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| x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | ||||
2021
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| ¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | ||||
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Delaware |
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Delaware | 72-1205791 | |||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S Employer Identification No.) | |||||||
5321 Corporate Blvd., Baton Rouge, LA | 70808 | |||||||
(Address of principal executive offices) | (Zip Code) | |||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Class A common stock, $0.001 par value | LAMR | The NASDAQ Stock Market, LLC | ||||||
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Emerging growth company |
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Emerging growth company |
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October 29, 2021: 86,819,395
•our future financial performance and condition; •our business plans, objectives, prospects, growth and operating strategies; •our future capital expenditures and level of acquisition activity; •market opportunities and competitive positions; •our future cash flows and expected cash requirements; •estimated risks; •our ability to maintain compliance with applicable covenants and restrictions included in Lamar Media’s senior credit facility, Accounts Receivable Securitization Program and the indentures relating to its outstanding notes; •stock price; •estimated future dividend distributions; and •our ability to remain qualified as a Real Estate Investment Trust (“REIT”). •the state of the economy and financial markets generally and their effects on the markets in which we operate and the broader demand for advertising; •the levels of expenditures on advertising in general and outdoor advertising in particular; •risks and uncertainties relating to our significant indebtedness; •the demand for outdoor advertising and its continued popularity as an advertising medium; •our need for, and ability to obtain, additional funding for acquisitions, operations and debt refinancing; •increased competition within the outdoor advertising industry; •the regulation of the outdoor advertising industry by federal, state and local governments; •our ability to renew expiring contracts at favorable rates; •the integration of businesses and assets that we acquire and our ability to recognize cost savings and operating efficiencies as a result of these acquisitions; •our ability to successfully implement our digital deployment strategy; •the market for our Class A common stock; •changes in accounting principles, policies or guidelines; •our ability to effectively mitigate the threat of and damages caused by hurricanes and other kinds of severe weather; •our ability to •changes in tax laws applicable to For a further description of these and other risks and uncertainties, the Company encourages you to read carefully Item 1A to the combined Annual Report on Form 10-K for the year ended December 31, Lamar Advertising Company Lamar Media Corp. September 30, 2017 December 31, 2016 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 29,419 $ 35,530 Receivables, net of allowance for doubtful accounts of $11,529 and $9,356 in 2017 and 2016, respectively 223,088 189,935 Prepaid lease expenses 72,816 48,815 Other current assets 45,187 39,973 Total current assets 370,510 314,253 Property, plant and equipment 3,354,962 3,294,251 Less accumulated depreciation and amortization (2,174,393 ) (2,111,536 ) Net property, plant and equipment 1,180,569 1,182,715 Goodwill 1,740,469 1,726,358 Intangible assets 668,667 637,153 Other assets 43,015 38,405 Total assets $ 4,003,230 $ 3,898,884 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Trade accounts payable $ 18,054 $ 17,653 Current maturities of long-term debt, net of deferred financing costs of $5,085 and $5,459 in 2017 and 2016, respectively 17,415 33,916 Accrued expenses 99,548 134,433 Deferred income 103,670 91,322 Total current liabilities 238,687 277,324 Long-term debt, net of deferred financing costs of $24,888 and $23,510 in 2017 and 2016, respectively 2,432,014 2,315,267 Deferred income tax liabilities 326 279 Asset retirement obligation 212,141 210,889 Other liabilities 29,536 25,597 Total liabilities 2,912,704 2,829,356 Stockholders’ equity: Series AA preferred stock, par value $.001, $63.80 cumulative dividends, 5,720 shares authorized; 5,720 shares issued and outstanding at 2017 and 2016 — — Class A common stock, par value $.001, 362,500,000 shares authorized; 84,007,335 and 83,038,831 shares issued at 2017 and 2016, respectively; 83,676,051 and 82,822,743 issued and outstanding at 2017 and 2016, respectively 84 83 Class B common stock, par value $.001, 37,500,000 shares authorized, 14,420,085 and 14,610,365 shares issued and outstanding at 2017 and 2016, respectively 14 15 Additional paid-in capital 1,754,892 1,713,312 Accumulated comprehensive income (loss) 1,480 (624 ) Accumulated deficit (644,644 ) (630,955 ) Cost of shares held in treasury, 331,284 and 216,088 shares at 2017 and 2016, respectively (21,300 ) (12,303 ) Stockholders’ equity 1,090,526 1,069,528 Total liabilities and stockholders’ equity $ 4,003,230 $ 3,898,884 Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Statements of Income Net revenues $ 399,345 $ 387,516 $ 1,142,785 $ 1,113,577 Operating expenses (income) Direct advertising expenses (exclusive of depreciation and amortization) 134,977 131,778 401,896 393,228 General and administrative expenses (exclusive of depreciation and amortization) 68,500 67,487 206,452 200,734 Corporate expenses (exclusive of depreciation and amortization) 15,088 19,359 48,451 55,432 Depreciation and amortization 51,796 49,307 155,003 152,729 Gain on disposition of assets (2,734 ) (189 ) (4,377 ) (12,221 ) 267,627 267,742 807,425 789,902 Operating income 131,718 119,774 335,360 323,675 Other expense (income) Loss on extinguishment of debt — — 71 3,198 Interest income (2 ) (2 ) (6 ) (6 ) Interest expense 32,064 31,102 95,526 92,469 32,062 31,100 95,591 95,661 Income before income tax expense 99,656 88,674 239,769 228,014 Income tax expense 3,325 3,613 9,257 9,730 Net income 96,331 85,061 230,512 218,284 Cash dividends declared and paid on preferred stock 91 91 273 273 Net income applicable to common stock $ 96,240 $ 84,970 $ 230,239 $ 218,011 Earnings per share: Basic earnings per share $ 0.98 $ 0.87 $ 2.35 $ 2.25 Diluted earnings per share $ 0.98 $ 0.87 $ 2.34 $ 2.23 Cash dividends declared per share of common stock $ 0.83 $ 0.76 $ 2.49 $ 2.26 Weighted average common shares used in computing earnings per share: Weighted average common shares outstanding basic 98,044,523 97,254,125 97,855,642 97,056,456 Weighted average common shares outstanding diluted 98,490,277 97,881,878 98,340,248 97,631,606 Statements of Comprehensive Income Net income $ 96,331 $ 85,061 $ 230,512 $ 218,284 Other comprehensive income (loss) Foreign currency translation adjustments 1,216 (328 ) 2,104 1,151 Comprehensive income $ 97,547 $ 84,733 $ 232,616 $ 219,435 Stockholders’ Equity Nine months ended September 30, 2017 2016 Cash flows from operating activities: Net income $ 230,512 $ 218,284 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 155,003 152,729 Stock-based compensation 7,060 19,650 Amortization included in interest expense 3,866 3,993 Gain on disposition of assets and investments (4,377 ) (12,221 ) Loss on extinguishment of debt 71 3,198 Deferred tax expense (benefit) 259 (150 ) Provision for doubtful accounts 6,009 5,831 Changes in operating assets and liabilities (Increase) decrease in: Receivables (38,083 ) (39,072 ) Prepaid lease expenses (23,281 ) (21,700 ) Other assets (4,334 ) 5,923 Increase (decrease) in: Trade accounts payable 401 (761 ) Accrued expenses (21,768 ) (5,623 ) Other liabilities 9,300 7,745 Net cash provided by operating activities 320,638 337,826 Cash flows from investing activities: Acquisitions (119,936 ) (526,029 ) Capital expenditures (74,446 ) (78,825 ) Proceeds from disposition of assets and investments 3,340 7,753 Decrease in notes receivable 13 16 Net cash used in investing activities (191,029 ) (597,085 ) Cash flows from financing activities: Cash used for purchase of treasury stock (8,997 ) (6,204 ) Net proceeds from issuance of common stock 19,817 18,278 Principal payments on long-term debt (11,250 ) (15,015 ) Payment on revolving credit facility (407,000 ) (302,000 ) Proceeds received from revolving credit facility 317,000 408,000 Proceeds received from note offering — 400,000 Payment on senior credit facility term loans (247,500 ) (300,000 ) Proceeds received from senior credit facility term loans 450,000 300,000 Debt issuance costs (4,941 ) (9,391 ) Distributions to non-controlling interest (415 ) (315 ) Dividends/distributions (244,201 ) (219,857 ) Net cash (used in) provided by financing activities (137,487 ) 273,496 Effect of exchange rate changes in cash and cash equivalents 1,767 915 Net (decrease) increase in cash and cash equivalents (6,111 ) 15,152 Cash and cash equivalents at beginning of period 35,530 22,327 Cash and cash equivalents at end of period $ 29,419 $ 37,479 Supplemental disclosures of cash flow information: Cash paid for interest $ 104,966 $ 91,952 Cash paid for foreign, state and federal income taxes $ 9,969 $ 11,023 (In thousands, except share and per share data) Additional shares reserved under Purchases Available for future purchases, September 30, Total Property, plant and equipment $ 14,305 Goodwill 13,925 Site locations 82,262 Non-competition agreements 325 Customer lists and contracts 10,224 Acquisition costs 194 Current assets 2,465 Current liabilities (510 ) Other liabilities (375 ) $ 122,815 Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Direct advertising expenses $ 47,168 $ 46,163 $ 144,171 $ 142,228 General and administrative expenses 955 900 2,857 2,683 Corporate expenses 3,673 2,244 7,975 7,818 $ 51,796 $ 49,307 $ 155,003 $ 152,729 Estimated September 30, 2017 December 31, 2016 Life (Years) Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Amortizable intangible assets: Customer lists and contracts 7—10 $ 570,073 $ 501,556 $ 559,513 $ 490,514 Non-competition agreements 3—15 64,976 63,861 64,646 63,692 Site locations 15 1,937,725 1,354,594 1,885,554 1,318,976 Other 2—15 45,406 29,502 14,174 13,552 $ 2,618,180 $ 1,949,513 $ 2,523,887 $ 1,886,734 Unamortizable intangible assets: Goodwill $ 1,994,005 $ 253,536 $ 1,979,894 $ 253,536 Balance at December 31, 2016 $ 210,889 Additions to asset retirement obligations 1,103 Accretion expense 3,182 Liabilities settled (3,033 ) Balance at September 30, 2017 $ 212,141 September 30, 2017 Debt Deferred financing costs Debt, net of deferred financing costs Senior Credit Facility $ 534,375 $ 8,133 $ 526,242 5 7/8% Senior Subordinated Notes 500,000 6,162 493,838 5% Senior Subordinated Notes 535,000 5,127 529,873 5 3/8% Senior Notes 510,000 5,155 504,845 5 3/4% Senior Notes 400,000 5,396 394,604 Other notes with various rates and terms 27 — 27 2,479,402 29,973 2,449,429 Less current maturities (22,500 ) (5,085 ) (17,415 ) Long-term debt, excluding current maturities $ 2,456,902 $ 24,888 $ 2,432,014 December 31, 2016 Debt Deferred financing costs Debt, net of deferred financing costs Senior Credit Facility $ 433,125 $ 4,769 $ 428,356 5 7/8% Senior Subordinated Notes 500,000 7,071 492,929 5% Senior Subordinated Notes 535,000 5,709 529,291 5 3/8% Senior Notes 510,000 5,662 504,338 5 3/4% Senior Notes 400,000 5,758 394,242 Other notes with various rates and terms 27 — 27 2,378,152 28,969 2,349,183 Less current maturities (39,375 ) (5,459 ) (33,916 ) Long-term debt, excluding current maturities $ 2,338,777 $ 23,510 $ 2,315,267 As a result of refinancing our credit facility the Company incurred a loss on debt extinguishment of $5,608 for the nine months ended September 30, 2020. Principal Payment Date Principal Amount December 31, 2017-June 30, 2019 $ 5,625.0 September 30, 2019-June 30, 2020 $ 8,437.5 September 30, 2020-March 31, 2022 $ 16,875.0 Term A Loan Maturity Date $ 253,125.0 February 6, 2025. •dispose of assets; •incur or repay debt; •create liens; •make investments; and •pay dividends. September 30, 2017 December 31, 2016 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 28,919 $ 35,030 Receivables, net of allowance for doubtful accounts of $11,529 and $9,356 in 2017 and 2016, respectively 223,088 189,935 Prepaid lease expenses 72,816 48,815 Other current assets 45,187 39,973 Total current assets 370,010 313,753 Property, plant and equipment 3,354,962 3,294,251 Less accumulated depreciation and amortization (2,174,393 ) (2,111,536 ) Net property, plant and equipment 1,180,569 1,182,715 Goodwill 1,730,318 1,716,207 Intangible assets 668,197 636,685 Other assets 37,731 33,120 Total assets $ 3,986,825 $ 3,882,480 LIABILITIES AND STOCKHOLDER’S EQUITY �� Current liabilities: Trade accounts payable $ 18,054 $ 17,653 Current maturities of long-term debt, net of deferred financing costs of $5,085 and $5,459 in 2017 and 2016, respectively 17,415 33,916 Accrued expenses 95,715 131,171 Deferred income 103,670 91,322 Total current liabilities 234,854 274,062 Long-term debt, net of deferred financing costs of $24,888 and $23,510 in 2017 and 2016, respectively 2,432,014 2,315,267 Deferred income tax liabilities 326 279 Asset retirement obligation 212,141 210,889 Other liabilities 29,536 25,597 Total liabilities 2,908,871 2,826,094 Stockholder’s equity: Common stock, par value $.01, 3,000 shares authorized, 100 shares issued and outstanding at 2017 and 2016 — — Additional paid-in-capital 2,825,333 2,783,753 Accumulated comprehensive income (loss) 1,480 (624 ) Accumulated deficit (1,748,859 ) (1,726,743 ) Stockholder’s equity 1,077,954 1,056,386 Total liabilities and stockholder’s equity $ 3,986,825 $ 3,882,480 Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Statements of Income Net revenues $ 399,345 $ 387,516 $ 1,142,785 $ 1,113,577 Operating expenses (income) Direct advertising expenses (exclusive of depreciation and amortization) 134,977 131,778 401,896 393,228 General and administrative expenses (exclusive of depreciation and amortization) 68,500 67,487 206,452 200,734 Corporate expenses (exclusive of depreciation and amortization) 14,982 19,252 48,154 55,143 Depreciation and amortization 51,796 49,307 155,003 152,729 Gain on disposition of assets (2,734 ) (189 ) (4,377 ) (12,221 ) 267,521 267,635 807,128 789,613 Operating income 131,824 119,881 335,657 323,964 Other expense (income) Loss on extinguishment of debt — — 71 3,198 Interest income (2 ) (2 ) (6 ) (6 ) Interest expense 32,064 31,102 95,526 92,469 32,062 31,100 95,591 95,661 Income before income tax expense 99,762 88,781 240,066 228,303 Income tax expense 3,325 3,613 9,257 9,730 Net income $ 96,437 $ 85,168 $ 230,809 $ 218,573 Statements of Comprehensive Income Net income $ 96,437 $ 85,168 $ 230,809 $ 218,573 Other comprehensive (loss) income Foreign currency translation adjustments 1,216 (328 ) 2,104 1,151 Comprehensive income $ 97,653 $ 84,840 $ 232,913 $ 219,724 Nine months ended September 30, 2017 2016 Cash flows from operating activities: Net income $ 230,809 $ 218,573 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 155,003 152,729 Stock-based compensation 7,060 19,650 Amortization included in interest expense 3,866 3,993 Gain on disposition of assets and investments (4,377 ) (12,221 ) Loss on extinguishment of debt 71 3,198 Deferred tax expense (benefit) 259 (150 ) Provision for doubtful accounts 6,009 5,831 Changes in operating assets and liabilities: (Increase) decrease in: Receivables (38,083 ) (39,072 ) Prepaid lease expenses (23,281 ) (21,700 ) Other assets (4,334 ) 5,923 Increase (decrease) in: Trade accounts payable 401 (761 ) Accrued expenses (21,768 ) (5,623 ) Other liabilities (13,033 ) (16,410 ) Net cash provided by operating activities 298,602 313,960 Cash flows from investing activities: Acquisitions (119,936 ) (526,029 ) Capital expenditures (74,446 ) (78,825 ) Proceeds from disposition of assets and investments 3,340 7,753 Decrease in notes receivable 13 16 Net cash used in investing activities (191,029 ) (597,085 ) Cash flows from financing activities: Principal payments on long-term debt (11,250 ) (15,015 ) Payment on revolving credit facility (407,000 ) (302,000 ) Proceeds received from revolving credit facility 317,000 408,000 Proceeds received from note offering — 400,000 Payment on senior credit facility term loans (247,500 ) (300,000 ) Proceeds received from senior credit facility term loans 450,000 300,000 Debt issuance costs (4,941 ) (9,391 ) Distributions to non-controlling interest (415 ) (315 ) Contributions from parent 41,580 41,872 Dividend to parent (252,925 ) (225,789 ) Net cash (used in) provided by financing activities (115,451 ) 297,362 Effect of exchange rate changes in cash and cash equivalents 1,767 915 Net (decrease) increase in cash and cash equivalents (6,111 ) 15,152 Cash and cash equivalents at beginning of period 35,030 21,827 Cash and cash equivalents at end of period $ 28,919 $ 36,979 Supplemental disclosures of cash flow information: Cash paid for interest $ 104,966 $ 91,952 Cash paid for foreign, state and federal income taxes $ 9,969 $ 11,023 Condensed Consolidating Balance Sheet as of September 30, 2017 Lamar Media Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Lamar Media Consolidated (unaudited) ASSETS Total current assets $ 3,405 $ 327,313 $ 39,292 $ — $ 370,010 Net property, plant and equipment — 1,158,402 22,167 — 1,180,569 Intangibles and goodwill, net — 2,368,590 29,925 — 2,398,515 Other assets 3,575,806 11,450 8 (3,549,533 ) 37,731 Total assets $ 3,579,211 $ 3,865,755 $ 91,392 $ (3,549,533 ) $ 3,986,825 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Current maturities of long-term debt $ 17,415 $ — $ — $ — $ 17,415 Other current liabilities 25,597 168,779 23,063 — 217,439 Total current liabilities 43,012 168,779 23,063 — 234,854 Long-term debt 2,432,014 — — — 2,432,014 Other noncurrent liabilities 26,231 215,029 56,898 (56,155 ) 242,003 Total liabilities 2,501,257 383,808 79,961 (56,155 ) 2,908,871 Stockholders’ equity 1,077,954 3,481,947 11,431 (3,493,378 ) 1,077,954 Total liabilities and stockholders’ equity $ 3,579,211 $ 3,865,755 $ 91,392 $ (3,549,533 ) $ 3,986,825 Condensed Consolidating Balance Sheet as of December 31, 2016 Lamar Media Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Lamar Media Consolidated ASSETS Total current assets $ 13,886 $ 268,091 $ 31,776 $ — $ 313,753 Net property, plant and equipment — 1,161,205 21,510 — 1,182,715 Intangibles and goodwill, net — 2,321,160 31,732 — 2,352,892 Other assets 3,453,161 10,379 116 (3,430,536 ) 33,120 Total assets $ 3,467,047 $ 3,760,835 $ 85,134 $ (3,430,536 ) $ 3,882,480 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: �� Current maturities of long-term debt $ 33,916 $ — $ — $ — $ 33,916 Other current liabilities 38,904 180,107 21,135 — 240,146 Total current liabilities 72,820 180,107 21,135 — 274,062 Long-term debt 2,315,267 — — — 2,315,267 Other noncurrent liabilities 22,574 213,916 53,609 (53,334 ) 236,765 Total liabilities 2,410,661 394,023 74,744 (53,334 ) 2,826,094 Stockholders’ equity 1,056,386 3,366,812 10,390 (3,377,202 ) 1,056,386 Total liabilities and stockholders’ equity $ 3,467,047 $ 3,760,835 $ 85,134 $ (3,430,536 ) $ 3,882,480 Condensed Consolidating Statements of Income and Comprehensive Income for the Three Months Ended September 30, 2017 Lamar Media Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Lamar Media Consolidated Statement of Income (unaudited) Net revenues $ — $ 387,095 $ 13,303 $ (1,053 ) $ 399,345 Operating expenses Direct advertising expenses (1) — 128,175 7,408 (606 ) 134,977 General and administrative expenses (1) — 66,467 2,033 — 68,500 Corporate expenses (1) — 14,705 277 — 14,982 Depreciation and amortization — 49,475 2,321 — 51,796 (Gain) loss on disposition of assets — (2,737 ) 3 — (2,734 ) — 256,085 12,042 (606 ) 267,521 Operating income (loss) — 131,010 1,261 (447 ) 131,824 Equity in (earnings) loss of subsidiaries (128,500 ) — — 128,500 — Other expenses (income) 32,063 (2 ) 448 (447 ) 32,062 Income (loss) before income tax expense 96,437 131,012 813 (128,500 ) 99,762 Income tax expense (2) — 2,659 666 — 3,325 Net income (loss) $ 96,437 $ 128,353 $ 147 $ (128,500 ) $ 96,437 Statement of Comprehensive Income Net income (loss) $ 96,437 $ 128,353 $ 147 $ (128,500 ) $ 96,437 Total other comprehensive loss, net of tax — — 1,216 — 1,216 Total comprehensive income (loss) $ 96,437 $ 128,353 $ 1,363 $ (128,500 ) $ 97,653 (1) Caption is exclusive of depreciation and amortization. (2) The income tax expense reflected in each column does not include any tax effect of the equity in earnings from subsidiaries. Condensed Consolidating Statements of Income and Comprehensive Income for the Three Months Ended September 30, 2016 Lamar Media Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Lamar Media Consolidated Statement of Income (unaudited) Net revenues $ — $ 374,909 $ 13,510 $ (903 ) $ 387,516 Operating expenses Direct advertising expenses (1) — 124,609 7,793 (624 ) 131,778 General and administrative expenses (1) — 64,949 2,538 — 67,487 Corporate expenses (1) — 18,895 357 — 19,252 Depreciation and amortization — 47,491 1,816 — 49,307 (Gain) loss on disposition of assets — (217 ) 28 — (189 ) — 255,727 12,532 (624 ) 267,635 Operating income (loss) — 119,182 978 (279 ) 119,881 Equity in (earnings) loss of subsidiaries (116,264 ) — — 116,264 — Other expenses (income) 31,096 (2 ) 285 (279 ) 31,100 Income (loss) before income tax expense 85,168 119,184 693 (116,264 ) 88,781 Income tax expense (2) — 3,014 599 — 3,613 Net income (loss) $ 85,168 $ 116,170 $ 94 $ (116,264 ) $ 85,168 Statement of Comprehensive Income Net income (loss) $ 85,168 $ 116,170 $ 94 $ (116,264 ) $ 85,168 Total other comprehensive loss, net of tax — — (328 ) — (328 ) Total comprehensive income (loss) $ 85,168 $ 116,170 $ (234 ) $ (116,264 ) $ 84,840 (1) Caption is exclusive of depreciation and amortization. (2) The income tax expense reflected in each column does not include any tax effect of the equity in earnings from subsidiaries. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (In Thousands, Except for Share Data) Condensed Consolidating Statements of Income and Comprehensive Income for the Nine Months Ended September 30, 2017 Lamar Media Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Lamar Media Consolidated Statement of Income (unaudited) Net revenues $ — $ 1,107,583 $ 38,191 $ (2,989 ) $ 1,142,785 Operating expenses Direct advertising expenses (1) — 381,317 22,330 (1,751 ) 401,896 General and administrative expenses (1) — 199,979 6,473 — 206,452 Corporate expenses (1) — 47,320 834 — 48,154 Depreciation and amortization — 148,357 6,646 — 155,003 (Gain) loss on disposition of assets — (4,377 ) — — (4,377 ) — 772,596 36,283 (1,751 ) 807,128 Operating income (loss) — 334,987 1,908 (1,238 ) 335,657 Equity in (earnings) loss of subsidiaries (326,401 ) — — 326,401 — Other expenses (income) 95,592 (5 ) 1,242 (1,238 ) 95,591 Income (loss) before income tax expense 230,809 334,992 666 (326,401 ) 240,066 Income tax expense (2) — 7,528 1,729 — 9,257 Net income (loss) $ 230,809 $ 327,464 $ (1,063 ) $ (326,401 ) $ 230,809 Statement of Comprehensive Income Net income (loss) $ 230,809 $ 327,464 $ (1,063 ) $ (326,401 ) $ 230,809 Total other comprehensive income, net of tax — — 2,104 — 2,104 Total comprehensive income (loss) $ 230,809 $ 327,464 $ 1,041 $ (326,401 ) $ 232,913 (1) Caption is exclusive of depreciation and amortization. (2) The income tax expense reflected in each column does not include any tax effect of the equity in earnings from subsidiaries. Condensed Consolidating Statements of Income and Comprehensive Income for the Nine Months Ended September 30, 2016 Lamar Media Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Lamar Media Consolidated Statement of Income (unaudited) Net revenues $ — $ 1,077,116 $ 39,228 $ (2,767 ) $ 1,113,577 Operating expenses Direct advertising expenses (1) — 371,915 23,139 (1,826 ) 393,228 General and administrative expenses (1) — 192,631 8,103 — 200,734 Corporate expenses (1) — 54,079 1,064 — 55,143 Depreciation and amortization — 147,158 5,571 — 152,729 (Gain) loss on disposition of assets — (12,482 ) 261 — (12,221 ) — 753,301 38,138 (1,826 ) 789,613 Operating income (loss) — 323,815 1,090 (941 ) 323,964 Equity in (earnings) loss of subsidiaries (314,228 ) — — 314,228 — Other expenses (income) 95,655 (6 ) 953 (941 ) 95,661 Income (loss) before income tax expense 218,573 323,821 137 (314,228 ) 228,303 Income tax expense (2) — 8,248 1,482 — 9,730 Net income (loss) $ 218,573 $ 315,573 $ (1,345 ) $ (314,228 ) $ 218,573 Statement of Comprehensive Income Net income (loss) $ 218,573 $ 315,573 $ (1,345 ) $ (314,228 ) $ 218,573 Total other comprehensive income, net of tax — — 1,151 — 1,151 Total comprehensive income (loss) $ 218,573 $ 315,573 $ (194 ) $ (314,228 ) $ 219,724 (1) Caption is exclusive of depreciation and amortization. (2) The income tax expense reflected in each column does not include any tax effect of the equity in earnings from subsidiaries. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (In Thousands, Except for Share Data) Condensed Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2017 Lamar Media Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Lamar Media Consolidated (unaudited) Cash flows from operating activities: Net cash provided by (used in) operating activities $ 227,195 $ 398,200 $ 5,472 $ (332,265 ) $ 298,602 Cash flows from investing activities: Acquisitions — (119,936 ) — — (119,936 ) Capital expenditures — (69,665 ) (4,781 ) — (74,446 ) Proceeds from disposition of assets and investments — 3,340 — — 3,340 Investment in subsidiaries (119,936 ) 119,936 — (Increase) decrease in intercompany notes receivable (2,713 ) — — 2,713 — Decrease in notes receivable 13 — — — 13 Net cash (used in) provided by investing activities (122,636 ) (186,261 ) (4,781 ) 122,649 (191,029 ) Cash flows from financing activities: Principal payments on long-term debt (11,250 ) — — — (11,250 ) Payment on revolving credit facility (407,000 ) — — — (407,000 ) Proceeds received from revolving credit facility 317,000 — — — 317,000 Payment on senior credit facility (247,500 ) — — — (247,500 ) Proceeds received from senior credit facility 450,000 — — — 450,000 Debt issuance costs (4,941 ) — — — (4,941 ) Intercompany loan proceeds (payments) — — 2,713 (2,713 ) — Distributions to non-controlling interest — — (415 ) — (415 ) Contributions from (to) parent 41,580 119,936 — (119,936 ) 41,580 Dividends (to) from parent (252,925 ) (332,265 ) — 332,265 (252,925 ) Net cash (used in) provided by financing activities (115,036 ) (212,329 ) 2,298 209,616 (115,451 ) Effect of exchange rate changes in cash and cash equivalents — — 1,767 — 1,767 Net (decrease) increase in cash and cash equivalents (10,477 ) (390 ) 4,756 — (6,111 ) Cash and cash equivalents at beginning of period 12,762 1,201 21,067 — 35,030 Cash and cash equivalents at end of period $ 2,285 $ 811 $ 25,823 $ — $ 28,919 AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (In Thousands, Except for Share Data) Condensed Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2016 Lamar Media Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Lamar Media Consolidated (unaudited) Cash flows from operating activities: Net cash provided by (used in) operating activities $ 240,727 $ 402,988 $ 4,412 $ (334,167 ) $ 313,960 Cash flows from investing activities: Acquisitions — (526,029 ) — — (526,029 ) Capital expenditures — (76,468 ) (2,357 ) — (78,825 ) Proceeds from disposition of assets and investments — 7,753 — — 7,753 Investment in subsidiaries (526,029 ) — — 526,029 — (Increase) decrease in intercompany notes receivable (462 ) — — 462 — Decrease in notes receivable 16 — — — 16 Net cash (used in) provided by investing activities (526,475 ) (594,744 ) (2,357 ) 526,491 (597,085 ) Cash flows from financing activities: Principal payments on long-term debt (15,015 ) — — — (15,015 ) Payment on revolving credit facility (302,000 ) — — — (302,000 ) Proceeds received from revolving credit facility 408,000 — — — 408,000 Proceeds received from note offering 400,000 — — — 400,000 Payment on senior credit facility (300,000 ) — — — (300,000 ) Proceeds received from senior credit facility 300,000 — — — 300,000 Debt issuance costs (9,391 ) — — — (9,391 ) Intercompany loan proceeds (payments) — — 462 (462 ) — Distributions to non-controlling interest — — (315 ) — (315 ) Contributions from (to) parent 41,872 526,029 — (526,029 ) 41,872 Dividends (to) from parent (225,789 ) (334,167 ) — 334,167 (225,789 ) Net cash provided by (used in) financing activities 297,677 191,862 147 (192,324 ) 297,362 Effect of exchange rate changes in cash and cash equivalents — — 915 — 915 Net increase in cash and cash equivalents 11,929 106 3,117 — 15,152 Cash and cash equivalents at beginning of period 4,955 454 16,418 — 21,827 Cash and cash equivalents at end of period $ 16,884 $ 560 $ 19,535 $ — $ 36,979 The following table presents a breakdown of capitalized expenditures for the three and nine months ended September 30, Three months ended September 30, (in thousands) Nine months ended September 30, (in thousands) 2017 2016 2017 2016 Total capital expenditures: Billboard — traditional $ 10,161 $ 10,950 $ 23,700 $ 34,322 Billboard — digital 8,605 9,283 29,568 24,757 Logos 2,498 2,160 6,409 5,421 Transit 290 387 578 603 Land and buildings 3,682 2,956 8,196 8,504 Operating equipment 1,374 1,576 5,995 5,218 Total capital expenditures $ 26,610 $ 27,312 $ 74,446 $ 78,825 investments and capitalized contract fulfillment costs, net. 2020 2020. 2020. compensation. 2020. The increase is primarily due to the revision in the cost estimate included in the calculation of asset retirement obligations during the period. sale of billboard locations and displays. earnings of investee was $1.1 million for the nine months ended September 30, 2021 as a result of the investment in Vistar Media that occurred in July 2021. There was no equity in earnings of investee for the nine months ended September 30, 2020. 2020. Reconciliations of Nine months ended September 30, 2017 2016 (in thousands) Reported net revenue $ 1,142,785 $ 1,113,577 Acquisition net revenue — 13,932 Adjusted totals $ 1,142,785 $ 1,127,509 Nine Months Ended September 30, Amount of Increase Percent Increase 2017 2016 (Decrease) (Decrease) Net income $ 230,512 $ 218,284 $ 12,228 5.6 % Income tax expense 9,257 9,730 (473 ) Loss on debt extinguishment 71 3,198 (3,127 ) Interest expense (income), net 95,520 92,463 3,057 Gain on disposition of assets (4,377 ) (12,221 ) 7,844 Depreciation and amortization 155,003 152,729 2,274 Stock-based compensation expense 7,060 19,650 (12,590 ) Adjusted EBITDA $ 493,046 $ 483,833 $ 9,213 1.9 % Nine Months Ended September 30, Amount of Increase Percent Increase 2017 2016 (Decrease) (Decrease) Net income $ 230,512 $ 218,284 $ 12,228 5.6 % Depreciation and amortization related to real estate 145,999 142,394 3,605 Gain from sale or disposal of real estate (4,114 ) (12,020 ) 7,906 Adjustments for unconsolidated affiliates and non-controlling interest 580 318 262 FFO $ 372,977 $ 348,976 $ 24,001 6.9 % Straight line (income) expense (382 ) 231 (613 ) Stock-based compensation expense 7,060 19,650 (12,590 ) Non-cash portion of tax provision 259 (150 ) 409 Non-real estate related depreciation and amortization 9,004 10,335 (1,331 ) Amortization of deferred financing costs 3,866 3,993 (127 ) Loss on extinguishment of debt 71 3,198 (3,127 ) Capital expenditures – maintenance (31,760 ) (25,942 ) (5,818 ) Adjustments for unconsolidated affiliates and non-controlling interest (580 ) (318 ) (262 ) AFFO $ 360,515 $ 359,973 $ 542 0.2 % 2020 2020. revenues, respectively. compensation. 2020. The increase is primarily due to the revision in the cost estimate included in the calculation of asset retirement obligations during the period. 2020. 2021. Three months ended September 30, 2017 2016 (in thousands) Reported net revenue $ 399,345 $ 387,516 Acquisition net revenue — 7,736 Adjusted totals $ 399,345 $ 395,252 Three Months Ended September 30, Amount of Increase Percent Increase 2017 2016 (Decrease) (Decrease) Net income $ 96,331 $ 85,061 $ 11,270 13.2 % Income tax expense 3,325 3,613 (288 ) Interest expense (income), net 32,062 31,100 962 Gain on disposition of assets (2,734 ) (189 ) (2,545 ) Depreciation and amortization 51,796 49,307 2,489 Stock-based compensation expense 2,017 8,358 (6,341 ) Adjusted EBITDA $ 182,797 $ 177,250 $ 5,547 3.1 % Adjusted EBITDA for the three months ended September 30, Three Months Ended September 30, Amount of Increase Percent Increase 2017 2016 (Decrease) (Decrease) Net income $ 96,331 $ 85,061 $ 11,270 13.2 % Depreciation and amortization related to real estate 48,613 46,327 2,286 Gain from sale or disposal of real estate (2,707 ) (546 ) (2,161 ) Adjustments for unconsolidated affiliates and non-controlling interest 190 52 138 FFO $ 142,427 $ 130,894 $ 11,533 8.8 % Straight line income (287 ) (46 ) (241 ) Stock-based compensation expense 2,017 8,358 (6,341 ) Non-cash portion of tax provision 229 (509 ) 738 Non-real estate related depreciation and amortization 3,183 2,980 203 Amortization of deferred financing costs 1,243 1,332 (89 ) Capital expenditures – maintenance (11,082 ) (9,005 ) (2,077 ) Adjustments for unconsolidated affiliates and non-controlling interest (190 ) (52 ) (138 ) AFFO $ 137,540 $ 133,952 $ 3,588 2.7 % We believe we have sufficient liquidity available under our revolving credit facility to meet our operating cash needs for the next twelve months. $600.0 million Term facility. We expect to generate cash flows from operations during 2021 in excess of our cash needs for operations, capital expenditures and dividends, as described herein, and we believe we have sufficient liquidity with cash on hand and availability under our revolving credit facility to meet our operating cash needs for the next twelve months. 2021. •up to •indebtedness outstanding on the date of the indentures or debt incurred to refinance outstanding debt; •inter-company debt between Lamar Media and its restricted subsidiaries or between restricted subsidiaries; •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 •additional debt not to exceed as of any date minus the lesser of (i) If during any period for which EBITDA is being determined, Principal Payment Date Principal Amount December 31, 2017-June 30, 2019 $ 5,625,000 September 30, 2019-June 30, 2020 $ 8,437,500 September 30, 2020-March 31, 2022 $ 16,875,000 Term A Loan Maturity Date $ 253,125,000 stockholders. Exchange Commission. Subject to market conditions, LPC’s proposed public offering is expected to have a base offering size of $300.0 million, or up to $345.0 million if the underwriters’ over-allotment is exercised in full. The Company, 2021. 2020 2020. 2020. compensation. 2020. The increase is primarily due to the revision in the cost estimate included in the calculation of asset retirement obligations during the period. billboard locations and displays. earnings of investee was $1.1 million for the nine months ended September 30, 2021 as a result of the investment in Vistar Media that occurred in July 2021. There was no equity in earnings of investee for the nine months ended September 30, 2020. 2020. acquisition or divestiture of these assets for the same time frame that those assets were owned in the nine months ended September 30, 2021. Nine months ended September 30, 2017 2016 (in thousands) Reported net revenue $ 1,142,785 $ 1,113,577 Acquisition net revenue — 13,932 Adjusted totals $ 1,142,785 $ 1,127,509 Nine Months Ended September 30, Amount of Increase Percent Increase 2017 2016 (Decrease) (Decrease) Net income $ 230,809 $ 218,573 $ 12,236 5.6 % Income tax expense 9,257 9,730 (473 ) Loss on debt extinguishment 71 3,198 (3,127 ) Interest expense (income), net 95,520 92,463 3,057 Gain on disposition of assets (4,377 ) (12,221 ) 7,844 Depreciation and amortization 155,003 152,729 2,274 Stock-based compensation expense 7,060 19,650 (12,590 ) Adjusted EBITDA $ 493,343 $ 484,122 $ 9,221 1.9 % Adjusted EBITDA for the nine months ended September 30, Nine Months Ended September 30, Amount of Increase Percent Increase 2017 2016 (Decrease) (Decrease) Net income $ 230,809 $ 218,573 $ 12,236 5.6 % Depreciation and amortization related to real estate 145,999 142,394 3,605 Gain from sale or disposal of real estate (4,114 ) (12,020 ) 7,906 Adjustments for unconsolidated affiliates and non-controlling interest 580 318 262 FFO $ 373,274 $ 349,265 $ 24,009 6.9 % Straight line (income) expense (382 ) 231 (613 ) Stock-based compensation expense 7,060 19,650 (12,590 ) Non-cash portion of tax provision 259 (150 ) 409 Non-real estate related depreciation and amortization 9,004 10,335 (1,331 ) Amortization of deferred financing costs 3,866 3,993 (127 ) Loss on extinguishment of debt 71 3,198 (3,127 ) Capital expenditures – maintenance (31,760 ) (25,942 ) (5,818 ) Adjustments for unconsolidated affiliates and non-controlling interest (580 ) (318 ) (262 ) AFFO $ 360,812 $ 360,262 $ 550 0.2 % 2020 2020. revenues, respectively. compensation. 2020. The increase is primarily due to the revision in the cost estimate included in the calculation of asset retirement obligations during the period. 2020. 2020. Three months ended September 30, 2017 2016 (in thousands) Reported net revenue $ 399,345 $ 387,516 Acquisition net revenue — 7,736 Adjusted totals $ 399,345 $ 395,252 Three Months Ended September 30, Amount of Increase Percent Increase 2017 2016 (Decrease) (Decrease) Net income $ 96,437 $ 85,168 $ 11,269 13.2 % Income tax expense 3,325 3,613 (288 ) Interest expense (income), net 32,062 31,100 962 Gain on disposition of assets (2,734 ) (189 ) (2,545 ) Depreciation and amortization 51,796 49,307 2,489 Stock-based compensation expense 2,017 8,358 (6,341 ) Adjusted EBITDA $ 182,903 $ 177,357 $ 5,546 3.1 % Three Months Ended September 30, Amount of Increase Percent Increase 2017 2016 (Decrease) (Decrease) Net income $ 96,437 $ 85,168 $ 11,269 13.2 % Depreciation and amortization related to real estate 48,613 46,327 2,286 Gain from sale or disposal of real estate (2,707 ) (546 ) (2,161 ) Adjustments for unconsolidated affiliates and non-controlling interest 190 52 138 FFO $ 142,533 $ 131,001 $ 11,532 8.8 % Straight line income (287 ) (46 ) (241 ) Stock-based compensation expense 2,017 8,358 (6,341 ) Non-cash portion of tax provision 229 (509 ) 738 Non-real estate related depreciation and amortization 3,183 2,980 203 Amortization of deferred financing costs 1,243 1,332 (89 ) Capital expenditures – maintenance (11,082 ) (9,005 ) (2,077 ) Adjustments for unconsolidated affiliates and non-controlling interest (190 ) (52 ) (138 ) AFFO $ 137,646 $ 134,059 $ 3,587 2.7 % approximately $11.2 million for the nine months ended September 30, 2021. 3.2 3.3 3.4 10.1 31.2 32.1 101 The following DATED: November BY: /s/ Executive Vice President, Chief Financial LAMAR MEDIA CORP. DATED: November BY: /s/ Executive Vice President, Chief Financial qualify as a REIT and maintain our status as a REIT; andREIT’sREITs or in the interpretation of those laws.20162020 of the Company and Lamar Media (the “2016“2020 Combined Form 10-K”), filed on February 24, 201726, 2021, and as such risk factors may be further updated or supplemented, from time to time, in our future combined Quarterly Reports on Form 10-Q.PagePage 78-1516171819-2728-4344454545454545-46
