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 September 30, 2000
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 organization) (I.R.S. Employer 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 November 7, 2000: 75,386,851
The number of shares of the Lamar Advertising Company's Class B common stock
outstanding as of November 7, 2000: 17,000,000
The number of shares of Lamar Media Corp. common stock outstanding as of
November 7, 2000: 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
September 30, 2000 and December 31, 1999 1
Condensed Consolidated Statements of Operations for the three
months ended September 30, 2000 and September 30, 1999 and
nine months ended September 30, 2000 and September 30, 1999 2
Condensed Consolidated Statements of Cash Flows
for the nine months ended September 30, 2000 and
September 30, 1999 3
Notes to Condensed Consolidated Financial Statements 4-7
Lamar Media Corp.
Condensed Consolidated Balance Sheets as of
September 30, 2000 and December 31, 1999 8
Condensed Consolidated Statements of Operations
for the three months ended September 30, 2000
and September 30, 1999 and nine months ended
September 30, 2000 and September 30, 1999 9
Condensed Consolidated Statements of Cash Flows
for the nine months ended September 30, 2000 and
September 30, 1999 10
Notes to Condensed Consolidated Financial Statements 11
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-15
ITEM 3. Quantitative and Qualitative Disclosures About
Market Risks 16
ITEM 4. Submission of Matters to a Vote of Security Holders 16
PART II - OTHER INFORMATION
ITEM 5. Other information 16
ITEM 6. Exhibits and Reports on Form 8-K 17-18
Signatures 18
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)
September 30, December 31,
Assets 2000 1999
------------- -----------
Current assets:
Cash and cash equivalents $ 6,676 $ 8,401
Receivables, net 102,930 81,226
Prepaid expenses 31,885 21,524
Other current assets 8,119 14,342
----------- -----------
Total current assets 149,610 125,493
----------- -----------
Property, plant and equipment 1,618,683 1,412,605
Less accumulated depreciation and amortization (322,539) (218,893)
----------- -----------
Net property plant and equipment 1,296,144 1,193,712
----------- -----------
Intangible assets 2,150,490 1,874,177
Other assets - non-current 15,009 13,563
----------- -----------
Total assets $ 3,611,253 $ 3,206,945
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable $ 6,500 $ 11,492
Current maturities of long-term debt 34,675 4,318
Accrued expenses 51,019 57,653
Deferred income 12,076 11,243
----------- -----------
Total current liabilities 104,270 84,706
Long-term debt 1,840,982 1,611,463
Deferred income taxes 149,355 112,412
Other liabilities 8,151 6,835
----------- -----------
Total liabilities 2,102,758 1,815,416
----------- -----------
Stockholders' equity:
Series AA preferred stock, par value $.001, $63.80 cumulative
dividends, authorized 5,720 shares; 5,719.49 shares issued and
outstanding at 2000 and 1999 -- --
Class A common stock, par value $.001, 175,000,000 shares
authorized, 75,386,851 shares and 70,576,251 shares issued and
outstanding at 2000 and 1999, respectively 75 71
Class B common stock, par value $.001, 37,500,000 shares authorized,
17,000,000 shares and 17,449,997 shares issued and outstanding at 2000
and 1999, respectively 17 17
Additional paid-in capital 1,665,032 1,478,916
Accumulated deficit (156,629) (87,475)
----------- -----------
Stockholders' equity 1,508,495 1,391,529
----------- -----------
Total liabilities and stockholders' equity $ 3,611,253 $ 3,206,945
=========== ===========
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 Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
------------ ------------ ------------ ------------
Net revenues $ 184,806 $ 111,039 $ 509,026 $ 294,614
------------ ------------ ------------ ------------
Operating expenses:
Direct advertising expenses 56,038 33,236 162,176 93,481
General and administrative expenses 33,748 23,172 103,213 64,025
Depreciation and amortization 82,333 40,738 231,533 104,951
------------ ------------ ------------ ------------
172,119 97,146 496,922 262,457
------------ ------------ ------------ ------------
Operating income 12,687 13,893 12,104 32,157
------------ ------------ ------------ ------------
Other expense (income):
Interest income (272) (112) (968) (1,067)
Interest expense 39,895 21,092 109,186 57,471
Gain on disposition of assets (170) (5,189) (274) (5,666)
------------ ------------ ------------ ------------
39,453 15,791 107,944 50,738
------------ ------------ ------------ ------------
