible Assets

The following is a summary of intangible assets at December 31, 20192021 and 2018:

2020:

 

Estimated

 

 

2019

 

 

2018

 

Estimated Life (Years)20212020

 

Life

(Years)

 

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

Gross Carrying AmountAccumulated AmortizationGross Carrying AmountAccumulated Amortization

Amortizable Intangible Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortizable Intangible Assets:

Customer lists and contracts

 

7—10

 

 

$

641,714

 

 

$

539,405

 

 

$

610,376

 

 

$

514,928

 

Customer lists and contracts7—10$676,846 $587,056 $645,739 $563,135 

Non-competition agreement

 

3—15

 

 

 

66,014

 

 

 

64,379

 

 

 

65,771

 

 

 

64,119

 

Non-competition agreement3—1569,276 64,942 66,156 64,647 

Site locations

 

 

15

 

 

 

2,384,520

 

 

 

1,509,335

 

 

 

2,228,767

 

 

 

1,422,794

 

Site locations152,619,531 1,680,333 2,412,745 1,593,805 

Other

 

2—15

 

 

 

49,318

 

 

 

36,671

 

 

 

45,446

 

 

 

33,535

 

Other2—1550,716 39,329 49,472 38,547 

 

 

 

 

 

$

3,141,566

 

 

$

2,149,790

 

 

$

2,950,360

 

 

$

2,035,376

 

$3,416,369 $2,371,660 $3,174,112 $2,260,134 

Unamortizable Intangible Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unamortizable Intangible Assets:

Goodwill

 

 

 

 

 

$

2,154,790

 

 

$

252,667

 

 

$

2,161,902

 

 

$

252,667

 

Goodwill$2,178,941 $252,667 $2,154,844 $252,667 

90

89

Table of Contents
LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

The changes in the gross carrying amount of goodwill for the years ended December 31, 20192021 and 20182020 are as follows:

Balance as of December 31, 2017

 

$

1,982,970

 

Goodwill acquired during the year

 

 

182,117

 

Purchase price adjustments and other

 

 

(3,185

)

Impairment losses

 

 

—

 

Balance as of December 31, 2018

 

$

2,161,902

 

Goodwill acquired during the year

 

 

29,360

 

Purchase price adjustments and other

 

 

(36,472

)

Impairment losses

 

 

—

 

Balance as of December 31, 2019

 

$

2,154,790

 

Balance as of December 31, 2019$2,154,790 
Purchase price adjustments and other54 
Balance as of December 31, 20202,154,844 
Goodwill acquired during the year24,089 
Purchase price adjustments and other8 
Balance as of December 31, 2021$2,178,941 

(4)Accrued Expenses

The following is a summary of accrued expenses at December 31, 20192021 and 2018:

2020:

 

2019

 

 

2018

 

20212020

Payroll

 

$

20,223

 

 

$

20,667

 

Payroll$36,531 $17,034 

Interest

 

 

32,734

 

 

 

27,067

 

Interest22,009 33,583 

Accrued variable lease and contract expense

 

 

12,559

 

 

 

36,158

 

Accrued variable lease and contract expense21,487 19,274 

Stock-based compensation

 

 

23,297

 

 

 

19,211

 

Non-cash compensationNon-cash compensation30,450 11,589 

Other

 

 

12,453

 

 

 

14,197

 

Other16,841 16,998 

 

$

101,266

 

 

$

117,300

 

$127,318 $98,478 

91

(5)Long-term Debt
Long-term debt consists of the following at December 31, 2021 and 2020:
December 31, 2021
DebtDeferred financing costsDebt, net of deferred financing costs
Senior Credit Facility$773,717 $9,306 $764,411 
Accounts Receivable Securitization Program175,000 585 174,415 
3 3/4% Senior Notes600,000 7,036 592,964 
3 5/8% Senior Notes550,000 7,711 542,289 
4% Senior Notes549,359 7,208 542,151 
4 7/8% Senior Notes400,000 5,013 394,987 
Other notes with various rates and terms2,378 — 2,378 
3,050,454 36,859 3,013,595 
Less current maturities(175,363)(585)(174,778)
Long-term debt, excluding current maturities$2,875,091 $36,274 $2,838,817 
90

Table of Contents
LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

(5) Long-term Debt

Long-term debt consists of the following at December 31, 2019 and 2018:

 

December 31, 2019

 

December 31, 2020

 

Debt

 

 

Deferred

financing costs

 

 

Debt, net of

deferred

financing costs

 

DebtDeferred financing costsDebt, net of deferred financing costs

Senior Credit Facility

 

$

1,127,069

 

 

$

9,077

 

 

$

1,117,992

 

Senior Credit Facility$598,466 $11,569 $586,897 

Accounts Receivable Securitization Program

 

 

175,000

 

 

 

846

 

 

 

174,154

 

Accounts Receivable Securitization Program122,500 445 122,055 

5% Senior Subordinated Notes

 

 

535,000

 

 

 

3,237

 

 

 

531,763

 

5 3/8% Senior Notes

 

 

510,000

 

 

 

3,502

 

 

 

506,498

 

3 3/4% Senior Notes3 3/4% Senior Notes600,000 8,031 591,969 
4% Senior Notes4% Senior Notes549,280 7,911 541,369 
4 7/8% Senior Notes4 7/8% Senior Notes400,000 5,586 394,414 

5 3/4% Senior Notes

 

 

654,345

 

 

 

7,752

 

 

 

646,593

 

5 3/4% Senior Notes653,631 6,575 647,056 

Other notes with various rates and terms

 

 

3,118

 

 

 

—

 

 

 

3,118

 

Other notes with various rates and terms2,756 — 2,756 

 

 

3,004,532

 

 

 

24,414

 

 

 

2,980,118

 

2,926,633 40,117 2,886,516 

Less current maturities

 

 

(232,595

)

 

 

(6,081

)

 

 

(226,514

)

Less current maturities(122,879)(445)(122,434)

Long-term debt, excluding current maturities

 

$

2,771,937

 

 

$

18,333

 

 

$

2,753,604

 

Long-term debt, excluding current maturities$2,803,754 $39,672 $2,764,082 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

 

Debt

 

 

Deferred

financing costs

 

 

Debt, net of

deferred

financing costs

 

Senior Credit Facility

 

$

1,291,088

 

 

$

11,576

 

 

$

1,279,512

 

Accounts Receivable Securitization Program

 

 

175,000

 

 

 

1,168

 

 

 

173,832

 

5% Senior Subordinated Notes

 

 

535,000

 

 

 

4,104

 

 

 

530,896

 

5 3/8% Senior Notes

 

 

510,000

 

 

 

4,262

 

 

 

505,738

 

5 3/4% Senior Notes

 

 

400,000

 

 

 

4,754

 

 

 

395,246

 

Other notes with various rates and terms

 

 

3,464

 

 

 

—

 

 

 

3,464

 

 

 

2,914,552

 

 

 

25,864

 

 

 

2,888,688

 

Less current maturities

 

 

(209,365

)

 

 

(5,245

)

 

 

(204,120

)

Long-term debt, excluding current maturities

 

$

2,705,187

 

 

$

20,619

 

 

$

2,684,568

 

Long-term debt contractual maturities are as follows:

 

Debt

 

 

Deferred

financing costs

 

 

Debt, net of

deferred

financing costs

 

2020

 

$

232,595

 

 

$

6,081

 

 

$

226,514

 

2021

 

$

74,487

 

 

$

6,205

 

 

$

68,282

 

DebtDeferred financing costsDebt, net of deferred financing costs

2022

 

$

426,971

 

 

$

4,677

 

 

$

422,294

 

2022$363 $— $363 

2023

 

$

541,989

 

 

$

3,480

 

 

$

538,509

 

2023$381 $— $381 

2024

 

$

517,008

 

 

$

2,216

 

 

$

514,792

 

2024$175,400 $585 $174,815 
20252025$175,420 $3,371 $172,049 
20262026$442 $— $442 

Later years

 

$

1,211,482

 

 

$

1,755

 

 

$

1,209,727

 

Later years$2,698,448 $32,903 $2,665,545 

(6)Related Party Transactions

Affiliates, as used within these statements, are persons or entities that are affiliated with Lamar Media Corp. or its subsidiaries through common ownership and directorate control.

As of December 31, 20192021 and 2018,2020, there was a payable to Lamar Advertising Company, its parent, in the amount of $4,779$3,018 and $5,571,$3,928, respectively.

92

LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

Effective December 31, 20192021 and 2018,2020, Lamar Advertising Company contributed $69,822$37,548 and $89,967,$41,628, respectively, to Lamar Media which resulted in an increase in Lamar Media’s additional paid-in capital.

(7) Quarterly Financial Data (Unaudited)

The tables below represent the balances for the selected quarterly financial data of the Company for each reporting period in the years ended December 31, 2019 and 2018.

 

 

Year 2019 Quarters

 

 

 

March 31

 

 

June 30

 

 

September 30

 

 

December 31

 

Net revenues

 

$

384,457

 

 

$

448,742

 

 

$

457,786

 

 

$

462,659

 

Net revenues less direct advertising expenses

 

$

243,987

 

 

$

302,352

 

 

$

308,940

 

 

$

308,287

 

Net income

 

$

51,362

 

 

$

118,485

 

 

$

99,832

 

 

$

102,861

 

 

 

Year 2018 Quarters

 

 

 

March 31

 

 

June 30

 

 

September 30

 

 

December 31

 

Net revenues

 

$

361,026

 

 

$

419,800

 

 

$

418,498

 

 

$

427,898

 

Net revenues less direct advertising expenses

 

$

222,733

 

 

$

279,016

 

 

$

277,799

 

 

$

285,826

 

Net income

 

$

15,158

 

 

$

100,520

 

 

$

94,165

 

 

$

95,788

 

(8)    Summarized Financial Information of Subsidiaries

Separate condensed consolidating financial information for Lamar Media,subsidiary guarantors and non-guarantor subsidiaries are presented below. Lamar Media and its subsidiary guarantors have fully and unconditionally guaranteed Lamar Media’s obligations with respect to its publicly issued notes. All guarantees are joint and several. As a result of these guarantee arrangements, we are required to present the following condensed consolidating financial information. The following condensed consolidating financial information should be read in conjunction with the accompanying consolidated financial statements and notes. The condensed consolidating financial information is provided as an alternative to providing separate financial statements for guarantor subsidiaries. Separate financial statements of Lamar Media’s subsidiary guarantors are not included because the guarantees are full and unconditional and the subsidiary

93

LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

guarantors are 100% owned and jointly and severally liable for Lamar Media’s outstanding publicly issued notes. The accounts for all companies reflected herein are presented using the equity method of accounting for investments in subsidiaries.

91
Table of Contents

Condensed Consolidating Balance Sheet as of December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lamar Media Corp.

