UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549FORM 10-Q
[X][X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934For the period ended
September 30, 2003March 31, 2004
or[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934For the transition period from _______________ to _______________
Commission File Number 0-30242
LAMAR ADVERTISING COMPANYLamar Advertising CompanyCommission File Number 1-12407LAMAR MEDIA CORP. (ExactLamar Media Corp.(Exact name of registrants as specified in their charters)
Delaware 72-1449411 Delaware 72-1205791 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5551 Corporate Blvd., Baton Rouge, LA 70808 (Address of principle executive offices) (Zip Code) Registrants'
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 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)[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)[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)[X]The number of shares of Lamar Advertising
Company'sCompany’s Class A common stock outstanding as ofOctober 31, 2003: 86,868,657May 4, 2004: 88,124,826The number of shares of the Lamar Advertising
Company'sCompany’s Class B common stock outstanding as ofOctober 31, 2003: 16,417,073May 4, 2004: 15,672,527The number of shares of Lamar Media Corp. common stock outstanding as of
October 31, 2003:May 4, 2004: 100THIS COMBINED FORMThis combined Form 10-Q
IS SEPARATELY FILED BYis separately filed by (i)LAMAR ADVERTISING COMPANY ANDLamar Advertising Company and (ii)LAMAR MEDIA CORP. (WHICH IS A WHOLLY OWNED SUBSIDIARY OF LAMAR ADVERTISING COMPANY)Lamar Media Corp. (which is a wholly owned subsidiary of Lamar Advertising Company).LAMAR MEDIA CORP. MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONLamar Media Corp. meets the conditions set forth in general instruction H(1) (a)ANDand (b)OF FORMof Form 10-QAND IS, THEREFORE, FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT PERMITTED BY SUCH INSTRUCTION.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 (the
"Company"“Company”) and Lamar Media Corp.("(“LamarMedia"Media”) 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 about theCompany's,Company’s, and LamarMedia's: -Media’s:expected operating results;-market opportunities;-acquisition opportunities;-ability to compete; and-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'sCompany’s and LamarMedia'sMedia’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:- -risks and uncertainties relating to theCompany'sCompany’s significant indebtedness;- -the demand for outdoor advertising;the performance of the U.S. economy generally and the level of expenditures on outdoor advertising particularly;- -theCompany'sCompany’s ability to renew expiring contracts at favorable rates;- -the integration of companies that the Company acquires and its ability to recognize cost savings or operating efficiencies as a result of these acquisitions;- -theCompany'sCompany’s need for and ability to obtain additional funding for acquisitions or operations; and- -the regulation of the outdoor advertising industry by federal, state and local governments.For a further description of these and other risks and uncertainties, the Company encourages you to read carefully
readthe portion of the combined Annual Report on Form 10-K for the year ended December 31,20022003 of the Company and Lamar Media (the"2002“2003 Combined Form10-K"10-K”) under the caption"Factors“Factors Affecting Future OperatingResults"Results” in Item 7 -Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations filed with the SEC on March26, 2003.10, 2004.The forward-looking statements contained in this combined Quarterly Report on Form 10-Q speak only as of the date of this combined report. Lamar Advertising Company and Lamar Media Corp. expressly disclaim any obligation or undertaking to disseminate any updates or 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, except as may be required by law.
CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1.- FINANCIAL STATEMENTS
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED) (IN(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
September 30, December 31, 2003 2002 ------------- -----------ASSETS Current assets: Cash and cash equivalents $ 6,492 $ 15,610 Cash on deposit for debt extinguishment - 266,657 Receivables, net of allowance for doubtful accounts of $5,153 and $4,914 in 2003 and 2002, respectively 98,200 92,382 Prepaid expenses 43,914 30,091 Deferred income tax asset 6,405 6,428 Other current assets 6,821 7,315 ------------ ----------- Total current assets 161,832 418,483 ------------ ----------- Property, plant and equipment 1,924,603 1,850,657 Less accumulated depreciation and amortization (650,119) (566,889) ------------ ----------- Net property, plant and equipment 1,274,484 1,283,768 ------------ ----------- Goodwill 1,237,867 1,178,428 Intangible assets 996,439 988,953 Other assets - non-current 30,531 18,474 ------------ ----------- Total assets $ 3,701,153 $ 3,888,106 ============ =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade accounts payable $ 13,751 $ 10,051 Current maturities of long-term debt 5,040 4,687 Current maturities related to debt extinguishment -- 255,000 Accrued expenses 36,606 38,881 Deferred income 15,395 13,942 ------------ ----------- Total current liabilities 70,792 322,561 ------------ ----------- Long-term debt 1,760,389 1,734,746 Deferred income taxes 100,104 114,260 Other liabilities 44,918 7,366 ------------ ----------- Total liabilities 1,976,203 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 2003 and 2002 -- -- Class A preferred stock, par value $638, $63.80 cumulative dividends, 10,000 shares authorized; 0 shares issued and outstanding at 2003 and 2002 -- -- Class A common stock, par value $.001, 175,000,000 shares authorized, 86,867,157 and 85,077,038 shares issued and outstanding at 2003 and 2002, respectively 87 85 Class B common stock, par value $.001, 37,500,000 shares authorized, 16,417,073 shares issued and outstanding at 2003 and 2002 16 16 Additional paid-in capital 2,093,738 2,036,709 Accumulated deficit (368,891) (327,637) ------------ ----------- Stockholders' equity 1,724,950 1,709,173 ------------ ----------- Total liabilities and stockholders' equity $ 3,701,153 $ 3,888,106 ============ ===========
March 31, December 31, 2004 2003 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 6,120 $ 7,797 Receivables, net of allowance for doubtful accounts of $4,914 in 2004 and 2003 92,023 90,567 Prepaid expenses 44,958 32,377 Deferred income tax assets 6,258 6,051 Other current assets 7,347 7,325
Total current assets 156,706 144,117
Property, plant and equipment 1,954,284 1,933,003 Less accumulated depreciation and amortization (710,445 ) (679,205 )
Net property, plant and equipment 1,243,839 1,253,798
Goodwill 1,248,061 1,240,275 Intangible assets 945,485 966,998 Other assets 29,030 32,159
Total assets $ 3,623,121 $ 3,637,347
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Trade accounts payable $ 8,810 $ 8,813 Current maturities of long-term debt 20,703 5,044 Accrued expenses 29,922 45,986 Deferred income 15,086 14,372
Total current liabilities 74,521 74,215
Long-term debt 1,676,755 1,699,819 Deferred income tax liabilities 90,751 94,542 Asset retirement obligation 39,201 36,857 Other liabilities 8,344 9,109
Total liabilities 1,889,572 1,914,542
Stockholders’ equity: Series AA preferred stock, par value $.001, $63.80 cumulative dividends, authorized 5,720 shares; 5,719 shares issued and outstanding at 2004 and 2003 — — Class A preferred stock, par value $638, $63.80 cumulative dividends, 10,000 shares authorized; 0 shares issued and outstanding at 2004 and 2003 — — Class A common stock, par value $.001, 175,000,000 shares authorized, 87,989,353 and 87,266,763 shares issued and outstanding at 2004 and 2003, respectively 88 87 Class B common stock, par value $.001, 37,500,000 shares authorized, 15,797,527 and 16,147,073 shares issued and outstanding at 2004 and 2003, respectively 16 16 Additional paid-in capital 2,110,836 2,097,555 Accumulated deficit (377,391 ) (374,853 )
Stockholders’ equity 1,733,549 1,722,805
Total liabilities and stockholders’ equity $ 3,623,121 $ 3,637,347
See accompanying notes to condensed consolidated financial statements.
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LAMAR ADVERTISING COMPANY AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)(IN(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Three Months Ended Nine Months Ended September 30, September 30, 2003 2002 2003 2002 ---- ---- ---- ----Net revenues $ 211,720 $ 201,918 $ 604,119 $ 580,985 ------------- ------------- ------------- ------------- Operating expenses (income) Direct advertising expenses 74,571 71,685 219,489 205,544 General and administrative expenses 36,098 33,721 107,615 101,853 Corporate expenses 6,631 8,604 18,541 21,095 Depreciation and amortization 70,410 70,268 207,483 206,769 Loss (gain) on disposition of assets 242 (33) (616) (203) ------------- ------------- ------------- ------------- 187,952 184,245 552,512 535,058 ------------- ------------- ------------- ------------- Operating income 23,768 17,673 51,607 45,927 Other expense (income) Loss on extinguishment of debt 12,566 -- 29,493 -- Interest income (99) (387) (283) (774) Interest expense 21,524 27,182 67,871 81,199 ------------- ------------- ------------- ------------- 33,991 26,795 97,081 80,425 ------------- ------------- ------------- ------------- Loss before income tax benefit and cumulative effect of a change in accounting principle (10,223) (9,122) (45,474) (34,498) Income tax benefit (3,715) (3,134) (16,172) (12,039) ------------- ------------- ------------- ------------- Loss before cumulative effect of a change in accounting principle (6,508) (5,988) (29,302) (22,459) Cumulative effect of a change in accounting principle, net of tax -- -- (11,679) -- ------------- ------------- ------------- ------------- Net loss (6,508) (5,988) (40,981) (22,459) Preferred stock dividends 91 91 273 273 ------------- ------------- ------------- ------------- Net loss applicable to common stock $ (6,599) $ (6,079) $ (41,254) $ (22,732) ------------- ------------- ------------- ------------- Loss per common share: Loss before cumulative effect of a change in accounting principle $ (0.06) $ (0.06) $ (0.29) $ (0.23) Cumulative effect of a change in accounting principle -- -- (0.11) -- ------------- ------------- ------------- ------------- Net loss $ (0.06) $ (0.06) $ (0.40) $ (0.23) ============= ============= ============= ============= Weighted average common shares outstanding - basic and diluted 103,251,834 101,377,147 102,472,830 100,965,349 ============= ============= ============= =============
Three Months Ended March 31, 2004 2003 Net revenues $ 200,976 $ 184,221
Operating expenses (income) Direct advertising expenses 73,791 71,557 General and administrative expenses 38,276 36,301 Corporate expenses 7,159 6,546 Depreciation and amortization 69,320 67,513 Gain on disposition of assets (929 ) (30 )
187,617 181,887
Operating income 13,359 2,334 Other expense (income) Loss on extinguishment of debt — 11,173 Interest income (59 ) (118 ) Interest expense 17,570 23,760
17,511 34,815
Loss before income tax benefit and cumulative effect of a change in accounting principle (4,152 ) (32,481 ) Income tax benefit (1,705 ) (11,888 )
Loss before cumulative effect of a change in accounting principle (2,447 ) (20,593 ) Cumulative effect of a change in accounting principle, net of tax benefit of $7,467 — 11,679
Net loss (2,447 ) (32,272 ) Preferred stock dividends 91 91
Net loss applicable to common stock $ (2,538 ) $ (32,363 )
Loss per common share: Loss before cumulative effect of a change in accounting principle $ (0.02 ) $ (0.20 ) Cumulative effect of a change in accounting principle — (0.12 )
Net loss $ (0.02 ) $ (0.32 )
Weighted average common shares outstanding 103,607,466 101,667,397 Incremental common shares from dilutive stock options — — Incremental common shares from convertible debt — —
Weighted average common shares assuming dilution 103,607,466 101,667,397
See accompanying notes to condensed consolidated financial statements.