Loss before income taxes, extraordinary
item and cumulative effect of a
change in accounting principle (26,766) (1,898) (95,840) (18,581)
Income tax expense (benefit) (7,257) 1,404 (26,959) (362)
------------ ------------ ------------ ------------
Loss before extraordinary item and
cumulative effect of a change in
accounting principle (19,509) (3,302) (68,881) (18,219)
------------ ------------ ------------ ------------
Extraordinary loss on debt
extinguishment, net of tax benefit
of $117 -- (182) -- (182)
------------ ------------ ------------ ------------
Loss before cumulative effect of a
change in accounting principle (19,509) (3,484) (68,881) (18,401)
------------ ------------ ------------ ------------
Cumulative effect of a change in
accounting principle -- -- -- (767)
------------ ------------ ------------ ------------
Net loss (19,509) (3,484) (68,881) (19,168)
Preferred stock dividends 91 91 273 365
------------ ------------ ------------ ------------
Net loss applicable to common stock $ (19,600) $ (3,575) $ (69,154) $ (19,533)
============ ============ ============ ============
Loss per common share - basic and diluted:
Loss before accounting change $ (.21) $ (.05) $ (.77) $ (.30)
Extraordinary Item - loss on debt
extinguishment -- -- -- --
Cumulative effect of a change in
accounting principle -- -- -- (.01)
------------ ------------ ------------ ------------
Net loss $ (.21) $ (.05) $ (.77) $ (.31)
============ ============ ============ ============
Weighted average common shares
outstanding 91,953,435 65,953,441 89,982,439 62,792,352
Incremental common shares from dilutive
stock options -- -- -- --
Incremental common shares from
convertible debt -- -- -- --
------------ ------------ ------------ ------------
Weighted average common shares assuming
dilution 91,953,435 65,953,441 89,982,439 62,792,352
============ ============ ============ ============
See accompanying notes to condensed consolidated financial statements.
-2-
5
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
Nine Months Ended
September 30,
2000 1999
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (68,881) $ (19,168)
Adjustments to reconcile net loss
to net cash provided by operating activities:
Depreciation and amortization 231,533 104,951
Cumulative effect of a change in accounting
principle -- 767
Gain on disposition of assets (274) (5,666)
Deferred taxes (26,757) (9,765)
Provision for doubtful accounts 4,686 2,114
Changes in operating assets and liabilities:
Decrease (Increase) in:
Receivables (20,238) (8,866)
Prepaid expenses (8,987) 445
Other assets 756 3,558
Increase (Decrease) in:
Trade accounts payable (4,992) 2,022
Accrued expenses 8,266 149
Deferred income 352 18
Other liabilities 4 (5,248)
--------- ---------
Net cash provided by operating activities 115,468 65,311
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in notes receivable (3,351) (1,587)
Acquisition of new markets (318,150) (831,681)
Capital expenditures (58,107) (53,435)
Proceeds from disposition of assets 1,511 3,943
--------- ---------
Net cash used in investing activities (378,097) (882,760)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt issuance costs (1,470) (12,507)
Net proceeds from issuance of common stock 5,404 3,948
Principal payments on long-term debt (3,757) (78,040)
Net proceeds from note offering -- 279,594
Net borrowings under credit agreements 261,000 507,000
Dividends (273) (365)
--------- ---------
Net cash provided by financing activities 260,904 699,630
--------- ---------
Net decrease in cash and cash equivalents (1,725) (117,819)
Cash and cash equivalents at beginning of period 8,401 128,597
--------- ---------
Cash and cash equivalents at end of period $ 6,676 $ 10,778
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 99,767 $ 56,183
========= =========
Cash paid for state and federal income taxes $ 1,717 $ 6,500
========= =========
Common stock issuance related to acquisitions $ 178,268 $ 952,255
========= =========
See accompanying notes to consolidated financial 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 in July, 1999. 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 in
July 1999, 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 the Company's
financial position and results of operations for the interim periods presented
have been reflected herein. The results of operations for interim periods are
not necessarily indicative of the results to be expected for the entire year.
These condensed consolidated financial statements should be read in conjunction
with the Company's consolidated financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K.