 

 

Guarantor Subsidiaries

 

 

Non-Guarantor Subsidiaries

 

 

Eliminations

 

 

Lamar Media Consolidated

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current assets

 

$

13,859

 

 

$

53,756

 

 

$

242,054

 

 

$

—

 

 

$

309,669

 

Net property, plant and equipment

 

 

—

 

 

 

1,340,675

 

 

 

8,440

 

 

 

—

 

 

 

1,349,115

 

Operating lease right of use assets

 

 

—

 

 

 

1,293,674

 

 

 

27,105

 

 

 

—

 

 

 

1,320,779

 

Intangibles and goodwill, net

 

 

—

 

 

 

2,875,644

 

 

 

18,255

 

 

 

—

 

 

 

2,893,899

 

Other assets

 

 

4,193,629

 

 

 

229,905

 

 

 

184,805

 

 

 

(4,557,380

)

 

 

50,959

 

Total assets

 

$

4,207,488

 

 

$

5,793,654

 

 

$

480,659

 

 

$

(4,557,380

)

 

$

5,924,421

 

LIABILITIES AND STOCKHOLDER'S EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

51,480

 

 

$

34

 

 

$

175,000

 

 

$

—

 

 

$

226,514

 

Current operating lease liabilties

 

 

—

 

 

 

189,071

 

 

 

7,770

 

 

 

—

 

 

 

196,841

 

Other current liabilities

 

 

26,960

 

 

 

196,689

 

 

 

19,845

 

 

 

—

 

 

 

243,494

 

Total current liabilities

 

 

78,440

 

 

 

385,794

 

 

 

202,615

 

 

 

—

 

 

 

666,849

 

Long-term debt

 

 

2,753,570

 

 

 

34

 

 

 

—

 

 

 

—

 

 

 

2,753,604

 

Operating lease liabilities

 

 

—

 

 

 

1,049,220

 

 

 

18,961

 

 

 

—

 

 

 

1,068,181

 

Other noncurrent liabilities

 

 

205,947

 

 

 

231,416

 

 

 

250,859

 

 

 

(421,966

)

 

 

266,256

 

Total liabilities

 

 

3,037,957

 

 

 

1,666,464

 

 

 

472,435

 

 

 

(421,966

)

 

 

4,754,890

 

Stockholders’ equity

 

 

1,169,531

 

 

 

4,127,190

 

 

 

8,224

 

 

 

(4,135,414

)

 

 

1,169,531

 

Total liabilities and stockholders’ equity

 

$

4,207,488

 

 

$

5,793,654

 

 

$

480,659

 

 

$

(4,557,380

)

 

$

5,924,421

 

94

LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

Condensed Consolidating Balance Sheet as of December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lamar Media Corp.

 

 

Guarantor Subsidiaries

 

 

Non-Guarantor Subsidiaries

 

 

Eliminations

 

 

Lamar Media Consolidated

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current assets

 

$

4,653

 

 

$

121,549

 

 

$

236,967

 

 

$

—

 

 

$

363,169

 

Net property, plant and equipment

 

 

—

 

 

 

1,289,348

 

 

 

5,700

 

 

 

—

 

 

 

1,295,048

 

Intangibles and goodwill, net

 

 

—

 

 

 

2,804,915

 

 

 

19,304

 

 

 

—

 

 

 

2,824,219

 

Other assets

 

 

4,056,288

 

 

 

230,504

 

 

 

184,247

 

 

 

(4,425,589

)

 

 

45,450

 

Total assets

 

$

4,060,941

 

 

$

4,446,316

 

 

$

446,218

 

 

$

(4,425,589

)

 

$

4,527,886

 

LIABILITIES AND STOCKHOLDER'S EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

29,086

 

 

$

34

 

 

$

175,000

 

 

$

—

 

 

$

204,120

 

Other current liabilities

 

 

27,067

 

 

 

204,103

 

 

 

14,578

 

 

 

—

 

 

 

245,748

 

Total current liabilities

 

 

56,153

 

 

 

204,137

 

 

 

189,578

 

 

 

—

 

 

 

449,868

 

Long-term debt

 

 

2,684,500

 

 

 

68

 

 

 

—

 

 

 

—

 

 

 

2,684,568

 

Other noncurrent liabilities

 

 

200,092

 

 

 

246,312

 

 

 

251,835

 

 

 

(424,985

)

 

 

273,254

 

Total liabilities

 

 

2,940,745

 

 

 

450,517

 

 

 

441,413

 

 

 

(424,985

)

 

 

3,407,690

 

Stockholders’ equity

 

 

1,120,196

 

 

 

3,995,799

 

 

 

4,805

 

 

 

(4,000,604

)

 

 

1,120,196

 

Total liabilities and stockholders’ equity

 

$

4,060,941

 

 

$

4,446,316

 

 

$

446,218

 

 

$

(4,425,589

)

 

$

4,527,886

 

Condensed Consolidating Balance Sheet as of December 31, 2021

95

Lamar Media Corp.Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsLamar Media Consolidated
ASSETS
Total current assets$91,119 $29,379 $267,609 $— $388,107 
Net property, plant and equipment— 1,321,526 15,748 — 1,337,274 
Operating lease right of use assets— 1,198,934 25,738 — 1,224,672 
Intangibles and goodwill, net— 2,953,600 17,383 — 2,970,983 
Other assets4,188,436 311,046 187,044 (4,576,531)109,995 
Total assets$4,279,555 $5,814,485 $513,522 $(4,576,531)$6,031,031 
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt$— $363 $174,415 $— $174,778 
Current operating lease liabilities— 190,748 7,538 — 198,286 
Other current liabilities22,009 246,030 14,142 — 282,181 
Total current liabilities22,009 437,141 196,095 — 655,245 
Long-term debt2,836,801 2,016 — — 2,838,817 
Operating lease liabilities— 977,463 17,893 — 995,356 
Other noncurrent liabilities212,399 292,194 292,281 (463,607)333,267 
Total liabilities3,071,209 1,708,814 506,269 (463,607)4,822,685 
Stockholder's equity1,208,346 4,105,671 7,253 (4,112,924)1,208,346 
Total liabilities and stockholder's equity$4,279,555 $5,814,485 $513,522 $(4,576,531)$6,031,031 
92

Table of Contents
LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

Condensed Consolidating Statements of Income and Comprehensive Income for the Year Ended December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lamar Media Corp.

 

 

Guarantor Subsidiaries

 

 

Non-Guarantor Subsidiaries

 

 

Eliminations

 

 

Lamar Media Consolidated

 

Statement of Income

 

 

 

Net revenues

 

$

—

 

 

$

1,709,691

 

 

$

46,804

 

 

$

(2,851

)

 

$

1,753,644

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct advertising expenses (1)

 

 

—

 

 

 

564,877

 

 

 

28,052

 

 

 

(2,851

)

 

 

590,078

 

General and administrative expenses (1)

 

 

—

 

 

 

310,813

 

 

 

7,567

 

 

 

—

 

 

 

318,380

 

Corporate expenses (1)

 

 

—

 

 

 

82,652

 

 

 

1,577

 

 

 

—

 

 

 

84,229

 

Depreciation and amortization

 

 

—

 

 

 

247,191

 

 

 

2,837

 

 

 

—

 

 

 

250,028

 

Gain on disposition of assets

 

 

—

 

 

 

(3,103

)

 

 

(4,138

)

 

 

—

 

 

 

(7,241

)

 

 

 

—

 

 

 

1,202,430

 

 

 

35,895

 

 

 

(2,851

)

 

 

1,235,474

 

Operating income

 

 

—

 

 

 

507,261

 

 

 

10,909

 

 

 

—

 

 

 

518,170

 

Equity in (earnings) loss of subsidiaries

 

 

(517,516

)

 

 

—

 

 

 

—

 

 

 

517,516

 

 

 

—

 

Interest expense (income), net

 

 

144,976

 

 

 

(149

)

 

 

5,025

 

 

 

—

 

 

 

149,852

 

Income (loss) before income tax expense

 

 

372,540

 

 

 

507,410

 

 

 

5,884

 

 

 

(517,516

)

 

 

368,318

 

Income tax (benefit) expense (2)

 

 

—

 

 

 

(7,360

)

 

 

3,138

 

 

 

—

 

 

 

(4,222

)

Net income (loss)

 

$

372,540

 

 

$

514,770

 

 

$

2,746

 

 

$

(517,516

)

 

$

372,540

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

372,540

 

 

$

514,770

 

 

$

2,746

 

 

$

(517,516

)

 

$

372,540

 

Total other comprehensive income, net of tax

 

 

—

 

 

 

—

 

 

 

673

 

 

 

—

 

 

 

673

 

Total comprehensive income (loss)

 

$

372,540

 

 

$

514,770

 

 

$

3,419

 

 

$

(517,516

)

 

$

373,213

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Caption is exclusive of depreciation and amortization.

 

(2) The income tax expense reflected in each column does not include any tax effect of the equity in earnings from subsidiaries.

 

Condensed Consolidating Balance Sheet as of December 31, 2020

96

Lamar Media Corp.Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsLamar Media Consolidated
ASSETS
Total current assets$110,678 $19,471 $249,921 $— $380,070 
Net property, plant and equipment— 1,268,765 13,084 — 1,281,849 
Operating lease right of use assets— 1,200,115 21,898 — 1,222,013 
Intangibles and goodwill, net— 2,798,343 17,812 — 2,816,155 
Other assets3,912,122 258,433 132,448 (4,228,383)74,620 
Total assets$4,022,800 $5,545,127 $435,163 $(4,228,383)$5,774,707 
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt$— $379 $122,055 $— $122,434 
Current operating lease liabilities— 188,712 6,727 — 195,439 
Other current liabilities33,583 170,320 19,286 — 223,189 
Total current liabilities33,583 359,411 148,068 — 541,062 
Long-term debt2,761,705 2,377 — — 2,764,082 
Operating lease liabilities— 979,785 13,991 — 993,776 
Other noncurrent liabilities34,668 245,891 266,968 (264,584)282,943 
Total liabilities2,829,956 1,587,464 429,027 (264,584)4,581,863 
Stockholder's equity1,192,844 3,957,663 6,136 (3,963,799)1,192,844 
Total liabilities and stockholder's equity$4,022,800 $5,545,127 $435,163 $(4,228,383)$5,774,707 
93

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LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

Condensed Consolidating Statements of Income and Comprehensive Income for the Year Ended December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lamar Media Corp.

 

 

Guarantor Subsidiaries

 

 

Non-Guarantor Subsidiaries

 

 

Eliminations

 

 

Lamar Media Consolidated

 

Statement of Income

 

 

 

Net revenues

 

$

—

 

 

$

1,579,619

 

 

$

50,352

 

 

$

(2,749

)

 

$

1,627,222

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct advertising expenses (1)

 

 

—

 

 

 

537,269

 

 

 

27,307

 

 

 

(2,728

)

 

 

561,848

 

General and administrative expenses (1)

 

 

—

 

 

 

280,874

 

 

 

8,554

 

 

 

—

 

 

 

289,428

 

Corporate expenses (1)

 

 

—

 

 

 

80,861

 

 

 

1,636

 

 

 

—

 

 

 

82,497

 

Depreciation and amortization

 

 

—

 

 

 

219,341

 

 

 

5,920

 

 

 

—

 

 

 

225,261

 

(Gain) loss on disposition of assets

 

 

—

 

 

 

(576

)

 

 

7,809

 

 

 

—

 

 

 

7,233

 

 

 

 

—

 

 

 

1,117,769

 

 

 

51,226

 

 

 

(2,728

)

 

 

1,166,267

 

Operating income (loss)

 

 

—

 

 

 

461,850

 

 

 

(874

)

 

 

(21

)

 

 

460,955

 

Equity in (earnings) loss of subsidiaries

 

 

(450,791

)

 

 

—

 

 

 

—

 

 

 

450,791

 

 

 

—

 

Interest expense (income), net

 

 

129,731

 

 

 

(99

)

 

 

(413

)

 

 

(21

)

 

 

129,198

 

Other expenses

 

 

15,429

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

15,429

 

Income (loss) before income tax expense

 

 

305,631

 

 

 

461,949

 

 

 

(461

)

 

 

(450,791

)

 

 

316,328

 

Income tax expense (2)

 

 

—

 

 

 

7,879

 

 

 

2,818

 

 

 

—

 

 

 

10,697

 

Net income (loss)

 

$

305,631

 

 

$

454,070

 

 

$

(3,279

)

 

$

(450,791

)

 

$

305,631

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

305,631

 

 

$

454,070

 

 

$

(3,279

)

 

$

(450,791

)

 

$

305,631

 

Total other comprehensive loss, net of tax

 

 

—

 

 

 

—

 

 

 

(1,290

)

 

 

—

 

 

 

(1,290

)

Total comprehensive income (loss)

 

$

305,631

 

 

$

454,070

 

 

$

(4,569

)

 

$

(450,791

)

 

$

304,341

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Caption is exclusive of depreciation and amortization.

