1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended June 30, 2000March 31, 2001
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to
_______________--------------- ---------------
Commission File Number 0-30242
Lamar Advertising Company
Commission File Number 1-12407
Lamar Media Corp.
(Exact name of registrants as specified in its charter)
Delaware 72-1449411
Delaware 72-1205791
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification No.)
5551 Corporate Blvd., Baton Rouge, LA 70808
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code: (225) 926-1000
Indicate by check mark whether each registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes (X) No ( )
The number of shares of Lamar Advertising Company's Class A common stock
outstanding as of August 10, 2000: 74,945,628May 5, 2001: 81,258,742
The number of shares of the Lamar Advertising Company's Class B common stock
outstanding as of August 10, 2000: 17,000,000May 5, 2001: 16,638,136
The number of shares of Lamar Media Corp. common stock outstanding as of August
10, 2000:May 5,
2001: 100
This combined Form 10-Q is separately filed by (i) Lamar Advertising Company and
(ii) Lamar Media Corp. (which is a wholly-owned subsidiary of Lamar Advertising
Company). Lamar Media Corp. meets the conditions set forth in general
instruction H(1) (a) and (b) of Form 10-Q and is, therefore, filing this form
with the reduced disclosure format permitted by such instruction.
2
CONTENTS
Page
----
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Lamar Advertising Company
Condensed Consolidated Balance Sheets as of
June 30, 2000March 31, 2001 and December 31, 19992000 1
Condensed Consolidated Statements of Operations
for the three months ended June 30,March 31, 2001
and March 31, 2000 and June 30, 1999 and six months
ended June 30, 2000
and June 30, 1999 2
Condensed Consolidated Statements of Cash Flows
for the sixthree months ended June 30,March 31, 2001 and
March 31, 2000 and
June 30, 1999 3
Notes to Condensed Consolidated Financial
Statements 4 - 75
Lamar Media Corp.
Condensed Consolidated Balance Sheets as of
June 30, 2000March 31, 2001 and December 31, 1999 82000 6
Condensed Consolidated Statements of Operations
for the three months ended June 30,March 31, 2001
and March 31, 2000 and June 30, 1999 and six months
ended June 30, 2000 and June 30, 1999 97
Condensed Consolidated Statements of Cash Flows
for the sixthree months ended June 30,March 31, 2001 and
March 31, 2000 and
June 30, 1999 108
Notes to Condensed Consolidated Financial
Statements 119
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 1210 - 1512
ITEM 3. Quantitative and Qualitative Disclosures About
Market Risks 16
ITEM 4. Submission of Matters to a Vote of Security Holders 1713
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 1814 - 1915
Signatures 1916
3
PART I - FINANCIAL INFORMATION
ITEM 1.- FINANCIAL STATEMENTS
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
June 30,March 31, December 31,
Assets 2001 2000
1999- ------ ------------ ------------
Current assets:
Cash and cash equivalents $ 11,5614,230 $ 8,40172,340
Receivables, net 93,114 81,22696,777 91,674
Prepaid expenses 30,005 21,52433,898 23,164
Other current assets 14,948 14,3428,498 8,738
------------ ------------
Total current assets 149,628 125,493143,403 195,916
------------ ------------
Property, plant and equipment 1,568,531 1,412,6051,694,453 1,630,866
Less accumulated depreciation and amortization (297,364) (218,893)(366,096) (335,991)
------------ ------------
Net property plant and equipment 1,271,167 1,193,7121,328,357 1,294,875
------------ ------------
Intangible assets 2,068,268 1,874,1772,171,552 2,129,733
Other assets - non-current 22,982 13,56319,120 17,249
------------ ------------
Total assets $ 3,512,0453,662,432 $ 3,206,9453,637,773
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable $ 9,96710,813 $ 11,4929,918
Current maturities of long-term debt 4,599 4,31890,906 66,814
Accrued expenses 38,643 57,65325,676 40,724
Deferred income 10,654 11,24313,098 11,005
------------ ------------
Total current liabilities 63,863 84,706140,493 128,461
Long-term debt 1,835,627 1,611,4631,688,150 1,671,466
Deferred income taxes 137,143 112,412139,342 140,452
Other liabilities 8,234 6,8358,360 7,939
------------ ------------
Total liabilities 2,044,867 1,815,4161,976,345 1,948,318
------------ ------------
Stockholders' equity:
Series AA preferred stock, par value $.001, $63.80 cumulative
dividends, authorized 1,000,0005,720 shares; 5,719.49 shares
issued and outstanding at 2001 and 2000 -- --
Class A preferred stock, par value $638, $63.80 cumulative
dividends, 10,000 shares authorized, 0 shares issued and
1999outstanding at 2001 and 2000 -- --
Class A common stock, par value $.001, 175,000,000 shares
authorized, 73,904,08681,258,742 shares and 70,576,251 shares80,101,793 issued and
outstanding at 2001 and 2000, and 1999, respectively 74 7181 80
Class B common stock, par value $.001, 37,500,000 shares
authorized, 17,000,000 shares16,638,136 and 17,449,99717,000,000 shares issued and
outstanding at 20002001 and 1999,2000, respectively 17 17
Additional paid-in capital 1,604,116 1,478,9161,902,315 1,871,303
Accumulated deficit (137,029) (87,475)(216,326) (181,945)
------------ ------------
Stockholders' equity 1,467,178 1,391,5291,686,087 1,689,455
------------ ------------
Total liabilities and stockholders' equity $ 3,512,0453,662,432 $ 3,206,9453,637,773
============ ============
See accompanying notes to consolidated financial statements.
-1-
4
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Three Months Ended Six Months Ended
June 30, June 30,months ended
March 31,
2001 2000 1999 2000 1999
------------ ------------
------------ ------------
Net revenues $ 172,953170,385 $ 97,809 $ 324,220 $ 183,575
------------ ------------151,267
------------ ------------
Operating expenses:
Direct advertising expenses 53,626 30,481 106,138 60,24561,536 52,512
General and administrative expenses 35,261 20,754 69,465 40,85337,696 34,204
Depreciation and amortization 76,230 32,652 149,200 64,21385,407 72,970
------------ ------------
------------ ------------
165,117 83,887 324,803 165,311
------------ ------------184,639 159,686
------------ ------------
Operating income (loss) 7,836 13,922 (583) 18,264
------------ ------------loss (14,254) (8,419)
------------ ------------
Other expense (income):
Interest income (369) (269) (696) (955)(244) (327)
Interest expense 36,401 18,234 69,291 36,379
Gain35,780 32,890
(Gain) loss on disposition of assets (105) (141) (104) (477)(216) 1
------------ ------------
------------ ------------
35,927 17,824 68,491 34,947
------------ ------------35,320 32,564
------------ ------------
Loss before income taxes and cumulative
effect of a change in accounting
principle (28,091) (3,902) (69,074) (16,683)tax benefit (49,574) (40,983)
Income tax expense (benefit) (7,693) 1,076 (19,702) (1,766)
------------ ------------ ------------ ------------
Loss before cumulative effect of a
change in accounting principle (20,398) (4,978) (49,372) (14,917)
------------ ------------ ------------ ------------
Cumulative effect of a change in
accounting principle -- -- -- (767)
------------ ------------benefit (15,284) (12,009)
------------ ------------
Net loss (20,398) (4,978) (49,372) (15,684)(34,290) (28,974)
Preferred stock dividends 91 183 182 274
------------ ------------(91) (91)
------------ ------------
Net loss applicable to common stock $ (20,489)(34,381) $ (5,161) $ (49,554) $ (15,958)
============ ============(29,065)
============ ============
Loss per common share - basic and diluted:
Loss before accounting changediluted $ (.23)(.35) $ (.08) $ (.56) $ (.25)
Cumulative effect of a change in
accounting principle (--) (--) (--) (.01)
------------ ------------ ------------ ------------
Net loss $ (.23) $ (.08) $ (.56) $ (.26)
============ ============(.33)
============ ============
Weighted average common shares outstanding 89,512,428 61,227,406 88,989,536 61,185,61097,603,342 88,466,644
Incremental common shares from dilutive stock
options -- -- -- --
Incremental common shares from convertible debt -- --
-- --
------------ ------------ ------------ ------------
Weighted average common shares assuming dilution 89,512,428 61,227,406 88,989,536 61,185,610
============ ============97,603,342 88,466,644
============ ============
See accompanying notes to condensed consolidated financial statements.