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LAMAR ADVERTISING COMPANY AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)(IN(IN THOUSANDS)
Nine Months Ended September 30, 2003 2002 ---- ----Cash flows from operating activities: Net loss $ (40,981) $ (22,459) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 207,483 206,769 Gain on disposition of assets (616) (203) Deferred tax benefit (15,862) (7,661) Provision for doubtful accounts 6,454 6,378 Loss on debt extinguishment 29,493 -- Cumulative effect of a change in accounting principle, net of tax 11,679 -- Changes in operating assets and liabilities: (Increase) decrease in: Receivables (11,871) (12,208) Prepaid expenses (14,120) (12,753) Other assets (2,229) (4,559) Increase (decrease) in: Trade accounts payable 3,700 (2,139) Accrued expenses (3,378) (1,150) Other liabilities 1,378 3,481 --------- --------- Cash flows provided by operating activities 171,130 153,496 --------- --------- Cash flows from investing activities: Acquisitions (124,967) (74,041) Capital expenditures (61,299) (56,938) Proceeds from disposition of assets 2,913 2,048 --------- --------- Cash flows used in investing activities (183,353) (128,931) --------- --------- Cash flows from financing activities: Debt issuance costs (9,800) (1,076) Net proceeds from issuance of common stock 5,451 12,697 Principal payments on long-term debt (667,280) (50,192) Net borrowings under credit agreements -- 60,000 Cash from deposits for debt extinguishment 266,657 -- Net proceeds from note offerings and new note payable 408,350 40 Dividends (273) (273) --------- --------- Cash flows provided by financing activities 3,105 21,196 --------- --------- Net (decrease) increase in cash and cash equivalents (9,118) 45,761 Cash and cash equivalents at beginning of period 15,610 12,885 --------- --------- Cash and cash equivalents at end of period $ 6,492 $ 58,646 --------- --------- Supplemental disclosures of cash flow information: Cash paid for interest $ 66,010 $ 85,252 ========= ========= Cash paid for state and federal income taxes $ 390 $ 481 ========= ========= Common stock issuance related to acquisitions $ 50,630 $ 56,100 ========= =========
Three Months Ended March 31, 2004 2003 Cash flows from operating activities: Net loss $ (2,447 ) $ (32,272 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 69,320 67,513 Gain on disposition of assets (929 ) (30 ) Deferred tax benefit (2,015 ) (11,982 ) Provision for doubtful accounts 1,248 2,325 Loss on debt extinguishment — 11,173 Cumulative effect of a change in accounting principle, net of tax — 11,679 Changes in operating assets and liabilities: (Increase) decrease in: Receivables (1,649 ) (475 ) Prepaid expenses (12,779 ) (11,533 ) Other assets 234 (1,422 ) Increase (decrease) in: Trade accounts payable (2 ) 371 Accrued expenses (16,064 ) (15,441 ) Other liabilities 681 1,148
Cash flows provided by operating activities 35,598 21,054
Cash flows from investing activities: Acquisitions (21,048 ) (6,638 ) Capital expenditures (15,891 ) (17,808 ) Proceeds from disposition of assets 1,135 938
Cash flows used in investing activities (35,804 ) (23,508 )
Cash flows from financing activities: Debt issuance costs (1,003 ) (8,356 ) Net proceeds from issuance of common stock 7,028 953 Principal payments on long-term debt (2,405 ) (264,449 ) Net payments under credit agreements (5,000 ) — Cash from deposits for debt extinguishment — 266,657 Dividends (91 ) (91 )
Cash flows used in financing activities (1,471 ) (5,286 )
Net decrease in cash and cash equivalents (1,677 ) (7,740 ) Cash and cash equivalents at beginning of period 7,797 15,610
Cash and cash equivalents at end of period $ 6,120 $ 7,870
Supplemental disclosures of cash flow information: Cash paid for interest $ 22,982 $ 27,792
Cash paid for state and federal income taxes $ 140 $ 146
Common stock issuance and warrants related to acquisitions $ 4,270 $ 18,000
See accompanying notes to condensed consolidated financial statements.
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LAMAR ADVERTISING COMPANY AND
SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(IN(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)1. Significant Accounting Policies
1. Significant Accounting Policies The information included in the foregoing interim condensed 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'sCompany’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 theCompany'sCompany’s consolidated financial statements and the notes thereto included in the20022003 Combined Form 10-K.Certain amounts in the prior
year'syear’s condensed 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
2. Acquisitions On
March 3, 2003, the Company purchased the stock of Delite Outdoor, Inc. for $18,000. The purchase price consisted of 588,543 shares of Lamar Advertising Class A common stock valued at $18,000. Effective May 1, 2003,January 8, 2004, the Company purchased the assets ofOutdoor Media Group, Inc. for $40,000.Advantage Advertising, LLC valued at approximately $7,158. The purchase price consisted of307,134 sharesapproximately $5,728 cash at closing and the exercise ofLamar Advertising Class A common stock as well asan option agreement previously entered into, valued at approximately$30,000 cash.$1,430.On
June 2, 2003,January 30, 2004, the Company purchased thestockassets ofAdams Outdoor,Action Advertising, Inc. forapproximately $40,137. Thea cash purchase priceincluded 501,626 sharesofLamar Advertising Class A common stock andapproximately$22,637 cash.$8,610.During the
ninethree months endedSeptember 30, 2003,March 31, 2004, the Company completed additional acquisitions of outdoor advertising assets for a total purchase price of approximately$78,798,$10,980, which consisted of the issuance of152,79268,986 shares of Lamar Advertising Class A common stock valued at $2,476, warrants valued at $1,794 and$73,668$6,710 cash.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.
Delite Adams Outdoor Outdoor Outdoor Media Inc. Inc. Group, Inc. Other Total ------- ------- ----------- ------ -------Current assets 911 1,327 19 435 2,692 Property, plant and equipment 4,580 2,299 2,793 14,015 23,687 Goodwill 43 24,254 17,111 18,031 59,439 Site locations 10,048 16,221 16,335 36,399 79,003 Non-competition agreements 145 -- -- 361 506 Customer lists and contracts 2,732 3,716 3,742 5,856 16,046 Other assets -- -- -- 6,666 6,666 Current liabilities 108 403 -- 445 956 Long-term liabilities 351 7,277 -- 2,520 10,148 ------- ------ -------- ------ ------- 18,000 40,137 40,000 78,798 176,935 ======= ====== ======== ====== =======
Advantage Action Adv., LLC Adv., Inc. Other Total Current assets $ — 110 36 146 Property, plant and equipment 855 2,208 3,534 6,597 Goodwill 2,854 — 4,932 7,786 Site locations 2,806 5,064 1,949 9,819 Non-competition agreements — 40 79 119 Customer lists and contracts 643 1,188 450 2,281
$ 7,158 8,610 10,980 26,748
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LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)(IN
(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, 2004 and
nine months ended September 30,March 31, 2003and September 30, 2002as if each of the above acquisitions and the acquisitions occurring in2002,2003, which were fully described in the20022003 Combined Form 10-K, had been consummated as of January 1,2002 and the adoption of SFAS No. 143 as of January 1, 2002.2003. This pro forma information does not purport to represent what theCompany'sCompany’s results of operations actually would have been had such transactions occurred on the date specified or to project theCompany'sCompany’s results of operations for any future periods.
Three Months Ended Nine Months Ended September 30, September 30, 2003 2002 2003 2002 ---- ---- ---- ----Net revenues $ 211,746 $ 208,194 $ 611,753 $ 602,291 --------- --------- --------- --------- Net loss applicable to common stock $ (6,612) $ (7,779) $ (42,470) $ (27,541) --------- --------- --------- --------- Net loss per common share $ (0.06) $ (0.08) $ (0.41) $ (0.27) --------- --------- --------- ---------
Three Months Ended March 31, 2004 2003 Net revenues $ 201,230 $ 189,935
Net loss applicable to common stock $ (2,534 ) $ (33,430 )
Net loss per common share $ (0.02 ) $ (0.32 )
3. Goodwill and Other Intangible Assets
The following is a summary of intangible assets at
September 30, 2003March 31, 2004 and December 31,2002.2003.