 

(2) The income tax expense reflected in each column does not include any tax effect of the equity in earnings from subsidiaries.

 

Condensed Consolidating Statements of Income and Comprehensive Income

97

for the Year Ended December 31, 2021

 Lamar Media Corp.Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsLamar Media Consolidated
Statement of Income
Net revenues$— $1,752,106 $37,055 $(1,760)$1,787,401 
Operating expenses (income)
Direct advertising expenses(1)
— 552,953 25,314 (1,760)576,507 
General and administrative expenses(1)
— 322,278 4,358 — 326,636 
Corporate expenses(1)
— 91,479 1,595 — 93,074 
Depreciation and amortization— 267,141 4,153 — 271,294 
Gain on disposition of assets— (1,965)(150)— (2,115)
— 1,231,886 35,270 (1,760)1,265,396 
Operating income— 520,220 1,785 — 522,005 
Loss on debt extinguishment21,604 — — — 21,604 
Equity in (earnings) loss of subsidiaries(515,288)— — 515,288 — 
Interest expense (income), net104,776 (44)889 — 105,621 
Equity in earnings of investee— (3,384)— — (3,384)
Income (loss) before income tax expense (benefit)388,908 523,648 896 (515,288)398,164 
Income tax expense (benefit)(2)
— 9,556 (300)— 9,256 
Net income (loss)$388,908 $514,092 $1,196 $(515,288)$388,908 
Statement of Comprehensive Income
Net income (loss)$388,908 $514,092 $1,196 $(515,288)$388,908 
Total other comprehensive loss, net of tax— — (79)— (79)
Total comprehensive income (loss)$388,908 $514,092 $1,117 $(515,288)$388,829 
(1)Caption is exclusive of depreciation and amortization.
(2)The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from subsidiaries.
94

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LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

Condensed Consolidating Statements of Income and Comprehensive Income for the Year Ended December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lamar Media Corp.

 

 

Guarantor Subsidiaries

 

 

Non-Guarantor Subsidiaries

 

 

Eliminations

 

 

Lamar Media Consolidated

 

Statement of Income

 

 

 

Net revenues

 

$

—

 

 

$

1,494,275

 

 

$

51,332

 

 

$

(4,347

)

 

$

1,541,260

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct advertising expenses (1)

 

 

—

 

 

 

512,247

 

 

 

31,277

 

 

 

(2,644

)

 

 

540,880

 

General and administrative expenses (1)

 

 

—

 

 

 

266,798

 

 

 

9,431

 

 

 

—

 

 

 

276,229

 

Corporate expenses (1)

 

 

—

 

 

 

60,830

 

 

 

1,132

 

 

 

—

 

 

 

61,962

 

Depreciation and amortization

 

 

—

 

 

 

201,424

 

 

 

9,680

 

 

 

—

 

 

 

211,104

 

(Gain) loss on disposition of assets

 

 

—

 

 

 

(5,704

)

 

 

1,040

 

 

 

—

 

 

 

(4,664

)

 

 

 

—

 

 

 

1,035,595

 

 

 

52,560

 

 

 

(2,644

)

 

 

1,085,511

 

Operating income (loss)

 

 

—

 

 

 

458,680

 

 

 

(1,228

)

 

 

(1,703

)

 

 

455,749

 

Equity in (earnings) loss of subsidiaries

 

 

(446,520

)

 

 

—

 

 

 

—

 

 

 

446,520

 

 

 

—

 

Interest expense (income), net

 

 

128,391

 

 

 

(5

)

 

 

1,707

 

 

 

(1,703

)

 

 

128,390

 

Other expenses

 

 

71

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

71

 

Income (loss) before income tax expense

 

 

318,058

 

 

 

458,685

 

 

 

(2,935

)

 

 

(446,520

)

 

 

327,288

 

Income tax expense (2)

 

 

—

 

 

 

7,069

 

 

 

2,161

 

 

 

—

 

 

 

9,230

 

Net income (loss)

 

$

318,058

 

 

$

451,616

 

 

$

(5,096

)

 

$

(446,520

)

 

$

318,058

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

318,058

 

 

$

451,616

 

 

$

(5,096

)

 

$

(446,520

)

 

$

318,058

 

Total other comprehensive income, net of tax

 

 

—

 

 

 

—

 

 

 

1,926

 

 

 

—

 

 

 

1,926

 

Total comprehensive income (loss)

 

$

318,058

 

 

$

451,616

 

 

$

(3,170

)

 

$

(446,520

)

 

$

319,984

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Caption is exclusive of depreciation and amortization.

 

(2) The income tax expense reflected in each column does not include any tax effect of the equity in earnings from subsidiaries.

 

Condensed Consolidating Statements of Income and Comprehensive Income

98

for the Year Ended December 31, 2020

Lamar Media Corp.Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsLamar Media Consolidated
Statement of Income
Net revenues$— $1,536,534 $33,965 $(1,643)$1,568,856 
Operating expenses (income)
Direct advertising expenses(1)
— 533,803 25,501 (1,643)557,661 
General and administrative expenses(1)
— 281,293 6,581 — 287,874 
Corporate expenses(1)
— 69,478 979 — 70,457 
Depreciation and amortization— 249,299 1,997 — 251,296 
(Gain) loss on disposition of assets— (9,036)10 — (9,026)
— 1,124,837 35,068 (1,643)1,158,262 
Operating income (loss)— 411,697 (1,103)— 410,594 
Loss on debt extinguishment25,235 — — — 25,235 
Equity in (earnings) loss of subsidiaries(404,332)— — 404,332 — 
Interest expense (income), net135,224 (175)1,777 — 136,826 
Income (loss) before income tax expense (benefit)243,873 411,872 (2,880)(404,332)248,533 
Income tax expense (benefit)(2)
— 5,203 (543)— 4,660 
Net income (loss)$243,873 $406,669 $(2,337)$(404,332)$243,873 
Statement of Comprehensive Income
Net income (loss)$243,873 $406,669 $(2,337)$(404,332)$243,873 
Total other comprehensive income, net of tax— — 249 — 249 
Total comprehensive income (loss)$243,873 $406,669 $(2,088)$(404,332)$244,122 
(1)Caption is exclusive of depreciation and amortization.
(2)The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from subsidiaries.
95

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LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

Condensed Consolidating Statement of Cash Flows for the Year Ended December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lamar Media Corp.

 

 

Guarantor Subsidiaries

 

 

Non-Guarantor Subsidiaries

 

 

Eliminations

 

 

Lamar Media Consolidated

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in)

   operating activities

 

$

469,907

 

 

$

738,030

 

 

$

6,660

 

 

$

(609,657

)

 

$

604,940

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

—

 

 

 

(136,696

)

 

 

(4,260

)

 

 

—

 

 

 

(140,956

)

Acquisitions

 

 

—

 

 

 

(226,278

)

 

 

—

 

 

 

—

 

 

 

(226,278

)

Proceeds from disposition of assets and

   investments

 

 

—

 

 

 

5,438

 

 

 

—

 

 

 

—

 

 

 

5,438

 

Proceeds received from insurance claims

 

 

—

 

 

 

210

 

 

 

—

 

 

 

—

 

 

 

210

 

Investment in subsidiaries

 

 

(226,278

)

 

 

—

 

 

 

—

 

 

 

226,278

 

 

 

—

 

Decrease in intercompany notes receivable

 

 

3,787

 

 

 

—

 

 

 

—

 

 

 

(3,787

)

 

 

—

 

Increase in notes receivable

 

 

(448

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(448

)

Net cash (used in) provided by

   investing activities

 

 

(222,939

)

 

 

(357,326

)

 

 

(4,260

)

 

 

222,491

 

 

 

(362,034

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds received from revolving credit

   facility

 

 

495,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

495,000

 

Payment on revolving credit facility

 

 

(625,000

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(625,000

)

Principal payments on long-term debt

 

 

(34,471

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(34,471

)

Proceeds received from accounts receivable

   securitization program

 

 

—

 

 

 

—

 

 

 

9,000

 

 

 

—

 

 

 

9,000

 

Payments on accounts receivable

   securitization program

 

 

—

 

 

 

—

 

 

 

(9,000

)

 

 

—

 

 

 

(9,000

)

Debt issuance costs

 

 

(4,463

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(4,463

)

Proceeds received from note offering

 

 

255,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

255,000

 

Intercompany loan proceeds (payments)

 

 

—

 

 

 

(702

)

 

 

(3,085

)

 

 

3,787

 

 

 

—

 

Distributions to non-controlling interest

 

 

—

 

 

 

—

 

 

 

(621

)

 

 

—

 

 

 

(621

)

Dividends (to) from parent

 

 

(393,700

)

 

 

(609,657

)

 

 

—

 

 

 

609,657

 

 

 

(393,700

)

Contributions from (to) parent

 

 

69,822

 

 

 

226,278

 

 

 

—

 

 

 

(226,278

)

 

 

69,822

 

Net cash (used in) provided by

   financing activities

 

 

(237,812

)

 

 

(384,081

)

 

 

(3,706

)

 

 

387,166

 

 

 

(238,433

)

Effect of exchange rate changes in cash and

   cash equivalents

 

 

—

 

 

 

—

 

 

 

221

 

 

 

—

 

 

 

221

 

Net increase in cash and cash equivalents

 

 

9,156

 

 

 

(3,377

)

 

 

(1,085

)

 

 

—

 

 

 

4,694

 

Cash and cash equivalents at beginning of

   period

 

 

4,029

 

 

 

11,655

 

 

 

5,310

 

 

 

—

 

 

 

20,994

 

Cash and cash equivalents at end of period

 

$

13,185

 

 

$

8,278

 

 

$

4,225

 

 

$

—

 

 

$

25,688

 

Condensed Consolidating Statements of Income and Comprehensive Income

99

for the Year Ended December 31, 2019

Lamar Media Corp.Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsLamar Media Consolidated
Statement of Income
Net revenues$— $1,709,691 $46,804 $(2,851)$1,753,644 
Operating expenses (income)
Direct advertising expenses(1)
— 564,877 28,052 (2,851)590,078 
General and administrative expenses(1)
— 310,813 7,567 — 318,380 
Corporate expenses(1)
— 82,652 1,577 — 84,229 
Depreciation and amortization— 247,191 2,837 — 250,028 
Gain on disposition of assets— (3,103)(4,138)— (7,241)
— 1,202,430 35,895 (2,851)1,235,474 
Operating income— 507,261 10,909 — 518,170 
Equity in (earnings) loss of subsidiaries(517,516)— — 517,516 — 
Interest expense (income), net144,976 (149)5,025 — 149,852 
Income (loss) before income tax (benefit) expense372,540 507,410 5,884 (517,516)368,318 
Income tax (benefit) expense(2)
— (7,360)3,138 — (4,222)
Net income (loss)$372,540 $514,770 $2,746 $(517,516)$372,540 
Statement of Comprehensive Income
Net income (loss)$372,540 $514,770 $2,746 $(517,516)$372,540 
Total other comprehensive income, net of tax— — 673 — 673 
Total comprehensive income (loss)$372,540 $514,770 $3,419 $(517,516)$373,213 
(1)Caption is exclusive of depreciation and amortization.
(2)The income tax (benefit) expense reflected in each column does not include any tax effect of the equity in earnings from subsidiaries.
96

Table of Contents
LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

Condensed Consolidating Statement of Cash Flows for the Year Ended December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lamar Media Corp.