-2-
5
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
SixThree Months Ended
June 30,March 31,
2001 2000
1999
---------- ---------------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (49,372)(34,290) $ (15,684)(28,974)
Adjustments to reconcile net loss
to net cash provided by operating activities:
Depreciation and amortization 149,200 64,213
Cumulative effect of a change in accounting
principle -- 767
Gain85,407 72,970
(Gain) loss on disposition of assets (104) (477)(216) 1
Deferred taxes (20,279) (4,469)tax benefit (15,611) (12,527)
Provision for doubtful accounts 2,329 5001,803 1,183
Changes in operating assets and liabilities:
Decrease (Increase) decrease in:
Receivables (10,438) (6,945)(6,416) (785)
Prepaid expenses (7,635) (150)(10,103) (7,273)
Other assets (207) 1,023(276) (508)
Increase (Decrease)(decrease) in:
Trade accounts payable (1,524) 67895 (1,531)
Accrued expenses (3,456) (4,441)(17,416) (11,208)
Deferred income (920) (1,373)1,846 955
Other liabilities 52 36
---------- ----------504 33
------------ ------------
Net cash provided by operating activities 57,646 33,067
---------- ----------6,127 12,336
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in notes receivable (197) (3,351) (1,590)
Acquisition of new markets (230,652) (139,064)(101,556) (82,082)
Capital expenditures (43,700) (30,274)(15,571) (19,004)
Proceeds from disposition of assets 1,122 1,602
---------- ----------1,036 531
------------ ------------
Net cash used in investing activities (276,581) (169,326)
---------- ----------(116,288) (103,906)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt issuance costs (1,448) --
Net proceeds from issuance of common stock 1,893 2,1941,487 1,213
Principal payments on long-term debt (2,168) (47,009)(1,345) (1,048)
Net borrowings under credit agreements 224,000 57,00042,000 93,000
Dividends (182) (274)
---------- ----------(91) (91)
------------ ------------
Net cash provided by financing activities 222,095 11,911
---------- ----------42,051 93,074
------------ ------------
Net (decrease) increase (decrease) in cash and cash equivalents 3,160 (124,348)(68,110) 1,504
Cash and cash equivalents at beginning of period 72,340 8,401
128,597
---------- ---------------------- ------------
Cash and cash equivalents at end of period $ 11,5614,230 $ 4,249
========== ==========9,905
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 69,04739,560 $ 36,196
========== ==========36,504
============ ============
Cash paid for state and federal income taxes $ 1,616368 $ 1,485
========== ==========886
============ ============
Common stock issuance related toissued for acquisitions $ 122,03129,000 $ 475
========== ==========29,226
============ ============
See accompanying notes to consolidated financial statements.statements
-3-
6
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
1. General
On July 20, 1999, Lamar Advertising Company reorganized into a new holding
company structure. As a result of this reorganization (1) the former Lamar
Advertising Company became a wholly-owned subsidiary of a newly formed holding
company, (2) the name of the former Lamar Advertising Company was changed to
Lamar Media Corp., (3) the name of the new holding company became Lamar
Advertising Company, (4) the outstanding shares of capital stock of the former
Lamar Advertising Company, including the Class A common stock, were
automatically converted, on a share for share basis, into identical shares of
capital stock of the new holding company and (5) the Class A common stock of the
new holding company commenced trading on the Nasdaq National Market under the
symbol "LAMR" instead of the Class A common stock of the former Lamar
Advertising Company. In addition, following the holding company reorganization,
substantially all of the former Lamar Advertising Company's debt obligations,
including the bank credit facility and other long-term debt remained the
obligations of Lamar Media. Under Delaware law, the reorganization did not
require the approval of the stockholders of the former Lamar Advertising
Company. The purpose of the reorganization was to provide Lamar Advertising
Company with a more flexible capital structure and to enhance its financing
options. The business operations of the former Lamar Advertising Company and its
subsidiaries have not changed as a result of the reorganization.
In this quarterly report, "Lamar," the "Company," "we," "us" and "our" refer to
Lamar Advertising Company and its consolidated subsidiaries with respect to
periods following the reorganization and to old Lamar Advertising Company with
respect to periods prior to the reorganization, except where we make it clear
that we are only referring to Lamar Media Corp. or a particular subsidiary.
In addition, "Lamar Media" and "Media" refer to Lamar Media Corp. and its
consolidated subsidiaries with respect to periods following the reorganization
and to old Lamar Advertising Company with respect to periods prior to the
reorganization, except where we make it clear that we are only referring to
Lamar Media Corp. or a subsidiary.
2. Significant Accounting Policies
The information included in the foregoing interim financial statements is
unaudited. In the opinion of management all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of theLamar Advertising
Company's financial position and results of operations for the interim periods
presented have been reflected herein. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the
entire year. These condensed consolidated financial statements should be read in
conjunction with the Company's consolidated financial statements and the notes
thereto included in the Company's Annual Report on Form 10-K.
Certain amounts in the prior year's consolidated financial statements have been
reclassified to conform with the current year presentation. These
reclassifications had no effect on previously reported results of operations.
-4-
7
3.2. Acquisitions
On January 14, 2000, the Company purchased the stock of Aztec Group, Inc. for a
purchase price of approximately $34,826. The purchase price consisted of
approximately $5,600 cash and the issuance of 481,481 shares of Lamar
Advertising Company common stock valued at approximately $29,226.
On March 31, 2000,1, 2001, the Company purchased the assets of antwo outdoor company in the
Company's Northeastern Regionadvertising
companies, American Outdoor Advertising, LLC and Appalachian Outdoor Advertising
Co., Inc. for a total cash purchase price of approximately $33,600.
Effective May$31,536 and $20,000,
respectively.
On February 1, 2000,2001, the Company purchased all of the outstanding common stock
of Bowlin Outdoor West,Advertising and Travel Centers, Inc. for a total cash purchase
price of approximately $39,900.
In addition, on May 24, 2000, the Company purchased all of the outstanding
common stock of Advantage Outdoor Company, Inc. for a cash$44,100. The purchase price consisted of approximately
$76,900$15,100 cash and the issuance of 2,300,000725,000 shares of Lamar'sLamar Advertising Class A
common stock valued at approximately $92,805.$29,000.
During the sixthree months ended June 30, 2000,March 31, 2001, the Company completed 4328
additional acquisitions of outdoor advertising assets for a cash purchase price
of approximately $52,200.$34,414.
Each of these acquisitions werewas accounted for under the purchase method of
accounting, and, accordingly, the accompanying financial statements include the
results of operations of each acquired entity from the date of acquisition. The
acquisition costs have been allocated to assets acquired and liabilities assumed
based on fair market value at the dates of acquisition. The following is a
summary of the preliminary allocation of the acquisition costs in the above
transactions.
