UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended September 30, 2002March 31, 2003
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to --------------- ---------------_______________
Commission File Number 0-30242
LAMAR ADVERTISING COMPANY
Commission File Number 1-12407
LAMAR MEDIA CORP.
(Exact name of registrants as specified in their charters)
Delaware 72-1449411
Delaware 72-1205791
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification No.)
5551 Corporate Blvd., Baton Rouge, LA 70808
(Address of principalDelaware 72-1449411
Delaware 72-1205791
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification No.)
5551 Corporate Blvd., Baton Rouge, LA 70808
(Address of principle executive offices) (Zip Code)
Registrants' telephone number, including area code: (225) 926-1000
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 Lamar Advertising Company is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act: Yes (X) No ( )
Indicate by check mark whether Lamar Media Corp. is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act: Yes ( ) No (X)
The number of shares of Lamar Advertising Company's Class A common stock
outstanding as of November 5, 2002: 85,037,311May 8, 2003: 85,718,968
The number of shares of the Lamar Advertising Company's Class B common stock
outstanding as of November 5, 2002:May 8, 2003: 16,417,073
The number of shares of Lamar Media Corp. common stock outstanding as of November 5, 2002:May 8,
2003: 100
THIS COMBINED FORM 10-Q IS SEPARATELY FILED BY (i) LAMAR ADVERTISING COMPANY AND
(ii)(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 H(1) (a) AND (b) OF FORM 10-Q AND IS, THEREFORE, FILING THIS FORM
WITH THE REDUCED DISCLOSURE FORMAT PERMITTED BY SUCH INSTRUCTION.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This combined Quarterly Report on Form 10-Q of Lamar Advertising Company and
Lamar Media Corp. contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These are statements that relate to future periods and
include statements regardingabout the Company's, and Lamar Media's anticipated
performance in 2002. In addition, the outcome of pending motions or appeals, if
any, relatedMedia's:
o expected operating results;
o market opportunities;
o acquisition opportunities;
o ability to litigation discussed herein is unknown.compete; and
o stock price.
Generally, the words anticipates, believes, expects, intends, estimates,
projects, plans and similar expressions identify forward-looking statements.
These forward-looking statements involve known and unknown risks, uncertainties
and other important factors that could cause the Company's and Lamar Media's
actual results, performance or achievements or industry results, to differ
materially from any future results, performance or achievements expressed or
implied by these forward-looking statements. These risks, uncertainties and
other important factors include, among others:
o the performance of the U.S. economy generally and the level of expenditures
on outdoor advertising particularly;
o the Company's ability to renew expiring contracts at favorable rates;
o the integration of companies that the Company acquires and its ability to
recognize cost savings or operating efficiencies as a result of these
acquisitions;
o risks and uncertainties relating to the Company's significant indebtedness;
o the Company's need for and ability to obtain additional funding for
acquisitions or operations; and
o the regulation of the outdoor advertising industry.
For a further description of these and other risks and uncertainties, the
Company encourages you to carefully read the portion of the combined Annual
Report on Form 10-K for the year ended December 31, 20012002 of the Company and
Lamar Media (the "2001"2002 Combined Form 10-K") under the caption "Factor"Factors Affecting
Future Operating Results" in Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations filed with the SEC on March 21,
2002.26,
2003.
The Company cautions investors not to place undue reliance on the forward-looking statements contained in this document. These statementscombined Quarterly Report on
Form 10-Q speak only as of the date of this report, andcombined report. Lamar Advertising
Company and Lamar Media undertake noCorp. expressly disclaim any obligation or undertaking
to updatedisseminate any updates or revise the statements, except as may
be required by law.revisions to any forward-looking statement
contained in this combined Quarterly Report to reflect any change in their
expectations with regard thereto or any change in events, conditions or
circumstances on which any forward-looking statement is based.
CONTENTS
Page
----
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Lamar Advertising Company
Condensed Consolidated Balance Sheets as of September 30, 2002March 31, 2003 and December 31, 20012002 1
Condensed Consolidated Statements of Operations for the three months ended
September 30,March 31, 2003 and 2002 and 2001 and nine months ended September 30, 2002 and 2001 2
Condensed Consolidated Statements of Cash Flows for the ninethree months ended
September 30,March 31, 2003 and 2002 and 2001 3
Notes to Condensed Consolidated Financial Statements 4 - 78
Lamar Media Corp.
Condensed Consolidated Balance Sheets as of September 30, 2002March 31, 2003 and December 31, 2001 82002 9
Condensed Consolidated Statements of Operations for the three months ended
September 30,March 31, 2003 and 2002 and 2001 and nine months ended September 30, 2002 and 2001 910
Condensed Consolidated Statements of Cash Flows for the ninethree months ended
September 30,March 31, 2003 and 2002 and 2001 1011
Notes to Condensed Consolidated Financial Statements 1112
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 1213 - 1518
ITEM 3. Quantitative and Qualitative Disclosures About Market Risks 1619
ITEM 4. Controls and Procedures 1619
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 1720
Signatures 1720
Certifications 1821 - 1922
Index to Exhibits 2023
PART I - FINANCIAL INFORMATION
ITEM 1.- FINANCIAL STATEMENTS
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
September 30,March 31, December 31,
ASSETS2003 2002 2001
- ------
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 58,6467,870 $ 12,88515,610
Cash on deposit for debt extinguishment -- 266,657
Receivables, net 102,877 95,135of allowance for doubtful accounts of $4,543 and $4,914
in 2003 and 2002, respectively 91,190 92,382
Prepaid expenses 41,344 27,17641,874 30,091
Deferred tax asset 5,758 6,428
Other current assets 12,318 8,0197,555 7,315
------------ ------------
Total current assets 215,185 143,215154,247 418,483
------------ ------------
Property, plant and equipment 1,824,868 1,777,3991,889,612 1,850,657
Less accumulated depreciation and amortization (522,405) (451,686)(603,223) (566,889)
------------ ------------
Net property, plant and equipment 1,302,463 1,325,7131,286,389 1,283,768
------------ ------------
Goodwill 1,179,934 1,178,428
Intangible assets, 2,192,081 2,179,475net 978,914 988,953
Other assets - non-current 18,797 17,30419,557 18,474
------------ ------------
Total assets $ 3,728,5263,619,041 $ 3,665,7073,888,106
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 7,909 $ 10,04810,421 10,051
Current maturities of long-term debt 114,244 66,5595,663 4,687
Current maturities related to debt extinguishment -- 255,000
Accrued expenses 32,480 33,67423,895 38,881
Deferred income 15,360 11,61815,060 13,942
------------ ------------
Total current liabilities 169,993 121,89955,039 322,561
------------ ------------
Long-term debt 1,710,697 1,745,0261,732,500 1,734,746
Deferred income taxes 118,229 118,83794,408 114,260
Other liabilities 7,937 7,72441,243 7,366
------------ ------------
Total liabilities 2,006,856 1,993,4861,923,190 2,178,933
------------ ------------
Stockholders' equity:
Series AA preferred stock, par value $.001, $63.80 cumulative dividends, authorized
5,720 shares; 5,719 shares issued and outstanding at 20022003 and 20012002 -- --
Class A preferred stock, par value $638, $63.80 cumulative dividends, 10,000 shares
authorized; 0 shares issued and outstanding at 20022003 and 20012002 -- --
Class A common stock, par value $.001, 175,000,000 shares authorized, 85,020,286
and 82,899,80085,707,418
And 85,077,038 shares issued and outstanding at 2003 and 2002, and 2001, respectively 86 85 83
Class B common stock, par value $.001, 37,500,000 shares authorized, 16,417,073
and 16,611,835 shares issued and outstanding at 2003 and 2002 and 2001, respectively 16 1716
Additional paid-in capital 2,035,245 1,963,0652,055,749 2,036,709
Accumulated deficit (313,676) (290,944)(360,000) (327,637)
------------ ------------
Stockholders' equity 1,721,670 1,672,2211,695,851 1,709,173
------------ ------------
Total liabilities and stockholders' equity $ 3,728,5263,619,041 $ 3,665,7073,888,106
============ ============
See accompanying notes to condensed consolidated financial statements.
-1-
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Three Months Ended
Nine Months Ended
September 30, September 30,March 31,
2003 2002
2001 2002 2001
------------- ------------- ------------- ------------------------- ------------
Net revenues $ 201,918184,221 $ 188,267 $ 580,985 $ 550,440
------------- ------------- ------------- -------------176,538
------------ ------------
Operating expenses (income)
Direct advertising expenses 71,685 64,593 205,544 187,44471,557 67,227
General and administrative expenses 42,325 37,552 122,948 111,68442,847 41,206
Depreciation and amortization 70,268 89,399 206,769 263,629
(Gain) Loss67,513 67,100
Gain on disposition of assets (33) 311 (203) (708)
------------- ------------- ------------- -------------
184,245 191,855 535,058 562,049
------------- ------------- ------------- -------------(30) (89)
------------ ------------
181,887 175,444
------------ ------------
Operating income (loss) 17,673 (3,588) 45,927 (11,609)2,334 1,094
Other expense (income)
Loss on extinguishment of debt 11,173 --
Interest income (387) (100) (774) (522)(118) (221)
Interest expense 27,182 30,409 81,199 99,161
------------- ------------- ------------- -------------
26,795 30,309 80,425 98,639
------------- ------------- ------------- -------------23,760 26,776
------------ ------------
34,815 26,555
------------ ------------
Loss before income tax benefit (9,122) (33,897) (34,498) (110,248)and cumulative effect of a change in
accounting principle (32,481) (25,461)
Income tax benefit (3,134) (9,536) (12,039) (31,197)
------------- ------------- ------------- -------------(11,888) (9,298)
------------ ------------
Loss before cumulative effect of a change in accounting principle (20,593) (16,163)
Cumulative effect of change in accounting principle, net of tax benefit (11,679) --
------------ ------------
Net loss (5,988) (24,361) (22,459) (79,051)(32,272) (16,163)
Preferred stock dividends 91 91
273 273
------------- ------------- ------------- ------------------------- ------------
Net loss applicable to common stock $ (6,079)(32,363) $ (24,452) $ (22,732) $ (79,324)
============= ============= ============= =============(16,254)
============ ============
Loss per common share - basic and diluted:share:
Loss before a change in accounting principle $ (.06)(.20) $ (.25)(.16)
Cumulative effect of a change in accounting principle (.12) (--)
------------ ------------
Net loss $ (.23)(.32) $ (.81)
============= ============= ============= =============(.16)
============ ============
Weighted average common shares outstanding 101,377,147 99,163,065 100,965,349 98,328,027101,667,397 100,542,109
Incremental common shares from dilutive stock options -- -- -- --
Incremental common shares from convertible debt -- --
-- --
------------- ------------- ------------- ------------------------- ------------
Weighted average common shares assuming dilution 101,377,147 99,163,065 100,965,349 98,328,027
============= ============= ============= =============101,667,397 100,542,109
============ ============
See accompanying notes to condensed consolidated financial statements.