 

 

Guarantor Subsidiaries

 

 

Non-Guarantor Subsidiaries

 

 

Eliminations

 

 

Lamar Media Consolidated

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in)

   operating activities

 

$

430,896

 

 

$

689,718

 

 

$

(17,143

)

 

$

(566,386

)

 

$

537,085

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions

 

 

—

 

 

 

(477,389

)

 

 

—

 

 

 

—

 

 

 

(477,389

)

Capital expenditures

 

 

—

 

 

 

(113,259

)

 

 

(4,379

)

 

 

—

 

 

 

(117,638

)

Proceeds from disposition of assets and

   investments

 

 

—

 

 

 

3,839

 

 

 

2,809

 

 

 

—

 

 

 

6,648

 

Proceeds received from insurance claims

 

 

—

 

 

 

—

 

 

 

4,222

 

 

 

—

 

 

 

4,222

 

Investment in subsidiaries

 

 

(498,226

)

 

 

—

 

 

 

—

 

 

 

498,226

 

 

 

—

 

Decrease in intercompany notes receivable

 

 

30,034

 

 

 

—

 

 

 

—

 

 

 

(30,034

)

 

 

—

 

Decrease in notes receivable

 

 

9

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

9

 

Net cash (used in) provided by

   investing activities

 

 

(468,183

)

 

 

(586,809

)

 

 

2,652

 

 

 

468,192

 

 

 

(584,148

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds received from revolving credit

   facility

 

 

563,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

563,000

 

Payment on revolving credit facility

 

 

(481,000

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(481,000

)

Principal payments on long-term debt

 

 

(27,297

)

 

 

(31

)

 

 

—

 

 

 

—

 

 

 

(27,328

)

Proceeds received from senior credit facility

   term loans

 

 

599,250

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

599,250

 

Proceeds received from accounts receivable

   securitization program

 

 

—

 

 

 

—

 

 

 

175,000

 

 

 

—

 

 

 

175,000

 

Debt issuance costs

 

 

(7,616

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(7,616

)

Redemption on senior subordinated notes

 

 

(509,790

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(509,790

)

Intercompany loan proceeds (payments)

 

 

175,000

 

 

 

(24,688

)

 

 

(180,346

)

 

 

30,034

 

 

 

—

 

Distributions to non-controlling interest

 

 

—

 

 

 

—

 

 

 

(541

)

 

 

—

 

 

 

(541

)

Contributions from (to) parent

 

 

89,967

 

 

 

498,226

 

 

 

—

 

 

 

(498,226

)

 

 

89,967

 

Dividends (to) from parent

 

 

(446,744

)

 

 

(566,386

)

 

 

—

 

 

 

566,386

 

 

 

(446,744

)

Net cash (used in) provided by

   financing activities

 

 

(45,230

)

 

 

(92,879

)

 

 

(5,887

)

 

 

98,194

 

 

 

(45,802

)

Effect of exchange rate changes in cash and

   cash equivalents

 

 

—

 

 

 

—

 

 

 

(1,112

)

 

 

—

 

 

 

(1,112

)

Net increase in cash and cash equivalents

 

 

(82,517

)

 

 

10,030

 

 

 

(21,490

)

 

 

—

 

 

 

(93,977

)

Cash and cash equivalents at beginning of

   period

 

 

86,546

 

 

 

1,625

 

 

 

26,800

 

 

 

—

 

 

 

114,971

 

Cash and cash equivalents at end of period

 

$

4,029

 

 

$

11,655

 

 

$

5,310

 

 

$

—

 

 

$

20,994

 

Condensed Consolidating Statement of Cash Flows for the Year Ended December 31, 2021

100

Lamar Media Corp.Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsLamar Media Consolidated
Cash flows from operating activities:
Net cash provided by (used in) operating activities$596,116 $849,072 $(21,301)$(708,341)$715,546 
Cash flows from investing activities:
Capital expenditures— (119,728)(6,362)— (126,090)
Acquisitions— (312,257)— — (312,257)
Payment for investments in equity securities— (30,000)— — (30,000)
Proceeds from disposition of assets and investments— 6,480 — — 6,480 
Investment in subsidiaries(342,257)— — 342,257 — 
Decrease (increase) in intercompany notes receivable51,976 — — (51,976)— 
Decrease in notes receivable— 107 — — 107 
Net cash (used in) provided by investing activities(290,281)(455,398)(6,362)290,281 (461,760)
Cash flows from financing activities:
Proceeds received from revolving credit facility200,000 — — — 200,000 
Payment on revolving credit facility(25,000)— — — (25,000)
Principal payments on long-term debt— (378)— — (378)
Principal payments on financing leases— (1,331)— — (1,331)
Proceeds received from note offering550,000 — — — 550,000 
Redemption of senior notes and senior subordinated notes(668,688)— — — (668,688)
Payment on accounts receivable securitization program— — (127,500)— (127,500)
Proceeds received from accounts receivable securitization program— — 180,000 — 180,000 
Debt issuance costs(8,385)— (438)— (8,823)
Intercompany loan (payments) proceeds— (24,119)(27,857)51,976 — 
Distributions to non-controlling interest— — (601)— (601)
Dividends (to) from parent(410,875)(708,341)— 708,341 (410,875)
Contributions from (to) parent37,548 342,257 — (342,257)37,548 
Net cash (used in) provided by financing activities(325,400)(391,912)23,604 418,060 (275,648)
Effect of exchange rate changes in cash and cash equivalents— — 81 — 81 
Net (decrease) increase in cash and cash equivalents(19,565)1,762 (3,978)— (21,781)
Cash and cash equivalents at beginning of period110,588 1,732 8,749 — 121,069 
Cash and cash equivalents at end of period$91,023 $3,494 $4,771 $— $99,288 
97

Table of Contents
LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

Condensed Consolidating Statement of Cash Flows for the Year Ended December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lamar Media Corp.

 

 

Guarantor Subsidiaries

 

 

Non-Guarantor Subsidiaries

 

 

Eliminations

 

 

Lamar Media Consolidated

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in)

   operating activities

 

$

383,370

 

 

$

602,504

 

 

$

2,174

 

 

$

(503,808

)

 

$

484,240

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions

 

 

3,750

 

 

 

(298,901

)

 

 

(2,154

)

 

 

—

 

 

 

(297,305

)

Capital expenditures

 

 

—

 

 

 

(104,325

)

 

 

(5,004

)

 

 

—

 

 

 

(109,329

)

Proceeds from disposition of assets and

   investments

 

 

—

 

 

 

6,053

 

 

 

—

 

 

 

—

 

 

 

6,053

 

Investment in subsidiaries

 

 

(301,055

)

 

 

—

 

 

 

—

 

 

 

301,055

 

 

 

—

 

(Increase) decrease in intercompany notes

   receivable

 

 

(7,624

)

 

 

—

 

 

 

—

 

 

 

7,624

 

 

 

—

 

Decrease in notes receivable

 

 

515

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

515

 

Net cash (used in) provided by

   investing activities

 

 

(304,414

)

 

 

(397,173

)

 

 

(7,158

)

 

 

308,679

 

 

 

(400,066

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal payments on long-term debt

 

 

(16,993

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(16,993

)

Payment on revolving credit

   facility

 

 

(477,000

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(477,000

)

Proceeds received from revolving credit facility

 

 

495,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

495,000

 

Payment on senior credit facility

 

 

(247,500

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(247,500

)

Proceeds received from senior credit facility

 

 

450,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

450,000

 

Debt issuance costs

 

 

(4,941

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(4,941

)

Intercompany loan proceeds (payments)

 

 

—

 

 

 

—

 

 

 

7,624

 

 

 

(7,624

)

 

 

—

 

Distributions to non-controlling interest

 

 

—

 

 

 

—

 

 

 

(693

)

 

 

—

 

 

 

(693

)

Contributions from (to) parent

 

 

49,187

 

 

 

298,901

 

 

 

2,154

 

 

 

(301,055

)

 

 

49,187

 

Dividends (to) from parent

 

 

(252,925

)

 

 

(503,808

)

 

 

—

 

 

 

503,808

 

 

 

(252,925

)

Net cash (used in) provided by

   financing activities

 

 

(5,172

)

 

 

(204,907

)

 

 

9,085

 

 

 

195,129

 

 

 

(5,865

)

Effect of exchange rate changes in cash and

   cash equivalents

 

 

—

 

 

 

—

 

 

 

1,632

 

 

 

—

 

 

 

1,632

 

Net increase in cash and

   cash equivalents

 

 

73,784

 

 

 

424

 

 

 

5,733

 

 

 

—

 

 

 

79,941

 

Cash and cash equivalents at beginning of

   period

 

 

12,762

 

 

 

1,201

 

 

 

21,067

 

 

 

—

 

 

 

35,030

 

Cash and cash equivalents at end of period

 

$

86,546

 

 

$

1,625

 

 

$

26,800

 

 

$

—

 

 

$

114,971

 

Condensed Consolidating Statement of Cash Flows for the Year Ended December 31, 2020


Lamar Media Corp.Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsLamar Media Consolidated
Cash flows from operating activities:
Net cash provided by (used in) operating activities$495,872 $668,673 $(5,639)$(619,877)$539,029 
Cash flows from investing activities:
Capital expenditures— (56,772)(5,500)— (62,272)
Acquisitions577 (46,161)— — (45,584)
Proceeds from disposition of assets and investments— 10,968 — — 10,968 
Investment in subsidiaries(46,161)— — 46,161 — 
(Increase) decrease in intercompany notes receivable(60,183)— — 60,183 — 
Net cash (used in) provided by investing activities(105,767)(91,965)(5,500)106,344 (96,888)
Cash flows from financing activities:
Proceeds received from revolving credit facility725,000 — — — 725,000 
Payment on revolving credit facility(875,000)— — — (875,000)
Principal payments on long-term debt— (9,112)— — (9,112)
Borrowings on long-term debt— 8,750 — — 8,750 
Proceeds received from note offering1,549,250 — — — 1,549,250 
Redemption of senior notes and senior subordinated notes(1,058,596)— — — (1,058,596)
Proceeds received from senior credit facility term loans598,500 — — — 598,500 
Payments on senior credit facility term loans(978,097)— — — (978,097)
Proceeds received from accounts receivable securitization program— — 122,500 — 122,500 
Payment on accounts receivable securitization program— — (175,000)— (175,000)
Debt issuance costs(32,950)— — — (32,950)
Intercompany loan (payments) proceeds— (9,176)69,359 (60,183)— 
Distributions to non-controlling interest— — (1,509)— (1,509)
Dividends (to) from parent(262,437)(619,877)— 619,877 (262,437)
Contributions from (to) parent41,628 46,161 — (46,161)41,628 
Net cash (used in) provided by financing activities(292,702)(583,254)15,350 513,533 (347,073)
Effect of exchange rate changes in cash and cash equivalents— — 313 — 313 
Net increase (decrease) in cash and cash equivalents97,403 (6,546)4,524 — 95,381 
Cash and cash equivalents at beginning of period13,185 8,278 4,225 — 25,688 
Cash and cash equivalents at end of period$110,588 $1,732 $8,749 $— $121,069 

