1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number 0-30242 Lamar Advertising Company Commission File Number 1-12407 Lamar Media Corp. (Exact name of registrants as specified in their charters) Delaware 72-1449411 Delaware 72-1205791 (State or other jurisdiction of (I.R.S. Employer incorporation or 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 SECURITIES OF LAMAR ADVERTISING COMPANY REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Name of each Exchange Title of Each Class: On Which Registered: - ------------------- ---------------------- None N/A SECURITIES OF LAMAR ADVERTISING COMPANY REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Class A common stock, $.001 par value SECURITIES OF LAMAR MEDIA CORP. REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Name of each Exchange Title of Each Class: On Which Registered: - ------------------- --------------------- 9 5/8% Senior Subordinated Notes due 2006 New York Stock Exchange SECURITIES OF LAMAR MEDIA CORP. REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None Indicate by check mark whether the 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 [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by nonaffiliates of Lamar Advertising Company as of March 1, 2001: $3,171,384,180 The number of shares of Lamar Advertising Company's Class A common stock outstanding as of March 1, 2001: 80,869,993 The number of shares of the Lamar Advertising Company's Class B common stock outstanding as of March 1, 2001: 17,000,000 This combined Form 10-K 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 I(1) (a) and (b) of Form 10-K and is, therefore, filing this form with the reduced disclosure format permitted by such instruction.
2 On July 20, 1999, Lamar Advertising Company completed a corporate reorganization to create a new holding company structure. The reorganization was accomplished through a merger under section 251(g) of the Delaware General Corporation Law. At the effective time of the merger, all stockholders of Lamar Advertising Company became stockholders in a new holding company and Lamar Advertising Company became a wholly-owned subsidiary of the new holding company. The new holding company took the Lamar Advertising Company name and the old Lamar Advertising Company was renamed Lamar Media Corp. In the merger, all outstanding shares of old Lamar Advertising Company's capital stock were converted into shares of the new holding company with the same voting powers, designations, preferences and rights, and the same qualifications, restrictions and limitations, as the shares of old Lamar Advertising Company. Following the restructuring, the Class A common stock of the new holding company trades under the symbol "LAMR" on the Nasdaq National Market with the same CUSIP number as the old Lamar Advertising Company's Class A common stock. In this annual 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 particular subsidiary. DOCUMENTS INCORPORATED BY REFERENCE Portions of Lamar Advertising Company's proxy statement for the Annual Meeting of Stockholders to be held on May 24, 2001 are incorporated by reference into Part III of this Form 10-K. NOTE REGARDING FORWARD-LOOKING STATEMENTS This combined Annual Report on Form 10-K of Lamar Advertising Company and Lamar Media Corp. contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These are statements that relate to future periods and include statements about the Company's, and Lamar Media's: o expected operating results; o market opportunities; o acquisition opportunities; o ability to compete; and o stock price. Generally, the words "anticipates," "believes," "expects," "intends," "estimates," "projects," "plans" and similar expressions identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the Company's and Lamar Media's actual results, performance or achievements or industry results, to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. These risks, uncertainties and other important factors include, among others: (1) risks and uncertainties relating to the Company's significant indebtedness; (2) the need for additional funds; (3) the integration of companies that the Company acquires and the Company's ability to recognize cost savings or operating efficiencies as a result of such acquisitions; (4) the continued popularity of outdoor advertising -2-
3 as an advertising medium; (5) the regulation of the outdoor advertising industry and (6) the risks and uncertainties described below under the caption "Factors Affecting Future Operating Results" under Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations. The forward-looking statements contained in this Annual Report on Form 10-K speak only as of the date of this Annual Report. Lamar Advertising Company and Lamar Media expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained in this Annual Report to reflect any change in their expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based. PART I ITEM 1. BUSINESS GENERAL Lamar is one of the largest and most experienced owners and operators of outdoor advertising structures in the United States. The Company conducts a business that has operated under the Lamar name since 1902. As of December 31, 2000, the Company operated approximately 131,000 outdoor advertising displays in 43 states. The Company also operates the largest logo sign business in the United States. Logo signs are signs located near highway exits which deliver brand name information on available gas, food, lodging and camping services. As of December 31, 2000, the Company maintained over 90,500 logo sign displays in 20 states and the province of Ontario, Canada. The Company also operates transit advertising displays on bus shelters, bus benches and buses in several markets. BUSINESS STRATEGY OUTDOOR ADVERTISING The Company's overall business strategy is to be the leading provider of outdoor advertising in the markets it serves. This strategy includes the following elements: OPERATING STRATEGY: HIGH QUALITY LOCAL SALES AND SERVICE. Local advertising constituted approximately 73% of the Company's net revenues in 2000, which management believes is higher than the industry average. The Company attempts to identify and closely monitor the needs of its customers and seeks to provide them with quality advertising products at a lower cost than competitive media. At December 31, 2000, the Company's 707-person sales force was supported by 137 full-service offices. Each salesperson is compensated under a performance-based compensation system and supervised by a sales manager executing a coordinated marketing plan. Art departments assist local customers in the development and production of creative, effective advertisements. CENTRALIZED CONTROL/DECENTRALIZED MANAGEMENT. Management believes that in 137 of the 150 markets in which the Company operated at December 31, 2000, the Company is the only outdoor advertising company offering a full complement of outdoor advertising services coupled with local production facilities, management and account executives. Local offices operate in defined geographic areas and function essentially as independent business units, consistent with senior management's philosophy that a decentralized organization is more responsive to particular local market demands. -3-
4 The Company maintains centralized accounting and financial control over its local operations, but local managers are responsible for the day-to-day operations in each local market and are compensated according to that market's financial performance. Each local manager reports to one of nine regional managers who in turn report to the Company's Chief Executive Officer. GROWTH STRATEGY: INTERNAL GROWTH. Within its existing markets, the Company enhances revenue and cash flow growth by employing highly targeted local marketing efforts to improve display occupancy rates and by increasing advertising rates. This strategy is facilitated through its local sales and service offices, which allow management to respond quickly to the demands of its local customer base. In addition, the Company routinely invests in upgrading its existing structures and constructing new display faces in order to provide quality service to its current customers and to attract new advertisers. ACQUISITIONS. Aggressive internal growth is enhanced by focused strategic acquisitions, resulting in increased operating efficiencies, greater geographic diversification and increased market penetration. The Company has completed over 320 acquisitions of outdoor advertising businesses since 1983. In addition to acquiring positions in new markets, the Company purchases smaller outdoor advertising properties within existing or contiguous markets. Acquisitions offer opportunities for inter-market cross-selling and the opportunity to centralize and combine accounting and administrative functions, thereby achieving economies of scale. In addition, the Company leverages its reputation for high quality local sales and service by taking advantage of opportunities to acquire high-profile bulletin displays that may become available in larger markets. Although the acquisition market is becoming more competitive, the Company believes that there will be future opportunities for implementing the Company's acquisition strategy given the industry's fragmentation and current consolidation trends. During 2000, the Company increased the number of outdoor advertising displays it operates by approximately 12% by acquiring outdoor advertising assets, including the completion of over 100 strategic acquisitions of outdoor advertising businesses as well as isolated purchases of outdoor advertising displays. Certain of the Company's principal acquisitions since January 1, 2000 are described below: AZTEC GROUP, INC. On January 14, 2000, the Company purchased all of the outstanding common stock of Aztec Group, Inc. for a purchase price of approximately $34.5 million. The purchase price consisted of approximately $5.3 million cash and the issuance of 481,481 shares of Lamar Advertising Company Class A common stock valued at approximately $29.2 million. OUTDOOR WEST, INC. 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 $39.3 million. ADVANTAGE OUTDOOR COMPANY, INC. 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 $76.8 million and the issuance of 2,300,000 shares of Lamar Advertising Company's Class A common stock valued at approximately $92.8 million. TYLER MEDIA GROUP, INC. On July 1, 2000, the Company purchased the stock of Tyler Media Group, Inc. for a purchase price of approximately $31.0 million. The purchase price consisted of approximately $4.5 million cash and the issuance of 611,764 shares of Lamar Advertising Company Class A common stock valued at approximately $26.5 million. -4-
5 ROOT OUTDOOR ADVERTISING, INC. On July 21, 2000, the Company purchased the assets of Root Outdoor Advertising, Inc. for a total cash purchase price of approximately $41.1 million. LOGO SIGNS The Company entered the business of logo sign advertising in 1988. The Company is now the largest provider of logo sign services in the United States, operating 21 of the 26 privatized state logo sign contracts. The Company also operates the tourism signage contracts in seven states and the province of Ontario, Canada. The Company plans to pursue additional logo sign contracts, through both new contract awards and, possibly, the acquisition of other logo sign operators. Logo sign opportunities arise periodically, both from states initiating new logo sign programs and states converting from government owned and operated programs to privately owned and operated programs. Furthermore, the Company plans to pursue additional tourism signage programs in Canada and is seeking to expand into other state-authorized signage programs, such as those involving directional signs providing tourist information. TRANSIT AND OTHER The Company entered into the transit advertising business through the operation of displays on bus shelters, benches and buses in 31 of its outdoor advertising markets, two markets in South Carolina, two markets in Utah, one market in California, one market in Florida and one in Colorado. The Company plans to continue pursuing transit advertising opportunities that arise in its primary markets and to expand into other markets. -5-
6 MARKETS As of December 31, 2000, the Company's 150 primary outdoor advertising markets were: <TABLE> <S> <C> <C> Birmingham, Alabama Shreveport, Louisiana Jackson, Tennessee Gadsden, Alabama Slidell, Louisiana Johnson City, Tennessee Huntsville, Alabama Detroit, Michigan Knoxville, Tennessee Mobile, Alabama Escanaba, Michigan Murfreesboro, Tennessee Montgomery, Alabama Muskegon, Michigan Nashville, Tennessee Shoals, Alabama Port Huron, Michigan Abilene, Texas Tuscaloosa, Alabama Saginaw, Michigan Amarillo, Texas Phoenix, Arizona Traverse City, Michigan Austin, Texas Yuma, Arizona Duluth, Minnesota Beaumont, Texas Little Rock, Arkansas St. Cloud, Minnesota Brownsville, Texas Bakersfield, California Columbus, Mississippi College Station, Texas Lancaster, California Corinth, Mississippi Corpus Christi, Texas Sacramento, California Greenville, Mississippi Dallas, Texas San Bernardino, California Gulfport, Mississippi Houston, Texas Colorado Springs, Colorado Hattiesburg, Mississippi Laredo, Texas Denver, Colorado Jackson, Mississippi Lubbock, Texas Bridgeport, Connecticut Meridian, Mississippi Midland, Texas Hartford, Connecticut Bonne Terre, Missouri San Angelo, Texas Daytona Beach, Florida Hannibal, Missouri Sherman, Texas Fort Myers, Florida Joplin, Missouri Temple, Texas Fort Walton, Florida Kansas City, Missouri Texarkana, Texas Lakeland, Florida Osage Beach, Missouri Tyler, Texas Ocala, Florida Springfield, Missouri Wichita Falls, Texas Panama City, Florida Billings, Montana Victoria, Texas Pensacola, Florida Lincoln, Nebraska Richmond, Virginia Tallahassee, Florida Omaha, Nebraska Roanoke, Virginia Albany, Georgia Las Vegas, Nevada Spokane, Washington Anderson, Georgia Laughlin/Bullhead, Nevada Tacoma, Washington Athens, Georgia Albany, New York Bluefield, West Virginia Atlanta, Georgia Buffalo, New York Bridgeport, West Virginia Augusta, Georgia Rochester, New York Huntington, West Virginia Brunswick, Georgia Syracuse, New York Wheeling, West Virginia Macon, Georgia Asheville, North Carolina Eau Claire, Wisconsin Rome, Georgia Elizabethtown, N. Carolina Janesville, Wisconsin Savannah, Georgia Rocky Mount, North Carolina Milwaukee, Wisconsin Valdosta, Georgia Cincinnati, Ohio Casper, Wyoming Boise, Idaho Columbus, Ohio Decatur, Illinois Dayton, Ohio Evansville, Indiana Elyria, Ohio Gary, Indiana Toledo, Ohio Terre Haute, Indiana Youngstown, Ohio Cedar Rapids, Iowa Oklahoma City, Oklahoma Davenport/Quad Cities, Iowa Allentown, Pennsylvania Dubuque, Iowa Altoona, Pennsylvania Waterloo, Iowa Erie, Pennsylvania Topeka, Kansas Harrisburg, Pennsylvania Lexington, Kentucky Pittsburgh, Pennsylvania Louisville, Kentucky Reading, Pennsylvania Paducah, Kentucky Scranton, Pennsylvania Alexandria, Louisiana Williamsport, Pennsylvania Baton Rouge, Louisiana York, Pennsylvania Hammond, Louisiana Providence, Rhode Island Houma, Louisiana Anderson, South Carolina Lafayette, Louisiana Columbia, South Carolina Lake Charles, Louisiana Rapid City, South Dakota Monroe, Louisiana Clarksville, Tennessee New Orleans, Louisiana Cookeville, Tennessee </TABLE> -6-
7 As of December 31, 2000, the Company operated logo sign contracts in the following states: <TABLE> <S> <C> <C> <C> Colorado Kentucky Nebraska Oklahoma Delaware Michigan Nevada South Carolina Florida Minnesota New Jersey Texas Georgia Mississippi New Mexico Utah Kansas Missouri Ohio Virginia Ontario </TABLE> COMPANY OPERATIONS OUTDOOR ADVERTISING INVENTORY: The Company operates the following types of outdoor advertising displays: BULLETINS generally are 14 feet high and 48 feet wide (672 square feet) and consist of panels on which advertising copy is displayed. The advertising copy is either hand painted onto the panels at the Company's facilities in accordance with design specifications supplied by the advertiser and attached to the outdoor advertising structure, or printed with computer-generated graphics on a single sheet of vinyl that is wrapped around the structure. On occasion, to attract more attention, some of the panels may extend beyond the linear edges of the display face and may include three-dimensional embellishments. Because of their greater impact and higher cost, bulletins are usually located on major highways. STANDARDIZED POSTERS generally are 12 feet high by 25 feet wide (300 square feet) and are the most common type of billboard. Advertising copy for these posters consists of lithographed or silk-screened paper sheets supplied by the advertiser that are pasted and applied like wallpaper to the face of the display, or single sheets of vinyl with computer-generated advertising copy that are wrapped around the structure. Standardized posters are concentrated on major traffic arteries. JUNIOR POSTERS usually are 6 feet high by 12 feet wide (72 square feet). Displays are prepared and mounted in the same manner as standardized posters, except that vinyl sheets are not typically used on junior posters. Most junior posters, because of their smaller size, are concentrated on city streets and target pedestrian traffic. For the year ended December 31, 2000, approximately 70% of the Company's outdoor advertising net revenues were derived from bulletin sales and 30% from poster sales. The Company regularly donates unoccupied display space for use by charitable and civic organizations. The physical structures are owned by the Company and are built on locations the Company either owns or leases. In each local office one employee typically performs site leasing activities for the markets served by that office. See Item 2. -- "Properties." Bulletin space is generally sold as individually selected displays for the duration of the advertising contract. Bulletins may also be sold as part of a rotary plan where advertising copy is periodically rotated from one location to another within a particular market. Poster space is generally sold in packages called "showings," which comprise a given number of displays in a market area. Posters provide advertisers with access either to a specified percentage of the general population or to a specific targeted audience. Displays making up a showing are placed in well-traveled areas and are distributed so as to reach a wide audience in a particular market. Bulletin space is generally sold for 12 month periods. Poster space averages between 30 and 90 days. -7-
8 PRODUCTION: The Company's local production staffs in 137 of its markets perform the full range of activities required to create and install outdoor advertising. Production work includes creating the advertising copy design and layout, painting the design or coordinating its printing and installing the designs on displays. The Company provides its production services to local advertisers and to advertisers that are not represented by advertising agencies, since national advertisers represented by advertising agencies often use preprinted designs that require only installation. The Company's creative and production personnel typically develop new designs or adopt copy from other media for use on billboards. The Company's artists also often assist in the development of marketing presentations, demonstrations and strategies to attract new advertisers. With the increased use of vinyl and pre-printed advertising copy furnished to the outdoor advertising company by the advertiser or its agency, outdoor advertising companies require less labor-intensive production work. In addition, increased use of vinyl and preprinted copy is also attracting more customers to the outdoor advertising medium. The Company believes that this trend over time will reduce operating expenses associated with production activities. CATEGORIES OF BUSINESS: The following table sets forth the top ten categories of business from which the Company derived its outdoor advertising revenues for 2000 and the respective percentages of such revenue. These business categories accounted for approximately 74% of the Company's total outdoor advertising net revenues in the year ended December 31, 2000. No one advertiser accounted for more than 3.0% of the Company's total outdoor advertising net revenues in that period. <TABLE> <CAPTION> PERCENTAGE NET ADVERTISING CATEGORIES REVENUES <S> <C> Restaurants 12% Retailers 10% Automotive 10% Hotels and Motels 9% Miscellaneous 8% Service 7% Hospitals and medical care 5% Gambling 5% Amusement - entertainment and sport 4% Media 4% ---- Total 74% ==== </TABLE> LOGO SIGNS The Company is the largest provider of logo sign services in the United States and operates over 3,700 logo sign structures containing over 90,500 logo advertising displays. The Company has been awarded contracts to erect and operate logo signs in the states of Colorado, Delaware, Florida, Georgia, Michigan, Minnesota, Mississippi, Nebraska, New Jersey, New Mexico, Ohio, Oklahoma, South Carolina, Texas, Utah and Virginia, and the province of Ontario, Canada, and through a 66.7% owned partnership in the state of Missouri. In addition, the Company has acquired the logo sign contracts in Kansas, Kentucky, and Nevada. The Company also operates the tourism signing contracts for the states of Colorado, Kentucky, Michigan, Nebraska, New Jersey and Ohio as well as for the province of Ontario, Canada. State logo sign contracts represent the contract right to erect and operate logo signs within a state. The term of the contracts vary, but generally range from ten to twenty years, including renewal terms. The logo sign contracts generally provide for -8-
9 termination by the state prior to the end of the term of the contract, in most cases with compensation to be paid to the Company. Typically, at the end of the term of the contract, ownership of the structures is transferred to the state without compensation to the Company. Of the Company's logo sign contracts, one is due to terminate in September 2001 and one is subject to renewal over the next year in January, 2002. The Company also designs and produces logo sign plates for customers throughout the country, including for use in states which have not yet privatized their logo sign programs. EMPLOYEES The Company employed approximately 2,700 persons at December 31, 2000. Of these, approximately 100 were engaged in overall management and general administration at the Company's management headquarters and the remainder were employed in the Company's operating offices. Of these, approximately 700 were direct sales and marketing personnel. The Company has 13 local offices covered by collective bargaining agreements, consisting of painters, billposters and construction personnel. The Company believes that its relations with its employees, including its 139 unionized employees, are good, and the Company has never experienced a strike or other labor dispute. COMPETITION OUTDOOR ADVERTISING The Company competes in each of its markets with other outdoor advertisers as well as other media, including broadcast and cable television, radio, print media and direct mail marketers. In addition, the Company also competes with a wide variety of out-of-home media, including advertising in shopping centers, malls, airports, stadiums, movie theaters and supermarkets, as well as on taxis, trains and buses. Advertisers compare relative costs of available media and cost-per-thousand impressions, particularly when delivering a message to customers with distinct demographic characteristics. In competing with other media, outdoor advertising relies on its relative cost efficiency and its ability to reach a broad segment of the population in a specific market or to target a particular geographic area or population with a particular set of demographic characteristics within that market. The outdoor advertising industry is fragmented, consisting of several large outdoor advertising and media companies with operations in multiple markets as well as smaller and local companies operating a limited number of structures in single or a few local markets. Although some consolidation has occurred over the past few years, according to the Outdoor Advertising Association of America ("OAAA") as of December 31, 2000 there were approximately 1,082 companies in the outdoor advertising industry operating approximately 600,000 outdoor displays. In several of its markets, the Company encounters direct competition from other major outdoor media companies, including Infinity Broadcasting Corp. (formerly Outdoor Systems, Inc.) and Clear Channel Communications, Inc. (formerly Eller Media) both of which may have greater total resources than the Company. The Company believes that its strong emphasis on sales and customer service and its position as a major provider of advertising services in each of its primary markets enables it to compete effectively with the other outdoor advertising companies, as well as other media, within those markets. LOGO SIGNS The Company faces competition in obtaining new logo sign contracts and in bidding for renewals of expiring contracts. The Company faces competition from three other national providers of logo signs in seeking state-awarded logo service contracts. In addition, local companies within each of the states that solicit bids will compete against the Company in the open-bid process. Competition from these sources is also encountered at the end of each contract period. In marketing logo signs to advertisers, the Company competes with the other forms of out-of-home advertising described above. -9-