-2-
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
NineThree Months Ended
September 30,March 31,
2003 2002
2001
--------- ------------------- ----------
Cash flows from operating activities:
Net loss $ (22,459)(32,272) $ (79,051)(16,163)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 206,769 263,62967,513 67,100
Gain on disposition of assets (203) (708)(30) (89)
Deferred tax benefit (7,661) (32,214)(11,982) (4,025)
Provision for doubtful accounts 6,378 5,4952,325 2,744
Loss on debt extinguishment 11,173 --
Cumulative effect of a change in accounting principle 11,679 --
Changes in operating assets and liabilities:
(Increase) decrease in:
Receivables (12,208) (21,325)(475) (5,698)
Prepaid expenses (12,753) (11,139)(11,533) (11,773)
Other assets (4,559) 3,442(1,422) (8,130)
Increase (decrease) in:
Trade accounts payable (2,139) 3,210371 1,652
Accrued expenses (1,150) (15,935)
Other liabilities (43) 178(15,441) (10,382)
Deferred income 3,524 2,426
--------- ---------1,148 2,085
---------- ----------
Net cash provided by operating activities 153,496 118,008
--------- ---------21,054 17,321
---------- ----------
Cash flows from investing activities:
Acquisition of new markets (74,041) (274,560)(6,638) (38,211)
Capital expenditures (56,938) (59,958)(17,808) (14,121)
Proceeds from disposition of assets 2,048 3,906
--------- ---------938 701
---------- ----------
Net cash used in investing activities (128,931) (330,612)
--------- ---------(23,508) (51,631)
---------- ----------
Cash flows from financing activities:
Debt issuance costs (1,076) --(8,356) (1,050)
Net proceeds from issuance of common stock 12,697 51,711
Principal953 6,355
Principle payments and repayment premiums on long-term debt (50,192) (35,159)(264,449) (16,668)
Net borrowings under credit agreements -- 60,000
130,000
Increase in notes payable 40Cash from deposits for debt extinguishment 266,657 --
Dividends (273) (273)
--------- ---------(91) (91)
---------- ----------
Net cash (used in) provided by financing activities 21,196 146,279
--------- ---------(5,286) 48,546
---------- ----------
Net (decrease) increase (decrease) in cash and cash equivalents 45,761 (66,325)(7,740) 14,236
Cash and cash equivalents at beginning of period 15,610 12,885
72,340
--------- ------------------- ----------
Cash and cash equivalents at end of period $ 58,6467,870 $ 6,015
--------- ---------27,121
========== ==========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 85,25227,792 $ 104,151
========= =========30,343
========== ==========
Cash paid for state and federal income taxes $ 481146 $ 798
========= =========311
========== ==========
Common stock issuance related to acquisitions $ 56,10018,000 $ 29,000
========= =========38,000
========== ==========
See accompanying notes to condensed consolidated financial statements.
-3-
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
1. Significant Accounting Policies
The information included in the foregoing interim consolidated financial
statements is unaudited. In the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
the Company's financial position and results of operations for the interim
periods presented have been reflected herein. The results of operations for
interim periods are not necessarily indicative of the results to be expected for
the entire year. These condensed consolidated financial statements should be
read in conjunction with the Company's consolidated financial statements and the
notes thereto included in the 20012002 Combined Form 10-K.
Certain amounts in the prior year's consolidated financial statements have been
reclassified to conform with the current year presentation. These
reclassifications had no effect on previously reported net loss.
2. Acquisitions
On January 1, 2002,March 3, 2003, the Company purchased the stock of Delite Outdoor, of Ohio
Holdings, Inc. for
$38,000.$18,000. The purchase price consisted of 963,488 shares of
Lamar Advertising Class A common stock.
On January 8, 2002, the Company purchased the assets of MC Partners for a cash
purchase price of approximately $15,313.
On May 31, 2002, the Company purchased the assets of American Outdoor
Advertising, Inc. for $15,725. The purchase price consisted of 349,376588,543 shares of Lamar Advertising
Class A common stock as well as approximately $725 in cash.valued at $18,000.
During the ninethree months ended September 30, 2002,March 31, 2003, the Company completed 5613
additional acquisitions of outdoor advertising assets for a cash purchase price
of approximately $58,003 and the issuance of 92,600 shares of Lamar Advertising
Class A common stock valued at $3,100.$6,638.
Each of these acquisitions was accounted for under the purchase 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 have been allocated to assets acquired and
liabilities assumed based on fair market value at the dates of acquisition. The
following is a summary of the preliminary allocation of the acquisition costs in
the above transactions.
Property,
Current Plant &Delite
Outdoor
Inc. Other Other Current Long-term
Assets Equipment Goodwill Intangibles Assets Liabilities Liabilities
------- --------- --------Total
------------ ----------- ------ ----------- ------------------------
Delite Outdoor of Ohio Holdings 972Current assets 911 18 929
Property, plant and equipment 4,580 1,835 6,415
Goodwill 47 1,459 1,506
Site locations 10,048 14,324 21,6402,943 12,991
Non-competition agreements 145 120 265
Customer lists and contracts 2,732 657 3,389
Current liabilities 108 394 502
Long-term liabilities 355 -- 742 8,242
MC Partners 245 2,563 5,523 9,363 -- 40 2,341
American 725 8,388 -- 6,612 -- -- --
Other 790 11,949 22,718 26,701 1,769 469 2,355
----- ------ ------ ------ ----- ----- ------
2,732 32,948 42,565 64,316 1,769 1,251 12,938
===== ====== ====== ====== ===== ===== ======355
------------ ----------- -------------
18,000 6,638 24,638
============ =========== =============
-4-
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
Summarized below are certain unaudited pro forma statements of operations data
for the three months ended March 31, 2003 and nine months ended September 30,March 31, 2002 and September 30,
2001 as if each of the
above acquisitions and the acquisitions occurring in 2001,2002, which were fully
described in the 20012002 Combined Form 10-K, had been consummated as of January 1,
2001.2002 and the adoption of SFAS No. 143 as of January 1, 2002. This pro forma
information does not purport to represent what the Company's results of
operations actually would have been had such transactions occurred on the date
specified or to project the Company's results of operations for any future
periods.
Three Monthsmonths ended
Nine Months ended
September 30, September 30,March 31,
2003 2002
2001 2002 2001
--------- --------- --------- ----------------- --------
Net revenues $ 202,042 $ 194,090 $ 583,860 $ 573,327
========= ========= ========= =========$184,848 $179,171
======== ========
Net loss before cumulative effect of a change in accounting
principle $(20,689) $(17,107)
======== ========
Net loss applicable to common stock $ (6,140) $ (25,042) $ (23,312) $ (83,525)
========= ========= ========= =========$(32,459) $(26,448)
======== ========
Net loss per common share applicable to common stock $ (.06)(0.32) $ (.25) $ (.23) $ (.84)
========= ========= ========= =========(0.26)
======== ========
3. Goodwill and Other Intangible Assets - Adoption of Statement 142
The following is a summary of intangible assets at September 30, 2002March 31, 2003 and December
31, 2001.2002.
March 31, 2003 December 31, 2002
Estimated --------------------------------- ----------------------------------
Life Gross Carrying Accumulated Gross Carrying Accumulated
Amortizable Intangible Assets: (Years) 2002 2001Amount Amortization Amount Amortization
- ----------------------------------------------------------- --------- -------------- ----------- ----------------------- -------------- ------------
Debt issuance costs and fees 7 - 10 $ 48,455 $ 47,37957,565 29,052 52,202 27,533
Customer lists and contracts 7 - 10 370,718 359,154
Non-compete375,176 208,933 371,787 196,084
Non-competition agreements 3 - 15 56,943 56,41957,288 41,213 57,023 39,458
Site locations and other15 950,764 192,706 937,773 177,016
Other 5 - 15 949,701 897,450
----------- -----------
1,425,817 1,360,402
Accumulated Amortization (411,061) (315,687)
----------- -----------
Net Amortizable Intangibles $ 1,014,756 $ 1,044,715
=========== ===========
16,242 6,217 15,997 5,738
--------- --------- --------- ---------
1,457,035 478,121 1,434,782 445,829
Unamortizable Intangible Assets:
2002 2001
- ------------------------------- ----------- -----------
--------------------------------
Goodwill $ 1,430,960 $ 1,388,395
Accumulated Amortization (253,635) (253,635)
----------- -----------
Net Unamortizable Intangibles $ 1,177,325 $ 1,134,760
=========== ===========1,433,569 253,635 1,432,063 253,635
The changes in the carrying amount of goodwill for the ninethree months ended
September 30, 2002March 31, 2003 are as follows:
Balance as of December 31, 2001 $1,388,3952002 $ 1,432,063
Goodwill acquired during the year 42,565quarter 1,506
Impairment losses --
--------------------------
Balance as of September 30, 2002 $1,430,960
==========March 31, 2003 $ 1,433,569
================
-5-
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
4. Long-Term Debt
On December 23, 2002, Lamar Media Corp. completed an offering of $260,000 7 1/4%
Senior Subordinated Notes due 2013. These notes are unsecured senior
subordinated obligations and will be subordinated to all of Lamar Media's
existing and future senior debt, rank equally with all of Lamar Media's existing
and future senior subordinated debt and rank senior to any future subordinated
debt of Lamar Media. The net proceeds from the issuance and sale of these notes,
together with additional cash, was used to redeem all of the outstanding
$255,000 principle amount of Lamar Media's 9 5/8% Senior Subordinated Notes due
2006 on January 22, 2003 at a redemption price equal to 103.208% of the
aggregate principle amount thereof plus accrued interest through the redemption
date of approximately $3,477 for a total redemption price of approximately
$266,657. The Company recorded a loss on the extinguishment of debt of $11,173
in the first quarter of 2003 which consists of a prepayment premium of $8,180
and associated debt issuance costs of $2,993.
5. Asset Retirement Obligation
Effective January 1, 2003, the Company adopted Statement of Financial Accounting
Standard (SFAS) No. 143, "Accounting for Asset Retirement Obligations," and
recorded a loss of $11,679 as the cumulative effect of a change in accounting
principle, which is net of a tax benefit of $7,467. Prior to our adoption of
SFAS No. 143, the Company expensed these costs at the date of retirement. Also,
as of January 1, 2003, we recorded additions to property, plant and equipment
totaling $23,114 under the provisions of SFAS No. 143.
All of our asset retirement obligations relate to the Company's structure
inventory that it considers would be retired upon dismantlement of the
advertising structure. The following table illustratesreflects information related to our
asset retirement obligations:
March 31, 2003
--------------
Balance at beginning of period $ 33,467
Accretion expense 559
Liabilities settled (118)
--------------
Balance at end of period $ 33,908
==============
The following pro forma data summarizes the effect ofCompany's net loss and net loss per
common share as if the adoptionCompany had adopted the provisions of SFAS 142No. 143 on
prior
periods and its effectJanuary 1, 2002, including an associated pro forma asset retirement obligation
on the Company's earnings per share.that date of $30,875.
Three Monthsmonths ended
Nine Months ended
September 30, September 30,March 31, 2002
2001 2002 2001
---------- ---------- ---------- ----------------------------
ReportedNet loss applicable to common stock, as reported $ (16,254)
Pro forma adjustments to reflect retroactive adoption
of SFAS No. 143 (9,971)
------------------
Proforma net loss applicable to common stock $ (6,079)(26,225)
==================
Net loss per common share - basic and diluted:
Net loss, as reported $ (24,452)(0.16)
Net loss, pro forma $ (22,732)(0.26)
6. Stock Based Compensation
The Company accounts for its stock option plan under the intrinsic value method
in accordance with the provisions of Accounting Principles Board (APB) Opinion
No. 25, "Accounting for Stock Issued to Employees", and related interpretations.