Certain amounts in the prior year's condensed consolidated financial statements
have been reclassified to conform with the current year presentation. These
reclassifications had no effect on previously reported results of operations.
-4-
7
3. Acquisitions
On January 14, 2000, the Company purchased all of the outstanding common stock
of Aztec Group, Inc. for a purchase price of approximately $34,486. The purchase
price consisted of approximately $5,260 cash and the issuance of 481,481 shares
of Lamar Advertising Company Class A common stock valued at approximately
$29,226.
On March 31, 2000, the Company purchased the assets of an outdoor company in the
Company's Northeastern Region for a cash purchase price of approximately
$33,600.
Effective May 1, 2000, the Company purchased all of the outstanding common stock
of Outdoor West, Inc. for a total cash purchase price of approximately $39,200.
On May 24, 2000, the Company purchased all of the outstanding common stock of
Advantage Outdoor Company, Inc. for a cash purchase price of approximately
$76,900 and the issuance of 2,300,000 shares of Lamar's Class A common stock
valued at approximately $92,805.
On July 1, 2000, the Company purchased the stock of Tyler Media Group, Inc. for
a purchase price of approximately $32,378. The purchase price consisted of
approximately $5,919 cash and the issuance of 611,764 shares of Lamar
Advertising Company Class A common stock valued at approximately $26,459.
On July 21, 2000, the Company purchased the assets of Root Outdoor Advertising,
Inc. for a total cash purchase price of approximately $41,100.
During the nine months ended September 30, 2000, the Company completed 66
additional acquisitions of outdoor advertising assets for a total purchase price
of approximately $137,864. The purchase price included the issuance of 674,491
shares of Lamar Advertising Company Class A common stock valued at approximately
$29,778.
Each of these acquisitions were 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 Current Long-term
Assets Equipment Goodwill Intangibles Liabilities Liabilities
-------- --------- -------- ----------- ----------- -----------
Aztec Group, Inc. $ 500 $ 8,279 $ 21,879 $ 10,526 $ 1,001 $ 5,698
Northeast Region 480 2,604 16,804 14,102 385 --
Acquisition
Outdoor West 638 10,539 20,917 17,222 998 9,115
Advantage Outdoor 3,814 64,488 77,734 58,108 6,074 28,328
Tyler Media Group, Inc. 470 16,563 14,029 11,123 -- 9,806
Root Outdoor Adv., Inc. 1,689 8,281 9,027 23,092 1,029 --
Other 2,200 36,807 58,297 56,225 2,464 13,201
-------- -------- -------- -------- -------- --------
$ 9,791 $147,561 $218,687 $190,398 $ 11,951 $ 66,148
======== ======== ======== ======== ======== ========
-5-
8
Summarized below are certain unaudited pro forma statement of operations data
for the three months ended September 30, 2000 and 1999 and the nine months ended
September 30, 2000 and 1999 as if each of the above acquisitions and the
acquisitions occurring in 1999, which were fully described in the Company's
December 31, 1999 Annual Report on Form 10-K, had been consummated as of January
1, 1999. 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 Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
Net revenues $ 185,911 $ 168,484 $ 532,913 $ 487,250
=========== =========== =========== ===========
Net loss applicable to
common stock $ (20,272) $ (24,458) $ (79,470) $ (88,936)
=========== =========== =========== ===========
Net loss per common share - basic $ (.22) $ (.27) $ (.86) $ (.97)
=========== =========== =========== ===========
Net loss per common share - diluted $ (.22) $ (.27) $ (.86) $ (.97)
=========== =========== =========== ===========
4. Summarized Financial Information of Subsidiaries
Separate financial statements of each of the Company's direct or indirect
wholly-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 Company has no independent assets or operations, the
guarantees are full and unconditional and joint and several and the only
subsidiary that is not a guarantor is considered minor. Lamar Media's ability to
make distributions to Lamar Advertising is restricted under the terms of its
bank credit facility and the indentures relating to Lamar Media's outstanding
notes.
5. Change in Accounting Principle
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP 98-5"), Reporting on 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 nine months ended September
30, 1999.