10 REGULATION Outdoor advertising is subject to governmental regulation at the federal, state and local levels. Federal law, principally the Highway Beautification Act of 1965 (the "HBA") regulates outdoor advertising on federally aided primary and interstate highways. The HBA requires, as a condition to federal highway assistance, states to restrict billboards on such highways to commercial and industrial areas, and requires certain additional size, spacing and other limitations. All states have passed state billboard control statutes and regulations at least as restrictive as the federal requirements, including removal at the owner's expense and without compensation of any illegal signs on such highways. The Company believes that the number of its billboards that may be subject to removal as illegal is immaterial. No state in which the Company operates has banned billboards, but some have adopted standards more restrictive than the federal requirements. Municipal and county governments generally also have sign controls as part of their zoning laws. Some local governments prohibit construction of new billboards and some allow new construction only to replace existing structures, although most allow construction of billboards subject to restrictions on zones, size, spacing and height. Federal law does not require removal of existing lawful billboards, but does require payment of compensation if a state or political subdivision compels the removal of a lawful billboard along a federally aided primary or interstate highway. State governments have purchased and removed legal billboards for beautification in the past, using federal funding for transportation enhancement programs, and may do so in the future. Governmental authorities from time to time use the power of eminent domain to remove billboards. Thus far, the Company has been able to obtain satisfactory compensation for any of its billboards purchased or removed as a result of governmental action, although there is no assurance that this will continue to be the case in the future. Local governments do not generally purchase billboards for beautification, but some have attempted to force removal of legal but nonconforming billboards (billboards which conformed with applicable zoning regulations when built but which do not conform to current zoning regulations) after a period of years under a concept called "amortization," by which the governmental body asserts that just compensation is earned by continued operation over time. Although there is some question as to the legality of amortization under federal and many state laws, amortization has been upheld in some instances. The Company generally has been successful in negotiating settlements with municipalities for billboards required to be removed. Restrictive regulations also limit the Company's ability to rebuild or replace nonconforming billboards. The outdoor advertising industry is heavily regulated and at various times and in various markets can be expected to be subject to varying degrees of regulatory pressure affecting the operation of advertising displays. Accordingly, although the Company's experience to date is that the regulatory environment can be managed, no assurance can be given that existing or future laws or regulations will not materially and adversely affect the Company. -10-
11 ITEM 1A. EXECUTIVE OFFICERS OF THE REGISTRANT <TABLE> <CAPTION> NAME AGE TITLE - ---- --- ----- <S> <C> <C> Kevin P. Reilly, Jr. 46 Chairman, President and Chief Executive Officer Keith A. Istre 48 Chief Financial Officer and Treasurer Sean E. Reilly 39 Director of Mergers and Acquisitions and President of the Real Estate Division </TABLE> Each officer's term of office extends until the meeting of the Board of Directors following the next annual meeting of stockholders and until a successor is elected and qualified or until his or her earlier resignation or removal. Kevin P. Reilly, Jr. has served as the Company's President and Chief Executive Officer since February 1989 and as a director of the Company since February 1984. Mr. Reilly served as President of the Company's Outdoor Division from 1984 to 1989. Mr. Reilly, an employee of the Company since 1978, has also served as Assistant and General Manager of the Company's Baton Rouge Region and Vice President and General Manager of the Louisiana region. Mr. Reilly received a B.A. from Harvard University in 1977. Keith A. Istre has been Chief Financial Officer of the Company since February 1989 and a director of the Company since February 1991. Mr. Istre joined the Company as Controller in 1978. Prior to joining the Company, Mr. Istre was employed by a public accounting firm in Baton Rouge from 1975 to 1978. Mr. Istre graduated from the University of Southwestern Louisiana in 1974 with a B.S. in Accounting. Sean E. Reilly is Director of Mergers and Acquisitions and President of the Company's real estate division, TLC Properties, Inc. He began working with the Company as Vice President of Mergers and Acquisitions in 1987 and served in that capacity until 1994. He served as a director of the Company from 1989 to 1996. Mr. Reilly was the Chief Executive Officer of Wireless One, Inc., a wireless cable television company, from 1994 to 1997. Mr. Reilly received a B.A. from Harvard University in 1984 and a J.D. from Harvard Law School in 1989. ITEM 2. PROPERTIES The Company's 53,500 square foot management headquarters is located in Baton Rouge, Louisiana. The Company occupies approximately 86% of the space in this facility and leases the remaining space. The Company owns 84 local operating facilities with front office administration and sales office space connected to back-shop poster and bulletin production space. In addition, the Company leases an additional 128 operating facilities at an aggregate lease expense for 2000 of approximately $3.7 million. The Company owns approximately 2,500 parcels of property beneath outdoor structures. As of December 31, 2000, the Company had approximately 70,000 active outdoor site leases accounting for a total annual lease expense of approximately $101.9 million. This amount represented 15% of total outdoor advertising net revenues for that period, which is consistent with the Company's historical lease expense experience. The Company's leases are for varying terms ranging from month-to-month to in some cases a term of over ten years, and many provide the Company with renewal options. There is no significant concentration of displays under any one lease or subject to negotiation with any one landlord. The Company believes that an important part of its management activity is to manage its lease portfolio and negotiate suitable lease renewals and extensions. -11-
12 ITEM 3. LEGAL PROCEEDINGS The Company from time to time is involved in litigation in the ordinary course of business, including disputes involving advertising contracts, site leases, employment claims and construction matters. The Company is also involved in routine administrative and judicial proceedings regarding billboard permits, fees and compensation for condemnations. The Company is not a party to any lawsuit or proceeding which, in the opinion of management, is likely to have a material adverse effect on the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report. -12-
13 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Since August 2, 1996, the Company's Class A common stock has traded on the over-the-counter market and prices have been quoted on the Nasdaq National Market under the symbol "LAMR." Prior to August 2, 1996, the day on which the Class A common stock was first publicly traded, there was no public market for the Class A common stock. On December 31, 1997, the Company declared a 3-for-2 stock split of shares of Class A common stock, which was paid in the form of a 50% stock dividend on February 27, 1998. All share and per share amounts included herein have been restated to reflect this split. As of March 9, 2001, the Class A common stock was held by 215 shareholders of record. The Company believes, however, that the actual number of beneficial holders of the Class A common stock may be substantially greater than the stated number of holders of record because a substantial portion of the Class A common stock is held in "street name." The following table sets forth, for the periods indicated, the high and low bid prices for the Class A common stock as reported on the Nasdaq National Market. <TABLE> <CAPTION> HIGH LOW ---- --- <S> <C> <C> Fiscal year ended December 31, 1999: First Quarter $41.63 $32.25 Second Quarter 43.00 27.75 Third Quarter 50.69 35.25 Fourth Quarter 64.50 44.63 Fiscal year ended December 31, 2000: First Quarter $70.25 $40.13 Second Quarter 50.38 36.50 Third Quarter 50.75 37.63 Fourth Quarter 49.00 36.00 </TABLE> The Company's Class B common stock is not publicly traded and is held of record by one entity. The Company does not anticipate paying dividends on either class of its common stock in the foreseeable future. The Company's Series AA preferred stock is entitled to preferential dividends, in an annual aggregate amount of $364,903, before any dividends may be paid on the common stock. In addition, the Company's bank credit facilities and other indebtedness have terms restricting the payment of dividends. Any future determination as to the payment of dividends will be subject to such limitations, will be at the discretion of the Company's Board of Directors and will depend on the Company's results of operations, financial condition, capital requirements and other factors deemed relevant by the Board of Directors. ITEM 6. SELECTED FINANCIAL DATA LAMAR ADVERTISING COMPANY The selected consolidated statement of operations and balance sheet data presented below are derived from the audited consolidated financial statements of the Company. Effective January 1, 1997, the Company changed its fiscal year from a twelve-month period ending October 31 to a twelve-month period ending December 31. The year end change was made to conform to the predominant fiscal year end for companies within the outdoor advertising industry. The results of operations for the two-month transition period ended December 31, 1996 are presented in the audited consolidated financial statements as filed previously on Form 10-K filed on March 30, 1998. The data presented below should be read in conjunction with the audited consolidated financial statements, related notes and Management's Discussion and Analysis of Financial Condition and Results of Operations included herein. -13-
14 STATEMENT OF OPERATIONS DATA: <TABLE> <CAPTION> FOR THE YEARS ENDED (DOLLARS IN THOUSANDS) DECEMBER 31, OCTOBER 31, ------------------------------------------------------------ ------------ 2000 1999 1998 1997 1996 ------------ ------------ ------------ ------------ ------------ <S> <C> <C> <C> <C> <C> Net revenues $ 687,319 $ 444,135 $ 288,588 $ 201,062 $ 120,602 Operating expenses: Direct advertising expenses 217,465 143,090 92,849 63,390 41,184 General & administrative expenses 138,072 94,372 60,935 45,368 29,466 Depreciation & amortization 318,096 177,138 88,791 48,317 16,712 ------------ ------------ ------------ ------------ ------------ Total operating expenses 673,633 414,600 242,575 157,075 87,362 ------------ ------------ ------------ ------------ ------------ Operating income 13,686 29,535 46,013 43,987 33,240 ------------ ------------ ------------ ------------ ------------ Other expense (income): Interest income (1,715) (1,421) (762) (1,723) (240) Interest expense 147,607 89,619 60,008 38,230 15,441 Loss (gain) on disposition of assets (986) (5,481) (1,152) (15) 91 ------------ ------------ ------------ ------------ ------------ Total other expense 144,906 82,717 58,094 36,492 15,292 ------------ ------------ ------------ ------------ ------------ Earnings (loss) before income taxes, extraordinary item and cumulative effect of an accounting change (131,220) (53,182) (12,081) 7,495 17,948 Income tax expense (benefit) (37,115) (9,596) (191) 4,654 7,099 ------------ ------------ ------------ ------------ ------------ Earnings (loss) before extraordinary item and cumulative effect of an accounting change (94,105) (43,586) (11,890) 2,841 10,849 Extraordinary loss on debt extinguishment -- (182) -- -- -- ------------ ------------ ------------ ------------ ------------ Earnings (loss) before cumulative effect of an accounting change (94,105) (43,768) (11,890) 2,841 10,849 Cumulative effect of an accounting change -- (767) -- -- -- ------------ ------------ ------------ ------------ ------------ Net earnings (loss) (94,105) (44,535) (11,890) 2,841 10,849 Preferred stock dividends (365) (365) (365) (365) (365) ------------ ------------ ------------ ------------ ------------ Net earnings (loss)applicable to common stock $ (94,470) $ (44,900) $ (12,255) $ 2,476 $ 10,484 ============ ============ ============ ============ ============ Earnings (loss) per common share - basic and diluted: Earnings (loss) before extraordinary item and accounting change(1) $ (1.04) $ (.64) $ (0.24) $ 0.05 $ 0.25 Extraordinary loss on debt extinguishment(1) -- -- -- -- -- Cumulative effect of a change in accounting principle(1) $ -- $ (.01) $ -- $ -- $ -- ------------ ------------ ------------ ------------ ------------ Net earnings (loss)(1) $ (1.04) $ (.65) $ (0.24) $ 0.05 $ 0.25 ============ ============ ============ ============ ============ Other Data: EBITDA(2) $ 331,782 $ 206,673 134,804 92,304 49,952 EBITDA margin 48% 47% 47% 46% 41% Cash flows from operating activities(3) $ 177,601 $ 110,551 $ 72,498 $ 45,783 $ 32,493 Cash flows from investing activities(3) $ (435,595) $ (950,650) $ (535,217) $ (370,228) $ (48,124) Cash flows from financing activities(3) $ 321,933 $ 719,903 $ 584,070 $ 250,684 $ 18,175 BALANCE SHEET DATA(4): Cash & cash equivalents $ 72,340 $ 8,401 $ 128,597 $ 7,246 $ 8,430 Working capital 67,455 40,787 94,221 18,662 1,540 Total assets 3,637,773 3,206,945 1,413,377 651,336 173,189 Total debt (including current maturities) 1,738,280 1,615,781 876,532 539,200 131,955 Total long-term obligations 1,819,857 1,730,710 857,760 551,865 130,211 Stockholders' equity 1,689,455 1,391,529 466,779 68,713 19,041 </TABLE> (1) After giving effect to the three-for-two split of the Company's Class A and Class B common stock effected in February 1998. (2) "EBITDA" is defined as operating income before depreciation and amortization. It represents a measure which management believes is customarily used to evaluate the financial performance of companies in the media industry. However, EBITDA is not a measure of financial performance under generally accepted accounting principles and should not be considered an alternative to operating income or net earnings as an indicator of the Company's operating performance or to net cash provided by operating activities as a measure of its liquidity. (3) Cash flows from operating, investing, and financing activities are obtained from the Company's consolidated statements of cash flows prepared in accordance with generally accepted accounting principles. (4) As of the end of the period. -14-
15 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LAMAR ADVERTISING COMPANY The following is a discussion of the consolidated financial condition and results of operations of the Company for the years ended December 31, 2000, 1999 and 1998. This discussion should be read in conjunction with the consolidated financial statements of the Company and the related notes. OVERVIEW The Company's net revenues, which represent gross revenues less commissions paid to advertising agencies that contract for the use of advertising displays on behalf of advertisers, are derived primarily from the sale of advertising on outdoor advertising displays owned and operated by the Company. In recent years, the Company's logo sign business has expanded rapidly and may in the future have an increasing impact on the Company's revenues and operating income. The Company has grown significantly during the last three years, primarily as the result of (i) internal growth in its existing outdoor advertising business resulting from construction of additional outdoor advertising displays, operating efficiency and increases in advertising rates, (ii) acquisitions of outdoor advertising businesses and structures, and (iii) the rapid expansion of the Company's logo sign business. The Company's net advertising revenues increased by $398.7 million from $288.6 million for the fiscal year ended December 31, 1998 to $687.3 million for the fiscal year ended December 31, 2000, representing a compound annual growth rate of approximately 54%. During the same period, EBITDA increased $197.0 million from $134.8 million for the fiscal year ended December 31, 1998 to $331.8 million for the fiscal year ended December 31, 2000, representing a compound annual growth rate of approximately 57%. The Company plans to continue a strategy of expanding through both internal growth and acquisitions. As a result of acquisitions, the operating performance of individual markets and of the Company as a whole are not necessarily comparable on a year-to-year basis. All recent acquisitions have been accounted for using the purchase method of accounting and, consequently, operating results from acquired operations are included from the respective dates of those acquisitions. Since December 31, 1999, the Company has increased the number of outdoor advertising displays it operates by approximately 12% by completing 103 strategic acquisitions of outdoor advertising and transit assets for an aggregate purchase price of approximately $536 million which included the issuance of 4,238,416 shares of Class A common stock valued at approximately $186 million. The Company has financed its recent acquisitions and intends to finance its acquisition activity from available cash, borrowings under its new bank credit agreement and the issuance of Class A common stock. See "Liquidity and Capital Resources" below. The Company relies on sales of advertising space for its revenues, and its operating results are therefore affected by general economic conditions, as well as trends in the advertising industry. Growth of the Company's business requires expenditures for maintenance and capitalized costs associated with new billboard displays and new logo sign contracts. Capitalized expenditures were $55.2 million in fiscal 1998, $77.2 million in fiscal 1999 and $78.3 million in fiscal 2000. Of these amounts,$10.6 million, $11.3 million and $10.6 million, respectively, were attributable to the logo sign business. See "Liquidity and Capital Resources." -15-
16 The following table presents certain items in the Consolidated Statements of Operations as a percentage of net revenues for the years ended December 31, 2000, 1999 and 1998: <TABLE> <CAPTION> YEAR ENDED DECEMBER 31, -------------------------------- 2000 1999 1998 -------- -------- -------- <S> <C> <C> <C> Net revenues 100.0% 100.0% 100.0% Operating expenses: Direct advertising expenses 31.6 32.2 32.2 General & administrative expenses 20.1 21.2 21.1 EBITDA(1) 48.3 46.5 46.7 Depreciation and amortization 46.3 39.8 30.8 Operating income 2.0 6.7 15.9 Interest expense 21.5 20.2 20.8 Other expense 21.1 18.6 20.1 Net loss (13.7) (10.0) (4.1) </TABLE> (1) "EBITDA" is defined as operating income before depreciation and amortization. It represents a measure which management believes is customarily used to evaluate the financial performance of companies in the media industry. However, EBITDA is not a measure of financial performance under generally accepted accounting principles and should not be considered an alternative to operating income or net earnings as an indicator of the Company's operating performance or to net cash provided by operating activities as a measure of its liquidity. -16-
17 YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999 Total revenues increased $243.2 million or 54.8% to $687.3 million for the year ended December 31, 2000 from $444.1 million for the same period in 1999. This increase was predominantly attributable to (i) an increase in billboard net revenues of $234.7 million or 56.9%, which was attributable to the Company's acquisitions during 2000 and 1999 and internal growth within the Company's previously existing markets, and (ii) a $4.6 million increase in logo sign revenue, which represents a 16.5% increase over the prior year. The increase in logo sign revenue was due to the completion of development of the new logo sign contracts awarded in 2000 and 1999 and the continued expansion of the Company's existing logo sign contracts. Operating expenses, exclusive of depreciation and amortization, increased $118.0 million or 49.7% to $355.5 million for the year ended December 31, 2000 from $237.5 million for the same period in 1999. This increase was the result of (i) an increase in personnel costs, sign site rent and other costs related to the increase in revenue and (ii) additional operating expenses related to the Company's recent acquisitions and the continued development of the logo sign business. Depreciation and amortization expense increased $141.0 million or 79.6% from $177.1 million for the year ended December 31, 1999 to $318.1 million for the year ended December 31, 2000 as a result of an increase in capital assets resulting from the Company's recent acquisition activity. Due to the above factors, operating income decreased $15.8 million or 53.6% from $29.5 million for the year ended December 31, 1999 to $13.7 million for the year ended December 31, 2000. Interest expense increased $58.0 million from $89.6 million for the year ended December 31, 1999 to $147.6 million for the year ended December 31, 2000 as a result of an entire year of interest expense related to the Company's 5 1/4% Convertible Notes due 2006 issued in August 1999, greater amounts outstanding under the bank credit agreement to finance recent acquisitions and an increase in interest rates during the period. The decrease in operating income and the increase in interest expense described above resulted in a $78.0 million increase in loss before income taxes, extraordinary item and cumulative effect of a change in accounting principle. The increase in loss before income taxes, resulted in an increase in the income tax benefit of $27.5 million for the year ended December 31, 2000 over the same period in 1999. As a result of the foregoing factors, the Company recognized a net loss for the year ended December 31, 2000 of $94.1 million, as compared to a net loss of $44.5 million for the same period in 1999. -17-
18 YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998 Total revenues increased $155.5 million or 53.9% to $444.1 million for the year ended December 31, 1999 from $288.6 million for the same period in 1998. This increase was predominantly attributable to (i) an increase in billboard net revenues of $150.5 million or 57.5%, which was attributable to the Company's acquisitions during 1999 and 1998 and internal growth within the Company's previously existing markets, and (ii) a $4.0 million increase in logo sign revenue, which represents a 16.6% increase over the prior year. The increase in logo sign revenue was due to the completion of development of the new logo sign contracts awarded in 1999 and 1998 and the continued expansion of the Company's existing logo sign contracts. Operating expenses, exclusive of depreciation and amortization, increased $83.7 million or 54.4% to $237.5 million for the year ended December 31, 1999 from $153.8 million for the same period in 1998. This increase was the result of (i) an increase in personnel costs, sign site rent and other costs related to the increase in revenue and (ii) additional operating expenses related to the Company's recent acquisitions and the continued development of the logo sign business. Depreciation and amortization expense increased $88.3 million or 99.4% from $88.8 million for the year ended December 31, 1998 to $177.1 million for the year ended December 31, 1999 as a result of an increase in capital assets resulting from the Company's recent acquisition activity. Due to the above factors, operating income decreased $16.5 million or 35.8% from $46.0 million for the year ended December 31, 1998 to $29.5 million for the year ended December 31, 1999. Interest income increased $.7 million as a result of an increase in excess cash investments made during the period. Interest expense increased $29.6 million from $60.0 million for the year ended December 31, 1998 to $89.6 million for the year ended December 31, 1999 as a result of interest expense on the Company's 5 1/4% Convertible Notes due 2006 and greater amounts outstanding under its new bank credit agreement to finance recent acquisitions. The decrease in operating income and the increase in interest expense described above resulted in a $41.1 million decrease in earnings before income taxes, extraordinary item and cumulative effect of a change in accounting principle. The decrease in earnings before income taxes, resulted in an increase in the income tax benefit of $9.4 million for the year ended December 31, 1999 over the same period in 1998. An extraordinary loss on debt extinguishment of $.2 million net of income tax benefit of $.1 million, was incurred during the year ended December 31, 1999, as a result of the extinguishment of a portion of the Company's 9 1/4% Senior Subordinated Notes due 2007 in connection with a change of control tender offer in July, 1999. 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. 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 foregoing factors, the Company recognized a net loss for the year ended December 31, 1999 of $44.5 million, as compared to a net loss of $11.9 million for the same period in 1998. -18-