Property
Current Plant & Other Other Current Long-term
Assets Equipment Goodwill Intangibles Assets Liabilities Liabilities
---------- ---------- ---------- ----------- ---------- ----------- ----------------------- ------------ ------------ ------------ ------------ ------------ ------------
Aztec Group, Inc. $ 487 $ 8,335 $ 21,786 $ 10,526 $American Outdoor 557 1,185 18,682 11,112 -- $ 708 $ 5,632
Northeast Region 480 2,604 16,804 14,102 -- 385 --
AcquisitionAppalachian Outdoor West 1,025 10,539 21,340 17,222 -- 1,192 9,040
Advantage10,377 7,510 2,113 -- -- --
Bowlin Outdoor 3,647 64,488 80,851 58,108 167 6,074 31,4451,726 29,173 9,218 23,889 73 3,371 16,608
Other 277 14,097 25,496 13,209196 12,526 8,410 13,283 -- 727 162
---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 5,916 $ 100,063 $ 166,277 $ 113,167 $ 167 $ 9,086 $ 46,279
========== ========== ========== ========== ========== ========== ==========1 --
------------ ------------ ------------ ------------ ------------ ------------ ------------
2,479 53,261 43,820 50,397 73 3,372 16,608
============ ============ ============ ============ ============ ============ ============
-4-
7
Summarized below are certain unaudited pro forma statement of operations data
for the three months ended June 30,March 31, 2001 and 2000 and 1999 and the six months ended June
30, 2000 and 1999 as if each of the above
acquisitions and the acquisitions occurring in 1999,2000, which were fully described
in the Company's December 31, 19992000 Annual Report on Form 10K,10-K, had been
consummated as of January 1, 1999.2000. This pro forma information does not purport
to represent what the Company's results of operations actually would have been
had such transactions occurred on the date specified or to project the Company's
results of operations for any future periods.
Three Months Ended SixThree Months Ended
June 30, June 30,March 31, 2001 March 31, 2000
1999 2000 1999
------------ ------------ ------------ ------------------------------ ------------------
Net revenues $ 176,954171,111 $ 159,771 $ 336,093 $ 308,225
============ ============ ============ ============167,900
============= =============
Net loss applicable to
common stock $ (23,337)(34,566) $ (27,808) $ (56,276) $ (62,020)
============ ============ ============ ============(36,507)
============= =============
Net loss per common share - basicshare-basic $ (.26)(.35) $ (.31) $ (.62) $ (.69)
============ ============ ============ ============(.39)
============= =============
Net loss per common share - dilutedshare-diluted $ (.26)(.35) $ (.31) $ (.62) $ (.69)
============ ============ ============ ============(.39)
============= =============
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8
4.3. Summarized Financial Information of Subsidiaries
Separate financial statements of each of the Company's direct or indirect wholly-ownedwholly
owned subsidiaries that have guaranteed the Company's obligations with respect
to its publicly issued notes (collectively, the "Guarantors") are not included
herein because the Guarantorsguarantees are jointlyfull and severally liable under
the guarantees,unconditional and the aggregate assets, liabilities, earningsjoint and equity of
the Guarantors are substantially equivalent to the assets, liabilities, earnings
and equity of the Company on a consolidated basis.
Summarized financial information for Missouri Logos, a Partnership, a 66 2/3%
owned subsidiary of the Companyseveral
and the only subsidiary of the Company that is not a Guarantor,guarantor is set forth below:
Balance Sheet Information:
June 30, 2000 December 31, 1999
------------- -----------------
Current assets $109 $288
Total assets 155 333
Total liabilities 10 6
Venturers' equity 145 327
Income Statement Information:
Three months ended Six months ended
June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
Revenues $311 $258 $565 $532
Net income 172 106 336 320
5. Change in Accounting Principle
In April 1998,considered minor. Lamar
Media's ability to make distributions to Lamar Advertising is restricted under
the American Instituteterms of Certified Public Accountants issued
Statement of Position ("SOP 98-5"), Reporting onits bank credit facility and the Costs of Start-Up
Activities. SOP 98-5 is effective for financial statements for fiscal years
beginning after December 15, 1998, and requires that the costs of start-up
activities, including organizational costs, be expensed as incurred. The effect
of SOP 98-5 is recorded as a cumulative effect of a change in accounting
principle as described in Accounting Principles Board Opinion No. 20 "Accounting
Changes" in the amount of $767, net of tax, for the six months ended June 30,
1999.
6.indenture relating to Lamar
Media's outstanding notes.
4. Earnings Per Share
Earnings per share are computed in accordance with SFAS No. 128, "Earnings Per
Share." The calculations of basic earnings per share excludeexcludes any dilutive
effect of stock options and convertible debt while diluted earnings per share
includes the dilutive effect of stock options and convertible debt. The number
of potentially dilutive shares excluded from the calculation because of their
anti-dilutive effect are 6,818,5496,738,378 and 555,5587,058,760 for the three months ended June
30, 2000 and 1999 and, 6,936,816 and 579,170 for the six months ended June 30,
2000 and 1999, respectively.
7. Stockholders' Equity
On May 25, 2000, the stockholders approved a resolution to amend the Company's
Restated Certificate of Incorporation to increase the number of authorized
shares of Class A common stock from 125,000,000 shares to 175,000,000 shares
which increased the total authorized capital stock from 163,510,000 shares to
213,510,000 shares. In addition, the shareholders also approved an amendment to
the Company's 1996 Equity Incentive Plan
-6-
9
to increase the number of shares of the Company's Class A common stock available
for issuance to an aggregate of 5,000,000 shares from 4,000,000 shares.
On May 25, 2000, the stockholders approved the 2000 Employee Stock Purchase Plan
whereby 500,000 shares of the Company's Class A common stock have been reserved
for issuance under the Plan. Under this plan, eligible employees may purchase
stock at 85% of the fair market value of a share on the offering commencement
date or the respective purchase date whichever is lower. Purchases are limited
to ten percent of an employee's total compensation. The initial offering under
the Plan commenced on April 1, 2000 with a single purchase date on June 30,
2000. Subsequent offerings shall commence each year on July 1 with a termination
date of December 31 and purchase dates on September 30 and December 31; and on
January 1 with a termination date on June 30 and purchase dates on March
31, 2001 and June 30.
8. Long-Term Debt
In August 1999, Lamar Media Corp. entered into a new bank credit agreement,
replacing its existing bank credit facility, with The Chase Manhattan Bank
serving as administrative agent. The $1,000,000 bank credit facility consists of
(1) a $350,000 revolving bank credit facility, (2) a $650,000 term facility with
two tranches, a $450,000 Term A facility and a $200,000 Term B facility. In
addition, the new bank credit facility provided for an uncommitted $400,000
incremental facility available at the discretion of the lenders.2000, respectively.
5. New Accounting Pronouncement
In June 2000, Lamar Media finalizedthe FASB issued SFAS No. 138, "Accounting for Derivative
Instruments and Hedging Activities - an incremental loan agreement with its lendersamendment of FASB No. 133", which
established accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in which
Lamar Media received commitmentsother contracts, and for
$250,000hedging activities. It requires that an entity recognize all derivatives as
assets or liabilities in the statement of financial position and measure those
instruments at fair value. On January 1, 2001, the previously uncommitted
$400,000 incremental facility.Company adopted SFAS No. 133.
