UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM ~~10-Q~~10-Q/A

Amendment No. 1

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the period ended ~~June 30,~~March 31, 2004

or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the transition period from _______________ to _______________

Commission File Number 0-30242

Lamar Advertising Company

Commission File Number 1-12407

Lamar Media Corp.

(Exact name of registrants as specified in their charters)


Delaware		72-1449411
Delaware		72-1205791
(State or other jurisdiction of incorporation or	(I.R.S Employer
organization)	Identification No.)
5551 Corporate Blvd., Baton Rouge, LA		70808
(Address of 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’s Class A common stock outstanding as of ~~August 2,~~May 4, 2004: ~~88,594,472~~88,124,826

The number of shares of the Lamar Advertising Company’s Class B common stock outstanding as of ~~August 2,~~May 4, 2004: 15,672,527

The number of shares of Lamar Media Corp. common stock outstanding as of ~~August 2,~~May 4, 2004: 100

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

Explanatory Note

In connection with the preparation of its Form 10-Q, for the quarter ended September 30, 2004, the Company determined, in consultation with its outside auditors, to change the way it applies Financial Accounting Standard 143, “Accounting for Asset Retirement Obligations,” which the Company adopted effective January 1, 2003. The Company has decided to expand the scope of the outdoor advertising structures that are subject to the calculation of the asset retirement obligations required under Financial Accounting Standard 143, “Accounting for Asset Retirement Obligations” by including steel structures in addition to non-steel structures, instead of accounting for such costs under Financial Accounting Standard 13, “Accounting for Leases.”

As a result, the Company is restating its audited consolidated financial statements for the year ended December 31, 2003 and its unaudited condensed consolidated financial statements for quarters ended March 31, 2004 and June 30, 2004. Amendments to the Company’s previously filed Form 10-K for 2003 and its Forms 10-Q for its first quarter of 2004 will be filed to reflect this restatement. In this Form 10-Q/A, the financial statements and other information for the six months ended June 30, 2004 and all comparative information for 2003 are presented on this restated basis. See Note 2 “Restatement of Financial Statements”. “In order to preserve the nature and character of the disclosures set forth in our Form 10-Q as originally filed, no attempt has been made in this amendment to modify or update such disclosures except as required to reflect the effects of the restatement.”

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This combined Quarterly Report on Form ~~10-Q~~10-Q/A of Lamar Advertising Company (the “Company”) and Lamar Media Corp. (“Lamar 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 the Company’s, and Lamar Media’s:

• ~~expected operating results;~~
• ~~market opportunities;~~
• ~~acquisition opportunities;~~
• ~~ability to compete; and~~
• ~~stock price.~~

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’s and Lamar Media’s actual results, performance or achievements or industry results, to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. These risks, uncertainties and other important factors include, among others:

risks and uncertainties relating to the Company’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;

the Company’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;

the Company’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 the portion of the combined Annual Report on Form 10-K for the year ended December 31, 2003 of the Company and Lamar Media (the “2003 Combined Form 10-K”) under the caption “Factors Affecting Future Operating Results” in Item 7 —- Management’s Discussion and Analysis of Financial Condition and Results of Operations filed with the SEC on March 10, 2004 and as amended on November 30, 2004.

The forward-looking statements contained in this combined Quarterly Report on Form ~~10-Q~~10-Q/A speak only as of May 10, 2004 the date of this combined ~~report.~~report was originally filed. 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.

PART I — FINANCIAL INFORMATION

ITEM 1.- FINANCIAL STATEMENTS

LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES

RESTATED CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)


	June 30,			December 31,			March 31,			December 31,
	2004			2003			2004			2003
	(unaudited)						(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	17,775		$	7,797		$	6,120		$	7,797
Receivables, net of allowance for doubtful accounts of $5,000 and $4,914 in 2004 and 2003, respectively		101,575			90,072
Receivables, net of allowance for doubtful accounts of $4,914 in 2004 and 2003								92,023			90,072
Prepaid expenses		46,731			32,377			44,958			32,377
Deferred income tax assets		6,166			6,051			6,258			6,051
Other current assets		6,685			7,820			7,347			7,820

Total current assets		178,932			144,117			156,706			144,117

Property, plant and equipment		1,959,219			1,933,003			2,009,980			1,988,096
Less accumulated depreciation and amortization		(733,109	)		(679,205	)		(734,265	)		(702,272	)

Net property, plant and equipment		1,226,110			1,253,798			1,275,715			1,285,824

Goodwill		1,252,749			1,240,275			1,248,061			1,240,275
Intangible assets		929,354			966,998			917,442			938,643
Deferred financing costs, net of accumulated amortization of $22,098 and $20,783, respectively								28,043			28,355
Other assets		31,191			32,159			29,030			32,159

Total assets	$	3,618,336		$	3,637,347		$	3,654,997		$	3,669,373

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	8,810		$	8,813		$	8,810		$	8,813
Current maturities of long-term debt		37,924			5,044			20,703			5,044
Accrued expenses		35,866			45,986			29,922			45,986
Deferred income		12,073			14,372			15,086			14,372

Total current liabilities		94,673			74,215			74,521			74,215

Long-term debt		1,623,444			1,699,819			1,676,755			1,699,819
Deferred income tax liabilities		93,427			94,542			68,717			73,352
Asset retirement obligation		40,393			36,857			127,441			123,217
Other liabilities		8,549			9,109			8,344			9,109

Total liabilities		1,860,486			1,914,542			1,955,778			1,979,712

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, 88,594,472 and 87,266,763 shares issued and outstanding at 2004 and 2003, respectively		89			87
Class B common stock, par value $.001, 37,500,000 shares authorized, 15,672,527 and 16,147,073 shares issued and outstanding at 2004 and 2003, respectively		16			16
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		2,126,362			2,097,555			2,110,836			2,097,555
Accumulated deficit		(368,617	)		(374,853	)		(411,721	)		(407,997	)

Stockholders’ equity		1,757,850			1,722,805			1,699,219			1,689,661

Total liabilities and stockholders’ equity	$	3,618,336		$	3,637,347		$	3,654,997		$	3,669,373

LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES

RESTATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Three Months Ended Six Months Ended
June 30,
June 30,
2004
2003
2004
2003
Net revenues $ 226,915 $ 208,178 $ 427,891 $ 392,399

Operating expenses (income)
Direct advertising expenses 74,362 73,361 148,153 144,918
General and administrative expenses 38,437 35,216 76,713 71,517
Corporate expenses 7,214 5,364 14,373 11,910
Depreciation and amortization 71,519 69,560 140,839 137,073
Loss (gain) on disposition of assets 3,461 (828 ) 2,532 (858 )

194,993 182,673 382,610 364,560

Operating income 31,922 25,505 45,281 27,839
Other expense (income)
Loss on extinguishment of debt — 5,754 — 16,927
Interest income (62 ) (66 ) (121 ) (184 )
Interest expense 16,833 22,587 34,403 46,347

16,771 28,275 34,282 63,090

Income (loss) before income tax expense (benefit) and cumulative effect of a change in accounting principle 15,151 (2,770 ) 10,999 (35,251 )
Income tax expense (benefit) 6,286 (569 ) 4,581 (12,457 )

Income (loss) before cumulative effect of a change in accounting principle 8,865 (2,201 ) 6,418 (22,794 )
Cumulative effect of a change in accounting principle, net of tax — — — 11,679

Net income (loss) 8,865 (2,201 ) 6,418 (34,473 )
Preferred stock dividends 91 91 182 182

Net income (loss) applicable to common stock $ 8,774 $ (2,292 ) $ 6,236 $ (34,655 )

Earnings (loss) per share:
Basic:
Before cumulative effect of a change in accounting principle $ 0.08 $ ( 0.02 ) $ 0.06 $ (0.23 )
Cumulative effect of a change in accounting principle — — — (0.11 )

Basic earnings (loss) per share $ 0.08 $ (0.02 ) $ 0.06 $ (0.34 )

Diluted:
Before cumulative effect of a change in accounting principle $ 0.08 $ (0.02 ) $ 0.06 $ (0.23 )
Cumulative effect of a change in accounting principle — — — (0.11 )

Diluted earnings (loss) per share $ 0.08 $ (0.02 ) $ 0.06 $ (0.34 )

Weighted average common shares used in computing earnings (loss) per share:
Basic 103,902,268 102,481,555 103,754,925 102,076,725
Incremental common shares 592,146 — 519,641 —

Diluted 104,494,414 102,481,555 104,274,566 102,076,725

~~See accompanying notes to condensed consolidated financial statements.~~

~~LAMAR ADVERTISING COMPANY AND~~
~~SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(UNAUDITED)~~

~~(IN THOUSANDS)~~

Six Months Ended
June 30,
2004
2003
Cash flows from operating activities:
Net income (loss) $ 6,418 $ (34,473 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 140,839 137,073
Loss (gain) on disposition of assets 2,532 (858 )
Deferred tax expense (benefit) 3,759 (12,197 )
Provision for doubtful accounts 3,460 4,268
Loss on debt extinguishment — 16,927
Cumulative effect of a change in accounting principle, net of tax — 11,679
Changes in operating assets and liabilities:
(Increase) decrease in:
Receivables (14,455 ) (10,293 )
Prepaid expenses (14,550 ) (13,038 )
Other assets 1,715 (4,776 )
Increase (decrease) in:
Trade accounts payable (2 ) 370
Accrued expenses (10,186 ) 4,646
Other liabilities (2,299 ) (1,014 )