19 LIQUIDITY AND CAPITAL RESOURCES The Company has historically satisfied its working capital requirements with cash from operations, offerings of its Class A common stock and debt securities and borrowings under its bank credit facilities. The Company's acquisitions have been financed primarily with funds borrowed under its bank credit facilities and issuance of its Class A common stock. The Company's net cash provided by operating activities increased to $177.6 million in fiscal 2000 due primarily to an increase in noncash items of $123.2 million, which includes an increase in depreciation and amortization of $141.0 million offset by a increase in deferred tax benefit of $23.4 million and an decrease in gain on disposition of assets of $4.5 million. There was also a decrease in net earnings of $49.6 million, a decrease in receivables of $5.9 million, an increase in prepaid expenses of $2.2 million, a decrease in other assets of $4.7 million, a decrease in trade accounts payable of $5.0 million, a decrease in accrued expenses of $16.4 million, and an increase in deferred income of $6.2 million. Net cash used in investing activities decreased $515.1 million from $950.7 million in fiscal 1999 to $435.6 million in fiscal 2000. This increase was due to a $521.0 million decrease in purchase of outdoor advertising assets offset by a $1.1 million increase in capital expenditures and a decrease in proceeds from the sale of property and equipment of $4.8 million. Net cash provided by financing activities decreased $398.0 million in fiscal 2000 due to a $279.6 million decrease in proceeds from issuance of long-term debt and a $402.0 million decrease in principal borrowings under credit agreements, offset by a $197.7 million increase in proceeds from issuance of common stock, a $74.3 million decrease in principal payments of long-term debt and a $11.6 million decrease in debt issuance costs. During the year ended December 31, 2000, the Company financed its acquisition activity of approximately $536.4 million with borrowings under the Company's bank credit facility and the issuance of approximately 4.2 million shares of common stock. At December 31, 2000, following these acquisitions, the Company had $350 million available under the revolving bank credit facility. 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. In November 2000, the Company completed a public offering of 4.5 million shares of Class A Common Stock at $45.00 per share. Net proceeds to the Company after underwriting discounts from the equity offering were $198.6 million. These proceeds were used to pay down the revolving bank credit facility and finance acquisitions in early 2001. NEW ACCOUNTING PRONOUNCEMENTS In June 2000, the FASB issued SFAS No. 138, "Accounting for Derivative Instruments and Hedging Activities - an amendment of FASB No. 133", which established accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as assets or liabilities in the statement of financial position and measures those instruments at fair value. On January 1, 2001, the Company adopted SFAS No. 133. The Company's adoption of SFAS No. 133 will not have any affect on the financial position or results of operation in 2001. -19-
20 LAMAR MEDIA CORP. On July 20, 1999, Lamar Advertising Company completed a corporate reorganization to create a new holding company structure. The reorganization was accomplished through a merger under section 251(g) of the Delaware General Corporation Law. At the effective time of the merger, all stockholders of Lamar Advertising Company became stockholders in a new holding company and Lamar Advertising Company became a wholly-owned subsidiary of the new holding company. The new holding company took the Lamar Advertising Company name and the old Lamar Advertising Company was renamed Lamar Media Corp. In the merger, all outstanding shares of old Lamar Advertising Company's capital stock were converted into shares of the new holding company with the same voting powers, designations, preferences and rights, and the same qualifications, restrictions and limitations, as the shares of old Lamar Advertising Company. The following is a discussion of the consolidated financial condition and results of operations of Lamar Media for the years ended December 31, 2000 and 1999. This discussion should be read in conjunction with the consolidated financial statements of Lamar Media and the related notes. YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999 Total revenues increased $243.2 million or 54.8% to $687.3 million for the year ended December 31, 2000 from $444.1 million for the same period in 1999. This increase was predominantly attributable to (i) an increase in billboard net revenues of $234.7 million or 56.9%, which was attributable to Lamar Media's acquisitions during 2000 and 1999 and internal growth within Lamar Media's previously existing markets, and (ii) a $4.6 million increase in logo sign revenue, which represents a 16.5% increase over the prior year. The increase in logo sign revenue was due to the completion of development of the new logo sign contracts awarded in 2000 and 1999 and the continued expansion of Lamar Media's existing logo sign contracts. Operating expenses, exclusive of depreciation and amortization, increased $117.4 million or 49.5% to $354.8 million for the year ended December 31, 2000 from $237.4 million for the same period in 1999. This increase was the result of (i) an increase in personnel costs, sign site rent and other costs related to the increase in revenue and (ii) additional operating expenses related to Lamar Media's recent acquisitions and the continued development of the logo sign business. Depreciation and amortization expense increased $139.3 million or 79.0% from $176.2 million for the year ended December 31, 1999 to $315.5 million for the year ended December 31, 2000 as a result of an increase in capital assets resulting from Lamar Media's recent acquisition activity. Due to the above factors, operating income decreased $13.4 million or 44.0% from $30.5 million for the year ended December 31, 1999 to $17.1 million for the year ended December 31, 2000. Interest expense increased $58.0 million from $89.6 million for the year ended December 31, 1999 to $147.6 million for the year ended December 31, 2000 as a result of interest expense on Lamar Media's obligation to Lamar Advertising Company and greater amounts outstanding under the new bank credit agreement to finance recent acquisitions. The decrease in operating income and the increase in interest expense described above resulted in a $75.6 million increase in loss before income taxes, extraordinary item and cumulative effect of a change in accounting principle. The increase in loss before income taxes, resulted in an increase in the income tax benefit of $26.6 million for the year ended December 31, 2000 over the same period in 1999. -20-
21 As a result of the foregoing factors, Lamar Media recognized a net loss for the year ended December 31, 2000 of $91.9 million, as compared to a net loss of $43.9 million for the same period in 1999. YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998 Total revenues increased $155.5 million or 53.9% to $444.1 million for the year ended December 31, 1999 from $288.6 million for the same period in 1998. This increase was predominantly attributable to (i) an increase in billboard net revenues of $150.5 million or 57.5%, which was attributable to Lamar Media's acquisitions during 1999 and 1998 and internal growth within Lamar Media's previously existing markets, and (ii) a $4.0 million increase in logo sign revenue, which represents a 16.6% increase over the prior year. The increase in logo sign revenue was due to the completion of development of the new logo sign contracts awarded in 1999 and 1998 and the continued expansion of Lamar Media's existing logo sign contracts. Operating expenses, exclusive of depreciation and amortization, increased $83.6 million or 54.3% to $237.4 million for the year ended December 31, 1999 from $153.8 million for the same period in 1998. This increase was the result of (i) an increase in personnel costs, sign site rent and other costs related to the increase in revenue and (ii) additional operating expenses related to Lamar Media's recent acquisitions and the continued development of the logo sign business. Depreciation and amortization expense increased $87.4 million or 98.5% from $88.8 million for the year ended December 31, 1998 to $176.2 million for the year ended December 31, 1999 as a result of an increase in capital assets resulting from Lamar Media's recent acquisition activity. Due to the above factors, operating income decreased $15.5 million or 33.6% from $46.0 million for the year ended December 31, 1998 to $30.5 million for the year ended December 31, 1999. Interest income increased $.7 million as a result of an increase in excess cash investments made during the period. Interest expense increased $29.6 million from $60.0 million for the year ended December 31, 1998 to $89.6 million for the year ended December 31, 1999 as a result of interest expense on Lamar Media's obligation to Lamar Advertising Company and greater amounts outstanding under its new bank credit agreement to finance recent acquisitions. The decrease in operating income and the increase in interest expense described above resulted in a $40.1 million decrease in earnings before income taxes, extraordinary item and cumulative effect of a change in accounting principle. The decrease in earnings before income taxes, resulted in an increase in the income tax benefit of $9.0 million for the year ended December 31, 1999 over the same period in 1998. An extraordinary loss on debt extinguishment of $.2 million net of income tax benefit of $.1 million, was incurred during the year ended December 31, 1999, as a result of the extinguishment of a portion of Lamar Media's 9 1/4% Senior Subordinated Notes due 2007 in connection with a change of control tender offer in July, 1999. 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. 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 foregoing factors, Lamar Media recognized a net loss for the year ended December 31, 1999 of $43.9 million, as compared to a net loss of $11.9 million for the same period in 1998. -21-
22 FACTORS AFFECTING FUTURE OPERATING RESULTS BECAUSE THE COMPANY HAS SIGNIFICANT FIXED PAYMENTS ON IT'S DEBT, IT MAY LACK SUFFICIENT CASH FLOW TO OPERATE ITS BUSINESS AS IT HAS IN THE PAST AND MAY NEED TO BORROW MONEY IN THE FUTURE TO MAKE THESE PAYMENTS AND OPERATE ITS BUSINESS. The Company has borrowed substantial amounts of money in the past and may borrow more money in the future. At December 31, 2000, Lamar Advertising Company had approximately $287.5 million of convertible notes outstanding. At December 31, 2000, Lamar Media had approximately $1.5 billion of debt outstanding consisting of approximately $900 million in bank debt, $528 million in various series of senior subordinated notes and $30 million in various other short-term and long-term debt. A large part of the Company's cash flow from operations must be used to make principal and interest payments on its debt. If the Company's operations make less money in the future, it may need to borrow to make these payments. In addition, the Company finances most of its acquisitions through borrowings under Lamar Media's bank credit facility which has a total committed amount of $1.25 billion in term, incremental and revolving credit loans. As of December 31, 2000, the Company had approximately $350 million available to borrow under this credit facility. Since its borrowing capacity under its credit facility is limited, the Company may not be able to continue to finance future acquisitions at its historical rate with borrowings under its credit facility. The Company may need to borrow additional amounts or seek other sources of financing to fund future acquisitions. The Company cannot guarantee that such additional financing will be available on favorable terms. The Company may need the consent of the banks under its credit facility, or the holders of other indebtedness, to borrow additional money. RESTRICTIONS IN THE COMPANY'S, AND ITS WHOLLY-OWNED, DIRECT SUBSIDIARY, LAMAR MEDIA'S DEBT AGREEMENTS REDUCE OPERATING FLEXIBILITY AND CONTAIN COVENANTS AND RESTRICTIONS THAT CREATE THE POTENTIAL FOR DEFAULTS. The terms of the indenture relating to Lamar Advertising's outstanding notes, Lamar Media's bank credit facility and the indentures relating to Lamar Media's outstanding notes restrict, among other things, the ability of Lamar Advertising and Lamar Media to: o dispose of assets; o incur or repay debt; o create liens; o make investments; and o pay dividends. Lamar Media's ability to make distributions to Lamar Advertising is also restricted under the terms of these agreements. Under Lamar Media's credit facility the Company must maintain specified financial ratios and levels including: o interest coverage; o fixed charges ratios; o senior debt ratios; and o total debt ratios. If Lamar Advertising fails to comply with these tests, the lenders have the right to cause all amounts outstanding under the credit facility to become immediately due. If this were to occur, and the lenders decide to exercise their right to accelerate the indebtedness, it would create serious financial problems for the Company. The Company's ability to comply with these restrictions, and any similar restrictions in future agreements, depends on its operating performance. Because its performance is subject to prevailing economic, financial and business conditions and other factors that are beyond the Company's control, it may be unable to comply with these restrictions in the future. -22-
23 THE COMPANY'S BUSINESS COULD BE HURT BY CHANGES IN ECONOMIC AND ADVERTISING TRENDS. The Company sells advertising space to generate revenues. A decrease in demand for advertising space could adversely affect the Company's business. General economic conditions and trends in the advertising industry affect the amount of advertising space purchased. A reduction in money spent on its displays could result from: o a general decline in economic conditions; o a decline in economic conditions in particular markets where the Company conducts business; o a reallocation of advertising expenditures to other available media by significant users of the Company's displays; or o a decline in the amount spent on advertising in general. THE COMPANY'S OPERATIONS ARE IMPACTED BY THE REGULATION OF OUTDOOR ADVERTISING. The Company's operations are significantly impacted by federal, state and local government regulation of the outdoor advertising business. The federal government conditions federal highway assistance on states imposing location restrictions on the placement of billboards on primary and interstate highways. Federal laws also impose size, spacing and other limitations on billboards. Some states have adopted standards more restrictive than the federal requirements. Local governments generally control billboards as part of their zoning regulations. Some local governments have enacted ordinances which require removal of billboards by a future date. Others prohibit the construction of new billboards and the reconstruction of significantly damaged billboards, or allow new construction only to replace existing structures. Local laws which mandate removal of billboards at a future date often do not provide for payment to the owner for the loss of structures that are required to be removed. Some federal and state laws require payment of compensation in such circumstances. Local laws that require the removal of a billboard without compensation have been challenged in state and federal courts with conflicting results. Accordingly, the Company may not be successful in negotiating acceptable arrangements when the Company's displays have been subject to removal under these types of local laws. Additional regulations may be imposed on outdoor advertising in the future. Legislation regulating the content of billboard advertisements has been introduced in Congress from time to time in the past. Additional regulations or changes in the current laws regulating and affecting outdoor advertising at the federal, state or local level may have a material adverse effect on the Company's results of operations. -23-
24 THE COMPANY'S CONTINUED GROWTH BY ACQUISITIONS MAY BECOME MORE DIFFICULT AND INVOLVES COSTS AND UNCERTAINTIES. The Company has substantially increased its inventory of advertising displays through acquisitions. The Company's operating strategy involves making purchases in markets where it currently competes as well as in new markets. However, the following factors may affect the Company's ability to continue to pursue this strategy effectively. o The outdoor advertising market has been consolidating, and this may adversely affect the Company's ability to find suitable candidates for purchase. o The Company is also likely to face increased competition from other outdoor advertising companies for the companies or assets it wishes to purchase. Increased competition may lead to higher prices for outdoor advertising companies and assets and decrease those it is able to purchase. o The Company does not know if it will have sufficient capital resources to make purchases, obtain any required consents from the Company's lenders, or find acquisition opportunities with acceptable terms. o The Company must integrate newly acquired assets into its existing operations. From January 1, 2000 to December 31, 2000, the Company completed approximately 100 transactions involving the purchase of complementary outdoor advertising assets. The process of integrating these acquisitions may result in unforeseen difficulties and could require significant time and attention from Lamar's management that would otherwise be directed at developing its existing business. Further, Lamar cannot be certain that the benefits and cost savings that it anticipates from these purchases will develop. THE COMPANY FACES COMPETITION FROM LARGER AND MORE DIVERSIFIED OUTDOOR ADVERTISERS AND OTHER FORMS OF ADVERTISING THAT COULD HURT ITS PERFORMANCE. The Company cannot be sure that in the future it will compete successfully against the current and future forms of outdoor advertising and other media. The competitive pressure that it faces could adversely affect its profitability or financial performance. Although Lamar Advertising is the largest company focusing exclusively on outdoor advertising, it faces competition from larger companies with more diversified operations that also include radio and other broadcast media. The Company also faces competition from other forms of media, including television, radio, newspapers and direct mail advertising. It must also compete with an increasing variety of other out-of-home advertising media that include advertising displays in shopping centers, malls, airports, stadiums, movie theaters and supermarkets, and on taxis, trains and buses. In the Company's logo sign business, it currently faces competition for state-awarded service contracts from two other logo sign providers as well as local companies. Initially, the Company competed for state-awarded service contracts as they are privatized. Because these contracts expire after a limited time, the Company must compete to keep its existing contracts each time they are up for renewal. IF THE COMPANY'S CONTINGENCY PLANS RELATING TO HURRICANES FAIL, THE RESULTING LOSSES COULD HURT THE COMPANY'S BUSINESS. Although the Company has developed contingency plans designed to deal with the threat posed to advertising structures by hurricanes, it cannot guarantee that these plans will work. If these plans fail, significant losses could result. A significant portion of its structures is located in the Mid-Atlantic and Gulf Coast regions of the United States. These areas are highly susceptible to hurricanes during the late summer and early fall. In the past, the Company has incurred significant -24-
25 losses due to severe storms. These losses resulted from structural damage, overtime compensation, loss of billboards that could not be replaced under applicable laws and reduced occupancy because billboards were out of service. The Company has determined that it is not economical to obtain insurance against losses from hurricanes and other storms. Instead, the Company has developed contingency plans to deal with the threat of hurricanes. For example, the Company attempts to remove the advertising faces on billboards at the onset of a storm, when possible, which permits the structures to better withstand high winds during a storm. The Company then replaces these advertising faces after the storm has passed. However, these plans may not be effective in the future and, if they are not, significant losses may result. THE COMPANY'S LOGO SIGN CONTRACTS ARE SUBJECT TO STATE AWARD AND RENEWAL. A portion of the Company's revenues and operating income come from its state-awarded service contracts for logo signs. The Company cannot predict what remaining states, if any, will start logo sign programs or convert state-run logo sign programs to privately operated programs. The Company competes with many other parties for new state-awarded service contracts for logo signs. Even when it is awarded such a contract, the award may be challenged under state contract bidding requirements. If an award is challenged, the Company may incur delays and litigation costs. Generally, state-awarded logo sign contracts have a term, including renewal options, of ten to twenty years. States may terminate a contract early, but in most cases must pay compensation to the logo sign provider for early termination. Typically, at the end of the term of the contract, ownership of the structures is transferred to the state without compensation to the logo sign provider. Of the Company's 20 logo sign contracts in place at December 31, 2000, one remains subject to renewal in September 2001, all other 2001 renewals have currently been secured. There is no guarantee that the Company will be able to obtain new logo sign contracts or renew its existing contracts. In addition, after a new state-awarded logo contract is received, the Company generally incurs significant start-up costs. The Company cannot guarantee that it will continue to have access to the capital necessary to finance those costs. THE COMPANY'S OPERATIONS COULD BE AFFECTED BY THE LOSS OF KEY EXECUTIVES. The Company's success depends to a significant extent upon the continued services of its executive officers and other key management and sales personnel. Kevin P. Reilly, Jr., the Chief Executive Officer, the nine regional managers and the manager of the logo sign business, in particular, are essential to the Company's continued success. Although the Company has designed it's incentive and compensation programs to retain key employees, the Company has no employment contracts with any employees and none of the executive officers have signed non-compete agreements. The Company does not maintain key man insurance on its executives. If any of the Company's executive officers or other key management and sales personnel stopped working with the Company in the future, it could have an adverse effect on its business. INFLATION In the last three years, inflation has not had a significant impact on the Company. SEASONALITY The Company's revenues and operating results have exhibited some degree of seasonality in past periods. Typically, the Company experiences its strongest financial performance in the summer and its lowest in the winter. The Company expects this trend to continue in the future. Because a significant portion of the Company's expenses is fixed, a reduction in revenues in any quarter is likely to result in a period to period decline in operating performance and net earnings. -25-