6. Earnings Per Share
Earnings per share are computed in accordance with SFAS No. 128, "Earnings Per
Share." The calculations of basic earnings per share exclude any dilutive effect
of stock options and convertible debt while diluted 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 6,801,011 and 4,067,805 for the three months ended
September 30, 2000 and 1999, respectively, and 6,844,713 and 1,696,780 for the
nine months ended September 30, 2000 and 1999, respectively.
-6-
9
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 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 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. In June 2000,
Lamar Media finalized an incremental loan agreement with its lenders in which
Lamar Media received commitments for $250,000 of the previously uncommitted
$400,000 incremental facility. The incremental facility consists of (1) $20,000
Series A-1 facility, (2) $130,000 Series A-2 facility and (3) a $100,000 Series
B-1 facility. Proceeds of this facility were used to pay down the revolving bank
credit facility. As of September 30, 2000, Lamar Media had $1,037,000
outstanding under the bank credit facility.
-7-
10
LAMAR MEDIA CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
September 30, December 31,
2000 1999
------------- -----------
Assets
Current assets:
Cash and cash equivalents $ 6,676 $ 8,401
Receivables, net 102,930 80,671
Prepaid expenses 31,885 21,524
Other current assets 12,501 25,193
----------- -----------
Total current assets 153,992 135,789
----------- -----------
Property, plant and equipment 1,618,683 1,412,605
Less accumulated depreciation and amortization (322,539) (218,893)
----------- -----------
Net property plant and equipment 1,296,144 1,193,712
----------- -----------
Intangible assets 2,128,095 1,851,965
Other assets - non-current 15,009 13,563
----------- -----------
Total assets $ 3,593,240 $ 3,195,029
=========== ===========
Liabilities and Stockholder's Equity
Current liabilities:
Trade accounts payable $ 6,500 $ 11,492
Current maturities of long-term debt 34,675 4,318
Accrued expenses 46,499 54,031
Deferred income 12,076 11,243
----------- -----------
Total current liabilities 99,750 81,084
Long-term debt 1,840,982 1,611,463
Deferred income taxes 150,593 112,776
Other liabilities 8,151 6,835
----------- -----------
Total liabilities 2,099,476 1,812,158
----------- -----------
Stockholder's equity:
Common stock, $.01 par value, authorized 3,000 shares; issued and
outstanding 100 shares at September 30, 2000 and December 31, 1999 -- --
Additional paid-in capital 1,647,874 1,469,606
Accumulated deficit (154,110) (86,735)
----------- -----------
Stockholder's equity 1,493,764 1,382,871
----------- -----------
Total liabilities and stockholder's equity $ 3,593,240 $ 3,195,029
=========== ===========
See accompanying notes to consolidated financial statements.
-8-
11
LAMAR MEDIA CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
--------- --------- --------- ---------
Net revenues $ 184,806 $ 111,039 $ 509,026 $ 294,614
--------- --------- --------- ---------
Operating expenses:
Direct advertising expenses 56,038 33,236 162,176 93,481
General and administrative expenses 33,910 23,113 102,503 63,966
Depreciation and amortization 82,367 40,434 229,863 104,647
--------- --------- --------- ---------
172,315 96,783 494,542 262,094
--------- --------- --------- ---------
Operating income 12,491 14,256 14,484 32,520
--------- --------- --------- ---------
Other expense (income):
Interest income (272) (112) (968) (1,067)
Interest expense 39,895 21,092 109,186 57,471
Gain on disposition of assets (170) (5,189) (274) (5,666)
--------- --------- --------- ---------
39,453 15,791 107,944 50,738
--------- --------- --------- ---------
Loss before income taxes, extraordinary
item and cumulative effect of a
change in accounting principle (26,962) (1,535) (93,460) (18,218)
Income tax expense (benefit) (7,354) 1,504 (26,085) (262)
--------- --------- --------- ---------
Loss before extraordinary item and
cumulative effect of a
change in accounting principle (19,608) (3,039) (67,375) (17,956)
Extraordinary item - loss on debt
extinguishment net of tax
benefit of $117 -- (182) -- (182)
--------- --------- --------- ---------
Loss before cumulative effect of a
change in accounting principle (19,608) (3,221) (67,375) (18,138)
--------- --------- --------- ---------
Cumulative effect of a change in
accounting principle -- -- -- (767)
--------- --------- --------- ---------
Net loss (19,608) (3,221) (67,375) (18,905)
Preferred stock dividends -- -- -- 274
--------- --------- --------- ---------
Net loss applicable to common stock $ (19,608) $ (3,221) $ (67,375) $ (19,179)
========= ========= ========= =========
See accompanying notes to condensed consolidated financial statements.