SCHEDULE II

98
Table of Contents
LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
Condensed Consolidating Statement of Cash Flows for the Year Ended December 31, 2019
Lamar Media Corp.Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsLamar Media Consolidated
Cash flows from operating activities:
Net cash provided by (used in) operating activities$469,907 $738,030 $6,660 $(609,657)$604,940 
Cash flows from investing activities:
Acquisitions— (226,278)— — (226,278)
Capital expenditures— (136,696)(4,260)— (140,956)
Proceeds from disposition of assets and investments— 5,438 — — 5,438 
Proceeds received from insurance claims— 210 — — 210 
Investment in subsidiaries(226,278)— — 226,278 — 
Decrease (increase) in intercompany notes receivable3,787 — — (3,787)— 
Increase in notes receivable(448)— — — (448)
Net cash (used in) provided by investing activities(222,939)(357,326)(4,260)222,491 (362,034)
Cash flows from financing activities:
Proceeds received from revolving credit facility495,000 — — — 495,000 
Payment on revolving credit facility(625,000)— — — (625,000)
Principal payments on long-term debt(34,471)— — — (34,471)
Proceeds received from accounts receivable securitization program— — 9,000 — 9,000 
Payment on accounts receivable securitization program— — (9,000)— (9,000)
Debt issuance costs(4,463)— — — (4,463)
Proceeds received from note offering255,000 — — — 255,000 
Intercompany loan (payments) proceeds— (702)(3,085)3,787 — 
Distributions to non-controlling interest— — (621)— (621)
Contributions from (to) parent69,822 226,278 — (226,278)69,822 
Dividends (to) from parent(393,700)(609,657)— 609,657 (393,700)
Net cash (used in) provided by financing activities(237,812)(384,081)(3,706)387,166 (238,433)
Effect of exchange rate changes in cash and cash equivalents— — 221 — 221 
Net increase (decrease) in cash and cash equivalents9,156 (3,377)(1,085)— 4,694 
Cash and cash equivalents at beginning of  period4,029 11,655 5,310 — 20,994 
Cash and cash equivalents at end of period$13,185 $8,278 $4,225 $— $25,688 

99
Table of Contents
SCHEDULE II
LAMAR MEDIA CORP.
AND SUBSIDIARIES
Valuation and Qualifying Accounts

Years Ended December 31, 2019, 20182021, 2020 and 2017

2019

(In thousands)

 

Balance at

Beginning

of Period

 

 

Charged to

Costs and

Expenses

 

 

Deductions

 

 

Balance at

End of

Period

 

Balance at Beginning of PeriodCharged to Costs and ExpensesDeductionsBalance at End of Period
Year ended December 31, 2021Year ended December 31, 2021
Deducted in balance sheet from trade accounts receivable:Deducted in balance sheet from trade accounts receivable:
Allowance for doubtful accountsAllowance for doubtful accounts$14,946 4,527 8,278 $11,195 
Deducted in balance sheet from deferred tax assets:Deducted in balance sheet from deferred tax assets:
Valuation allowanceValuation allowance$20,997 — 1,564 $19,433 
Year ended December 31, 2020Year ended December 31, 2020
Deducted in balance sheet from trade accounts receivable:Deducted in balance sheet from trade accounts receivable:
Allowance for doubtful accountsAllowance for doubtful accounts$13,185 12,729 10,968 $14,946 
Deducted in balance sheet from deferred tax assets:Deducted in balance sheet from deferred tax assets:
Valuation allowanceValuation allowance$22,902 — 1,905 $20,997 

Year ended December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 2019

Deducted in balance sheet from trade accounts receivable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deducted in balance sheet from trade accounts receivable:

Allowance for doubtful accounts

 

$

11,161

 

 

 

11,608

 

 

 

9,584

 

 

$

13,185

 

Allowance for doubtful accounts$11,161 11,608 9,584 $13,185 

Deducted in balance sheet from deferred tax assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deducted in balance sheet from deferred tax assets:

Valuation allowance

 

$

23,934

 

 

 

—

 

 

 

1,032

 

 

$

22,902

 

Valuation allowance$23,934 — 1,032 $22,902 

Year ended December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deducted in balance sheet from trade accounts receivable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for doubtful accounts

 

$

10,055

 

 

 

8,472

 

 

 

7,366

 

 

$

11,161

 

Deducted in balance sheet from deferred tax assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation allowance

 

$

20,120

 

 

 

3,814

 

 

 

—

 

 

$

23,934

 

Year ended December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deducted in balance sheet from trade accounts receivable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for doubtful accounts

 

$

9,356

 

 

 

6,762

 

 

 

6,063

 

 

$

10,055

 

Deducted in balance sheet from deferred tax assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation allowance

 

$

16,167

 

 

 

3,953

 

 

 

—

 

 

$

20,120

 

 



100
Table of Contents
SCHEDULE III

LAMAR MEDIA CORP.

AND SUBSIDIARIES

Schedule of Real Estate and Accumulated Depreciation

December 31, 2019, 20182021, 2020 and 2017

2019

(In thousands)

Description(1)

 

Encumbrances

 

 

Initial Cost(2)

 

 

Gross Carrying

Amount(3)

 

 

Accumulated

Depreciation

 

 

Construction

Date

 

Acquisition

Date

 

Useful Lives

391,456 Displays

 

 

—

 

 

 

—

 

 

$

3,333,590

 

 

$

(2,166,579

)

 

Various

 

Various

 

5 to 20 years

(1)

NaN single asset exceeded 5% of the total gross carrying amount at December 31, 2019

(2)

This information is omitted, as it would be impracticable to compile such information on a site-by-site basis

Description(1)
Encumbrances
Initial Cost(2)
Gross Carrying Amount(3)
Accumulated DepreciationConstruction DateAcquisition DateUseful Lives
354,053 Displays— — $3,439,618 $(2,287,590)VariousVarious5 to 20 years

(3)(1)No single asset exceeded 5% of the total gross carrying amount at December 31, 2021

Includes sites under construction

(2)This information is omitted, as it would be impracticable to compile such information on a site-by-site basis
(3)Includes sites under construction
The following table summarizes activity for the Company’s real estate assets, which consists of advertising displays and the related accumulated depreciation.

 

 

December 31,

2019

 

 

December 31,

2018

 

 

December 31,

2017

 

Gross real estate assets:

 

 

 

 

 

 

 

 

 

 

 

 

Balance at the beginning of the year

 

$

3,201,434

 

 

$

3,074,046

 

 

$

2,998,540

 

Capital expenditures on new advertising displays(4)

 

 

59,604

 

 

 

54,151

 

 

 

49,946

 

Capital expenditures on improvements/redevelopments of existing advertising displays

 

 

25,025

 

 

 

12,781

 

 

 

6,265

 

Capital expenditures other recurring

 

 

36,354

 

 

 

34,758

 

 

 

32,523

 

Land acquisitions(6)

 

 

22,965

 

 

 

15,368

 

 

 

14,904

 

Acquisition of advertising displays(5)(6)

 

 

23,589

 

 

 

82,617

 

 

 

32,109

 

Assets sold or written-off

 

 

(35,320

)

 

 

(70,494

)

 

 

(61,306

)

Foreign exchange

 

 

(61

)

 

 

(1,793

)

 

 

1,065

 

Balance at the end of the year

 

$

3,333,590

 

 

$

3,201,434

 

 

$

3,074,046

 

Accumulated depreciation:

 

 

 

 

 

 

 

 

 

 

 

 

Balance at the beginning of the year

 

$

2,082,335

 

 

$

2,025,251

 

 

$

1,973,958

 

Depreciation

 

 

111,531

 

 

 

106,700

 

 

 

102,494

 

Assets sold or written-off

 

 

(27,890

)

 

 

(48,488

)

 

 

(51,976

)

Foreign exchange

 

 

603

 

 

 

(1,128

)

 

 

775

 

Balance at the end of the year

 

$

2,166,579

 

 

$

2,082,335

 

 

$

2,025,251

 

(4)

Includes non-cash amounts of $554, $446 and $921 at December 31, 2019, 2018 and 2017, respectively

(5)

Includes non-cash amounts of $1,928, $7,199 and $3,043 at December 31, 2019, 2018 and 2017, respectively

December 31, 2021December 31, 2020December 31, 2019
Gross real estate assets:
Balance at the beginning of the year$3,293,778 $3,333,590 $3,201,434 
Capital expenditures on new advertising displays(4)
45,427 21,598 59,604 
Capital expenditures on improvements/redevelopments of existing advertising displays21,287 13,021 25,025 
Capital expenditures other recurring(5)
88,697 12,631 36,354 
Land acquisitions(6)
17,151 8,980 22,965 
Acquisition of advertising displays(7)
17,662 4,446 23,589 
Assets sold or written-off(44,466)(100,906)(35,320)
Foreign exchange82 418 (61)
Balance at the end of the year$3,439,618 $3,293,778 $3,333,590 
Accumulated depreciation:
Balance at the beginning of the year$2,192,700 $2,166,579 $2,082,335 
Depreciation126,805 111,049 111,531 
Assets sold or written-off(31,971)(85,267)(27,890)
Foreign exchange56 339 603 
Balance at the end of the year$2,287,590 $2,192,700 $2,166,579 

(6)(4)Includes non-cash amounts of $1,541, $621 and $554 at December 31, 2021, 2020 and 2019, respectively

Includes preliminary allocation of assets acquired from Fairway at December 31, 2018


ITEM 9.(5)Includes non-cash amounts of $48,848 at December 31, 2021 related to the revision in cost estimate included in the calculation of asset retirement obligations

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

(6)Includes preliminary allocation of assets acquired during 2021
(7)Includes non-cash amounts of $3,843 and $1,928 and at December 31, 2021 and 2019, respectively

101
Table of Contents
ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Lamar Advertising Company

None.

Lamar Media Corp.

None.

ITEM 9A.

CONTROLS AND PROCEDURES

ITEM 9A.    CONTROLS AND PROCEDURES
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures.

The Company’s and Lamar Media’s management, with the participation of the principal executive officer and principal financial officer of the Company and Lamar Media, have evaluated the effectiveness of the design and operation of the Company’s and Lamar Media’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, the principal executive officer and principal financial officer of the Company and Lamar Media concluded, as of December 31, 2019,2021, that these disclosure controls and procedures are effective and designed to ensure that the information required to be disclosed in the Company’s and Lamar Media’s reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the requisite time periods.

Management’s Report on Internal Control Over Financial Reporting

Lamar Advertising Company

The Company’s Management Report on Internal Control Over Financial Reporting is set forth on page 4744 of this combined Annual Report and is incorporated herein by reference.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. A control system, no matter how well designed and operated, can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Lamar Media Corp.

Lamar Media’s Management Report on Internal Control Over Financial Reporting is set forth on page 8281 of this combined Annual Report and is incorporated herein by reference.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. A control system, no matter how well designed and operated, can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s or Lamar Media’s internal control over financial reporting identified in connection with the evaluation of the Company’s and Lamar Media’s internal controls performed during the fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s or Lamar Media’s internal control over financial reporting.

ITEM 9B.

OTHER INFORMATION

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ITEM 9B.    OTHER INFORMATION
Lamar Advertising Company

None.

Lamar Media Corp.

None.


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PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item is incorporated by reference to Lamar Advertising Company’s Proxy Statement for its 20202022 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2019.

2021.

We have adopted a Code of Business Conduct and Ethics (the “code of ethics”) that applies to all of our directors, officers and employees. The code of ethics is filed as an exhibit that is incorporated by reference into this Annual Report. In addition, if we make any substantive amendments to the code of ethics or grant any wavier, including any implicit wavier, from a provision of the code to any of our executive officers or directors, we will disclose the nature of such amendment or waiver in a report on Form 8-K.

ITEM 11.