26 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK LAMAR ADVERTISING COMPANY AND LAMAR MEDIA CORP. Lamar Advertising Company is exposed to interest rate risk in connection with variable rate debt instruments issued by its wholly-owned subsidiary Lamar Media Corp. The 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 December 31, 2000, and should be read in conjunction with Note 8 of the Notes to the Company's Consolidated Financial Statements. Loans under Lamar Media Corp.'s new bank credit agreement bear interest at variable rates equal to the Chase Prime Rate 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 new bank credit agreement. Increases in the interest rates applicable to borrowings under the new bank credit agreement would result in increased interest expense and a reduction in the Company's net income and after tax cash flow. At December 31, 2000, there was approximately $900 million of aggregate indebtedness outstanding under the new bank credit agreement, or approximately 53.8% of the Company's outstanding long-term debt on that date, bearing interest at variable rates. The aggregate interest expense for 2000 with respect to borrowings under the new bank credit agreement was $81.8 million, and the weighted average interest rate applicable to borrowings under these credit facilities during 2000 was 8.6%. Assuming that the weighted average interest rate was 200-basis points higher (that is 10.6% rather than 8.6%), then the Company's 2000 interest expense would have been approximately $19.0 million higher resulting in a $7.4 million decrease in the Company's 2000 net income and 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 agreement to fix the interest rates applicable to its borrowings at an amount equal to LIBOR plus the applicable margin for periods of up to twelve months, which would allow the Company to mitigate the impact of short-term fluctuations in market interest rates. In the event of an increase in interest rates, the Company may take further actions to mitigate its exposure. The Company cannot guarantee, however, that the actions that it may take to mitigate this risk will be feasible or that, if these actions are taken, that they will be effective. ITEM 8. FINANCIAL STATEMENTS (following on next page) -26-
27 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES <TABLE> <S> <C> Independent Auditors' Report............................................................................................28 Consolidated Balance Sheets as of December 31, 2000 and 1999 ...........................................................29 Consolidated Statements of Operations for the years ended December 31, 2000, 1999 and 1998.............................................................................................. 30 Consolidated Statements of Comprehensive Income for the years ended December 31, 2000, 1999 and 1998.................................................................................. 31 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2000, 1999 and 1998.................................................................................. 32 Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998.............................................................................................. 33 Notes to Consolidated Financial Statements ..........................................................................34-54 </TABLE> -27-
28 Independent Auditors' Report Board of Directors Lamar Advertising Company: We have audited the accompanying consolidated balance sheets of Lamar Advertising Company and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 2000. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Lamar Advertising Company and subsidiaries as of December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 17 to the consolidated financial statements, the Company changed its method of accounting for the costs of start-up activities in 1999. KPMG LLP New Orleans, Louisiana February 2, 2001 -28-
29 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except share and per share data) December 31, 2000 and 1999 <TABLE> <CAPTION> 2000 1999 ------------ ------------ <S> <C> <C> ASSETS Current assets: Cash and cash equivalents $ 72,340 $ 8,401 Receivables, net 91,674 81,226 Prepaid expenses 23,164 21,524 Other current assets 8,738 14,342 ------------ ------------ Total current assets 195,916 125,493 ------------ ------------ Property, plant and equipment (note 4) 1,630,866 1,412,605 Less accumulated depreciation and amortization (335,991) (218,893) ------------ ------------ Net property plant and equipment 1,294,875 1,193,712 ------------ ------------ Intangible assets (note 5) 2,129,733 1,874,177 Other assets - non-current 17,249 13,563 ------------ ------------ Total assets $ 3,637,773 $ 3,206,945 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade accounts payable $ 9,918 $ 11,492 Current maturities of long-term debt (note 8) 66,814 4,318 Accrued expenses (note 7) 40,724 57,653 Deferred income 11,005 11,243 ------------ ------------ Total current liabilities 128,461 84,706 Long-term debt (note 8) 1,671,466 1,611,463 Deferred income taxes (note 9) 140,452 112,412 Other liabilities 7,939 6,835 ------------ ------------ Total liabilities 1,948,318 1,815,416 ------------ ------------ Stockholders' equity (note 11): 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 preferred stock, par value $638, $63.80 cumulative dividends, 10,000 shares authorized, 0 shares issued and outstanding at 2000 and 1999 -- -- Class A common stock, par value $.001, 175,000,000 shares authorized, 80,101,793 and 70,576,251 shares issued and outstanding at 2000 and 1999, respectively 80 71 Class B common stock, par value $.001, 37,500,000 shares authorized, 17,000,000 and 17,449,997 shares issued and outstanding at 2000 and 1999, respectively 17 17 Additional paid-in capital 1,871,303 1,478,916 Accumulated deficit (181,945) (87,475) ------------ ------------ Stockholders' equity 1,689,455 1,391,529 ------------ ------------ Total liabilities and stockholders' equity $ 3,637,773 $ 3,206,945 ============ ============ </TABLE> See accompanying notes to consolidated financial statements. -29-
30 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Consolidated Statements of Operations (In thousands, except share and per share data) Years ended December 31, 2000, 1999 and 1998 <TABLE> <CAPTION> 2000 1999 1998 ------------ ------------ ------------ <S> <C> <C> <C> Net revenues $ 687,319 $ 444,135 $ 288,588 ------------ ------------ ------------ Operating expenses: Direct advertising expenses 217,465 143,090 92,849 General and administrative expenses 138,072 94,372 60,935 Depreciation and amortization 318,096 177,138 88,791 ------------ ------------ ------------ 673,633 414,600 242,575 ------------ ------------ ------------ Operating income 13,686 29,535 46,013 ------------ ------------ ------------ Other expense (income): Interest income (1,715) (1,421) (762) Interest expense 147,607 89,619 60,008 Gain on disposition of assets (986) (5,481) (1,152) ------------ ------------ ------------ 144,906 82,717 58,094 ------------ ------------ ------------ Loss before income taxes, extraordinary item and cumulative effect of a change in accounting principle (131,220) (53,182) (12,081) Income tax benefit (note 9) (37,115) (9,596) (191) ------------ ------------ ------------ Loss before extraordinary item and cumulative effect of a a change in accounting principle (94,105) (43,586) (11,890) Extraordinary loss on debt extinguishment, net of income tax benefit of $117 -- (182) -- ------------ ------------ ------------ Loss before cumulative effect of a change in accounting principle (94,105) (43,768) (11,890) Cumulative effect of a change in accounting principle -- (767) -- ------------ ------------ ------------ Net loss (94,105) (44,535) (11,890) Preferred stock dividends (365) (365) (365) ------------ ------------ ------------ Net loss applicable to common stock $ (94,470) $ (44,900) $ (12,255) ============ ============ ============ Loss per common share - basic and diluted: Loss before extraordinary item and accounting change $ (1.04) $ (.64) $ (.24) Extraordinary loss on debt extinguishment -- -- -- Cumulative effect of a change in accounting principle -- (.01) -- ------------ ------------ ------------ Net loss $ (1.04) $ (.65) $ (.24) ============ ============ ============ Weighted average common shares outstanding 91,164,884 69,115,764 51,361,522 Incremental common shares from dilutive stock options -- -- -- Incremental common shares from convertible debt -- -- -- ------------ ------------ ------------ Weighted average common shares assuming dilution 91,164,884 69,115,764 51,361,522 ============ ============ ============ </TABLE> See accompanying notes to consolidated financial statements. -30-
31 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (In thousands) Years ended December 31, 2000, 1999 and 1998 <TABLE> <CAPTION> 2000 1999 1998 ------------ ------------ ------------ <S> <C> <C> <C> Net loss applicable to common stock $ (94,470) $ (44,900) $ (12,255) Other comprehensive income - change in unrealized loss on investment securities (net of deferred tax benefit of $217 for the year December 31, 1998) -- -- 354 ------------ ------------ ------------ Comprehensive loss $ (94,470) $ (44,900) $ (11,901) ============ ============ ============ </TABLE> See accompanying notes to consolidated financial statements. -31-
32 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity (In thousands, except share and per share data) Years ended December 31, 2000, 1999 and 1998 <TABLE> <CAPTION> SERIES UNREALIZED AA CLASS A CLASS A CLASS B ADDITIONAL GAIN (LOSS) PREFERRED PREFERRED COMMON COMMON PAID-IN ACCUMULATED ON INVESTMENT STOCK STOCK STOCK STOCK CAPITAL DEFICIT SECURITIES TOTAL --------- --------- ------- ------- ---------- ----------- ------------- ---------- <S> <C> <C> <C> <C> <C> <C> <C> <C> Balance, December 31, 1997 -- 3,649 28 19 95,691 (30,320) (354) 68,713 Issuance of 13,338,005 shares of common stock -- -- 13 -- 399,288 -- -- 399,301 Exercise of stock options -- -- 1 -- 10,665 -- -- 10,666 Conversion of 1,062,912 shares of Class B common stock to Class A common stock -- -- 1 (1) -- -- -- -- Net loss -- -- -- -- -- (11,890) -- (11,890) Dividends ($63.80 per preferred share) -- -- -- -- -- (365) -- (365) Realized loss on investment securities, net of tax -- -- -- -- -- -- 354 354 --------- --------- ------- ------- ---------- ----------- ------------- ---------- Balance, December 31, 1998 -- 3,649 43 18 505,644 (42,575) -- 466,779 Issuance of 26,407,650 shares of common stock in acquisitions -- -- 26 -- 954,946 -- -- 954,972 Exercise of stock options -- -- 1 -- 14,677 -- -- 14,678 Conversion of 250,000 shares of Class B common stock to Class A common stock -- -- 1 (1) -- -- -- -- Conversion of Class A preferred stock into Series AA preferred stock -- (3,649) -- -- 3,649 -- -- -- Net loss -- -- -- -- -- (44,535) -- (44,535) Dividends ($63.80 per preferred share) -- -- -- -- -- (365) -- (365) --------- --------- ------- ------- ---------- ----------- ------------- ---------- Balance, December 31, 1999 $ -- -- 71 17 1,478,916 (87,475) -- 1,391,529 Issuance of 4,238,416 shares of common stock in acquisitions -- -- 4 -- 185,599 -- -- 185,603 Exercise of stock options -- -- -- -- 7,471 -- -- 7,471 Conversion of 449,997 shares of Class B common stock to Class A common stock -- -- -- -- -- -- -- -- Issuance of 37,510 shares of common stock through employee stock purchase plan -- -- -- -- 1,261 -- -- 1,261 Issuance of 4,500,000 shares of common stock for cash -- -- 5 -- 198,056 -- -- 198,061 Net loss -- -- -- -- -- (94,105) -- (94,105) Dividends ($63.80 per preferred share) -- -- -- -- -- (365) -- (365) --------- --------- ------- ------- ---------- ----------- ------------- ---------- Balance, December 31, 2000 $ -- -- 80 17 1,871,303 (181,945) -- 1,689,455 ========= ========= ======= ======= ========== =========== ============= ========== </TABLE> See accompanying notes to consolidated financial statements. -32-
33 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands) Years ended December 31, 2000, 1999 and 1998 <TABLE> <CAPTION> 2000 1999 1998 ---------- ---------- ---------- <S> <C> <C> <C> Cash flows from operating activities: Net loss $ (94,105) (44,535) (11,890) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 318,096 177,138 88,791 Gain on disposition of assets (986) (5,481) (1,152) Cumulative effect of accounting change -- 767 -- Deferred tax benefit (36,974) (13,579) (7,537) Provision for doubtful accounts 5,991 4,065 2,883 Changes in operating assets and liabilities: (Increase) decrease in: Receivables (13,232) (19,091) (2,464) Prepaid expenses (1,371) 782 (521) Other assets 349 (4,337) (2,148) Increase (decrease) in: Trade accounts payable (1,574) 3,438 250 Accrued expenses 2,175 18,597 4,326 Deferred income (964) (7,184) 2,132 Other liabilities 196 (29) (172) ---------- ---------- ---------- Net cash provided by operating activities 177,601 110,551 72,498 ---------- ---------- ---------- Cash flows from investing activities: Capital expenditures (78,304) (77,186) (55,196) Purchase of new markets (360,118) (881,067) (485,514) Proceeds from sale of property and equipment 2,827 7,603 5,493 ---------- ---------- ---------- Net cash used in investing activities (435,595) (950,650) (535,217) ---------- ---------- ---------- Cash flows from financing activities: Net proceeds from issuance of common stock 205,098 7,418 402,629 Proceeds from issuance of long-term debt -- 279,594 70 Principal payments on long-term debt (5,330) (79,667) (6,229) Debt issuance costs (1,470) (13,077) (3,035) Net borrowing (payments) under credit agreements 124,000 526,000 191,000 Dividends (365) (365) (365) ---------- ---------- ---------- Net cash provided by financing activities 321,933 719,903 584,070 ---------- ---------- ---------- Net increase (decrease) in cash and cash equivalents 63,939 (120,196) 121,351 Cash and cash equivalents at beginning of period 8,401 128,597 7,246 ---------- ---------- ---------- Cash and cash equivalents at end of period $ 72,340 8,401 128,597 ========== ========== ========== Supplemental disclosures of cash flow information: Cash paid for interest $ 147,875 83,837 56,960 ========== ========== ========== Cash paid for state and federal income taxes $ 1,936 6,919 1,107 ========== ========== ========== </TABLE> See accompanying notes to consolidated financial statements. -33-
34 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (1) Significant Accounting Policies (a) Nature of Business Lamar Advertising Company (the "Company") is engaged in the outdoor advertising business operating approximately 131,300 outdoor advertising displays in 43 states. The Company's operating strategy is to be the leading provider of outdoor advertising services the markets it serves. In addition, the Company operates a logo sign business in 20 states throughout the United States and in 1 province of Canada. Logo signs are erected pursuant to state-awarded service contracts on public rights-of-way near highway exits and deliver brand name information on available gas, food, lodging and camping services. Included in the Company's logo sign business are tourism signing contracts. (b) Principles of Consolidation The accompanying consolidated financial statements include Lamar Advertising Company, its wholly-owned subsidiary, Lamar Media Corp. ("Lamar Media"), and its majority-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. (c) Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is calculated using accelerated and straight-line methods over the estimated useful lives of the assets. (d) Intangible Assets Intangible assets, consisting primarily of goodwill, site locations, customer lists and contracts, and non-competition agreements are amortized using the straight-line method over the assets estimated useful lives, generally from 5 to 15 years. Debt issuance costs are deferred and amortized over the terms of the related credit facilities using the interest method. (e) Investment Securities Investment securities at December 31, 1997 consisted of the Company's investment in approximately 340,000 shares of common stock of Wireless One, Inc., a publicly-held company in the wireless cable business. The Wireless One, Inc. shares were classified as available-for-sale at December 31, 1997 and were carried at fair value with the unrealized gain or loss, net of the related tax effect, reported as a separate component of stockholders' equity. These shares were sold in May, 1998, resulting in a realized loss of $875. (Continued) -34-
35 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (f) Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of The Company accounts for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of." SFAS No. 121 requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. The Company assesses the recoverability of enterprise level goodwill by determining whether the unamortized goodwill balance can be recovered through undiscounted future results of the Company's operations. The amount of enterprise-level goodwill impairment, if any, is measured based on projected discounted future results using a discount rate reflecting the Company's average cost of funds. (g) Deferred Income Deferred income consists principally of advertising revenue received in advance and gains resulting from the sale of certain assets to related parties. Deferred advertising revenue is recognized in income as services are provided over the term of the contract. Deferred gains are recognized in income in the consolidated financial statements at the time the assets are sold to an unrelated party or otherwise disposed of. (h) Revenue Recognition The Company recognizes revenue from outdoor and logo sign advertising contracts, net of agency commissions, on an accrual basis ratably over the term of the contracts, as advertising services are provided. (i) Income Taxes The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets (Continued) -35-
36 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. (j) Earnings Per Share Earnings per share are computed in accordance with SFAS No. 128, "Earnings Per Share." The calculation of basic earnings per share excludes 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 6,807,708, 3,017,724 and 505,558 for the twelve months ended December 31, 2000, 1999 and 1998, respectively. (k) Stock Option Plan The Company accounts for its stock option plan in accordance with the provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees", and related interpretations. As such, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price. SFAS No. 123, "Accounting for Stock-Based Compensation", permits entities to recognize as expense over the vesting period the fair value of all stock-based awards on the date of grant. Alternatively, SFAS No. 123 also allows entities to continue to apply the provisions of APB Opinion No. 25 and provide pro forma net income and pro forma earnings per share disclosures for employee stock option grants made in 1995 and future years as if the fair-value-based method defined in SFAS No. 123 has been applied. The Company has elected to continue to apply the provisions of APB Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No. 123. (l) Cash and Cash Equivalents The Company considers all highly-liquid investments with original maturities of three months or less to be cash equivalents. (m) Reclassification of Prior Year Amounts Certain amounts in the prior years' consolidated financial statements have been reclassified to conform to the current year presentation. These reclassifications had no effect on previously reported net earnings. (n) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (continued) -36-
37 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (2) Acquisitions Year Ended December 31, 1998 On January 2, 1998, the Company purchased all the outdoor advertising assets of Ragan Outdoor Advertising Company, Ragan Outdoor Advertising Company of Cedar Rapids, and Ragan Outdoor Advertising Company of Rockford, L.L.C. for a cash purchase price of $25,000. On January 30, 1998, the Company acquired all of the outdoor advertising assets of three related outdoor advertising companies (Pioneer Advertising Company, Superior Outdoor Advertising Company and Overland Outdoor Advertising Company, Inc.) located in Missouri and Arkansas for a cash purchase price of $19,200. On April 30, 1998, the Company purchased all the outdoor advertising assets of Northwest Outdoor Advertising, L.L.C. for a cash purchase price of approximately $70,000. The acquired displays are located in the states of Washington, Montana, Oregon, Idaho, Wyoming, Nebraska, Nevada and Utah. On May 15, 1998, the Company purchased the assets of Odegard Outdoor Advertising, L.L.C., for a cash purchase price of approximately $8,500. This acquisition increases the Company's presence in the Kansas City, Missouri market. On May 29, 1998, the Company entered into an agreement to purchase from Rainier Evergreen, Inc. or through its affiliates (i) all of the issued and outstanding common stock of American Signs, Inc., (ii) the assets of the Sun Media division and (iii) the assets of Sun Media of the Rockies, Inc. The asset purchases were closed on that date; while the stock purchase was delayed due to lease transfer issues involving the Bureau of Interior Affairs. The stock purchase was completed in September, 1998. The total purchase price was $26,550. On September 1, 1998, the Company entered into an agreement to purchase all of the outdoor advertising assets of Nichols & Vann Advertising. The Company paid a cash purchase price of $11,000 of which $6,100 is held on deposit as of December 31, 1998, and is included in other assets in the accompanying balance sheet at December 31, 1998. On October 1, 1998, the Company purchased all of the outstanding stock of OCI for a purchase price of $385,000. The purchase price included approximately $235,000 in cash, the assumption of OCI debt of approximately $105,000 and the issuance of notes in the aggregate amount of $45,000 to certain principal stockholders of OCI. Pursuant to this acquisition, the Company acquired approximately 14,700 displays in 12 states. Funds for this acquisition were provided from borrowings under the New Revolving Credit Facility and the Term Facility. During the year ended December 31, 1998, the Company completed 60 additional acquisitions of outdoor advertising assets, none of which were individually significant, for an aggregate cash purchase price of approximately $89 million and issuance of 63,005 shares of Class A common stock valued at approximately $2,400. (Continued) -37-
38 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) 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 allocation of the acquisition costs in the above transactions. <TABLE> <CAPTION> Property Current Plant & Other Current Long-term Assets Equipment Goodwill Assets Liabilities Liabilities ------------ ------------ ------------ ------------ ------------ ------------ <S> <C> <C> <C> <C> <C> <C> Ragan Companies $ 694 9,634 13,275 1,573 (176) -- Pioneer and related companies 307 15,062 264 4,046 (479) -- Northwest Outdoor Advertising, LLC 2,176 23,667 36,199 8,861 (697) (273) Odegard Outdoor Advertising, LLC 285 1,633 5,959 1,095 (272) (300) Rainier Evergreen, Inc. 359 3,205 21,681 1,855 (550) (50) Nichols & Vann Advertising -- 300 3,944 6,756 -- -- Outdoor Communications, Inc. 9,957 97,058 266,856 37,625 (54,112) (121,296) Other 1,036 33,227 46,756 16,415 (3,506) (2,549) ------------ ------------ ------------ ------------ ------------ ------------ $ 14,814 183,786 394,934 78,226 (59,792) (124,468) ============ ============ ============ ============ ============ ============ </TABLE> Year Ended December 31, 1999 On January 5, 1999, the Company purchased all of the outdoor advertising assets of American Displays, Inc. for a cash purchase price of approximately $14,500. On February 1, 1999, the Company purchased all of the outdoor advertising assets of KJS, LLC for a cash purchase price of $40,500. On April 1, 1999, the Company purchased all of the assets of Frank Hardie, Inc. for a cash purchase price of approximately $20,300. On June 1, 1999, the Company purchased the assets of Vivid, Inc. for a cash purchase price of approximately $22,100. On September 15, 1999, Lamar Media Corp. purchased the capital stock of Chancellor Media Outdoor Corporation and Chancellor Media Whiteco Outdoor Corporation, ("Chancellor Outdoor") for a combination of approximately $703,000 in cash and 26,227,273 shares of Class A common stock valued at approximately $947,000. The stock purchase agreement also contains a post-closing adjustment in the event that the net working capital of Chancellor Outdoor as shown on the closing balance sheet is greater or less than $12,000. As of December 31, 1999, the working capital adjustment to be paid by the Company is $15,750, and is included in accrued expenses in the accompanying balance sheet. (Continued) -38-
39 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) During the year ended December 31, 1999, the Company completed 72 additional acquisitions of outdoor advertising and transit assets for an aggregate cash purchase price of approximately $93,873 and the issuance of 180,377 shares of Class A common stock valued at approximately $7,981. 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 purchase price has 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 allocation of the purchase price in the above transactions. <TABLE> <CAPTION> Property Current Plant & Other Current Long-term Assets Equipment Goodwill Intangibles Liabilities Liabilities -------- -------- -------------- -------------- -------------- -------------- <S> <C> <C> <C> <C> <C> <C> American Displays $ 87 899 10,532 3,277 (284) -- KJS, LLC 20 9,468 30,543 4,489 (2,079) (1,921) Frank Hardie 187 6,582 10,464 3,630 (525) -- Vivid, Inc. 357 9,706 8,526 4,085 (593) Chancellor 39,242 645,151 298,486 779,944 (6,014) (106,102) Other 310 22,411 74,976 8,678 (1,301) (3,218) -------- -------- -------------- -------------- -------------- -------------- $ 40,203 694,217 433,527 804,103 (10,796) (111,241) ======== ======== ============== ============== ============== ============== </TABLE> Year Ended December 31, 2000 On January 14, 2000, the Company purchased all of the outstanding common stock of Aztec Group, Inc. for a purchase price of approximately $34,485. The purchase price consisted of approximately $5,259 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 Northeast Region for a cash purchase price of approximately $33,605. 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 $39,287. 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 $76,764 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 $30,937. The purchase price consisted of approximately $4,478 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 $41,059. (continued) -39-