As such, compensation expense is recorded on the date of grant only if the
current market price of the underlying stock exceeds the exercise price. SFAS
No. 123, "Accounting for Stock-Based Compensation" and SFAS No. 148, "Accounting
for Stock-Based Compensation - Transition and Disclosure an amendment of FASB
Statement No. 123," permits entities to recognize as expense over the vesting
period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income and pro forma
earnings per share disclosures for employee stock option grants made in 1995 and
future years as if the fair-value-based method defined in SFAS No. 123 has been
applied.
-6-
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
The following table illustrates the effect on net loss and loss per share if we
had applied the fair value recognition provisions of SFAS No. 123 to stock-based
employee compensation:
Three months ended
March 31
2003 2002
---------- ----------
Net loss applicable to common stock, as reported $ (79,324)
Add: goodwill amortization,(32,363) $ (16,254)
Deduct: Total stock based employee compensation
expense determined under fair value based
method for all awards, net of related tax
-- 17,838 -- 52,615effects (1,011) (2,049)
---------- ----------
---------- ----------
AdjustedPro forma net loss applicable to common stock $ (6,079)(33,374) $ (6,614) $ (22,732) $ (26,709)(18,303)
========== ==========
========== ==========
Earnings per common share--basic and diluted
Reported netNet loss per common share - basic and diluted
Net loss, as reported $ (.06)(0.32) $ (.25)(0.16)
Net loss, pro forma $ (.23)(0.33) $ (.81)
Add: goodwill amortization per share -- .18 -- .54
---------- ---------- ---------- ----------
Adjusted net loss per common share $ (.06) $ (.07) $ (.23) $ (.27)
========== ========== ========== ==========(0.18)
In accordance with SFAS No. 142 "Goodwill and Other Intangible Assets", which
the Company adopted on January 1, 2002, the Company has conducted an impairment
review of goodwill. Based upon the review, no impairment charge was required.
4. Long-term Debt
On January 11, 2002, the Company activated $200,000 in new borrowings under the
incremental facility of its bank credit agreement. The proceeds were used to
reduce the outstanding balance of the revolving bank credit facility by $160,000
and approximately $10,000 was used for operations resulting in excess cash on
hand of $30,000. Also, on January 30, 2002, JPMorgan Chase Bank issued a standby
letter of credit of approximately $3,203 to benefit American Casualty Insurance
Company, the provider of the Company's general liability and workman's
compensation coverage. This issuance reduces the Company's availability under
its revolving credit facility. Effective March 31, 2002, in accordance with the
Company's bank credit agreement, the Company began to make its scheduled
quarterly principal payments of $15,750 and commitments under the revolving
facility of the bank credit agreement began reducing by $8,750 quarterly. On
September 30, 2002, the Company had $319,058 available under the revolving
credit facility.
On September 25, 2002, the Company called for full redemption on October 25,
2002 of its outstanding 9.25% Senior Subordinated Notes due 2007 in aggregate
principal amount of approximately $74,073 for a redemption price equal to
104.625% of the principal amount of the Notes plus accrued interest to the
redemption date of approximately $1,332. The Notes were called pursuant to the
optional redemption provisions of the Notes and the related indenture applicable
to optional redemptions. The Company used cash on hand to redeem the Notes. In
the fourth quarter of 2002, the Company will record approximately $2,090, net of
tax, as an expense related to the prepayment penalty of the Notes.
5.7. Summarized Financial Information of Subsidiaries
Separate financial statements of each of the Company's direct or indirect
wholly
ownedwholly-owned subsidiaries that have guaranteed Lamar Media's obligations with
respect to its publicly issued notes (collectively, the "Guarantors")Guarantors) are not
included herein because the Company has no independent assets or operations, the
guarantees are full and unconditional and joint and several and the only
subsidiary that is not a guarantor is considered to be minor. Lamar Media's
ability to make distributions to Lamar Advertising is restricted under the terms
of its bank credit facility and the indentureindentures relating to Lamar Media's
outstanding notes. 6.As of March 31, 2003 and December 31, 2002, the net assets
restricted as to transfers from Lamar Media Corp. to Lamar Advertising Company
in the form of cash dividends, loans or advances were $1,903,292 and $1,915,035,
respectively.
8. Earnings Per Share
Earnings per share are computed in accordance with SFAS No. 128, "Earnings Per
Share." The calculations of basic earnings per share exclude any dilutive effect
of stock options and convertible debt while diluted earning per share includes
the dilutive effect of stock options and convertible debt. The number of
potentially dilutive shares excluded from the calculation because of their
anti-dilutive effect are 331,4026,590,096 and 418,5856,957,782 for three months ended September
30,March
31, 2003 and 2002, respectively.
9. Accounting Pronouncements
In June 2002, the Financial Accounting Standards Board (FASB) issued SFAS No.
146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS
No. 146 addresses financial accounting and 2001,reporting for costs associated with
exit or disposal activities and 595,728nullified Emerging Issues Task Force (EITF)
Issue 94-3, "Liability Recognition for Certain Employee Termination Benefits and
469,059Other Costs to Exit an Activity." The provisions of this Statement are effective
for exit or disposal activities that are initiated after December 31, 2002, with
early application encouraged. The adoption of SFAS No. 146 did not have a
material effect on the nine months ended September
30, 2002 and 2001, respectively.
-6-Company's financial statements.
-7-
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness to Others, an interpretation of FASB Statements No. 5, 57, and 107
and a rescission of FASB Interpretation No. 34." This Interpretation elaborates
on the disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under guarantees issued. The Interpretation
also clarifies that a guarantor is required to recognize, at inception of a
guarantee, a liability for the fair value of the obligation undertaken. The
initial recognition and measurement provisions of the Interpretation are
applicable to guarantees issued or modified after December 31, 2002 and did not
have a material effect on the Company's financial statements.
In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities, an interpretation of ARB No. 51." This
Interpretation addresses the consolidation by business enterprises of variable
interest entities as defined in the Interpretation. The Interpretation applies
immediately to variable interest in variable interest entities created after
January 31, 2003 and to variable interest entities obtained after January 31,
2003. The application of this Interpretation is not expected to have a material
effect on the Company's financial statements as the Company has no variable
interest entities. The Interpretation requires certain disclosures in financial
statements issued after January 31, 2003, if it is reasonably possible that the
Company will consolidate or disclose information about variable interest
entities when the Interpretation becomes effective.
In April 2003, the FASB issued Statement of Financial Accounting Standard (SFAS)
No 149, "Amendment of Statement 133 on Derivative Instruments and Hedging
Activities," which amends and clarifies financial accounting and reporting for
derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives) and for hedging
activities under FASB Statement No. 133, "Accounting for Derivative Instruments
and Hedging Activities." The Company is required to adopt SFAS No. 149 for all
contracts entered into or modified after June 30, 2003, except for certain
hedging relationships designated after June 30, 2003 pursuant to the guidance in
SFAS No. 149. The Company does not expect adoption to have an impact on its
consolidated financial statements.
-8-
LAMAR MEDIA CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
March 31, December 31,
2003 2002
----------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 7,870 $ 15,610
Cash on deposit for debt extinguishment -- 266,657
Receivables, net of allowance for doubtful accounts of $4,543 and $4,914 in
2003 and 2002, respectively 90,959 92,295
Prepaid expenses 41,874 30,091
Deferred income tax asset 5,758 6,428
Other current assets 22,504 14,293
----------- ------------
Total current assets 168,965 425,374
----------- ------------
Property, plant and equipment 1,889,612 1,850,657
Less accumulated depreciation and amortization (603,223) (566,889)
----------- ------------
Net property, plant and equipment 1,286,389 1,283,768
----------- ------------
Goodwill 1,179,953 1,171,595
Intangible assets 959,333 975,998
Other assets - non-current 19,004 18,174
----------- ------------
Total assets $ 3,613,644 $ 3,874,909
=========== ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Trade accounts payable $ 10,421 $ 10,051
Current maturities of long-term debt 5,663 4,687
Current maturities related to debt extinguishment -- 255,000
Accrued expenses 15,113 25,981
Deferred income 15,060 13,942
----------- ------------
Total current liabilities 46,257 309,661
----------- ------------
Long-term debt 1,445,000 1,447,246
Deferred income taxes 111,877 129,924
Other liabilities 41,243 7,366
----------- ------------
Total liabilities 1,644,377 1,894,197
----------- ------------
Stockholder's equity:
Common stock, $0.01 par value, authorized 3,000 shares; 100 shares issued and
outstanding at March 31, 2003 and December 31, 2002, respectively -- --
Additional paid-in capital 2,299,901 2,281,901
Accumulated deficit (330,634) (301,189)
----------- ------------
Stockholder's equity 1,969,267 1,980,712
----------- ------------
Total liabilities and stockholder's equity $ 3,613,644 $ 3,874,909
=========== ============
See accompanying notes to condensed consolidated financial statements.
-9-
LAMAR MEDIA CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
Three months ended
March 31,
2003 2002
---------- ----------
Net revenues $ 184,221 $ 176,538
---------- ----------
Operating expenses (income)
Direct advertising expenses 71,557 67,227
General and administrative expenses 42,820 41,134
Depreciation and amortization 66,682 66,288
Gain on disposition of assets (30) (89)
---------- ----------
181,029 174,560
---------- ----------
Operating income 3,192 1,978
Other expense (income)
Loss on extinguishment of debt 11,173 --
Interest income (118) (221)
Interest expense 19,986 23,003
---------- ----------
31,041 22,782
---------- ----------
Loss before income tax benefit and cumulative effect of a change in
accounting principle (27,849) (20,804)
Income tax benefit (10,083) (7,473)
---------- ----------
Loss before cumulative effect of a change in accounting principle (17,766) (13,331)
Cumulative effect of a change in accounting principle (11,679) (--)
---------- ----------
Net loss (29,445) (13,331)
========== ==========
See accompanying notes to condensed consolidated financial statements.