September 30, 2003 December 31, 2002 Estimated ------------------ ----------------- Life Gross Carrying Accumulated Gross Carrying Accumulated (Years) Amount Amortization Amount Amortization ------- -------------- ------------ -------------- ------------Amortizable Intangible Assets: Debt issuance costs and fees 7 - 10 $ 51,621 $ 20,976 $ 52,202 $ 27,533 Customer lists and contracts 7 - 10 387,833 235,393 371,787 196,084 Non-competition agreements 3 - 15 57,529 44,608 57,023 39,458 Site locations 15 1,016,775 226,181 937,773 177,016 Other 5 - 15 17,029 7,190 15,997 5,738 ------ ---------- --------- ----------- ---------- 1,530,787 534,348 1,434,782 445,829 Unamortizable Intangible Assets: Goodwill $1,491,502 $ 253,635 $ 1,432,063 $ 253,635
March 31, 2004 December 31, 2003 Estimated Life Gross Carrying Accumulated Gross Carrying Accumulated Amortizable Intangible Assets: (Years) Amount Amortization Amount Amortization Debt issuance costs and fees 7 – 10 $ 50,141 $ 22,098 $ 49,138 $ 20,783 Customer lists and contracts 7 – 10 391,072 261,598 388,791 248,617 Non-competition agreements 3 – 15 57,783 47,782 57,664 46,197 Site locations 15 1,030,855 260,306 1,021,037 243,170 Other 5 – 15 13,612 6,194 17,578 8,443
1,543,463 597,978 1,534,208 567,210 Unamortizable Intangible Assets: Goodwill $ 1,501,696 $ 253,635 $ 1,493,910 $ 253,635 The changes in the gross carrying amount of goodwill for the
ninethree months endedSeptember 30, 2003March 31, 2004 are as follows:
Balance as of December 31, 2002 $ 1,432,063 Goodwill acquired during the nine months ending September 30, 2003 59,439 Impairment losses -- ---------------- Balance as of September 30, 2003 $ 1,491,502 ================
Balance as of December 31, 2003 $ 1,493,910 Goodwill acquired during the three months ending March 31, 2004 7,786 Impairment losses —
Balance as of March 31, 2004 $ 1,501,696
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LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)(IN
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)4. Long-Term Debt
4. Long-Term Debt On
December 23, 2002,February 6, 2004, Lamar MediaCorp. completed an offering of $260,000amended its credit agreement dated March 7,1/4% Senior Subordinated Notes due 2013. These notes are unsecured senior subordinated obligations subordinated2003 whereby it changed its $975,000 term facility toall of Lamar Media's existinginclude a $425,000 Tranche A andany future senior debt, ranked equally with all of Lamar Media's existing and future senior subordinated debt and ranked senior to any future subordinated debt of Lamar Media.a $550,000 Tranche C facility. Thenetproceedsfrom the issuance and sale of these notes, together with additional cash, was used to redeem all of the outstanding $255,000 principal 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 principal 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 that consisted of a prepayment premium of $8,180 and associated debt issuance costs of $2,993. On June 12, 2003, Lamar Media Corp. issued $125,000 7 1/4% Senior Subordinated Notes due 2013 as an add on to the $260,000 issued in December 2002. The issue price of the $125,000 7 1/4% Notes was 103.661% of the principal amount of the notes, which yields an effective rate of 6 5/8% . The proceeds of the issuancewere used toredeem approximately $100,000 of Lamar Media's 8 5/8% senior subordinated notes for a redemption price equal to 104.313% ofpay off theprincipal amount ofTranche B facility and thenotes. The Company recorded a loss on extinguishment oftotal debtof $5,754 in the second quarter of 2003 related to this prepayment. Approximately $100,000 in aggregate principal amount of Lamar Media's 8 5/8% notes remainoutstandingfollowing this redemption. On June 16, 2003, the Company issued $287,500 2 7/8% Convertible Notes due 2010. The net proceeds from these notes together with additional cash were used on July 16, 2003 to redeem all of the Company's outstanding 5 1/4% convertible notes due 2006 in aggregate principal amount of approximately $287,500 for a redemption price equal to 103.0% of the principal amount of notes. The Company recorded a loss on extinguishment of debt in the third quarter of 2003 of $12,566 related to this redemption. 5. Asset Retirement Obligationremained unchanged.
5. Asset Retirement Obligation Effective January 1, 2003, the Company adopted Statement of Financial Accounting Standard
(SFAS) No.143,"Accounting“Accounting for Asset RetirementObligations,"Obligations” (Statement 143), and recorded a loss of $11,679 as the cumulative effect of a change in accounting principle, which is net ofaan income tax benefit of $7,467. Prior to its adoption ofSFAS No.Statement 143, the Company expensed these costs at the date of retirement.Also, as of January 1, 2003, the Company recorded additions to property, plant and equipment totaling $23,114 under the provisions of SFAS No. 143.All of the
Company'sCompany’s asset retirement obligations relate to theCompany'sCompany’s structure inventory that it considers would be retired upon dismantlement of the advertising structure. The following table reflects information related to our asset retirement obligations:
Balance at December 31, 2003 $ 36,857 Additions to asset retirement obligations 1,577 Accretion expense 1,158 Liabilities settled (391 )
Balance at March 31, 2004 $ 39,201
Balance at January 1, 2003 $ 33,467 Additions to asset retirement obligations 1,326 Accretion expense 1,745 Liabilities settled (462) -------- Balance at September 30, 2003 $ 36,076 --------6. Stock-Based Compensation The following pro forma data summarizes the Company's net loss and net loss per common share as if the Company had adopted the provisions of SFAS No. 143 on January 1, 2002, including an associated pro forma asset retirement obligation on that date of $30,875.
Nine months ended September 30, 2002 ------------------Net loss applicable to common stock, as reported $(22,732) Pro forma adjustments to reflect retroactive adoption of SFAS No. 143 (11,044) -------- Pro forma net loss applicable to common stock $(33,776) ======== Net loss per common share - basic and diluted: Net loss, as reported $ (0.23) Net loss, pro forma $ (0.33)-6-LAMAR ADVERTISING COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 6. Stock-Based CompensationThe 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“Accounting for Stock Issued toEmployees"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“Accounting for Stock-BasedCompensation"Compensation” and SFAS No. 148,"Accounting“Accounting for Stock-Based Compensation-– Transition and Disclosure an amendment of FASB Statement No.123" permits123” permit entities to recognize as an 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.The following table illustrates the effect on net loss and loss per common share as if we had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation:
Three months ended March 31, 2004 2003 Net loss applicable to common stock, as reported $ (2,538 ) $ (32,363 ) Deduct: Total stock based employee compensation expense determined under fair value based method for all awards, net of related tax effects (3,861 ) (1,011 )
Pro forma net loss applicable to common stock $ (6,399 ) $ (33,374 )
Net loss per common share – basic and diluted Net loss, as reported $ (0.02 ) $ (0.32 ) Net loss, pro forma $ (0.06 ) $ (0.33 ) -6-
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Three Months Ended Nine Months Ended September 30, September 30, 2003 2002 2003 2002 ---- ---- ---- ----Net loss applicable to common stock, as reported $ (6,599) $ (6,079) $(41,254) $(22,732) Deduct: Total stock based employee compensation expense determined under fair value based method for all awards, net7. Summarized Financial Information of related tax effects (964) (1,628) (2,942) (5,470) -------- -------- -------- -------- Pro forma net loss applicable to common stock $ (7,563) $ (7,707) $(44,196) $(28,202) -------- -------- -------- -------- Net loss per common share - basic and diluted Net loss, as reported $ (0.06) $ (0.06) $ (0.40) $ (0.23) Net loss, pro forma $ (0.07) $ (0.08) $ (0.43) $ (0.28)Subsidiaries7. Summarized Financial Information of SubsidiariesSeparate financial statements of each of the
Company'sCompany’s direct or indirect wholly owned subsidiaries that have guaranteed LamarMedia'sMedia’s obligations with respect to its publicly issued notes (collectively, the 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. LamarMedia'sMedia’s ability to make distributions to Lamar Advertising is restricted under the terms of its bank credit facility and the indentures relating to LamarMedia'sMedia’s outstanding notes. As ofSeptember 30, 2003March 31, 2004 and December 31,2002,2003, 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$1,940,622$1,948,778 and$1,915,035,$1,937,244, respectively.8. Earnings Per Share
8. Earnings Per Share Earnings per share are computed in accordance with SFAS No. 128,
"Earnings“Earnings Per Share."” Thecalculationscalculation of basic earnings per shareexcludeexcludes any dilutive effect of stock options and convertibledebt whiledebt. The calculation of diluted earnings 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 effectare 6,949,954is 6,125,133 and6,547,6126,590,096 for the three months endedSeptember 30, 2003March 31, 2004 and2002 and 7,000,969 and 6,811,938 for the nine months ended September 30, 2003 and 2002, respectively. 9. Accounting Pronouncements2003.
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 reporting for costs associated with exit or disposal activities and nullified Emerging Issues Task Force (EITF) Issue 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity." The provisions of this Statement are effective for exit or disposal activities that are initiated afterDecember31, 2002, with early application encouraged. The adoption of SFAS No. 146 did not have a material effect on the Company's financial statements. -7-LAMAR ADVERTISING COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (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 January2003, the FASB issued Interpretation No. 46"Consolidation(revised December 2003), “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 interests in variable interest entities created after January 31, 2003 andto variable interests inexisting variable interest entitiesobtainedat the end of the period ending afterJanuary 31, 2003.March 15, 2004. The application of this Interpretation did not have a material effect on theCompany'sCompany’s financial statements as the Company has no interest in 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 other contracts (collectively referred
10. Subsequent Event An unsolicited offer was made by Outdoor Promotions, Inc. to
as derivatives) and for hedging activities under FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities." The Company adopted SFAS No. 149 for all contracts entered into or modified after June 30, 2003. The adoption of SFAS No. 149 did not have a material impact on its consolidated financial statements. In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." Statement 150 affects the issuer's accounting for three types of freestanding financial instruments. One type is mandatory redeemable shares, which the issuing company is obligated to buy back in exchange for cash or other assets. A second type, which includes put options and forwardpurchasecontracts, involves instruments that do or may require the issuer to buy back some of its shares in exchange for cash or other assets. The third type of instruments that are liabilities under this Statement is obligations that can be settled with shares, the monetary value of which is fixed, tied solely or predominately to a variable such as a market index, or varies inversely with the value of the issuers' shares. Statement 150 does not apply to features embedded in a financial instrument that is not a derivative in its entirety. Most of the guidance in Statement 150 is effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. Becauseselected transit advertising assets from the Companydoes not have any financial instruments covered by SFAS No. 150 outstanding, its adoption did not materially impactfor approximately $2,950. The sale of these assets was closed on April 23, 2004 at which time theCompany's financial position, cash flows or results of operations. 10. Commitments and Contingent Liabilities In August 2002, a jury verdictcarrying value wasrendered in a lawsuit filed against the Company in the amount of $32 in compensatory damages and $2,245 in punitive damages. As a result of the verdict, the Company recorded a $2,277 charge in its operating expenses during the quarter ended September 30, 2002. In May 2003, the Court ordered a reduction to the punitive damage award, which was subject to the plaintiff's consent. The plaintiff rejected the reduced award and the Court ordered a new trial. Based on legal analysis, management believes the best estimate of the Company's potential liability related to this claim is currently $1,277. The $1,000 reduction in the reserve for this liability was recorded as a reduction of corporate expenses in the second quarter of 2003. -8-approximately $7,030. -7-
LAMAR MEDIA CORP.
AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED) (IN(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
September 30, December 31, 2003 2002 ---- ----ASSETS Current assets: Cash and cash equivalents $ 6,492 $ 15,610 Cash on deposit for debt extinguishment -- 266,657 Receivables, net of allowance for doubtful accounts of $5,153 and $4,914 in 2003 and 2002, respectively 98,086 92,295 Prepaid expenses 43,914 30,091 Deferred income tax asset 6,405 6,428 Other current assets 6,821 7,315 ----------- ----------- Total current assets 161,718 418,396 ----------- ----------- Property, plant and equipment 1,924,603 1,850,657 Less accumulated depreciation and amortization (650,119) (566,889) ----------- ----------- Net property, plant and equipment 1,274,484 1,283,768 ----------- ----------- Goodwill 1,230,685 1,171,595 Intangible assets 981,051 975,998 Other assets - non-current 48,050 25,152 ----------- ----------- Total assets $ 3,695,988 $ 3,874,909 =========== =========== LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Trade accounts payable $ 13,751 $ 10,051 Current maturities of long-term debt 5,040 4,687 Current maturities related to debt extinguishment -- 255,000 Accrued expenses 26,763 25,981 Deferred income 15,395 13,942 ----------- ----------- Total current liabilities 60,949 309,661 ----------- ----------- Long-term debt 1,472,889 1,447,246 Deferred income taxes 125,890 129,924 Other liabilities 44,918 7,366 ----------- ----------- Total liabilities 1,704,646 1,894,197 ----------- ----------- Stockholder's equity: Common stock, $0.01 par value, authorized 3,000 shares; 100 shares issued and outstanding at September 30, 2003 and December 31, 2002, respectively -- -- Additional paid-in capital 2,333,482 2,281,901 Accumulated deficit (342,140) (301,189) ----------- ----------- Stockholder's equity 1,991,342 1,980,712 ----------- ----------- Total liabilities and stockholder's equity $ 3,695,988 $ 3,874,909 =========== ===========
March 31, December 31, 2004 2003 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 6,120 $ 7,797 Receivables, net of allowance for doubtful accounts of $4,914 in 2004 and 2003 91,930 90,413 Prepaid expenses 44,958 32,377 Deferred income tax asset 6,258 6,051 Other current assets 7,347 7,324
Total current assets 156,613 143,962
Property, plant and equipment 1,954,284 1,933,003 Less accumulated depreciation and amortization (710,445 ) (679,205 )
Net property, plant and equipment 1,243,839 1,253,798
Goodwill 1,240,592 1,232,857 Intangible assets 931,540 952,347 Other assets 40,633 50,744
Total assets $ 3,613,217 $ 3,633,708
LIABILITIES AND STOCKHOLDER’S EQUITY Current liabilities: Trade accounts payable $ 8,810 $ 8,813 Current maturities of long-term debt 20,703 5,044 Accrued expenses 19,994 38,068 Deferred income 15,086 14,372
Total current liabilities 64,593 66,297
Long-term debt 1,389,255 1,412,319 Deferred income taxes 118,751 121,440 Asset retirement obligation 39,201 36,857 Other liabilities 8,344 9,109
Total liabilities 1,620,144 1,646,022
Stockholder’s equity: Common stock, $0.01 par value, authorized 3,000 shares; 100 shares issued and outstanding at March 31, 2004 and December 31, 2003 — — Additional paid-in capital 2,340,204 2,333,951 Accumulated deficit (347,131 ) (346,265 )
Stockholder’s equity 1,993,073 1,987,686
Total liabilities and stockholder’s equity $ 3,613,217 $ 3,633,708
See accompanying notes to condensed consolidated financial statements.
-9--8-
LAMAR MEDIA CORP.
AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)(IN(IN THOUSANDS)
Three Months Ended Nine Months Ended September 30, September 30, 2003 2002 2003 2002 ---- ---- ---- ----Net revenues $ 211,720 $ 201,918 $ 604,119 $ 580,985 --------- --------- --------- --------- Operating expenses (income) Direct advertising expenses 74,571 71,685 219,489 205,544 General and administrative expenses 36,098 33,722 107,615 101,854 Corporate expenses 6,541 8,531 18,286 20,884 Depreciation and amortization 69,632 69,455 204,968 204,332 Loss (gain) on disposition of assets 242 (33) (616) (203) --------- --------- --------- --------- 187,084 183,360 549,742 532,411 --------- --------- --------- --------- Operating income 24,636 18,558 54,377 48,574 Other expense (income) Loss on debt extinguishment -- -- 16,927 -- Interest income (99) (387) (283) (774) Interest expense 18,786 23,408 57,242 69,878 --------- --------- --------- --------- 18,687 23,021 73,886 69,104 --------- --------- --------- --------- Income (loss) before income tax expense (benefit) and cumulative effect of a change in accounting principle 5,949 (4,463) (19,509) (20,530) Income tax expense (benefit) 2,578 (1,318) (6,050) (6,596) --------- --------- --------- --------- Income (loss) before cumulative effect of a change in accounting principle 3,371 (3,145) (13,459) (13,934) Cumulative effect of a change in accounting principle, net of tax -- -- (11,679) -- --------- --------- --------- --------- Net income (loss) $ 3,371 $ (3,145) $ (25,138) $ (13,934) ========= ========= ========= =========
Three Months Ended March 31, 2004 2003 Net revenues $ 200,976 $ 184,221
Operating expenses (income) Direct advertising expenses 73,791 71,557 General and administrative expenses 38,276 36,301 Corporate expenses 7,075 6,519 Depreciation and amortization 68,788 66,682 Gain on disposition of assets (929 ) (30 )
187,001 181,029
Operating income 13,975 3,192 Other expense (income) Loss on extinguishment of debt — 11,173 Interest income (59 ) (118 ) Interest expense 15,504 19,986
15,445 31,041
Loss before income tax benefit and cumulative effect of a change in accounting principle (1,470 ) (27,849 ) Income tax benefit (604 ) (10,083 )
Loss before cumulative effect of a change in accounting principle (866 ) (17,766 ) Cumulative effect of a change in accounting principle, net of tax benefit of $7,467 — (11,679 )
Net loss $ (866 ) $ (29,445 )
See accompanying notes to condensed consolidated financial statements.
-10--9-
LAMAR MEDIA CORP.
AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)(IN(IN THOUSANDS)
Nine Months Ended September 30, 2003 2002 ---- ----Cash flows from operating activities: Net loss $ (25,138) $ (13,934) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 204,968 204,332 Gain on disposition of assets (616) (203) Deferred tax benefit (5,740) (2,218) Provision for doubtful accounts 6,454 6,378 Loss on debt extinguishment 16,927 -- Cumulative effect of change in accounting principle, net of tax 11,679 -- Changes in operating assets and liabilities: (Increase) decrease in: Receivables (11,844) (13,652) Prepaid expenses (14,120) (12,753) Other assets (13,070) (4,740) Increase (decrease) in: Trade accounts payable 3,700 (2,139) Accrued expenses (320) 1,368 Other liabilities 1,378 3,481 --------- --------- Cash flows provided by operating activities 174,258 165,920 --------- --------- Cash flows from investing activities: Acquisitions (123,666) (74,041) Capital expenditures (61,299) (56,938) Proceeds from disposition of assets 2,913 2,048 --------- --------- Cash flows used in investing activities (182,052) (128,931) --------- --------- Cash flows from financing activities: Debt issuance costs (9,051) (1,076) Dividend (15,813) -- Principal payments on long-term debt (371,155) (50,192) Net borrowings under credit agreements -- 60,000 Cash from deposits for debt extinguishment 266,657 -- Net proceeds from note offering and new note payable 128,038 40 --------- --------- Cash flows (used in) provided by financing activities (1,324) 8,772 --------- --------- Net (decrease) increase in cash and cash equivalents (9,118) 45,761 Cash and cash equivalents at beginning of period 15,610 12,885 --------- --------- Cash and cash equivalents at end of period $ 6,492 $ 58,646 ========= ========= Supplemental disclosures of cash flow information: Cash paid for interest $ 53,390 $ 70,159 ========= ========= Cash paid for state and federal income taxes $ 390 $ 481 ========= ========= Parent company stock contributed for acquisitions $ 50,630 $ 56,100 ========= =========
Three Months Ended March 31, 2004 2003 Cash flows from operating activities: Net loss $ (866 ) $ (29,445 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 68,788 66,682 Gain on disposition of assets (929 ) (30 ) Deferred tax benefit (914 ) (10,177 ) Provision for doubtful accounts 1,248 2,325 Loss on debt extinguishment — 11,173 Cumulative effect of change in accounting principle, net of tax — 11,679 Changes in operating assets and liabilities: Increase (decrease) in: Receivables (1,709 ) (8,389 ) Prepaid expenses (12,779 ) (11,533 ) Other assets 7,091 (1,169 ) Increase (decrease) in: Trade accounts payable (2 ) 371 Accrued expenses (18,074 ) (11,290 ) Other liabilities 681 1,113
Cash flows provided by operating activities 42,535 21,310
Cash flows from investing activities: Acquisitions (21,048 ) (6,032 ) Capital expenditures (15,891 ) (17,808 ) Proceeds from disposition of assets 1,135 938
Cash flows used in investing activities (35,804 ) (22,902 )
Cash flows from financing activities: Debt issuance costs (1,003 ) (8,356 ) Principal payments on long-term debt (2,405 ) (264,449 ) Net borrowings under credit agreements (5,000 ) — Cash from deposits for debt extinguishment — 266,657
Cash flows used in financing activities (8,408 ) (6,148 )
Net decrease in cash and cash equivalents (1,677 ) (7,740 ) Cash and cash equivalents at beginning of period 7,797 15,610
Cash and cash equivalents at end of period $ 6,120 $ 7,870
Supplemental disclosures of cash flow information: Cash paid for interest $ 22,982 $ 20,245
Cash paid for state and federal income taxes $ 140 $ 146
Parent company stock and warrants contributed for acquisitions $ 4,270 $ 18,000
See accompanying notes to condensed consolidated financial statements.