The incremental facility consistsCompany's adoption of (1) $20,000
Series A-1 facility, (2)$130,000 Series A-2 facility and (3) a $100,000 Series
B-1 facility. ProceedsSFAS No. 133 did not have any affect on the financial
position or results of this facility were used to pay down the revolving bank
debt facility. As of June 30, 2000, Lamar Media had $1,000,000 outstanding under
the bank credit facility.
-7-operations in 2001.
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108
LAMAR MEDIA CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
June 30,March 31, December 31,
Assets 2001 2000
1999- ------ ------------ ------------
Current assets:
Current assets:
Cash and cash equivalents $ 11,5614,230 $ 8,40172,340
Receivables, net 93,104 80,67196,777 91,628
Prepaid expenses 30,005 21,52433,898 23,164
Other current assets 22,772 25,19314,233 15,966
------------ ------------
Total current assets 157,442 135,789149,138 203,098
------------ ------------
Property, plant and equipment 1,568,531 1,412,6051,694,453 1,630,866
Less accumulated depreciation and amortization (297,364) (218,893)(366,096) (335,991)
------------ ------------
Net property plant and equipment 1,271,167 1,193,7121,328,357 1,294,875
------------ ------------
Intangible assets 2,048,154 1,851,9652,148,816 2,106,493
Other assets - non-current 22,982 13,56318,395 17,249
------------ ------------
Total assets $ 3,499,7453,644,706 $ 3,195,0293,621,715
============ ============
Liabilities and Stockholder's Equity
Current liabilities:
Trade accounts payable $ 9,96710,813 $ 11,4929,918
Current maturities of long-term debt 4,599 4,31890,906 66,814
Accrued expenses 35,051 54,03119,657 35,765
Deferred income 10,654 11,24313,098 11,005
------------ ------------
Total current liabilities 60,271 81,084134,474 123,502
Long-term debt 1,835,627 1,611,4631,400,650 1,671,466
Deferred income taxes 138,478 112,776142,264 142,052
Other liabilities 8,234 6,8358,360 7,939
------------ ------------
Total liabilities 2,042,610 1,812,1581,685,748 1,944,959
------------ ------------
Stockholder's equity:
Common stock, $.01 par value, authorized 3,000 shares;
issued and outstanding
100 shares at June 30, 2000March 31, 2001 and
December 31, 19992000 -- --
Additional paid-in capital 1,591,637 1,469,6062,169,769 1,855,421
Accumulated deficit (134,502) (86,735)(210,811) (178,665)
------------ ------------
Stockholder's equity 1,457,135 1,382,8711,958,958 1,676,756
------------ ------------
Total liabilities and stockholder's equity $ 3,499,7453,644,706 $ 3,195,0293,621,715
============ ============
See accompanying notes to consolidated financial statements.
-6-
9
LAMAR MEDIA CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
Three Months ended
March 31,
2001 2000
------------ ------------
Net revenues $ 170,385 $ 151,267
------------ ------------
Operating expenses:
Direct advertising expenses 61,536 52,512
General and administrative expenses 37,645 33,818
Depreciation and amortization 84,509 72,307
------------ ------------
183,690 158,637
------------ ------------
Operating loss (13,305) (7,370)
------------ ------------
Other expense (income):
Interest income (244) (327)
Interest expense 33,263 32,890
(Gain) loss on disposition of assets (216) 1
------------ ------------
32,803 32,564
------------ ------------
Loss before income tax benefit (46,108) (39,934)
Income tax benefit (13,962) (11,615)
------------ ------------
Net loss $ (32,146) $ (28,319)
============ ============
See accompanying notes to consolidated financial statements.
-7-
10
LAMAR MEDIA CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
Three Months ended
March 31,
2001 2000
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (32,146) $ (28,319)
Adjustments to reconcile net loss
to net cash provided by operating activities:
Depreciation and amortization 84,509 72,307
Gain (loss) on disposition of assets (216) 1
Deferred tax benefit (14,289) (12,133)
Provision for doubtful accounts 1,803 1,183
Changes in operating assets and liabilities:
(Increase) decrease in:
Receivables (6,479) (1,389)
Prepaid expenses (10,103) (7,273)
Other assets (721) 2,907
Increase (decrease) in:
Trade accounts payable 895 (1,531)
Accrued expenses (18,475) (13,656)
Deferred income 1,846 955
Other liabilities 504 33
------------ ------------
Net cash provided by operating activities 7,128 13,085
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in notes receivable (197) (3,351)
Acquisition of new markets (101,161) (81,709)
Capital expenditures (15,571) (19,004)
Proceeds from disposition of assets 1,036 531
------------ ------------
Net cash used in investing activities (115,893) (103,533)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (1,345) (1,048)
Proceeds from issuance of long-term debt 42,000 93,000
------------ ------------
Net cash provided by financing activities 40,655 91,952
------------ ------------
Net (decrease) increase in cash and cash equivalents (68,110) 1,504
Cash and cash equivalents at beginning of period 72,340 8,401
------------ ------------
Cash and cash equivalents at end of period $ 4,230 $ 9,905
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 35,786 $ 36,504
============ ============
Cash paid for state and federal income taxes $ 368 $ 886
============ ============
NONCASH FINANCING ACTIVITY:
Note payable converted to contributed capital $ 287,500 $ --
============ ============
See accompanying notes to consolidated financial statements.
-8-
11
LAMAR MEDIA CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
------------ ------------ ------------ ------------
Net revenues $ 172,953 $ 97,809 $ 324,220 $ 183,575
------------ ------------ ------------ ------------
Operating expenses:
Direct advertising expenses 53,626 30,481 106,138 60,245
General and administrative expenses 34,775 20,754 68,593 40,853
Depreciation and amortization 75,189 32,652 147,496 64,213
------------ ------------ ------------ ------------
163,590 83,887 322,227 165,311
------------ ------------ ------------ ------------
Operating income 9,363 13,922 1,993 18,264
------------ ------------ ------------ ------------
Other expense (income):
Interest income (369) (269) (696) (955)
Interest expense 36,401 18,234 69,291 36,379
Gain on disposition of assets (105) (141) (104) (477)
------------ ------------ ------------ ------------
35,927 17,824 68,491 34,947
------------ ------------ ------------ ------------
Loss before income taxes and cumulative
effect of a change in accounting
principle (26,564) (3,902) (66,498) (16,683)
Income tax expense (benefit) (7,116) 1,076 (18,731) (1,766)
------------ ------------ ------------ ------------
Loss before cumulative effect of a
change in accounting principle (19,448) (4,978) (47,767) (14,917)
------------ ------------ ------------ ------------
Cumulative effect of a change in
accounting principle -- -- -- (767)
------------ ------------ ------------ ------------
Net loss (19,448) (4,978) (47,767) (15,684)
Preferred stock dividends -- 183 -- 274
------------ ------------ ------------ ------------
Net loss applicable to common stock $ (19,448) $ (5,161) $ (47,767) $ (15,958)
============ ============ ============ ============
See accompanying notes to condensed consolidated financial statements.