-10-
LAMAR MEDIA CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
Three Months Ended
March 31,
2003 2002
---------- ----------
Cash flows from operating activities:
Net loss $ (29,445) $ (13,331)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 66,682 66,288
Gain on disposition of assets (30) (89)
Deferred tax benefit (10,177) (2,200)
Provision for doubtful accounts 2,325 2,744
Loss on debt extinguishment 11,173 --
Cumulative effect of change in accounting principle 11,679 --
Changes in operating assets and liabilities:
(Increase) decrease in:
Receivables (8,389) (7,791)
Prepaid expenses (11,533) (11,773)
Other assets (1,169) (7,274)
Increase (decrease) in:
Trade accounts payable 371 1,652
Accrued expenses (11,290) (7,152)
Other liabilities 31 57
Deferred income 1,082 2,085
---------- ----------
Net cash provided by operating activities 21,310 23,216
---------- ----------
Cash flows from investing activities:
Acquisition of new markets (6,032) (37,842)
Capital expenditures (17,808) (14,121)
Proceeds from disposition of assets 938 701
---------- ----------
Net cash used in investing activities (22,902) (51,262)
---------- ----------
Cash flows from financing activities:
Debt issuance costs (8,356) (1,050)
Principle payments and repayment premiums on long-term debt (264,449) (16,668)
Cash from deposits for debt extinguishment 266,657 --
Net borrowings under credit agreements -- 60,000
---------- ----------
Net cash (used in) provided by financing activities (6,148) 42,282
---------- ----------
Net (decrease) increase in cash and cash equivalents (7,740) 14,236
Cash and cash equivalents at beginning of period 15,610 12,885
---------- ----------
Cash and cash equivalents at end of period $ 7,870 $ 27,121
========== ==========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 20,245 $ 30,343
========== ==========
Cash paid for state and federal income taxes $ 146 $ 311
========== ==========
Parent company stock contributed for acquisitions $ 18,000 $ 38,000
========== ==========
See accompanying notes to condensed consolidated financial statements.
-11-
LAMAR MEDIA CORP.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
1. Significant Accounting Policies
The information included in the foregoing interim consolidated financial
statements is unaudited. In the opinion of management all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
Lamar Media's financial position and results of operations for the interim
periods presented have been reflected herein. The results of operations for
interim periods are not necessarily indicative of the results to be expected for
the entire year. These condensed consolidated financial statements should be
read in conjunction with Lamar Media's consolidated financial statements and the
notes thereto included in the 2002 Combined Form 10-K.
Certain amounts in the prior year's condensed consolidated financial statements
have been reclassified to conform with the current year presentation. These
reclassifications had no effect on previously reported results of operations.
Certain footnotes are not provided for the accompanying consolidated financial
statements as the information in notes 2, 3, 4, 5, 7, 8 and 9 to the condensed
consolidated financial statements of Lamar Advertising Company included
elsewhere in this report is substantially equivalent to that required for the
condensed 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.
-12-
ITEM 2. MANAGEMENT'S DISCUSSION AND PER SHARE DATA)
7. New Accounting Pronouncements
Effective January 1,ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This discussion contains forward-looking statements. Actual results could differ
materially from those anticipated by the forward-looking statements due to the
risks and uncertainties described in the section of this combined report on Form
10-Q entitled "Note Regarding Forward-Looking Statements" and described in the
2002 Combined 10-K under the caption "Factors Affecting Future Operating
Results." You should consider carefully each of these risks and uncertainties in
evaluating the Company's and Lamar Media's financial condition and results of
operations.
LAMAR ADVERTISING COMPANY
The following is a discussion of the consolidated financial condition and
results of operations of the Company adopted SFAS No. 142, "Goodwillfor the three months ended March 31, 2003
and Other
Intangible Assets". SFAS No. 142 requires that goodwill and intangible assets
with indefinite useful lives no longer2002. This discussion should be amortized, but instead tested for
impairment at least annuallyread in accordanceconjunction with the provisionscondensed
consolidated financial statements of SFAS No. 142.
SFAS No. 142 also requiresthe Company and the related notes.
OVERVIEW
The Company's net revenues, which represent gross revenues less commissions paid
to advertising agencies that intangible assets with estimable useful lives be
amortized over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment in accordance with SFAS No. 121,
"Accountingcontract for the Impairmentuse of Long-Lived Assetsadvertising displays on
behalf of advertisers, are derived primarily from the sale of advertising on
outdoor advertising displays owned and operated by the Company.
Since December 31, 2000, the Company has increased the number of outdoor
advertising displays it operates by approximately 12% by completing over 190
strategic acquisitions of outdoor advertising and transit assets for Long-Lived Assetsan
aggregate purchase price of approximately $491 million, which included the
issuance of 2,719,007 shares of Lamar Advertising Company Class A common stock
valued at the time of issuance at approximately $103.1 million. The Company has
financed its recent acquisitions and intends to Be Disposed Of"finance its future acquisition
activity from available cash, borrowings under its bank credit agreement and subsequently SFAS No. 144 "Accountingthe
issuance of Class A common stock. See "Liquidity and Capital Resources" below.
As a result of acquisitions, the operating performance of individual markets and
of the Company as a whole are not necessarily comparable on a year-to-year
basis. The Company also provides acquisition-adjusted net revenue that include
adjustments to the 2002 results for acquisitions for the Impairment or
Disposalsame time frame as
actually owned in 2003. The Company's management believes that this additional
information is useful in evaluating the Company's performance and provides
investors and financial analysts with a better understanding of Long-Lived Assets", after its adoption.the Company's
core operating results. In August, 2001,addition, it may be useful to investors when
assessing the FASB issued SFAS No. 144, "Accounting for the Impairment or
DisposalCompany's period to period results. The Company's presentation of
Long-Lived Assets. SFAS No. 144 addresses financial accounting and
reporting for the impairment or disposal of long-lived assets. This Statement
requires that long-lived assets be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an assetthese measures, however, may not be recoverable. Recoverabilitycomparable to similarly titled measures used
by other companies and they should not be used as alternatives to net revenue or
other GAAP measures as indicators of the Company's performance. The Company has
provided a reconciliation of acquisition-adjusted net revenue to reported net
revenue below.
The Company relies on sales of advertising space for its revenues, and its
operating results are therefore affected by general economic conditions, as well
as trends in the advertising industry.
Growth of the Company's business requires expenditures for maintenance and
capitalized costs associated with new billboard displays, logo sign and transit
contracts, and the purchase of real estate and operating equipment. Capitalized
expenditures for the three months ended 2003 and 2002, respectively, were $17.8
million and $14.1 million. The following table presents a breakdown of
capitalized expenditures for three months ended March 31, 2003 and 2002:
Three months ended
March 31,
(In Thousands)
----------------------
2003 2002
------- -------
Billboard $10,100 $ 7,461
Logos 2,518 1,402
Transit 710 1,590
Land and buildings 2,889 2,419
PP&E 1,591 1,249
------- -------
Total capital expenditures $17,808 $14,121
======= =======
-13-
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO THREE MONTHS ENDED MARCH 31, 2002
Net revenues increased $7.7 million or 4.4% to $184.2 million for the three
months ended March 31, 2003 from $176.5 million for the same period in 2002.
This increase was attributable primarily to (i) an increase in billboard net
revenues of $6.3 million or 3.8%, (ii) a $0.6 million increase in logo sign
revenue, which represents an increase of 7.0% over the prior year, and (iii) a
$0.7 million increase in transit revenue, which represents a 53% increase over
the prior year.
The increase in billboard net revenues of $6.3 million was due to both
acquisition activity and internal growth while the increase in logo sign revenue
of $0.6 million and transit revenue growth of $0.7 million was generated by
internal growth across various markets within the logo sign and transit
programs. Net revenues for the three months ended March 31, 2003 as compared to
acquisition-adjusted net revenue(1) for the three months ended March 31, 2002,
which includes adjustments for acquisitions for the same time frame as actually
owned in 2003, increased $5.3 million or 2.9% as a result of net revenue
internal growth.
Operating expenses, exclusive of depreciation and amortization and gain on sale
of assets, increased $6.0 million or 5.5% to be held$114.4 million for the three months
ended March 31, 2003 from $108.4 million for the same period in 2002. There was
a $5.8 million increase as a result of additional operating expenses related to
the operations of acquired outdoor advertising assets and usedincreases in
personnel, sign site rent, insurance costs and property taxes. The remaining
$0.2 million increase in operating expenses is measured by a comparisonresult of increases in
corporate overhead expenses.
Depreciation and amortization expense increased $0.4 million or 0.6% from $67.1
million for the three months ended March 31, 2002 to $67.5 million for the three
months ended March 31, 2003.
Due to the above factors, operating income increased $1.2 million to $2.3
million for three months ended March 31, 2003 compared to $1.1 million for the
same period in 2002.
In January 2003, the Company's wholly-owned subsidiary, Lamar Media Corp.,
redeemed all of its outstanding 9 5/8% Senior Subordinated Notes due 2006 in
aggregate principle amount of approximately $255.0 million for a redemption
price equal to 103.208% of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If the carrying amount of an asset exceeds its
estimated future cash flows, an impairment charge is recognized by the amount by
which the carryingprinciple amount of the asset exceedsNotes. In the fair valuefirst
quarter of 2003, the asset. SFAS
No. 144 requires companies to separately report discontinued operations and
extends that reporting toCompany recorded approximately $11.2 million as a component of an entity that either has been disposed
of (by sale, abandonment, or in a distribution to owners) or is classified as
held for sale. Assets to be disposed of are reported at the lower of the
carrying amount or fair value less costs to sell. The Company adopted SFAS No.
144 on January 1, 2002.
In April 2002, the FASB issued Statement 145, Rescission of FASB Statements No.
4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections
("Statement 145"). This statement rescinds SFAS No. 4, Reporting Gains and
Losses from Extinguishments of Debt, and requires that all gains and losses from
extinguishments of debt should be classified as extraordinary items only if they
meet the criteria in APB No. 30. Applying APB No. 30 will distinguish
transactions that are part of an entity's recurring operations from those that
are unusual or infrequent or that meet the criteria for classification as to an
extraordinary item. Any gain or loss on
extinguishment of debt that was
classified as an extraordinary item in prior periods presented that does not
meet the criteria in APB No. 30 for classification as an extraordinary item must
be reclassified. The Company will adopt the provisions related to the rescissionprepayment of the 9 5/8% Senior
Subordinated Notes due 2006 and the write-off of related debt issuance costs.
Interest expense decreased $3.0 million from $26.8 million for the three months
ended March 31, 2002 to $23.8 million for the three months ended March 31, 2003
as a result of lower interest rates both on existing and recently refinanced
debt.
The increase in operating income and the decrease in interest expense offset by
the loss on extinguishment of debt described above resulted in a $7.0 million
increase in loss before income taxes and cumulative effect of a change in
accounting principle. The increase in this loss, resulted in an increase in the
income tax benefit of $2.6 million for the three months ended March 31, 2003
over the same period in 2002. The effective tax rate for the three months ended
March 31, 2003 is 36.6%.
Due to the adoption of SFAS No. 4143, the Company recorded a cumulative effect of
a change in accounting principle, net of tax of $11.7 million.
As a result of the above factors, the Company recognized a net loss for the
three months ended March 31, 2003 of $32.3 million, as compared to a net loss of
$16.2 million for the same period in 2002.
- ----------
(1) Reconciliation of Reported Net Revenue to Acquisition-Adjusted Net Revenue:
Three months ended March 31,
2003 2002
--------- ---------
Reported net revenue $ 184,221 $ 176,538
Acquisition net revenue -- 2,409
--------- ---------
Acquisition-adjusted net revenue $ 184,221 $ 178,947
========= =========
-14-
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically satisfied its working capital requirements with
cash from operations and borrowings under its bank credit facility. The
Company's wholly owned subsidiary, Lamar Media, is the borrower under the bank
credit facility and maintains all corporate cash balances. Any cash requirements
of Lamar Advertising, therefore, must be funded by distributions from Lamar
Media. The Company's acquisitions have been financed primarily with funds
borrowed under its bank credit facility and issuance of its Class A common stock
and debt securities. If an acquisition is made by one of the Company's
subsidiaries using the Company's Class A common stock, a permanent contribution
of additional paid-in-capital of Class A common stock is distributed to that
subsidiary.