-9-
12
LAMAR MEDIA CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
Nine Months Ended
September 30,
2000 1999
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (67,375) $ (18,905)
Adjustments to reconcile net loss
to net cash provided by operating activities:
Depreciation and amortization 229,863 104,647
Cumulative effect of a change in accounting
principle -- 767
Gain on disposition of assets (274) (5,666)
Deferred taxes (25,882) (9,800)
Provision for doubtful accounts 4,686 2,114
Changes in operating assets and liabilities:
Decrease (Increase) in:
Receivables (20,792) (8,866)
Prepaid expenses (8,987) 445
Other assets 7,524 (1,303)
Increase (Decrease) in:
Trade accounts payable (4,992) 2,022
Accrued expenses 4,620 (2,746)
Deferred income 352 (5,248)
Other liabilities 4 18
--------- ---------
Net cash provided by operating activities 118,747 57,479
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in notes receivable (3,351) (1,587)
Acquisition of new markets (316,298) (830,428)
Capital expenditures (58,107) (53,435)
Proceeds from disposition of assets 1,511 3,943
--------- ---------
Net cash used in investing activities (376,245) (881,507)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt issuance costs (1,470) (12,207)
Net proceeds from issuance of common stock -- 2,230
Proceeds from issuance of notes payable -- 287,500
Principal payments on long-term debt (3,757) (78,040)
Net borrowings under credit agreements 261,000 507,000
Dividends -- (274)
--------- ---------
Net cash provided by financing activities 255,773 706,209
--------- ---------
Net decrease in cash and cash equivalents (1,725) (117,819)
Cash and cash equivalents at beginning of period 8,401 128,597
--------- ---------
Cash and cash equivalents at end of period $ 6,676 $ 10,778
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 99,767 $ 56,183
========= =========
Cash paid for state and federal income taxes $ 1,717 $ 6,500
========= =========
Common stock issuance related to acquisitions $ -- $
========= =========
Parent company stock contributed for acquisitions $ 178,268 $ 952,255
========= =========
See accompanying notes to consolidated financial statements.
-10-
13
LAMAR MEDIA CORP.
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, 3, 4, 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.
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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 the Company for the nine month and three month periods
ended September 30, 2000 and 1999. 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 the
"Risk Factor" section of our registration statement on Form S-3 (File No.
333-48288) filed with the Securities and Exchange Commission on October 20,
2000.
RESULTS OF OPERATIONS
Nine Months Ended September 30, 2000 Compared to Nine Months Ended September 30,
1999
Net revenues increased $214.4 million or 72.8% to $509.0 million for the nine
months ended September 30, 2000 as compared to the same period in 1999. This
increase was attributable to the Company's acquisitions during 2000 and 1999 and
internal growth within the Company's existing markets.
Operating expenses, exclusive of depreciation and amortization, increased $107.9
million or 68.5% for the nine months ended September 30, 2000 as compared to the
same period in 1999. 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 $126.5 million or 120.6% from
$105.0 million for the nine months ended September 30, 1999 to $231.5 million
for the nine months ended September 30, 2000 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 $20.1 million or 62.4% to
an operating income of $12.1 million for nine months ended September 30, 2000
from operating income of $32.2 million for the same period in 1999.
Interest expense increased $51.7 million from $57.5 million for the nine months
ended September 30, 1999 to $109.2 million for the same period in 2000 as a
result of additional borrowings under the Company's bank credit facility to fund
increased acquisition activity and increasing interest rates.
There was an income tax benefit of $27.0 million for the nine months ended
September 30, 2000 as compared to an income tax benefit of $0.4 million for the
same period in
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1999. The effective tax rate for the nine months ended September 30, 2000 is
approximately 28.1%, 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 nine months ended
September 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, the Company recognized a net loss for the nine
months ended September 30, 2000 of $68.9 million, as compared to a net loss of
$19.2 million for the same period in 1999.