See accompanying notes to condensed consolidated financial statements.September 30,
2021December 31,
2020(Unaudited) ASSETS Current assets: Cash and cash equivalents $ 87,569 $ 121,569 Receivables, net of allowance for doubtful accounts of $12,458 and $14,946 in 2021 and 2020, respectively 262,661 240,854 Other current assets 20,202 18,147 Total current assets 370,432 380,570 Property, plant and equipment 3,720,040 3,615,505 Less accumulated depreciation and amortization (2,428,803) (2,333,656) Net property, plant and equipment 1,291,237 1,281,849 Operating lease right of use assets 1,208,425 1,222,013 Financing lease right of use assets 17,604 19,670 Goodwill 1,926,919 1,912,328 Intangible assets, net 909,508 914,446 Other assets 94,562 60,565 Total assets $ 5,818,687 $ 5,791,441 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Trade accounts payable $ 12,655 $ 12,017 Current maturities of long-term debt, net of deferred financing costs of $641 and $445 in 2021 and 2020, respectively 174,725 122,434 Current operating lease liabilities 174,659 195,439 Current financing lease liabilities 1,331 1,331 Accrued expenses 114,194 105,288 Deferred income 128,991 111,363 Total current liabilities 606,555 547,872 Long-term debt, net of deferred financing costs of $37,446 and $39,672 in 2021 and 2020, respectively 2,662,656 2,764,082 Operating lease liabilities 977,941 993,776 Financing lease liabilities 17,609 18,608 Deferred income tax liabilities 6,016 4,854 Asset retirement obligation 267,024 222,876 Other liabilities 39,090 36,605 Total liabilities 4,576,891 4,588,673 Stockholders’ equity: Series AA preferred stock, par value $0.001, $63.80 cumulative dividends, 5,720 shares authorized; 5,720 shares issued and outstanding at 2021 and 2020 — — Class A common stock, par value $0.001, 362,500,000 shares authorized; 87,505,031 and 87,111,327 shares issued at 2021 and 2020, respectively; 86,819,395 and 86,491,646 outstanding at 2021 and 2020, respectively 88 87 Class B common stock, par value $0.001, 37,500,000 shares authorized, 14,420,085 shares issued and outstanding at 2021 and 2020 14 14 Additional paid-in capital 1,997,162 1,963,850 Accumulated comprehensive income 850 934 Accumulated deficit (705,745) (717,331) Cost of shares held in treasury, 685,636 and 619,681 shares at 2021 and 2020, respectively (50,573) (44,786) Stockholders’ equity 1,241,796 1,202,768 Total liabilities and stockholders’ equity $ 5,818,687 $ 5,791,441 Three Months Ended
September 30,Nine Months Ended
September 30,2021 2020 2021 2020 Statements of Income Net revenues $ 476,894 $ 386,110 $ 1,292,827 $ 1,140,331 Operating expenses (income) Direct advertising expenses (exclusive of depreciation and amortization) 147,310 136,309 418,973 419,862 General and administrative expenses (exclusive of depreciation and amortization) 85,946 66,749 234,429 216,361 Corporate expenses (exclusive of depreciation and amortization) 26,028 17,266 64,431 52,507 Depreciation and amortization 84,300 61,237 205,671 187,548 Gain on disposition of assets (26) (1,304) (1,922) (4,823) 343,558 280,257 921,582 871,455 Operating income 133,336 105,853 371,245 268,876 Other expense (income) Loss on extinguishment of debt — 7,051 21,604 25,235 Interest income (198) (248) (554) (617) Interest expense 26,125 35,068 80,638 107,058 Equity in earnings of investee Equity in earnings of investee (1,141) — (1,141) — 24,786 41,871 100,547 131,676 Income before income tax expense 108,550 63,982 270,698 137,200 Income tax expense 1,712 1,224 5,922 2,520 Net income 106,838 62,758 264,776 134,680 Cash dividends declared and paid on preferred stock 91 91 273 273 Net income applicable to common stock $ 106,747 $ 62,667 $ 264,503 $ 134,407 Earnings per share: Basic earnings per share $ 1.05 $ 0.62 $ 2.62 $ 1.33 Diluted earnings per share $ 1.05 $ 0.62 $ 2.61 $ 1.33 Cash dividends declared per share of common stock $ 1.00 $ 0.50 $ 2.50 $ 2.00 Weighted average common shares used in computing earnings per share: Weighted average common shares outstanding basic 101,195,158 100,812,570 101,097,124 100,722,859 Weighted average common shares outstanding diluted 101,401,754 100,924,981 101,298,444 100,860,870 Statements of Comprehensive Income Net income $ 106,838 $ 62,758 $ 264,776 $ 134,680 Other comprehensive (loss) income Other comprehensive (loss) income Foreign currency translation adjustments (588) 330 (84) (528) Comprehensive income $ 106,250 $ 63,088 $ 264,692 $ 134,152 Cash Flows(In thousands) See accompanying notes to condensed consolidated financial statements.AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements(Unaudited)
See accompanying notes to condensed consolidated financial statementsSeries AA
PREF
StockClass A
CMN
StockClass B
CMN
StockTreasury
StockAdd’l
Paid in
CapitalAccumulated Comprehensive
IncomeAccumulated
DeficitTotal Balance, December 31, 2020 $ — $ 87 $ 14 $ (44,786) $ 1,963,850 $ 934 $ (717,331) $ 1,202,768 Non-cash compensation — — — — 1,060 — — 1,060 Issuance of 149,000 shares of common stock through stock awards — — — — 13,376 — — 13,376 Exercise of 82,101 shares of stock options — — — — 5,224 — — 5,224 Issuance of 31,824 shares of common stock through employee purchase plan — — — — 2,172 — — 2,172 Purchase of 65,290 shares of treasury stock — — — (5,717) — — — (5,717) Foreign currency translation — — — — — 204 — 204 Net income — — — — — — 38,329 38,329 Dividends/distributions to common shareholders ($0.75 per common share) — — — — — — (75,818) (75,818) Dividends ($15.95 per preferred share) — — — — — — (91) (91) Balance, March 31, 2021 $ — $ 87 $ 14 $ (50,503) $ 1,985,682 $ 1,138 $ (754,911) $ 1,181,507 Non-cash compensation — — — — 917 — — 917 Issuance of 4,685 shares of common stock through stock awards — — — — 594 — — 594 Exercise of 38,265 shares of stock options — — — — 2,575 — — 2,575 Issuance of 30,302 shares of common stock through employee purchase plan — — — — 2,068 — — 2,068 Foreign currency translation — — — — — 300 — 300 Net income — — — — — — 119,609 119,609 Dividends/distributions to common shareholders ($0.75 per common share) — — — — — — (75,874) (75,874) Dividends ($15.95 per preferred share) — — — — — — (91) (91) Balance, June 30, 2021 $ — $ 87 $ 14 $ (50,503) $ 1,991,836 $ 1,438 $ (711,267) $ 1,231,605 Non-cash compensation — — — — 1,128 — — 1,128 Issuance of 5,300 shares of common stock through stock awards — — — — 188 — — 188 Exercise of 26,880 shares of stock options — 1 — — 1,748 — — 1,749 Issuance of shares 25,347 of common stock through employee purchase plan — — — — 2,262 — — 2,262 Purchase of 665 shares of treasury stock — — — (70) — — — (70) Foreign currency translation — — — — — (588) — (588) Net income — — — — — — 106,838 106,838 Dividends/distributions to common shareholders ($1.00 per common share) — — — — — — (101,225) (101,225) Dividends ($15.95 per preferred share) — — — — — — (91) (91) Balance, September 30, 2021 $ — $ 88 $ 14 $ (50,573) $ 1,997,162 $ 850 $ (705,745) $ 1,241,796
See accompanying notes to condensed consolidated financial statementsSeries AA
PREF
StockClass A
CMN
StockClass B
CMN
StockTreasury
StockAdd’l
Paid in
CapitalAccumulated
Comprehensive
Income (Loss)Accumulated
DeficitTotal Balance, December 31, 2019 $ — $ 87 $ 14 $ (34,294) $ 1,922,222 $ 685 $ (708,408) $ 1,180,306 Non-cash compensation — — — — 1,261 — — 1,261 Issuance of 279,116 shares of common stock through stock awards — — — — 24,956 — — 24,956 Exercise of 14,609 shares of stock options — — — — 652 — — 652 Issuance of 58,734 shares of common stock through employee purchase plan — — — — 2,560 — — 2,560 Purchase of 110,520 shares of treasury stock — — — (10,068) — — — (10,068) Foreign currency translation — — — — — (1,598) — (1,598) Net income — — — — — — 40,493 40,493 Dividends/distributions to common shareholders ($1.00 per common share) — — — — — — (100,687) (100,687) Dividends ($15.95 per preferred share) — — — — — — (91) (91) Balance, March 31, 2020 $ — $ 87 $ 14 $ (44,362) $ 1,951,651 $ (913) $ (768,693) $ 1,137,784 Non-cash compensation — — — — 916 — — 916 Issuance of 11,008 shares of common stock through stock awards — — — — 609 — — 609 Exercise of 13,642 shares of stock options — — — — 671 — — 671 Issuance of 31,114 shares of common stock through employee purchase plan — — — — 1,765 — — 1,765 Purchase of 1,196 shares of treasury stock — — — (56) — — — (56) Foreign currency translation — — — — — 740 — 740 Net income — — — — — — 31,429 31,429 Dividends/distributions to common shareholders ($0.50 per common share) — — — — — — (50,396) (50,396) Dividends ($15.95 per preferred share) — — — — — — (91) (91) Balance, June 30, 2020 $ — $ 87 $ 14 $ (44,418) $ 1,955,612 $ (173) $ (787,751) $ 1,123,371 Non-cash compensation — — — — 1,011 — — 1,011 Exercise of 6,455 shares of stock options — — — — 307 —�� — 307 Issuance of shares 31,705 of common stock through employee purchase plan — — — — 1,783 — — 1,783 Foreign currency translation — — — — — 330 — 330 Net income — — — — — — 62,758 62,758 Dividends/distributions to common shareholders ($0.50 per common share) — — — — — — (50,416) (50,416) Dividends ($15.95 per preferred share) — — — — — — (91) (91) Balance, September 30, 2020 $ — 87 14 (44,418) 1,958,713 157 (775,500) $ 1,139,053 Nine Months Ended
September 30,2021 2020 Cash flows from operating activities: Net income $ 264,776 $ 134,680 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 205,671 187,548 Stock-based compensation 22,540 11,046 Amortization included in interest expense 4,405 4,467 Gain on disposition of assets and investments (1,922) (4,823) Loss on extinguishment of debt 21,604 25,235 Equity in earnings of investee (1,141) — Deferred tax expense (benefit) 1,178 (1,870) Provision for doubtful accounts 2,711 9,442 Changes in operating assets and liabilities (Increase) decrease in: Receivables (24,475) 19,253 Prepaid expenses (1,953) 1,002 Other assets (444) 2,110 (Decrease) increase in: Trade accounts payable (69) (186) Accrued expenses 3,610 (11,597) Operating lease liabilities (22,560) 625 Other liabilities 14,303 (15,475) Net cash provided by operating activities 488,234 361,457 Cash flows from investing activities: Acquisitions (107,593) (28,747) Capital expenditures (71,513) (44,633) Payment for investments in equity securities (30,000) — Proceeds from disposition of assets and investments 5,761 5,699 Decrease in notes receivable 107 — Net cash used in investing activities (203,238) (67,681) Cash flows from financing activities: Cash used for purchase of treasury stock (5,787) (10,124) Net proceeds from issuance of common stock 16,050 7,740 Principal payments on long-term debt (282) (273) Borrowings on long-term debt — 8,750 Principal payments on financing leases (998) — Payments on revolving credit facility (25,000) (805,000) Proceeds received from revolving credit facility 25,000 725,000 Redemption of senior notes and senior subordinated notes (668,688) (1,058,596) Proceeds received from note offering 550,000 1,549,250 Proceeds received from accounts receivable securitization program 120,000 122,500 Payments on accounts receivable securitization program (67,500) (175,000) Proceeds received from senior credit facility term loans — 598,500 Payments on senior credit facility term loans — (978,097) Debt issuance costs (8,662) (32,667) Distributions to non-controlling interest (82) (1,475) Dividends/distributions (253,190) (201,772) Net cash used in financing activities (319,139) (251,264) Effect of exchange rate changes in cash and cash equivalents 143 (72) Net (decrease) increase in cash and cash equivalents (34,000) 42,440 Cash and cash equivalents at beginning of period 121,569 26,188 Cash and cash equivalents at end of period $ 87,569 $ 68,628 Supplemental disclosures of cash flow information: Cash paid for interest $ 87,729 $ 115,999 Cash paid for foreign, state and federal income taxes $ 7,231 $ 3,558 20162020 Combined Form 10-K. Subsequent events, if any, are evaluated through the date on which the financial statements are issued.Three Months Ended
September 30,Nine Months Ended
September 30,2021 2020 2021 2020 Billboard advertising $ 430,103 $ 348,361 $ 1,169,426 $ 1,015,761 Logo advertising 19,720 19,790 58,820 62,235 Transit advertising 27,071 17,959 64,581 62,335 Net revenues $ 476,894 $ 386,110 $ 1,292,827 $ 1,140,331 2021 $ 40,519 2022 208,326 2023 176,861 2024 157,270 2025 131,273 Thereafter 817,054 Total undiscounted operating lease payments 1,531,303 Less: Imputed interest (378,703) Total operating lease liabilities $ 1,152,600 Total Property, plant and equipment $ 15,949 Goodwill 14,584 Site locations 66,321 Non-competition agreements 440 Customer lists and contracts 10,100 Asset acquisition costs 139 Current assets 218 Current liabilities (911) Operating lease right of use assets 12,274 Operating lease liabilities (11,521) $ 107,593 15.517.5 million shares of Class A common stock for issuance to directors and employees, including shares underlying granted options and common stock reserved for issuance under its performance-based incentive program. Options granted under the plan expire ten years from the grant date with vesting terms ranging from three to five years and include 1) options that vest in one-fifth increments beginning on the grant date and continuing on each of the first four anniversaries of the grant date and 2) options that cliff-vest on the fifth anniversary of the grant date. All grants are made at fair market value based on the closing price of our Class A common stock as reported on the NASDAQNasdaq Global Select Market on the date of grant.87,50045,000 shares of its Class A common stock during the nine months ended September 30, 2017.2021. At September 30, 20172021 a total of 1,174,9062,297,290 shares were available for future grant.or 2009 ESPP was(the “2009 ESPP”), approved by our shareholders on May 28, 2009.2009, expired by its terms on June 30, 2019. On May 30, 2019, our shareholders approved Lamar Advertising’s 2019 Employee Stock Purchase Plan (the “2019 ESPP”). The 2019 ESPP became effective upon the expiration of20092019 ESPP was automatically increased by 82,82386,490 shares on January 1, 20172021 pursuant to the automatic increase provisions of the 20092019 ESPP.20092019 ESPP share activity for the nine months ended September 30, 2017: 2021:SharesShares Available for future purchases, January 1, 20172021369,771 250,57320092019 ESPP86,490 82,823(87,473) (84,005)2017368,788 249,391our 1996 Equitythe Incentive Plan. The number of shares to be issued, if any, will be dependent on the level of achievement of performance measures for key officers and employees, as determined by the Company’s Compensation Committee based on our 20172021 results. Any shares issued based on the achievement of performance goals will be issued in the first quarter of 2018.2022. The shares subject to these awards can range from a minimum of 0% to a maximum of 100% of the target number of shares depending on the level at which the goals are attained. For the nine months ended September 30, 2017,2021, the Company has recorded $3,837$18,379 as stock-based compensation expense related to performance-based awards. In addition, upon election or re-election a restricted stock award of our Class A common stock.stock upon election or re-election. The awards vest 50% on grant date and 50% on the last day of the directors’directors' one year term. The Company recorded a $326$544 in stock-based compensation expense related to these awards for the nine months ended September 30, 2017.3. AcquisitionsDuring the nine months ended September 30, 2017, the Company completed several acquisitions of outdoor advertising assets for a total purchase price of $122,815, of which $119,936 was in cash and $2,879 was in non-cash consideration consisting principally of exchanges of outdoor advertising assets. As a result of these acquisitions, a gain of $2,389 was recorded during the nine months ended September 30, 2017 related to the transactions that involved the exchange of outdoor advertising assets.8LAMAR ADVERTISING COMPANYAND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements(Unaudited)(In thousands, except share and per share data)Each of these acquisitions was accounted for under the acquisition method of accounting, and, accordingly, the accompanying consolidated financial statements include the results of operations of each acquired entity from the date of acquisition. The acquisition costs have been allocated to assets acquired and liabilities assumed based on preliminary fair market value estimates at the dates of acquisition. The allocations are pending final determination of the fair value of certain assets and liabilities. The following is a summary of the preliminary allocation of the acquisition costs in the above transactions.4. Three Months Ended
September 30,Nine Months Ended
September 30,2021 2020 2021 2020 Direct advertising expenses $ 80,068 $ 57,556 $ 192,816 $ 176,395 General and administrative expenses 1,068 1,126 3,338 3,558 Corporate expenses 3,164 2,555 9,517 7,595 $ 84,300 $ 61,237 $ 205,671 $ 187,548 5. 20172021 and December 31, 2016: 2020:Estimated
Life
(Years)September 30, 2021 December 31, 2020 Gross Carrying
AmountAccumulated
AmortizationGross Carrying
AmountAccumulated