The Company's net cash provided by operating activities increased to $21.1
million for the three months ended March 31, 2003 due primarily to an increase
in net loss of $16.1 million offset by an increase in noncash items of $15.0
million, which primarily includes an increase in depreciation and amortization
of $0.4 million offset by an increase in deferred income tax benefit of $8.0
million, the loss on early extinguishment of debt of $11.2 million and the
cumulative effect of a change in accounting principle of $11.7 million. In
addition as compared to the same period in 2002, there was a decrease in
receivables of $5.2 million, a decrease in other assets of $6.7 million, a
decrease in trade accounts payable of $1.3 million, a decrease in accrued
expenses of $5.1 million and a decrease in deferred income of $0.9 million. Net
cash provided by operating activities for the three months ended March 31, 2003,
as described above differs from the amount used in the fourthreconciliation tables
included in the Company's first quarter earnings release. This difference was
due to the reclassification of 2002.the loss from extinguishment of debt included in
cash flows from operations in that release to cash flows from financing
activities.
Net cash used in investing activities decreased $28.1 million from $51.6 million
in 2002 to $23.5 million in 2003 primarily due to the decrease in merger and
acquisition activity by the Company in 2003 of $31.6 million, offset by a $3.7
million increase in capital expenditures. Net cash used in financing activities
increased to $5.3 million for the three months ended March 31, 2003 due to a
$247.8 million increase in principle payments of long-term debt due primarily to
the redemption of Lamar Media's 9 5/8% Senior Subordinated Notes, offset by cash
from deposits for debt extinguishment of $266.7 million. In addition, there was
a $5.4 million decrease in proceeds from issuance of the Company's Class A
common stock and a $60 million decrease in borrowings from credit agreements.
During the three months ended March 31, 2003, the Company financed its
acquisition activity of approximately $24.6 million with cash on hand of
approximately $6.6 million and the issuance of 588,543 shares of the Company's
Class A common stock. As of March 31, 2003, the Company had $219.6 million
available under its revolving credit facility.
The Company's wholly-owned subsidiary, Lamar Media Corp., replaced its old bank
credit facility with a new bank credit facility on March 7, 2003. The new bank
credit facility is comprised of a $225.0 million revolving bank credit facility
and a $975.0 million term facility. The new bank credit facility also includes a
$500.0 million incremental facility, which permits Lamar Media to request that
its lenders enter into commitments to make additional term loans to it, up to a
maximum aggregate amount of $500.0 million. The lenders have no obligation to
make additional term loans to Lamar Media under the incremental facility, but
may enter into such commitments in their sole discretion.
In the future, Lamar Media has principle reduction obligations and revolver
commitment reductions under its new bank credit agreement. In addition it has
fixed commercial commitments. These commitments are detailed as follows:
Payments Due by Period
(in millions)
--------------------------------------------
Contractual Balance at Less than 1 - 3 4 - 5 After 5
Obligations March 31, 2003 1 Year Years Years Years
- ---------------------------------- -------------- ------------ ------------ ------------ ------------
Long-Term Debt $ 1,738.2 5.7 75.9 641.4 1,015.2
Billboard site and building leases $ 795.0 107.0 172.0 131.4 384.6
------------ ------------ ------------ ------------ ------------
Total Payments due $ 2,533.2 112.7 247.9 772.8 1,399.8
============ ============ ============ ============ ============
Amount of Commitment
Expiration Per Period
--------------------------------------------
Other Commercial Total Amount Less than 1 - 3 4 - 5 After 5
Commitments Committed 1 Year Years Years Years
- --------------------------- ------------ ------------ ------------ ------------ ------------
Revolving Bank Facility (2) $ 225.0 -- -- -- 225.0
============ ============ ============ ============ ============
Standby Letters of Credit $ 5.4 1.1 4.3 -- --
============ ============ ============ ============ ============
- ----------
(2) Lamar Media had no balance outstanding at March 31, 2003.
-15-
In January 2003, Lamar Media redeemed all of its outstanding 9 5/8% Senior
Subordinated Notes due 2006 in aggregate principle amount of approximately $255
million for a redemption price equal to 103.208% of the principle amount of the
Notes. As a result of this redemption, the Company recorded a loss on
extinguishment of debt of $11.2 million which consisted of a prepayment penalty
of $8.2 million and associated debt issuance costs of approximately $3.0
million.
Currently Lamar Media has outstanding approximately $200.0 million 8 5/8% Senior
Subordinated Notes due 2007 and $260.0 million 7 1/4% Senior Subordinated Notes
due 2013. The indentures relating to Lamar Media's outstanding notes restrict
its ability to incur indebtedness other than:
o up to $1.3 billion of indebtedness under its bank credit facility;
o currently outstanding indebtedness or debt incurred to refinance
outstanding debt;
o inter-company debt between Lamar Media and its subsidiaries or between
subsidiaries; and
o certain other debt incurred in the ordinary course of business (provided
that all of the above ranks junior in right of payment to the notes that
has a maturity or mandatory sinking fund payment prior to the maturity
of the notes).
Lamar Media is required to comply with certain covenants and restrictions under
its new bank credit agreement. If the Company fails to comply with these tests,
the payments set forth in the above table may be accelerated. At March 31, 2003
and currently Lamar Media is in compliance with all such tests.
Lamar Media cannot exceed the following financial ratios under its new bank
credit facility:
o a total debt ratio, defined as total consolidated debt to EBITDA, as
defined below, for the most recent four fiscal quarters, of 6.00 to 1
(through December 30, 2004) and 5.75 to 1 (after December 30, 2004); and
o a senior debt ratio, defined as total consolidated senior debt to EBITDA,
as defined below, for the most recent four fiscal quarters, of 4.00 to 1
(through December 30, 2004) and 3.75 to 1 (after December 30, 2004).
In addition, the new bank credit facility requires that Lamar Media must
maintain the following financial ratios:
o an interest coverage ratio, defined as EBITDA, as defined below, for the
most recent four fiscal quarters to total consolidated accrued interest
expense for that period, of at least 2.25 to 1; and
o a fixed charges coverage ratio, defined as the ratio of EBITDA, as defined
below, for the most recent four fiscal quarters to (1) the total payments
of principle and interest on debt for such period (2) capital expenditures
made during such period and (3) income and franchise tax payments made
during such period, of at least 1.05 to 1.
As defined under Lamar Media's new bank credit facility, EBITDA is, for any
period, operating income for Lamar Media and its restricted subsidiaries
(determined on a consolidated basis without duplication in accordance with GAAP)
for such period (calculated before taxes, interest expense, depreciation,
amortization and any other non-cash income or charges accrued for such period
and (except to the extent received or paid in cash by Lamar Media or any of its
restricted subsidiaries) income or loss attributable to equity in affiliates for
such period) excluding any extraordinary and unusual gains or losses during such
period and excluding the proceeds of any casualty events whereby insurance or
other proceeds are received and certain dispositions not in the ordinary course.
Any dividend payment made by Lamar Media or any of its restricted subsidiaries
to Lamar Advertising Company during any period to enable Lamar Advertising
Company to pay certain qualified expenses on behalf of Lamar Media and its
subsidiaries, shall be treated as operating expenses of Lamar Media for the
purposes of calculating EBITDA for such period. EBITDA under the new bank credit
agreement is also adjusted to reflect certain acquisitions or dispositions as if
such acquisitions or dispositions were made on the first day of such period.
The Company believes that its current level of cash on hand, availability under
its new bank credit agreement and future cash flows from operations are
sufficient to meet its operating needs through the year 2003. All debt
obligations are on the Company's balance sheet.
NEW ACCOUNTING PRONOUNCEMENTS
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities", ("Statement 146") which addresses financial
accounting and reporting for costs associated with exit or disposal activities.
It nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." The principalprinciple difference between Statement
146 and Issue 94-3 relates to the recognition of a
-16-
liability for a cost associated with an exit or disposal activity. Statement 146
requires that a liability be recognized for those costs only when the liability
is incurred, that is, when it meets the definition of a liability in the FASB's
conceptual framework. In contrast, under Issue 94-3, a company recognized a
liability for an exit cost when it committed to an exit plan. Statement 146 also
establishes fair value as the objective for initial measurement of liabilities
related to exit or disposal activities. The Statement is effective for exit or
disposal activities that are initiated after December 31, 2002.2002 and did not have
an impact on the Company's consolidated financial statements. The Company
will adoptadopted the provisions related to Statement No. 146 as of January 1, 2003.
8. Commitments and Contingent Liabilities
In August 2002, a jury verdict was rendered in a lawsuit filed against the
Company in the amount of $32 in compensatory damages and $2,245 in punitive
damages. In OctoberNovember 2002, the Company filedFASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness to Others, an interpretation of FASB Statements No. 5, 57 and 107
and a motion seekingrescission of FASB Interpretation No. 34". This Interpretation elaborates
on the elimination or
reductiondisclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under guarantees issued. The Interpretation
also clarifies that a guarantor is required to recognize, at inception of a
guarantee, a liability for the fair value of the punitive damages portionobligation undertaken. The
initial recognition and measurement provisions of the award. As of the date of this
report, the court hasInterpretation are
applicable to guarantees issued or modified after December 31, 2002 and did not
ruledhave a material effect on the Company's motion. If the ruling is
adverse to the Company, the Company intends to appeal. As a result of the
verdict, the Company recorded a $2,277 charge in its operating expenses during
the quarter ended September 30, 2002.
-7-
LAMAR MEDIA CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
September 30, December 31,
ASSETS 2002 2001
- ------ ------------- ------------
Current assets:
Cash and cash equivalents $ 58,646 $ 12,885
Receivables, net 102,477 93,043
Prepaid expenses 41,344 27,176
Other current assets 17,778 17,688
------------ ------------
Total current assets 220,245 150,792
------------ ------------
Property, plant and equipment 1,824,868 1,777,399
Less accumulated depreciation and amortization (522,405) (451,686)
------------ ------------
Net property plant and equipment 1,302,463 1,325,713
------------ ------------
Intangible assets 2,171,699 2,156,079
Other assets - non-current 18,255 16,580
------------ ------------
Total assets $ 3,712,662 $ 3,649,164
============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Trade accounts payable $ 7,909 $ 10,048
Current maturities of long-term debt 114,244 66,559
Accrued expenses 23,685 22,362
Deferred income 15,360 11,618
------------ ------------
Total current liabilities 161,198 110,587
------------ ------------
Long-term debt 1,423,197 1,457,526
Deferred income taxes 128,692 127,241
Other liabilities 7,937 7,724
------------ ------------
Total liabilities 1,721,024 1,703,078
------------ ------------
Stockholder's equity:
Common stock, $0.01 par value, authorized 3,000 shares; 100 shares issued and
outstanding at September 30, 2002 and December 31, 2001 -- --
Additional paid-in capital 2,281,803 2,222,317
Accumulated deficit (290,165) (276,231)
------------ ------------
Stockholder's equity 1,991,638 1,946,086
------------ ------------
Total liabilities and stockholder's equity $ 3,712,662 $ 3,649,164
============ ============
See accompanying notes to condensed consolidated financial statements.