EXECUTIVE COMPENSATION

ITEM 11.    EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to Lamar Advertising Company’s Proxy Statement for its 20202022 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2019.

2021.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated by reference to Lamar Advertising Company’s Proxy Statement for its 20202022 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2019.

2021.

ITEM 13.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is incorporated by reference to Lamar Advertising Company’s Proxy Statement for its 20202022 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2019.

2021.

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this item is incorporated by reference to Lamar Advertising Company’s Proxy Statement for its 20202022 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2019.

2021.

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PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(A) 1.FINANCIAL STATEMENTS

The financial statements are listed under Part II, Item 8 of this Annual Report.

2.FINANCIAL STATEMENT SCHEDULES

The financial statement schedules are included under Part II, Item 8 of this Annual Report.

3. EXHIBITS

The exhibits filed as part of this report are listed on the Exhibit Index immediately followingpreceding the signature page hereto, which Exhibit Index is incorporated herein by reference.

(B) Exhibits required by Item 601 of Regulation S-K are listed on the Exhibit Index immediately followingpreceding the signature page hereto.

ITEM 16.

FORM 10-K SUMMARY

ITEM 16.    FORM 10-K SUMMARY
None.


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INDEX TO EXHIBITS

EXHIBIT

NUMBER

DESCRIPTION

EXHIBIT
NUMBER		DESCRIPTIONMETHOD OF FILING

2(a)

Agreement and Plan of Merger by and between Lamar Advertising Company (the “Company”) and Lamar Advertising REIT Company dated August 27, 2014.

2(b)

3(a)

Equity Purchase Agreement dated January 7, 2016 by and among CCOI Holdco Parent I, LLC, CCOI Holdco Sub I, LLC, and Lamar Media Corp (“Lamar Media”).

Previously filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K (File No. 1-36756) filed on January 13, 2016 and incorporated herein by reference.

2(c)

Equity Purchase Agreement dated January 7, 2016 by and among CCOI Holdco Parent II, LLC, CCOI Holdco Sub II, LLC, and Lamar Media.

Previously filed as Exhibit 2.2 to the Company’s Current Report on Form 8-K (File No. 1-36756) filed on January 13, 2016 and incorporated herein by reference.

2(d)

Equity Purchase Agreement, dated December  21, 2018, by and among Lamar Media, FMG Outdoor Holdings, LLC, GTCR/FMG Blocker Corp., NCP Fairway, Inc., GTCR Fund XI/C LP, Newstone Capital Partners II, L.P., each of the Selling Members party thereto, and GTCR Partners XI/B LP, solely in its capacity as the Representative.

Previously filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K (File No. 1-36756) filed on December 28, 2018 and incorporated herein by reference.

3(a)

Amended and Restated Certificate of Incorporation of the Company, as filed with the Secretary of the State of Delaware effective as of November 18, 2014.

3(b)

Certificate of Merger, effective as of November 18, 2014.

3(c)

Amended and Restated Bylaws of the Company, adopted as of November 18, 2014.

3(d)

Amended and Restated Certificate of Incorporation of Lamar Media.

3(e)

Amended and Restated Bylaws of Lamar Media.

4(a)(1)

Specimen certificate for the shares of Class A common stock of the Company.

4(a)(2)

Specimen certificate for the shares of Class B common stock of the Company.

4(a)(3)

Description of Securities Registered Under Section 12 of the Exchange Act.


EXHIBIT

NUMBER

DESCRIPTION

METHOD OF FILING

4(b)(1)

Indenture, dated as of February 9,October 30, 2012, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Lamar Media’s 5 7/8% Senior Subordinated Notes due 2022.

Previously filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 0-30242) filed on February 14, 2012 and incorporated herein by reference.

4(b)(2)

Form of 5 7/8% Senior Subordinated Notes due 2022.

Previously filed with the Indenture dated February 9, 2012, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 0-30242) filed on February 14, 2012, and incorporated herein by reference.

4(b)(3)

Form of 5 7/8% Senior Subordinated Exchange Notes due 2022.

Previously filed with the Indenture dated February 9, 2012, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 0-30242) filed on February 14, 2012, and incorporated herein by reference.

4(b)(4)

Supplemental Indenture to the Indenture dated as of February 9, 2012, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of December 30, 2012, relating to Lamar Media’s 5 7/8% Senior Subordinated Notes due 2022.

Previously filed as Exhibit 4(g)(4) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 0-30242) filed on February 28, 2013 and incorporated herein by reference.

4(b)(5)

Supplemental Indenture to the Indenture dated as of February 9, 2012, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of December 30, 2012, relating to Lamar Media’s 5 7/8% Senior Subordinated Notes due 2022.

Previously filed as Exhibit 4(g)(5) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 0-30242) filed on February 28, 2013 and incorporated herein by reference.

4(b)(6)

Supplemental Indenture to the Indenture dated as of February 9, 2012, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of December 30, 2012, relating to Lamar Media’s 5 7/8% Senior Subordinated Notes due 2022.

Previously filed as Exhibit 4(g)(6) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 0-30242) filed on February 28, 2013 and incorporated herein by reference.

4(b)(7)

Supplemental Indenture to the Indenture dated as of February 9, 2012, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of May 31, 2013, relating to Lamar Media’s 5 7/8% Senior Subordinated Notes due 2022.

Previously filed as Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2013 (File No. 0-30242) filed on August 8, 2013 and incorporated herein by reference.

4(b)(8)

Supplemental Indenture to the Indenture dated as of February 9, 2012, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of January 2, 2014, relating to Lamar Media’s 5 7/8% Senior Subordinated Notes due 2022.

Previously filed as Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2014 (File No. 0-30242) filed on May 7, 2014 and incorporated herein by reference.

4(b)(9)

Supplemental Indenture to the Indenture dated as of February 9, 2012, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of July 28, 2015, relating to Lamar Media’s 5 7/8% Senior Subordinated Notes due 2022.

Previously filed as Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2015 (File No. 1-36756) filed on November 5, 2015 and incorporated herein by reference.

4(b)(10)

Supplemental Indenture to the Indenture dated as of February 9, 2012, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of December 14, 2017, relating to Lamar Media’s 5 7/8% Senior Subordinated Notes due 2022.

Previously filed as Exhibit 4(b)(10) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (File No. ‎1-36756‎) filed on February 27, 2018 and incorporated herein by reference.

4(b)(11)

Supplemental Indenture to the Indenture dated as of February 9, 2012, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of December 14, 2017, relating to Lamar Media’s 5 7/8% Senior Subordinated Notes due 2022.

Previously filed as Exhibit 4(b)(11) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (File No. ‎1-36756‎) filed on February 27, 2018 and incorporated herein by reference.


EXHIBIT

NUMBER

DESCRIPTION

METHOD OF FILING

4(c)(1)

Indenture, dated as of October 30, 2012, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust

Company, N.A., as Trustee, relating to Lamar Media’s 5% Senior Subordinated Notes due 2023.

4(c)4(b)(2)

Form of 5% Senior Subordinated Notes due 2023.

4(c)4(b)(3)

Form of 5% Senior Subordinated Exchange Notes due 2023.

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4(c)(4)

EXHIBIT
NUMBER

DESCRIPTION

METHOD OF FILING
4(b)(4)Supplemental Indenture to the Indenture dated as of October 30, 2012, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of December 30, 2012, relating to Lamar Media’s 5% Senior Subordinated Notes due 2023.

4(c)4(b)(5)

Supplemental Indenture to the Indenture dated as of October 30, 2012, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of December 30, 2012, relating to Lamar Media’s 5% Senior Subordinated Notes due 2023.

4(c)4(b)(6)

Supplemental Indenture to the Indenture dated as of October 30, 2012, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of December 30, 2012, relating to Lamar Media’s 5% Senior Subordinated Notes due 2023.

4(c)4(b)(7)

Supplemental Indenture to the Indenture dated as of October 30, 2012, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of May 31, 2013, relating to Lamar Media’s 5% Senior Subordinated Notes due 2023.

4(c)4(b)(8)

Supplemental Indenture to the Indenture dated as of October 30, 2012, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of January 2, 2014, relating to Lamar Media’s 5% Senior Subordinated Notes due 2023.

4(c)4(b)(9)

Supplemental Indenture to the Indenture dated as of October 30, 2012, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of July 28, 2015, relating to Lamar Media’s 5% Senior Subordinated Notes due 2023.

4(c)4(b)(10)

Supplemental Indenture to the Indenture dated as of October 30, 2012, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of December 14, 2017, relating to Lamar Media’s 5% Senior Subordinated Notes due 2023.

4(c)4(b)(11)

Supplemental Indenture to the Indenture dated as of October 30, 2012, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of December 14, 2017, relating to Lamar Media’s 5% Senior Subordinated Notes due 2023.


EXHIBIT

NUMBER

DESCRIPTION

METHOD OF FILING

4(c)4(b)(12)

Supplemental Indenture to the Indenture dated as of ‎ October 30, 2012, among Lamar Media, the Guarantors ‎namednamed therein and The Bank of New York Mellon Trust ‎Company,Company, N.A., as Trustee, dated

as of January 22, 2019, relating to Lamar Media’s 5% Senior Subordinated ‎NotesNotes due 2023.‎

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4(c)(13)

EXHIBIT
NUMBER

DESCRIPTION

METHOD OF FILING
4(b)(13)Supplemental Indenture to the Indenture dated as of October 30, 2012, among Lamar Media, the Guarantors ‎namednamed therein and The Bank of New York Mellon Trust ‎Company,Company, N.A., as Trustee, dated as of January 22, 2019, relating to Lamar Media’s 5% Senior Subordinated ‎NotesNotes due 2023.‎

4(c)4(b)(14)

Supplemental Indenture to the Indenture dated as of ‎ October 30, 2012, among Lamar Media, the Guarantors ‎namednamed therein and The Bank of New York Mellon Trust ‎Company,Company, N.A., as Trustee, dated as of August 15, 2019, relating to Lamar Media’s 5% Senior Subordinated ‎NotesNotes due 2023.‎

4(d)4(c)(1)

Indenture, dated as of January 10, 2014, between Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Lamar Media’s 5 3/8% Senior Notes due 2024.

4(d)4(c)(2)

Form of 5 3/8% Senior Notes due 2024.

4(d)4(c)(3)

Form of 5 3/8% Senior Exchange Notes due 2024.

4(d)4(c)(4)

Supplemental Indenture to the Indenture dated as of January 10, 2014, among Lamar Media, the Guarantors named therein

and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of July 28, 2015, relating to Lamar Media’s 5 3/8% Senior Notes due 2024.

4(d)4(c)(5)

Supplemental Indenture to the Indenture dated as of January 10, 2014, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of December 14, 2017, relating to Lamar Media’s 5 3/8% Senior Notes due 2024.

4(d)4(c)(6)

Supplemental Indenture to the Indenture dated as of January 10, 2014, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of December 14, 2017, relating to Lamar Media’s 5 3/8% Senior Notes due 2024.

4(d)4(c)(7)

Supplemental Indenture to the Indenture dated as of ‎JanuaryJanuary 10, 2014, among Lamar Media, the Guarantors ‎namednamed therein and The Bank of New York Mellon Trust ‎Company,Company, N.A., as Trustee, dated as of January 22, 2019, relating to Lamar Media’s 5 3/8% Senior Notes due ‎‎2024.‎

4(d)4(c)(8)

Supplemental Indenture to the Indenture dated as of ‎JanuaryJanuary 10, 2014, among Lamar Media, the Guarantors ‎namednamed therein and The Bank of New York Mellon Trust ‎Company,Company, N.A., as Trustee, dated as of January 22, 2019, relating to Lamar Media’s 5 3/8% Senior Notes due ‎‎2024.‎


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EXHIBIT

NUMBER

DESCRIPTION

EXHIBIT
NUMBER		DESCRIPTIONMETHOD OF FILING

4(d)4(c)(9)

Supplemental Indenture to the Indenture dated as of ‎JanuaryJanuary 10, 2014, among Lamar Media, the Guarantors ‎namednamed therein and The Bank of New York Mellon Trust ‎Company,Company, N.A., as Trustee, dated as of August 15, 2019, relating to Lamar Media’s 5 3/8% Senior Notes due ‎‎2024.‎

4(e)4(d)(1)

Indenture, dated as of January 28, 2016, between Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Lamar Media’s 5 3/4% Senior Notes due 2026.