40 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) During the year ended December 31, 2000, the Company completed 97 additional acquisition of outdoor advertising assets for a total purchase price of approximately $187,416. The purchase price included the issuance of 845,171 shares of Lamar Advertising Company Class A common stock valued at approximately $37,113. 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. <TABLE> <CAPTION> Property Current Plant & Other Current Long-term Assets Equipment Goodwill Intangibles Liabilities Liabilities ------------ ------------ ------------ ------------ ------------ ------------ <S> <C> <C> <C> <C> <C> <C> Aztec Group, Inc. $ 500 8,279 21,879 10,526 827 5,872 Northeast Region Acquisition 480 2,604 16,804 14,102 385 -- Outdoor West 1,131 9,187 21,297 17,222 675 8,875 Advantage Outdoor 3,256 65,534 78,846 58,442 4,456 32,053 Tyler Media Group, Inc. 378 16,241 12,876 11,123 -- 9,681 Root Outdoor Adv. Inc. 1,632 9,098 8,266 23,092 1,029 -- Other 2,497 56,583 81,303 61,110 1,550 12,527 ------------ ------------ ------------ ------------ ------------ ------------ $ 9,874 167,526 241,271 195,617 8,922 69,008 ============ ============ ============ ============ ============ ============ </TABLE> The following unaudited pro forma financial information for the Company gives effect to the 2000 and 1999 acquisitions as if they had occurred on January 1, 1999. These pro forma results do not purport to be indicative of the results of operations which actually would have resulted had the acquisitions occurred on such date or to project the Company's results of operations for any future period. <TABLE> <CAPTION> 2000 1999 ---------- ---------- <S> <C> <C> Net revenues $ 711,206 650,766 ========== ========== Loss before extraordinary item and cumulative effect of a change in accounting principle $ (104,421) (120,102) ========== ========== Net loss applicable to common stock $ (104,786) (121,416) ========== ========== Net loss per common share $ (1.13) (1.33) (basic and diluted) ========== ========== </TABLE> (Continued) -40-
41 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (3) Noncash Financing and Investing Activities A summary of significant noncash financing and investing activities for the years ended December 31, 2000, 1999 and 1998 follows: <TABLE> <CAPTION> 2000 1999 1998 ---------- ---------- ---------- <S> <C> <C> <C> Disposition of assets $ -- 5,387 30 Issuance of stock in acquisitions 185,603 954,972 2,706 Issuance of Series AA preferred stock in exchange for Class A preferred stock -- 3,649 -- Debt issuance costs -- 7,906 -- </TABLE> (4) Property, Plant and Equipment Major categories of property, plant and equipment at December 31, 2000 and 1999 are as follows: <TABLE> <CAPTION> ESTIMATED LIFE (YEARS) 2000 1999 -------------- ----------- ----------- <S> <C> <C> <C> Land -- $ 56,608 $ 48,024 Building and improvements 10-39 47,679 42,292 Advertising structures 15 1,464,794 1,240,020 Automotive and other equipment 3-7 61,785 82,269 ----------- ----------- $ 1,630,866 $ 1,412,605 =========== =========== </TABLE> (5) Intangible Assets The following is a summary of intangible assets at December 31, 2000 and 1999: <TABLE> <CAPTION> ESTIMATED LIFE (YEARS) 2000 1999 -------------- ----------- ----------- <S> <C> <C> <C> Debt issuance costs and fees 7-10 $ 46,806 $ 45,043 Customer lists and contracts 7-10 329,867 286,301 Non-compete agreements 3-15 53,807 50,277 Goodwill 15 1,276,623 1,033,287 Site locations and other 5-15 779,355 630,585 ---------- ---------- $2,486,458 $2,045,493 ========== ========== Cost 2,486,458 2,045,493 Accumulated amortization (356,725) (171,316) ---------- ---------- $2,129,733 $1,874,177 ========== ========== </TABLE> (Continued) -41-
42 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (6) Leases The Company is party to various operating leases for production facilities and sites upon which advertising structures are built. The leases expire at various dates, generally during the next five years, and have varying options to renew and to cancel. The following is a summary of minimum annual rental payments required under those operating leases that have original or remaining lease terms in excess of one year as of December 31: <TABLE> <S> <C> 2001 $ 98,304 2002 79,350 2003 71,455 2004 63,786 2005 53,335 Thereafter 316,542 </TABLE> Rental expense related to the Company's operating leases were $105,661, $63,193 and $43,440 for the years ended December 31, 2000, 1999 and 1998, respectively. (7) Accrued Expenses The following is a summary of accrued expenses at December 31, 2000 and 1999: <TABLE> <CAPTION> 2000 1999 -------- ------- <S> <C> <C> Payroll $ 10,939 $ 7,406 Interest 17,143 17,411 Insurance benefits 4,851 4,460 Purchase price payable (note 2) -- 15,750 Other 7,791 12,626 -------- -------- $ 40,724 $ 57,653 ======== ======== </TABLE> (8) Long-term Debt Long-term debt consists of the following at December 31, 2000 and 1999: <TABLE> <CAPTION> 2000 1999 ------------ ------------ <S> <C> <C> 5-1/4% Convertible notes $ 287,500 $ 287,500 9-5/8% Senior subordinated notes (1996 Notes) 255,000 255,000 8-5/8% Senior subordinated notes (1997 Notes) 198,989 198,882 Bank Credit Agreement 900,000 776,000 9-1/4% Senior subordinated notes 74,073 74,073 8% unsecured subordinated notes (see note 12) 11,333 13,333 Other notes with various rates and terms 11,385 10,993 ------------ ------------ 1,738,280 1,615,781 Less current maturities (66,814) (4,318) ------------ ------------ Long-term debt, excluding current maturities $ 1,671,466 $ 1,611,463 ============ ============ </TABLE> (Continued) -42-
43 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) Long-term debt matures as follows: <TABLE> <S> <C> 2001 $ 66,814 2002 66,607 2003 128,416 2004 155,393 2005 173,310 Later years 1,147,740 </TABLE> In November 1996, the Company issued $255,000 in principal amount of 9 5/8% Senior Subordinated Notes due 2006 (the "1996 Notes"), with interest payable semi-annually on June 1 and December 1 of each year. The 1996 Notes are senior subordinated unsecured obligations of the Company and are subordinated in right of payment to all senior indebtedness of the Company, pari passu with the 1997 Notes (as defined below), and are senior to all existing and future subordinated indebtedness of the Company. In September 1997, the Company issued $200,000 in principal amount of 8 5/8% Senior Subordinated Notes due 2007 (the "1997 Notes") with interest payable semi-annually on March 15 and September 15 of each year, commencing March 15, 1998. The 1997 Notes were issued at a discount for $198,676. The Company is using the effective interest method to recognize the discount over the life of the 1997 Notes. The 1997 Notes are senior subordinated unsecured obligations of the Company, subordinated in right of payment to all senior indebtedness of the Company, pari passu with the 1996 Notes and are senior to all existing and future subordinated indebtedness of the Company. The 1996 and 1997 Notes are redeemable at the Company's option at any time on or after December 31, 2001 and September 15, 2002, respectively, at redemption prices specified by the indentures, and are required to be repurchased earlier in the event of a change of control of the Company. The indentures covering the 1996 and 1997 Notes include certain restrictive covenants which limit the Company's ability to incur additional debt, pay dividends and make other restricted payments, consummate certain transactions and other matters. In August 1999, the Company replaced its previous credit agreement with a new bank credit agreement under which The Chase Manhattan Bank serves as administrative agent. The new $1,000,000 bank credit agreement consists of (1) a $350,000 revolving bank credit facility (the "New Revolving Credit Facility") and (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 agreement provided for an uncommitted $400,000 incremental facility available at the discretion of the lenders. In June 2000, the incremental loan agreement was finalized with its lenders and commitments for $250,000 of the previously uncommitted $400,000 were obtained. 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 a result of the holding company reorganization completed on July 20, 1999 and explained in footnote 12, the existing bank credit agreement and the new bank credit agreement are obligations of Lamar Media Corp., a wholly owned subsidiary of Lamar Advertising Company. As of December 31, 2000, the Company had borrowings under this agreement of $900,000. (Continued) -43-
44 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) Availability of the line under the New Revolving Credit Facility is reduced quarterly beginning with the quarter ended March 31, 2002, in the following amounts: <TABLE> <S> <C> <C> <C> March 31, 2002 - December 31, 2003 $ 8,750 March 31, 2004 - December 31, 2004 26,250 March 31, 2005 - December 31, 2005 30,625 March 31, 2006 (Revolving Credit Termination Date) 52,500 </TABLE> The Term Facility will begin to amortize quarterly beginning September 30, 2001 in the following quarterly amounts: <TABLE> <CAPTION> Tranche A Tranche B --------- --------- <S> <C> <C> <C> <C> September 30, 2001 - December 31, 2001 $ 22,500 $ 500 March 31, 2002 - December 31, 2002 11,250 500 March 31, 2003 - December 31, 2003 22,500 500 March 31, 2004 - December 31, 2004 28,125 500 March 31, 2005 - December 31, 2005 31,500 500 March 31, 2006 (Tranche A Maturity Date) 31,500 500 June 30, 2006 -- 500 August 1, 2006 (Tranche B Maturity Date) -- 190,000 </TABLE> The Incremental Facility will begin to amortize quarterly beginning September 30, 2001, in the following quarterly amounts: <TABLE> <CAPTION> Series A-1 Series A-2 Series B-1 ---------- ---------- ---------- <S> <C> <C> <C> <C> September 30, 2001 - December 31, 2001 $1,000 $6,500 $ 250 March 31, 2002 - December 31, 2002 500 3,250 250 March 31, 2003 - December 31, 2003 1,000 6,500 250 March 31, 2004 - December 31, 2004 1,250 8,125 250 March 31, 2005 - December 31, 2005 1,400 9,100 250 March 31, 2006 (Series A-1 and A-2 Maturity Date) 1,400 9,100 250 June 30, 2006 -- -- 250 August 1, 2006 (Series B-1 Maturity Date) -- -- 95,000 </TABLE> (Continued) -44-
45 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) Revolving credit loans may be requested under the New Revolving Credit Facility at any time prior to maturity. The loans bear interest, at the Company's option, at the LIBOR Rate or Chase Prime Rate plus applicable margins, such margins being set from time to time based on the Company's ratio of debt to trailing twelve month EBITDA, as defined in the agreement. The terms of the indenture relating to Lamar Advertising's outstanding notes, Lamar Media's bank credit facility and the indentures relating to Lamar Media's outstanding notes restrict, among other things, the ability of Lamar Advertising and Lamar Media to: o dispose of assets; o incur or repay debt; o create liens; o make investments; and o pay dividends. Lamar Media's ability to make distributions to Lamar Advertising is also restricted under the terms of these agreements. Under Lamar Media's credit facility the Company must maintain specified financial ratios and levels including: o interest coverage; o fixed charges ratios; o senior debt ratios; and o total debt ratios. On August 10, 1999, Lamar Advertising Company, the new holding company, completed an offering of $287,500 5 1/4% Convertible Notes due 2006. The net proceeds of approximately $279,594 of the convertible notes were used to pay down existing bank debt. In connection with the reorganization of Lamar Advertising Company into a new holding company structure, Lamar Media Corp. (formerly known as Lamar Advertising Company) made a change of control tender offer to the holders of its 9 1/4% Senior Subordinated Notes due 2007 in aggregate principal amount of approximately $103,900. Pursuant to the change of control tender offer and in accordance with the Indenture, Lamar Media Corp. offered to repurchase the Notes for 101% of the principal amount plus accrued interest. A total of $29,876 aggregate principal amount of Notes were tendered for payment on August 19, 1999, and the related 1% prepayment penalty is reflected as an extraordinary item in the Company's statement of operations for the year ended December 31, 1999. The Company's obligations with respect to its publicly issued notes are not guaranteed by the Company's direct or indirect wholly-owned subsidiaries. Certain obligations of the Company's wholly-owned subsidiary, Lamar Media Corp. are guaranteed by its subsidiaries. (Continued) -45-
46 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (9) Income Taxes Income tax expense (benefit) for the years ended December 31, 2000, 1999 and 1998, consists of: <TABLE> <CAPTION> Current Deferred Total ---------- ---------- ---------- <S> <C> <C> <C> Year ended December 31, 2000: U.S. federal $ -- (29,864) (29,864) State and local (141) (7,110) (7,251) ---------- ---------- ---------- (141) (36,974) (37,115) ========== ========== ========== Year ended December 31, 1999: U.S. federal $ 3,083 (11,838) (8,755) State and local 900 (1,741) (841) ---------- ---------- ---------- 3,983 (13,579) (9,596) ========== ========== ========== Year ended December 31, 1998: U.S. federal $ 6,269 (6,074) 195 State and local 1,077 (1,463) (386) ---------- ---------- ---------- 7,346 (7,537) (191) Change in deferred tax attributable to unrealized losses on investment securities, included in stockholders' equity -- 217 217 ---------- ---------- ---------- $ 7,346 (7,320) 26 ========== ========== ========== </TABLE> Income tax expense (benefit) attributable to continuing operations for the years ended December 31, 2000, 1999 and 1998, differs from the amounts computed by applying the U.S. federal income tax rate of 34 percent to loss before income taxes as follows: <TABLE> <CAPTION> 2000 1999 1998 ---------- ---------- ---------- <S> <C> <C> <C> Computed "expected" tax benefit $ (44,615) (18,081) (4,108) Increase (reduction) in income taxes resulting from: Book expenses not deductible for tax purposes 754 121 450 Amortization of non-deductible goodwill 11,926 8,841 3,752 State and local income taxes, net of federal income tax benefit (4,786) (555) (255) Other differences, net (394) 78 (30) ---------- ---------- ---------- $ (37,115) (9,596) (191) ========== ========== ========== </TABLE> (Continued) -46-
47 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2000 and 1999 are presented below: <TABLE> <CAPTION> 2000 1999 ---------- ---------- <S> <C> <C> Deferred tax liabilities: Plant and equipment, principally due to differences in depreciation $ (3,513) $ (3,942) Plant and equipment, due to basis differences on acquisitions (161,065) (134,323) Employee benefit plans -- (1,058) Intangibles, due to differences in amortizable lives (20,056) -- ---------- ---------- Deferred tax liabilities (184,634) (139,323) Deferred tax assets: Intangibles, due to differences in amortizable lives -- 3,796 Receivables, principally due to allowance for doubtful accounts 1,916 1,514 Plant and equipment, due to basis differences on acquisitions and costs capitalized for tax purposes 4,246 4,614 Investment in affiliates and plant and equipment, due to gains recognized for tax purposes and deferred for financial reporting purposes 941 941 Accrued liabilities not deducted for tax purposes 3,299 3,121 Net operating loss carryforward 33,004 11,844 Minimum tax credit 331 357 Other, net 445 724 ---------- ---------- Deferred tax assets 44,182 26,911 ---------- ---------- Net deferred tax liability $ (140,452) $ (112,412) ========== ========== </TABLE> In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. (Continued) -47-
48 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (10) Related Party Transactions Affiliates, as used within these statements, are persons or entities that are affiliated with Lamar Advertising Company or its subsidiaries through common ownership and directorate control. As of December 31, 2000 and 1999, debentures and ten year subordinated notes totaling $11,873 and $14,318, respectively, are owned by shareholders, directors and employees. Interest expense under the debentures and ten year subordinated notes during the years ended December 31, 2000, 1999, and 1998 was $1,080, $1,290 and $1,497 respectively. In addition, the Company had receivables from affiliates, related parties and employees of $444 and $833 at December 31, 2000 and 1999, respectively. During 1999, the Company purchased a sign easement for approximately $94 from Jennifred Holdings, LLC, of which Kevin P. Reilly, Jr. and Sean Reilly each hold a 50% interest. The Company purchased approximately $2,407, $1,951 and $1,810 of highway signs used in its logo sign business from Interstate Highway Signs Corp., ("IHS") during the years ended December 31, 2000, 1999 and 1998, respectively. IHS is a wholly-owned subsidiary of Sign Acquisition Corp. Kevin P. Reilly, Jr. has voting control over a majority of the outstanding shares of Sign Acquisition Corp. through a voting trust. (11) Stockholders' Equity On December 31, 1997, the Board of Directors approved a three-for-two split of its Class A and Class B common stock subject to the approval by the shareholders of an increase in the authorized number of shares of Class A and Class B common stock. On February 26, 1998, the shareholders approved an increase in the authorized number of shares of Class A common stock to 75,000,000 and Class B common stock to 37,500,000. The stock split, which was effected by means of a 50% stock dividend, was paid to shareholders on February 27, 1998. Par value of the common stock remained unchanged at $.001. Common stock and additional paid in capital were adjusted to reflect the split as of December 31, 1997. All references to share and per share information in the consolidated financial statements and related footnotes have been restated to reflect the effect of the split for all periods presented. (Continued) -48-
49 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) In June, 1998, the Company completed a public offering of 6,375,000 shares of Class A common stock at $29.00 per share. Net proceeds to the Company after underwriting discounts from the equity offering were $177.5 million. These proceeds were used to pay down outstanding bank debt of approximately $173.0 million with the remainder used for operations. In December, 1998, the Company completed a public offering of 6,900,000 shares of Class A common stock at $35 per share. Net proceeds to the Company after underwriting discounts from the equity offering were $219.8 million. These proceeds were used to pay down outstanding bank debt of approximately $99.0 million with the remainder used for debt reduction and acquisitions in 1999. On July 16, 1999, the Board of Directors amended the preferred stock of the Company by designating 5,720 shares of the 1,000,000 shares of previously undesignated preferred stock, par value $.001 as "Series AA preferred stock". The previously issued Class A preferred stock par value $638 was exchanged for the new Series AA preferred stock. The new Series AA preferred stock have the same liquidation preferences, dividends and other rights as the previously issued Class A preferred stock. Series AA preferred stock has a liquidation preference over Class A & B common stock. Liquidation value of the Series AA preferred stock at December 31, 2000 was $3,649. The new shares of Series AA preferred stock, however, are entitled to one vote per share. The rights of the Class A and Class B common stock are equal in all respects, except holders of Class B common stock have ten votes per share on all matters in which the holders of common stock are entitled to vote and holders of Class A common stock have one vote per share on such matters. The Class B common stock will convert automatically into Class A common stock upon the sale or transfer to persons other than permitted transferees (as defined in the Company's certificate of incorporation, as amended). On July 20, 1999, Lamar Advertising Company completed a corporate reorganization to create a new holding company structure. The reorganization was accomplished through a merger under section 251(g) of the Delaware General Corporation Law. At the effective time of the merger, all stockholders of Lamar Advertising Company became stockholders in a new holding company and Lamar Advertising Company became a wholly-owned subsidiary of the new holding company. The new holding company took the Lamar Advertising Company name and the old Lamar Advertising Company was renamed Lamar Media Corp. In the merger, all outstanding shares of old Lamar Advertising Company's capital stock were converted into shares of the new holding company with the same voting powers, designations, preferences and rights, and the same qualifications, restrictions and limitations, as the shares of old Lamar Advertising Company. Following the restructuring, the Class A common stock of the new holding company trades under the symbol "LAMR" on the Nasdaq National Market with the same CUSIP number as the old Lamar Advertising Company's Class A common stock. 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. (continued) -49-
50 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) 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. (12) Stock Option Plan In 1996, the Company adopted the 1996 Equity Incentive Plan (the "1996 Plan"). The purpose of the 1996 Plan is to attract and retain key employees and consultants of the Company. The 1996 Plan authorizes the grant of stock options, stock appreciation rights and restricted stock to employees and consultants of the Company capable of contributing to the Company's performance. Options granted under the 1996 Plan generally become exercisable over a five-year period and expire 10 years from the date of grant. The Company initially reserved an aggregate of 3,000,000 shares of Class A common stock (as adjusted for the Company's February 1998 three-for-two stock split) for awards under the 1996 Plan. In September, 1998, the Board of Directors of the Company voted to increase the number of shares reserved for issuance under the 1996 Plan by 1,000,000 shares to 4,000,000 shares. In August, 1999, the Board of Directors voted subject to stockholder approval, to increase the number of shares of Class A common stock reserved for issuance under the 1996 plan by 1,000,000 shares to 5,000,000 shares. This increase was approved by the shareholders on May 25, 2000. In August 2000, the Board of Directors voted, subject to stockholder approval, to amend the 1996 Plan to (i) authorize grants to members of the Company's board of directors (ii) provide the Committee with more flexibility in determining the exercise price of awards made under the 1996 Plan (iii) allow for grants of unrestricted stock and (iv) set forth performance criteria that the Committee may establish for the granting of stock awards. The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation." Accordingly, no compensation cost has been recognized for the stock option grants. Had compensation cost for the Company's stock option plan been determined based on the fair value at the grant date consistent with the provisions of SFAS No. 123, the Company's net earnings (loss) and earnings (loss) per share would have been reduced to the pro forma amounts indicated below: <TABLE> <CAPTION> 2000 1999 1998 --------- ------- ------- <S> <C> <C> <C> Net loss applicable to common stock - as reported $ (94,470) (44,900) (12,255) ========= ======= ======= Net loss applicable to common stock - pro forma $(100,877) (50,073) (15,145) ========= ======= ======= Net loss per common share - as reported (basic and diluted) $ (1.04) (.65) (.24) ========= ======= ======= Net loss per common share - pro forma (basic and diluted) $ (1.11) (.73) (.29) ========= ======= ======= </TABLE> (continued) -50-