-8-
LAMAR MEDIA CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
Three Months ended Nine Months ended
September 30, September 30,
2002 2001 2002 2001
--------- --------- --------- ---------
Net revenues $ 201,918 $ 188,267 $ 580,985 $ 550,440
--------- --------- --------- ---------
Operating expenses (income)
Direct advertising expenses 71,685 64,593 205,544 187,444
General and administrative expenses 42,253 37,481 122,738 111,502
Depreciation and amortization 69,455 88,501 204,332 260,920
(Gain) loss on disposition of assets (33) 311 (203) (708)
--------- --------- --------- ---------
183,360 190,886 532,411 559,158
--------- --------- --------- ---------
Operating income (loss) 18,558 (2,619) 48,574 (8,718)
Other expense (income)
Interest income (387) (100) (774) (522)
Interest expense 23,408 26,635 69,878 89,098
--------- --------- --------- ---------
23,021 26,535 69,104 88,576
--------- --------- --------- ---------
Loss before income tax benefit (4,463) (29,154) (20,530) (97,294)
Income tax benefit (1,318) (7,720) (6,596) (26,238)
--------- --------- --------- ---------
Net loss $ (3,145) $ (21,434) $ (13,934) $ (71,056)
========= ========= ========= =========
See accompanying notes to condensed consolidated financial statements.
-9-
LAMAR MEDIA CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
Nine Months Ended
September 30,
2002 2001
--------- ---------
Cash flows from operating activities:
Net loss $ (13,934) $ (71,056)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 204,332 260,920
Gain on disposition of assets (203) (708)
Deferred tax benefit (2,218) (27,256)
Provision for doubtful accounts 6,378 5,495
Changes in operating assets and liabilities:
(Increase) decrease in:
Receivables (13,652) (21,369)
Prepaid expenses (12,753) (11,139)
Other assets (4,740) (3,100)
Increase (decrease) in:
Trade accounts payable (2,139) 3,210
Accrued expenses 1,368 (18,279)
Other liabilities (43) 178
Deferred income 3,524 2,426
--------- ---------
Net cash provided by operating activities 165,920 119,322
--------- ---------
Cash flows from investing activities:
Acquisition of new markets (74,041) (272,436)
Capital expenditures (56,938) (59,958)
Proceeds from disposition of assets 2,048 3,906
--------- ---------
Net cash used in investing activities (128,931) (328,488)
--------- ---------
Cash flows from financing activities:
Debt issuance costs (1,076) --
Contribution from parent -- 48,000
Principal payments on long-term debt (50,192) (35,159)
Increase in notes payable 40 --
Net borrowings under credit agreements 60,000 130,000
--------- ---------
Net cash provided by financing activities 8,772 142,841
--------- ---------
Net increase (decrease) in cash and cash equivalents 45,761 (66,325)
Cash and cash equivalents at beginning of period 12,885 72,340
--------- ---------
Cash and cash equivalents at end of period $ 58,646 $ 6,015
--------- ---------
Supplemental disclosures of cash flow information:
Cash paid for interest $ 70,159 $ 94,717
========= =========
Cash paid for state and federal income taxes $ 481 $ 798
========= =========
Parent company stock contributed for acquisitions $ 56,100 $ 29,000
========= =========
Noncash Financing Activity:
Note payable converted to contributed capital $ -- $ 287,500
========= =========
See accompanying notes to condensed consolidated financial statements.
-10-
LAMAR MEDIA CORP.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
1. Significant Accounting Policies
The information includedIn January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities, an interpretation of ARB No. 51." This
interpretation addresses the consolidation by business enterprises of variable
interest entities as defined in the foregoing interim financial statements is
unaudited. In the opinion of management all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of Lamar Media's
financial positionInterpretation. The Interpretation applies
immediately to variable interests in variable interest entities created after
January 31, 2003, and results of operations for the interim periods presented
have been reflected herein.to variable interests in variable interest entities
obtained after January 31, 2003. The results of operations for interim periods are
not necessarily indicativeapplication of the resultsInterpretation is not
expected to be expected for the entire year.
These condensed consolidated financial statements should be read in conjunction
with Lamar Media's consolidated financial statements and the notes thereto
included in the 2001 Combined Form 10-K.
Certain amounts in the prior year's condensed consolidated financial statements
have been reclassified to conform with the current year presentation. These
reclassifications had noan effect on previously reported results of operations.
Certain footnotes are not provided for the accompanyingCompany's consolidated financial statements as
the Company has no variable interest entities. The Interpretation requires
certain disclosures in financial statements issued after January 31, 2003 if it
is reasonably possible that the Company will consolidate or disclose information
about variable interest entities.
In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities," which amends and clarifies
financial accounting and reporting for derivative instruments, including certain
derivative instruments embedded in notes 2, 3, 4, 5, 7other contracts (collectively referred to as
derivatives) and 8for hedging activities under FASB Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities." The Company is
required to adopt SFAS No. 149 for all contracts entered into or modified after
June 30, 2003, except for certain hedging relationships designated after June
30, 2003 pursuant to the condensedguidance in SFAS No. 149. The Company does not expect
adoption to have an impact on its consolidated financial statements of Lamar Advertising Company included elsewhere in this
report is substantially equivalentstatements.
LAMAR MEDIA CORP.
THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO THREE MONTHS ENDED MARCH 31, 2002
Net revenues increased $7.7 million or 4.4% to that required$184.2 million for the condensed
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.
-11-
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion contains forward-looking statements. Actual results could differ
materially from those anticipated by the forward-looking statements due to the
risks and uncertainties described in the section of this report on Form 10-Q
entitled "Note Regarding Forward-Looking Statements" and described in the 2001
Combined 10-K under the caption "Factors Affecting Future Operating Results."
You should consider carefully each of these risks and uncertainties in
evaluating the Company's and Lamar Media's financial condition and results of
operations.
LAMAR ADVERTISING COMPANY
The following is a discussion of the consolidated financial condition and
results of operations of Lamar Advertising Company for the nine months and three
months ended September 30, 2002 and 2001. This discussion should be read in
conjunction with the consolidated financial statements of the Company and the
related notes.
RESULTS OF OPERATIONS
We use EBITDA (earnings before interest, taxes, depreciation and amortization)
as one measure to evaluate the operating performance of our business. EBITDA is
not a measure of performance under generally accepted accounting principles and
should be considered in addition to, but not as an alternative to or superior to
other measures of financial performance prepared in accordance with generally
accepted accounting principles.
NINE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 2001
Net revenues increased $30.6March 31, 2003 from $176.5 million or 5.5% to $581.0 million for the nine
months ended September 30, 2002 as compared to the same period in 2001.2002.
This increase was attributable primarily to (i) an increase in billboard net
revenues of $24.8$6.3 million or 4.8% and3.8%, (ii) a $2.1$0.6 million increase in logo sign
revenue, or 8.1%,which represents an increase of 7.0% over the prior year, and (iii) a
$2.7$0.7 million increase in transit revenue, which represents a 78.4%53% increase over
the prior year.
The increase in billboard net revenues of $6.3 million was due to both
acquisition activity and internal growth while the increase in logo sign revenue
of $0.6 million and transit revenue growth of $0.7 million was generated by
internal growth across various markets within the logo sign and transit
programs. Net revenues for the three months ended March 31, 2003 as compared to
acquisition-adjusted net revenue (3) for the three months ended March 31, 2002,
which includes adjustments for acquisitions for the same time frame as actually
owned in 2003, increased $5.3 million or 2.9% as a result of net revenue
internal growth.
Operating expenses, exclusive of depreciation and amortization and gain or loss
on sale
of assets, increased $29.4$6.0 million or 9.8%5.5% to $114.4 million for the ninethree months
ended September 30, 2002 as compared toMarch 31, 2003 from $108.4 million for the same period in 2001. This2002. There was
primarily
thea $5.8 million increase as a result of additional operating expenses related to
the operations of acquired outdoor advertising assets. Includedassets and increases in
operatingpersonnel, sign site rent, insurance costs and property taxes. The remaining
$0.2 million increase in expenses for the nine
months ended September 30, 2002 is a chargeresult of $2.3 million relatedincreases in corporate overhead
expenses.
- ----------
(3) Reconciliation of Reported Net Revenue to a jury
verdict rendered in August 2002 against the Company for compensatory and
punitive damages. In October 2002, the Company filed a motion seeking the
elimination or reduction of the punitive damages portion of the award, which was
$2.2 million. As of the date of this report, the court has not ruled on the
Company's motion. If the ruling is adverse to the Company, the Company intends
to appeal.
EBITDA increased $1.2 million to $252.5 million for the nine months ended
September 30, 2002 from $251.3 million for the same period in 2001.Acquisition-Adjusted Net Revenue:
Three months ended March 31,
2003 2002
--------- ---------
Reported net revenue $ 184,221 $ 176,538
Acquisition net revenue -- 2,409
--------- ---------
Acquisition-adjusted net revenue $ 184,221 $ 178,947
========= =========
-17-
Depreciation and amortization expense decreased $56.8increased $0.4 million or 21.5%0.6% from $263.6$66.3
million for the ninethree months ended September 30, 2001March 31, 2002 to $206.8$66.7 million for the ninethree
months ended September 30, 2002 as a result of the Company's
adoption of SFAS No. 142 "Goodwill and Other Intangible Assets", which
eliminated the amortization expense for goodwill.March 31, 2003.
Due to the above factors, operating income increased $57.5$1.2 million to $45.9$3.2
million for ninethree months ended September 30, 2002March 31, 2003 compared to an operating loss
of $11.6$2.0 million for the
same period in 2001.2002.
In January 2003, Lamar Media Corp., redeemed all of its outstanding 9 5/8%
Senior Subordinated Notes due 2006 in aggregate principle amount of
approximately $255 million for a redemption price equal to 103.208% of the
principle amount of the Notes. In the first quarter of 2003, Lamar Media
recorded approximately $11.2 million as a loss on extinguishment of debt related
to the prepayment of the 9 5/8% Senior Subordinated Notes due 2006.
Interest expense decreased $18.0$3.0 million from $99.2$23.0 million for the ninethree months
ended September 30, 2001March 31, 2002 to $81.2$20.0 million for the same period in 2002three months ended March 31, 2003
as a result of lower interest rates both on existing and recently refinanced
debt.
The increase in operating income, the decrease in interest expense offset by the
loss on extinguishment of debt described above resulted in a $7.0 million
increase in loss before income taxes and cumulative effect of change in
accounting principle. The increase in this loss, resulted in an increase in the
income tax benefit of $2.6 million for the ninethree months ended September 30, 2002 as
compared toMarch 31, 2003
over the same period in 2001.
There was an income tax benefit of $12.0 million for the nine months ended
September 30, 2002 as compared to an income tax benefit of $31.2 million for the
same period in 2001. The decrease in income tax benefit of $19.2 million is
primarily due to the increase in income before income taxes as a result of the
Company's adoption of SFAS No. 142.2002. The effective tax rate for the nine months
ended September 30, 2002 was approximately 34.9%.
As a result of the above factors, the Company recognized a net loss for the nine
months ended September 30, 2002 of $22.5 million, as compared to a net loss of
$79.1 million for the same period in 2001.