Three Months Ended September 30, 2000 Compared to Three Months Ended September
30, 1999
Revenues for the three months ended September 30, 2000 increased $73.8 million
or 66.4% to $184.8 million from $111.0 million for the same period in 1999.
Operating expenses, exclusive of depreciation and amortization, for the three
months ended September 30, 2000 increased $33.4 million or 59.2% over the same
period in 1999.
Depreciation and amortization expense increased $41.6 million or 102.1% from
$40.7 million for three months ended September 30, 1999 to $82.3 million for the
three months ended September 30, 2000.
Operating income decreased $1.2 million or 8.6% to $12.7 million for the three
months ended September 30, 2000 as compared to $13.9 million for the same period
in 1999.
Interest expense increased $18.8 million from $21.1 million for the three months
ended September 30, 1999 to $39.9 million for the same period in 2000.
The Company recognized a net loss for the three months ended September 30, 2000
of $19.5 million as compared to a net loss of $3.5 million for the same period
in 1999.
The results for the three months ended September 30, 2000 were affected by the
same factors as the nine months ended September 30, 2000. Reference is made to
the discussion of the nine month results.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically satisfied its working capital requirements with
cash from operations and revolving credit borrowings. Its acquisitions have been
financed primarily with borrowed funds and the issuance of debt and equity
securities.
During the nine months ended September 30, 2000, the Company financed the cash
portion of its acquisition activity of approximately $300.0 million with
borrowings under the Company's bank credit facility. At September 30, 2000,
following these acquisitions, the Company had $212 million available under the
Revolving 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 $50.2 million
from $65.3 million for the nine months ended September 30, 1999 to $115.5
million for the nine months ended September 30, 2000 due primarily to an
increase in noncash items of $116.8 million, which includes an increase in
depreciation and amortization of $126.6 million offset by a decrease in deferred
taxes of $17.0 million a decrease in gain on disposition of assets of $5.4
million and an increase in provision for doubtful accounts of $2.6 million. The
increase in noncash items was offset by a decrease in
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net earnings of $49.7 million, an increase in receivables of $11.3 million, an
increase in prepaid expenses of $9.4 million a decrease in other assets of $2.8
million and a decrease in trade accounts payable of $7.0 million offset by an
increase in accrued expenses of $8.2 million and an increase in other
liabilities of $5.3 million. Net cash used in investing activities decreased
$504.7 million from $882.8 million for the nine months ended September 30, 1999
to $378.1 million for the same period in 2000. This decrease was due to a $515.5
million decrease in acquisitions of new markets related to the September, 1999
acquisition of the outstanding common stock of AMFM and offset by an increase in
capital expenditures of $4.7 million and an increase in notes receivable of $3.8
million and an increase in proceeds from disposition of assets of $2.4 million.
Net cash provided by financing activities for the nine months ended September
30, 2000 is $260.9 million due significantly to $261.0 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 of the previously
uncommitted $400 million incremental facility. The proceeds of this facility
were used to pay down the revolving bank credit facility.
LAMAR MEDIA CORP.
The following is a discussion of the consolidated financial condition and
results of operations of Lamar Media for the nine month and three month periods
ended September 30, 2000 and 1999. 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. 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 the "Risk Factor" section of Lamar
Advertising Company's registration statement on Form S-3 (File No. 333-48288)
filed with the Securities and Exchange Commission on October 20, 2000.
RESULTS OF OPERATIONS
Nine Months Ended September 30, 2000 Compared to Nine Months Ended September 30,
1999
Net revenues increased $214.4 million or 72.7% to $509.0 million for the nine
months ended September 30, 2000 as compared to the same period in 1999. This
increase was attributable to Lamar Media's acquisitions during 2000 and 1999 and
internal growth within Lamar Media's existing markets.
Operating expenses, exclusive of depreciation and amortization, increased $107.2
million or 68.1% for the nine months ended September 30, 2000 as compared to the
same period in 1999. 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 $125.2 million or 119.6% from
$104.7 million for the nine months ended September 30, 1999 to $229.9 million
for the nine months ended September 30, 2000 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 $18.0 million or 55.4% to
an operating income of $14.5 million for nine months ended September 30, 2000
from $32.5 million for the same period in 1999.