AmortizationAmortizable intangible assets: Customer lists and contracts 7—10 $ 655,843 $ 580,671 $ 645,739 $ 563,135 Non-competition agreements 3—15 66,596 64,857 66,156 64,647 Site locations 15 2,479,103 1,657,456 2,412,745 1,593,805 Other 2—15 50,157 39,207 50,018 38,625 $ 3,251,699 $ 2,342,191 $ 3,174,658 $ 2,260,212 Unamortizable intangible assets: Goodwill $ 2,180,455 $ 253,536 $ 2,165,864 $ 253,536 9LAMAR ADVERTISING COMPANYAND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements(Unaudited)(In thousands, except share and per share data)6. Balance at December 31, 2020 $ 222,876 Additions to asset retirement obligations 2,363 Revision in estimates 41,363 Accretion expense 3,053 Liabilities settled (2,631) Balance at September 30, 2021 $ 267,024 7. 20172021 and December 31, 2016,2020, Lamar Media was permitted under the terms of its outstanding senior subordinated and senior notes to make transfers to Lamar Advertising in the form of cash dividends, loans or advances in amounts up to $2,834,543$3,874,821 and $2,702,633,$3,625,712, respectively.2017,2021, Lamar Media’s senior credit facility allows it to make transfers to Lamar Advertising in any taxable year up to the amount of Lamar Advertising’s taxable income (without any deduction for dividends paid). In addition, as of September 30, 2017,2021, transfers to Lamar Advertising are permitted under Lamar Media’s senior credit facility and as defined therein up to the available cumulative credit, as long as no default has occurred and is continuing and, after giving effect to such distributions, (i) the total debt ratio is less than 6.57.0 to 1 and (ii) the secured debt ratio does not exceed 3.04.5 to 1. As of September 30, 2017,2021, the total debt ratio was less than 6.57.0 to 1 and Lamar Media’s secured debt ratio was less than 3.04.5 to 1, and the available cumulative credit was $1,666,430.8. $2,625,301.20172021 or 2016.9. 2020.20172021 and December 31, 2016: 2020:September 30, 2021 Debt Deferred
financing costsDebt, net of
deferred
financing costsSenior Credit Facility $ 598,655 $ 9,873 $ 588,782 Accounts Receivable Securitization Program Accounts Receivable Securitization Program 175,000 641 174,359 3 3/4% Senior Notes 3 3/4% Senior Notes 600,000 7,288 592,712 3 5/8% Senior Notes 3 5/8% Senior Notes 550,000 7,736 542,264 4% Senior Notes 4% Senior Notes 549,339 7,390 541,949 4 7/8% Senior Notes 4 7/8% Senior Notes 400,000 5,159 394,841 Other notes with various rates and terms 2,474 — 2,474 2,875,468 38,087 2,837,381 Less current maturities (175,366) (641) (174,725) Long-term debt, excluding current maturities $ 2,700,102 $ 37,446 $ 2,662,656 10LAMAR ADVERTISING COMPANYAND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements(Unaudited)(In thousands, except share and per share data)5 7/8% Senior Subordinated NotesOn February 9, 2012, Lamar Media completed an institutional private placement of $500,000 aggregate principal amount of 5 7/8% Senior Subordinated Notes, due 2022 (the “5 7/8% Notes”). The institutional private placement resulted in net proceeds to Lamar Media of approximately $489,000.On or after February 1, 2017, Lamar Media may redeem the 5 7/8% Notes, in whole or in part, in cash at redemption prices specified in the 5 7/8% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder’s 5 7/8% Notes at a price equal to 101% of the principal amount of the 5 7/8% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.5% Senior Subordinated NotesOn October 30, 2012, Lamar Media completed an institutional private placement of $535,000 aggregate principal amount of 5% Senior Subordinated Notes due 2023 (the “5% Notes”). The institutional private placement resulted in net proceeds to Lamar Media of approximately $527,100.At any time prior to May 1, 2018, Lamar Media may redeem some or all of the 5% Notes at a price equal to 100% of the aggregate principal amount, plus accrued and unpaid interest thereon, plus a make-whole premium. On or after May 1, 2018, Lamar Media may redeem the 5% Notes, in whole or in part, in cash at redemption prices specified in the 5% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder’s 5% Notes at a price equal to 101% of the principal amount of the 5% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.5 3/8% Senior NotesOn January 10, 2014, Lamar Media completed an institutional private placement of $510,000 aggregate principal amount of 5 3/8% Senior Notes due 2024 (the “5 3/8% Notes”). The institutional private placement resulted in net proceeds to Lamar Media of approximately $502,300.At any time prior to January 15, 2019, Lamar Media may redeem some or all of the 5 3/8% Notes at a price equal to 100% of the aggregate principal amount, plus accrued and unpaid interest thereon plus a make-whole premium. On or after January 15, 2019, Lamar Media may redeem the 5 3/8% Notes, in whole or in part, in cash at redemption prices specified in the 5 3/8% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder’s 5 3/8% Notes at a price equal to 101% of the principal amount of the 5 3/8% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.11LAMAR ADVERTISING COMPANYAND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements(Unaudited)(In thousands, except share and per share data)On January 28, 2016, Lamar Media completed an institutional private placement of $400,000 aggregate principal amount of 5 3/4% Senior Notes due 2026 (the “5 3/4% Notes”). The institutional private placement resulted in net proceeds to Lamar Media of approximately $394,500.Lamar Media may redeem up to 35% of the aggregate principal amount of the 5 3/4% Notes, at any time and from time to time, at a price equal to 105.750% of the aggregate principal amount so redeemed, plus accrued and unpaid interest thereon, with the net cash proceeds of certain public equity offerings completed before February 1, 2019, provided that following the redemption, at least 65% of the 5 3/4% Notes that were originally issued remain outstanding and any such redemption occurs within 120 days following the closing of any such public equity offering. At any time prior to February 1, 2021, Lamar Media may redeem some or all of the 5 3/4% Notes at a price equal to 100% of the aggregate principal amount, plus accrued and unpaid interest thereon plus a make-whole premium. On or after February 1, 2021, Lamar Media may redeem the 5 3/4% Notes, in whole or in part, in cash at redemption prices specified in the 5 3/4% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder’s 5 3/4% Notes at a price equal to 101% of the principal amount of the 5 3/4% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.December 31, 2020 Debt Deferred
financing costsDebt, net of
deferred
financing costsSenior Credit Facility $ 598,466 $ 11,569 $ 586,897 Accounts Receivable Securitization Program 122,500 445 122,055 3 3/4% Senior Notes 600,000 8,031 591,969 4% Senior Notes 549,280 7,911 541,369 4 7/8% Senior Notes 400,000 5,586 394,414 5 3/4% Senior Notes 653,631 6,575 647,056 Other notes with various rates and terms 2,756 — 2,756 2,926,633 40,117 2,886,516 Less current maturities (122,879) (445) (122,434) Long-term debt, excluding current maturities $ 2,803,754 $ 39,672 $ 2,764,082 May 15, 2017,February 6, 2020, Lamar Media entered into a Third Restatement Agreement (“Restatement Agreement”) to its SecondFourth Amended and Restated Credit Agreement (“existing senior credit facility”(the “Fourth Amended and Restated Credit Agreement”) dated as of February 3, 2014 with the Company, certain of Lamar Media’s subsidiaries as guarantors, JPMorgan Chase Bank, N.A. as administrative agent and the lenders party thereto, under which the parties agreed to amend and restate Lamar Media’s existing senior credit facility. Lamar Media’sThe Fourth Amended and Restated Credit Agreement amended and restated the Third Amended and Restated Credit Agreement dated as of May 15, 2017, (asas amended (the “Third Amended and Restated Credit Agreement”).new $450,000$750,000 senior secured revolving credit facility which will mature on May 15, 2022,February 6, 2025 (the “revolving credit facility”), (ii) a new $450,000$600,000 Term AB loan facility (the “Term AB loans”) which will mature on May 15, 2022,February 6, 2027, and (iii) an incremental facility (the “Incremental Facility”) pursuant to which Lamar Media may incur additional term loan tranches or increase its revolving credit facility subject to a pro forma compliance with the secured debt ratio financial maintenance covenant described below.Under the senior credit facilityof 4.50 to 1.00, as well as certain other conditions including lender approval. Lamar Media borrowed all $450,000$600,000 in Term AB loans on May 15, 2017.February 6, 2020. The entire amount of the Term B loans will be payable at maturity. The net proceeds from the Term B loans, together with borrowingborrowings under the revolving portion of the senior credit facility and cash on hand,a portion of the proceeds of the issuance of the 3 3/4% Senior Notes due 2028 and 4% Senior Notes due 2030 (both as described below), were used to repay all outstanding amounts under the existing senior credit facility,Third Amended and Restated Credit Agreement, and all revolving commitments under that facility were terminated.A Loans began amortizingB loans mature on September 30, 2017 in quarterly installments on each December 31, March 31, June 30 and September 30 thereafter.February 6, 2027 with no required amortization payments. The remaining quarterly installments scheduled to be paid are as follows: For each borrowing of Term A loans or revolving credit loans, Lamar Media can elect whether suchB loans bear interest at (i)rates based on the Adjusted LIBO Rate (“Eurodollar term loans”) or the Adjusted Base Rate (“Base Rate term loans”), at Lamar Media’s option. Eurodollar term loans bear interest at a rate per annum equal to the Adjusted LIBO Rate plus 1.50%. Base Rate term loans bear interest at a rate per annum equal to the Adjusted Base Rate plus (a) 0.75%0.50%.or (b) 0.50%at Lamar Media’s option. Eurodollar revolving loans bear interest at a rate per annum equal to the Adjusted LIBO Rate plus 1.50% (or the Adjusted LIBO Rate plus 1.25% at any time thatthe Total Debt Ratio is less than or equal to 3.25 to 1). Base Rate revolving loans bear interest at a rate per annum equal to the Adjusted Base Rate plus 0.50% (or the Adjusted Base Rate plus 0.25% at any time the total debt ratio is less than or equal to 3.25 to 1 as of the last day of the most recently ended fiscal quarter for which Lamar Media has delivered financial statements, or (ii) the Adjusted LIBO Rate plus (a) 1.75%, or (b) 1.50% at any time that the total debt ratio is less than 3.25 to 1 as of the last day of the most recently ended fiscal quarter for which Lamar Media has delivered financial statements.1). The guarantees, covenants, events of default and other terms of the senior credit facility apply to the Term AB loans and revolving credit facility.12LAMAR ADVERTISING COMPANYAND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements(Unaudited)(In thousands, except share and per share data)2017,2021, there was $90,000were no borrowings outstanding under the revolving credit facility. Availability under the revolving credit facility is reduced by the amount of any letters of credit outstanding. Lamar Media had $13,091$14,345 in letters of credit outstanding as of September 30, 20172021 resulting in $346,909$735,655 of availability under its revolving credit facility. Revolving credit loans may be requested under the revolving credit facility at any time prior to its maturity on May 15, 2022.seniorsecured debt ratio at all timesas long as a revolving credit commitment, revolving loan or letter of credit remains outstanding, and in addition, must satisfy a total debt ratio in order to incur debt, make distributions or make certain investments.10. 20172021 and December 31, 2016,2020, the Company’s financial instruments included cash and cash equivalents, marketable securities, accounts receivable, investments, accounts payable and borrowings. The fair values of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings and current portion of long-term debt approximated carrying values because of the short-term nature of these instruments. Investment contracts are reported at fair values. Fair values for investments held at cost are not readily available, but are estimated to approximate fair value. The estimated fair value of the Company’s long-term debt (including current maturities) was $2,578,645$2,913,841 which exceededexceeds the carrying amount of $2,479,402$2,875,468 as of September 30, 2017.2021. The majority of the fair value is determined using observed prices of publicly traded debt (level 1 in the fair value hierarchy) and the remaining is valued based on quoted prices for similar debt (level 2 in the fair value hierarchy).11. May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. Generally Accepted Accounting Principles (“GAAP”) when it becomes effective. In August 2015,December 2019, the FASB issued ASU No. 2015-14 deferring2019-12, Income Taxes (Topic 740): Simplifying the effective date from January 1, 2017 to January 1, 2018, while allowingAccounting for early adoption as of January 1, 2017. The standard permitsIncome Taxes, which simplifies the use of either the retrospective or cumulative effect transition method. The Company is in the final stages of its review of contracts and we do not expect any material impact on our consolidated financial statementsaccounting for the adoption of ASU No. 2014-09. We currently believe the only contracts with customers which will be accounted for under ASU No. 2014-09 are our Transit advertising contracts and production services. We have preliminarily determined to adopt the provisions of ASU No. 2014-09 using the cumulative effect transition method with an adjustmentincome taxes by removing specific exceptions to the opening balance of retained earnings of the annual reporting period that includes the date of initial application.13LAMAR ADVERTISING COMPANYAND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements(Unaudited)(In thousands, except share and per share data)In November 2015, the FASB issued ASU No. 2015-17 general principles in Topic 740 - Income taxes – Balance Sheet Classification of Deferred Taxes. The amendments in this update require deferred tax liabilities and assets be classified as noncurrent in the balance sheet. The amendments areTaxes. This guidance is effective for annual and interim periodsyears beginning after December 15, 2016, with early adoption permitted as of the beginning of an interim or annual reporting period.2020. The Company adopted the update in ASU No. 2015-17 as ofthis guidance on January 1, 2017. The Company’s 2016 consolidated balance sheet has been adjusted to reflect retrospective adoption of the update2021 and the impact wasof the adoption is not considered material.In February 2016,material to the FASB issued ASU No. 2016-02, Leases. The update is to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about lease arrangements. The amendments in this update are effective beginning January 1, 2019 with retrospective application. The Company is in the process of assessing the impact ASU No. 2016-02 will have on ourCompany's consolidated financial statements. The Company expects the primary impact to our consolidated financial statements will be the recognition, on a discounted basis, of our minimum commitments under non-cancelable operating leases on our consolidated balance sheets, resulting in the recording of right of use assets and lease obligations.In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments. The update clarifies how certain cash receipts and cash payments are presented in the statement of cash flows. The update is effective for annual periods beginning January 1, 2018 with early adoption permitted. The Company adopted the update in ASU No. 2016-15 as of January 1, 2017. The adoption of this update did not have a material impact on the consolidated financial statements.In January 2017, the FASB issued ASU No. 2017-01, Business Combinations: Clarifying the definition of a business. The update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The update is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. Early adoption is allowed for transactions which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. The Company adopted the update in ASU 2017-01 for transactions which occurred on or after October 1, 2016. The adoption of this update did not have a material impact on the consolidated financial statements.In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and other (Topic 350): Simplifying the test for goodwill impairment. The update simplifies how a company completes its goodwill impairment test by eliminating the two-step process, which requires determining the fair value of assets acquired or liabilities assumed in a business combination. The update requires completing the goodwill impairment test by comparing the difference between the reporting unit’s carrying value and fair value. Goodwill charges, if any, would be determined by reducing the goodwill balance by the excess of the reporting unit’s carrying value over its fair value. The update is effective for annual and interim fiscal periods beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on or after January 1, 2017. The Company plans to early adopt this update for its December 31, 2017 goodwill impairment test.12. 20172021 and September 30, 2016,2020, the Company declared and paid cash distributions of its REIT taxable income in an aggregate amount of $81,408$101,225 or $0.83$1.00 per share and $73,938$50,416 or $0.76$0.50 per share, respectively. During the nine months ended September 30, 20172021 and September 30, 2016,2020, the Company declared and paid cash distributions of its REIT taxable income in an aggregate amount of $243,928$252,917 or $2.49$2.50 per share and $219,584$201,499 or $2.26$2.00 per share, respectively. The amount, timing and frequency of future distributions will be at the sole discretion of the Board of Directors and will be declared based upon various factors, a number of which may be beyond the Company’s control, including financial condition and operating cash flows, the amount required to maintain REIT status and reduce any income and excise taxes that the Company otherwise would be required to pay, limitations on distributions in our existing and future debt instruments, the Company’s ability to utilize net operating losses to offset, in whole or in part, the Company’s distribution requirements, limitations on its ability to fund distributions using cash generated through its taxable REIT subsidiaries (TRSs), the impact of COVID-19 on the Company’s operations and other factors that the Board of Directors may deem relevant. During the three and nine months ended September 30, 20172021 and September 30, 2016,2020, the Company paid cash dividend distributions to holders of its Series AA Preferred Stock in an aggregate amount of $91 or $15.95 per share. During the nine months ended September 30, 2017share and September 30, 2016, the Company paid cash dividend distributions to holders of its Series AA Preferred Stock in an aggregate amount of $273 or $47.85 per share.1413. $24,335$17,568 and $24,076$16,295 for the nine months ended September 30, 20172021 and 2016,2020, respectively. Net carrying value of long livedlong-lived assets located in foreign countries totaled $4,121$9,957 and $4,893$8,727 as of September 30, 20172021 and December 31, 2016,2020, respectively. All other revenues from external customers and long livedlong-lived assets relate to domestic operations.