51 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used: <TABLE> <CAPTION> Grant Dividend Expected Risk Free Expected Year Yield Volatility Interest Rate Lives ----- -------- ---------- ------------- -------- <S> <C> <C> <C> <C> 2000 0% 54% 6% 4 1999 0% 54% 6% 4 1998 0% 59% 5% 4 </TABLE> Information regarding the 1996 Plan for the years ended December 31, 2000, 1999 and 1998, is as follows: <TABLE> <CAPTION> 2000 1999 1998 ------------------------ ------------------------ ------------------------ Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price ---------- ---------- ---------- ---------- ---------- ---------- <S> <C> <C> <C> <C> <C> <C> Outstanding, beginning of year 2,757,954 $ 27.14 2,240,567 $ 19.25 1,868,804 $ 11.60 Granted ...................... 470,500 43.87 1,115,000 37.94 950,500 29.88 Exercised .................... (299,619) 17.75 (525,725) 15.16 (538,154) 10.84 Canceled ..................... (63,188) 39.09 (71,888) 30.84 (40,583) 18.24 ---------- ---------- ---------- ---------- ---------- ---------- Outstanding, end of year ..... 2,865,647 $ 30.59 2,757,954 $ 27.14 2,240,567 $ 19.25 ========== ========== ========== ========== ========== ========== Price for exercised shares $ 17.75 $ 15.16 $ 10.84 Shares available for grant, end of year 513,258 920,570 963,682 Weighted average fair value of options granted during the year $ 26.57 $ 23.19 $ 13.09 </TABLE> The following table summarizes information about fixed-price stock options outstanding at December 31, 2000: <TABLE> <CAPTION> Weighted Range Number Average Weighted Number Weighted Of Outstanding Remaining Average Exercisable Average Exercise At Contractual Exercise At Exercise Prices December 31, 2000 Life Price December 31, 2000 Price -------- ----------------- ----------- -------- ----------------- --------- <S> <C> <C> <C> <C> <C> $ 10.67 - 17.00 587,747 5.77 $ 11.87 418,997 $10.78 17.67 - 26.17 104,400 6.46 20.71 -- 0.00 26.69 - 33.38 1,402,000 7.99 31.20 446,500 31.84 34.16 - 47.75 658,500 8.97 42.41 25,400 38.33 - 60.63 113,000 9.01 60.63 7,500 60.63 </TABLE> No stock appreciation rights or restricted stock authorized by the 1996 Plan have been granted. (continued) -51-
52 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (13) Commitments and Other Contingencies The Company sponsors a partially self-insured group health insurance program. The Company is obligated to pay all claims under the program, which are in excess of premiums, up to program limits of $150 per employee, per claim, per year. The Company is also self-insured with respect to its income disability benefits and against casualty losses on advertising structures. Amounts for expected losses, including a provision for losses incurred but not reported, is included in accrued expenses in the accompanying consolidated financial statements. The Company maintains a $385 letter of credit with a bank to meet requirements of the Company's worker's compensation insurance carrier. The Company sponsors The Lamar Corporation Savings and Profit Sharing Plan covering employees who have completed one year of service and are at least 21 years of age. The Company matches 50% of employees' contributions up to 5% of related compensation. Employees can contribute up to 15% of compensation. Full vesting on the Company's matched contributions occurs after five years. Annually, at the Company's discretion, an additional profit sharing contribution may be made on behalf of each eligible employee. In total, for the years ended December 31, 1999 and 1998 the Company contributed $2,403 and $1,608, respectively. The Company did not make a profit sharing contribution for the year ended December 31, 2000. The Company sponsors a Deferred Compensation Plan for the benefit of certain of its senior management who meet specific age and years of service criteria. Employees who have attained the age of 30 and have a minimum of 10 years of service are eligible for annual contributions to the Plan generally ranging from $3 to $8, depending on the employee's length of service. The Company's contributions to the Plan are maintained in a "rabbi" trust and, accordingly, the assets and liabilities of the Plan are reflected in the balance sheet of the Company. Upon termination, death or disability, participating employees are eligible to receive an amount equal to the fair market value of the assets in the employee's deferred compensation account. The Company has contributed $456, $448 and $406 to the Plan during the years ended December 31, 2000, 1999 and 1998, respectively. Contributions to the Deferred Compensation Plan are discretionary and are determined by the Board of Directors. The Company is the subject of litigation arising during the normal course of business. In the opinion of management and the general counsel of the Company, those claims will not have a material impact on the financial position, results of operations or liquidity of the Company. (14) 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. (Continued) -52-
53 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (15) Disclosures About Fair Value of Financial Instruments The following table presents the carrying amounts and estimated fair values of the Company's financial instruments at December 31, 2000 and 1999. The fair value of the financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties. <TABLE> <CAPTION> 2000 1999 ------------------------ ----------------------- Carrying Estimated Carrying Estimated Amount Fair Value Amount Fair Value ---------- ---------- ---------- ---------- <S> <C> <C> <C> <C> Long-term debt $1,671,466 $1,677,434 $1,611,463 $1,613,209 </TABLE> The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies as follows: o The carrying amounts of cash and cash equivalents, receivables, trade accounts payable, accrued expenses, and deferred income approximate fair value because of the short term nature of these items. o The fair value of long-term debt is based upon market quotes obtained from dealers where available and by discounting future cash flows at rates currently available to the Company for similar instruments when quoted market rates are not available. Fair value estimates are subject to inherent limitations. Estimates of fair values are made at a specific point in time, based on relevant market information and information about the financial instrument. The estimated fair values of financial instruments presented above are not necessarily indicative of amounts the Company might realize in actual market transactions. Estimates of fair value are subjective in nature and involve uncertainties and matters of significant judgement and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. (16) Quarterly Financial Data (Unaudited) <TABLE> <CAPTION> Fiscal Year 2000 Quarters March 31 June 30 September 30 December 31 -------- ------- ------------ ----------- <S> <C> <C> <C> <C> Net revenues $ 151,267 $ 172,953 $ 184,806 $ 178,293 Net revenues less direct advertising expenses 98,755 119,327 128,768 123,004 Net loss applicable to common stock (29,065) (20,489) (19,600) (25,316) Net loss per common share (basic and diluted) (.33) (.23) (.21) (.27) </TABLE> <TABLE> <CAPTION> Fiscal Year 1999 Quarters March 31 June 30 September 30 December 31 -------- ------- ------------ ----------- <S> <C> <C> <C> <C> Net revenues $ 85,766 $ 97,809 $ 111,039 $ 149,521 Net revenues less direct advertising expenses 56,002 67,328 77,803 99,912 Net loss applicable to common stock (10,797) (5,161) (3,575) (25,367) Net loss per common share (basic and (diluted) (.18) (.08) (.05) (.29) </TABLE> (Continued) -53-
54 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (17) New Accounting Pronouncements 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 was recorded in the first quarter of fiscal 1999 as the cumulative effect of a change in accounting principle in the amount of $(767), net of tax, as described in Accounting Principles Board Opinion No. 20 "Accounting Changes". (18) Subsequent Events Effective January 30, 2001, Lamar Media Corp. and its subsidiaries entered into an amendment to its bank credit agreement for the purposes of increasing "Incremental Loan Commitments" from $400,000 to $1,000,000, and affording Lamar Media Corp. and Lamar Advertising Company more flexibility in incurring debt. The "Total Debt Ratio", previously measured at the Lamar Advertising Company level, is now measured at the Lamar Media Corp. level with the result that the 5-1/4% Convertible Notes will be excluded from this ratio. The loan documents were amended further to permit Lamar Advertising Company to incur additional debt which is no more restrictive than the high-yield debt currently outstanding. In connection with these changes, the note receivable and note payable of equal amounts between Lamar Advertising and Lamar Media, its wholly-owned subsidiary, were cancelled. The cancellation of the note of $287,500 will be treated as capital contributed by parent on Lamar Media's balance sheet effective January 30, 2001. Effective February 1, 2001, the Company purchased all of the outstanding common stock of Bowlin Outdoor Advertising and Travel Centers Incorporated by issuing 725,000 shares of the Company's Class A common stock valued at approximately $29,000. -54-
55 SCHEDULE 2 Lamar Advertising Company Valuation and Qualifying Accounts The Years Ended December 31, 2000, 1999 and 1998 (in 000's) <TABLE> <CAPTION> Balance at Charged to Beginning Costs and Balance at Description of Period Expenses Deductions End of Period ----------- ----------- ----------- ---------- ------------- <S> <C> <C> <C> <C> Year ended December 31, 2000 Deducted in balance sheet from trade accounts receivable: Allowance for doubtful accounts $ 3,928 5,991 5,005 4,914 Deducted in balance sheet from intangible assets: Amortization of intangible assets $171,316 185,409 -- 356,725 Year ended December 31, 1999 Deducted in balance sheet from trade accounts receivable: Allowance for doubtful accounts $ 2,722 4,065 2,859 3,928 Deducted in balance sheet from intangible assets: Amortization of intangible assets $ 72,121 100,019 824 171,316 Year ended December 31, 1998 Deducted in balance sheet from trade accounts receivable: Allowance for doubtful accounts $ 1,311 2,883 1,472 2,722 Deducted in balance sheet from intangible assets: Amortization of intangible assets $ 29,698 43,023 -- 72,721 </TABLE> -55-
56 LAMAR MEDIA CORP. AND SUBSIDIARIES <TABLE> <S> <C> Independent Auditors' Report..........................................................57 Consolidated Balance Sheets as of December 31, 2000 and 1999..........................58 Consolidated Statements of Operations for the years ended December 31, 2000, 1999 and 1998................................................................... 59 Consolidated Statements of Comprehensive Income for the years ended December 31, 2000, 1999 and 1998................................................ 60 Consolidated Statements of Stockholder's Equity for the years ended December 31, 2000, 1999 and 1998................................................ 61 Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998............................................................ 62 Notes to Consolidated Financial Statements ........................................63-68 </TABLE> -56-
57 Independent Auditors' Report Board of Directors Lamar Media Corp.: We have audited the accompanying consolidated balance sheets of Lamar Media Corp. and subsidiaries as of December 31, 2000, and 1999, and the related consolidated statements of operations, comprehensive income, stockholder's equity and cash flows for each of the years in the three-year period ended December 31, 2000. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Lamar Media Corp. and subsidiaries as of December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 17 to the consolidated financial statements of Lamar Advertising Company, the Company changed its method of accounting for the costs of start-up activities in 1999. KPMG LLP New Orleans, Louisiana February 2, 2001 -57-
58 LAMAR MEDIA CORP. and Subsidiaries Consolidated Balance Sheets December 31, 2000 and 1999 (In thousands, except share and per share data) <TABLE> <CAPTION> 2000 1999 ----------- ----------- <S> <C> <C> ASSETS Current assets: Cash and cash equivalents $ 72,340 $ 8,401 Receivables, net 91,628 80,671 Prepaid expenses 23,164 21,524 Other current assets 15,966 25,193 ----------- ----------- Total current assets 203,098 135,789 ----------- ----------- Property, plant and equipment 1,630,866 1,412,605 Less accumulated depreciation and amortization (335,991) (218,893) ----------- ----------- Net property plant and equipment 1,294,875 1,193,712 ----------- ----------- Intangible assets (note 3) 2,106,493 1,851,965 Other assets - non-current 17,249 13,563 ----------- ----------- Total assets $ 3,621,715 $ 3,195,029 =========== =========== LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Trade accounts payable $ 9,918 $ 11,492 Current maturities of long-term debt (note 5) 66,814 4,318 Accrued expenses (note 4) 35,765 54,031 Deferred income 11,005 11,243 ----------- ----------- Total current liabilities 123,502 81,084 Long-term debt (note 5) 1,671,466 1,611,463 Deferred income taxes (note 6) 142,052 112,776 Other liabilities 7,939 6,835 ----------- ----------- Total liabilities 1,944,959 1,812,158 ----------- ----------- Stockholder's equity: Common stock, $.01 par value, authorized 3000 shares; 100 shares issued and outstanding at December 31, 2000 and 1999 -- -- Additional paid-in capital 1,855,421 1,469,606 Accumulated deficit (178,665) (86,735) ----------- ----------- Stockholder's equity 1,676,756 1,382,871 ----------- ----------- Total liabilities and stockholder's equity $ 3,621,715 $ 3,195,029 =========== =========== </TABLE> See accompanying notes to consolidated financial statements. -58-
59 LAMAR MEDIA CORP. and Subsidiaries Consolidated Statements of Operations Years ended December 31, 2000, 1999 and 1998 (In thousands, except share and per share data) <TABLE> <CAPTION> 2000 1999 1998 --------- --------- --------- <S> <C> <C> <C> Net revenues $ 687,319 $ 444,135 $ 288,588 --------- --------- --------- Operating expenses: Direct advertising expenses 217,465 143,090 92,849 General and administrative expenses 137,292 94,264 60,935 Depreciation and amortization 315,465 176,233 88,791 --------- --------- --------- 670,222 413,587 242,575 --------- --------- --------- Operating income 17,097 30,548 46,013 --------- --------- --------- Other expense (income): Interest income (1,715) (1,421) (762) Interest expense 147,607 89,619 60,008 Gain on disposition of assets (986) (5,481) (1,152) --------- --------- --------- 144,906 82,717 58,094 --------- --------- --------- Loss before income taxes, extraordinary item and cumulative effect of a change in accounting principle (127,809) (52,169) (12,081) Income tax benefit (note 6) (35,879) (9,232) (191) --------- --------- --------- Loss before extraordinary item and cumulative effect of a change in accounting principle (91,930) (42,937) (11,890) Extraordinary loss on debt extinguishment net of income tax benefit of $117 -- (182) -- --------- --------- --------- Loss before cumulative effect of a change in accounting principle (91,930) (43,119) (11,890) Cumulative effect of a change in accounting principle -- (767) -- --------- --------- --------- Net loss (91,930) (43,886) (11,890) Preferred stock dividends -- (274) (365) --------- --------- --------- Net loss applicable to common stock $ (91,930) $ (44,160) $ (12,255) ========= ========= ========= </TABLE> See accompanying notes to consolidated financial statements. -59-
60 LAMAR MEDIA CORP. and Subsidiaries Consolidated Statements of Comprehensive Income Years ended December 31, 2000, 1999 and 1998 (In Thousands) <TABLE> <CAPTION> 2000 1999 1998 -------- -------- -------- <S> <C> <C> <C> Net loss applicable to common stock $(91,930) $(44,160) $(12,255) Other comprehensive income - change in unrealized gain (loss) on investment securities (net of deferred tax benefit $217 for the year ended December 31, 1998) -- -- 354 -------- -------- -------- Comprehensive loss $(91,930) (44,160) (11,901) ======== ======== ======== </TABLE> See accompanying notes to consolidated financial statements. -60-
61 LAMAR MEDIA CORP. and Subsidiaries Consolidated Statements of Stockholder's Equity Years ended December 31, 2000, 1999 and 1998 (In thousands, except share and per share data) <TABLE> <CAPTION> Unrealized Class A Class A Class B Additional Gain (Loss) Common Preferred Common Common Paid-in Accumulated On Investment Stock Stock Stock Stock Capital Deficit Securities -------- ---------- ---------- ---------- ---------- ---------- ---------- <S> <C> <C> <C> <C> <C> <C> <C> Balance, December 31, 1997 -- 3,649 28 19 95,691 (30,320) (354) Issuance of 13,338,005 shares of common stock -- -- 13 -- 399,288 -- -- Exercise of stock options -- -- 1 -- 10,665 -- -- Conversion of 1,062,912 shares of Class B common stock to Class A common stock -- -- 1 (1) -- -- -- Net loss -- -- -- -- -- (11,890) -- Dividends ($63.80 per preferred share) -- -- -- -- -- (365) -- Realized loss on investment securities, net of tax -- -- -- -- -- -- 354 -------- ---------- ---------- ---------- ---------- ---------- ---------- Balance December 31, 1998 -- 3,649 43 18 505,644 (42,575) -- Issuance of 13,023 shares of common stock in acquisitions -- -- -- -- 475 -- -- Exercise of stock options -- -- -- -- 3,833 -- -- Effect of Corporate restructuring -- (3,649) (43) (18) 3,710 -- -- Contributions from parent -- -- -- -- 955,944 -- -- Net loss -- -- -- -- -- (43,886) -- Dividends ($63.80 per preferred share) -- -- -- -- -- (274) -- -------- ---------- ---------- ---------- ---------- ---------- ---------- Balance December 31, 1999 $ -- -- -- -- 1,469,606 (86,735) -- Contributions from parent -- -- -- -- 385,815 -- -- Net loss -- -- -- -- -- (91,930) -- -------- ---------- ---------- ---------- ---------- ---------- ---------- Balance December 31, 2000 $ -- -- -- -- 1,855,421 (178,665) -- ======== ========== ========== ========== ========== ========== ========== <CAPTION> Total ---------- <S> <C> Balance, December 31, 1997 68,713 Issuance of 13,338,005 shares of common stock 399,301 Exercise of stock options 10,666 Conversion of 1,062,912 shares of Class B common stock to Class A common stock -- Net loss (11,890) Dividends ($63.80 per preferred share) (365) Realized loss on investment securities, net of tax 354 ---------- Balance December 31, 1998 466,779 Issuance of 13,023 shares of common stock in acquisitions 475 Exercise of stock options 3,833 Effect of Corporate restructuring -- Contributions from parent 955,944 Net loss (43,886) Dividends ($63.80 per preferred share) (274) ---------- Balance December 31, 1999 1,382,871 Contributions from parent 385,815 Net loss (91,930) ---------- Balance December 31, 2000 1,676,756 ========== </TABLE> See accompanying notes to consolidated financial statements. -61-
62 LAMAR MEDIA CORP. and Subsidiaries Consolidated Statements of Cash Flows Years ended December 31, 2000, 1999 and 1998 (In thousands) <TABLE> <CAPTION> 2000 1999 1998 --------- --------- --------- <S> <C> <C> <C> Cash flows from operating activities: Net loss $ (91,930) (43,886) (11,890) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 315,465 176,233 88,791 Gain on disposition of assets (986) (5,481) (1,152) Cumulative effect of accounting change -- 767 -- Deferred tax benefit (35,737) (13,215) (7,537) Provision for doubtful accounts 5,991 4,065 2,883 Changes in operating assets and liabilities: (Increase) decrease in: Receivables (13,786) (19,091) (2,464) Prepaid expenses (1,371) 782 (521) Other assets 4,568 (10,937) (2,148) Increase (decrease) in: Trade accounts payable (1,574) 3,438 250 Accrued expenses (1,910) 14,974 4,326 Deferred income (964) (7,184) 2,132 Other liabilities 196 (29) (172) --------- --------- --------- Net cash provided by operating activities 177,962 100,436 72,498 --------- --------- --------- Cash flows from investing activities: Capital expenditures (78,304) (77,186) (55,196) Purchase of new markets (355,958) (878,933) (485,514) Proceeds from sale of property and equipment 2,827 7,603 5,493 --------- --------- --------- Net cash used in investing activities (431,435) (948,516) (535,217) --------- --------- --------- Cash flows from financing activities: Net proceeds from the issuance of common stock -- 2,231 402,629 Contribution from parent 200,212 -- -- Proceeds from issuance of long-term debt -- 279,594 70 Principal payments on long-term debt (5,330) (79,667) (6,229) Debt issuance costs (1,470) -- (3,035) Net borrowing under credit agreements 124,000 526,000 191,000 Dividends -- (274) (365) --------- --------- --------- Net cash provided by financing activities 317,412 727,884 584,070 --------- --------- --------- Net increase (decrease) in cash and cash equivalents 63,939 (120,196) 121,351 Cash and cash equivalents at beginning of period 8,401 128,597 7,246 --------- --------- --------- Cash and cash equivalents at end of period $ 72,340 8,401 128,597 ========= ========= ========= Supplemental disclosures of cash flow information: Cash paid for interest $ 147,875 83,837 56,960 ========= ========= ========= Cash paid for income taxes $ 1,936 6,919 1,107 ========= ========= ========= </TABLE> See accompanying notes to consolidated financial statements. -62-
63 LAMAR MEDIA CORP. and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (1) Significant Accounting Policies (a) Nature of Business 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, including the Company, has not changed as a result of the reorganization. Lamar Media Corp. is engaged in the outdoor advertising business operating approximately 116,800 outdoor advertising displays in 42 states. Lamar Media's operating strategy is to be the leading provider of outdoor advertising services in the markets it serves. In addition, Lamar Media operates a logo sign business in 20 states throughout the United States and in 1 province of Canada. Logo signs are erected pursuant to state-awarded service contracts on public rights-of-way near highway exits and deliver brand name information on available gas, food, lodging and camping services. Included in the Company's logo sign business are tourism signing contracts. Certain footnotes are not provided for the accompanying financial statements as the information in notes 2, 4, 6, 11 through 13, 15, 17, 18 and portions of notes 1, 8 and 10 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. (Continued) -63-
64 LAMAR MEDIA CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (b) Principles of Consolidation The accompanying consolidated financial statements include Lamar Media Corp., its wholly-owned subsidiaries, The Lamar Company, LLC, Lamar Whiteco Outdoor Corporation, Lamar Outdoor Corporation and their majority-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. (2) Noncash Financing and Investing Activities A summary of significant noncash financing and investing activities for the years ended December 31, 2000, 1999 and 1998: <TABLE> <CAPTION> 2000 1999 1998 -------- -------- -------- <S> <C> <C> <C> Disposition of assets $ -- 5,387 30 Acquisitions of assets 185,603 475 2,706 Recapitalization related to corporate restructure (note 1) -- 3,710 -- </TABLE> (3) Intangible Assets The following is a summary of intangible assets at December 31, 2000 and 1999: <TABLE> <CAPTION> Estimated life (years) 2000 1999 -------------- ----------- ----------- <S> <C> <C> <C> Debt issuance costs and fees 7-10 $ 24,206 $ 24,059 Customer lists and contracts 7-10 329,867 286,301 Non-compete agreements 3-15 53,807 50,277 Goodwill 15 1,276,623 1,033,287 Site locations and other 5-15 774,304 628,451 ----------- ----------- $ 2,458,807 $ 2,022,375 =========== =========== Cost 2,458,807 2,022,375 Accumulated amortization (352,314) (170,410) ----------- ----------- $ 2,106,493 $ 1,851,965 =========== =========== </TABLE> (Continued) -64-
65 LAMAR MEDIA CORP. and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (4) Accrued Expenses The following is a summary of accrued expenses at December 31, 2000 and 1999: <TABLE> <CAPTION> 2000 1999 ------- ------- <S> <C> <C> Payroll $10,939 $ 7,406 Interest 17,143 17,411 Insurance benefits -- 838 Purchase price payable (note 2) -- 15,750 Other 7,683 12,626 ------- ------- $35,765 $54,031 ======= ======= </TABLE> (5) Long-term Debt Long-term debt consists of the following at December 31, 2000 and 1999: <TABLE> <CAPTION> 2000 1999 ----------- ----------- <S> <C> <C> 5-1/4% Note to Lamar Advertising Company $ 287,500 $ 287,500 9-5/8% Senior subordinated notes (1996 Notes) 255,000 255,000 8-5/8% Senior subordinated notes (1997 Notes) 198,989 198,882 Bank Credit Agreement 900,000 776,000 9-1/4% Senior subordinated notes 74,073 74,073 8% unsecured subordinated notes (see Note 12) 11,333 13,333 Other notes with various rates and terms 11,385 10,993 ----------- ----------- 1,738,280 1,615,781 Less current maturities (66,814) (4,318) ----------- ----------- Long-term debt, excluding current maturities $ 1,671,466 $ 1,611,463 =========== =========== </TABLE> Long-term debt matures as follows: <TABLE> <S> <C> 2001 $ 66,814 2002 66,607 2003 128,416 2004 155,393 2005 173,310 Later years 1,147,740 </TABLE> On August 10, 1999, Lamar Media Corp. borrowed from Lamar Advertising Company, its parent, $287,500 in exchange for a note payable bearing interest at 5-1/4% due 2006. The proceeds were used to pay down existing bank debt of the Company. (Continued) -65-