Net cash provided by operating activities 117,231 98,314

Cash flows from investing activities:
Acquisition of new markets (50,541 ) (102,804 )
Capital expenditures (35,075 ) (40,767 )
Proceeds from disposition of assets 3,526 2,448

Net cash used in investing activities (82,090 ) (141,123 )

Cash flows from financing activities:
Debt issuance costs (1,036 ) (9,050 )
Net proceeds from issuance of common stock 19,549 4,303
Principal payments on long-term debt (3,494 ) (370,939 )
Net (payments) borrowings under credit agreements (40,000 ) 40,000
Cash from deposits for debt extinguishment — 266,657
Deposits for debt extinguishment — (301,198 )
Net proceeds from note offerings and new note payable — 408,300
Dividends (182 ) (182 )

Net cash (used in) provided by financing activities (25,163 ) 37,891

Net increase (decrease) in cash and cash equivalents 9,978 (4,918 )
Cash and cash equivalents at beginning of period 7,797 15,610

Cash and cash equivalents at end of period $ 17,775 $ 10,692

Supplemental disclosures of cash flow information:
Cash paid for interest $ 37,671 $ 36,422

Cash paid for state and federal income taxes $ 423 $ 291

Common stock issuance related to acquisitions $ 4,270 $ 50,630


	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		70,241			68,112
Gain on disposition of assets		(1,152	)		(330	)

		188,315			182,186

Operating income		12,661			2,035

Other expense (income)
Loss on extinguishment of debt		—			11,173
Interest income		(59	)		(118	)
Interest expense		18,902			25,339

		18,843			36,394

Loss before income tax benefit and cumulative effect of a change in accounting principle		(6,182	)		(34,359	)
Income tax benefit		(2,549	)		(12,620	)

Loss before cumulative effect of a change in accounting principle		(3,633	)		(21,739	)
Cumulative effect of a change in accounting principle, net of tax benefit of $25,727		—			40,240

Net loss		(3,633	)		(61,979	)
Preferred stock dividends		91			91

Net loss applicable to common stock	$	(3,724	)	$	(62,070	)

Loss per common share:
Loss before cumulative effect of a change in accounting principle	$	(0.04	)	$	(0.21	)
Cumulative effect of a change in accounting principle		—			(0.40	)

Net loss	$	(0.04	)	$	(0.61	)

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.

-3-

LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES

RESTATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(IN THOUSANDS)


	Three Months Ended
	March 31,
	2004			2003
Cash flows from operating activities:
Net loss	$	(3,633	)	$	(61,979	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		70,241			68,112
Amortization included in interest expense		1,332			1,579
Gain on disposition of assets		(1,152	)		(330	)
Deferred tax benefit		(2,859	)		(12,714	)
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		—			40,240
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.

-4-

LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

1.
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’s financial position and results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and the notes thereto included in the 2003 Combined Form 10-K.

~~Certain amounts~~The Company previously included amortization of debt issuance costs under depreciation and amortization in the Consolidated Statement of Operations. The Company is reclassifying this cost to interest expense. The effect of this reclassification is a decrease in depreciation and amortization and an increase in interest expense and operating income in the prior ~~year’s condensed consolidated financial statements have been reclassified to conform with the current year presentation. These reclassifications~~periods. The reclassification had no effect on previously reported ~~results~~net income. The amortization of ~~operations.~~debt issuance fees was $1,332 for the three months ended March 31, 2004 and $1,579 for the three months ended March 31, 2003.

2.
2. Restatement of Financial Statements

The Company is restating its financial statements for the fiscal quarters ended March 31, 2004 and 2003. The Company will also amend and restate its financial statements and notes thereto included in the Company’s 2003 annual report on Form 10-K and its unaudited condensed consolidated financial statements for the quarter ended June 30, 2004 on Form 10-Q.

This restatement of the financial statements corrects the adoption of Statement of Financial Accounting Standard 143, “Accounting for Asset Retirement Obligations” (Statement 143), effective January 1, 2003. Previously all of the Company’s liabilities for asset retirement obligations related to the Company’s structure inventory that it considers would be retired upon dismantlement of the advertising structure. The Company’s steel structures, unlike its non-steel structures, are not typically retired but relocated to another location. As such, the costs associated with the removal of the steel structures and resurfacing of the land were believed to be outside the scope of Statement 143 and were recorded when incurred in accordance with Statement of Financial Accounting Standard 13, “Accounting for Leases”. The Company reconsidered the provisions of Statement 143 and has determined that the liabilities should include costs associated with the removal of the steel structures and resurfacing of the land in the asset retirement obligation.

The effect of the restatement on the condensed consolidated statements of operations for the three-months ended March 31, 2004 and March 31, 2003 are set forth below:


	Three months ended						Three months ended
	March 31, 2004						March 31, 2003
				As Previously						As Previously
	As Restated			Reported			As Restated			Reported
Depreciation and amortization*		70,241			69,320			68,112			67,513
Gain on disposition of assets		(1,152	)		(929	)		(330	)		(30	)
Operating expenses		188,315			187,617			182,186			181,887
Operating income		12,661			13,359			2,035			2,334
Interest expense*		18,902			17,570			25,339			23,760
Loss before income tax benefit and cumulative effect of a change in accounting principle		(6,182	)		(4,152	)		(34,359	)		(32,481	)
Income tax benefit		(2,549	)		(1,705	)		(12,620	)		(11,888	)
Loss before cumulative effect of a change in accounting principle		(3,633	)		(2,447	)		(21,739	)		(20,593	)
Cumulative effect of a change in accounting principle, net of tax		—			—			40,240			11,679
Net loss		(3,633	)		(2,447	)		(61,979	)		(32,272	)
Net loss applicable to common stock		(3,724	)		(2,538	)		(62,070	)		(32,363	)

* The as restated three months ended March 31, 2004 and 2003 results have been adjusted for the amortization of deferred financing cost reclassification as discussed in footnote 1 to these quarterly financial statements.


	Three months ended						Three months ended
	March 31, 2004						March 31, 2003
				As Previously						As Previously
	As Restated			Reported			As Restated			Reported
Loss per share:
Basic and diluted:
Before cumulative effect of a change in accounting principle		(0.04	)		(0.02	)		(0.21	)		(0.20	)
Cumulative effect of a change in accounting principle		—			—			(0.40	)		(0.12	)

Basic and diluted loss per share		(0.04	)		(0.02	)		(0.61	)		(0.32	)

The effect of the restatement of the condensed consolidated balance sheet as of December 31, 2003 is set forth below:


	December 31, 2003
				As Previously
	As Restated			Reported
Property, plant & equipment		1,988,096			1,933,003
Accumulated depreciation		(702,272	)		(679,205	)
Total Assets		3,669,373			3,637,347
Deferred income tax liabilities		73,352			94,542
Asset retirement obligation		123,217			36,857
Total Liabilities		1,979,712			1,914,542
Accumulated Deficit		(407,997	)		(374,853	)
Stockholders’ Equity		1,689,661			1,722,805
Total liabilities and stockholders’ equity		3,669,373			3,637,347

The restatement did not effect cash provided by operations, cash used in investing activities or cash provided by financing activities for the three months ended March 31, 2004 and March 31, 2003.

3. Acquisitions

On January 8, 2004, the Company purchased the assets of Advantage Advertising, LLC valued at approximately $7,158. The purchase price consisted of approximately $5,728 cash at closing and the exercise of an option agreement previously entered into, valued at approximately $1,430.

On January 30, 2004, the Company purchased the assets of Action Advertising, Inc. for a cash purchase price of approximately $8,610.

~~On June 25, 2004, the Company purchased the assets of Pinnacle Media, LLC for a cash purchase price of approximately $10,338.~~

During the ~~six~~three months ended ~~June 30,~~March 31, 2004, the Company completed additional acquisitions of outdoor advertising assets for a total purchase price of approximately ~~$30,135,~~$10,980, which consisted of the issuance of 68,986 shares of Lamar Advertising Class A common stock valued at $2,476, warrants valued at $1,794 and ~~$25,865 in~~$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.


	Advantage		Action		Pinnacle						Advantage		Action
	Adv., LLC		Adv., Inc.		Media, LLC		Other		Total		Adv., LLC		Adv., Inc.		Other		Total
Current assets	$	—		110		207		—		317	$	—		110		36		146
Property, plant and equipment		855		2,208		1,699		9,782		14,544		855		2,208		3,534		6,597
Goodwill		2,854		—		643		8,977		12,474		2,854		—		4,932		7,786
Site locations		2,806		5,064		6,386		8,622		22,878		2,806		5,064		1,949		9,819
Non-competition agreements		—		40		—		215		255		—		40		79		119
Customer lists and contracts		643		1,188		1,463		2,896		6,190		643		1,188		450		2,281
Current liabilities		—		—		60		357		417

	$	7,158		8,610		10,338		30,135		56,241	$	7,158		8,610		10,980		26,748

LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

Summarized below are certain unaudited pro forma statements of operations data for the three months ~~and six months~~ ended ~~June 30,~~March 31, 2004 and ~~June 30,~~March 31, 2003 as if each of the above acquisitions and the acquisitions occurring in 2003, which were fully described in the 2003 Combined Form 10-K, had been consummated as of January 1, 2003. This pro forma information does not purport to represent what the Company’s results of operations actually would have been had such transactions occurred on the date specified or to project the Company’s results of operations for any future periods.