4(e)4(d)(2)

Form of 5 3/4% Senior Notes due 2026.

4(e)4(d)(3)

Form of 5 3/4% Senior Exchange Notes due 2026.

4(e)4(d)(4)

Supplemental Indenture to the Indenture dated as of January 28, 2016, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of December 14, 2017, relating to Lamar Media’s 5 3/4% Senior Notes due 2026.

4(e)4(d)(5)

Supplemental Indenture to the Indenture dated as of January 28, 2016, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of December 14, 2017, relating to Lamar Media’s 5 3/4% Senior Notes due 2026.

4(e)4(d)(6)

Supplemental Indenture to the Indenture dated as of January 28, 2016, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of January 22, 2019, relating to Lamar Media’s 5 3/4% Senior Notes due 2026.

4(e)4(d)(7)

Supplemental Indenture to the Indenture dated as of January 28, 2016, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of January 22, 2019, relating to Lamar Media’s 5 3/4% Senior Notes due 2026.

4(e)4(d)(8)

Supplemental Indenture, dated as of February 1, 2019, between Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Lamar Media’s 5 3/4% Senior Notes due 2026.

4(e)4(d)(9)

Supplemental Indenture to the Indenture dated as of January 28, 2016, among Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of August 15, 2019, relating to Lamar Media’s 5 3/4% Senior Notes due 2026.

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EXHIBIT
NUMBER

DESCRIPTIONMETHOD OF FILING
4(e)(1)Indenture, dated as of February 6, 2020, between Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Lamar Media’s 3 3/4% Senior Notes due 2028.
4(e)(2)Form of 3 3/4% Senior Notes due 2028.
4(e)(3)Form of 3 3/4% Senior Exchange Notes due 2028.
4(f)(1)Indenture, dated as of February 6, 2020, between Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Lamar Media’s 4% Senior Notes due 2030.
4(f)(2)Form of 4% Senior Notes due 2030.
4(f)(3)Form of 4% Senior Exchange Notes due 2030.
4(g)(1)Indenture, dated as of May 13, 2020, between Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Lamar Media’s 4 7/8% Senior Notes due 2029.
4(g)(2)Form of 4 7/8% Senior Notes due 2029.
4(g)(3)Form of 4 7/8% Senior Exchange Notes due 2029.
4(h)(1)Indenture, dated as of January 22, 2021, between Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Lamar Media’s 3.625% Senior Notes due 2031.
4(h)(2)Form of 3.625% Senior Notes due 2031.
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EXHIBIT
NUMBER		DESCRIPTIONMETHOD OF FILING
4(h)(3)Form of 3.625% Senior Exchange Notes due 2031.
4(i)Agreement of Resignation, Appointment and Acceptance, dated as of June 14, 2021, by and among Lamar Media, as issuer, U.S. Bank National Association, as successor trustee, and The Bank of New York Mellon Trust Company, N.A., as resigning trustee.
10(a)(1)*

Lamar Advertising Company 1996 Equity Incentive Plan, as amended and restated by the Board of Directors on December 12, 2019.

10(a)(2)*

Form of Stock Option Agreement under the 1996 Equity Incentive Plan, as amended and restated.


EXHIBIT

NUMBER

DESCRIPTION

METHOD OF FILING

10(a)(3)*

Form of Restricted Stock Agreement.

10(a)(4)*

Form of Restricted Stock Agreement for Non-Employee directors.

10(b)(1)*

2009 Employee Stock Purchase Plan, as amended.

10(b)(2)*

Lamar Advertising Company 2019 Employee Stock ‎PurchasePurchase Plan.

10(c)(1)*

Lamar Deferred Compensation Plan (as amended).

10(c)(2)*

Form of Trust Agreement for the Lamar Deferred Compensation Plan.

10(c)(3)*

Amendment to the Lamar Deferred Compensation Plan dated December 13, 2013.

10(c)(1)*

Summary of Management Compensatory Arrangements, dated March 28, 2016.

10(d)(2)*

Summary of Non-Management Director Compensatory Arrangements, dated May 26, 2016.

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EXHIBIT
NUMBER

DESCRIPTION

METHOD OF FILING

10(e)(1)

Receivables Financing Agreement, dated December  18, 2018, by and among Lamar Media, as initial Servicer, Lamar TRS Receivables, LLC and Lamar QRS

10(e)(2)

Purchase and Sale Agreement, dated December 18, 2018, by and among certain subsidiaries of Lamar Media, Lamar Media, as initial Servicer, and Lamar QRS Receivables, LLC as Buyer.

10(e)(3)

Purchase and Sale Agreement, dated December 18, 2018, by and among certain subsidiaries of Lamar Media, Lamar Media, as initial Servicer, and Lamar TRS Receivables, LLC as Buyer.

10(e)(4)

Performance Guaranty of Lamar Media dated December 18, 2018 in favor of PNC Bank, National Association.

10(e)(5)First Amendment to the Receivables Financing Agreement, dated as of February 6, 2020, by and among Lamar Media as initial Servicer, Lamar TRS Receivables, LLC and Lamar QRS Receivables, LLC as borrowers and PNC Bank, National Association as Administrative Agent and Lender.
10(e)(6)First Amendment to the Purchase and Sale Agreement, dated as of February 6, 2020, by and among certain subsidiaries of Lamar Media, Lamar Media as initial Servicer, and Lamar QRS Receivables, LLC as Buyer.
10(e)(7)First Amendment to the Purchase and Sale Agreement, dated as of February 6, 2020, by and among certain subsidiaries of Lamar Media, Lamar Media as initial Servicer, and Lamar TRS Receivables, LLC as Buyer.
10(e)(8)Second Amendment to the Receivables Financing Agreement, dated as of May 6, 2020, by and among Lamar Media as Servicer, Lamar TRS Receivables, LLC and Lamar QRS Receivables, LLC as borrowers and PNC Bank, National Association as Administrative Agent and Lender.
10(e)(9)Second Amendment to the Purchase and Sale Agreement, dated as of May 6, 2020, by and among certain subsidiaries of Lamar Media. as originators, Lamar Media as Servicer, and Lamar QRS Receivables, LLC as Buyer, and consented to by PNC Bank, National Association, as Administrative Agent.
10(e)(10)Third Amendment to the Receivables Financing Agreement, dated as of June 30, 2020, among Lamar Media, as Initial Servicer, Lamar TRS Receivables, LLC and Lamar QRS Receivables, LLC as borrowers, and PNC Bank, National Association, as Administrative Agent and a Lender.
10(e)(11)Fourth Amendment to the Receivables Financing Agreement, dated as of October 23, 2020, among Lamar Media, as Initial Servicer, Lamar TRS Receivables, LLC and Lamar QRS Receivables, LLC as borrowers, and PNC Bank, National Association, as Administrative Agent and a Lender.

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EXHIBIT

NUMBER

DESCRIPTION

EXHIBIT
NUMBER		DESCRIPTIONMETHOD OF FILING

10(e)(12)

Fifth Amendment to the Receivables Financing Agreement, dated as of May 24, 2021, among Lamar Media, as Initial Servicer, Lamar TRS Receivables, LLC and Lamar QRS Receivables, LLC as borrowers, and PNC Bank, National Association, as Administrative Agent and a Lender.
10(f)(1)

Credit Agreement dated as of April 28, 2010 by and among Lamar Media, Lamar Advertising of Puerto Rico, Inc., the Subsidiary Guarantors named therein, each additional Subsidiary Borrower that may be designated as such thereunder, the Lenders named therein, and JPMorgan Chase Bank, N.A., as administrative agent.

10(f)(2)

Amendment No. 1, dated as of June 11, 2010, to the Credit Agreement dated as of April 28, 2010 by and among Lamar Media, Lamar Advertising of Puerto Rico, Inc., the Subsidiary Guarantors named therein, each additional Subsidiary Borrower that may be designated as such thereunder, the Lenders named therein, and JPMorgan Chase Bank, N.A., as administrative agent.

10(f)(3)

Amendment No. 2, dated as of November 18, 2010, to the Credit Agreement dated as of April 28, 2010 by and among Lamar Media, Lamar Advertising of Puerto Rico, Inc., the Subsidiary Guarantors named therein, each additional Subsidiary Borrower that may be designated as such thereunder, the Lenders named therein, and JPMorgan Chase Bank, N.A., as administrative agent.

10(f)(4)

Restatement Agreement, dated as of February 9, 2012, to the Credit Agreement dated as of April 28, 2010 by and among Lamar Media, Lamar Advertising of Puerto Rico, Inc., the Subsidiary Guarantors named therein, each additional Subsidiary Borrower that may be designated as such thereunder, the Lenders named therein, and JPMorgan Chase Bank, N.A., as administrative agent (including the Amended and Restated Credit Agreement).

10(f)(5)

10(f)(5)

Amendment No. 1, dated as of October 24, 2013, to the Amended and Restated Credit Agreement dated as of February 9, 2012 among Lamar Media, the subsidiary borrower party thereto, the subsidiary guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent.

10(f)(6)

10(f)(6)

Second Restatement Agreement, dated as of February 3, 2014, by and among Lamar Media, the Company, the Subsidiary Guarantors named therein, the Lenders named therein, and JPMorgan Chase Bank, N.A., as administrative agent (including the Second Amended and Restated Credit Agreement as Exhibit A thereto).


EXHIBIT

NUMBER

DESCRIPTION

METHOD OF FILING

10(f)(7)

Amendment No. 1, dated as of April 18, 2014, to the Second Amended and Restated Credit Agreement, dated as of February 3, 2014, by and among Lamar Media, the Company, the Subsidiary Guarantors named therein, the Lenders named therein, and JPMorgan Chase Bank, N.A., as administrative agent.

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EXHIBIT
NUMBER

DESCRIPTION		METHOD OF FILING

10(f)(8)

Incremental Amendment No. 1 dated January 7, 2016 to the Second Amended and Restated Credit Agreement, dated as of February 3, 2014, as amended by and among Lamar Media, the Company, the Subsidiary Guarantors named therein, the Lenders named therein, and JPMorgan Chase Bank, N.A., as Administrative Agent.

10(f)(9)

10(f)(9)

Amendment No. 2, dated as of March 4, 2016, to the Second Amended and Restated Credit Agreement, dated as of February 3, 2014, as amended by and among Lamar Media, the Company, certain of Lamar Media’s subsidiaries as Guarantors, JPMorgan Chase Bank, N.A. as Administrative Agent and the Lenders party thereto.

10(f)(10)

10(f)(10)

Third Restatement Agreement, dated as of May 15, 2017, by and among Lamar Media, the Company, the Subsidiary Guarantors named therein, the Lenders named therein, and JPMorgan Chase Bank, N.A., as Administrative Agent (including the Third Amended and Restated Credit Agreement as Exhibit A thereto).