-11--10-
LAMAR MEDIA CORP.
AND SUBSIDIARIESNOTESNOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(IN(IN THOUSANDS, EXCEPT FOR SHARE DATA)1. Significant Accounting Policies
1. Significant Accounting Policies The information included in the foregoing interim condensed 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'sMedia’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 LamarMedia'sMedia’s consolidated financial statements and the notes thereto included in the20022003 Combined Form 10-K.Certain amounts in the prior
year'syear’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, 9 and 10 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 Lamar Media Corp. as it is a wholly owned subsidiary of Lamar Advertising Company.
2. Note Offering for Lamar Advertising Company On June 16, 2003, Lamar Advertising Company issued $287,500 2 7/8% Convertible Notes due 2010. The net proceeds from these notes together with additional cash were used to redeem all of Lamar Advertising Company's outstanding 5 1/4% convertible notes due 2006 in aggregate principal amount of approximately $287,500 on July 16, 2003 for a redemption price equal to 103.0% of the principal amount of notes. In connection with this offering, Lamar Media paid dividends to Lamar Advertising Company in the amount of $15,813 to fund the additional cash necessary for Lamar Advertising Company to complete this transaction. -12-ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-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
therisks and uncertainties described in the section of this combined report on Form 10-Q entitled"Note“Note RegardingForward-Looking Statements"Forward – Looking Statements” anddescribedin the20022003 Combined Form 10-K under the caption"Factors“Factors Affecting Future Operating Results."” You should carefully considercarefullyeach of these risks and uncertainties in evaluating theCompany'sCompany’s and LamarMedia'sMedia’s financialconditionconditions and results of operations.LAMAR ADVERTISING COMPANYInvestors are cautioned not to place undue reliance on the forward-looking statements contained in this document. These statements speak only as of the date of this document, and the Company undertakes no obligation to update or revise the statements, except as may be required by law.Lamar Advertising Company
The following is a discussion of the consolidated financial condition and results of operations of the Company for the
nine months andthree months endedSeptember 30, 2003March 31, 2004 and2002.2003. This discussion should be read in conjunction with thecondensedconsolidated financial statements of the Company and the related notes.OVERVIEW
The
Company'sCompany’s net revenues, which represent gross revenues less commissions paid to advertising agencies that contract for the use of advertising 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 13% by completing acquisitions of outdoor advertising and transit assets for an aggregate purchase price of approximately $642 million, which included the issuance of 3,680,559 shares of Lamar Advertising Company Class A common stock valued at the time of issuance at approximately $136 million. The Company has financed its recent acquisitions and intends to finance its future acquisition activity from available cash, borrowings under its bank credit agreement and the 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 includes adjustments to the 2002 results for acquisitions for the same 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 the Company's core operating results. In addition, it may be useful to investors when assessing the Company's period to period results. The Company's presentation of these measures, however, may not be comparable 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. Advertising spending is particularly sensitive to changes in general economic conditions.Since December 31, 2001, the Company has increased the number of outdoor advertising displays it operates by approximately 3% by completing over 170 strategic acquisitions of outdoor advertising and transit assets for an aggregate purchase price of approximately $349 million, which included the issuance of 3,024,545 shares of Lamar Advertising Company Class A common stock valued at the time of issuance at approximately $109.2 million and warrants valued at the time of issuance of approximately $1.8 million. The Company has financed its recent acquisitions and intends to finance its future acquisition activity from available cash, borrowings under its bank credit agreement, as amended, and the 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 expects to continue to pursue acquisitions that complement the Company’s existing operations.
Growth of the
Company'sCompany’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. The following table presents a breakdown of capitalized expenditures for the three months ended March 31, 2004 andnine2003:
Three months ended March 31, (in thousands) 2004 2003 Billboard $ 10,118 $ 10,100 Logos 677 2,518 Transit 331 710 Land and buildings 3,303 2,889 Property, plant and equipment 1,462 1,591
Total capital expenditures $ 15,891 $ 17,808
-12-
RESULTS OF OPERATIONS
Three months ended
September 30,March 31, 2004 compared to three months ended March 31, 2003and 2002:
Three months ended Nine months ended September 30, September 30, (in thousands) (in thousands) 2003 2002 2003 2002 ---- ---- ---- ----Billboard $14,512 $11,952 $39,733 $32,798 Logos 1,470 1,205 5,538 3,335 Transit 422 1,520 1,353 3,900 Land and buildings 2,181 4,194 8,100 11,600 PP&E 1,947 1,987 6,575 5,305 ------- ------- ------- ------- Total capital expenditures $20,532 $20,858 $61,299 $56,938 ======= ======= ======= =======-13-RESULTS OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2002Net revenues increased
$23.1$16.8 million or4.0%9.1% to$604.1$201.0 million for theninethree months endedSeptember 30, 2003March 31, 2004 from$581.0$184.2 million for the same period in2002.2003. This increase was attributable primarily to(i)an increase in billboard net revenues of$19.9$16.4 million or3.6%, (ii) a $1.9 million increase in logo sign revenue, which represents an increase of 6.7% over the prior year, and (iii) a $1.0 million increase in transit revenue, which represents a 16.7% increase over the prior year.9.6%. The increase in billboard net revenues of$19.9$16.4 million was due to both acquisition activity and internalgrowth while the increase in logo sign revenue of $1.9 million and transit revenue growth of $1.0 million was generated by internal growth across various markets within the logo sign and transit programs.growth. Net revenues for theninethree months endedSeptember 30, 2003March 31, 2004 as compared to acquisition-adjusted netrevenue(1)revenue(1) for theninethree months endedSeptember 30, 2002,March 31, 2003, which includes adjustments for acquisitions for the same time frame as actually owned in2003,2004, increased$9.0$11.1 million or1.5%5.9% as a result of net revenue internal growth.Operating expenses, exclusive of depreciation and amortization and gain on sale of assets, increased
$17.1$4.8 million or5.2%4.2% to$345.6$119.2 million for theninethree months endedSeptember 30, 2003March 31, 2004 from$328.5$114.4 million for the same period in2002.2003. There was a$19.7$4.2 million increase as a result of additional operating expenses related to the operations of acquired outdoor advertising assets and increases in costs in operating theCompany'sCompany’s coreassets. Thisassets and a $0.6 million increasewas offset by a $2.6 million decreasein corporate expensesduewhich is primarily related to thepartial reversal innew national sales department established at thesecond quarter of 2003 of a charge relatedcorporate headquarters toa jury verdict rendered againstbetter serve theCompany in the third quarter of 2002, which is discussed below. In the third quarter of 2002, the Company recorded a charge of $2.3 million related to a jury verdict rendered in August 2002 against the Company for compensatory and punitive damages. In May 2003, the Court ordered a reduction to the punitive damage award, which was subject to the plaintiff's consent. The plaintiff rejected the reduced award and the Court ordered a new trial. Based on legal analysis, management believes the best estimate of the Company's potential liability related to this claim is currently $1.3 million. The $1.0 million reduction in the reserve for this liability was recorded as a reduction of corporate expenses in the second quarter of 2003.Company’s national accounts.Depreciation and amortization expense increased
$0.7$1.8 million or0.3%2.7% from$206.8$67.5 million for theninethree months endedSeptember 30, 2002March 31, 2003 to$207.5$69.3 million for theninethree months endedSeptember 30, 2003.March 31, 2004, due to continued acquisition activity and capital expenditures.Due to the above factors, operating income increased
$5.7$11.1 million to$51.6$13.4 million forninethe three months endedSeptember 30, 2003March 31, 2004 compared to$45.9$2.3 million for the same period in2002. 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 principal amount of approximately $255.0 million for a redemption price equal to 103.208% of the principal amount of the notes. In the first quarter of 2003, the Company 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 and the write-off of related debt issuance costs. In June 2003, Lamar Media Corp., redeemed $100.0 million in principal amount of its 8 5/8% Senior Subordinated Notes due 2007, for a redemption price equal to 104.313% of the principal amount of the notes. In the second quarter of 2003, the Company recorded a loss on extinguishment of debt of $5.8 million, related to this prepayment. Approximately $100.0 million in aggregate principal amount of our 8 5/8% notes remain outstanding following this redemption. In July, the Company redeemed all of it's outstanding 5 1/4 % Convertible Notes due 2006 in aggregate principal amount of approximately $287.5 million for a redemption price equal to 103.0% of the principal amount of the notes. As a result of this redemption, the Company recorded a loss on extinguishment of debt of $12.6 million.2003.Interest expense decreased
$13.3$6.2 million from$81.2$23.8 million for theninethree months endedSeptember 30, 2002March 31, 2003 to$67.9$17.6 million for theninethree months endedSeptember 30, 2003March 31, 2004 as a result of lower interest rates both on existing and recently refinanced debt. In addition, for the three months ended March 31, 2004 there were no refinancing activities resulting in a loss on extinguishment of debt.The increase in operating income, the absence of the loss on extinguishment of debt and the decrease in interest expense described above
offset by the loss on extinguishment of debtresulted in a$11.0$28.3 millionincreasedecrease in loss before income taxes and cumulative effect of a change in accounting principle.The increase in this loss resulted in an increaseThere was a decrease in the income tax benefit of$4.1$10.2 million for theninethree months endedSeptember 30, 2003March 31, 2004 over the same period in2002.2003. The effective tax rate for theninethree months endedSeptember 30, 2003March 31, 2004 is35.6%41.1%.- ------------------------- (1) Reconciliation of Reported Net Revenue to Acquisition-Adjusted Net Revenue:
Nine months ended September 30, (in thousands) 2003 2002 ---- ----Reported net revenue $ 604,119 $ 580,985 Acquisition net revenue - 14,164 --------- --------- Acquisition-adjusted net revenue $ 604,119 $ 595,149 ========= =========-14-Due to the adoption of SFAS No. 143 during the three months ended March 31, 2003, the Company recorded a cumulative effect of a change in accounting principle in the amount of $11.7 million net of