Three Months Ended Six Months Ended
June 30,
June 30,
2004
2003
2004
2003
Net revenues $ 227,443 $ 211,153 $ 429,341 $ 401,660

Net income (loss) applicable to common stock $ 9,065 $ (2,032 ) $ 6,954 $ (34,364 )

Net loss per common share - basic $ 0.09 $ (0.02 ) $ 0.07 $ (0.33 )

Net loss per common share - diluted $ 0.09 $ (0.02 ) $ 0.07 $ (0.33 )


	Three Months Ended
	March 31,
	2004			2003
Net revenues	$	201,230		$	189,935

Net loss applicable to common stock	$	(3,720	)	$	(63,137	)

Net loss per common share	$	(0.04	)	$	(0.61	)

3.4. Goodwill and Other Intangible Assets

The following is a summary of intangible assets at ~~June 30,~~March 31, 2004 and December 31, 2003.


			June 30, 2004				December 31, 2003
	Estimated												March 31, 2004				December 31, 2003
	Life		Gross Carrying		Accumulated		Gross Carrying		Accumulated		Estimated
	(Years)		Amount		Amortization		Amount		Amortization		Life		Gross Carrying		Accumulated		Gross Carrying		Accumulated
Amortizable Intangible Assets:											(Years)		Amount		Amortization		Amount		Amortization
Debt issuance costs and fees		7 – 10	$	50,174	$	23,415	$	49,138	$	20,783
Customer lists and contracts		7 – 10		394,981		274,013		388,791		248,617		7 – 10		391,072		261,598		388,791		248,617
Non-competition agreements		3 - 15		57,919		49,371		57,664		46,197		3 – 15		57,783		47,782		57,664		46,197
Site locations		15		1,043,915		277,595		1,021,037		243,170		15		1,030,855		260,306		1,021,037		243,170
Other		5 - 15		13,611		6,852		17,578		8,443		5 – 15		13,612		6,194		17,578		8,443

				1,560,600		631,246		1,534,208		567,210				1,493,322		575,880		1,485,070		546,427
Unamortizable Intangible Assets:
Goodwill			$	1,506,384	$	253,635	$	1,493,910	$	253,635			$	1,501,696	$	253,635	$	1,493,910	$	253,635

The changes in the gross carrying amount of goodwill for the ~~six~~three months ended ~~June 30,~~March 31, 2004 are as follows:

LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

4.
5. Long-Term Debt

On February 6, 2004, Lamar Media amended its credit agreement dated March 7, 2003 whereby it changed its $975,000 term facility to include a $425,000 Tranche A and a $550,000 Tranche C facility. The proceeds were used to pay off the Tranche B facility and the total debt outstanding remained unchanged.

5.
6. Asset Retirement Obligation

Effective January 1, 2003, the Company adopted Statement of Financial Accounting Standard 143, “Accounting for Asset Retirement Obligations” (Statement 143), and recorded a loss of ~~$11,679~~$40,240 as the cumulative effect of a change in accounting principle, which is net of an income tax benefit of ~~$7,467.~~$25,727. Prior to its adoption of Statement 143, the Company expensed these costs at the date of retirement.

~~All of the~~The Company’s asset retirement ~~obligations relate~~obligation includes the costs associated with the removal of its structures, resurfacing of the land and retirement cost, if applicable, related to the Company’s ~~structure inventory that it considers would be retired upon dismantlement of the~~outdoor advertising ~~structure.~~portfolio. The following table reflects information related to our asset retirement obligations:


Balance at December 31, 2003	$	36,857
Balance at December 31, 2003 (restated)				$	123,217
Additions to asset retirement obligations		3,053			2,422
Accretion expense		1,355			2,566
Liabilities settled		(872	)		(764	)

Balance at June 30, 2004	$	40,393
Balance at March 31, 2004 (restated)				$	127,441

The Company accounts for its stock option plan under the intrinsic value method in accordance with the provisions of Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to ~~Employees,”~~Employees”, and related interpretations. As such, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price. SFAS No. 123, “Accounting for Stock-Based Compensation” and SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure an amendment of FASB Statement No. 123” 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 ~~income (loss)~~loss and ~~income (loss)~~loss per common share as if we had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation:

LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

7.
8. Summarized Financial Information of Subsidiaries

Separate financial statements of each of the Company’s direct or indirect wholly owned subsidiaries that have guaranteed Lamar Media’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. Lamar Media’s ability to make distributions to Lamar Advertising is restricted under the terms of its bank credit facility and the ~~indenture~~indentures relating to Lamar Media’s outstanding notes. As of ~~June 30,~~March 31, 2004 and December 31, 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 ~~$1,962,069~~$1,914,392 and ~~$1,937,244,~~$1,903,600, respectively.

8.
9. Earnings Per Share

Earnings per share are computed in accordance with SFAS No. 128, “Earnings Per Share.” ~~Basic~~The calculation of basic earnings per share ~~are computed by dividing income available to common stockholders by the weighted average number~~excludes any dilutive effect of ~~common shares outstanding during the period. Diluted~~stock options and convertible debt. The calculation of diluted earnings per share ~~reflect~~includes the ~~potential dilution that could occur if the Company’s convertible debt,~~dilutive effect of stock options and ~~warrants were converted to common stock.~~convertible debt. The number of potentially dilutive shares excluded from the calculation because of their ~~antidilutive~~anti-dilutive effect is ~~5,581,755~~6,125,133 and ~~7,513,583~~6,590,096 for the three months ended ~~June 30,~~March 31, 2004 and ~~2003 and 5,581,755 and 7,033,955 for the six months ended June 30, 2004 and 2003, respectively.~~2003.

The following table reconciles the net income (loss) and common shares outstanding used in the calculations of basic and diluted earnings per share for the three month and six month periods ended June 30, 2004 and 2003.

Three months ended June 30, 2004
Six months ended June 30, 2004
Weighted Weighted
Net Income Average Net Income Average
Available Common Available Common
to Common Shares Earnings to Common Shares Earnings
Stockholders
Outstanding
Per Share
Stockholders
Outstanding
Per Share
Basic $ 8,774 103,902,268 $ 0.08 $ 6,236 103,754,925 $ 0.06
Effect of dilutive securities:
Preferred stock — — — —
Stock options — 585,166 — 514,043
Warrants — 6,980 — 5,598

Diluted $ 8,774 104,494,414 $ 0.08 $ 6,236 104,274,566 $ 0.06

Three months ended June 30, 2003
Six months ended June 30, 2003
Weighted Weighted
Net Loss Average Net Loss Average
Available Common Available Common
to Common Shares Loss to Common Shares Loss
Stockholders
Outstanding
Per Share
Stockholders
Outstanding
Per Share
Basic $ (2,292 ) 102,481,555 $ (0.02 ) $ (34,655 ) 102,076,725 $ (0.34 )
Effect of dilutive securities:
Preferred stock — — — —
Stock options — — — —
Warrants — — — —

Diluted $ (2,292 ) 102,481,555 $ (0.02 ) $ (34,655 ) 102,076,725 $ (0.34 )

~~-7-~~

~~LAMAR ADVERTISING COMPANY~~
~~AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~(UNAUDITED)~~
~~(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)~~

9.
10. Accounting Pronouncements

In December 2003, the FASB issued Interpretation No. ~~46R,~~46 (revised December 2003), “Consolidation of Variable Interest Entities, ~~(revised December 2003)~~ 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 and existing variable interest entities at the end of the period ending after March 15, 2004. The application of this Interpretation did not have ana material effect on the Company’s financial statements as the Company has no interest in variable interest entities.

~~On March 31,~~
11. Subsequent Event

An unsolicited offer was made by Outdoor Promotions, Inc. to purchase selected transit advertising assets from the Company for approximately $2,950. The sale of these assets was closed on April 23, 2004 at which time the FASB published an Exposure Draft, “Share-Based Payment, an Amendment of FASB Statement No. 123 and APB No. 25.” The proposed change in accounting would replace the existing requirements under FAS No. 123 and APB No. 25. Under the proposal, all forms of share-based payments to employees, including employee stock options and employee stock purchase plans, would be treated the same as other forms of compensation by recognizing the related cost in the statement of income. This proposed Statement would eliminate the ability to account for stock-based compensation transactions using the intrinsiccarrying value methods of APB No. 25 and generally would require that such transactions be accounted for using a fair-value based method, with binomial or lattice model preferred to the Black-Scholes valuation model. The comment period for the exposure draft ended June 30, 2004. We are currently analyzing what impact the adoption of the exposure draft will have on our financial position and results of operations.was approximately $7,030.