See accompanying notes to condensed consolidated financial statements.September 30,
2021December 31,
2020(Unaudited) ASSETS Current assets: Cash and cash equivalents $ 87,069 $ 121,069 Receivables, net of allowance for doubtful accounts of $12,458 and $14,946 in 2021 and 2020, respectively 262,661 240,854 Other current assets 20,202 18,147 Total current assets 369,932 380,070 Property, plant and equipment 3,720,040 3,615,505 Less accumulated depreciation and amortization (2,428,803) (2,333,656) Net property, plant and equipment 1,291,237 1,281,849 Operating lease right of use assets 1,208,425 1,222,013 Financing lease right of use assets 17,604 19,670 Goodwill 1,916,767 1,902,177 Intangible assets, net 909,040 913,978 Other assets 89,219 54,950 Total assets $ 5,802,224 $ 5,774,707 LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Trade accounts payable $ 12,655 $ 12,017 Current maturities of long-term debt, net of deferred financing costs of $641 and $445 in 2021 and 2020, respectively 174,725 122,434 Current operating lease liabilities 174,659 195,439 Current financing lease liabilities 1,331 1,331 Accrued expenses 106,686 98,478 Deferred income 128,991 111,363 Total current liabilities 599,047 541,062 Long-term debt, net of deferred financing costs of $37,446 and $39,672 in 2021 and 2020, respectively 2,662,656 2,764,082 Operating lease liabilities 977,941 993,776 Financing lease liabilities 17,609 18,608 Deferred income tax liabilities 6,016 4,854 Asset retirement obligation 267,024 222,876 Other liabilities 39,090 36,605 Total liabilities 4,569,383 4,581,863 Stockholder's equity: Common stock, par value $0.01, 3,000 shares authorized, 100 shares issued and outstanding at 2021 and 2020 — — Additional paid-in-capital 3,067,669 3,034,357 Accumulated comprehensive income 850 934 Accumulated deficit (1,835,677) (1,842,447) Stockholder's equity 1,232,842 1,192,844 Total liabilities and stockholder's equity $ 5,802,225 $ 5,774,707 Three Months Ended
September 30,Nine Months Ended
September 30,2021 2020 2021 2020 Statements of Income Net revenues $ 476,894 $ 386,110 $ 1,292,827 $ 1,140,331 Operating expenses (income) 147,310 136,309 418,973 419,862 General and administrative expenses (exclusive of depreciation and amortization) 85,947 66,749 234,115 216,361 Corporate expenses (exclusive of depreciation and amortization) 25,891 17,129 64,048 52,141 Depreciation and amortization 84,300 61,237 205,671 187,548 Gain on disposition of assets (26) (1,304) (1,922) (4,823) 343,422 280,120 920,885 871,089 Operating income 133,472 105,990 371,942 269,242 Other expense (income) Loss on extinguishment of debt — 7,051 21,604 25,235 Interest income (198) (248) (554) (617) Interest expense 26,125 35,068 80,638 107,058 Equity in earnings of investee Equity in earnings of investee (1,141) — (1,141) — 24,786 41,871 100,547 131,676 Income before income tax expense 108,686 64,119 271,395 137,566 Income tax expense 1,712 1,224 5,922 2,520 Net income $ 106,974 $ 62,895 $ 265,473 $ 135,046 Statements of Comprehensive Income Net income $ 106,974 $ 62,895 $ 265,473 $ 135,046 Other comprehensive (loss) income Foreign currency translation adjustments (588) 330 (84) (528) Comprehensive income $ 106,386 $ 63,225 $ 265,389 $ 134,518 Common
StockAdditional
Paid-In
CapitalAccumulated
Comprehensive
IncomeAccumulated
DeficitTotal Balance, December 31, 2020 $ — $ 3,034,357 $ 934 $ (1,842,447) $ 1,192,844 Contribution from parent — 21,831 — — 21,831 Foreign currency translations — — 204 — 204 Net income — — — 38,466 38,466 Dividend to parent — — — (81,535) (81,535) Balance, March 31, 2021 $ — 3,056,188 1,138 (1,885,516) $ 1,171,810 Contribution from parent — 6,154 — — 6,154 Foreign currency translations — — 300 — 300 Net income — — — 120,033 120,033 Dividend to parent — — — (75,874) (75,874) Balance, June 30, 2021 $ — 3,062,342 1,438 (1,841,357) $ 1,222,423 Contribution from parent — 5,327 — — 5,327 Foreign currency translations — — (588) — (588) Net income — — — 106,974 106,974 Dividend to parent — — — (101,294) (101,294) Balance, September 30, 2021 $ — 3,067,669 850 (1,835,677) $ 1,232,842 Common
StockAdditional
Paid-In
CapitalAccumulated
Comprehensive
Income (Loss)Accumulated
DeficitTotal Balance, December 31, 2019 $ — $ 2,992,729 $ 685 $ (1,823,883) $ 1,169,531 Contribution from parent — 29,429 — — 29,429 Foreign currency translations — — (1,598) — (1,598) Net income — — — 40,617 40,617 Dividend to parent — — — (110,755) (110,755) Balance, March 31, 2020 $ — 3,022,158 (913) (1,894,021) $ 1,127,224 Contribution from parent — 3,962 — — 3,962 Foreign currency translations — — 740 — 740 Net income — — — 31,534 31,534 Dividend to parent — — — (50,453) (50,453) Balance, June 30, 2020 $ — 3,026,120 (173) (1,912,940) $ 1,113,007 Contribution from parent — 3,101 — — 3,101 Foreign currency translations — — 330 — 330 Net income — — — 62,895 62,895 Dividend to parent — — — (50,416) (50,416) Balance, September 30, 2020 $ — 3,029,221 157 (1,900,461) $ 1,128,917
See accompanying notes to condensed consolidated financial statements.Nine Months Ended
September 30,2021 2020 Cash flows from operating activities: Net income $ 265,473 $ 135,046 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 205,671 187,548 Stock-based compensation 22,540 11,046 Amortization included in interest expense 4,405 4,467 Gain on disposition of assets and investments (1,922) (4,823) Loss on extinguishment of debt 21,604 25,235 Equity in earnings of investee (1,141) — Deferred tax expense (benefit) 1,178 (1,870) Provision for doubtful accounts 2,711 9,442 Changes in operating assets and liabilities: (Increase) decrease in: Receivables (24,475) 19,253 Prepaid expenses (1,953) 1,002 Other assets (444) 2,110 (Decrease) increase in: Trade accounts payable (69) (186) Accrued expenses 3,610 (11,597) Operating lease liabilities (22,560) 625 Other liabilities (3,930) (44,865) Net cash provided by operating activities 470,698 332,433 Cash flows from investing activities: Acquisitions (107,593) (28,747) Capital expenditures (71,513) (44,633) Payment for investments in equity securities (30,000) — Proceeds from disposition of assets and investments 5,761 5,699 Decrease in notes receivable 107 — Net cash used in investing activities (203,238) (67,681) Cash flows from financing activities: Principal payments on long-term debt (282) (273) Borrowings on long-term debt — 8,750 Principal payments on financing leases (998) — Payments on revolving credit facility (25,000) (805,000) Proceeds received from revolving credit facility 25,000 725,000 Redemption of senior notes and senior subordinated notes (668,688) (1,058,596) Proceeds received from note offering 550,000 1,549,250 Proceeds received from accounts receivable securitization program 120,000 122,500 Payments on accounts receivable securitization program (67,500) (175,000) Proceeds received from senior credit facility term loans — 598,500 Payments on senior credit facility term loans — (978,097) Debt issuance costs (8,662) (32,667) Distributions to non-controlling interest (82) (1,475) Contributions from parent 33,312 36,492 Dividend to parent (258,703) (211,624) Net cash used in financing activities (301,603) (222,240) Effect of exchange rate changes in cash and cash equivalents 143 (72) Net (decrease) increase in cash and cash equivalents (34,000) 42,440 Cash and cash equivalents at beginning of period 121,069 25,688 Cash and cash equivalents at end of period $ 87,069 $ 68,128 Supplemental disclosures of cash flow information: Cash paid for interest $ 87,729 $ 115,999 Cash paid for foreign, state and federal income taxes $ 7,231 $ 3,558 20162020 Combined Form 10-K.10, 11, 12, 13, 14 and 1316 to the condensed consolidated financial statements of Lamar Advertising included elsewhere in this report is substantially equivalent to that required for the condensed consolidated financial statements of Lamar Media. Earnings per share data is not provided for Lamar Media, as it is a wholly owned subsidiary of the Company.areis presented below. Lamar Media and its subsidiary guarantors have fully and unconditionally guaranteed Lamar Media’s obligations with respect to its publicly issued notes. All guarantees are joint and several. As a result of these guarantee arrangements, we are required to present the following condensed consolidating financial information. The following condensed consolidating financial information should be read in conjunction with the accompanying consolidated financial statements and notes. The condensed consolidating financial information is provided as an alternative to providing separate financial statements for guarantor subsidiaries. Separate financial statements of Lamar Media’s subsidiary guarantors are not included because the guarantees are full and unconditional and the subsidiary guarantors are 100% owned and jointly and severally liable for Lamar Media’s outstanding publicly issued notes. The accounts for all companies reflected herein are presented using the equity method of accounting for investments in subsidiaries.
Condensed Consolidating Balance Sheet as of September 30, 2021Lamar
Media Corp.Guarantor
SubsidiariesNon-
Guarantor
SubsidiariesEliminations Lamar Media
Consolidated(unaudited) ASSETS Total current assets $ 84,528 $ 21,427 $ 263,978 $ — $ 369,933 Net property, plant and equipment — 1,277,082 14,155 — 1,291,237 Operating lease right of use assets — 1,179,793 28,632 — 1,208,425 Intangibles and goodwill, net — 2,808,322 17,485 — 2,825,807 Other assets 4,042,153 310,925 186,517 (4,432,772) 106,823 Total assets $ 4,126,681 $ 5,597,549 $ 510,767 $ (4,432,772) $ 5,802,225 LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Current maturities of long-term debt $ — $ 366 $ 174,359 $ — $ 174,725 Current operating lease liabilities — 167,067 7,592 — 174,659 Other current liabilities 22,086 216,543 11,034 — 249,663 Total current liabilities 22,086 383,976 192,985 — 599,047 Long-term debt 2,660,548 2,108 — — 2,662,656 Operating lease liabilities — 958,770 19,171 — 977,941 Other noncurrent liabilities 211,205 289,459 291,032 (461,957) 329,739 Total liabilities 2,893,839 1,634,313 503,188 (461,957) 4,569,383 Stockholder's equity 1,232,842 3,963,236 7,579 (3,970,815) 1,232,842 Total liabilities and stockholder's equity $ 4,126,681 $ 5,597,549 $ 510,767 $ (4,432,772) $ 5,802,225 Lamar Media
Corp.Guarantor
SubsidiariesNon-
Guarantor
SubsidiariesEliminations Lamar Media
ConsolidatedASSETS Total current assets $ 110,678 $ 19,471 $ 249,921 $ — $ 380,070 Net property, plant and equipment — 1,268,765 13,084 — 1,281,849 Operating lease right of use assets — 1,200,115 21,898 — 1,222,013 Intangibles and goodwill, net — 2,798,343 17,812 — 2,816,155 Other assets 3,912,122 258,433 132,448 (4,228,383) 74,620 Total assets $ 4,022,800 $ 5,545,127 $ 435,163 $ (4,228,383) $ 5,774,707 LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Current maturities of long-term debt $ — $ 379 $ 122,055 $ — $ 122,434 Current operating lease liabilities — 188,712 6,727 — 195,439 Other current liabilities 33,583 170,320 19,286 — 223,189 Total current liabilities 33,583 359,411 148,068 — 541,062 Long-term debt 2,761,705 2,377 — — 2,764,082 Operating lease liabilities — 979,785 13,991 — 993,776 Other noncurrent liabilities 34,668 245,891 266,968 (264,584) 282,943 Total liabilities 2,829,956 1,587,464 429,027 (264,584) 4,581,863 Stockholder's equity 1,192,844 3,957,663 6,136 (3,963,799) 1,192,844 Total liabilities and stockholder's equity $ 4,022,800 $ 5,545,127 $ 435,163 $ (4,228,383) $ 5,774,707
Condensed Consolidating Statements of Income and Comprehensive IncomeLamar Media Corp. Guarantor Subsidiaries Non-
Guarantor SubsidiariesEliminations Lamar Media Consolidated Statement of Income (unaudited) Net revenues $ — $ 466,222 $ 11,216 $ (544) $ 476,894 Operating expenses (income) — 140,641 7,213 (544) 147,310 — 85,077 870 — 85,947 — 25,366 525 — 25,891 Depreciation and amortization — 82,577 1,723 — 84,300 Loss (gain) on disposition of assets — 115 (141) — (26) — 333,776 10,190 (544) 343,422 Operating income (loss) — 132,446 1,026 — 133,472 Equity in (earnings) loss of subsidiaries (132,727) — — 132,727 — Loss on extinguishment of debt — — — — — Interest expense (income), net 25,753 (4) 178 — 25,927 Equity in earnings of investee — (1,141) — — (1,141) Income (loss) before income tax expense (benefit) 106,974 133,591 848 (132,727) 108,686 — 1,943 (231) — 1,712 Net income (loss) $ 106,974 $ 131,648 $ 1,079 $ (132,727) $ 106,974 Statement of Comprehensive Income Net income (loss) $ 106,974 $ 131,648 $ 1,079 $ (132,727) $ 106,974 Total other comprehensive loss, net of tax — — (588) — (588) Total comprehensive income (loss) $ 106,974 $ 131,648 $ 491 $ (132,727) $ 106,386
Condensed Consolidating Statements of Income and Comprehensive IncomeLamar Media Corp. Guarantor Subsidiaries Non-
Guarantor SubsidiariesEliminations Lamar Media Consoliated Statement of Income (unaudited) Net revenues $ — $ 378,652 $ 7,825 $ (367) $ 386,110 Operating expenses (income) — 130,496 6,180 (367) 136,309 — 65,340 1,409 — 66,749 — 16,918 211 — 17,129 Depreciation and amortization — 60,751 486 — 61,237 Gain on disposition of assets — (1,304) — — (1,304) — 272,201 8,286 (367) 280,120 Operating income (loss) — 106,451 (461) — 105,990 Equity in (earnings) loss of subsidiaries (104,769) — — 104,769 — Loss on extinguishment of debt 7,051 — — — 7,051 Interest expense (income), net 34,823 (92) 89 — 34,820 Income (loss) before income tax expense (benefit) 62,895 106,543 (550) (104,769) 64,119 — 1,449 (225) — 1,224 Net income (loss) $ 62,895 $ 105,094 $ (325) $ (104,769) $ 62,895 Statement of Comprehensive Income Net income (loss) $ 62,895 $ 105,094 $ (325) $ (104,769) $ 62,895 Total other comprehensive income, net of tax — — 330 — 330 Total comprehensive income (loss) $ 62,895 $ 105,094 $ 5 $ (104,769) $ 63,225
(1) Caption is exclusive of depreciation and amortization.
Condensed Consolidating Statements of Income and Comprehensive Incomefor the Nine Months Ended September 30, 2021
Lamar Media
Corp.Guarantor
SubsidiariesNon-
Guarantor
SubsidiariesEliminations Lamar Media
ConsolidatedStatement of Income (unaudited) Net revenues $ — $ 1,266,818 $ 27,326 $ (1,317) $ 1,292,827 Operating expenses (income) — 402,260 18,030 (1,317) 418,973 — 231,091 3,024 — 234,115 — 62,897 1,151 — 64,048 Depreciation and amortization — 202,660 3,011 — 205,671 Gain on disposition of assets — (1,774) (148) — (1,922) — 897,134 25,068 (1,317) 920,885 Operating income — 369,684 2,258 — 371,942 Equity in (earnings) loss of subsidiaries (366,556) — — 366,556 — Loss on extinguishment of debt 21,604 — — — 21,604 Interest expense (income), net 79,479 (30) 635 — 80,084 Equity in earnings of investee — (1,141) — — (1,141) Income (loss) before income tax expense 265,473 370,855 1,623 (366,556) 271,395 — 5,826 96 — 5,922 Net income (loss) $ 265,473 $ 365,029 $ 1,527 $ (366,556) $ 265,473 Statement of Comprehensive Income Net income (loss) $ 265,473 $ 365,029 $ 1,527 $ (366,556) $ 265,473 Total other comprehensive loss, net of tax — — (84) — (84) Total comprehensive income (loss) $ 265,473 $ 365,029 $ 1,443 $ (366,556) $ 265,389
(1)Caption is exclusive of depreciation and amortization.