-9-
12
LAMAR MEDIA CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
Six Months Ended
June 30,
2000 1999
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (47,767) $ (15,684)
Adjustments to reconcile net loss
to net cash provided by operating activities:
Depreciation and amortization 147,496 64,213
Cumulative effect of a change in accounting
principle -- 767
Gain on disposition of assets (104) (477)
Deferred taxes (19,308) (4,469)
Provision for doubtful accounts 2,329 500
Changes in operating assets and liabilities:
Decrease (Increase) in:
Receivables (10,992) (6,945)
Prepaid expenses (7,635) (150)
Other assets 3,902 1,023
Increase (Decrease) in:
Trade accounts payable (1,524) 67
Accrued expenses (6,172) (4,441)
Deferred income (920) (1,373)
Other liabilities 52 36
------------ ------------
Net cash provided by operating activities 59,357 33,067
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in notes receivable (3,351) (1,590)
Acquisition of new markets (230,652) (139,064)
Capital expenditures (43,700) (30,274)
Proceeds from disposition of assets 1,122 1,602
------------ ------------
Net cash used in investing activities (276,581) (169,326)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt issuance costs (1,448) --
Net proceeds from issuance of common stock -- 2,194
Principal payments on long-term debt (2,168) (47,009)
Net borrowings under credit agreements 224,000 57,000
Dividends -- (274)
------------ ------------
Net cash provided by financing activities 220,384 11,911
------------ ------------
Net increase (decrease) in cash and cash equivalents 3,160 (124,348)
Cash and cash equivalents at beginning of period 8,401 128,597
------------ ------------
Cash and cash equivalents at end of period $ 11,561 $ 4,249
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 69,047 $ 36,196
============ ============
Cash paid for state and federal income taxes $ 1,616 $ 1,485
============ ============
Common stock issuance related to acquisitions $ -- $ 475
============ ============
Parent company stock contributed for acquisitions $ 122,031 $ --
============ ============
See accompanying notes to consolidated financial statements.
-10-
13
LAMAR MEDIA CORP.AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
1. Significant Accounting Policies
The information included in the foregoing interim financial statements is
unaudited. In the opinion of management all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of Lamar Media's
financial position and results of operations for the interim periods presented
have been reflected herein. The results of operations for interim periods are
not necessarily indicative of the results to be expected for the entire year.
These condensed consolidated financial statements should be read in conjunction
with Lamar Media's consolidated financial statements and the notes thereto
included in Lamar Media's Annual Report on Form 10-K.
Certain amounts in the prior year's consolidated financial statements have been
reclassified to conform with the current year presentation. These
reclassifications had no effect on previously reported results of operations.
Certain footnotes are not provided for the accompanying financial statements as
the information in notes 1,2, 3, 4,and 5 7 and 8 to the consolidated financial statements of
Lamar Advertising Company included elsewhere in this report is substantially
equivalent to that required for the consolidated financial statements of Lamar
Media Corp. Earnings per share data is not provided for the operating results of
Lamar Media Corp. as it is a wholly-owned subsidiary of Lamar Advertising
Company.
-11--9-
1412
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In this quarterly report, "Lamar," the "Company," "we," "us" and "our" refer to
Lamar Advertising Company and its consolidated subsidiaries with respect to
periods following the reorganization and to old Lamar Advertising Company with
respect to periods prior to the reorganization, except where we make it clear
that we are only referring to Lamar Media Corp. or a particular subsidiary.
In addition, "Lamar Media" and "Media" refer to Lamar Media Corp. and its
consolidated subsidiaries with respect to periods following the reorganization
and to old Lamar Advertising Company with respect to periods prior to the
reorganization, except where we make it clear that we are only referring to
Lamar Media Corp. or a subsidiary.
LAMAR ADVERTISING COMPANY
The following is a discussion of the consolidated financial condition and
results of operations of theLamar Advertising Company for the six monththree months ended
March 31, 2001 and three month periods
ended June 30, 2000 and 1999.2000. This discussion should be read in conjunction with the
consolidated financial statements of the Company and the related notes.
The following discussion is a summary of the key factors management considers
necessary in reviewing the Company's results of operations, liquidity and
capital resources. The future operating results of the Company may differ
materially from the results described below. For a discussion of certain factors
which may affect the Company's future operating performance, please refer to Exhibit 99.1 hereto entitledthe
"Factors Affecting Future Operating Results". included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2000 filed with the
Securities and Exchange Commission on March 23, 2001.
RESULTS OF OPERATIONS
SixThree Months Ended June 30, 2000March 31, 2001 Compared to SixThree Months Ended June 30, 1999March 31, 2000
Net revenues increased $140.6$19.1 million or 76.6%12.6% to $324.2$170.4 million for the sixthree
months ended June 30, 2000March 31, 2001 as compared to the same period in 1999.2000. This
increase was attributable to the Company's acquisitions during 2000 and 19992001 and
internal growth within the Company's existing markets.
Operating expenses, exclusive of depreciation and amortization, increased $74.5$12.5
million or 73.7%14.4% for the sixthree months ended June 30, 2000March 31, 2001 as compared to the
same period in 1999.2000. This was primarily the result of the additional operating
expenses related to the operations of acquired outdoor advertising assets and
the continued development of the logo sign program.
Depreciation and amortization expense increased $85.0$12.4 million or 132.4%17.0% from
$64.2$73.0 million for the sixthree months ended June 30, 1999March 31, 2000 to $149.2$85.4 million for the
sixthree months ended June 30, 2000March 31, 2001 as a result of an increase in capitalized
assets resulting from the Company's recent acquisition activity.
Due to the above factors, operating income decreased $18.9$5.9 million or 103.2% to an
operating loss of $0.6$14.3 million for sixthree months ended June 30, 2000March 31, 2001 from an
operating incomeloss of $18.3$8.4 million for the same period in 1999.2000.
Interest expense increased $32.9$2.9 million from $36.4$32.9 million for the sixthree months
ended June 30, 1999March 31, 2000 to $69.3$35.8 million for the same period in 20002001 as a result of
additional borrowings under the Company's bank credit facility to fund increased
acquisition activity and increasing interest rates.activity.
There was an income tax benefit of $19.7$15.3 million for the sixthree months ended
June
30, 2000March 31, 2001 as compared to an income tax benefit of $1.8$12.0 million for the
same period in 1999.2000. The effective tax rate for the sixthree months ended June 30, 2000March 31,
2001 is approximately 28.5%,
-12-
1530.8% which is less than statutory rates due to permanent
differences resulting from non-deductible amortization of goodwill.
Due to the adoption of SOP 98-5 "Reporting on the Costs of Start-Up Activities",
which requires costs of start-up activities and organization costs to be
expensed as incurred, the Company recognized an expense of $.8 million as a
cumulative effect of a change in accounting principle for the six months ended
June 30, 1999. This expense is a one time adjustment to recognize start-up
activities and organization costs that were capitalized in prior periods.-10-
13
As a result of the above factors, the Company recognized a net loss for the
sixthree months ended June 30, 2000March 31, 2001 of $49.4$34.3 million, as compared to a net loss of
$15.7$29.0 million for the same period in 1999.
Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999
Revenues for the three months ended June 30, 2000 increased $75.2 million or
76.8% to $173.0 million from $97.8 million for the same period in 1999.
Operating expenses, exclusive of depreciation and amortization, for the three
months ended June 30, 2000 increased $37.7 million or 73.5% over the same period
in 1999.
Depreciation and amortization expense increased $43.5 million or 133.5% from
$32.7 million for three months ended June 30, 1999 to $76.2 million for the
three months ended June 30, 2000.
Operating income decreased $6.1 million or 43.7% to $7.8 million for the three
months ended June 30, 2000 as compared to $13.9 million for the same period in
1999.
Interest expense increased $18.2 million from $18.2 million for the three months
ended June 30, 1999 to $36.4 million for the same period in 2000.
The Company recognized a net loss for the three months ended June 30, 2000 of
$20.4 million as compared to a net loss of $5.0 million for the same period in
1999.
The results for the three months ended June 30, 2000 were affected by the same
factors as the six months ended June 30, 2000. Reference is made to the
discussion of the six month results.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically satisfied its working capital requirements with
cash from operations and revolving credit borrowings. Its acquisitions have been
financed primarily with borrowed funds and the issuance of debt and equity
securities.Class A common stock.