-8-

LAMAR MEDIA CORP.
AND SUBSIDIARIES

RESTATED CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)


	June 30,			December 31,			March 31,			December 31,
	2004			2003			2004			2003
	(unaudited)						(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	17,775		$	7,797		$	6,120		$	7,797
Receivables, net of allowance for doubtful accounts of $5,000 and 4,914 in 2004 and 2003, respectively		101,575			90,072
Receivables, net of allowance for doubtful accounts of $4,914 in 2004 and 2003								91,930			90,072
Prepaid expenses		46,731			32,377			44,958			32,377
Deferred income tax asset		6,166			6,051			6,258			6,051
Other current assets		5,998			7,665			7,347			7,665

Total current assets		178,245			143,962			156,613			143,962

Property, plant and equipment		1,959,219			1,933,003			2,009,980			1,988,096
Less accumulated depreciation and amortization		(733,109	)		(679,205	)		(734,265	)		(702,272	)

Net property, plant and equipment		1,226,110			1,253,798			1,275,715			1,285,824

Goodwill		1,245,233			1,232,857			1,240,592			1,232,857
Intangible assets		916,121			952,347			917,052			938,062
Deferred financing costs, net of accumulated amortization of $15,367 and $14,567, respectively								14,488			14,285
Other assets		35,929			50,744			40,633			50,744

Total assets	$	3,601,638		$	3,633,708		$	3,645,093		$	3,665,734

LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Trade accounts payable	$	8,810		$	8,813		$	8,810		$	8,813
Current maturities of long-term debt		37,924			5,044			20,703			5,044
Accrued expenses		28,507			38,068			19,994			38,068
Deferred income		12,073			14,372			15,086			14,372

Total current liabilities		87,314			66,297			64,593			66,297

Long-term debt		1,335,944			1,412,319			1,389,255			1,412,319
Deferred income tax liabilities		122,711			121,440
Deferred income taxes								96,716			100,250
Asset retirement obligation		40,393			36,857			127,441			123,217
Other liabilities		8,549			9,109			8,344			9,109

Total liabilities		1,594,911			1,646,022			1,686,349			1,711,192

Stockholder’s equity:
Common stock, $0.01 par value, authorized 3,000 shares; 100 shares issued and outstanding at June 30, 2004 and December 31, 2003		—			—
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		2,343,210			2,333,951			2,340,204			2,333,951
Accumulated deficit		(336,483	)		(346,265	)		(381,460	)		(379,409	)

Stockholder’s equity		2,006,727			1,987,686			1,958,744			1,954,542

Total liabilities and stockholder’s equity	$	3,601,638		$	3,633,708		$	3,645,093		$	3,665,734

LAMAR MEDIA CORP.
AND SUBSIDIARIES

RESTATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(IN THOUSANDS)


	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
	2004			2003			2004			2003			2004			2003
Net revenues	$	226,915		$	208,178		$	427,891		$	392,399		$	200,976		$	184,221

Operating expenses
Operating expenses (income)
Direct advertising expenses		74,362			73,361			148,153			144,918			73,791			71,557
General and administrative expenses		38,437			35,216			76,713			71,517			38,276			36,301
Corporate expenses		7,128			5,226			14,203			11,745			7,075			6,519
Depreciation and amortization		70,604			68,654			139,392			135,336			70,241			68,112
Loss (gain) on disposition of assets		3,461			(828	)		2,532			(858	)
Gain on disposition of assets														(1,152	)		(330	)

		193,992			181,629			380,993			362,658			188,231			182,159

Operating income		32,923			26,549			46,898			29,741			12,745			2,062

Other expense (income)
Loss on debt extinguishment		—			5,754			—			16,927
Loss on extinguishment of debt														—			11,173
Interest income		(62	)		(66	)		(121	)		(184	)		(59	)		(118	)
Interest expense		14,767			18,470			30,271			38,456			16,304			20,734

		14,705			24,158			30,150			55,199			16,245			31,789

Income (loss) before income tax expense (benefit) and cumulative effect of a change in accounting principle		18,218			2,391			16,748			(25,458	)
Income tax expense (benefit)		7,570			1,455			6,966			(8,628	)
Loss before income tax benefit and cumulative effect of a change in accounting principle														(3,500	)		(29,727	)
Income tax benefit														(1,449	)		(10,815	)

Income (loss) before cumulative effect of a change in accounting principle		10,648			936			9,782			(16,830	)
Cumulative effect of a change in accounting principle, net of tax		—			—			—			(11,679	)
Loss before cumulative effect of a change in accounting principle														(2,051	)		(18,912	)
Cumulative effect of a change in accounting principle, net of tax benefit of $25,727														—			(40,240	)

Net income (loss)	$	10,648		$	936		$	9,782		$	(28,509	)
Net loss													$	(2,051	)	$	(59,152	)

LAMAR MEDIA CORP.
AND SUBSIDIARIES

RESTATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(IN THOUSANDS)


	Six Months Ended						Three Months Ended
	June 30,						March 31,
	2004			2003			2004			2003
Cash flows from operating activities:
Net income (loss)	$	9,782		$	(28,509	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net loss							$	(2,051	)	$	(59,152	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		139,392			135,336			70,241			68,112
Loss (gain) on disposition of assets		2,532			(858	)
Deferred tax expense (benefit)		6,144			(8,368	)
Amortization included in interest expense								800			748
Gain on disposition of assets								(1,152	)		(330	)
Deferred tax benefit								(1,759	)		(10,909	)
Provision for doubtful accounts		3,460			4,268			1,248			2,325
Loss on debt extinguishment		—			16,927			—			11,173
Cumulative effect of a change in accounting principle, net of tax		—			11,679
Cumulative effect of change in accounting principle, net of tax								—			40,240
Changes in operating assets and liabilities:
(Increase) decrease in:
Increase (decrease) in:
Receivables		(13,922	)		(10,165	)		(1,709	)		(8,389	)
Prepaid expenses		(14,550	)		(13,038	)		(12,779	)		(11,533	)
Other assets		15,561			(15,922	)		7,091			(1,169	)
Increase (decrease) in:
Trade accounts payable		(2	)		370			(2	)		371
Accrued expenses		(9,626	)		5,451			(18,074	)		(11,290	)
Other liabilities		(2,299	)		(1,014	)		681			1,113

Net cash provided by operating activities		136,472			96,157
Cash flows provided by operating activities								42,535			21,310

Cash flows from investing activities:
Acquisition of new markets		(50,541	)		(101,599	)
Acquisitions								(21,048	)		(6,032	)
Capital expenditures		(34,949	)		(40,767	)		(15,891	)		(17,808	)
Proceeds from disposition of assets		3,526			2,448			1,135			938

Net cash used in investing activities		(81,964	)		(139,918	)
Cash flows used in investing activities								(35,804	)		(22,902	)

Cash flows from financing activities:
Debt issuance costs		(1,036	)		(9,050	)		(1,003	)		(8,356	)
Dividend		—			(15,813	)
Principal payments on long-term debt		(3,494	)		(370,939	)		(2,405	)		(264,449	)
Net (payments) borrowings under credit agreements		(40,000	)		40,000
Net borrowings under credit agreements								(5,000	)		—
Cash from deposits for debt extinguishment		—			266,657			—			266,657
Net proceeds from note offering and new note payable		—			127,988

Net cash (used in) provided by financing activities		(44,530	)		38,843
Cash flows used in financing activities								(8,408	)		(6,148	)

Net increase (decrease) in cash and cash equivalents		9,978			(4,918	)
Net decrease in cash and cash equivalents								(1,677	)		(7,740	)
Cash and cash equivalents at beginning of period		7,797			15,610			7,797			15,610

Cash and cash equivalents at end of period	$	17,775		$	10,692		$	6,120		$	7,870

Supplemental disclosures of cash flow information:
Cash paid for interest	$	33,538		$	28,875		$	22,982		$	20,245

Cash paid for state and federal income taxes	$	423		$	291		$	140		$	146

Parent company stock contributed for acquisitions	$	4,270		$	50,630
Parent company stock and warrants contributed for acquisitions							$	4,270		$	18,000

LAMAR MEDIA CORP.
AND SUBSIDIARIES

NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(IN THOUSANDS, EXCEPT FOR SHARE DATA)

1.
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’s financial position and results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year. These condensed consolidated financial statements should be read in conjunction with Lamar Media’s consolidated financial statements and the notes thereto included in the 2003 Combined Form 10-K.

~~Certain amounts~~Lamar Media previously included amortization of debt issuance costs under depreciation and amortization in the Consolidated Statement of Operations. The Company is reclassifying this cost to interest expense. The effect of this reclassification is a decrease in depreciation and amortization and an increase expense and operating income in the prior ~~year’s condensed consolidated financial statements have been reclassified to conform with the current year presentation. These reclassifications~~periods. The reclassification had no effect on previously reported ~~results~~net income. The amortization of ~~operations.~~debt issuance fees was $800 for the three months ended March 31, 2004 and $748 for the three months ended March 31, 2003.

Certain ~~notes~~footnotes are not provided for the accompanying consolidated financial statements as the information in notes 2, 3, 4, 5, 76, 8, 10 and 911 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.

-12-

~~ITEM 2.~~
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 risks and uncertainties described in the section of this combined report on Form ~~10-Q~~10-Q/A entitled “Note Regarding ~~Forward–~~Forward – Looking Statements” and in the 2003 Combined Form 10-K under the caption “Factors Affecting Future Operating Results.” You should carefully consider each of these risks and uncertainties in evaluating the Company’s and Lamar Media’s financial conditions and results of operations. Investors 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 ~~six months and~~ three months ended ~~June 30,~~March 31, 2004 and 2003. This discussion should be read in conjunction with the consolidated financial statements of the Company and the related notes.