(2)The income tax expense reflected in each column does not include any tax effect of the equity in earnings from subsidiaries.ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSLamar Media
Corp.Guarantor
SubsidiariesNon-
Guarantor
SubsidiariesEliminations Lamar Media
ConsolidatedStatement of Income (unaudited) Net revenues $ — $ 1,116,947 $ 24,514 $ (1,130) $ 1,140,331 Operating expenses (income) — 402,033 18,959 (1,130) 419,862 — 211,090 5,271 — 216,361 — 51,526 615 — 52,141 Depreciation and amortization — 186,201 1,347 — 187,548 (Gain) loss on disposition of assets — (4,878) 55 — (4,823) — 845,972 26,247 (1,130) 871,089 Operating income (loss) — 270,975 (1,733) — 269,242 Equity in (earnings) loss of subsidiaries (265,353) — — 265,353 — Loss on extinguishment of debt 25,235 — — — 25,235 Interest expense (income), net 105,072 (151) 1,520 — 106,441 Income (loss) before income tax expense (benefit) 135,046 271,126 (3,253) (265,353) 137,566 — 3,373 (853) — 2,520 Net income (loss) $ 135,046 $ 267,753 $ (2,400) $ (265,353) $ 135,046 Statement of Comprehensive Income Net income (loss) $ 135,046 $ 267,753 $ (2,400) $ (265,353) $ 135,046 Total other comprehensive loss, net of tax — — (528) — (528) Total comprehensive income (loss) $ 135,046 $ 267,753 $ (2,928) $ (265,353) $ 134,518 Lamar Media
Corp.Guarantor
SubsidiariesNon-
Guarantor
SubsidiariesEliminations Lamar Media
Consolidated(unaudited) Cash flows from operating activities: Net cash provided by (used in) operating activities $ 380,225 $ 584,251 $ (26,729) $ (467,049) $ 470,698 Cash flows from investing activities: Acquisitions — (107,593) — — (107,593) Capital expenditures — (67,767) (3,746) — (71,513) Payment for investments in equity securities — (30,000) — — (30,000) Proceeds from disposition of assets and investments — 5,761 — — 5,761 Decrease in notes receivable — 107 — — 107 Investment in subsidiaries (107,593) — — 107,593 — Decrease (increase) in intercompany notes receivable 53,515 — — (53,515) — Net cash (used in) provided by investing activities (54,078) (199,492) (3,746) 54,078 (203,238) Cash flows from financing activities: Proceeds received from revolving credit facility 25,000 — — — 25,000 Payment on revolving credit facility (25,000) — — — (25,000) Principal payments on long-term debt — (282) — — (282) Principal payments on financing leases — (998) — — (998) Proceeds received from note offering 550,000 — — — 550,000 Redemption of senior notes (668,688) — — — (668,688) Payment on accounts receivable securitization program — — (67,500) — (67,500) Proceeds received from accounts receivable securitization program — — 120,000 — 120,000 Debt issuance costs (8,224) — (438) — (8,662) Intercompany loan (payments) proceeds — (24,119) (29,396) 53,515 — Distributions to non-controlling interest — — (82) — (82) Dividends (to) from parent (258,703) (467,049) — 467,049 (258,703) Contributions from (to) parent 33,312 107,593 — (107,593) 33,312 Net cash (used in) provided by financing activities (352,303) (384,855) 22,584 412,971 (301,603) Effect of exchange rate changes in cash and cash equivalents — — 143 — 143 Net decrease in cash and cash equivalents (26,156) (96) (7,748) — (34,000) Cash and cash equivalents at beginning of period 110,588 1,732 8,749 — 121,069 Cash and cash equivalents at end of period $ 84,432 $ 1,636 $ 1,001 $ — $ 87,069 Lamar Media
Corp.Guarantor
SubsidiariesNon-
Guarantor
SubsidiariesEliminations Lamar Media
Consolidated(unaudited) Cash flows from operating activities: Net cash provided by (used in) operating activities $ 310,395 $ 436,270 $ 4,949 $ (419,181) $ 332,433 Cash flows from investing activities: Acquisitions 577 (29,324) — — (28,747) Capital expenditures — (42,792) (1,841) — (44,633) Proceeds from disposition of assets and investments — 5,699 — — 5,699 Investment in subsidiaries (29,324) — — 29,324 — (Increase) decrease in intercompany notes receivable (57,807) — — 57,807 — Net cash (used in) provided by investing activities (86,554) (66,417) (1,841) 87,131 (67,681) Cash flows from financing activities: Proceeds received from revolving credit facility 725,000 — — — 725,000 Payment on revolving credit facility (805,000) — — — (805,000) Principal payments on long-term debt — (273) — — (273) Borrowings on long-term debt — 8,750 — — 8,750 Proceeds received from note offering 1,549,250 — — — 1,549,250 Payment on accounts receivable securitization program — — (175,000) — (175,000) Proceeds received from accounts receivable securitization program — — 122,500 — 122,500 Redemption of senior notes and senior subordinated notes (1,058,596) — — — (1,058,596) Proceeds received from senior credit facility term loans 598,500 — — — 598,500 Payments on senior credit facility term loans (978,097) — — — (978,097) Debt issuance costs (32,667) — — — (32,667) Intercompany loan proceeds (payments) — 4,111 53,696 (57,807) — Distributions to non-controlling interest — — (1,475) — (1,475) Dividends (to) from parent (211,624) (419,181) — 419,181 (211,624) Contributions from (to) parent 36,492 29,324 — (29,324) 36,492 Net cash (used in) provided by financing activities (176,742) (377,269) (279) 332,050 (222,240) Effect of exchange rate changes in cash and cash equivalents — — (72) — (72) Net increase (decrease) in cash and cash equivalents 47,099 (7,416) 2,757 — 42,440 Cash and cash equivalents at beginning of period 13,185 8,278 4,225 — 25,688 Cash and cash equivalents at end of period $ 60,284 $ 862 $ 6,982 $ — $ 68,128 20162020 Combined Form 10-K filed on February 24, 2017, 26 2021, and as supplemented by anysuch risk factors containedmay be further updated or supplemented, from time to time, in our future combined Quarterly Reports on Form 10-Q.10-Q and Current Reports on Form 8-K. 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.nine monthsthree and threenine months ended September 30, 20172021 and 2016.2020. This discussion should be read in conjunction with the consolidated financial statements of the Company and the related notes thereto.2017,2021, the Company completed several acquisitions for a total cash purchase price of approximately $119.9$107.6 million. See—“See Uses of Cash – Acquisitions” for more information.20172021 and 2016:Three Months Ended
September 30,Nine Months Ended
September 30,2021 2020 2021 2020 Total capital expenditures: Billboard — traditional $ 5,706 $ 678 $ 13,077 $ 8,701 Billboard — digital 15,140 2,620 37,841 19,422 Logos 2,898 1,853 7,465 5,398 Transit 564 817 1,774 2,672 Land and buildings 2,871 1,210 5,233 3,468 Operating equipment 2,918 1,181 6,123 4,972 Total capital expenditures $ 30,097 $ 8,359 $ 71,513 $ 44,633 Adjustedadjusted EBITDA”), Funds From Operationsfunds from operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts, Adjusted Funds From Operationsadjusted funds from operations (“AFFO”) and acquisition-adjusted net revenue.Adjustedadjusted EBITDA as net income before income tax expense (benefit), interest expense (income), gainequity in earnings (loss) of investees, loss (gain) on extinguishment of debt and investments, stock-based compensation, depreciation and amortization, and gain or loss (gain) on disposition of assets and investments.revenueincome and expense; (ii) capitalized contract fulfillment costs, net (iii) stock-based compensation expense; (iii)(iv) non-cash portion of tax provision; (iv)expense (benefit); (v) non-real estate related depreciation and amortization; (v)(vi) amortization of deferred financing costs; (vi)(vii) loss on extinguishment of debt; (vii)(viii) non-recurring infrequent or unusual losses (gains); (viii)(ix) less maintenance capital expenditures; and (ix)(x) an adjustment for unconsolidated affiliates and non-controlling interest.Adjustedadjusted EBITDA, FFO, AFFO and acquisition-adjusted net revenue are presented as we believe each is a useful indicator of our current operating performance. We believe that these metrics are useful to an investor in evaluating our operating performance because (1) each is a key measure used by our management team for purposes of decision makingdecision-making andAdjustedadjusted EBITDA is widely used in the industry to measure operating performance as depreciation and amortization may vary significantly among companies depending upon accounting methods and useful lives, particularly where acquisitions and non-operating factors are involved; (3) acquisition-adjusted net revenue is a supplement to net revenue to enable investors to compare period over periodperiod-over-period results on a more consistent basis without the effects of acquisitions and divestures,divestitures, which reflects our core performance and organic growth (if any) during the period in which the assets were owned and managed by us; (4) Adjustedadjusted EBITDA, FFO and AFFO each providesprovide investors with a meaningful measure for evaluating our period-to-period operating performance by eliminating items that are not operational in nature; and (5) each provides investors with a measure for comparing our results of operations to those of other companies.Adjustedadjusted EBITDA, FFO, AFFO and acquisition-adjusted net revenue may not, however, be fully comparable to similarly titled measures used by other companies. Reconciliations of Adjustedadjusted EBITDA, FFO, AFFO and acquisition-adjusted net revenue to net income, the most directly comparable GAAP measure, have been included herein.Monthsmonths ended September 30, 20172021 compared to Nine Monthsnine months ended September 30, 2016$29.2$152.5 million or 2.6%13.4% to $1.14$1.29 billion for the nine months ended September 30, 20172021 from $1.11$1.14 billion for the same period in 2016.2020. This increase was primarily attributable primarily to an increase in billboard net revenues of $21.8$153.7 million which representsand an increase in transit net revenues of 2.2%$2.2 million, offset by a decrease in logo net revenues of $3.4 million over the same period in 2016. In addition, logo sign revenue increased $3.3 million, which represents an increase of 5.6% over the prior period and transit revenue increased $4.1 million which represents an increase of 5.1% over the same period in 2016.2017,2021, there was a $15.3$156.5 million increase in net revenues as compared to acquisition-adjusted net revenue for the nine months ended September 30, 2016,2020, which represents an increase of 1.4%13.8%. See “Reconciliations” below. The $15.3$156.5 million increase in revenue primarily consists of a $9.6 million increase in billboard revenue which is largelyprimarily due to an increase of $151.1 million in digital revenue, a $3.8 million increase in logo revenue and a $1.9 millionbillboard net revenues as well as an increase in transit revenuenet revenues of $5.1 million over the acquisition-adjusted net revenue for the comparablesame period in 2016. saledisposition of assets, increased $7.4$29.1 million, or 1.1%4.2%, to $656.8$717.8 million for the nine months ended September 30, 20172021 from $649.4$688.7 million infor the same period in 2016.2020. The $7.4$29.1 million increase over the prior year is comprised of a $17.0$17.6 million increase in total direct, and general and administrative operatingand corporate expenses (excluding stock-based compensation) primarily related to the operations of our outdoor advertising assets, andas well as an increase of $3.0$11.5 million in corporate expenses (excluding stock-based compensation expense), offset by a $12.6 million decreaseincrease in stock-based compensation expense.$2.3$18.1 million to $155.0$205.7 million for the nine months ended September 30, 20172021 as compared to $152.7$187.5 million for the same period in 2016.2017,2021, the Company recognized a gain on disposition of assets decreased $7.8of $1.9 million to $4.4 million as compared to $12.2 million for the same period in 2016. The decrease in gain on disposition of assets is primarily resulting from transactions related to a $5.9 million decrease in gain recognized for acquisition swap transactions in 2017 as compared to the same period in 2016.$11.7$102.4 million to $335.4$371.2 million for the nine months ended September 30, 20172021 as compared to $323.7$268.9 million for the same period in 2016.During the nine months ended September 30, 2017 the2020.$0.1 million loss on debt extinguishment of debt, related to the amendment of Lamar Media’s senior credit facility. See “Sources of Cash” for more information.Interest expense increased $3.0$21.6 million during the nine months ended September 30, 20172021, which is a $3.6 million decrease over the same period in 2020. The loss on debt extinguishment during the nine months ended September 30, 2021 relates to $95.5 million as compared to $92.5the early repayment of our 5 3/4% Senior Notes during the period.2016.2021 to $80.6 million as compared to $107.1 million for the nine months ended September 30, 2020. The increase in interest expensedecrease is primarily related to the increasedCompany’s debt outstanding, primarily related to the refinancing of Lamar Media’stransactions completed in 2020 and 2021, as well as a reduction in our senior credit facility interest rates.2017.athe decrease in loss on debt extinguishment offset by the increase in interest expense described aboveof debt, resulted in $239.8an $133.5 million increase in net income before income taxes. The effective tax rate for the nine months ended September 30, 20172021 was 3.9%2.2%, which differs from the federal statutory rate primarily due to our qualification for taxation as a REIT and adjustments for foreign items.20172021 of $230.5$264.8 million, as compared to net income of $218.3$134.7 million for the same period in 2016.2015 (the “acquired assets”)2019 have contributed to our net revenue results for the periods presented, we provide 20162020 acquisition-adjusted net revenue, which adjusts our 20162020 net revenue for the nine months ended September 30, 20162020 by adding to or subtracting from it the net revenue generated by the acquired or divested assets prior to our acquisition or divestiture of these assets for the same time frame that those assets were owned in the nine months ended September 30, 2017.2021.20162020 reported net revenue to 20162020 acquisition-adjusted net revenue for the nine months ended September 30, as well as a comparison of 20162020 acquisition-adjusted net revenue to 20172021 reported net revenue for the nine months ended September 30, are provided below:Nine Months Ended
September 30,2021 2020 (in thousands) Reported net revenue $ 1,292,827 $ 1,140,331 Acquisition net revenue — (3,958) Adjusted totals $ 1,292,827 $ 1,136,373 Nine Months Ended
September 30,Amount of
Increase (Decrease)Percent
Increase (Decrease)2021 2020 Net income $ 264,776 $ 134,680 $ 130,096 96.6 % Income tax expense 5,922 2,520 3,402 Loss on debt extinguishment 21,604 25,235 (3,631) Interest expense (income), net 80,084 106,441 (26,357) Equity in earnings of investee Equity in earnings of investee (1,141) — (1,141) Gain on disposition of assets (1,922) (4,823) 2,901 Depreciation and amortization 205,671 187,548 18,123 Capitalized contract fulfillment costs, net Capitalized contract fulfillment costs, net (900) 1,036 (1,936) Stock-based compensation expense 22,540 11,046 11,494 Adjusted EBITDA $ 596,634 $ 463,683 $ 132,951 28.7 % 20172021 increased 1.9%28.7% to $493.0$596.6 million. The increase in Adjustedadjusted EBITDA was primarily attributable to an increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization)amortization and capitalized contract fulfillment costs, net) of $20.5$155.3 million, and was offset by an increase in total general and administrative and corporate expenses of $11.3$18.5 million, excluding the impact of stock-based compensation expense.Nine Months Ended
September 30,Amount of
Increase
(Decrease)Percent
Increase
(Decrease)2021 2020 Net income $ 264,776 $ 134,680 $ 130,096 96.6 % Depreciation and amortization related to real estate 197,395 178,884 18,511 Gain from sale or disposal of real estate, net of tax Gain from sale or disposal of real estate, net of tax (1,712) (4,422) 2,710 Adjustments for unconsolidated affiliates and
non-controlling interest(618) 456 (1,074) FFO $ 459,841 $ 309,598 $ 150,243 48.5 % Straight line expense Straight line expense 2,195 2,615 (420) Capitalized contract fulfillment costs, net Capitalized contract fulfillment costs, net (900) 1,036 (1,936) Stock-based compensation expense 22,540 11,046 11,494 Non-cash portion of tax provision 1,178 (1,870) 3,048 Non-real estate related depreciation and amortization 8,276 8,664 (388) Amortization of deferred financing costs 4,405 4,467 (62) Loss on extinguishment of debt 21,604 25,235 (3,631) Capital expenditures – maintenance (32,697) (17,616) (15,081) Adjustments for unconsolidated affiliates and
non-controlling interest618 (456) 1,074 AFFO $ 487,060 $ 342,719 $ 144,341 42.1 % 20172021 increased 6.9%from $309.6 million in 2020 to $373.0 million as compared to FFO of $349.0$459.8 million for the same period in 2016.2021, an increase of 48.5%. AFFO for the nine months ended September 30, 20172021 increased 0.2%42.1% to $360.5$487.1 million as compared to $360.0$342.7 million for the same period in 2016.2020. The increase in AFFO was primarily attributable to thean increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization)amortization and capitalized contract fulfillment costs, net) offset by an increase in maintenance capital expenditures, interest expense andtotal general and administrative expenses and corporate expenses (excluding the effect of stock-based compensation expense).Monthsmonths ended September 30, 20172021 compared to Three Monthsthree months ended September 30, 2016 $11.8$90.8 million or 3.1%23.5% to $399.3$476.9 million for the three months ended September 30, 20172021 from $387.5$386.1 million for the same period in 2016.2020. This increase was primarily attributable primarily to an increase in billboard and transit net revenues of $6.1$81.7 million which represents an increase of 1.8%and $9.1 million, respectively, over the same period in 2016. In addition, logo sign revenue increased $1.5 million, which represents an increase of 7.8% over the prior period and there was a $4.3 million increase in transit revenue, which represents an increase of 15.3% over the prior period.2017,2021, there was a $4.1$90.0 million increase in net revenues as compared to acquisition-adjusted net revenue for the three months ended September 30, 2016,2020, which represents an increase of 1.0%23.3%. See “Reconciliations”"Reconciliations" below. The 1.0%$90.0 million increase in revenue is primarily due to an increase in digital revenuea $80.5 million and production revenue for three months ended September 30, 2017, as compared to the same period in 2016. The $4.1 million increase in revenue primarily consists of a $1.2$9.7 million increase in billboard revenue largely due to an increase in digital revenue, a $1.8 million increase in logo revenue, and a $1.2 million increase in transit revenue over the acquisition-adjusted net revenue for the comparable period in 2016.saledisposition of assets, decreased $0.1increased $39.0 million, or 17.7%, to $259.3 million for the three months ended September 30, 2017 as compared to2021 from $220.3 million in the same period in 2016.2020. The $0.1$39.0 million decreaseincrease over the prior year is comprised of a $6.3 million decrease in stock-based compensation expense offset by a $5.7$30.8 million increase in total direct, and general and administrative operatingand corporate expenses (excluding stock-based compensation) primarily related to the operations of our outdoor advertising assets and a $0.5$8.2 million increase in corporate expenses (excluding stock-based compensation expense).$2.5$23.1 million to $51.8$84.3 million for the three months ended September 30, 20172021 as compared to $49.3$61.2 million for the same period in 2016.2017,2021, the Company recognized a gain on disposition of assets of $0.03 million primarily resulting from transactions related to billboard locations.$2.5by $27.5 million to $2.7$133.3 million for the three months ended September 30, 2021 as compared to $0.1$105.9 million for the same period in 2016. The increase is primarily due to a $2.42020.gain resulting from acquisition swap transactions duringfor the three months ended September 30, 2017.2021 to $26.1 million as compared to $35.1 million for the three months ended September 30, 2020. The decrease is primarily related to the Company's debt transactions completed in 2020 and 2021, as well as a reduction in our senior credit facility interest rates.