During the sixthree months ended June 30, 2000,March 31, 2001, the Company financed the cash
portion of its acquisition activity of approximately $230.7$101.6 million with
borrowings under the Company's bank credit facility. At June 30, 2000,March 31, 2001,
following these acquisitions, the Company had $249$308 million available under the
Revolving
Facilityrevolving facility and believes that this availability coupled with internally
generated funds will be sufficient for the foreseeable future to satisfy all
debt service obligations and to finance additional acquisition activity and
current operations.
The Company's net cash provided by operating activities increased $24.5 million
from $33.1decreased $6.2 million
for the sixthree months ended June 30, 1999 to $57.6 million for
the six months ended June 30, 2000March 31, 2001 due primarily to an increase in net
loss of $5.3 million, an increase in receivables of $5.6 million and a decrease
in accrued expenses of $6.2 million. These changes were offset primarily by an
increase in noncash items of $71.6$9.8 million, which includes an increase in
depreciation and amortization of $85.0 million offset by a decrease in deferred taxes of $15.8$12.4 million and an increase in provision for doubtful accountsthe deferred
income tax benefit of $1.8 million. The increase in
noncash items was offset by a decrease in net earnings of $33.7 million, an
increase in receivables of $3.5 million, an increase in prepaid expenses of $7.5
million and an increase in accrued expenses of $1.0$3.1 million. Net cash used in investing activities
increased $107.3
-13-
16$12.4 million from $169.3$103.9 million for the sixthree months ended June 30, 1999March 31,
2000 to $276.6$116.3 million for the same period in 2000.2001. This increase was due to a
$91.6$19.5 million increase in acquisitionacquisitions of new markets, offset by a $3.2 million
decrease in notes receivable, and an increasea $3.4 million decrease in capital
expenditures
of $13.4 million.expenditures. Net cash provided by financing activities for the sixthree months
ended June 30, 2000March 31, 2001 is $222.1$42.1 million primarily due significantly to $224.0$42.0 million in net
borrowings under credit agreements which was used primarily to finance acquisitions.
In June 2000, Lamar Media Corp. finalized an incremental loan agreement with its
lenders in which Media received commitments for $250 million ofacquisition activity and
working capital requirements during the previously
uncommitted $400 million incremental facility. The proceeds of this facility
were used to pay down the revolving bank credit facility.period.
-11-
14
LAMAR MEDIA CORP.
The following is a discussion of the consolidated financial condition and
results of operations of Lamar Media for the six monththree months ended March 31, 2001
and three month periods
ended June 30, 2000 and 1999.2000. This discussion should be read in conjunction with the consolidated
financial statements of Lamar Media and the related notes.
The following discussion is a summary of the key factors management considers
necessary in reviewing Lamar Media's results of operations.operations, liquidity and
capital resources. The future operating results of Lamar Media may differ
materially from the results described below. For a discussion of certain factors
which may affect Lamar Media's future operating performance, please refer to
Exhibit 99.1 hereto entitledthe "Factors Affecting Future Operating Results". included in Lamar Media's
Annual Report on Form 10-K for the year ended December 31, 2000 filed with the
Securities and Exchange Commission on March 23, 2001.
RESULTS OF OPERATIONS
SixThree Months Ended June 30, 2000March 31, 2001 Compared to SixThree Months Ended June 30, 1999March 31, 2000
Net revenues increased $140.6$19.1 million or 76.6%12.6% to $324.2$170.4 million for the sixthree
months ended June 30, 2000March 31, 2001 as compared to the same period in 1999.2000. This
increase was attributable to Lamar Media's acquisitions during 2000 and 19992001 and
internal growth within Lamar Media's existing markets.
Operating expenses, exclusive of depreciation and amortization, increased $73.6$12.9
million or 72.8%14.9% for the sixthree months ended June 30, 2000March 31, 2001 as compared to the
same period in 1999.2000. This was primarily the result of the additional operating
expenses related to the operations of acquired outdoor advertising assets and
the continued development of the logo sign program.
Depreciation and amortization expense increased $83.3$12.2 million or 129.7%16.9% from
$64.2$72.3 million for the sixthree months ended June 30, 1999March 31, 2000 to $147.5$84.5 million for the
sixthree months ended June 30, 2000March 31, 2001 as a result of an increase in capitalized
assets resulting from Lamar Media's recent acquisition activity.
Due to the above factors, operating income decreased $16.3loss increased $5.9 million or 89.1% to an operating
incomeloss of $2.0$13.3 million for sixthree months ended June 30, 2000March 31, 2001 from $18.3operating loss
of $7.4 million for the same period in 1999.2000.
Interest expense increased $32.9$0.4 million from $36.4$32.9 million for the sixthree months
ended June 30, 1999March 31, 2000 to $69.3$33.3 million for the same period in 20002001 as a result of
additionalincreased borrowings under Lamar Media'sthe bank credit facility used to fundfind increased
acquisition activity and increasingoffset by the reduction of interest rates.expense due to
cancellation of the $287.5 million note payable to Lamar Advertising Company in
January 2001.
There was an income tax benefit of $18.7$14.0 million for the sixthree months ended
June
30, 2000March 31, 2001 as compared to an income tax benefit of $1.8$11.6 million for the
same period in 1999.2000. The effective tax rate for the sixthree months ended June 30, 2000March 31,
2001 is approximately 28.2%30.3% which is less than statutory rates due to permanent
differences resulting from non-deductible amortization of goodwill.
-14-
17
Due to the adoption of SOP 98-5 "Reporting on the Costs of Start-Up Activities"
which requires costs of start-up activities and organization costs to be
expensed as incurred, Lamar Media recognized an expense of $.8 million as a
cumulative effect of a change in accounting principle for the six months ended
June 30, 1999. This expense is a one time adjustment to recognize start-up
activities and organization costs that were capitalized in prior periods.
As a result of the above factors, Lamar Media recognized a net loss for the
sixthree months ended June 30, 2000March 31, 2001 of $47.8$32.1 million, as compared to a net loss of
$15.7
million for the same period in 1999.
Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999
Revenues for the three months ended June 30, 2000 increased $75.2 million or
76.8% to $173.0 million from $97.8 million for the same period in 1999.
Operating expenses, exclusive of depreciation and amortization, for the three
months ended June 30, 2000 increased $37.2 million or 72.5% over the same period
in 1999.
Depreciation and amortization expense increased $42.5 million or 130.3% from
$32.7 million for three months ended June 30, 1999 to $75.2 million for the
three months ended June 30, 2000.
Operating income decreased $4.5 million or 32.7% to $9.4 million for the three
months ended June 30, 2000 as compared to $13.9 million for the same period in
1999.
Interest expense increased $18.2 million from $18.2 million for the three
months ended June 30, 1999 to $36.4$28.3 million for the same period in 2000.
Lamar Media recognized a net loss for the three months ended June 30, 2000 of
$19.4 million as compared to a net loss of $5.0 million for the same period in
1999.
The results for the three months ended June 30, 2000 were affected by the same
factors as the six months ended June 30, 2000. Reference is made to the
discussion of the six month results.
-15--12-
1815
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
TheLamar Advertising Company is exposed to interest rate risk in connection with
variable rate debt instruments issued by the Company.its wholly-owned subsidiary, Lamar
Media Corp. The Company does not enter into market risk sensitive instruments
for trading purposes. The information below summarizes the Company's interest
rate risk associated with its principal variable rate debt instruments
outstanding at June 30, 2000.March 31, 2001.