OVERVIEW

The Company’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. 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 ~~190~~170 strategic acquisitions of outdoor advertising and transit assets for an aggregate purchase price of approximately ~~$378.2~~$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 ofat 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’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 ~~and six~~ months ended ~~June 30,~~March 31, 2004 and 2003:


	Three months ended				Six months ended				Three months ended
	June 30,				June 30,				March 31,
	(in thousands)				(in thousands)				(in thousands)
	2004		2003		2004		2003		2004		2003
Billboard	$	14,067	$	15,121	$	24,185	$	25,221	$	10,118	$	10,100
Logos		475		1,550		1,152		4,068		677		2,518
Transit		444		221		775		931		331		710
Land and buildings		2,462		3,030		5,765		5,919		3,303		2,889
Other PP&E		1,736		3,037		3,198		4,628
Property, plant and equipment										1,462		1,591

Total capital expenditures	$	19,184	$	22,959	$	35,075	$	40,767	$	15,891	$	17,808

RESULTS OF OPERATIONS

~~Six Months~~Three months ended ~~June 30,~~March 31, 2004 compared to ~~Six Months~~three months ended ~~June 30,~~March 31, 2003

Net revenues increased ~~$35.5~~$16.8 million or ~~9.0%~~9.1% to ~~$427.9~~$201.0 million for the ~~six~~three months ended ~~June 30,~~March 31, 2004 from ~~$392.4~~$184.2 million for the same period in 2003. This increase was attributable primarily to ~~(i)~~ an increase in billboard net revenues of ~~$34.3~~$16.4 million or 9.3%, (ii) a $0.8 million increase in logo sign revenue, which represents an increase of 4.3% over the prior period, and (iii) a $0.7 million increase in transit revenue, which represents a 16.8% increase over the prior period.

9.6%. The increase in billboard net revenues of ~~$34.3~~$16.4 million was due to both acquisition activity and internal growth generated by increases in both billboard occupancy and rates while the increase in logo sign revenue of $0.8 million and transit revenue growth of $0.7 million was generated by internal growth across various markets within the logo sign and transit programs.growth. Net revenues for the ~~six~~three months ended ~~June 30,~~March 31, 2004 as compared to ~~adjusted~~acquisition-adjusted net revenue⁽¹⁾ for the ~~six~~three months ended ~~June 30,~~March 31, 2003, which includes adjustments for acquisitions ~~and divestitures~~ for the same time frame as actually owned in 2004, increased ~~$27.3~~$11.1 million or ~~6.8%~~5.9% as a result of net revenue internal growth.

Operating expenses, exclusive of depreciation and amortization and gain ~~(loss)~~ on sale of assets, increased ~~$10.9~~$4.8 million or ~~4.8%~~4.2% to ~~$239.2~~$119.2 million for the ~~six~~three months ended ~~June 30,~~March 31, 2004 from ~~$228.3~~$114.4 million for the same period in 2003. There was ~~an $8.4~~a $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 the Company’s core assets and a ~~$2.5~~$0.6 million increase in corporate ~~expenses. The increase in corporate~~ expenses which is primarily related to the new national sales department established ~~in 2004~~ at the corporate headquarters ~~and a $1.0 million reduction in our legal reserve, which was recorded as a reduction of corporate expenses in~~to better serve the ~~second quarter of 2003.~~Company’s national accounts.

Depreciation and amortization expense increased ~~$3.7~~$2.1 million or ~~2.7%~~3.1% from ~~$137.1~~$68.1 million for the ~~six~~three months ended ~~June 30,~~March 31, 2003 to ~~$140.8~~$70.2 million for the ~~six~~three months ended ~~June 30, 2004.~~March 31, 2004, due to continued acquisition activity and capital expenditures.

Due to the above factors, operating income increased ~~$17.5~~$10.7 million to ~~$45.3~~$12.7 million for ~~six~~the three months ended ~~June 30,~~March 31, 2004 compared to ~~$27.8~~$2.0 million for the same period in 2003.

InInterest expense decreased $6.4 million from $25.3 million for the ~~first quarter of~~three months ended March 31, 2003 to $18.9 million for the ~~Company recorded approximately $11.2 million~~three months ended March 31, 2004 as a ~~loss~~result of lower interest rates both on ~~extinguishment of debt related to~~existing and recently refinanced debt. In addition, for the prepayment of the 9 5/8% Senior Subordinated Notes due 2006 and the write-off of related debt issuance costs. In the second quarter of 2003, the Company recorded a loss on extinguishment of debt of $5.8 million, related to the prepayment of $100 million in principal amount of its 8 5/8% Senior Subordinated Notes due 2007. During the sixthree months ended ~~June 30,~~March 31, 2004 there were no refinancing activities resulting in a loss on extinguishment of debt.

As a result of our refinancing activities and lower interest rates, interest expense decreased $11.9 million from $46.3 million for the six months ended June 30, 2003 to $34.4 million for the six months ended June 30, 2004.

The increase in operating income, the absence of athe loss on extinguishment of debt and the decrease in interest expense described above resulted in a ~~$46.3~~$28.2 million ~~increase~~decrease in ~~income~~loss before income taxes and cumulative effect of a change in accounting principle. ~~This increase in income resulted in an increase~~There was a decrease in the income tax ~~expense~~benefit of ~~$17.0~~$10.1 million for the ~~six~~three months ended ~~June 30,~~March 31, 2004 over the same period in 2003. The effective tax rate for the ~~six~~three months ended ~~June 30,~~March 31, 2004 ~~was 41.6%~~is 41.2%.

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 $40.2 million net of an income tax benefit of ~~$11.7 million during the six months ended June 30, 2003.~~$25.7 million.

As a result of the above factors, the Company recognized a net ~~income~~loss for the ~~six~~three months ended ~~June 30,~~March 31, 2004 of ~~$6.4~~$3.6 million, as compared to a net loss of ~~$34.5~~$62.0 million for the same period in 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 ~~Adjusted~~Acquisition-Adjusted Net Revenue:

Six months ended June 30,
(in thousands)
2004
2003
Reported net revenue $ 427,891 $ 392,399
Acquisition net revenue, net of divestitures — 8,162

Adjusted net revenue $ 427,891 $ 400,561


	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 ~~adjusted~~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.

-14-

~~Three Months ended June 30, 2004 compared to Three Months ended June 30, 2003~~

Net revenues increased $18.7 million or 9.0% to $226.9 million for the three months ended June 30, 2004 from $208.2 million for the same period in 2003. This increase was attributable primarily to an increase in billboard net revenues of $17.7 million or 9.1% over the prior period. The increase in billboard net revenues of $17.7 million was due to both acquisition activity and internal growth generated by increases in both billboard occupancy and rates. Net revenues for the three months ended June 30, 2004 as compared to adjusted net revenue⁽²⁾ for the three months ended June 30, 2003, which includes adjustments for acquisitions and divestitures for the same time frame as actually owned in 2004, increased $16.2 million or 7.7% as a result of net revenue internal growth.

Operating expenses, exclusive of depreciation and amortization and gain (loss) on sale of assets, increased $6.1 million or 5.4% to $120.0 million for the three months ended June 30, 2004 from $113.9 million for the same period in 2003. There was a $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 the Company’s core assets and a $1.9 million increase in corporate expenses. The increase in corporate expenses is primarily related to the new national sales department established in 2004 at the corporate headquarters and a $1.0 million reduction in our legal reserve, which was recorded as a reduction of corporate expenses in the second quarter of 2003.

Depreciation and amortization expense increased $1.9 million or 2.7% from $69.6 million for the three months ended June 30, 2003 to $71.5 million for the three months ended June 30, 2004, due to continued acquisition activity and capital expenditures.

~~Due to the above factors, operating income increased $6.4 million to $31.9 million for the three months ended June 30, 2004 compared to $25.5 million for the same period in 2003.~~

In the second quarter of 2003, the Company recorded a loss on extinguishment of debt of $5.8 million, related to the prepayment of $100 million in principal amount of its 8 5/8% Senior Subordinated Notes due 2007. During the three months ended June 30, 2004, there were no refinancing activities resulting in a loss on extinguishment of debt.

As a result of our refinancing activities and lower interest rates, interest expense decreased $5.8 million from $22.6 million for the three months ended June 30, 2003 to $16.8 million for the three months ended June 30, 2004.

The increase in operating income, the absence of the loss on extinguishment of debt and the decrease in interest expense described above resulted in a $17.9 million increase in income before income taxes and cumulative effect of a change in accounting principle. There was an increase in income tax expense of $6.9 million for the three months ended June 30, 2004 over the same period in 2003. The effective tax rate for the three months ended June 30, 2004 was 41.5%.

~~As a result of the above factors, the Company recognized net income for the three months ended June 30, 2004 of $8.9 million, as compared to a net loss of $2.2 million for the same period in 2003.~~

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically satisfied its working capital requirements with cash from operations and borrowings under its bank credit facility. The Company’s wholly owned subsidiary, Lamar Media 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. The Company’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 the Company’s subsidiaries using the Company’s Class A common stock, a permanent contribution of additional paid-in-capital of Class A common stock is distributed to that subsidiary.

~~(2)~~

~~Reconciliation of Reported Net Revenue to Adjusted Net Revenue:~~

Three months ended June 30,
(in thousands)
2004
2003
Reported net revenue $ 226,915 $ 208,178
Acquisition net revenue, net of divestitures — 2,541

Adjusted net revenue $ 226,915 $ 210,719

The Company’s management believes that 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.