10(f)(11)

10(f)(11)

Amendment No. 1 dated as of March  16, 2018 to the Third Restatement Agreement, by and among Lamar Media, the Company, the subsidiary guarantors named therein, the Lenders named therein, and JPMorgan Chase Bank, N.A., as administrative agent (including the Third Amended and Restated Credit Agreement, as amended for Amendment No. 1, as Exhibit A thereto).

10(f)(12)

Amendment No. 2 dated as of December  6, 2018 to the Third Restatement Agreement, by and among Lamar Media, the Company, the subsidiary guarantors named therein, the Lenders named therein, and JPMorgan Chase Bank, N.A., as administrative agent (including the Third Amended and Restated Credit Agreement, as amended for Amendment No. 2, as Exhibit A thereto).

10(f)(13)

Incremental Amendment No. 1, dated January 17, 2019, by and among Lamar Media, Lamar Advertising, the ‎subsidiarysubsidiary guarantors named therein, the Lenders named therein, and JPMorgan Chase Bank, N.A., as ‎AdministrativeAdministrative Agent.

10(f)(14)

10(f)(14)

Joinder Agreement, dated as of July 19, 2010, to the Credit Agreement dated as of April 28, 2010 among Lamar Media, the subsidiary borrower party thereto, the subsidiary guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, by Arizona Logos, L.L.C.

10(f)(15)

10(f)(15)

Joinder Agreement, dated as of April 21, 2011, to the Credit Agreement dated as of April 28, 2010 among Lamar Media, the subsidiary borrower party thereto, the subsidiary guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, by Wisconsin Logos, LLC.

10(f)(16)

10(f)(16)

Joinder Agreement, dated as of August 26, 2011, to the Credit Agreement dated as of April 28, 2010 among Lamar Media, the subsidiary borrower party thereto, the subsidiary guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, by Montana Logos, LLC.


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EXHIBIT

NUMBER

DESCRIPTION

METHOD OF FILING

EXHIBIT
NUMBER

DESCRIPTIONMETHOD OF FILING
10(f)(17)

Joinder Agreement, dated as of November 14, 2012, to the Amended and Restated Credit Agreement dated as of February 9, 2012 among Lamar Media, the subsidiary borrower party thereto, the subsidiary guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, by NextMedia Outdoor, Inc.

10(f)(18)

10(f)(18)

Joinder Agreement, dated as of November 14, 2012, to the Amended and Restated Credit Agreement dated as of February 9, 2012 among Lamar Media, the subsidiary borrower party thereto, the subsidiary guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, by NextMedia Outdoor, Inc.

10(f)(19)

10(f)(19)

Joinder Agreement, dated as of November 14, 2012, to the Amended and Restated Credit Agreement dated as of February 9, 2012 among Lamar Media, the subsidiary borrower party thereto, the subsidiary guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, by NMG Outdoor I Corp.

10(f)(20)

10(f)(20)

Joinder Agreement, dated as of December 5, 2013, to the Amended and Restated Credit Agreement dated as of February 9, 2012 among Lamar Media, the subsidiary borrower party thereto, the subsidiary guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, by Lamar TRS Holdings, LLC.

10(f)(21)

10(f)(21)

Joinder Agreement, dated as of December 5, 2013, to the Amended and Restated Credit Agreement dated as of February 9, 2012 among Lamar Media, the subsidiary borrower party thereto, the subsidiary guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, by Lamar Service Company, LLC.

10(f)(22)

10(f)(22)

Joinder Agreement, dated as of December 5, 2013, to the Amended and Restated Credit Agreement dated as of February 9, 2012 among Lamar Media, the subsidiary borrower party thereto, the subsidiary guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, by Lamar Investments, LLC.

10(f)(23)

10(f)(23)

Joinder Agreement, dated as of December 5, 2013, to the Amended and Restated Credit Agreement dated as of February 9, 2012 among Lamar Media, the subsidiary borrower party thereto, the subsidiary guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, by Lamar Transit, LLC.

10(f)(24)

10(f)(24)

Joinder Agreement, dated as of July 28, 2015, to the Second Amended and Restated Credit Agreement dated as of February 3, 2014, as amended, among Lamar Media, the subsidiary borrower party thereto, the subsidiary guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, by Lamar Alliance Airport Advertising Company.


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EXHIBIT

NUMBER

DESCRIPTION

EXHIBIT
NUMBER		DESCRIPTIONMETHOD OF FILING

10(f)(25)

Joinder Agreement, dated as of January 30, 2018, to the Third Amended and Restated Credit Agreement dated as of May 15, 2017, as amended, among Lamar Media, the subsidiary borrower party thereto, the subsidiary guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, by Interstate Logos TRS, LLC.

10(f)(26)

10(f)(26)

Joinder Agreement, dated as of January 15, 2019, to the ‎ThirdThird Amended and Restated Credit Agreement dated as ‎ofof May 15, 2017, as amended, among Lamar Media, the ‎subsidiarysubsidiary borrower party thereto, the subsidiary ‎guarantorsguarantors party thereto, the lenders party thereto and ‎JPMorganJPMorgan Chase Bank, N.A., as administrative agent, by ‎FMGFMG Outdoor Holdings, LLC, Lamar-Fairway Blocker 1, Inc.‎, Lamar-Fairway Blocker 2, Inc.‎, Magic Media, Inc.‎, Fairway Media Group, LLC, Fairway Outdoor Advertising, LLC, Fairway Outdoor Funding Holdings, LLC, Fairway Outdoor Funding, LLC, MCC Outdoor, LLC, Magic Media Real Estate, LLC, FMO Real Estate, LLC, Douglas Outdoor Advertising of GA., Inc., ‎OlympusOlympus Media/Indiana, LLC and Fairway CCO Indiana, LLC.

10(f)(27)

10(f)(27)

Joinder Agreement, dated as of January 15, 2019, to the ‎‎Third Amended and Restated Credit Agreement dated as ‎of ‎Mayof May 15, 2017, as amended, among Lamar Media, the ‎‎subsidiary borrower party thereto, the subsidiary ‎guarantors ‎partyguarantors party thereto, the lenders party thereto and ‎JPMorgan ‎ChaseJPMorgan Chase Bank, N.A., as administrative agent, by ‎ New Hampshire Logos, L.L.C.‎

10(f)(28)

10(f)(28)

Joinder Agreement, dated as of August 15, 2019, to the ‎ThirdThird Amended and Restated Credit Agreement dated as ‎ofof May 15, 2017, as amended, among Lamar Media, the ‎subsidiarysubsidiary borrower party thereto, the subsidiary ‎guarantorsguarantors party thereto, the lenders party thereto and ‎JPMorganJPMorgan Chase Bank, N.A., as administrative agent, by Ashby Street Outdoor Holdings LLC,  Ashby Street Outdoor CC, LLC and Ashby Street Outdoor LLC‎.

LLC.

10(f)(29)

10(h)

Registration RightsFourth Amended and Restated Credit Agreement, dated as of October 30, 2012, betweenFebruary 6, 2020, by and among Lamar Media, the Subsidiary Guarantors named therein, the Lenders named therein, and the Initial Purchasers named therein.

JPMorgan Chase Bank, N.A., as Administrative Agent.

10(i)

Registration Rights Agreement, dated as of January 10, 2014, between Lamar Media, the Guarantors named therein and J.P. Morgan Securities LLC, as representative for the Initial Purchasers named therein.

Previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 0-30242) filed on January 15, 2014 and incorporated herein by reference.

10(j)

Registration Rights Agreement, dated as of January 28, 2016, between Lamar Media, the Guarantors named therein and J.P. Morgan Securities LLC, as representative for the Initial Purchasers named therein.

Previously filed as Exhibit 10.110.3 to the Company’s Current Report on Form 8-K (File No. 1-36756) filed on February 1, 201612, 2020 and incorporated herein by reference.

10(l)*

10(k)

Registration Rights Agreement, dated as of February 1, 2019, between Lamar Media, the Guarantors named therein and J.P. Morgan Securities LLC, as representative for the Initial Purchasers named therein.

Previously filed as Exhibit 10.1 to Lamar ‎Advertising’s Current Report on Form 8-K ‎‎(File No. 1-36756) filed on February 6, ‎‎2019 and incorporated herein by reference.‎

10(l)*

Form of Indemnification Agreement between the Company and the directors and executive officers of the Company, dated as of November 18, 2014.

14(a)

EXHIBIT

NUMBER

DESCRIPTION

METHOD OF FILING

14(a)

Lamar Advertising Company Code of Business Conduct and Ethics.

21(a)

21(a)

Subsidiaries of the Company.

22(a)

Subsidiary guarantors of Lamar Media.

23(a)

Consent of KPMG LLP.

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EXHIBIT
NUMBER

DESCRIPTION		METHOD OF FILING

31(a)

Certification of the Chief Executive Officer of the Company and Lamar Media pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.

31(b)

31(b)

Certification of the Chief Financial Officer of the Company and Lamar Media pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32(a)

32(a)

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

101

The following materials from the combined Annual Report of the Company and Lamar Media Corp. on Form 10-K for the year ended December 31, 2019,2021, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 20192021 and 20182020 of the Company and Lamar Media, (ii) Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2019, 20182021, 2020 and 20172019 of the Company and Lamar Media, (iii) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2019, 20182021, 2020 and 20172019 of the Company and Lamar Media, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2019, 20182021, 2020 and 20172019 of the Company and Lamar Media, and (v) Notes to Consolidated Financial Statements of the Company and Lamar Media.

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*

*    Denotes management contract or compensatory plan or arrangement in which the executive officers or directors of the Company participate.


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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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

February 20, 2020

25, 2022

By:

By:

/s/ Sean E. Reilly

Sean E. Reilly

President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

Signature

Title		Date

/s/ Sean E. Reilly

President and Chief Executive Officer (Principal Executive Officer)

2/20/20

25/22

Sean E. Reilly

/s/ Jay L. Johnson

Chief Financial Officer (Principal Financial and Accounting Officer)

2/20/20

25/22

Jay L. Johnson

/s/ Kevin P. Reilly, Jr.

PresidentExecutive Chairman and Director

2/20/20

25/22

Kevin P. Reilly, Jr.

/s/ Wendell S. Reilly

Director

2/20/20

25/22

Wendell S. Reilly

/s/ Stephen P. Mumblow

Director

2/20/20

25/22

Stephen P. Mumblow

/s/ Marshall A. Loeb

Director

2/20/20

25/22

Marshall A. Loeb

/s/ Thomas Reifenheiser

Director

2/20/20

25/22

Thomas Reifenheiser

/s/ Anna Reilly

Director

2/20/20

25/22

Anna Reilly

/s/ John E. Koerner, III

Director

2/20/20

25/22

John E. Koerner, III

/s/ Elizabeth Thompson

Director

2/20/20

25/22

Elizabeth Thompson

/s/ Nancy FletcherDirector2/25/22
Nancy Fletcher



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 MEDIA CORP.

February 20, 2020

25, 2022

By:

By:

/s/ Sean E. Reilly

Sean E. Reilly

President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

Signature

Title		Date

/s/ Kevin P. Reilly, Jr.

PresidentExecutive Chairman and Director

2/20/20

25/22

Kevin P. Reilly, Jr.

/s/ Sean E. Reilly

President and Chief Executive Officer and Director (Principal Executive Officer)

2/20/20

25/22

Sean E. Reilly

/s/ Jay L. Johnson

Chief Financial and Accounting Officer and Director


(Principal Financial and Accounting Officer)

2/20/20

25/22

Jay L. Johnson

/s/ C. Brent McCoy

Lee Kantrow, Jr.

Executive Vice President of Business DevelopmentMergers and Acquisitions and Director

2/20/20

25/22

C. Brent McCoy

Lee Kantrow, Jr.

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