66 LAMAR MEDIA CORP. and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (6) Income Taxes Income tax expense (benefit) for the years ended December 31, 2000, 1999 and 1998, consists of: <TABLE> <CAPTION> Current Deferred Total -------- -------- -------- <S> <C> <C> <C> Year ended December 31, 2000: U.S. federal $ -- (28,865) (28,865) State and local (142) (6,872) (7,014) -------- -------- -------- $ (142) (35,737) (35,879) ======== ======== ======== Year ended December 31, 1999: U.S. federal $ 3,083 (11,521) (8,438) State and local 900 (1,694) (794) -------- -------- -------- $ 3,983 (13,215) (9,232) ======== ======== ======== Year ended December 31, 1998: U.S. federal $ 6,269 (6,074) 195 State and local 1,077 (1,463) (386) -------- -------- -------- 7,346 (7,537) (191) Change in deferred tax attributable to unrealized losses on investment securities, included in stockholders' equity -- 217 217 -------- -------- -------- $ 7,346 (7,320) 26 ======== ======== ======== </TABLE> Income tax benefit attributable to continuing operations for the years ended December 31, 2000, 1999 and 1998, differs from the amounts computed by applying the U.S. federal income tax rate of 34 percent to earnings before income taxes as follows: <TABLE> <CAPTION> 2000 1999 1998 -------- -------- -------- <S> <C> <C> <C> Computed "expected" tax benefit $(43,455) (17,737) (4,108) Increase (reduction) in income taxes resulting from: Book expenses not deductible for tax purposes 754 122 450 Amortization of non-deductible goodwill 11,845 8,814 3,752 State and local income taxes, net of federal income tax benefit (4,629) (534) (255) Other differences, net (394) 103 (30) -------- -------- -------- $(35,879) (9,232) (191) ======== ======== ======== </TABLE> (Continued) -66-
67 LAMAR MEDIA CORP. and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2000 and 1999 are presented below: <TABLE> <CAPTION> 2000 1999 --------- --------- <S> <C> <C> Deferred tax liabilities: Plant and equipment, principally due to differences in depreciation $ (3,513) $ (3,942) Plant and equipment, due to basis differences on acquisitions (161,065) (134,323) Employee benefit plans -- (1,058) Intangibles, due to differences in amortizable lives (19,891) -- --------- --------- Deferred tax liabilities (184,469) (139,323) Deferred tax assets: Intangibles, due to differences in amortizable lives -- 3,935 Receivables, principally due to allowance for doubtful accounts 1,916 1,514 Plant and equipment, due to basis differences on acquisitions and costs capitalized for tax purposes 4,246 4,614 Investment in affiliates and plant and equipment, due to gains recognized for tax purposes and deferred for financial reporting purposes 941 941 Accrued liabilities not deducted for tax purposes 3,299 3,121 Net operating loss carryforward 31,239 11,340 Minimum tax credit 331 357 Other, net 445 725 --------- --------- Deferred tax assets 42,417 26,547 --------- --------- Net deferred tax liability $(142,052) $(112,776) ========= ========= </TABLE> In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that Lamar Media will realize the benefits of these deductible differences. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. (7) Related Party Transactions Affiliates, as used within these statements, are persons or entities that are affiliated with Lamar Media Corp. or its subsidiaries through common ownership and directorate control. (Continued) -67-
68 LAMAR MEDIA CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) As of December 31, 2000 and 1999, there was a receivable from Lamar Advertising Company, its parent, in the amount of $7,227 and $10,851, respectively. (8) Quarterly Financial Data (Unaudited) <TABLE> <CAPTION> Fiscal Year 2000 Quarters March 31 June 30 September 30 December 31 --------- --------- ------------ ----------- <S> <C> <C> <C> <C> Net revenues $ 151,267 $ 172,953 $ 184,806 $ 178,293 Net revenues less direct advertising expenses 98,755 119,327 128,768 123,004 Net loss applicable to common stock (28,319) (19,448) (19,608) (24,555) </TABLE> <TABLE> <CAPTION> Fiscal Year 1999 Quarters March 31 June 30 September 30 December 31 -------- ------- ------------ ----------- <S> <C> <C> <C> <C> Net revenues $ 85,766 97,809 111,039 149,521 Net revenues less direct advertising expenses 56,002 67,328 77,803 99,912 Net loss applicable to common stock (10,797) (5,161) (3,221) (24,981) </TABLE> -68-
69 SCHEDULE 2 Lamar Media Corp. and Subsidiaries Valuation and Qualifying Accounts The Years Ended December 31, 2000, 1999 and 1998 (in 000's) <TABLE> <CAPTION> Balance at Charged to Beginning Costs and Balance at Description of Period Expenses Deductions End of Period ----------- --------- ---------- ---------- ------------- <S> <C> <C> <C> <C> Year ended December 31, 2000 Deducted in balance sheet from trade accounts receivable: Allowance for doubtful accounts $ 3,928 5,991 5,005 4,914 Deducted in balance sheet from intangible assets: Amortization of intangible assets $170,410 181,904 -- 352,314 Year ended December 31, 1999 Deducted in balance sheet from trade accounts receivable: Allowance for doubtful accounts $ 2,722 4,065 2,859 3,928 Deducted in balance sheet from intangible assets: Amortization of intangible assets $ 72,721 99,113 824 170,410 Year ended December 31, 1998 Deducted in balance sheet from trade accounts receivable: Allowance for doubtful accounts $ 1,311 2,883 1,472 2,722 Deducted in balance sheet from intangible assets: Amortization of intangible assets $ 29,698 43,023 -- 72,721 </TABLE> -69-
70 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Lamar Advertising Company None Lamar Media Corp. None PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The response to this item is contained in part under the caption "Executive Officers of the Registrant" in Part I, Item 1A hereof and the remainder is incorporated herein by reference from the discussion responsive thereto under the captions "Election of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's Proxy Statement relating to the 2001 Annual Meeting of Stockholders. ITEM 11. EXECUTIVE COMPENSATION The response to this item is incorporated herein by reference from the discussion responsive thereto under the following captions in the Company's Proxy Statement relating to the 2001 Annual Meeting of Stockholders: "Election of Directors - Director Compensation," "Executive Compensation" and "Compensation Committee Interlocks and Insider Participation." ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The response to this item is incorporated herein by reference from the discussion responsive thereto under the caption "Share Ownership" in the Company's Proxy Statement relating to the 2001 Annual Meeting of Stockholders. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The response to this item is incorporated herein by reference from the discussion responsive thereto under the caption "Certain Relationships and Related Transactions" in the Company's Proxy Statement relating to the 2001 Annual Meeting of Stockholders. -70-
71 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (A) 1. FINANCIAL STATEMENTS The financial statements are listed under Part II, Item 8 of this Report. 2. FINANCIAL STATEMENT SCHEDULES The financial statement schedules are included under Part II, Item 8 of this Report. 3. EXHIBITS The exhibits are listed below under Part IV, Item 14(c) of this Report. (B) REPORTS ON FORM 8-K Reports on Form 8-K were filed with the Commission during the fourth quarter of 2000 to report the following items as of the dates indicated: 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. On November 16, 2000, Lamar Advertising filed a Current Report on Form 8-K in order to furnish certain exhibits for incorporation by reference into the Registration Statement on Form S-3 of Lamar Advertising Company previously filed with Securities and Exchange Commission (File No. 333-48288), which Registration Statement was declared effective by the Commission on November 2, 2000. Lamar Advertising Company filed an Underwriting Agreement dated November 15, 2000 between Lamar and Morgan Stanley & Co. Incorporated as Exhibit 1.2 to such Registration Statement and an opinion of Palmer & Dodge LLP, counsel to the Company, regarding the validity of 4,500,000 shares of the Company's Class A common stock, $.001 par value per share, to be sold by the Company pursuant to such Underwriting Agreement as Exhibit 5.2 to such Registration Statement. -71-
72 INDEX TO EXHIBITS Exhibit No. Description 2.1 Agreement and Plan of Merger dated as of July 20, 1999 among Lamar Media Corp., Lamar New Holding Co., and Lamar Holdings Merge Co. Previously filed as exhibit 2.1 to the Company's Current Report on Form 8-K filed on July 22, 1999 (File No. 0-30242) and incorporated herein by reference. 3.1 Certificate of Incorporation of Lamar New Holding Co. Previously filed as exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1999 (File No. 0-20833) filed on August 16, 1999 and incorporated herein by reference. 3.2 Certificate of Amendment of Certificate of Incorporation of Lamar New Holding Co. (whereby the name of Lamar New Holding Co. was changed to Lamar Advertising Company). Previously filed as exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1999 (File No. 0-20833) filed on August 16, 1999 and incorporated herein by reference. 3.3 Certificate of Amendment of Certificate of Incorporation of Lamar Advertising Company. Previously filed as Exhibit 3.3 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2000 (Filed No. 0-30242) filed on August 11, 2000 and incorporated herein by reference. 3.4 Certificate of Correction of Certificate of Incorporation of Lamar Advertising Company. Previously filed as Exhibit 3.4 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2000 (File No. 0-30242) filed on November 14, 2000 and incorporated herein by reference. 3.5 Amended and Restated 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. 3.6 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 Specimen certificate for the shares of Class A common stock of the Company. Previously filed as Exhibit 4.1 to the Company's Registration Statement on Form S-1 (File No. 333-05479), and incorporated herein by reference. 4.2 Senior Secured Note dated May 19, 1993. Previously filed as Exhibit 4.1 to the Company's Registration Statement on Form S-1 (File No. 33-59624), and incorporated herein by reference. 4.3 Indenture dated May 15, 1993 relating to the Company's 11% Senior Secured Notes due May 15, 2003. Previously filed as Exhibit 4.3 to the Company's Registration Statement on Form S-1 (File No. 33-59624), and incorporated herein by reference. 4.4 First Supplemental Indenture dated July 30, 1996 relating to the Company's 11% Senior Secured Notes due May 15, 2003. Previously filed as Exhibit 4.5 to the Company's Registration Statement on Form S-1 (File No. 333-05479), and incorporated herein by reference. 4.5 Form of Second Supplemental Indenture in the form of an Amended and Restated Indenture dated November 8, 1996 relating to the Company's 11% Senior Secured Notes due May 15, 2003. Previously filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on November 15, 1996 (File No. 1-12407), and incorporated herein by reference. 4.6 Notice of Trustee dated November 8, 1996 with respect to the release of the security interest in the Trustee on behalf of the holders of the Company's 11% Senior Secured Notes due May 15, 2003. Previously filed as Exhibit 4.2 to the Company's Current Report on Form 8-K filed on November 15, 1996 (File No. 1-12407), and incorporated herein by reference. -72-
73 4.7 Form of Subordinated Note. Previously filed as Exhibit 4.8 to the Company's Registration Statement on Form S-1 (File No. 333-05479), and incorporated herein by reference. 4.8 Indenture dated as of November 15, 1996 between the Company, certain of its subsidiaries and State Street Bank and Trust Company, as trustee, relating to the Company's 9 5/8% Senior Subordinated Notes due 2006. Previously filed as Exhibit 4.11 to the Company's Registration Statement on Form S-3 (File No. 333-14789), and incorporated herein by reference. 4.9 Form of 9 5/8% Senior Subordinated Note due 2006. Previously filed as Exhibit 4.12 to the Company's Registration Statement on Form S-3 (File No. 333-14789), and incorporated herein by reference. 4.10 Form of 8 5/8% Senior Subordinated Note due 2007. Previously filed as Exhibit 4.10 to the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1997, (File No. 1-12407), and incorporated herein by reference. 4.11 Indenture dated as of September 25, 1997 between the Company, certain of its subsidiaries, and State Street Bank and Trust Company, as trustee, relating to the Company's 8 5/8% Senior Subordinated Notes due 2007. Previously filed as Exhibit 4.2 to the Company's Current Report on Form 8-K filed on September 30, 1997 (File No. 1-12407), and incorporated herein by reference. 4.12 Indenture dated August 15, 1997, relating to Outdoor Communications, Inc. 9 1/4% Senior Subordinated Notes. Previously filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference. 4.13 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 October 1, 1998. Previously filed as Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference. 4.14 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 October 23, 1998. Previously filed as Exhibit 4.3 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference. 4.15 Supplemental Indenture to the Indenture dated November 15, 1996 among the Company, certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated October 23, 1998. Previously filed as Exhibit 4.4 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference. 4.16 Supplemental Indenture to the Indenture dated September 25, 1997 among the Company, certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated October 23, 1998. Previously filed as Exhibit 4.5 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference. 4.17 Indenture dated as of August 10, 1999 between the Company and State Street Bank and Trust Company, as Trustee. Previously filed as Exhibit 4.1 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. 4.18 First Supplemental Indenture dated as of August 10, 1999 between the Company and State Street Bank and Trust Company, as Trustee. Previously filed as Exhibit 4.2 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. 4.19 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 July 20, 1999. Previously filed as Exhibit 4.1 to Lamar Advertising -73-
74 Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.20 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 September 15, 1999. Previously filed as Exhibit 4.2 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.21 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 September 15, 1999. Previously filed as Exhibit 4.3 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.22 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 July 20, 1999. Previously filed as Exhibit 4.4 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.23 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 July 20, 1999. Previously filed as Exhibit 4.5 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.24 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 September 15, 1999. Previously filed as Exhibit 4.6 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.25 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 as of August 8, 2000. Previously filed as Exhibit 4.3 to Lamar Advertising 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. 4.26 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 as of August 8, 2000. Previously filed as Exhibit 4.8 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.27 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 as of August 8, 2000. Previously filed as Exhibit 4.9 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.28 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 December 23, 1999. Previously filed as Exhibit 4.28 to the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1999, (File No. 0-30242), and incorporated herein by reference. 4.29 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 December 23, 1999. Previously filed as Exhibit 4.29 to the Company's -74-
75 Annual Report on Form 10-K for fiscal year ended December 31, 1999, (File No. 0-30242), and incorporated herein by reference. 4.30 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 December 23, 1999. Previously filed as Exhibit 4.30 to the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1999, (File No. 0-30242), and incorporated herein by reference. 4.31 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 as of August 8, 2000. Previously filed as Exhibit 4.3 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 14, 2000 and incorporated herein by reference. 4.32 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 as of August 8, 2000. Previously filed as Exhibit 4.8 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 14, 2000 and incorporated herein by reference. 4.33 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 as of August 8, 2000. Previously filed as Exhibit 4.2 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 14, 2000 and incorporated herein by reference. 4.34 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 as of June 1, 2000. Previously filed as Exhibit 4.3 to Lamar Advertising 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. 4.35 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 as of June 30, 2000. Previously filed as Exhibit 4.1 to Lamar Advertising 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. 4.36 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 as of June 1, 2000. Previously filed as Exhibit 4.2 to Lamar Advertising 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. 4.37 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 as of March 2, 2000. Previously filed as Exhibit 4.3 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended March 31, 2000 (File No. 0-30242) filed on May 15, 2000 and incorporated herein by reference. 4.38 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 as of March 2, 2000. Previously filed as Exhibit 4.1 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended March 31, 2000 (File No. 0-30242) filed on May 15, 2000 and incorporated herein by reference. 4.39 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 as of March 2, 200. Previously filed as Exhibit 4.2 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended March 31, 2000 (File No. 0-30242) filed on May 14, 2000 and incorporated herein by reference. -75-
76 4.40 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 as of December 31, 2000. Filed herewith. 4.41 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 as of December 31, 2000. Filed herewith. 4.42 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 as of December 31, 2000. Filed herewith. 10.1 Consulting Agreement dated July 1, 1996 between the Lamar Texas Limited Partnership and the Reilly Consulting Company, L.L.C., of which Kevin P. Reilly, Sr. is the manager. Previously filed as Exhibit 10.2 to the Company's Registration Statement on Form S-1 (File No. 33-05479), and incorporated herein by reference. 10.2 Indenture dated as of September 24, 1986 relating to the Company's 8% Unsecured Subordinated Debentures. Previously filed as Exhibit 10.3 to the Company's Registration Statement on Form S-1 (File No. 33-59624), and incorporated herein by reference. 10.3* The Lamar Savings and Profit Sharing Plan Trust. Previously filed as Exhibit 10.4 to the Company's Registration Statement on Form S-1 (File No. 33-59624), and incorporated herein by reference. 10.4 Trust under The Lamar Corporation, its Affiliates and Subsidiaries Deferred Compensation Plan dated October 3, 1993. Previously filed as Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1995 (File No. 33-59624), and incorporated herein by reference. 10.5* 1996 Equity Incentive Plan. Previously filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q (File No. 0-30242), for the period ended June 30, 2000 filed on August 11, 2000 and incorporated herein by reference. 10.6 Bank Credit Agreement dated December 18, 1996 between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.18 to the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1996 (File No. 1-12407), and incorporated herein by reference. 10.7 Amendment No. 1 to the Bank Credit Agreement dated as of March 31, 1997 between the Company, the Subsidiary Guarantors party thereto, the Lenders party thereto and the Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1997 (File No. 1-12407), and incorporated herein by reference. 10.8 Amendment No. 2 to the Bank Credit Agreement dated as of September 12, 1997 between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed on September 30, 1997 (File No. 1-12407), and incorporated herein by reference. 10.9 Amendment No. 3 to the Bank Credit Agreement dated as of December 31, 1997 between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.9 to the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1997, (File No. 1-12407), and incorporated herein by reference. 10.10 Contract to Sell and Purchase, dated as of October 9, 1996, between the Company and Outdoor East L.P. Previously filed as Exhibit 10.16 to the Company's Registration Statement on Form S-3 (File No. 333-14677), and incorporated herein by reference. 10.11 Stock Purchase Agreement, dated as of September 25, 1996, between the Company and the shareholders of FKM Advertising, Co., Inc. Previously filed as Exhibit 10.17 to the Company's Registration Statement on Form S-3 (File No. 333-14677), and incorporated herein by reference. -76-
77 10.12 Stock Purchase Agreement dated as of February 7, 1997 between the Company and the stockholders of Penn Advertising, Inc. named therein. Previously filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed on April 14, 1997 (File No. 1-12407), and incorporated herein by reference. 10.13 Asset Purchase Agreement dated as of August 15, 1997 between The Lamar Corporation and Outdoor Systems, Inc. Previously filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed on August 27, 1997 (File No. 1-12407), and incorporated herein by reference. 10.14 Bank Credit Agreement dated July 16, 1998, between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1998, (File No. 0-020833), and incorporated herein by reference. 10.15 Amendment No. 1 to the Amended and Restated Bank Credit Agreement dated September 15, 1998, between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998 (File No. 0-20833) and incorporated herein by reference. 10.16 Stock Purchase Agreement dated as of October 1, 1998, between the Company and the stockholders of Outdoor Communications, Inc. named therein. Previously filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed on October 15, 1998 (File No. 0-20833), and incorporated herein by reference. 10.17 Amendment No. 4 to Credit Agreement dated as of March 31, 1998, between Lamar Advertising Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1998 (File No. 1-12407), and incorporated herein by reference. 10.18 Second Amended and Restated Stock Purchase Agreement dated as of August 11, 1999 among the Company, Lamar Media Corp., Chancellor Media Corporation of Los Angeles and Chancellor Mezzanine Holdings Corporation. Previously filed as Appendix A to the Company's Schedule 14C Information Statement filed on August 13, 1999 and incorporated herein by reference. Pursuant to Item 601(b)(2) of Regulation S-K, the Schedules and Annexes A and B referred to in the Second Amended and Restated Stock Purchase Agreement are omitted. The Company hereby undertakes to furnish supplementary a copy of any omitted Schedule or Annex to the Commission upon request. 10.19 Bank Credit Agreement dated August 13, 1999, between Lamar Media Corp., certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.1 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 10.20 Stockholders Agreement dated as of September 15, 1999 by and among Lamar Advertising Company, Chancellor Media Corporation of Los Angeles, Chancellor Mezzanine Holdings Corporation and the Reilly Family Limited Partnership. Previously filed as Exhibit 10.2 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-030242) filed on November 12, 1999 and incorporated herein by reference. 10.21 Amended and Restated Registration Rights Agreement dated as of July 19, 2000 among Lamar Advertising Company, AMFM Operating Inc., AMFM Holdings Inc. and Clear Channel Communications, Inc. Previously filed as Exhibit 10.3 to Lamar Advertising Company's Current Report on Form 8-K (File No. 0-030242) filed on August 31, 2000 and incorporated herein by reference. 10.22 Assumption Agreement dated as of July 20, 1999 is by and among Lamar Advertising Company, Lamar Media Corp., and the direct and indirect subsidiaries of such corporations. Previously filed as Exhibit 10.4 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-030242) filed on November 12, 1999 and incorporated herein by reference. -77-