~~-15-~~

The Company’s cash flows provided by operating activities increased by ~~$18.9~~$14.5 million for the ~~six~~three months ended ~~June 30, 2004. The increase was~~March 31, 2004 due primarily to a ~~change~~decrease in net ~~income (loss)~~loss of ~~$40.9~~$58.3 million offset by a decrease in adjustments to reconcile net loss to cash provided by operating activities of ~~$6.3~~$41.6 million, which primarily includes a decrease in the loss on extinguishment of debt of ~~$16.9 million;~~$11.2 million, a decrease in the cumulative effect of a change in accounting principle of ~~$11.7~~$40.2 million offset by a decrease in deferred income tax benefit of ~~$16.0 million; and an increase in depreciation and amortization of $3.7 million and an increase in loss (gain) on disposition of assets of $3.4~~$9.9 million. In addition, as compared to the same period in 2003, there were increases in the change in receivables of ~~$4.1~~$1.2 million and prepaid expenses of ~~$1.6~~$1.2 million, and decreases in other liabilities of ~~$1.3~~$0.5 million, trade accounts payable of ~~$0.3~~$0.4 million and in accrued expenses of ~~$14.9~~$0.6 million offset by a decrease in other assets of ~~$6.5~~$1.7 million.

Cash flows used in investing activities ~~decreased $59.0~~increased $12.3 million from ~~$141.1~~$23.5 million in 2003 to ~~$82.1~~$35.8 million in 2004 primarily due to the ~~decreases~~increase in cash used in acquisition activity by the Company in 2004 of ~~$52.3~~$14.4 million ~~and~~offset by a decrease in cash used for capital expenditures of ~~$5.7 million and an increase in proceeds from disposition of assets of $1.0~~$1.9 million.

Cash flows used in financing activities decreased by ~~$63.1~~$3.8 million for the ~~six~~three months ended ~~June 30,~~March 31, 2004 due to ~~decreases~~a decrease in cash from deposits for debt extinguishment of $266.7 million ~~and net proceeds from note offerings and new notes payable of $408.3 million~~ offset by ~~decreases of $287.4~~a $262.0 million decrease in principal payments of long-term debt ~~and deposits for debt extinguishment of $301.2 million~~ related to the Company’s refinancing activity in 2003. In addition, there was a ~~$15.2~~$6.1 million increase in proceeds from issuance of the Company’s Class A common stock related to option activity, ~~and an $8.1~~a $7.4 million decrease in debt issuance ~~costs.~~costs and a $5.0 million increase in net payments under credit agreements.

During the ~~six~~three months ended ~~June 30,~~March 31, 2004, the Company financed its acquisition activity of approximately ~~$54.8~~$25.3 million with borrowings under Lamar Media’s revolving credit facility and cash on hand totaling ~~$50.5~~$21.0 million as well as the issuance of shares of the Company’s Class A common stock and warrants valued at the time of issuance at approximately $4.3 million.

The Company’s wholly owned subsidiary, Lamar Media Corp., amended its bank credit facility in February 2004 whereby it changed its $975.0 million term facility which included a ~~$300.0~~$300 million Tranche A facility and a ~~$675.0~~$675 million Tranche B facility to a $425.0 million Tranche A and a $550.0 million Tranche C facility. The total 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. The bank credit facility also includes a $500.0 million incremental facility, which permits Lamar Media to request that its lenders enter into commitments to make additional term loans to it, up to a maximum aggregate amount of $500.0 million. The lenders have no obligation to make additional term loans to Lamar Media under the incremental facility, but may enter into such commitments in their sole discretion. At ~~June 30,~~March 31, 2004, Lamar Media had ~~$216.6~~$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 bank credit agreement. In addition it has fixed commercial commitments. These commitments were detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003, which was filed on March 10, 2004 and there have been no material changes during the ~~six months~~quarter ended ~~June 30,~~March 31, 2004.

Currently Lamar Media has outstanding approximately $385.0 million 7 1/4% Senior Subordinated Notes due 2013 issued in December 2002 and June 2003. The indenture relating to Lamar Media’s outstanding notes restrict its ability to incur indebtedness other than:

• ~~up to $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 capitalized lease obligations to acquire or lease property in the ordinary course of business that cannot exceed the greater of $20 million or 5% of Lamar Media’s net tangible assets; and
• ~~additional debt not to exceed $40 million.~~

up to $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 capitalized lease obligations to acquire or lease property in the ordinary course of business that cannot exceed the greater of $20 million or 5% of Lamar Media’s net tangible assets; and

additional debt not to 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 ~~due under~~set forth in the ~~bank credit agreement~~above table may be accelerated. At ~~June 30,~~March 31, 2004 and currently Lamar Media is in compliance with all such tests.

~~-16-~~-15-

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 ~~the ratio of~~ EBITDA, as defined below, for the most recent four fiscal quarters to total consolidated accrued interest expense for that period, of at least 2.25 to 1; and

a fixed charges coverage ratio, defined as the ratio of EBITDA, as defined below, for the most recent four fiscal quarters to ~~the sum of~~ (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’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 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’s balance sheet.

NEW ACCOUNTING PRONOUNCEMENTS

On March 31, 2004, the FASB published an Exposure Draft, “Share-Based Payment, an Amendment of FASB Statement No. 123 and APB No. 25.” The proposed change in accounting would replace the existing requirements under FAS No. 123 and APB No. 25. Under the proposal, all forms of share-based payments to employees, including employee stock options and employee stock purchase plans, would be treated the same as other forms of compensation by recognizing the related cost in the statement of income. This proposed Statement would eliminate the ability to account for stock-based compensation transactions using the intrinsic value methods of APB No. 25 and generally would require that such transactions be accounted for using a fair-value based method, with binomial or lattice models preferred to the Black-Scholes valuation model. The comment period for the exposure draft ended June 30, 2004. We are currently analyzing what impact, if any, the adoption of the exposure draft, if issued as a final standard, will have on our financial position and results of operations.

~~-17-~~-16-

Lamar Media Corp.

The following is a discussion of the consolidated financial condition and results of operations of Lamar Media for the ~~six months and the~~ three months ended ~~June 30,~~March 31, 2004 and 2003. This discussion should be read in conjunction with the consolidated financial statements of Lamar Media and the related notes.

~~Six Months~~Three months ended ~~June 30,~~March 31, 2004 compared to ~~Six Months~~three months ended ~~June 30,~~March 31, 2003

Net revenues increased ~~$35.5~~$16.8 million or ~~9.0%~~9.1% to ~~$427.9~~$201.0 million for the ~~six~~three months ended ~~June 30,~~March 31, 2004 from ~~$392.4~~$184.2 million for the same period in 2003. This increase was attributable primarily to ~~(i)~~ an increase in billboard net revenues of ~~$34.3~~$16.4 million or 9.3% over the prior period, (ii) a $0.8 million increase in logo sign revenue, which represents an increase of 4.3% over the prior period and (iii) a $0.7 million increase in transit revenue, which represents a 16.8% increase over the prior period.

9.6%. The increase in billboard net revenues of ~~$34.3~~$16.4 million was due to both acquisition activity and internal growth generated by increases in both billboard occupancy and rates while the increase in logo sign revenue of $0.8 million and transit revenue growth of $0.7 million was generated by internal growth across various markets within the logo sign and transit programs.growth. Net revenues for the ~~six~~three months ended ~~June 30,~~March 31, 2004 as compared to ~~adjusted~~acquisition-adjusted net revenue⁽³⁾⁽²⁾ for the ~~six~~three months ended ~~June 30,~~March 31, 2003, which includes adjustments for acquisitions ~~and divestitures~~ for the same time frame as actually owned in 2004, increased ~~$27.3~~$11.1 million or ~~6.8%~~5.9% as a result of net revenue internal growth.

Operating expenses, exclusive of depreciation and amortization and gain ~~(loss)~~ on sale of assets, increased ~~$10.9~~$4.7 million or ~~4.8%~~4.1% to ~~$239.1~~$119.1 million for the ~~six~~three months ended ~~June 30,~~March 31, 2004 from ~~$228.2~~$114.4 million for the same period in 2003. There was a ~~$8.4~~$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 ~~the Company’s~~Media’s core assets and a ~~$2.5~~$0.6 million increase in corporate ~~expenses. The increase in corporate~~ expenses which is primarily related to the new national sales department established ~~in 2004~~ at the corporate headquarters ~~and a $1.0 million reduction in our legal reserve, which was recorded as a reduction of corporate expenses in the second quarter of 2003.~~to better serve Media’s national accounts.

Depreciation and amortization expense increased ~~$4.1~~$2.1 million or ~~3.0%~~3.1% from ~~$135.3~~$68.1 million for the ~~six~~three months ended ~~June 30,~~March 31, 2003 to ~~$139.4~~$70.2 million for the ~~six~~three months ended ~~June 30, 2004.~~March 31, 2004, due to continued acquisition activity and capital expenditures.

Due to the above factors, operating income increased ~~$17.2~~$10.6 million to ~~$46.9~~$12.7 million for ~~six~~the three months ended ~~June 30,~~March 31, 2004 compared to ~~$29.7~~$2.1 million for the same period in 2003.