-12-
THREE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 2001
Net revenues increased $13.7 million or 7.3% to $201.9 million for the three months ended
September 30, 2002 as comparedMarch 31, 2003 is 36.2%.
Due to the same period in 2001.
Operating expenses, exclusive of depreciation and amortization and gain or loss
on sale of assets, increased $11.9 million or 11.6% for the three months ended
September 30, 2002 as compared to the same period in 2001, which includes a
charge of $2.3 million related to a jury verdict rendered in August 2002 against
the Company for compensatory and punitive damages. In October 2002, the Company
filed a motion seeking the elimination or reduction of the punitive damages
portion of the award, which was $2.2 million. As of the date of this report, the
court has not ruled on the Company's motion. If the ruling is adverse to the
Company, the Company intends to appeal.
EBITDA increased $1.8 million or 2.1% to $87.9 million for the three months
ended September 30, 2002 from $86.1 million for the same period in 2001.
For the three months ended September 30, 2002 same store net revenue increased
3.5% and same store billboard cash flow increased 1% as compared to the same
period in 2001. Same store is defined by the Company as results of markets owned
and operated for a period of more than 12 months.
Depreciation and amortization expense decreased $19.1 million or 21.4% from
$89.4 million for the three months ended September 30, 2001 to $70.3 million for
the three months ended September 30, 2002 as a result of the Company's adoption of SFAS No. 142 "Goodwill and Other Intangible Assets", which eliminated the
amortization expense for goodwill.
Due to the above factors, operating income increased $21.3 million to $17.7
million for three months ended September 30, 2002 from143, Lamar Media recorded a $3.6 million loss for
the same periodcumulative effect of a
change in 2001.
Interest expense decreased $3.2 million from $30.4 million for the three months
ended September 30, 2001 to $27.2 million for the same period in 2002 as a
result of lower interest rates for the three months ended September 30, 2002 as
compared to the same period in 2001.
There was an income tax benefit of $3.1 million for the three months ended
September 30, 2002 as compared to an income tax benefit of $9.5 million for the
same period in 2001. This change is primarily due to the increase in income
before income taxes as a result of the Company's adoption of SFAS No. 142.
The Company recognized a net loss for the three months ended September 30, 2002
of $6.0 million, as compared to a net loss of $24.4 million for the same period
in 2001.
The results for the three months ended September 30, 2002 were affected by the
same factors as the nine months ended September 30, 2002. Reference is made to
the discussion of the nine month results.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically satisfied its working capital requirements with
cash from operations and revolving credit borrowings. Its acquisitions have been
financed primarily with borrowed funds and the issuance of Class A common stock.
During the nine months ended September 30, 2002, the Company financed the cash
portion of its acquisition activity of approximately $74.0 million with excess
cash on hand. On January 11, 2002 the Company activated $200 million in new
borrowings under the incremental facility of its bank credit agreement. The
proceeds were used to reduce the balance of the revolving bank credit facility
balance by $160 million and approximately $10 million was used for operations
resulting in excess cash on hand of $30 million. Also on January 30, 2002,
JPMorgan Chase issued a standby letter of credit of approximately $3.2 million
to benefit American Casualty Insurance Company, the provider of the Company's
general liability and workman's compensation coverage. This issuance reduces the
Company's availability under its revolving bank credit facility. On March 31,
2002, in accordance with the Company's bank credit agreement, required quarterly
principal payments of $15.75 million were made and commitments under the
revolving facility of the bank credit agreement were reduced by $8.75 million
per quarter. As of September 30, 2002 the Company had $319.1 million available
under the revolving credit facility.
On September 25, 2002, the Company called for full redemption on October 25,
2002 of its outstanding 9.25% Senior Subordinated Notes due 2007 in aggregate
principal amount of approximately $74.1 million for a redemption price equal to
104.625% of the principal amount of the Notes plus accrued interest to the
redemption date of approximately $1.3 million. The Notes were called pursuant to
the optional redemption provisions of the Notes and the related indenture
applicable to optional redemptions. The Company used cash on hand to redeem the
Notes. In the fourth quarter of 2002, the Company will record approximately $2.1
million,accounting principle, net of tax as an expense related to the prepayment penalty of the
Notes.
-13-
The Company's net cash provided by operating activities increased $35.5 million
for the nine months ended September 30, 2002 due primarily to a decrease in net
loss of $56.6 million, an increase in cash provided from accounts receivable of
$9.1 million and accrued expenses of $14.8$11.7 million. These changes were offset
primarily by an increase in other assets of $8.0 million, an increase in prepaid
expenses of $1.6 million, a decrease in accounts payable of $5.3 million and a
decrease in noncash items of $30.9 million. The decrease in non cash items
includes a decrease in depreciation and amortization of $56.9 million, offset by
a decrease in the deferred income tax benefit of $24.6 million and an increase
in the provision for doubtful accounts of $0.9 million. Net cash used in
investing activities decreased $201.7 million from $330.6 million for the nine
months ended September 30, 2001 to $128.9 million for the same period in 2002.
This decrease was due to a $200.5 million decrease in acquisitions of new
markets. Net cash provided by financing activities for the nine months ended
September 30, 2002 is $21.2 million primarily due to $60.0 million in net
borrowings under credit agreements and $12.7 million in proceeds from the
issuance of common stock, offset by $50.2 million in scheduled principal
payments of the Company's debt.
In the future the Company has principal reduction obligations and revolver
commitment reductions under its bank credit agreement. In addition it has fixed
commercial commitments which consists of various operating leases for production
facilities and sites upon which advertising structures are built. The leases
expire at various dates and have varying options to renew and to cancel. These
commitments are detailed as follows:
Payments Due by Period
(in millions)
Total Less
Contractual Obligations at than 1 1 - 3 4 - 5 After 5
Obligations September 30, 2002 Year Years Years Years
----------- ------------------ ------ ----- ------- -------
Long-Term debt $1,824.9 114.2 325.2 1,384.4 1.1
Billboard site and building leases 809.5 95.1 168.7 126.5 419.2
-------- ------ ----- ------- -------
Total Payments due $2,634.4 209.3 493.9 1,510.9 420.3
======== ====== ===== ======= =======
Amount of Commitment
Expiration per Period
(in millions)
Total Amount Less
Other Commercial Committed at than 1 1 - 3 4 - 5 After 5
Commitments September 30, 2002 Year Years Years Years
---------------- ------------------ ------ ----- ----- -------
Revolving credit facility (1) $ 323.8 35.0 205.7 83.1 0.0
======= ------ ----- ----- -------
Standby Letter of Credit $ 4.7 0.3 0.0 4.4 0.0
======= ====== ===== ===== =======
(1) The Company had no outstanding balance at September 30, 2002.
The Company believes that its current level of cash on hand, availability under
its bank credit agreement and future cash flows from operations are sufficient
to meet its operating needs through the year 2002. All debt obligations are on
the Company's balance sheet.
LAMAR MEDIA CORP.
The following is a discussion of the consolidated financial condition and
results of operations of Lamar Media for the nine months and three months ended
September 30, 2002 and 2001. This discussion should be read in conjunction with
the consolidated financial statements of Lamar Media and the related notes.
RESULTS OF OPERATIONS
We use EBITDA (earnings before interest, taxes, depreciation and amortization)
as one measure to evaluate the operating performance of our business. EBITDA is
not a measure of performance under generally accepted accounting principles and
should be considered in addition to, but not as an alternative to or superior to
other measures of financial performance prepared in accordance with generally
accepted accounting principles.
NINE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 2001
Net revenues increased $30.6 million or 5.5% to $581.0 million for the nine
months ended September 30, 2002 as compared to the same period in 2001. This
increase was attributable to an increase in billboard net revenues of $24.8
million or 4.8%, a $2.1 million increase in logo sign revenue or 8.1% and a $2.7
million increase in transit revenue, which represents a 78.4% increase over the
prior year.
-14-
Operating expenses, exclusive of depreciation and amortization and gain or loss
on sale of assets, increased $29.3 million or 9.8% for the nine months ended
September 30, 2002 as compared to the same period in 2001. This was primarily
the result of additional operating expenses related to the operations of
acquired outdoor advertising assets. Included in operating expenses for the nine
months ended September 30, 2002 is a charge of $2.3 million related to a jury
verdict rendered in August 2002 against the Company for compensatory and
punitive damages. In October 2002, the Company filed a motion seeking the
elimination or reduction of the punitive damages portion of the award, which was
$2.2 million. As of the date of this report, the court has not ruled on the
Company's motion. If the ruling is adverse to the Company, the Company intends
to appeal.
EBITDA increased $1.2 million to $252.7 million for the nine months ended
September 30, 2002 from $251.5 million for the same period in 2001.
Depreciation and amortization expense decreased $56.6 million or 21.7% from
$260.9 million for the nine months ended September 30, 2001 to $204.3 million
for the nine months ended September 30, 2002 as a result of Lamar Media's
adoption of SFAS No. 142 "Goodwill and Other Intangible Assets", which
eliminated the amortization expense for goodwill.
Due to the above factors, operating income increased $57.3 million to $48.6
million for nine months ended September 30, 2002 compared to an operating loss
of $8.7 million for the same period in 2001.
Interest expense decreased $19.2 million from $89.1 million for the nine months
ended September 30, 2001 to $69.9 million for the same period in 2002 as a
result of lower interest rates for the nine months ended September 30, 2002 as
compared to the same period in 2001.
There was an income tax benefit of $6.6 million for the nine months ended
September 30, 2002 as compared to an income tax benefit of $26.2 million for the
same period in 2001. This change is primarily due to the increase in income
before income taxes as a result of Lamar Media's adoption of SFAS No. 142. The
effective tax rate for the nine months ended September 30, 2002 was
approximately 32.1%.
As a result of the above factors, Lamar Media recognized a net loss for the
ninethree months ended September 30, 2002March 31, 2003 of $13.9$29.4 million, as compared to a net loss of
$71.1$13.3 million for the same period in 2001.
THREE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 2001
Net revenues increased $13.7 million or 7.3% to $201.9 million for the three
months ended September 30, 2002 as compared to the same period in 2001.
Operating expenses, exclusive of depreciation and amortization and gain or loss
on sale of assets, increased $11.9 million or 11.6% for the three months ended
September 30, 2002 as compared to the same period in 2001, which includes a
charge of $2.3 million related to a jury verdict rendered in August 2002 against
the Company for compensatory and punitive damages. In October 2002, the Company
filed a motion seeking the elimination or reduction of the punitive damages
portion of the award, which was $2.2 million. As of the date of this report, the
court has not ruled on the Company's motion. If the ruling is adverse to the
Company, the Company intends to appeal.
EBITDA increased $1.8 million or 2.1% to $88.0 million for the three months
ended September 30, 2002 from $86.2 million for the same period in 2001.
Depreciation and amortization expense decreased $19.0 million or 21.5% from
$88.5 million for the three months ended September 30, 2001 to $69.5 million for
the three months ended September 30, 2002 as a result of Lamar Media's adoption
of SFAS No. 142 "Goodwill and Other Intangible Assets", which eliminated the
amortization expense for goodwill.