Equity in earnings of investee was $1.1 million for the three months ended September 30, 2021 as a result of the investment in Vistar Media that occurred in July 2021. There was no equity in earnings of investee for the three months ended September 30, 2020.offset by a slight increaseand decrease in interest expense resulted in a $11.0$44.6 million increase in net income before income taxes. The effective tax rate for the three months ended September 30, 20172021 was 3.3%1.6%, which differs from the federal statutory rate primarily due to our qualification for taxation as a REIT and adjustments for foreign items.20172021 of $96.3$106.8 million, as compared to net income of $85.1$62.8 million for the same period in 2016.Reconciliations:2015 (the “acquired assets”)2019 have contributed to our net revenue results for the periods presented, we provide 20162020 acquisition-adjusted net revenue, which adjusts our 20162020 net revenue for the three months ended September 30, 20162020 by adding to or subtracting from it the net revenue generated by the acquired or divested assets prior to our acquisition or divestiture of these assets for the same time frame that those assets were owned in the three months ended September 30, 2017.20162020 reported net revenue to 20162020 acquisition-adjusted net revenue for the three months ended September 30, as well as a comparison of 20162020 acquisition-adjusted net revenue to 20172021 reported net revenue for the three months ended September 30, are provided below:Three Months Ended
September 30,2021 2020 (in thousands) Reported net revenue $ 476,894 $ 386,110 Acquisition net revenue — 771 Adjusted totals $ 476,894 $ 386,881 Three Months Ended
September 30,Amount of Increase (Decrease) Percent Increase (Decrease) 2021 2020 Net income $ 106,838 $ 62,758 $ 44,080 70.2 % Income tax expense 1,712 1,224 488 Loss on debt extinguishment — 7,051 (7,051) Interest expense (income), net 25,927 34,820 (8,893) Equity in earnings of investee (1,141) — (1,141) Gain on disposition of assets (25) (1,304) 1,279 Depreciation and amortization 84,299 61,237 23,062 Stock-based compensation expense 13,076 4,884 8,192 Adjusted EBITDA $ 230,686 $ 170,670 $ 60,016 35.2 % 20172021 increased 3.1%35.2% to $182.8$230.7 million. The increase in Adjustedadjusted EBITDA was primarily attributable to an increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization)amortization and capitalized contract fulfillment costs, net) of $8.6$79.8 million, and was offset by an increase in total general and administrative and corporate expenses of $3.1$19.8 million, excluding the impact of stock-based compensation expense.Three Months Ended
September 30,Amount of Increase (Decrease) Amount of Increase (Decrease) 2021 2020 Net income $ 106,838 $ 62,758 $ 44,080 70.2 % Depreciation and amortization related to real estate 81,580 58,431 23,149 Gain from sale or disposal of real estate, net of tax Gain from sale or disposal of real estate, net of tax 83 (1,324) 1,407 Adjustments for unconsolidated affiliates and non-controlling interest (903) 67 (970) FFO $ 187,598 $ 119,932 $ 67,666 56.4 % Straight line expense Straight line expense 466 882 (416) Stock-based compensation expense 13,076 4,884 8,192 Non-cash portion of tax provision (565) (557) (8) Non-real estate related depreciation and amortization 2,720 2,806 (86) Amortization of deferred financing costs 1,443 1,589 (146) Loss on extinguishment of debt Loss on extinguishment of debt — 7,051 (7,051) Capital expenditures - maintenance Capital expenditures - maintenance (13,094) (3,124) (9,970) Adjustments for unconsolidated affiliates and non-controlling interest 903 (67) 970 AFFO $ 192,547 $ 133,396 $ 59,151 44.3 % 20172021 increased 8.8%from $119.9 million in 2020 to $142.4$187.6 million as compared to FFOin 2021, an increase of $130.9 million for the same period in 2016.56.4%. AFFO for the three months ended September 30, 20172021 increased 2.7%44.3% to $137.5$192.5 million as compared to $134.0$133.4 million for the same period in 2016.2020. The increase in AFFO was primarily attributable to thean increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization)amortization and capitalized fulfillment costs, net) offset by an increase in maintenance capital expenditures, interest expense andtotal general and administrative expense and corporate expenses (excluding the effect of stock-based compensation expense).20172021 we had approximately $376.3$823.2 million of total liquidity, which is comprised of approximately $29.4$87.6 million in cash and cash equivalents and approximately $346.9$735.7 million of availability under the revolving portion of Lamar Media’s senior credit facility. We expect our total liquidity to be adequate for the Company to meet its operational requirements for the next twelve months. We are currently in compliance with the maintenance covenant included in the senior credit facility and we would remain in compliance after giving effect to borrowing the full amount available to us under the revolving portion of the senior credit facility.20172021 and 20162020, our cash provided by operating activities was $320.6$488.2 million and $337.8$361.5 million, respectively. The decreaseincrease in cash provided by operating activities for the nine months ended September 30, 20172021 over the same period in 20162020 primarily relates to an increase in revenues offset by an increase in operating expenses (excluding depreciation and amortization), and a net increase in operating assets and liabilities.of $152.5 million. We expect to generate cash flows from operations during 20172021 in excess of our cash needs for operations, capital expenditures and dividends, as described herein.May 15, 2017,February 6, 2020, Lamar Media entered into a Third Restatement Agreement (“Restatement Agreement”) to its SecondFourth Amended and Restated Credit Agreement (“existing senior credit facility”(the “Fourth Amended and Restated Credit Agreement”) dated as of February 3, 2014 with the Company, certain of Lamar Media’s subsidiaries as guarantors, JPMorgan Chase Bank, N.A. as administrative agent and the lenders party thereto, under which the parties agreed to amend and restate Lamar Media’s existing senior credit facility.TheFourth Amended and Restated Credit Agreementamended and restated the Third Amended and Restated Credit Agreement dated as of May 15, 2017, (asas amended (the “Third Amended and Restated Credit Agreement”).new $450.0$750.0 million senior secured revolving credit facility which will mature on May 15, 2022,February 6, 2025 (the “revolving credit facility”), (ii) a new $450.0AB loan facility (the “Term AB loans”) which will mature on May 15, 2022,February 6, 2027, and (iii) an incremental facility (the “Incremental Facility”) pursuant to which Lamar Media may incur additional term loan tranches or increase its revolving credit facility subject to a pro forma compliance with the secured debt ratio financial maintenance covenantcalculated as described below.Underunder Lamar Media borrowed all $450.0 million inapply to the Term AB loans on May 15, 2017. The net proceeds, together with borrowing under theand revolving portion of senior credit facility and cash on hand, were used to repay all outstanding amounts under the existing senior credit facility, and all revolving commitments under that facility were terminated.2017,2021 the aggregate balance outstanding under the senior credit facility was $600.0 million, consisting of $600.0 million in Term B loans aggregate principal balance and no outstanding borrowings under our revolving credit facility. Lamar Media had $444.4 million outstanding in Term A loans, $90.0approximately $735.7 million of revolving credit loans and approximately $13.1 million in letters of credit outstandingunused capacity under the revolving credit facility.$500the $600.0 million 53 3/4% Senior Notes issued February 2020, the $550.0 million 4% Senior Notes issued February 2020 and August 2020, the $400.0 million 4 7/8% Senior Subordinated Notes issued in February 2012 (the “5 7/8% Senior Subordinated Notes”), $535May 2020 and the $550.0 million 5% Senior Subordinated Notes issued in October 2012 (the “5% Senior Subordinated Notes”), $510 million 5 3/3 5/8% Senior Notes issued in January 2014 (the “5 3/8% Senior Notes”) and the $400 million 5 3/4% Senior Notes issued in January 2016 (the “5 3/4% Senior Notes”) .1.1.0. Currently, Lamar Media is not in default under the indentures of any of its outstanding notes and, therefore, would be permitted to incur additional indebtedness subject to the foregoing provision.$1.5$2.0 billion of indebtedness under the senior credit facility;$50$50.0 million or 5% of Lamar Media’s net tangible assets; and$75 million.underUnder Senior Credit Facility.Lamar Media is required to comply with certain covenants and restrictions under the senior credit facility. If the Company or Lamar Media fails to comply with these tests, the lenders under the senior credit facility will be entitled to exercise certain remedies, including the termination of the lending commitments and the acceleration of the debt payments under the senior credit facility. At September 30, 2017,2021 we were, and currently, we wereare, in compliance with all such tests under the senior credit facility.$150$150.0 million and (y) the aggregate amount of unrestricted cash and cash equivalents of Lamar Advertising, Lamar Media and its restricted subsidiaries (other than the Special Purpose Subsidiaries (as defined above under Sources of Cash – Accounts Receivable Securitization Program)) to EBITDA, as defined below, for the period of four consecutive fiscal quarters then ended, of less than or equal to 3.04.5 to 1.0.andor 6% of its total assets.it is in compliance with the secured debt ratio covenant and its seniorLamar Media would have a total debt ratio, defined as (a) total consolidated debt (excluding(including subordinated debt) of Lamar Advertising, Lamar Media and its restricted subsidiaries$150$150.0 million and (ii) the aggregate amount of unrestricted cash and cash equivalents of Lamar Advertising, Lamar Media and its restricted subsidiaries (other than the Special Purpose Subsidiaries) to (b) EBITDA, as defined below, for the most recent four fiscal quarters then ended, is less than 4.57.0 to 1.0.defined as (a) total consolidated debt (including subordinated debt) of Lamar Advertising, Lamar Media and its restricted subsidiaries as of any date minus the lesser of (i) $150 million and (ii) the aggregate amount of unrestricted cash and cash equivalents of Lamar Advertising, Lamar Media and its restricted subsidiaries to (b) EBITDA, as defined below, for the most recent four fiscal quarters then ended, is less than 6.57.0 to 1.0.operatingnet income, plus (a) to the extent deducted in determining net income for Lamar Advertising, Lamar Media and its restricted subsidiaries (determined on a consolidated basissuch period, the sum determined without duplication and in accordance with GAAP) for such period (calculated (A) beforeGAAP, of (i) taxes, (ii) interest expense, (iii) depreciation, (iv) amortization, (v) any other non-cash income or charges accrued for such period, (vi) charges and expenses in connection with the senior credit facility, any actual or proposed acquisition, disposition or investment (excluding, in each case, purchases and sales of advertising space and operating assets in the ordinary course of business) and any actual or proposed offering of securities, incurrence or repayment of indebtedness (or amendment to any agreement relating to indebtedness), including any refinancing thereof, or recapitalization, and (vii) any loss or gain relating to amounts paid or earned in cash prior to the stated settlement date of any swap agreement that has been reflected in operating income for such period), and (B) after giving effect(viii) any loss on sales of receivables and related assets to a securitization entity in connection with a permitted securitization financing, plus (b) the amount of cost savings, operating expense reductions and other operating improvements or synergies projected by Lamar Media in good faith to be realized as a result of any acquisition, investment, merger, amalgamation or disposition within 18 months of any such acquisition, investment, merger, amalgamation or disposition, net of the amount of actual benefits realized during such period from such action; provided,, (a) the aggregate amount for all such cost savings, operating expense reductions and other operating improvements or synergies shallwill not exceed an amount equal to 15% of EBITDA for the applicable four quarter period and (b) any such adjustment to EBITDA pursuant to this clause (b) may only take into account cost savings, operating expense reductions and other operating improvements or synergies that are (I) directly attributable to such acquisition, investment, merger, amalgamation or disposition, (II) expected to have a continuing impact on Lamar Media and its restricted subsidiaries and (III) factually supportable, in each case all asand excluding (exceptminus (c) to the extent received or paidincluded in cash by Lamar Advertising, Lamar Media or any of its restricted subsidiariesnet income or loss attributable to equity in affiliates for such period), excludingperiod (determined without duplication and in accordance with GAAP) (i) any extraordinary and unusual gains or losses during such period, and excluding(ii) the proceeds of any casualty events and dispositions. For purposes hereof,of this EBITDA definition, the effect thereon of any adjustments required under Statement of Financial Accounting Standards No. 141R shallwill be excluded.Lamar Media shallwe have consummated any acquisition or disposition, EBITDA shallwill be determined on a pro forma basis as if such acquisition or disposition had been made or consummated on the first day of such period.through fiscal 2017.for the next twelve months. All debt obligations are reflected on the Company’s balance sheet.$74.4$71.5 million for the nine months ended September 30, 2017.2021. We anticipate our 20172021 total capital expenditures willto be approximately $110$120.0 million.2017,2021, the Company completed 36 acquisitions for a cashan aggregate purchase price of approximately $119.9$107.6 million, which included the acquisition of more than 480 billboard displays from Steen Outdoor Advertising. The acquisition of the Steen displays expanded Lamar’s presence in Philadelphia and surrounding Pennsylvania suburbs, New Jersey and Delaware. The acquisitions occurring during the nine months ended September 30, 2017 were financed using available cash on hand orand borrowings on the Accounts Receivable Securitization Program.itsthe revolving credit facility. Term A Loans. facility and Accounts Receivable Securitization Program. The Term A Loans mature on May 15, 2022notes were redeemed at a redemption price equal to 102.875% of the aggregate principal amount of the outstanding notes, plus accrued and began amortizing onunpaid interest to (but not including) the redemption date. During the nine months ended September 30, 2017. The remaining quarterly installments scheduled to be paid2021, the Company recorded a loss on each September 30, December 31, March 31 and June 30 are as follows:For each borrowingdebt extinguishment of Term A loans or revolving credit loans, Lamar Media can elect whether such loans bear interest at (i) the Adjusted Base Rate plus (a) 0.75%, or (b) 0.50% at any time that the total debt ratio is less than 3.25 to 1 as of the last day of the most recently ended fiscal quarter for which Lamar Media has delivered financial statements, or (ii) the Adjusted LIBO Rate plus (a) 1.75%, or (b) 1.50% at any time that the total debt ratio is less than 3.25 to 1 as of the last day of the most recently ended fiscal quarter for which Lamar Media has delivered financial statements. The guarantees, covenants, events of default and other terms of the senior credit facility applyapproximately $21.6 million related to the Term A loans and revolving credit facility.Dividends.note redemption. See August 29, 2017, MayFebruary 25, 2017 and February 23, 2017, Lamar Advertising Company’s2021, the Company's Board of Directors declared a quarterly cash dividendsdividend of $0.83$0.75 per share, payablepaid on March 31, 2021 to its stockholders of record of its Class A common stock and Class B common stock on March 22, 2021. On May 20, 2021, the Company's Board of Directors declared a quarterly cash dividend of $0.75 per share, paid on June 30, 2021 to its stockholders of record of its Class A common stock and Class B common stock on June 21, 2021. On September 7, 2021, the Company's Board of Directors declared a quarterly cash dividend of $1.00 per share, paid on September 29, 2017, June 30, 2017 and March 31, 2017, respectively,2021 to its stockholders of record of its Class A common stock and Class B common stock on September 15, 2017, June 15, 2017 and March 15, 2017, respectively. The20, 2021. Subject to approval of the Company's Board of Directors, the Company expects aggregateto declare a quarterly dividend of $1.00 per share of common stock for the upcoming fourth quarter 2021 distributions to stockholders in 2017, including the dividend paid on September 29, 2017, June 30, 2017 and March 31, 2017 will total $3.32 per common share.EffectRecent Hurricanesthe Company, filed a Registration Statement on Form S-1, with the Securities and Named Stormshas operationsthrough an indirect wholly-owned subsidiary, would own approximately 20% of LPC’s issued and outstanding ordinary shares upon the consummation of the proposed offering. The Company intends to commit to acquire up to $100.0 million of forward purchase units in a forward purchase agreement that would close concurrently with LPC’s consummation of an initial business combination. As of September 30, 2021, the southeastern United States and the Caribbean island of Puerto Rico, and as such, its operationsCompany incurred $1.0 million in those geographical areas may be impacted by disruptionsdeferred offering costs related to tropical storms, should they occur.During the three months ended September 30, 2017, there were three named stormsproposed offering, which made landfallis included in other assets on our Condensed Consolidated Balance Sheet.Southeastern portionCompany’s Board of Directors authorized the repurchase of up to $250.0 million of the United StatesCompany’s Class A common stock. Additionally, the Board of Directors has authorized Lamar Media to repurchase up to $250.0 million in outstanding senior or senior subordinated notes and Puerto Rico. Specifically, hurricane Harvey made landfall in August and primarily affected markets in southeast Texas; hurricane Irma made landfall on September 12, 2017 primarily affecting markets in Florida and Georgia; and hurricane Maria made landfall onother indebtedness outstanding from time to time under its senior credit agreement. On September 20, 2017 affecting Puerto Rico. The Company has developed contingency plans designed to mitigate damage to our assets such as removing2021, the faces prior toBoard of Directors authorized the storms making landfall, which better enablesextension of the structures to withstand high winds duringrepurchase program through March 31, 2023. There were no repurchases under the storm and this plan was largely successful. The named storms affecting the markets in Florida, Georgia and Texas caused little or no damage to our structures and minimal affect to our revenue, operations and/or operating income for the three and nine months ended September 30, 2017. Our operations in those markets were fully operationalprogram as of September 30, 2017.billboard structure inventoryoff-balance sheet commitments consist of guaranteed minimum payments to local transit municipalities and airport authorities for agreements which entitle us to rent advertising space to customers, in Puerto Rico was also largely unaffectedairports and on buses, benches or shelters.Payments Due by Period Contractual Obligations Total Less Than
1 Year1 - 3 Years 3 - 5 Years After
5 Years(In millions) Long-term debt $ 2,837.4 $ 174.7 $ 0.8 $ 0.9 $ 2,661.0 729.4 101.1 202.1 187.5 238.7 Billboard site, transit and other operating and financing leases 1,656.2 238.9 390.7 276.8 749.8 Total payments due $ 5,223.0 $ 514.7 $ 593.6 $ 465.2 $ 3,649.5 Amount of Expiration Per Period Other Commercial Commitments Total Amount
CommittedLess Than 1
Year1 - 3 Years 3 - 5 Years After