Loans under Lamar Media's new bank credit facilityagreement bear interest at variable
rates equal to the Chase Prime Rate plus the applicable margin or LIBOR plus the applicable margin. Because
the Chase Prime Rate or LIBOR may increase or decrease at any time, the Company
isand Lamar Media are exposed to market risk as a result of the impact that
changes in these base rates may have on the interest rate applicable to
borrowings under the new bank credit facility.agreement. Increases in the interest rates
applicable to borrowings under the new bank credit facilityagreement would result in
increased interest expense and a reduction in the Company's and Lamar Media's
net income and after tax cash flow.
At June 30, 2000,March 31, 2001, there was approximately $1.0 billion$942 million of aggregate
indebtedness outstanding under Lamar Media'sthe new bank credit facility,agreement, or approximately
54.5%52.9% of the Company's and 63.2% of Lamar Media's outstanding long-term debt on
that date, bearing interest at variable rates. The aggregate interest expense
for the sixthree months ended June 30,
2000March 31, 2001 with respect to borrowings under the
new bank credit facilityagreement was $35.9$19.3 million, and the weighted average interest
rate applicable to borrowings under these credit facilities during the sixthree
months ended June 30, 2000March 31, 2001 was 8.3%8.4%. Assuming that the weighted average
interest rate was 200-basis points higher (that is 10.3%10.4% rather than 8.3%8.4%), then
the Company's 2000and Lamar Media's March 31, 2001 interest expense would have been
approximately $8.6$4.6 million higher resulting in a $5.3$2.8 million increasedecrease in the
Company's sixand Lamar Media's three months ended June 30, 2000March 31, 2001 net lossincome and a related decrease in
after tax cash flow.
The Company attempts to mitigate the interest rate risk resulting from its
variable interest rate long-term debt instruments by also issuing fixed rate
long-term debt instruments and maintaining a balance over time between the
amount of the Company's variable rate and fixed rate indebtedness. In addition,
the Company has the capability under the new bank credit facilityagreement to fix the
interest rates applicable to its borrowings at an amount equal to LIBOR plus the
applicable margin for periods of up to twelve months, which would allow the
Company to mitigate the impact of short-term fluctuations in market interest
rates. In the event of an increase in interest rates, the Company may take
further actions to mitigate its exposure. The Company cannot guarantee, however,
that the actions that it may take to mitigate this risk will be feasible or
that, if these actions are taken, that they will be effective.
-16--13-
19
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company held its annual meeting of stockholders on Thursday, May 25, 2000.
The following represents the results of the proposals submitted to a vote of
security holders:
Proposal to Elect Directors
The following persons were elected to the Company's Board of Directors for a
term of office expiring at the Company's 2001 Annual Meeting of Stockholders:
Votes Cast For Votes Withheld
-------------- --------------
Kevin P. Reilly, Jr. 211,506,097 145,881
Sean E. Reilly 211,538,427 113,488
Keith A. Istre 211,538,427 113,488
Charles W. Lamar, III 211,538,427 113,488
Gerald H. Marchand 211,538,427 113,488
Wendell S. Reilly 211,458,427 193,488
T. Everett Stewart 211,538,427 113,488
Stephen P. Mumblow 211,538,427 113,488
R. Steven Hicks 211,538,427 113,488
Thomas O. Hicks 211,538,427 113,488
Approval of the Amendment to the Company's 1996 Equity Incentive Plan
FOR AGAINST ABSTAIN
--- ------- -------
200,583,680 9,212,727 31,423
Approval of the Amendment to the Company's Restated Certificate of Incorporation
FOR AGAINST ABSTAIN
--- ------- -------
211,303,051 321,224 27,640
Approval of the Assumption of Lamar Advertising Company's 1996 Equity Incentive
Plan
FOR AGAINST ABSTAIN
--- ------- -------
201,109,477 8,688,830 29,523
Approval of the 2000 Employee Stock Purchase Plan
FOR AGAINST ABSTAIN
--- ------- -------
209,281,296 545,144 1,390
The Company's 2001 annual meeting of stockholders has been scheduled for May 24,
2001.
-17-
2016
PART II - OTHER INFORMATION
ITEMItem 6. EXHIBITS AND REPORTS ON FORMExhibits and Reports on Form 8-K.
(a) Exhibits
2.1 Agreement and Plan of Merger dated as of July 20,
1999 among Lamar Media Corp., Lamar New Holding Co.,
and Lamar Holdings Merge Co. Previously filed as
exhibit 2.1 to the Company's Current Report on Form
8-K filed on July 22, 1999 (File No. 0-30242) and
incorporated herein by reference.
3.1 Certificate of Incorporation of Lamar New Holding Co.
Previously filed as exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q for the period ended
June 30, 1999 (File No. 0-20833) filed on August 16,
1999 and incorporated herein by reference.
3.2 Certificate of Amendment of Certificate of
Incorporation of Lamar New Holding Co. (whereby the
name of Lamar New Holding Co. was changed to Lamar
Advertising Company). Previously filed as exhibit 3.2
to the Company's Quarterly Report on Form 10-Q for
the period ended JunJune 30, 1999 (File No. 0-20833)
filed on August 16, 1999 and incorporated herein by
reference.
3.3 Certificate of Amendment of Certificate of
Incorporation of Lamar Advertising Company.
Previously filed as Exhibit 3.3 to the Company's
Quarterly Report on Form 10-Q for the period ended
June 30, 2000 (File No. 0-30242) filed on August 11,
2000 and incorporated herein by reference.
3.4 Certificate of Correction of Certificate of
Incorporation of Lamar Advertising Company.
Filed herewith.Previously filed as Exhibit 3.4 to the Company's
Quarterly Report on Form 10-Q for the period ended
September 30, 2000 (File No. 0-30242) filed on
November 14, 2000 and incorporated herein by
reference.
3.5 Bylaws of the Company. Previously filed as exhibit
3.3 to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1999 (File No. 0-20833)
filed on August 16, 1999 and incorporated herein by
reference.
3.53.6 Amended and Restated Bylaws of Lamar Media Corp.
Previously filed as exhibit 3.1 to Lamar Media's
Quarterly Report on Form 10-Q for the period ended
September 30, 1999 (File No. 1-12407) filed on
November 12, 1999 and incorporated herein by
reference.
4.1 Supplemental Indenture to the Indenture dated
November 15, 1996 among Lamar Media Corp., certain of
its subsidiaries and State Street Bank and Trust
Company, as Trustee, dated June 1, 2000March 15, 2001 delivered
by Lamar Hardy Outdoor West,Advertising, Inc. of Georgia and Outdoor West, Inc. of Tennessee and, in
substantially identical agreements, by the schedulescheduled
additional subsidiary guarantors. Filed herewith.
-14-
17
4.2 Supplemental Indenture to the Indenture dated August
15, 1997 among Outdoor Communications, Inc., certain
of its subsidiaries and First Union National Bank, as
Trustee, dated June 1, 2000March 15, 2001 delivered by Lamar
Hardy Outdoor West,Advertising, Inc. of Georgia and Outdoor West, Inc. of Tennessee and, in substantially
identical agreements, by the scheduled additional
subsidiary guarantors. Filed herewith.
4.3 Supplemental Indenture to the Indenture dated
September 25, 1997 among Lamar Media Corp., certain
of its subsidiaries and State Street Bank and Trust
Company, as Trustee, dated June 1, 2000March 15, 2001 delivered
by Lamar Hardy Outdoor West,Advertising, Inc. of Georgia and Outdoor West, Inc. of Tennessee and, in
substantially identical agreements, by the scheduled
additional subsidiary guarantors. Filed herewith.