InInterest expense decreased $4.4 million from $20.7 million for the ~~first quarter of~~three months ended March 31, 2003 to $16.3 million for the ~~Company recorded approximately $11.2 million~~three months ended March 31, 2004 as a ~~loss~~result of lower interest rates both on ~~extinguishment of debt related to~~existing and recently refinanced debt. In addition for the prepayment of the 9 5/8% Senior Subordinated Notes due 2006 and the write-off of related debt issuance costs. In the second quarter of 2003, the Company recorded a loss on extinguishment of debt of $5.8 million, related to the prepayment of $100 million in principal amount of its 8 5/8% Senior Subordinated Notes due 2007. During the sixthree months ended ~~June 30,~~March 31, 2004 there were no refinancing activities resulting in a loss onof extinguishment of debt.

As a result of our refinancing activities and lower interest rates, interest expense decreased $8.2 million from $38.5 million for the six months ended June 30, 2003 to $30.3 million for the six months ended June 30, 2004.

The increase in operating income, the absence of athe loss on extinguishment of debt and the decrease in interest expense described above resulted in a ~~$42.2~~$26.2 million ~~increase~~decrease in ~~income~~loss before income taxes and cumulative effect of a change in accounting principle. ~~This increase in income resulted in an increase~~There was a decrease in the income tax ~~expense~~benefit of ~~$15.6~~$9.4 million for the ~~six~~three months ended ~~June 30,~~March 31, 2004 over the same period in 2003. The effective tax rate for the ~~six~~three months ended ~~June 30,~~March 31, 2004 ~~was 41.6%~~is 41.4%.

Due to the adoption of SFAS No. 143 during the three months ended March 31, 2003, Media recorded a cumulative effect of a change in accounting principle in the amount of $40.2 million net of an income tax benefit of $25.7 million.

As a result of the above factors, Media recognized a net loss for the three months ended March 31, 2004 of $2.1 million, as compared to a net loss of $59.2 million for the same period in 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 2004. The sale of these assets is not expected to have a material effect on our revenues.

~~(3)~~⁽²⁾

Reconciliation of Reported Net Revenue to ~~Adjusted~~Acquisition-Adjusted Net Revenue:

Six months ended June 30,
(in thousands)
2004
2003
Reported net revenue $ 427,891 $ 392,399
Acquisition net revenue, net of divestitures — 8,162

Adjusted net revenue $ 427,891 $ 400,561


	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~~Media’s management believes that ~~adjusted~~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~~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.

~~-18-~~

~~Due to the adoption of SFAS No. 143, the Company recorded a cumulative effect of a change in accounting principle, net of tax, of $11.7 million during the six months ended June 30, 2003.~~

~~As a result of the above factors, the Company recognized net income for the six months ended June 30, 2004 of $9.8 million, as compared to a net loss of $28.5 million for the same period in 2003.~~

~~Three Months ended June 30, 2004 compared to Three Months ended June 30, 2003~~

Net revenues increased $18.7 million or 9.0% to $226.9 million for the three months ended June 30, 2004 from $208.2 million for the same period in 2003. This increase was attributable primarily to an increase in billboard net revenues of $17.7 million or 9.1% over the prior period. The increase in billboard net revenues of $17.7 million was due to both acquisition activity and internal growth generated by increases in both billboard occupancy and rates. Net revenues for the three months ended June 30, 2004 as compared to adjusted net revenue⁽⁴⁾ for the three months ended June 30, 2003, which includes adjustments for acquisitions and divestitures for the same time frame as actually owned in 2004, increased $16.2 million or 7.7% as a result of net revenue internal growth.

Operating expenses, exclusive of depreciation and amortization and gain (loss) on sale of assets, increased $6.1 million or 5.4% to $119.9 million for the three months ended June 30, 2004 from $113.8 million for the same period in 2003. There was a $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 the Company’s core assets and a $1.9 million increase in corporate expenses. The increase in corporate expenses is primarily related to the new national sales department established in 2004 at the corporate headquarters and a $1.0 million reduction in our legal reserve which, was recorded as a reduction of corporate expenses in the second quarter of 2003.

Depreciation and amortization expense increased $1.9 million or 2.8% from $68.7 million for the three months ended June 30, 2003 to $70.6 million for the three months ended June 30, 2004, due to continued acquisition activity and capital expenditures.

~~Due to the above factors, operating income increased $6.4 million to $32.9 million for the three months ended June 30, 2004 compared to $26.5 million for the same period in 2003.~~

As a result of our refinancing activities and lower interest rates, interest expense decreased $3.7 million from $18.5 million for the three months ended June 30, 2003 to $14.8 million for the three months ended June 30, 2004.

The increase in operating income, the absence of the loss on extinguishment of debt and the decrease in interest expense described above resulted in a $15.8 million increase in income before income taxes and cumulative effect of a change in accounting principle. There was an increase in income tax expense of $6.1 million for the three months ended June 30, 2004 over the same period in 2003. The effective tax rate for the three months ended June 30, 2004 was 41.6%.

~~As a result of the above factors, the Company recognized net income for the three months ended June 30, 2004 of $10.6 million, as compared to net income of $0.9 million for the same period in 2003.~~

~~(4)~~

~~Reconciliation of Reported Net Revenue to Adjusted Net Revenue:~~

~~-19-~~-17-

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Lamar Advertising Company and Lamar Media Corp.

Lamar Advertising Company is exposed to interest rate risk in connection with variable rate debt instruments issued by its wholly owned subsidiary Lamar Media Corp. The information below summarizes the Company’s interest rate risk associated with its principal variable rate debt instruments outstanding at ~~June 30,~~March 31, 2004, and should be read in conjunction with Note 89 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 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 the Company’s net income.

At ~~June 30,~~March 31, 2004, there was approximately ~~$975.0 million~~$1.0 billion of aggregate indebtedness outstanding under the bank credit agreement, or approximately ~~60.1%~~60.2% of the Company’s outstanding long-term debt on that date, bearing interest at variable rates. The aggregate interest expense for the ~~six months ended June 30,~~first quarter of 2004 with respect to borrowings under the bank credit agreement was ~~$16.2~~$8.3 million, and the weighted average interest rate applicable to borrowings under this credit facility during the ~~six months ended June 30,~~first quarter of 2004 was ~~3.0%~~3.1%. Assuming that the weighted average interest rate was 200-basis points higher (that is ~~5.0%~~5.1% rather than ~~3.0%~~3.1%), then the Company’s ~~six months ended June 30,~~first quarter 2004 interest expense would have been approximately ~~$10.3~~$5.2 million higher resulting in a ~~$6.0~~$3.1 million ~~decrease~~increase in the Company’s ~~six months ended June 30,~~first quarter 2004 net ~~income.~~loss.

The Company has attempted to mitigate the interest rate risk resulting from its variable interest rate long-term debt instruments by issuing fixed rate long-term debt instruments and maintaining a balance over time between the amount of the Company’s variable rate and fixed rate indebtedness. In addition, the Company has the capability under the 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.

The Company’s and Lamar Media’s management, with the participation of the principal executive officer and principal financial officer of the Company and Lamar Media, have evaluated the effectiveness of the design and operation of the Company’s and Lamar Media’s disclosure controls and procedures (as 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 the Company’s and Lamar Media’s reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the requisite time periods.

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’s and Lamar Media’s internal control performed during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s and Lamar Media’s internal control over financial reporting.

~~-20-~~-18-

PART II —- OTHER INFORMATION

ITEM ~~4. SUBMISSION~~2. CHANGES IN SECURITIES, USE OF ~~MATTERS TO A VOTE~~PROCEEDS AND ISSUER PURCHSES OF ~~SECURITY HOLDERS.~~EQUITY SECURITIES.

The Company held its annual meeting of stockholders on Thursday, May 27, 2004. Kevin P. Reilly, Jr., Charles W. Lamar, III, Anna Reilly Cullinan, Stephen P. Mumblow, John Maxwell Hamilton, Thomas Reifenheiser and Robert Jelenic were elected as directors(c) In connection with the acquisition of the Robert G. Woodward Entities on January 9, 2004, the Company ~~each~~issued a warrant to ~~hold office until the next annual meeting of stockholders or until his or her successor has been elected and qualified. The stockholders also approved an amendment~~purchase up to ~~the Company’s 1996 Equity Incentive Plan to increase the number of~~50,000 shares of ~~the Company’s~~its Class A common stock ~~available~~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 ~~issuance from 8,000,000 to 10,000,000 shares.~~

~~The results~~the Robert G. Woodward Entities consisted of ~~voting at~~the Warrant, approximately $1.9 million in cash and 68,986 shares of Class A common stock, which were issued off the Company’s ~~annual meeting of stockholders were as follows:~~

~~Proposal~~effective S-4 registration statement (File No. ~~1 Election of Directors~~

VOTES VOTES
Nominee
FOR
WITHHELD
Kevin P. Reilly, Jr. 239,033,483 376,866
Charles W. Lamar, III 238,595,883 814,466
Anna Reilly Cullinan 239,033,483 376,866
Stephen P. Mumblow 238,585,533 824,816
John Maxwell Hamilton 239,033,483 376,866
Thomas V. Reifenheiser 239,033,483 376,866
Robert M. Jelenic 239,195,363 214,986

~~Proposal No. 2. Amendment~~333-108689). The Warrant was issued in reliance on the exemption from registration provided by Section 4(2) of the ~~Company’s 1996 Equity Incentive Plan~~

VOTES VOTES VOTES BROKER
FOR
AGAINST
ABSTAIN
NON-VOTES
201,803,772 30,884,463 3,627 6,718,487

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 ~~May 6,~~February 11, 2004, Lamar Advertising Company filed a Current Report on Form 8-K ~~(Item 12)~~ in order to furnish to the Commission its earnings press release for the ~~quarter~~year ended ~~March~~December 31, ~~2004.~~^*

^* ~~Information furnished under Item 9 or Item 12 of Form 8-K is not incorporated by reference, is not deemed filed and is not subject to liability~~
~~under Section 11 of the Securities Act of 1933 or Section 18 of the Securities exchange Act of 1934.~~

~~-21-~~

INDEX TO EXHIBITS


EXHIBIT
NUMBER		DESCRIPTION
2.1		Agreement and Plan of Merger dated as of July 20, 1999 among Lamar Media Corp., Lamar New Holding Co., and Lamar Holdings Merge Co. Previously filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on July 22, 1999 (File No. 0-30242) and incorporated herein by reference.