tax of $11.7 million. As a result of the above factors, the Company recognized a net loss for the nine months ended September 30, 2003 of $41.0 million, as compared to a net loss of $22.5 million for the same period in 2002. THREE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2002 Net revenues increased $9.8 million or 4.9% to $211.7 million for the three months ended September 30, 2003 from $201.9 million for the same period in 2002. This increase was attributable primarily to (i)anincrease in billboard net revenues of $8.7 million or 4.6%, (ii) a $0.7 million increase in logo sign revenue, which represents an increase of 7.3% over the prior year, and (iii) a $0.3 million increase in transit revenue, which represents a 11.8% increase over the prior year. The increase in billboard net revenues of $8.7 million was due to acquisition activity while the increase in logo sign revenue of $0.7 million and transit revenue growth of $0.3 million was generated by internal growth across various markets within the logo sign and transit programs. Net revenues for the three months ended September 30, 2003 as compared to acquisition-adjusted net revenue(2) for the three months ended September 30, 2002, which includes adjustments for acquisitions for the same time frame as actually owned in 2003 increased $3.5 million or 1.7% as a result of net revenue internal growth. Operating expenses, exclusive of depreciation and amortization and gain or loss on sale of assets, increased $3.3 million or 2.9% to $117.3 million for the three months ended September 30, 2003 from $114.0 million for the same period in 2002. There was a $5.3 million increase as a result of additional operating expenses related to the operations of acquired outdoor advertising assets and increases in costs in operating the Company's core assets. This increase was offset by a $2.0 million decrease in corporate expenses primarily due to a jury verdict rendered against the Company in the third quarter of 2002, which is discussed below. In the third quarter of 2002, the Company recorded a charge of $2.3 million related to a jury verdict rendered in August 2002 against the Company for compensatory and punitive damages. In May, 2003, the Court ordered a reduction to the punitive damage award, which was subject to the plaintiff's consent. The plaintiff rejected the reduced award and the Court ordered a new trial. Based on legal analysis, management believes the best estimate of the Company's potential liability related to this claim is currently $1.3 million. The $1.0 million reduction in the reserve for this liability was recorded as a reduction of corporate expenses in the second quarter of 2003. Depreciation and amortization expense increased $0.1 million from $70.3 million for the three months ended September 30, 2002 to $70.4 million for the three months ended September 30, 2003. Due to the above factors, operating income increased $6.1 million to $23.8 million for three months ended September 30, 2003 compared to $17.7 million for the same period in 2002. In July 2003, the Company, redeemed all of its 5 1/4% Convertible Notes due 2006, for a redemption price equal to 103.0% of the principal amount of the notes. The redemption was funded by the issuance on June 16, 2003 of $287.5 million of 2 7/8% Convertible Notes due 2010. In the third quarter of 2003, the Company recorded a loss on extinguishment of debt of $12.6 million related to this prepayment. Interest expense decreased $5.7 million from $27.2 million for the three months ended September 30, 2002 to $21.5 million for the three months ended September 30, 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 described above offset by the loss on extinguishment of debt resulted in a $1.1 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 theincome tax benefit of$0.6 million for the three months ended September 30, 2003 over the same period in 2002. The effective tax rate for the three months ended September 30, 2003 is 36.3%. - ------------------------ (2) Reconciliation of Reported Net Revenue to Acquisition-Adjusted Net Revenue:
Three months ended September 30, (in thousands) 2003 2002 ---- ----Reported net revenue $ 211,720 $ 201,918 Acquisition net revenue -- 6,255 --------- ---------- Acquisition-adjusted net revenue $ 211,720 $ 208,173 ========= ==========-15-$7.5 million. As a result of the above factors, the Company recognized a net loss for the three months ended
September 30, 2003March 31, 2004 of$6.5$2.4 million, as compared to a net loss of$6.0$32.3 million for the same period in2002.2003.On April 23, 2004, the Company sold transit advertising assets with a carrying value of approximately $7.0 million to Outdoor Promotions, Inc. for a purchase price of approximately $3.0 million, which will be recorded as a loss on disposition of assets in the second quarter of 2004. The sale of these assets is not expected to have a material effect on our revenues.
(1) Reconciliation of Reported Net Revenue to Acquisition-Adjusted Net Revenue:
Three months ended March 31, (in thousands) 2004 2003 Reported net revenue $ 200,976 $ 184,221 Acquisition net revenue — 5,621
Acquisition-adjusted net revenue $ 200,976 $ 189,842
The Company’s management believes that acquisition-adjusted net revenue is useful in evaluating the Company’s performance and provides investors and financial analysts a better understanding of the Company’s core operating results. The acquisition adjustments are intended to provide information that may be useful for investors when assessing period to period results. Our presentations of this measure, however, may not be comparable to similarly titled measures used by other companies. -13-
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'sCompany’s wholly owned subsidiary, Lamar Media Corp., 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. TheCompany'sCompany’s acquisitions have been financed primarily with funds borrowed under the bank credit facility and issuance of its Class A common stock and debt securities. If an acquisition is made by one of theCompany'sCompany’s subsidiaries using theCompany'sCompany’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'sCompany’s cash flows provided by operating activities increasedto $171.1by $14.5 million for theninethree months endedSeptember 30, 2003March 31, 2004 due primarily toan increasea decrease in net loss of $29.8 million offset by a decrease in adjustments to reconcile net loss to cash provided by operating activities of$33.3$13.1 million, which primarily includes a decrease in the loss onearlyextinguishment of debt of$29.5$11.2 million,anda decrease in the cumulative effect of a change in accounting principle of $11.7 million offset byan increasea decrease in deferred income tax benefit of$8.2 million. This increase was offset by an increase in net loss of $18.5$10.0 million. In addition, as compared to the same period in2002,2003, there weredecreasesincreases in the change in receivables of$0.3$1.2 millionin other assetsand prepaid expenses of$2.3$1.2 million, and decreases in other liabilities of$2.1$0.5 million, trade accounts payable of $0.4 million and in accrued expenses of$2.2$0.6 millionand increasesoffset by a decrease inthe change in trade accounts payableother assets of$5.8 million and prepaid expenses of $1.4$1.7 million.Cash flows used in investing activities increased
$54.5$12.3 million from$128.9$23.5 million in20022003 to$183.4$35.8 million in20032004 primarily due to the increase in cash used in acquisition activity by the Company in20032004 of$50.9$14.4 millionandoffset by a$4.4 million increasedecrease in cash used for capitalexpenditures.expenditures of $1.9 million.Cash flows
provided byused in financing activities decreasedto $3.1by $3.8 million for theninethree months endedSeptember 30, 2003March 31, 2004 due to a$408.3 million increasedecrease innet proceeds from note offerings and new note payable, which is due to the issuance of Lamar Advertising's $287.5 million 2 7/8% Convertible Notes and Lamar Media's issuance of $125.0 million 7 1/4% Senior Subordinated Notes andcash from deposits for debt extinguishment of $266.7 million offset by a$617.1$262.0 millionincreasedecrease in principal payments of long-term debtdue primarilyrelated to theredemption of Lamar Media's 9 5/8% Senior Subordinated Notes, 8 5/8% Senior Subordinated Notes and the Company's 5 1/4% Convertible Notes.Company’s refinancing activity in 2003. In addition, there was a$7.2$6.1 milliondecreaseincrease in proceeds from issuance of theCompany'sCompany’s Class A common stock related to option activity, a$8.7$7.4 millionincreasedecrease in debt issuance costs and a$60.0$5.0 milliondecreaseincrease inborrowings fromnet payments under credit agreements.During the
ninethree months endedSeptember 30, 2003,March 31, 2004, the Company financed its acquisition activity of approximately$175.6$25.3 million with borrowings under LamarMedia'sMedia’s revolving credit facility and cash on hand totaling$125.0$21.0 million as well as the issuance of shares of theCompany'sCompany’s Class A common stock and warrants valued at the time of issuance at approximately$50.6$4.3 million.As of September 30, 2003, the Company had $219.3 million available under its revolving credit facility.The
Company'sCompany’s wholly owned subsidiary, Lamar Media Corp.,replacedamended its bank credit facilitywithin February 2004 whereby it changed its $975.0 million term facility which included anew bank credit$300 million Tranche A facilityon March 7, 2003.and a $675 million Tranche B facility to a $425.0 million Tranche A and a $550.0 million Tranche C facility. Thenewtotal debt outstanding remained unchanged. The bank credit facility is comprised of a $225.0 million revolving bank credit facility and a $975.0 million term facility. Thenewbank 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. At March 31, 2004, Lamar Media had $182.3 million available under its revolving bank credit facility.In the future, Lamar Media has principal reduction obligations and revolver commitment reductions under its
newbank credit agreement. In addition it has fixed commercial commitments. These commitmentsarewere detailedas follows:
Payments Due by Period (in millions) ---------------------------------------------- Contractual Balance at Less than 1 - 3 4 - 5 After 5 Obligations September 30, 2003 1 Year Years Years Years - ---------------------------------- --------------------- --------- ----- ----- -------Long-Term Debt $ 1,765.4 5.0 110.0 261.3 1,389.1 Billboard site and building leases $ 839.3 112.6 178.4 136.3 412.0 --------------------- ----- ----- ----- ------- Total Payments due $ 2,604.7 117.6 288.4 397.6 1,801.1 ===================== ===== ===== ===== =======
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 * $ 225.0 -- -- -- 225.0 ============ === === == ===== Standby Letters of Credit $ 5.7 1.4 4.3 -- -- ============ === === == =====* Lamar Media had $0 outstanding at September 30, 2003. -16-In Januaryin the Company’s Annual Report on Form 10-K for the year ended December 31, 2003,Lamar Media redeemed all of its outstanding 9 5/8% Senior Subordinated Notes due 2006 in aggregate principal amount of approximately $255 million for a redemption price equal to 103.208% of the principal amount of the notes. As a result of this redemption, the Company recorded a losswhich was filed onextinguishment of debt of $11.2 million which consisted of a prepayment penalty of $8.2 millionMarch 10, 2004 andassociated debt issuance costs of approximately $3.0 million. In June 2003, Lamar Media Corp. called for redemption $100.0 million of its $200.0 million 8 5/8% Senior Subordinated Notes due 2007. The redemption was funded by the issuance on June 12, 2003 of a $125.0 million add on to its $260.0 million 7 1/4% Notes due 2013 issued in December 2002. The issue price of the $125.0 million 7 1/4% Notes was 103.661% of the principal amount of the notes, which yields an effective rate of 6 5/8%. The redemption price of the $100.0 million 8 5/8% senior subordinated notes was equal to 104.313% of the principal amount of the notes. As a result of this redemption, the Company recorded a loss on extinguishment of debt of $5.8 million which consisted of a prepayment penalty of $4.3 million and associated debt issuance costs of approximately $1.5 million. Lamar Media intends to call its remaining $100.0 million of 8 5/8% Senior Subordinated Notes due 2007there have been no material changes during thefourthquarterof 2003 and fund the redemption with cash on hand and borrowings under its bank credit facility. In July 2003, the Company redeemed all of its $287.5 million 5 1/4% Convertible Notes due 2006. The redemption was funded by the issuance on June 16, 2003 of $287.5 million 2 7/8% Convertible Notes due 2010. The redemption price of the notes was equal to 103.0% of the principal amount of the notes. As a result of this redemption, the Company recorded a loss on extinguishment of debt of $12.6 million, which consisted of a prepayment penalty of $8.6 million and associated debt issuance costs of approximately $4.0 million.ended March 31, 2004.Currently Lamar Media has outstanding approximately
$100.0 million 8 5/8% Senior Subordinated Notes due 2007 and$385.0 million 7 1/4% Senior Subordinated Notes due 2013 issued in December 2002 and June 2003. Theindenturesindenture relating to LamarMedia'sMedia’s outstanding notes restrict its ability to incur indebtedness other than:-up to$1.2$1.3 billion of indebtedness under its bank credit facility;-currently outstanding indebtedness or debt incurred to refinance outstanding debt;-inter-company debt between Lamar Media and its subsidiaries or between subsidiaries;certain purchase money indebtedness and- certain other debt incurredcapitalized lease obligations to acquire or lease property in the ordinary course of business(providedthatallcannot exceed the greater ofthe above ranks junior in right$20 million or 5% ofpaymentLamar Media’s net tangible assets; andadditional debt not tothe notes that has a maturity or mandatory sinking fund payment prior to the maturity of the notes).exceed $40 million.Lamar Media is required to comply with certain covenants and restrictions under its bank credit agreement. If the Company fails to comply with these tests, the payments set forth in the above table may be accelerated. At
September 30, 2003March 31, 2004 and currently Lamar Media is in compliance with all such tests.-14-
Lamar Media cannot exceed the following financial ratios under its bank credit facility:
- -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- -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 bank credit facility requires that Lamar Media must maintain the following financial ratios:
- -an interest coverage ratio defined as EBITDA, as(defined below)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- -a fixed charges coverage ratio, defined as the ratio of EBITDA,(asas definedbelow)below, for the most recent four fiscal quarters to (1) the total payments of principal 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'sMedia’s 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-17-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 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 bank credit agreement and future cash flows from operations are sufficient to meet its operating needs through the year 2004. All debt obligations are on the
Company'sCompany’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 principle difference between Statement 146 and Issue 94-3 relates to the recognition of a 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 afterDecember31, 2002 and did not have an impact on the Company's consolidated financial statements. The Company adopted the provisions related to Statement No. 146 as of January 1, 2003. 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 consolidated financial statements. In January2003, the FASB issued Interpretation No. 46"Consolidation(revised December 2003), “Consolidation of Variable Interest Entities, an interpretation of ARB No. 51."” ThisinterpretationInterpretation addresses the consolidation by business enterprises of variable interest entities as defined in the Interpretation. The Interpretation applies immediately to variable interests in variable interest entities created after January 31, 2003 andto variable interests inexisting variable interest entitiesobtainedat the end of the period ending afterJanuary 31, 2003.March 15, 2004. The application ofthethis Interpretation did not have a material effect on theCompany's consolidatedCompany’s financial statements as the Company has no interest in variable interest entities.In April 2003,-15-
Lamar Media Corp.
The following is a discussion of 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 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 adopted 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 adoption of SFAS No. 149 did not have a material impact on itsconsolidated financialstatements. In May 2003,condition and results of operations of Lamar Media for theFASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilitiesthree months ended March 31, 2004 andEquity." Statement 150 affects the issuer's accounting for three types of freestanding financial instruments. One type is mandatory redeemable shares, which the issuing company is obligated to buy back2003. This discussion should be read inexchange for cash or other assets. A second type, which includes put options and forward purchase contracts, involves instruments that do or may require the issuer to buy back some of its shares in exchange for cash or other assets. The third type of instruments that are liabilities under this Statement is obligations that can be settled with shares, the monetary value of which is fixed, tied solely or predominately to a variable such as a market index, or varies inverselyconjunction with thevalueconsolidated financial statements of Lamar Media and theissuers' shares. Statement 150 does not applyrelated notes.Three months ended March 31, 2004 compared to
features embedded in a financial instrument that is not a derivative in its entirety. Most of the guidance in Statement 150 is effective for all financial instruments entered into or modified after Maythree months ended March 31, 2003and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. Because the Company does not have any financial instruments covered by SFAS No. 150 outstanding, its adoption did not materially impact the Company's financial position, cash flows or results of operations. -18-LAMAR MEDIA CORP. NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2002Net revenues increased
$23.1$16.8 million or4.0%9.1% to$604.1$201.0 million for theninethree months endedSeptember 30, 2003March 31, 2004 from$581.0$184.2 million for the same period in2002.2003. This increase was attributable primarily to(i)an increase in billboard net revenues of$19.9$16.4 million or3.6%, (ii) a $1.9 million increase in logo sign revenue, which represents an increase of 6.7% over the prior year, and (iii) a $1.0 million increase in transit revenue, which represents a 16.7% increase over the prior year.9.6%. The increase in billboard net revenues of$19.9$16.4 million was due to both acquisition activity and internalgrowth while the increase in logo sign revenue of $1.9 million and transit revenue growth of $1.0 million was generated by internal growth across various markets within the logo sign and transit programs.growth. Net revenues for theninethree months endedSeptember 30, 2003March 31, 2004 as compared to acquisition-adjusted netrevenue(3)revenue(2) for theninethree months endedSeptember 30, 2002,March 31, 2003, which includes adjustments for acquisitions for the same time frame as actually owned in2003,2004, increased$9.0$11.1 million or1.5%5.9% as a result of net revenue internal growth.Operating expenses, exclusive of depreciation and amortization and gain
or losson sale of assets, increased$17.1$4.7 million or5.2%4.1% to$345.4$119.1 million for theninethree months endedSeptember 30, 2003March 31, 2004 from$328.3$114.4 million for the same period in2002.2003. There was a$19.7$4.2 million increase as a result of additional operating expenses related to the operations of acquired outdoor advertising assets and increases in costs in operatingthe Company'sMedia’s coreassets. Thisassets and a $0.6 million increasewas offset by a $2.6 million decreasein corporate expensesthatwhich is primarily related to the new national sales department established at the corporate headquarters to better serve Media’s national accounts.Depreciation and amortization expense increased $2.1 million or 3.1% from $66.7 million for the three months ended March 31, 2003 to $68.8 million for the three months ended March 31, 2004, due to
the partial reversal in the second quarter of 2003 of a charge related to a jury verdict rendered against Lamar Media in the third quarter 2002, which is discussed below. In the third quarter of 2002, Lamar Media recorded a charge of $2.3 million related to a jury verdict rendered in August 2002 against Lamar Advertising Company for compensatorycontinued acquisition activity andpunitive damages. In May 2003, the Court ordered a reduction to the punitive damage award, which was subject to the plaintiff's consent. The plaintiff rejected the reduced award and the Court ordered a new trial. Based on legal analysis, management believes the best estimate of the Company's potential liability related to this claim is currently $1.3 million. The $1.0 million reduction in the reserve for this liability was recorded as a reduction of corporate expenses in the second quarter of 2003.capital expenditures.Due to the above factors, operating income increased
$5.8$10.8 million to$54.4$14.0 million for theninethree months endedSeptember 30, 2003March 31, 2004 compared to$48.6$3.2 million for the same period in2002. In January 2003, Lamar Media redeemed all of its outstanding 9 5/8% Senior Subordinated Notes due 2006 in aggregate principal amount of approximately $255.0 million for a redemption price equal to 103.208% of the principal 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 and the write-off of related debt issuance costs. In June 2003, Lamar Media redeemed $100.0 million in principal amount of its 8 5/8% Senior Subordinated Notes due 2007, for a redemption price equal to 104.313% of the principal amount of the notes. In the second quarter of 2003, Lamar Media recorded a loss on extinguishment of debt of $5.8 million, related to this prepayment. Approximately $100.0 million in aggregate principal amount of our 8 5/8% notes remain outstanding following this redemption.2003.Interest expense decreased
$12.7$4.5 million from$69.9$20.0 million for theninethree months endedSeptember 30, 2002March 31, 2003 to$57.2$15.5 million for theninethree months endedSeptember 30, 2003March 31, 2004 as a result of lower interest rates both on existing and recently refinanced debt. In addition for the three months ended March 31, 2004 there were no refinancing activities resulting in a loss of extinguishment of debt.The increase in operating income, the absence of the loss on extinguishment of debt and the decrease in interest expense
offset by the loss on extinguishment of debtdescribed above resulted in a$1.0$26.4 million decrease in loss before income taxes and cumulative effect of a change in accounting principle.The decrease in this loss, resulted inThere was a decrease in the income tax benefit of$0.5$9.5 million for theninethree months endedSeptember 30, 2003March 31, 2004 over the same period in2002.2003. The effective tax rate for theninethree months endedSeptember 30, 2003March 31, 2004 is31.0%41.1%.Due to the adoption of SFAS No. 143
Lamarduring the three months ended March 31, 2003, Media recorded a cumulative effect of a change in accounting principle in the amount of $11.7 million net of an income tax benefit of$11.7$7.5 million.As a result of the above factors,
LamarMedia recognized a net loss for theninethree months endedSeptember 30, 2003March 31, 2004 of$25.1$0.9 million, as compared to a net loss of$13.9$29.4 million for the same period in2002. - -------------------------- (3) Reconciliation of Reported Net Revenue to Acquisition-Adjusted Net Revenue:
Nine months ended September 30, (in thousands) 2003 2002 ---- ----Reported net revenue $ 604,119 $ 580,985 Acquisition net revenue - 14,164 --------- --------- Acquisition-adjusted net revenue $ 604,119 $ 595,149 ========= =========-19-THREE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2002 Net revenues increased $9.8 million or 4.9% to $211.7 million for2003.On April 23, 2004, the
three months ended September 30, 2003 from $201.9 million for the same period in 2002. This increase was attributable primarily to (i) an increase in billboard net revenues of $8.7 million or 4.6%, (ii) a $0.7 million increase in logo sign revenue, which represents an increase of 7.3% over the prior year, and (iii) a $0.3 million increase inCompany sold transitrevenue, which represents a 11.8% increase over the prior year. The increase in billboard net revenues of $8.7 million was due to acquisition activity while the increase in logo sign revenue of $0.7 million and transit revenue growth of $0.3 million was generated by internal growth across various markets within the logo sign and transit programs. Net revenues for the three months ended September 30, 2003 as compared to acquisition-adjusted net revenue(4) for the three months ended September 30, 2002, which includes adjustments for acquisitions for the same time frame as actually owned in 2003 increased $3.5 million or 1.7% as a result of net revenue internal growth. Operating expenses, exclusive of depreciation and amortization and gain or loss on sale of assets, increased $3.3 million or 2.9% to $117.2 million for the three months ended September 30, 2003 from $113.9 million for the same period in 2002. There was a $5.3 million increase as a result of additional operating expenses related to the operations of acquired outdooradvertising assetsand increases in costs in operating the Company's core assets. This increase was offset bywith a$2.0carrying value of approximately $7.0 milliondecrease in corporate overhead expenses that is primarily dueto Outdoor Promotions, Inc. for ajury verdict rendered against Lamar Media in the third quarterpurchase price of2002,approximately $3.0 million, whichis discussed below. In the third quarter of 2002, Lamar Media recorded a charge of $2.3 million related to a jury verdict rendered in August 2002 against Lamar Advertising Company for compensatory and punitive damages. In May 2003, the Court ordered a reduction to the punitive damage award, which was subject to the plaintiff's consent. The plaintiff rejected the reduced award and the Court ordered a new trial. Based on legal analysis, management believes the best estimate of the Company's potential liability related to this claim is currently $1.3 million. The $1.0 million reduction in the reserve for this liability waswill be recorded as areductionloss on disposition ofcorporate expensesassets in the second quarter 2004. The sale of2003. Duethese assets is not expected tothe above factors, operating income increased $6.0 million to $24.6 million for three months ended September 30, 2003 compared to $18.6 million for the same period in 2002. Interest expense decreased $4.6 million from $23.4 million for the three months ended September 30, 2002 to $18.8 million for the three months ended September 30, 2003 ashave aresult of lower interest rates bothmaterial effect onexisting and recently refinanced debt. The increase in operating income and the decrease in interest expense described above resulted in a $10.4 million increase in income before income taxes and cumulative effect of a change in accounting principle. As a result of the above factors, Lamar Media recognized net income for the three months ended September 30, 2003 of $3.4 million, as compared to a net loss of $3.1 million for the same period in 2002. - ----------------------------------------- (4) Reconciliation of Reported Net Revenue to Acquisition-Adjusted Net Revenue:our revenues.