10.1 Joinder Agreement to the Lamar Media Corp. Credit
Agreement datedated August 13, 1999 by Lamar Hardy
Outdoor West,Advertising, Inc. of Georgia and Outdoor West,
Inc. of Tennessee and, in substantially
identical agreements, by the scheduled additional
subsidiary guarantors, in favor of The Chase
Manhattan Bank, as Administrative Agent dated June 1, 2000. Filed
herewith.
-18-
21
10.2 1996 Equity Incentive Plan, as amended. Filed herewith.
10.3 2000 Employee Stock Purchase Plan. Filed herewith.
10.4 Series A-1 Incremental Loan Agreement among Lamar Advertising Company,
Lamar Media Corp. and certain of its subsidiaries, the Series A-1
Lenders and the Chase Manhattan Bank, as Administrative Agent, dated
as of May 31, 2000. Filed herewith.
10.5 Series A-2 and Series B-1 Incremental Loan Agreement among Lamar
Advertising Company, Lamar Media Corp. and certain of its
subsidiaries, the Series A-2 and B-1 Lenders and the Chase Manhattan
Bank, as Administrative Agent, dated as of June 22, 2000. Filed
herewith.
27.1 Financial Data Schedule for the Company. Filed herewith.
27.2 Financial Data Schedule for Lamar Media Corp. Filed herewith.
99.1 Factors Affecting Future Operating Results of the Company and Lamar
Media.March
15, 2001. Filed herewith.
(b) Reports on Form 8-K
NoneReports on Form 8-K were filed with the Commission during the
first quarter of 2001 to report the following items as of the
dates indicated:
On January 12, 2001, the Company filed a report on
Form 8-K in order to file an Underwriting Agreement
dated January 11, 2001 among Lamar Advertising
Company, AMFM Operating Inc. and Deutsche Bank
Securities Inc. for incorporation by reference into
the Registration Statement on Form S-3 (File No.
333-45490), which Registration Statement was declared
effective by the Commission on September 21, 2000. An
amendment to such Report on Form 8-K was filed on
January 16, 2001 to correct an error in the
Registration Number referenced in the Form 8-K.
-15-
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LAMAR ADVERTISING COMPANY
DATED: August 11, 2000May 14, 2001 BY: /s/ Keith A. Istre
-----------------------------------------------
Keith A. Istre
Chief Financial and Accounting
Officer, Treasurer and Director
LAMAR MEDIA CORP.
DATED: August 11, 2000 BY: /s/ Keith A. Istre
-----------------------------------------------
Keith A. Istre
Chief Financial and Accounting
Officer, Treasurer and Director
-19-
2219
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
2.1 Agreement and Plan of Merger dated as of July 20, 1999 among Lamar
Media Corp., Lamar New Holding Co., and Lamar Holdings Merge Co.
Previously filed as exhibit 2.1 to the Company's Current Report on
Form 8-K filed on July 22, 1999 (File No. 0-30242) and incorporated
herein by reference.
3.1 Certificate of Incorporation of Lamar New Holding Co. Previously
filed as exhibit 3.1 to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1999 (File No. 0-20833) filed on
August 16, 1999 and incorporated herein by reference.
3.2 Certificate of Amendment of Certificate of Incorporation of Lamar
New Holding Co. (whereby the name of Lamar New Holding Co. was
changed to Lamar Advertising Company). Previously filed as exhibit
3.2 to the Company's Quarterly Report on Form 10-Q for the period
ended JunJune 30, 1999 (File No. 0-20833) filed on August 16, 1999 and
incorporated herein by reference.
3.3 Certificate of Amendment of Certificate of Incorporation of Lamar
Advertising Company. Previously filed as Exhibit 3.3 to the
Company's Quarterly Report on Form 10-Q for the period ended June
30, 2000 (File No. 0-30242) filed on August 11, 2000 and
incorporated herein by reference.
3.4 Certificate of Correction of Certificate of Incorporation of Lamar
Advertising Company. Filed herewith.Previously filed as Exhibit 3.4 to the
Company's Quarterly Report on Form 10-Q for the period ended
September 30, 2000 (File No. 0-30242) filed on November 14, 2000 and
incorporated herein by reference.
3.5 Bylaws of the Company. Previously filed as exhibit 3.3 to the
Company's Quarterly Report on Form 10-Q for the period ended June
30, 1999 (File No. 0-20833) filed on August 16, 1999 and
incorporated herein by reference.
3.53.6 Amended and Restated Bylaws of Lamar Media Corp. Previously filed as
exhibit 3.1 to Lamar Media's Quarterly Report on Form 10-Q for the
period ended September 30, 1999 (File No. 1-12407) filed on November
12, 1999 and incorporated herein by reference.
4.1 Supplemental Indenture to the Indenture dated November 15, 1996
among Lamar Media Corp., certain of its subsidiaries and State
Street Bank and Trust Company, as Trustee, dated June 1, 2000March 15, 2001
delivered by Lamar Hardy Outdoor West,Advertising, Inc. of Georgia and Outdoor West, Inc. of Tennessee and, in
substantially identical agreements, by the schedulescheduled additional
subsidiary guarantors. Filed herewith.
20
4.2 Supplemental Indenture to the Indenture dated August 15, 1997 among
Outdoor Communications, Inc., certain of its subsidiaries and First
Union National Bank, as Trustee, dated June 1, 2000March 15, 2001 delivered by
Lamar Hardy Outdoor West,Advertising, Inc. of Georgia and Outdoor West, Inc. of Tennessee and, in substantially
identical agreements, by the scheduled additional subsidiary
guarantors. Filed herewith.
4.3 Supplemental Indenture to the Indenture dated September 25, 1997
among Lamar Media Corp., certain of its subsidiaries and State
Street Bank and Trust Company, as Trustee, dated June 1, 2000March 15, 2001
delivered by Lamar Hardy Outdoor West,Advertising, Inc. of Georgia and Outdoor West, Inc. of Tennessee and, in
substantially identical agreements, by the scheduled additional
subsidiary guarantors. Filed herewith.
10.1 Joinder Agreement to the Lamar Media Corp. Credit Agreement datedated
August 13, 1999 by Lamar Hardy Outdoor West,Advertising, Inc. of Georgia and Outdoor West,
Inc. of Tennessee and, in
substantially identical agreements, by the scheduled additional
subsidiary guarantors, in favor of The Chase Manhattan Bank, as
Administrative Agent dated June 1, 2000.March 15, 2001. Filed herewith.
23
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
10.2 1996 Equity Incentive Plan, as amended. Filed herewith.
10.3 2000 Employee Stock Purchase Plan. Filed herewith.
10.4 Series A-1 Incremental Loan Agreement among Lamar Advertising Company,
Lamar Media Corp. and certain of its subsidiaries, the Series A-1
Lenders and the Chase Manhattan Bank, as Administrative Agent, dated
as of May 31, 2000. Filed herewith.
10.5 Series A-2 and Series B-1 Incremental Loan Agreement among Lamar
Advertising Company, Lamar Media Corp. and certain of its
subsidiaries, the Series A-2 and B-1 Lenders and the Chase Manhattan
Bank, as Administrative Agent, dated as of June 22, 2000. Filed
herewith.
27.1 Financial Data Schedule for the Company. Filed herewith.
27.2 Financial Data Schedule for Lamar Media Corp. Filed herewith.
99.1 Factors Affecting Future Operating Results of the Company and Lamar
Media. Filed herewith.