Interest expense increased $51.7 million from $57.5 million for the nine months
ended September 30, 1999 to $109.2 million for the same period in 2000 as a
result of additional borrowings under Lamar Media's bank credit facility to fund
increased acquisition activity and increasing interest rates.
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There was an income tax benefit of $26.1 million for the nine months ended
September 30, 2000 as compared to an income tax benefit of $0.3 million for the
same period in 1999. The effective tax rate for the nine months ended September
30, 2000 is approximately 27.9% 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, Lamar Media recognized an expense of $.8 million as a
cumulative effect of a change in accounting principle for the nine months ended
September 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 nine
months ended September 30, 2000 of $67.4 million, as compared to a net loss of
$18.9 million for the same period in 1999.
Three Months Ended September 30, 2000 Compared to Three Months Ended September
30, 1999
Revenues for the three months ended September 30, 2000 increased $73.8 million
or 66.4% to $184.8 million from $111.0 million for the same period in 1999.
Operating expenses, exclusive of depreciation and amortization, for the three
months ended September 30, 2000 increased $33.6 million or 59.7% over the same
period in 1999.
Depreciation and amortization expense increased $42.0 million or 103.9% from
$40.4 million for three months ended September 30, 1999 to $82.4 million for the
three months ended September 30, 2000.
Operating income decreased $1.8 million or 12.6% to $12.5 million for the three
months ended September 30, 2000 as compared to $14.3 million for the same period
in 1999.
Interest expense increased $18.8 million from $21.1 million for the three months
ended September 30, 1999 to $39.9 million for the same period in 2000.
Lamar Media recognized a net loss for the three months ended September 30, 2000
of $19.6 million as compared to a net loss of $3.2 million for the same period
in 1999.
The results for the three months ended September 30, 2000 were affected by the
same factors as the nine months ended September 30, 2000. Reference is made to
the discussion of the nine month results.
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ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The Company is exposed to interest rate risk in connection with variable rate
debt instruments issued by the Company. 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 September 30, 2000.
Loans under Lamar Media's bank credit facility 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 is exposed to market risk as a result of the
impact that changes in these base rates may have on the interest rate applicable
to borrowings under the bank credit facility. Increases in the interest rates
applicable to borrowings under the bank credit facility would result in
increased interest expense and a reduction in the Company's net income and after
tax cash flow.
At September 30, 2000, there was approximately $1.04 billion of aggregate
indebtedness outstanding under Lamar Media's bank credit facility, or
approximately 55% 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, 2000 with respect to borrowings under the bank credit
facility was $59.3 million and the weighted average interest rate applicable to
borrowings under these credit facilities during the nine months ended September
30, 2000 was 8.5%. Assuming that the weighted average interest rate was
200-basis points higher (that is 10.5% rather than 8.5%), then the Company's
2000 interest expense would have been approximately $13.9 million higher
resulting in a $8.5 million increase in the Company's nine months ended
September 30, 2000 net loss 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 bank credit facility to fix the
interest rates applicable to its borrowings at an amount equal to LIBOR plus the
applicable margin for periods of up to twelve months, which would allow the
Company to mitigate the impact of short-term fluctuations in market interest
rates. In the event of an increase in interest rates, the Company may take
further actions to mitigate its exposure. The Company cannot guarantee, however,
that the actions that it may take to mitigate this risk will be feasible or
that, if these actions are taken, that they will be effective.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The annual meeting of stockholders of the Company will be held on Thursday, May
24, 2001.
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ITEM 6. EXHIBITS 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 June 30,
1999 (File No. 0-20833) filed on August 16, 1999 and incorporated
herein by reference.
3.3 Certificate of Amendment of Certificate of Incorporation of Lamar
Advertising. Previously filed as Exhibit 3.3 to Lamar Advertising's
Quarterly Report on Form 10-Q for the period ended June 30, 1999 (File
No. 0-20833) and Incorporated herein by reference.
3.4 Certificate of Correction of Certificate of Amendment of Certificate of
Incorporation of Lamar Advertising. Filed herewith.
3.5 Bylaws of Lamar Advertising. Previously filed as exhibit 3.3 to Lamar
Advertising's Quarterly Report on Form 10-Q for the period ended June
30, 1999 (File No. 0-20833) filed on August 16, 1999 and incorporated
herein by reference.