3.1		Certificate of Incorporation of Lamar New Holding Co. Previously filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 1999 (File No. 0-20833) filed on August 16, 1999 and incorporated herein by reference.

3.2		Certificate of Amendment of Certificate of Incorporation of Lamar New Holding Co. (whereby the name of Lamar New Holding Co. was changed to Lamar Advertising Company). Previously filed as Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 1999 (File No. 0-20833) filed on August 16, 1999 and incorporated herein by reference.

3.3		Certificate of Amendment of Certificate of Incorporation of Lamar Advertising Company. Previously filed as Exhibit 3.3 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2000 (File No. 0-30242) filed on August 11, 2000 and incorporated herein by reference.

3.4		Certificate of Correction of Certificate of Incorporation of Lamar Advertising Company. Previously filed as Exhibit 3.4 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2000 (File No. 0-30242) filed on November 14, 2000 and incorporated herein by reference.

3.5		Bylaws of the Lamar Advertising Company. Previously filed as Exhibit 3.3 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 1999 (File No. 0-20833) filed on August 16, 1999 and incorporated herein by reference.

3.6		Amended and Restated Bylaws of Lamar Media Corp. Previously filed as Exhibit 3.1 to Lamar Media’s Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 1-12407) filed on November 12, 1999 and incorporated herein by reference.

4.1		Supplemental Indenture to the Indenture dated December 23, 2002 among Lamar Media Corp., Lamar Canadian Outdoor Company and Wachovia Bank of Delaware, National Association, as Trustee, dated April 5, 2004. Filed herewith.

~~10.1~~		~~Joinder Agreement~~Amendment No. 1 dated as of ~~April 19,~~January 28, 2004 to the Credit Agreement dated as of March 7, 2003 between Lamar Media Corp. ~~and Lamar Canadian Outdoor Company,~~, the ~~Lenders~~Subsidiary Guarantors a party thereto and JPMorgan Chase Bank, as ~~Administrative Agent. Filed herewith.~~administrative agent for the lenders. Previously filed as Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2004 and incorporated by reference.

~~10.2~~4.2		~~1996 Equity Incentive Plan,~~Tranche C Term Loan Agreement dated as ~~amended. Filed herewith.~~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. Previously filed as Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2004 and incorporated by reference.

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- Oxley~~Sarbanes-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- Oxley~~Sarbanes-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-~~-20-


		Page
PART I - FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	Lamar Advertising Company		2
	Condensed Consolidated Balance Sheets as of March 31, 2004 and December 31, 2003		2
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2004 and 2003		3
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2004 and 2003		4
	Notes to Condensed Consolidated Financial Statements		5 - 8
	Lamar Media Corp.
	Condensed Consolidated Balance Sheets as of March 31, 2004 and December 31, 2003		9
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2004 and 2003		10
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2004 and 2003		11
	Note to Condensed Consolidated Financial Statements		12
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		13 - 17
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risks		18
ITEM 4.	Controls and Procedures		18
PART II - OTHER INFORMATION
ITEM 2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities		19
ITEM 6.	Exhibits and Reports on Form 8-K		19
	Signatures		19
	Index to Exhibits		20
Certification of CEO under Section 302
Certification of CFO under Section 302
Certification Pursuant to 18 U.S.C. Section 1350


	~~Page~~
~~PART I — FINANCIAL INFORMATION~~
~~ITEM 1. FINANCIAL STATEMENTS~~
~~Lamar Advertising Company~~
~~Condensed Consolidated Balance Sheets as of June 30, 2004 and December 31, 2003~~		1
~~Condensed Consolidated Statements of Operations for the three months and six months ended June 30, 2004 and 2003~~		2
~~Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2004 and 2003~~		3
~~Notes to Condensed Consolidated Financial Statements~~		~~4 - 8~~
~~Lamar Media Corp.~~
~~Condensed Consolidated Balance Sheets as of June 30, 2004 and December 31, 2003~~		9
~~Condensed Consolidated Statements of Operations for the three months and six months ended June 30, 2004 and 2003~~		10
~~Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2004 and 2003~~		11
~~Note to Condensed Consolidated Financial Statements~~		12
~~ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~		~~13 - 19~~
~~ITEM 3. Quantitative and Qualitative Disclosures About Market Risks~~		20
~~ITEM 4. Controls and Procedures~~		20
~~PART II — OTHER INFORMATION~~
~~ITEM 4. Submission of Matters to a Vote of Security Holders~~		21
~~ITEM 6. Exhibits and Reports on Form 8-K~~		21
~~Signatures~~		22
~~Index to Exhibits~~		23
~~Supplemental Indenture~~
~~Joinder Agreement~~
~~1996 Equity Incentive Plan~~
~~Certification of CEO Pursuant to Section 302~~
~~Certification of CFO Pursuant to Section 302~~
~~Certification Pursuant to Section 906~~


	Three months ended
	March 31,
	2004			2003
Net loss applicable to common stock, as reported (restated)	$	(3,724	)	$	(62,070	)
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 (restated)	$	(7,585	)	$	(63,081	)

Net loss per common share – basic and diluted
Net loss, as reported	$	(0.04	)	$	(0.61	)
Net loss, pro forma	$	(0.07	)	$	(0.62	)


		LAMAR ADVERTISING COMPANY

DATED: ~~August 5,~~November 30, 2004		BY: /s/ Keith A. Istre

		Chief Financial and Accounting Officer and Treasurer


		LAMAR MEDIA CORP.

DATED: ~~August 5,~~November 30, 2004		BY: /s/ Keith A. Istre

		Chief Financial and Accounting Officer and Treasurer

•		~~expected operating results;~~

•		~~market opportunities;~~

•		~~acquisition opportunities;~~

•		~~ability to compete; and~~

•		~~stock price.~~


Balance as of December 31, 2003	$	1,493,910	$	1,493,910
Goodwill acquired during the six months ending June 30, 2004		12,474
Goodwill acquired during the three months ending March 31, 2004				7,786
Impairment losses		—		—

Balance as of June 30, 2004	$	1,506,384
Balance as of March 31, 2004			$	1,501,696


	Three months ended June 30, 2004						Six months ended June 30, 2004
			Weighted						Weighted
	Net Income		Average				Net Income		Average
	Available		Common				Available		Common
	to Common		Shares		Earnings		to Common		Shares		Earnings
	Stockholders		Outstanding		Per Share		Stockholders		Outstanding		Per Share
Basic	$	8,774		103,902,268	$	0.08	$	6,236		103,754,925	$	0.06
Effect of dilutive securities:
Preferred stock		—		—				—		—
Stock options		—		585,166				—		514,043
Warrants		—		6,980				—		5,598

Diluted	$	8,774		104,494,414	$	0.08	$	6,236		104,274,566	$	0.06


	Three months ended June 30, 2003								Six months ended June 30, 2003
				Weighted								Weighted
	Net Loss			Average					Net Loss			Average
	Available			Common					Available			Common
	to Common			Shares		Loss			to Common			Shares		Loss
	Stockholders			Outstanding		Per Share			Stockholders			Outstanding		Per Share
Basic	$	(2,292	)		102,481,555	$	(0.02	)	$	(34,655	)		102,076,725	$	(0.34	)
Effect of dilutive securities:
Preferred stock		—			—					—			—
Stock options		—			—					—			—
Warrants		—			—					—			—

Diluted	$	(2,292	)		102,481,555	$	(0.02	)	$	(34,655	)		102,076,725	$	(0.34	)


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


	Six months ended June 30,
	(in thousands)
	2004		2003
Reported net revenue	$	427,891	$	392,399
Acquisition net revenue, net of divestitures		—		8,162

Adjusted net revenue	$	427,891	$	400,561


	Three months ended June 30,
	(in thousands)
	2004		2003
Reported net revenue	$	226,915	$	208,178
Acquisition net revenue, net of divestitures		—		2,541

Adjusted net revenue	$	226,915	$	210,719

•		~~up to $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 capitalized lease obligations to acquire or lease property in the ordinary course of business that cannot exceed the greater of $20 million or 5% of Lamar Media’s net tangible assets; and

•		~~additional debt not to exceed $40 million.~~


	VOTES		VOTES
Nominee	FOR		WITHHELD
Kevin P. Reilly, Jr.		239,033,483		376,866
Charles W. Lamar, III		238,595,883		814,466
Anna Reilly Cullinan		239,033,483		376,866
Stephen P. Mumblow		238,585,533		824,816
John Maxwell Hamilton		239,033,483		376,866
Thomas V. Reifenheiser		239,033,483		376,866
Robert M. Jelenic		239,195,363		214,986