Three months ended September 30, (in thousands) 2003 2002 ---- ----(2) Reconciliation of Reported Net Revenue to Acquisition-Adjusted Net Revenue:
Three months ended March 31, (in thousands) 2004 2003 Reported net revenue $ 200,976 $ 184,221 Acquisition net revenue — 5,621
Acquisition-adjusted net revenue $ 200,976 $ 189,842
Media’s management believes that acquisition-adjusted net revenue $ 211,720 $ 201,918 Acquisition net revenue - 6,255 --------- --------- Acquisition-adjusted net revenue $ 211,720 $ 208,173 ========= =========is useful in evaluating the Company’s performance and provides investors and financial analysts a better understanding of Media’s core operating results. The acquisition adjustments are intended to provide information that may be useful for investors when assessing period to period results. Our presentations of this measure, however, may not be comparable to similarly titled measures used by other companies.-20--16-
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISKS LAMAR ADVERTISING COMPANY AND LAMAR MEDIA CORP.RISKLamar Advertising Company and Lamar Media Corp.
Lamar Advertising Company is exposed to interest rate risk in connection with variable rate debt instruments issued by its wholly owned subsidiary Lamar Media Corp. The information below summarizes the
Company'sCompany’s interest rate risk associated with its principal variable rate debt instruments outstanding atSeptember 30, 2003.March 31, 2004, and should be read in conjunction with Note 8 of the Notes to the Company’s Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2003, which was filed on March 10, 2004.Loans under Lamar Media Corp.
's’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 is 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 theCompany'sCompany’s net income.At
September 30, 2003,March 31, 2004, there was$975.0 millionapproximately $1.0 billion of aggregate indebtedness outstanding under the bank credit agreement, or approximately55.4%60.2% of theCompany'sCompany’s outstanding long-term debt on that date, bearing interest at variable rates. The aggregate interest expense for2003the first quarter of 2004 with respect to borrowings under the bank credit agreement wasapproximately $27.4$8.3 million, and the weighted average interest rate applicable to borrowings under this credit facility during2003the first quarter of 2004 was3.5%3.1%. Assuming that the weighted average interest rate was 200-basis points higher (that is5.5%5.1% rather than3.5%3.1%), then theCompany's 2003Company’s first quarter 2004 interest expense would have been approximately$15.1$5.2 million higher resulting in a$9.2$3.1 million increase in theCompany's 2003Company’s first quarter 2004 net loss.The Company has
mitigatedattempted to mitigate the interest rate risk resulting from its variable interest rate long-term debt instruments by issuing fixed rate long-term debt instruments and maintaining a balance over time between the amount of theCompany'sCompany’s variable rate and fixed rate indebtedness. In addition, the Company has the capability under the 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.PROCEDURES
a) Evaluation of disclosure controls and procedures. The
Company'sCompany’s and LamarMedia'sMedia’s management, with the participation of the principal executive officer and principal financial officer of the Company and Lamar Media, have evaluated the effectiveness of the design and operation of theCompany'sCompany’s and LamarMedia'sMedia’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this quarterly report. Based on this evaluation, the principal executive officer and principal financial officer of the Company and Lamar Media concluded that these disclosure controls and procedures are effective and designed to ensure that the information required to be disclosed in theCompany'sCompany’s and LamarMedia'sMedia’s reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the requisite time periods.b) Changes in internal controls.
b) Changes in internal controls. There was no change in the internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) of the Company and Lamar Media identified in connection with the evaluation of the
Company'sCompany’s and LamarMedia'sMedia’s internal control performed during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, theCompany'sCompany’s and LamarMedia'sMedia’s internal control over financial reporting.-21--17-
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHSES OF EQUITY SECURITIES.
(c) In connection with the acquisition of the Robert G. Woodward Entities on January 9, 2004, the Company issued a warrant to purchase up to 50,000 shares of its Class A common stock at a price per share of $35.89 (the “Warrant”), which is exercisable in whole or part through January 9, 2009. The total acquisition consideration for the Robert G. Woodward Entities consisted of the Warrant, approximately $1.9 million in cash and 68,986 shares of Class A common stock, which were issued off the Company’s effective S-4 registration statement (File No. 333-108689). The Warrant was issued in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933. As a basis for doing so the Company relied on the following facts: (1) the Company offered these securities to one offeree without any general solicitation and (2) the Company obtained representations from the purchaser that it was acquiring the shares for investment purposes and not with a view to distribution or resale, nor with any present intention of distributing or selling the same.
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
On
July 29, 2003, in connection with the filing by Lamar Media Corp. of a Registration Statement on Form S-4 to register $125 million of its 7 1/4% Senior Subordinated Notes due 2013, Lamar Media and the Company filed a Current Report on Form 8-K disclosing certain unaudited pro forma financial information that related to its and Lamar Advertising's adoption, of Statement of Financial Accounting Standard (SFAS) No. 143, "Accounting for Asset Retirement Obligations" on January 1, 2003. On August 6, 2003,February 11, 2004, Lamar Advertising Company filed a Current Report on Form 8-K in order to furnish to the Commission its earnings press release for thesecond quarteryear endedJune 30,December 31, 2003.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 5, 2003 BY: /s/ Keith A. Istre ---------------------- Chief Financial and Accounting Officer and Treasurer LAMAR MEDIA CORP. DATED: November 5, 2003 BY: /s/ Keith A. Istre ---------------------- Chief Financial and Accounting Officer and Treasurer -22-
LAMAR ADVERTISING COMPANY DATED: May 7, 2004 BY: /s/ Keith A. Istre Chief Financial and Accounting Officer and Treasurer LAMAR MEDIA CORP. DATED: May 7, 2004 BY: /s/ Keith A. Istre Chief Financial and Accounting Officer and Treasurer -18-
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 exhibitExhibit 2.1 to theCompany'sCompany’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 exhibitExhibit 3.1 to theCompany'sCompany’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 exhibitExhibit 3.2 to theCompany'sCompany’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'sCompany’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'sCompany’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'sCompany’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'sMedia’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 December 23, 2002 among Lamar Media Corp., certain of its subsidiaries and Wachovia Bank of Delaware, National Association, as Trustee, dated October 7, 2003. Filed herewith. 4.2 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 October 7, 2003. Filed herewith. 10.1 Joinder AgreementAmendment No. 1 dated as of October 7, 2003January 28, 2004 to the Credit Agreement dated as of March 7, 2003 between Lamar Media Corp.and, the Subsidiary Guarantorsparty thereto, the Lendersa party thereto and JPMorgan Chase Bank, asAdministrative Agent by Premere Outdoor, Inc.administrative agent for the lenders. Filed herewith.4.2 Tranche C Term Loan Agreement dated as of February 6, 2004 between Lamar Media Corp., the Subsidiary Guarantors a party thereto, the Tranche C Loan Lenders a party thereto and JPMorgan Chase Bank, as administrative agent. Filed herewith. 31.1 Certification of the Chief Executive Officer of Lamar Advertising Company and Lamar Media Corp. pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes- OxleySarbanes-Oxley Act of 2002. Filed herewith.31.2 Certification of the Chief Financial Officer of Lamar Advertising Company and Lamar Media Corp. pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes- OxleySarbanes-Oxley Act of 2002. Filed herewith.32 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith. -23--19-