3.6 Amended and Restated Bylaws of Lamar Media Corp. Previously filed as
exhibit 3.1 to Lamar Media's Quarterly Report on Form 10-Q for the
period ended September 30, 1999 (File No. 1-12407) filed on November
12, 1999 and incorporated herein by reference.
4.1 Supplemental Indenture to the Indenture dated November 15, 1996 among
Lamar Media Corp., certain of its subsidiaries and State Street Bank
and Trust Company, as Trustee, dated August 8, 2000 delivered by Lamar
Ohio Outdoor Holding Corp. and, in substantially identical agreements,
by the scheduled additional subsidiary guarantors. Filed herewith.
4.2 Supplemental Indenture to the Indenture dated August 15, 1997 among
Outdoor Communications, Inc., certain of its subsidiaries and First
Union National Bank, as Trustee, dated August 8, 2000 delivered by
Lamar Ohio Outdoor Holding Corp. 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 August 8, 2000 delivered by Lamar
Ohio Outdoor Holding Corp. and, in substantially identical agreements,
by the scheduled additional subsidiary guarantors. Filed herewith.
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10.1 Joinder Agreement dated September 13, 2000 to the Lamar Media Corp.
Credit Agreement dated August 13, 1999 by Lamar Ohio Outdoor Holding
Corp. and, in substantially identical agreements, by the scheduled
additional subsidiary guarantors, in favor of The Chase Manhattan Bank,
as Administrative Agent. Filed herewith.
27.1 Financial Data Schedule for the Company. Filed herewith.
27.2 Financial Data Schedule for Lamar Media Corp. Filed herewith.
(b) Reports on Form 8-K
Lamar Advertising filed a Current Report on Form 8-K, dated August 31,
2000 to report that the Department of Justice had proposed a consent
decree requiring a divestiture of 26,227,273 shares of Lamar
Advertising's Class A common stock held by AMFM, Inc. by January 1,
2003.
Lamar Advertising filed a Current Report on Form 8-K, dated September
6, 2000 to file updated pro-forma financial information giving effect
to its September 1999 acquisition of Chancellor Media Outdoor
Corporation and Chancellor Media Whiteco Outdoor Corporation.
Lamar Advertising filed a Current Report on Form 8-K, dated October 17,
2000 to file certain financial statements of Advantage Outdoor Company,
LP, the wholly-owned subsidiary of Billboard Acquisition Company, LLC
which Lamar Advertising acquired in May 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
LAMAR ADVERTISING COMPANY
DATED: November 14, 2000 BY: /s/Keith Istre
-------------------------------
Keith A. Istre
Chief Financial and Accounting
Officer and Director
LAMAR MEDIA CORP.
DATED: November 14, 2000 BY: /s/Keith Istre
-------------------------------
Keith A. Istre
Chief Financial and Accounting
Officer and Director
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
3.4 Certificate of Correction of Certificate of Amendment of Certificate of
Incorporation of Lamar Advertising. Filed herewith.
4.1 Supplemental Indenture to the Indenture dated November 15, 1996 among
Lamar Media Corp., certain of its subsidiaries and State Street Bank
and Trust Company, as Trustee, dated August 8, 2000 delivered by Lamar
Ohio Outdoor Holding Corp. and, in substantially identical agreements,
by the scheduled additional subsidiary guarantors. Filed herewith.
4.2 Supplemental Indenture to the Indenture dated August 15, 1997 among
Outdoor Communications, Inc., certain of its subsidiaries and First
Union National Bank, as Trustee, dated August 8, 2000 delivered by
Lamar Ohio Outdoor Holding Corp. 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 August 8, 2000 delivered by Lamar
Ohio Outdoor Holding Corp. and, in substantially identical agreements,
by the scheduled additional subsidiary guarantors. Filed herewith.
10.1 Joinder Agreement dated September 13, 2000 to the Lamar Media Corp.
Credit Agreement dated August 13, 1999 by Lamar Ohio Outdoor Holding
Corp. and, in substantially identical agreements, by the scheduled
additional subsidiary guarantors, in favor of The Chase Manhattan Bank,
as Administrative Agent. Filed herewith.
27.1 Financial Data Schedule for the Company. Filed herewith.
27.2 Financial Data Schedule for Lamar Media Corp. Filed herewith.