78 <TABLE> <S> <C> 10.23 Joinder Agreement to the Lamar Media Corp. Credit Agreement dated August 13, 1999 by Lamar Florida, Inc. in favor of The Chase Manhattan Bank, as Administrative Agent dated December 23, 1999. Previously filed as Exhibit 10.23 to the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1999, (File No. 1-12407), and incorporated herein by reference. 10.24* 2000 Employee Stock Purchase Plan. Previously filed as Exhibit 10.3 to Lamar Advertising 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. 10.25 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. Previously filed as exhibit 10.4 to Lamar Advertising 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. 10.26 Series A-2 and 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. Previously filed as exhibit 10.4 to Lamar Advertising 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. 10.27 Amendment No. 1 to Credit Agreement and Guaranty and Pledge Agreement dated as of April 10, 2000 in respect of (i) the Credit Agreement dated as of August 13, 1999 between Lamar Media Corp., the Subsidiary Guarantors party thereto, the lenders party thereto, and The Chase Manhattan Bank, as Administrative Agent, and (ii) the Guaranty and Pledge Agreement dated as of September 15, 1999 between Lamar Advertising Company and The Chase Manhattan Bank. Filed herewith. 10.28 Amendment No. 2 to Credit Agreement and Guaranty and Pledge Agreement dated as of January 30, 2001 in respect of (i) the Credit Agreement dated as of August 13, 1999 between Lamar Media Corp., the Subsidiary Guarantors party thereto, the lenders party thereto, and The Chase Manhattan Bank, as Administrative Agent, and (ii) the Guaranty and Pledge Agreement dated as of September 15, 1999 between Lamar Advertising Company and The Chase Manhattan Bank. Filed herewith. 10.29 First Amendment to Stockholders Agreement by and among Lamar Advertising Company, AMFM Operating, Inc., AMFM Holdings, Inc., Clear Channel Communications, Inc. and the Reilly Family Limited Partnership, dated July 19, 2000. Previously filed as exhibit 10.1 to the Company's Current Report on Form 8-K filed on August 31, 2000, and incorporated herein by reference. 10.30 Joinder Agreement to the Lamar Media Corp. Credit Agreement dated August 13, 1999 by Lamar Ohio Outdoor Holding Corp. in favor of The Chase Manhattan Bank, as Administrative Agent dated September 13, 2000. Previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, (File No. 0-30242) filed on November 14, 2000, and incorporated herein by reference. 10.31 Joinder Agreement to the Lamar Media Corp. Credit Agreement dated August 13, 1999 by Outdoor West, Inc. of Georgia and Outdoor West, Inc. of Tennessee in favor of The Chase Manhattan Bank, as Administrative Agent dated December 23, 1999. Previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for quarter ended June 30, 2000, (File No. 0-30242) filed on August 11, 2000, and incorporated herein by reference. 10.32 Joinder Agreement to the Lamar Media Corp. Credit Agreement dated August 13, 1999 by Lamar Advan, Inc. in favor of The Chase Manhattan Bank, as Administrative Agent dated March 2, 2000. Previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for quarter ended March 31, 2000, (File No. 0-30242) filed on May 15, 2000, and incorporated herein by reference. 10.33 Joinder Agreement to the Lamar Media Corp. Credit Agreement dated August 13, 1999 by Texas Logos, L.P., in favor of The Chase Manhattan Bank, as Administrative Agent dated December 31, 2000. Filed herewith. </TABLE> -78-
79 11.1 Statement regarding computation of per share earnings. Filed herewith. 21.1 Subsidiaries of the Company. Filed herewith. 23.1 Consent of KPMG LLP. Filed herewith. * Management contract or compensatory plan or arrangement in which the executive officers or directors of the Company participate. -79-
80 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 March 23, 2001 By: /s/ Kevin P. Reilly, Jr. --------------------------------- Kevin P. Reilly, Jr. President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. <TABLE> <CAPTION> Signature Title Date --------- ----- ---- <S> <C> <C> /s/ Kevin P. Reilly, Jr. Chief Executive Officer and Director 3/23/01 - ------------------------------ Kevin P. Reilly, Jr. /s/ Keith A. Istre Chief Financial and Accounting Officer 3/23/01 - ------------------------------ and Director Keith A. Istre /s/ Charles W. Lamar, III Director 3/23/01 - ------------------------------ Charles W. Lamar, III /s/ Gerald H. Marchand Director 3/23/01 - ------------------------------ Gerald H. Marchand /s/ T. Everett Stewart, Jr. Director 3/23/01 - ------------------------------ T. Everett Stewart, Jr. /s/ Sean E. Reilly Director 3/23/01 - ------------------------------ Sean E. Reilly /s/ Stephen P. Mumblow Director 3/23/01 - ------------------------------ Stephen P. Mumblow /s/ John Maxwell Hamilton Director 3/23/01 - ------------------------------ John Maxwell Hamilton /s/ Thomas Reifenheiser Director 3/23/01 - ------------------------------ Thomas Reifenheiser </TABLE> -80-
81 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 MEDIA CORP. March 23, 2001 By: /s/ Kevin P. Reilly, Jr. --------------------------------- Kevin P. Reilly, Jr. President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. <TABLE> <CAPTION> Signature Title Date --------- ----- ---- <S> <C> <C> /s/ Kevin P. Reilly, Jr. Chief Executive Officer and Director 3/23/01 - ------------------------------ Kevin P. Reilly, Jr. /s/ Keith A. Istre Chief Financial and Accounting Officer 3/23/01 - ------------------------------ and Director Keith A. Istre /s/ Charles W. Lamar, III Director 3/23/01 - ------------------------------ Charles W. Lamar, III /s/ Gerald W. Marchand Director 3/23/01 - ------------------------------ Gerald W. Marchand /s/ T. Everett Stewart, Jr. Director 3/23/01 - ------------------------------ T. Everett Stewart, Jr. /s/ Sean E. Reilly Director 3/23/01 - ------------------------------ Sean E. Reilly /s/ Stephen P. Mumblow Director 3/23/01 - ------------------------------ Stephen P. Mumblow </TABLE> -81-
82 INDEX TO EXHIBITS <TABLE> <CAPTION> EXHIBIT NUMBER DESCRIPTION - ------- ----------- <S> <C> 2.1 Agreement and Plan of Merger dated as of July 20, 1999 among Lamar Media Corp., Lamar New Holding Co., and Lamar Holdings Merge Co. Previously filed as exhibit 2.1 to the Company's Current Report on Form 8-K filed on July 22, 1999 (File No. 0-30242) and incorporated herein by reference. 3.1 Certificate of Incorporation of Lamar New Holding Co. Previously filed as exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1999 (File No. 0-20833) filed on August 16, 1999 and incorporated herein by reference. 3.2 Certificate of Amendment of Certificate of Incorporation of Lamar New Holding Co. (whereby the name of Lamar New Holding Co. was changed to Lamar Advertising Company). Previously filed as exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1999 (File No. 0-20833) filed on August 16, 1999 and incorporated herein by reference. 3.3 Certificate of Amendment of Certificate of Incorporation of Lamar Advertising Company. Previously filed as Exhibit 3.3 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2000 (Filed No. 0-30242) filed on August 11, 2000 and incorporated herein by reference. 3.4 Certificate of Correction of Certificate of Incorporation of Lamar Advertising Company. Previously filed as Exhibit 3.4 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2000 (File No. 0-30242) filed on November 14, 2000 and incorporated herein by reference. 3.5 Amended and Restated 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. 3.6 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 Specimen certificate for the shares of Class A common stock of the Company. Previously filed as Exhibit 4.1 to the Company's Registration Statement on Form S-1 (File No. 333-05479), and incorporated herein by reference. 4.2 Senior Secured Note dated May 19, 1993. Previously filed as Exhibit 4.1 to the Company's Registration Statement on Form S-1 (File No. 33-59624), and incorporated herein by reference. 4.3 Indenture dated May 15, 1993 relating to the Company's 11% Senior Secured Notes due May 15, 2003. Previously filed as Exhibit 4.3 to the Company's Registration Statement on Form S-1 (File No. 33-59624), and incorporated herein by reference. 4.4 First Supplemental Indenture dated July 30, 1996 relating to the Company's 11% Senior Secured Notes due May 15, 2003. Previously filed as Exhibit 4.5 to the Company's Registration Statement on Form S-1 (File No. 333-05479), and incorporated herein by reference. 4.5 Form of Second Supplemental Indenture in the form of an Amended and Restated Indenture dated November 8, 1996 relating to the Company's 11% Senior Secured Notes due May 15, 2003. Previously filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on November 15, 1996 (File No. 1-12407), and incorporated herein by reference. 4.6 Notice of Trustee dated November 8, 1996 with respect to the release of the security interest in the Trustee on behalf of the holders of the Company's 11% Senior Secured Notes due May 15, 2003. Previously filed as Exhibit 4.2 to the Company's Current Report on Form 8-K filed on November 15, 1996 (File No. 1-12407), and incorporated herein by reference. </TABLE>
83 <TABLE> <S> <C> 4.7 Form of Subordinated Note. Previously filed as Exhibit 4.8 to the Company's Registration Statement on Form S-1 (File No. 333-05479), and incorporated herein by reference. 4.8 Indenture dated as of November 15, 1996 between the Company, certain of its subsidiaries and State Street Bank and Trust Company, as trustee, relating to the Company's 9 5/8% Senior Subordinated Notes due 2006. Previously filed as Exhibit 4.11 to the Company's Registration Statement on Form S-3 (File No. 333-14789), and incorporated herein by reference. 4.9 Form of 9 5/8% Senior Subordinated Note due 2006. Previously filed as Exhibit 4.12 to the Company's Registration Statement on Form S-3 (File No. 333-14789), and incorporated herein by reference. 4.10 Form of 8 5/8% Senior Subordinated Note due 2007. Previously filed as Exhibit 4.10 to the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1997, (File No. 1-12407), and incorporated herein by reference. 4.11 Indenture dated as of September 25, 1997 between the Company, certain of its subsidiaries, and State Street Bank and Trust Company, as trustee, relating to the Company's 8 5/8% Senior Subordinated Notes due 2007. Previously filed as Exhibit 4.2 to the Company's Current Report on Form 8-K filed on September 30, 1997 (File No. 1-12407), and incorporated herein by reference. 4.12 Indenture dated August 15, 1997, relating to Outdoor Communications, Inc. 9 1/4% Senior Subordinated Notes. Previously filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference. 4.13 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 October 1, 1998. Previously filed as Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference. 4.14 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 October 23, 1998. Previously filed as Exhibit 4.3 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference. 4.15 Supplemental Indenture to the Indenture dated November 15, 1996 among the Company, certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated October 23, 1998. Previously filed as Exhibit 4.4 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference. 4.16 Supplemental Indenture to the Indenture dated September 25, 1997 among the Company, certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated October 23, 1998. Previously filed as Exhibit 4.5 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference. 4.17 Indenture dated as of August 10, 1999 between the Company and State Street Bank and Trust Company, as Trustee. Previously filed as Exhibit 4.1 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. 4.18 First Supplemental Indenture dated as of August 10, 1999 between the Company and State Street Bank and Trust Company, as Trustee. Previously filed as Exhibit 4.2 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. 4.19 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 July 20, 1999. Previously filed as Exhibit 4.1 to Lamar Advertising </TABLE>
84 <TABLE> <S> <C> Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.20 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 September 15, 1999. Previously filed as Exhibit 4.2 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.21 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 September 15, 1999. Previously filed as Exhibit 4.3 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.22 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 July 20, 1999. Previously filed as Exhibit 4.4 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.23 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 July 20, 1999. Previously filed as Exhibit 4.5 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.24 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 September 15, 1999. Previously filed as Exhibit 4.6 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.25 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 as of August 8, 2000. Previously filed as Exhibit 4.3 to Lamar Advertising 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. 4.26 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 as of August 8, 2000. Previously filed as Exhibit 4.8 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.27 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 as of August 8, 2000. Previously filed as Exhibit 4.9 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.28 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 December 23, 1999. Previously filed as Exhibit 4.28 to the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1999, (File No. 0-30242), and incorporated herein by reference. 4.29 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 December 23, 1999. Previously filed as Exhibit 4.29 to the Company's </TABLE>
85 <TABLE> <S> <C> Annual Report on Form 10-K for fiscal year ended December 31, 1999, (File No. 0-30242), and incorporated herein by reference. 4.30 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 December 23, 1999. Previously filed as Exhibit 4.30 to the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1999, (File No. 0-30242), and incorporated herein by reference. 4.31 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 as of August 8, 2000. Previously filed as Exhibit 4.3 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 14, 2000 and incorporated herein by reference. 4.32 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 as of August 8, 2000. Previously filed as Exhibit 4.8 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 14, 2000 and incorporated herein by reference. 4.33 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 as of August 8, 2000. Previously filed as Exhibit 4.2 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 14, 2000 and incorporated herein by reference. 4.34 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 as of June 1, 2000. Previously filed as Exhibit 4.3 to Lamar Advertising 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. 4.35 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 as of June 30, 2000. Previously filed as Exhibit 4.1 to Lamar Advertising 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. 4.36 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 as of June 1, 2000. Previously filed as Exhibit 4.2 to Lamar Advertising 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. 4.37 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 as of March 2, 2000. Previously filed as Exhibit 4.3 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended March 31, 2000 (File No. 0-30242) filed on May 15, 2000 and incorporated herein by reference. 4.38 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 as of March 2, 2000. Previously filed as Exhibit 4.1 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended March 31, 2000 (File No. 0-30242) filed on May 15, 2000 and incorporated herein by reference. 4.39 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 as of March 2, 200. Previously filed as Exhibit 4.2 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended March 31, 2000 (File No. 0-30242) filed on May 14, 2000 and incorporated herein by reference. </TABLE>
86 <TABLE> <S> <C> 4.40 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 as of December 31, 2000. Filed herewith. 4.41 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 as of December 31, 2000. Filed herewith. 4.42 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 as of December 31, 2000. Filed herewith. 10.1 Consulting Agreement dated July 1, 1996 between the Lamar Texas Limited Partnership and the Reilly Consulting Company, L.L.C., of which Kevin P. Reilly, Sr. is the manager. Previously filed as Exhibit 10.2 to the Company's Registration Statement on Form S-1 (File No. 33-05479), and incorporated herein by reference. 10.2 Indenture dated as of September 24, 1986 relating to the Company's 8% Unsecured Subordinated Debentures. Previously filed as Exhibit 10.3 to the Company's Registration Statement on Form S-1 (File No. 33-59624), and incorporated herein by reference. 10.3* The Lamar Savings and Profit Sharing Plan Trust. Previously filed as Exhibit 10.4 to the Company's Registration Statement on Form S-1 (File No. 33-59624), and incorporated herein by reference. 10.4 Trust under The Lamar Corporation, its Affiliates and Subsidiaries Deferred Compensation Plan dated October 3, 1993. Previously filed as Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1995 (File No. 33-59624), and incorporated herein by reference. 10.5* 1996 Equity Incentive Plan. Previously filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q (File No. 0-30242), for the period ended June 30, 2000 filed on August 11, 2000 and incorporated herein by reference. 10.6 Bank Credit Agreement dated December 18, 1996 between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.18 to the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1996 (File No. 1-12407), and incorporated herein by reference. 10.7 Amendment No. 1 to the Bank Credit Agreement dated as of March 31, 1997 between the Company, the Subsidiary Guarantors party thereto, the Lenders party thereto and the Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1997 (File No. 1-12407), and incorporated herein by reference. 10.8 Amendment No. 2 to the Bank Credit Agreement dated as of September 12, 1997 between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed on September 30, 1997 (File No. 1-12407), and incorporated herein by reference. 10.9 Amendment No. 3 to the Bank Credit Agreement dated as of December 31, 1997 between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.9 to the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1997, (File No. 1-12407), and incorporated herein by reference. 10.10 Contract to Sell and Purchase, dated as of October 9, 1996, between the Company and Outdoor East L.P. Previously filed as Exhibit 10.16 to the Company's Registration Statement on Form S-3 (File No. 333-14677), and incorporated herein by reference. 10.11 Stock Purchase Agreement, dated as of September 25, 1996, between the Company and the shareholders of FKM Advertising, Co., Inc. Previously filed as Exhibit 10.17 to the Company's Registration Statement on Form S-3 (File No. 333-14677), and incorporated herein by reference. </TABLE>
87 <TABLE> <S> <C> 10.12 Stock Purchase Agreement dated as of February 7, 1997 between the Company and the stockholders of Penn Advertising, Inc. named therein. Previously filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed on April 14, 1997 (File No. 1-12407), and incorporated herein by reference. 10.13 Asset Purchase Agreement dated as of August 15, 1997 between The Lamar Corporation and Outdoor Systems, Inc. Previously filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed on August 27, 1997 (File No. 1-12407), and incorporated herein by reference. 10.14 Bank Credit Agreement dated July 16, 1998, between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1998, (File No. 0-020833), and incorporated herein by reference. 10.15 Amendment No. 1 to the Amended and Restated Bank Credit Agreement dated September 15, 1998, between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998 (File No. 0-20833) and incorporated herein by reference. 10.16 Stock Purchase Agreement dated as of October 1, 1998, between the Company and the stockholders of Outdoor Communications, Inc. named therein. Previously filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed on October 15, 1998 (File No. 0-20833), and incorporated herein by reference. 10.17 Amendment No. 4 to Credit Agreement dated as of March 31, 1998, between Lamar Advertising Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1998 (File No. 1-12407), and incorporated herein by reference. 10.18 Second Amended and Restated Stock Purchase Agreement dated as of August 11, 1999 among the Company, Lamar Media Corp., Chancellor Media Corporation of Los Angeles and Chancellor Mezzanine Holdings Corporation. Previously filed as Appendix A to the Company's Schedule 14C Information Statement filed on August 13, 1999 and incorporated herein by reference. Pursuant to Item 601(b)(2) of Regulation S-K, the Schedules and Annexes A and B referred to in the Second Amended and Restated Stock Purchase Agreement are omitted. The Company hereby undertakes to furnish supplementary a copy of any omitted Schedule or Annex to the Commission upon request. 10.19 Bank Credit Agreement dated August 13, 1999, between Lamar Media Corp., certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.1 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 10.20 Stockholders Agreement dated as of September 15, 1999 by and among Lamar Advertising Company, Chancellor Media Corporation of Los Angeles, Chancellor Mezzanine Holdings Corporation and the Reilly Family Limited Partnership. Previously filed as Exhibit 10.2 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-030242) filed on November 12, 1999 and incorporated herein by reference. 10.21 Amended and Restated Registration Rights Agreement dated as of July 19, 2000 among Lamar Advertising Company, AMFM Operating Inc., AMFM Holdings Inc. and Clear Channel Communications, Inc. Previously filed as Exhibit 10.3 to Lamar Advertising Company's Current Report on Form 8-K (File No. 0-030242) filed on August 31, 2000 and incorporated herein by reference. 10.22 Assumption Agreement dated as of July 20, 1999 is by and among Lamar Advertising Company, Lamar Media Corp., and the direct and indirect subsidiaries of such corporations. Previously filed as Exhibit 10.4 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-030242) filed on November 12, 1999 and incorporated herein by reference. </TABLE>
88 <TABLE> <S> <C> 10.23 Joinder Agreement to the Lamar Media Corp. Credit Agreement dated August 13, 1999 by Lamar Florida, Inc. in favor of The Chase Manhattan Bank, as Administrative Agent dated December 23, 1999. Previously filed as Exhibit 10.23 to the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1999, (File No. 1-12407), and incorporated herein by reference. 10.24* 2000 Employee Stock Purchase Plan. Previously filed as Exhibit 10.3 to Lamar Advertising 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. 10.25 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. Previously filed as exhibit 10.4 to Lamar Advertising 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. 10.26 Series A-2 and 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. Previously filed as exhibit 10.4 to Lamar Advertising 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. 10.27 Amendment No. 1 to Credit Agreement and Guaranty and Pledge Agreement dated as of April 10, 2000 in respect of (i) the Credit Agreement dated as of August 13, 1999 between Lamar Media Corp., the Subsidiary Guarantors party thereto, the lenders party thereto, and The Chase Manhattan Bank, as Administrative Agent, and (ii) the Guaranty and Pledge Agreement dated as of September 15, 1999 between Lamar Advertising Company and The Chase Manhattan Bank. Filed herewith. 10.28 Amendment No. 2 to Credit Agreement and Guaranty and Pledge Agreement dated as of January 30, 2001 in respect of (i) the Credit Agreement dated as of August 13, 1999 between Lamar Media Corp., the Subsidiary Guarantors party thereto, the lenders party thereto, and The Chase Manhattan Bank, as Administrative Agent, and (ii) the Guaranty and Pledge Agreement dated as of September 15, 1999 between Lamar Advertising Company and The Chase Manhattan Bank. Filed herewith. 10.29 First Amendment to Stockholders Agreement by and among Lamar Advertising Company, AMFM Operating, Inc., AMFM Holdings, Inc., Clear Channel Communications, Inc. and the Reilly Family Limited Partnership, dated July 19, 2000. Previously filed as exhibit 10.1 to the Company's Current Report on Form 8-K filed on August 31, 2000, and incorporated herein by reference. 10.30 Joinder Agreement to the Lamar Media Corp. Credit Agreement dated August 13, 1999 by Lamar Ohio Outdoor Holding Corp. in favor of The Chase Manhattan Bank, as Administrative Agent dated September 13, 2000. Previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, (File No. 0-30242) filed on November 14, 2000, and incorporated herein by reference. 10.31 Joinder Agreement to the Lamar Media Corp. Credit Agreement dated August 13, 1999 by Outdoor West, Inc. of Georgia and Outdoor West, Inc. of Tennessee in favor of The Chase Manhattan Bank, as Administrative Agent dated December 23, 1999. Previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for quarter ended June 30, 2000, (File No. 0-30242) filed on August 11, 2000, and incorporated herein by reference. 10.32 Joinder Agreement to the Lamar Media Corp. Credit Agreement dated August 13, 1999 by Lamar Advan, Inc. in favor of The Chase Manhattan Bank, as Administrative Agent dated March 2, 2000. Previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for quarter ended March 31, 2000, (File No. 0-30242) filed on May 15, 2000, and incorporated herein by reference. 10.33 Joinder Agreement to the Lamar Media Corp. Credit Agreement dated August 13, 1999 by Texas Logos, L.P., in favor of The Chase Manhattan Bank, as Administrative Agent dated December 31, 2000. Filed herewith. </TABLE>
89 <TABLE> <S> <C> 11.1 Statement regarding computation of per share earnings. Filed herewith. 21.1 Subsidiaries of the Company. Filed herewith. 23.1 Consent of KPMG LLP. Filed herewith. </TABLE> * Management contract or compensatory plan or arrangement in which the executive officers or directors of the Company participate.