5 Years(In millions) $ 750.0 $ — $ — $ 750.0 $ — $ 14.3 $ 11.8 $ 1.7 $ 0.8 $ — hurricane Maria, however, the island was not. Currently,same amount.islandreported amounts of assets, liabilities, revenues and expenses. There have been no material changes to the critical accounting policies and estimates as previously disclosed in Item 7 of our 2020 Combined Form 10-K.largely without powereffective for years beginning after December 15, 2020. The Company adopted this guidance on January 1, 2021 and we are continuing to assess the impact of the storm on our operations andadoption is not material to the effect, if any, on our existing customers. While it may take several months for our Puerto Rico operations to be fully functioning, the Company does not expect the impact of this storm to materially impact consolidated revenue, operating income or net income. Off Balance Sheet ArrangementsThe Company has no off-balance sheet arrangements with the exception of operating leases.Debt Service and Contractual Obligations. In our Quarterly Report on Form 10-Q for the six months ended June 30, 2017, Part I, Item 2, Management’s Discussion and Analysis of Financial Conditions and Results of Operations, under the heading “Debt Service and Contractual Obligations,” we described our commitments and contingencies. There was no material change in our commitments and contingencies during the three months ended September 30, 2017.Accounting Standards UpdateIn May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. Generally Accepted Accounting Principles (“GAAP”) when it becomes effective. In August 2015, the FASB issued ASU No. 2015-14 deferring the effective date from January 1, 2017 to January 1, 2018, while allowing for early adoption as of January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is in the final stages of its review of contracts and we do not expect any material impact on ourCompany's consolidated financial statements for the adoption of ASU No. 2014-09. We currently believe the only contracts with customers which will be accounted for under ASU No. 2014-09 are our Transit advertising contracts and production services. We have preliminarily determined to adopt the provisions of ASU No. 2014-09 using the cumulative effect transition method with an adjustment to the opening balance of retained earnings of the annual reporting period that includes the date of initial application.In November 2015, the FASB issued ASU No. 2015-17 Income taxes – Balance Sheet Classification of Deferred Taxes. The amendments in this update require deferred tax liabilities and assets be classified as noncurrent in the balance sheet. The amendments are effective for annual and interim periods beginning after December 15, 2016, with early adoption permitted as of the beginning of an interim or annual reporting period. The Company adopted the update in ASU No. 2015-17 as of January 1, 2017. The Company’s 2016 consolidated balance sheet has been adjusted to reflect retrospective adoption of the update and the impact was not considered material.In February 2016, the FASB issued ASU No. 2016-02, Leases. The update is to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about lease arrangements. The amendments in this update are effective beginning January 1, 2019 with retrospective application. The Company is in the process of assessing the impact ASU No. 2016-02 will have on our consolidated financial statements. The Company expects the primary impact to our consolidated financial statements will be the recognition, on a discounted basis, of our minimum commitments under non-cancelable operating leases on our consolidated balance sheets, resulting in the recording of right of use assets and lease obligations.In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments. The update clarifies how certain cash receipts and cash payments are presented in the statement of cash flows. The update is effective for annual periods beginning January 1, 2018 with early adoption permitted. The Company adopted the update in ASU No. 2016-15 as of January 1, 2017. The adoption of this update did not have a material impact on the consolidated financial statements.In January 2017, the FASB issued ASU No. 2017-01, Business Combinations: Clarifying the definition of a business. The update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The update is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. Early adoption is allowed for transactions which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. The Company adopted the update in ASU 2017-01 for transactions which occurred on or after October 1, 2016. The adoption of this update did not have a material impact on the consolidated financial statements.In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and other (Topic 350): Simplifying the test for goodwill impairment. The update simplifies how a company completes its goodwill impairment test by eliminating the two-step process, which requires determining the fair value of assets acquired or liabilities assumed in a business combination. The update requires completing the goodwill impairment test by comparing the difference between the reporting units’ carrying value and fair value. Goodwill charges, if any, would be determined by reducing the goodwill balance by the excess of the reporting unit’s carrying value over its fair value. The update is effective for annual and interim fiscal periods beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on or after January 1, 2017. The Company plans to early adopt this update for its December 31, 2017 goodwill impairment test.nine monthsthree and threenine months ended September 30, 20172021 and 2016.2020. This discussion should be read in conjunction with the consolidated financial statements of Lamar Media and the related notes thereto.Monthsmonths ended September 30, 20172021 compared to Nine Monthsnine months ended September 30, 2016$29.2$152.5 million or 2.6%13.4% to $1.14$1.29 billion for the nine months ended September 30, 20172021 from $1.11$1.14 billion for the same period in 2016.2020. This increase was primarily attributable primarily to an increase in billboard net revenues of $21.8$153.7 million which representsand an increase in transit net revenues of 2.2%$2.2 million, offset by a decrease in logo net revenues of $3.4 million over the same period in 2016. In addition, logo sign revenue increased $3.3 million, which represents an increase of 5.6% over the prior period and transit revenue increased $4.1 million, which represents an increase of 5.1% over the same period in 2016.2017,2021, there was a $15.3$156.5 million increase in net revenues as compared to acquisition-adjusted net revenue for the nine months ended September 30, 2016,2020, which represents an increase of 1.4%13.8%. See “Reconciliations” below. The $15.3$156.5 million increase in revenue primarily consists of a $9.6 million increase in billboard revenue which is largelyprimarily due to an increase of $151.1 million in digital revenue, a $3.8 million increase in logo revenue and a $1.9 millionbillboard net revenues as well as an increase in transit revenuenet revenues of $5.1 million over the acquisition-adjusted net revenue for the comparablesame period in 2016. saledisposition of assets, increased $7.4$28.8 million, or 1.1%4.2%, to $656.5$717.1 million for the nine months ended September 30, 20172021 from $649.1$688.4 million in the same period in 2016.2020. The $7.4$28.8 million increase over the prior year is comprised of a $17.0$17.3 million increase in total direct, and general and administrative operatingand corporate expenses (excluding stock-based compensation) primarily related to the operations of our outdoor advertising assets, andas well as an increase of $3.0$11.5 million in corporate expenses (excluding stock-based compensation expense), offset by a $12.6 million decreaseincrease in stock-based compensation expense.$2.3$18.1 million to $155.0$205.7 million for the nine months ended September 30, 20172021 as compared to $152.7$187.5 million for the same period in 2016.2017,2021, Lamar Media recognized a gain on disposition of assets decreased $7.8of $1.9 million, to $4.4 million as compared to $12.2 million for the same period in 2016. The decrease in gain on disposition of assets is primarily resulting from transactions related to a $5.9 million decrease in gain recognized for acquisition swap transactions in 2017 as compared to the same period in 2016.$11.7$102.7 million to $335.7$371.9 million for the nine months ended September 30, 20172021 as compared to $324.0$269.2 million for the same period in 2016.During the nine months ended September 30, 2017 2020.$0.1 million loss on debt extinguishment of debt, related to the amendment of its senior credit facility. See “Sources of Cash” for more information.Interest expense increased $3.0 million during the nine months ended September 30, 2017 to $95.5 million as compared to $92.5$21.6 million for the nine months ended September 30, 2016.2021, a $3.6 million decrease over the same period in 2020. The increase in interestloss on debt extinguishment during the nine months ended September 30, 2021 relates to the early repayment of our 5 3/4% Senior Notes during the period.the increasedLamar Media's debt outstanding, primarily related to the refinancing of Lamar Media’stransactions completed in 2020 and 2021, as well as a reduction in our senior credit facility interest rates.2017.athe decrease in loss on debt extinguishment offset by the increase in interest expense described aboveof debt, resulted in $240.1an $133.8 million increase in net income before income taxes. The effective tax rate for the nine months ended September 30, 20172021 was 3.9%2.2%, which differs from the federal statutory rate primarily due to our qualification for taxation as a REIT and adjustments for foreign items.20172021 of $230.8$265.5 million, as compared to net income of $218.6$135.0 million for the same period in 2016.2015 (the “acquired assets”)2019 have contributed to our net revenue results for the periods presented, we provide 20162020 acquisition-adjusted net revenue, which adjusts our 20162020 net revenue for the nine months ended September 30, 20162020 by adding to or subtracting from it the net revenue generated by the acquired or divested assets prior to our2017.20162020 reported net revenue to 20162020 acquisition-adjusted net revenue for the nine months ended September 30, as well as a comparison of 20162020 acquisition-adjusted net revenue to 20172021 reported net revenue for the nine months ended September 30, are provided below:Nine Months Ended
September 30,2021 2020 (in thousands) Reported net revenue $ 1,292,827 $ 1,140,331 Acquisition net revenue — (3,958) Adjusted totals $ 1,292,827 $ 1,136,373 Nine Months Ended
September 30,Amount of
Increase (Decrease)Percent
Increase (Decrease)2021 2020 Net income $ 265,473 $ 135,046 $ 130,427 96.6 % Income tax expense 5,922 2,520 3,402 Loss on debt extinguishment 21,604 25,235 (3,631) Interest expense (income), net 80,084 106,441 (26,357) Equity in earnings of investee (1,141) — (1,141) Gain on disposition of assets (1,922) (4,823) 2,901 Depreciation and amortization 205,671 187,548 18,123 Capitalized contract fulfillment costs, net (900) 1,036 (1,936) Stock-based compensation expense 22,540 11,046 11,494 Adjusted EBITDA $ 597,331 $ 464,049 $ 133,282 28.7 % 20172021 increased 1.9%28.7% to $493.3$597.3 million. The increase in Adjustedadjusted EBITDA was primarily attributable to an increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization)amortization and capitalized contract fulfillment costs, net) of $20.5$155.3 million, and was offset by an increase in total general and administrative and corporate expenses of $11.3$18.2 million, excluding the impact of stock-based compensation expense.Nine Months Ended
September 30,Amount of
Increase
(Decrease)Percent
Increase
(Decrease)2021 2020 Net income $ 265,473 $ 135,046 $ 130,427 96.6 % Depreciation and amortization related to real estate 197,395 178,884 18,511 Gain from sale or disposal of real estate, net of tax Gain from sale or disposal of real estate, net of tax (1,712) (4,422) 2,710 Adjustments for unconsolidated affiliates and
non-controlling interest(618) 456 (1,074) FFO $ 460,538 $ 309,964 $ 150,574 48.6 % Straight line expense Straight line expense 2,195 2,615 (420) Capitalized contract fulfillment costs, net Capitalized contract fulfillment costs, net (900) 1,036 (1,936) Stock-based compensation expense 22,540 11,046 11,494 Non-cash portion of tax provision 1,178 (1,870) 3,048 Non-real estate related depreciation and amortization 8,276 8,664 (388) Amortization of deferred financing costs 4,405 4,467 (62) Loss on extinguishment of debt 21,604 25,235 (3,631) Capital expenditures – maintenance (32,697) (17,616) (15,081) Adjustments for unconsolidated affiliates and
non-controlling interest618 (456) 1,074 AFFO $ 487,757 $ 343,085 $ 144,672 42.2 % 20172021 increased 6.9%from $310.0 million in 2020 to $373.3 million as compared to FFO of $349.3$460.5 million for the same period in 2016.2021, an increase of 48.6%. AFFO for the nine months ended September 30, 20172021 increased 0.2%42.2% to $360.8$487.8 million as compared to $360.3$343.1 million for the same period in 2016.2020. The increase in AFFO was primarily attributable to thean increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization)amortization and capitalized contract fulfillment costs, net) offset by an increase in maintenance capital expenditures, interest expense andtotal general and administrative expenses and corporate expenses (excluding the effect of stock-based compensation expense).Monthsmonths ended September 30, 20172021 compared to Three Monthsthree months ended September 30, 2016$11.8$90.8 million or 3.1%23.5% to $399.3$476.9 million for the three months ended September 30, 20172021 from $387.5$386.1 million for the same period in 2016.2020. This increase was primarily attributable primarily to an increase in billboard and transit net revenues of $6.1$81.7 million which represents an increase of 1.8%and $9.1 million, respectively, over the same period in 2016. In addition, logo sign revenue increased $1.5 million, which represents an increase of 7.8% over the prior period and there was a $4.3 million increase in transit revenue, which represents an increase of 15.3% over the prior period.2017,2021, there was a $4.1$90.0 million increase in net revenues as compared to acquisition-adjusted net revenue for the three months ended September 30, 2016,2021, which represents an increase of 1.0%23.3%. See “Reconciliations”"Reconciliations" below. The 1.0%$90.0 million increase in revenue is primarily due to an increase in digital revenuea $80.5 million and production revenue for three months ended September 30, 2017, as compared to the same period in 2016. The $4.1 million increase in revenue primarily consists of a $1.2$9.7 million increase in billboard revenue largely due to an increase in digital revenue, a $1.8 million increase in logo revenue, and a $1.2 million increase in transit revenue over the acquisition-adjusted net revenue for the comparable period in 2016.saledisposition of assets, decreased $0.1increased $39.0 million, or 17.7%, to $259.1 million for the three months ended September 30, 2017 as compared to2021 from $220.2 million in the same period in 2016.2020. The $0.1$39.0 million decreaseincrease over the prior year is comprised of a $6.3 million decrease in stock-based compensation expense offset by a $5.7$30.8 million increase in total direct, and general and administrative operatingand corporate expenses (excluding stock-based compensation) primarily related to the operations of our outdoor advertising assets, andas well as a $0.5$8.2 million increase in corporate expenses (excluding stock-based compensation expense).$2.5$23.1 million to $51.8$84.3 million for the three months ended September 30, 20172021 as compared to $49.3$61.2 million for the same period in 2016.2017,2021, Lamar Media recognized a gain on disposition of assets increased $2.5of $0.03 million, to $2.7 million as compared to $0.1 million for the same period in 2016. The increase is primarily due to a $2.4 million gain resulting from acquisition swap transactions during the three months ended September 30, 2017.related to billboard locations.$11.9$27.5 million to $131.8$133.5 million for the three months ended September 30, 20172021 as compared to $119.9$106.0 million for the same period in 2016.offset by a slight increaseand decrease in interest expense resulted in a $11.0$44.6 million increase in net income before income taxes. The effective tax rate for the three months ended September 30, 20172021 was 3.3%1.6%, which differs from the federal statutory rate primarily due to our qualification for taxation as a REIT and adjustments for foreign items.20172021 of $96.4$107.0 million, as compared to net income of $85.2$62.9 million for the same period in 2016.2015 (the “acquired assets”)2019 have contributed to our net revenue results for the periods presented, we provide 20162020 acquisition-adjusted net revenue, which adjusts our 20162020 net revenue for the three months ended September 30, 20162021 by adding to or subtracting from it the net revenue generated by the acquired or divested assets prior to our acquisition or divestiture of these assets for the same time frame that those assets were owned in the three months ended September 30, 2017. 2021.20162020 reported net revenue to 20162020 acquisition-adjusted net revenue for the three months ended SeptemberJune 30, as well as a comparison of 20162020 acquisition-adjusted net revenue to 20172021 reported net revenue for the three months ended SeptemberJune 30, are provided below:Three Months Ended
September 30,2021 2020 (in thousands) Reported net revenue $ 476,894 $ 386,110 Acquisition net revenue — 771 Adjusted totals $ 476,894 $ 386,881 Three Months Ended
September 30,Amount of Increase (Decrease) Percent of Increase (Decrease) 2021 2020 Net income $ 106,974 $ 62,895 $ 44,079 70.1 % Income tax expense 1,712 1,224 488 Loss on debt extinguishment Loss on debt extinguishment — 7,051 (7,051) Interest expense (income), net 25,927 34,820 (8,893) Equity in earnings of investee Equity in earnings of investee (1,141) — (1,141) Gain on disposition of assets (26) (1,304) 1,278 Depreciation and amortization 84,300 61,237 23,063 Stock-based compensation expense 13,076 4,884 8,192 Adjusted EBITDA $ 230,822 $ 170,807 $ 60,015 35.1 % 20172021 increased 3.1%35.1% to $182.9$230.8 million. The increase in Adjustedadjusted EBITDA was primarily attributable to an increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization)amortization and capitalized contract fulfillment costs, net) of $8.6$79.8 million, and was offset by an increase in total general and administrative and corporate expenses of $3.1$19.8 million, excluding the impact of stock-based compensation expense.Three Months Ended
September 30,Amount of Increase (Decrease) Percent of Increase (Decrease) 2021 2020 Net income $ 106,974 $ 62,895 $ 44,079 70.1 % Depreciation and amortization related to real estate 81,580 58,431 23,149 Gain from sale or disposal of real estate, net of tax Gain from sale or disposal of real estate, net of tax 83 (1,324) 1,407 Adjustments for unconsolidated affiliates and non-controlling interest (903) 67 (970) FFO $ 187,734 $ 120,069 $ 67,665 56.4 % Straight line expense Straight line expense 466 882 (416) Stock-based compensation expense 13,076 4,884 8,192 Non-cash portion of tax provision (565) (557) (8) Non-real estate related depreciation and amortization 2,720 2,806 (86) Amortization of deferred financing costs 1,443 1,589 (146) Loss on extinguishment of debt Loss on extinguishment of debt — 7,051 (7,051) Capital expenditures - maintenance Capital expenditures - maintenance (13,094) (3,124) (9,970) Adjustments for unconsolidated affiliates and non-controlling interest 903 (67) 970 AFFO $ 192,683 $ 133,533 $ 59,150 44.3 % 20172021 increased 8.8%from $120.1 million in 2020 to $142.5$187.7 million as compared to FFOin 2021, an increase of $131.0 million for the same period in 2016.56.4%. AFFO for the three months ended September 30, 20172021 increased 2.7%44.3% to $137.6$192.7 million as compared to $134.1$133.5 million for the same period in 2016.2020. The increase in AFFO was primarily attributable to thean increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization)amortization and capitalized contract fulfillment costs, net) offset by an increase in maintenance capital expenditures, interest expense andtotal general and administrative expense and corporate expenses (excluding the effect of stock-based compensation expense).The Company2017,2021, and should be read in conjunction with Note 911 of the Notes to the Company’s Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.LoansStatements.Lamar Media’sits senior credit facility bearand its Accounts Receivable Securitization Program. Because interest at variable rates equal to the Adjusted LIBO Rate or Adjusted Base Rate plus the applicable margin. Because the Adjusted LIBO Rate or Adjusted Base Rate may increase or decrease at any time, the Company is exposed to market risk as a result of the impact that changes in these baseinterest rates may have on the interest rate applicable to borrowings under the senior credit facility.outstanding. Increases in the interest rates applicable to these borrowings under the senior credit facility would result in increased interest expense and a reduction in the Company’s net income.2017,2021 there was approximately $534.4$773.7 million of aggregate indebtedness outstanding under the senior credit facility and the Accounts Receivable Securitization Program, or approximately 21.8%26.9% of the Company’s outstanding long-term debt on that date, bearing interest at variable rates. The aggregate interest expense for the nine months ended September 30, 20172021 with respect to borrowings under the senior credit facility and the Accounts Receivable Securitization Program was $11.7$9.8 million, and the weighted average interest rate applicable to these borrowings under this credit facility during the nine months ended September 30, 20172021 was 3.0%1.4%. Assuming that the weighted average interest rate was 200-basis200 basis points higher (that is 5.0%3.4% rather than 3.0%1.4%), then the Company’s nine months ended September 30, 20172021 interest expense would have increased by $7.2 million.attemptedattempts to mitigate the interest rate risk resulting from its variable interest rate long-term debt instruments by issuing fixed rate long-term debt instruments and maintaining a balance over time between the amount of the Company’s variable rate and fixed rate indebtedness. In addition, the Company has the capability under the senior credit facility to fix the interest rates applicable to its borrowings at an amount equal to LIBORAdjusted LIBO Rate or Adjusted Base Rate plus the applicable margin for periods of up to twelve months (in certain cases with the consent of the lenders), which would allow the Company to mitigate the impact of short-term fluctuations in market interest rates. In the event of an increase in interest rates, the Company may take further actions to mitigate its exposure. The Company cannot guarantee, however, that the actions that it may take to mitigate this risk will be feasible or that, if these actions are taken, that they will be effective.washave been no changechanges in the internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) 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.2016,2020, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our Class A common stock. There have been no material changes to our risk factors since our combined Annual Report on Form 10-K for the year ended December 31, 2016.2020.None.On July 5, 2017, the Company adopted immaterial amendments to its 2009 Employee Stock Purchase Plan. A copy of the plan as amended is attached as Exhibit 10.1.ITEM 6.EXHIBITSExhibitNumberDescriptionExhibit
NumberDescription 3.13.1 ExhibitNumberDescription12(a)Statement regarding computation of earnings to fixed charges for the Company. Filed herewith.31.1 12(b)Statement regarding computation of earnings to fixed charges for Lamar Media. Filed herewith.31.1materialsfinancial statements from the combinedCompany’s Quarterly Report of the Company and Lamar Media on Form 10-Q for the nine monthsquarter ended September 30, 2017,2021, formatted in XBRL (eXtensible Business Reporting Language):Inline XBRL: (i) Condensed Consolidated Balance Sheets, as of September 30, 2017 and December 31, 2016 of the Company and Lamar Media, (ii) Condensed Consolidated Statements of Income and Comprehensive Income, for the three and nine months ended September 30, 2017 and 2016(iii) Condensed Consolidated Statements of the Company and Lamar Media, (iii)Stockholders' Equity, (iv) Condensed Consolidated Statements of Cash Flows, for the nine months ended September 30, 2017 and 2016 of the Company and Lamar Media, and (iv)(v) Notes to the Condensed Consolidated Financial Statements, tagged as blocks of the Companytext and Lamar Media104 Cover Page Interactive Date File (formatted as Inline XBRL and contained in Exhibit 101). LAMAR ADVERTISING COMPANY 6, 2017Keith A. Istre and Accounting Officer and Treasurer6, 2017Keith A. Istre and Accounting Officer and Treasurer47