Due to the above factors, operating income increased $21.2 million to $18.6
million for three months ended September 30, 2002 compared to an operating loss
of $2.6 million for the same period in 2001.
Interest expense decreased $3.2 million from $26.6 million for the three months
ended September 30, 2001 to $23.4 million for the same period in 2002 as a
result of lower interest rates for the three months ended September 30, 2002 as
compared to the same period in 2001.
There was a income tax benefit of $1.3 million for the three months ended
September 30, 2002 as compared to an income tax benefit of $7.7 million for the
same period in 2001. This change is primarily due to the increase in income
before income taxes as a result of Lamar Media's adoption of SFAS No. 142.
As a result of the above factors, Lamar Media a recognized a net loss for the
three months ended September 30, 2002 of $3.1 million, as compared to a net loss
of $21.4 million for the same period in 2001.
-15-2002.
-18-
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
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-ownedwholly owned subsidiary Lamar Media
Corp. The Company does not enter into market risk sensitive instruments
for trading purposes. The information below summarizes the Company's interest rate risk
associated with its principalprinciple variable rate debt instruments outstanding at
September 30, 2002.March 31, 2003.
Loans under Lamar Media'sMedia Corp.'s bank credit agreement bear interest at variable
rates equal to the JPMorgan Chase Prime Rate or LIBOR plus the applicable
margin. Because the JPMorgan Chase Prime Rate or LIBOR may increase or decrease
at any time, the Company and Lamar Media areis exposed to market risk as a result of the impact
that changes in these base rates may have on the interest rate applicable to
borrowings under the bank credit agreement. Increases in the interest rates
applicable to borrowings under the bank credit agreement would result in
increased interest expense and a reduction in the Company's and Lamar Media's
net income and total free cash flow.income.
At September 30, 2002,March 31, 2003, there was approximately $991$975.0 million of aggregate indebtedness
outstanding under the new bank credit agreement, or approximately 58%56.2% of the
Company's and 70% of Lamar Media's outstanding long-term debt on that date, bearing interest at variable
rates. The aggregate interest expense for the
nine months ended September 30, 20022003 with respect to borrowings under
the bank credit agreement was approximately $32$9.0 million, and the weighted
average interest rate applicable to borrowings under thesethis credit facilitiesfacility during
the
nine months ended September 30, 20022003 was 3.97%3.6%. Assuming that the weighted average interest rate was 200-basis
points higher (that is 5.97%5.6% rather than 3.97%3.6%), then the Company's and Lamar Media's September 30, 20022003 interest
expense would have been approximately $15$4.8 million higher resulting in a $9$2.9
million decreaseincrease in the Company's and Lamar Media's nine months ended September 30, 20022003 net income and total free cash flow.loss.
The Company attempts to mitigatehas mitigated the interest rate risk resulting from its variable
interest rate long-term debt instruments by also 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 and had the capability under the old and new bank credit agreement to fix
the interest rates applicable to its borrowings at an amount equal to LIBOR plus
the applicable margin for periods of up to twelve months, 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.
ITEM 4.
CONTROLS AND PROCEDURES.
a) Evaluation of disclosure controls and procedures. TheWithin 90 days prior to the
date of this report, the Company and Lamar Media carried out an evaluation under
the supervision and with the participation of their management, including the
Company's and Lamar Media's chief executive officerChief Executive Officer and chief financial officer, after evaluatingChief Financial Officer,
of the effectiveness of the Company'sdesign and Media's "disclosure controls and
procedures" (as defined in the Securities Exchange Actoperation of 1934 Rules 13a-14(c)
and 15-d-14(c)) as of a date (the "Evaluation Date") within 90 days before the
filing date of this combined quarterly report, have concluded that, as of the
Evaluation Date, the Company's and Lamar
Media's disclosure controls and procedures were adequate(as defined in Rules 13a-14(c) and
designed to ensure that the information required to
be disclosed in the reports filed or submitted by the Company and Lamar Media15d-14(c) under the Securities Exchange Act of 1934 is recorded, processed, summarized1934). Based upon that
evaluation, the Chief Executive Officer and reported withinChief Financial Officer concluded
that the requisite time periods.Company's and Lamar Media's disclosure controls and procedures are
effective in timely alerting them to material information relating to the
Company and Lamar Media required to be included in the Company's and Lamar
Media's reports filed with or submitted to the Securities and Exchange
Commission under the Securities Exchange Act of 1934.
b) Changes in internal controls. There wereSince the date of that evaluation, there have
been no significant changes in the internal controls of the Company or Lamar
Media or in other factors that could significantly affect the Company's or Lamar Media's internal controls subsequent
to the Evaluation Date.
-16-those controls.
-19-
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The Exhibits filed as part of this report are listed on the Exhibit Index
immediately following the signature page hereto, which Exhibit Index is
incorporated herein by reference.
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LAMAR ADVERTISING COMPANY
DATED: November 12, 2002May 14, 2003 BY: /s/ KeithKEITH A. Istre
----------------------ISTRE
----------------------------------------
Chief Financial and Accounting Officer,
Treasurer and Director
LAMAR MEDIA CORP.
DATED: November 12, 2002May 14, 2003 BY: /s/ KeithKEITH A. Istre
----------------------ISTRE
----------------------------------------
Chief Financial and Accounting Officer,
Treasurer and Director
-17--20-
CERTIFICATIONS
I, Kevin P. Reilly, Jr., certify that:
1. I have reviewed this combined quarterly report on Form 10-Q of Lamar
Advertising Company and Lamar Media Corp.;
2. Based on my knowledge, this combined quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this combined quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this combined quarterly report, fairly present in
all material respects the financial condition, results of operations and
cash flows of the registrants as of, and for, the periods presented in this
combined quarterly report;
4. The registrants' other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrants and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrants,
including their consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this combined quarterly report is being
prepared;
b) evaluated the effectiveness of the registrants' disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this combined quarterly report (the
"Evaluation Date"); and
c) presented in this combined quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;
5. The registrants' other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrants' auditors and the audit
committee of registrants' board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrants' ability to record, process, summarize and report
financial data and have identified for the registrants'
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrants' internal controls; and
6. The registrants' other certifying officer and I have indicated in this
combined quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
DATED: November 12, 2002May 14, 2003 BY: /s/ KevinKEVIN P. Reilly, Jr.
----------------------------REILLY, JR.
--------------------------------------------------
Kevin P. Reilly, Jr.
Chief Executive Officer, Lamar Advertising Company
Chief Executive Officer, Lamar Media Corp.
-18--21-
I, Keith A. Istre, certify that:
1. I have reviewed this combined quarterly report on Form 10-Q of Lamar
Advertising Company and Lamar Media Corp.;
2. Based on my knowledge, this combined quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this combined quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this combined quarterly report, fairly present in
all material respects the financial condition, results of operations and
cash flows of the registrants as of, and for, the periods presented in this
combined quarterly report;
4. The registrants' other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrants and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrants,
including their consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this combined quarterly report is being
prepared;
b) evaluated the effectiveness of the registrants' disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this combined quarterly report (the
"Evaluation Date"); and
c) presented in this combined quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;
5. The registrants' other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrants' auditors and the audit
committee of registrants' board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrants' ability to record, process, summarize and report
financial data and have identified for the registrants'
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrants' internal controls; and
6. The registrants' other certifying officer and I have indicated in this
combined quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
DATED: November 12, 2002May 14, 2003 BY: /s/ KeithKEITH A. Istre
-----------------------ISTRE
--------------------------------------------------
Keith A. Istre
Chief Financial Officer, Lamar Advertising Company
Chief Financial Officer, Lamar Media Corp.
-19--22-
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
2.1 Agreement and Plan of Merger dated as of July 20, 1999 among
Lamar Media Corp., Lamar New Holding Co., and Lamar Holdings
Merge Co. Previously filed as exhibit 2.1 to the Company's
Current Report on Form 8-K filed on July 22, 1999 (File No.
0-30242) and incorporated herein by reference.
3.1 Certificate of Incorporation of Lamar New Holding Co.
Previously filed as exhibit 3.1 to the Company's Quarterly
Report on Form 10-Q for the period ended June 30, 1999 (File
No. 0-20833) filed on August 16, 1999 and incorporated herein
by reference.
3.2 Certificate of Amendment of Certificate of Incorporation of
Lamar New Holding Co. (whereby the name of Lamar New Holding
Co. was changed to Lamar Advertising Company). Previously
filed as exhibit 3.2 to the Company's Quarterly Report on Form
10-Q for the period ended June 30, 1999 (File No. 0-20833)
filed on August 16, 1999 and incorporated herein by reference.
3.3 Certificate of Amendment of Certificate of Incorporation of
Lamar Advertising Company. Previously filed as Exhibit 3.3 to
the Company's Quarterly Report on Form 10-Q for the period
ended June 30, 2000 (File No. 0-30242) filed on August 11,
2000 and incorporated herein by reference.
3.4 Certificate of Correction of Certificate of Incorporation of
Lamar Advertising Company. Previously filed as Exhibit 3.4 to
the Company's Quarterly Report on Form 10-Q for the period
ended September 30, 2000 (File No. 0-30242) filed on November
14, 2000 and incorporated herein by reference.
3.5 Bylaws of the Lamar Advertising Company. Previously filed as
Exhibit 3.3 to the Company's Quarterly Report on Form 10-Q for
the period ended June 30, 1999 (File No. 0-20833) filed on
August 16, 1999 and incorporated herein by reference.
3.6 Amended and Restated Bylaws of Lamar Media Corp. Previously
filed as Exhibit 3.1 to Lamar Media's Quarterly Report on Form
10-Q for the period ended September 30, 1999 (File No.
1-12407) filed on November 12, 1999 and incorporated herein by
reference.
4.1 Supplemental Indenture to the Indenture dated November 15,
1996 among Lamar Media Corp., certain of its subsidiaries and
State Street Bank and Trust Company, as Trustee, dated August
16, 2002 delivered by Washington Logos, L.L.C. Filed herewith.
4.2 Supplemental Indenture to the Indenture dated August 15, 1997
among Outdoor Communications, Inc., certain of its
subsidiaries and First Union National Bank, as Trustee, dated
August 16, 2002 delivered by Washington Logos, L.L.C. Filed
herewith.
4.3 Supplemental Indenture to the Indenture dated September 25,
1997 among Lamar Media Corp., certain of its subsidiaries and
State Street Bank and Trust Company, as Trustee, dated August
16, 2002 delivered by Washington Logos, L.L.C. Filed herewith.
10.1 Joinder Agreement dated November 12, 2001 to the Lamar Media
Corp. Credit Agreement dated August 16, 2002 by Washington
Logos L.L.C. Filed herewith.
10.2 Amendment No. 4 dated as of October 23, 2002 in respect of the Credit Agreement dated as of August 13, 1999March 7, 2003 between Lamar Media
Corp., and the Subsidiary Guarantors party thereto, the Lenders
party thereto, and JPMorgan Chase Bank, (formerly known
as The Chase Manhattan Bank), as Administrative
Agent. Filed herewith.as Exhibit 10.38 to Lamar Media Corp.'s
Registration Statement on Form S-4/A (File No. 333-102634)
filed on March 18, 2003 and incorporated herein by reference.
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
-20--23-