e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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| þ |
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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For the quarterly period ended March 31, 2011 |
or
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| o |
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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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)
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| Delaware
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72-1449411 |
| Delaware
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72-1205791 |
| (State or other jurisdiction of incorporation or
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|
(I.R.S Employer |
| organization)
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|
Identification No.) |
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| 5321 Corporate Blvd., Baton Rouge, LA
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70808 |
| (Address of principal executive offices)
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(Zip Code) |
Registrants’ telephone number, including area code: (225) 926-1000
Indicate by check mark whether each registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether each registrant has submitted electronically and posted on their
corporate web sites, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months or
(for such shorter period that the registrant was required to submit and post such files). Yes
þ No o
Indicate by check mark whether Lamar Advertising Company is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of
“large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
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| Large accelerated filer þ
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether Lamar Media Corp. is a large accelerated filer, an accelerated
filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large
accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
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| Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer þ
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether Lamar Advertising Company is a shell company (as defined in Rule
12b-2 of the Exchange Act):
Yes o No þ
Indicate by check mark whether Lamar Media Corp. is a shell company (as defined in Rule 12b-2 of
the Exchange Act): Yes o No þ
The number of shares of Lamar Advertising Company’s Class A common stock outstanding as of May 2,
2011: 77,708,875
The number of shares of the Lamar Advertising Company’s Class B common stock outstanding as of May
2, 2011: 15,122,865
The number of shares of Lamar Media Corp. common stock outstanding as of May 2, 2011: 100
This combined Form 10-Q is separately filed by (i) Lamar Advertising Company and (ii) Lamar Media
Corp. (which is a wholly owned subsidiary of Lamar Advertising Company). Lamar Media Corp. meets
the conditions set forth in general instruction H(1) (a) and (b) of Form 10-Q and is, therefore,
filing this form with the reduced disclosure format permitted by such instruction.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information included in this report is forward-looking in nature within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
This report uses terminology such as “anticipates,” “believes,” “plans,” “expects,” “future,”
“intends,” “may,” “will,” “should,” “estimates,” “predicts,” “potential,” “continue” and similar
expressions to identify forward-looking statements. Examples of forward-looking statements in this
report include statements about:
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• |
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Lamar Advertising Company’s (the “Company” or “Lamar”) future financial performance and
condition; |
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• |
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the extent of any excess cash flow payments required under our senior credit facility for the fiscal year ending December 31, 2011; |
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• |
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the Company’s anticipated capital expenditures and acquisition activity; |
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the Company’s business plans, objectives, prospects, growth and operating strategies; |
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• |
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market opportunities and competitive positions; |
Forward-looking statements are subject to known and unknown risks, uncertainties and other
important factors, including but not limited to the following, any of which may cause the Company’s
actual results, performance or achievements to differ materially from those expressed or implied by
the forward-looking statements:
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• |
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current economic conditions and their affect on the markets in which the Company
operates; |
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• |
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the levels of expenditures on advertising in general and outdoor advertising in
particular; |
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risks and uncertainties relating to the Company’s significant indebtedness; |
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the Company’s need for, and ability to obtain, additional funding for acquisitions and
operations; |
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increased competition within the outdoor advertising industry; |
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the regulation of the outdoor advertising industry; |
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the Company’s ability to renew expiring contracts at favorable rates; |
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the Company’s ability to successfully implement its digital deployment strategy; |
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• |
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the integration of any businesses that the Company may acquire and its ability to
recognize cost savings and operating efficiencies as a result of any acquisitions; and |
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• |
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changes in accounting principles, policies or guidelines. |
The forward-looking statements in this report are based on the Company’s current good faith
beliefs, however, actual results may differ due to inaccurate assumptions, the factors listed above
or other foreseeable or unforeseeable factors. Consequently, the Company cannot guarantee that any
of the forward-looking statements will prove to be accurate. The forward-looking statements in this
report speak only as of the date of this report, and Lamar Advertising Company and Lamar Media
Corp. (“Lamar Media”) expressly disclaim any obligation or undertaking to update or revise any
forward-looking statement contained in this report, except as required by law.
For a further description of these and other risks and uncertainties, the Company encourages you to
read carefully Item 1A to the combined Annual Report on Form 10-K for the year ended December 31,
2010 of the Company and Lamar Media (the “2010 Combined Form 10-K”), filed on February 25, 2011 and
as such risk factors are updated, from time to time, in our combined Quarterly Reports on Form
10-Q.
2
PART I — FINANCIAL INFORMATION
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| ITEM 1. |
|
— FINANCIAL STATEMENTS |
LAMAR ADVERTISING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
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March 31, |
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December 31, |
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2011 |
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2010 |
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(Unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
|
$ |
32,441 |
|
|
$ |
91,679 |
|
Receivables, net of allowance for doubtful accounts of $8,400 and $8,100 in 2011 and 2010 |
|
|
144,100 |
|
|
|
141,166 |
|
Prepaid expenses |
|
|
59,094 |
|
|
|
40,046 |
|
Deferred income tax assets |
|
|
9,205 |
|
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|
9,241 |
|
Other current assets |
|
|
29,284 |
|
|
|
27,277 |
|
|
|
|
|
|
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Total current assets |
|
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274,124 |
|
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|
309,409 |
|
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|
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Property, plant and equipment |
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2,809,052 |
|
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2,796,935 |
|
Less accumulated depreciation and amortization |
|
|
(1,561,094 |
) |
|
|
(1,539,484 |
) |
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|
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Net property, plant and equipment |
|
|
1,247,958 |
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1,257,451 |
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Goodwill |
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1,426,704 |
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1,426,135 |
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Intangible assets |
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546,832 |
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|
569,723 |
|
Deferred financing costs, net of accumulated amortization of $22,316 and $20,221 in 2011 and 2010, respectively |
|
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41,090 |
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43,170 |
|
Other assets |
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40,755 |
|
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43,073 |
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Total assets |
|
$ |
3,577,463 |
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$ |
3,648,961 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Trade accounts payable |
|
$ |
13,359 |
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$ |
13,208 |
|
Current maturities of long-term debt |
|
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5,523 |
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|
5,694 |
|
Accrued expenses |
|
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88,691 |
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96,542 |
|
Deferred income |
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|
40,948 |
|
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|
38,136 |
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|
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Total current liabilities |
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148,521 |
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153,580 |
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Long-term debt |
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2,351,057 |
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2,403,446 |
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Deferred income tax liabilities |
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|
81,912 |
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87,234 |
|
Asset retirement obligation |
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175,647 |
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173,673 |
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Other liabilities |
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14,229 |
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|
12,505 |
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Total liabilities |
|
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2,771,366 |
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2,830,438 |
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Stockholders’ equity: |
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Series AA preferred stock, par value $.001, $63.80 cumulative dividends, authorized 5,720 shares; 5,720 shares
issued and outstanding at 2011 and 2010 |
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— |
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— |
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Class A preferred stock, par value $638, $63.80 cumulative dividends, 10,000 shares authorized; 0 shares
issued and outstanding at 2011 and 2010 |
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— |
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— |
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Class A common stock, par value $.001, 175,000,000 shares authorized, 94,790,458 and 94,483,412 shares
issued at 2011 and 2010, respectively; 77,707,806 and 77,484,562 issued and outstanding at 2011 and 2010,
respectively |
|
|
95 |
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|
94 |
|
Class B common stock, par value $.001, 37,500,000 shares authorized, 15,122,865 shares issued and
outstanding at 2011 and 2010 |
|
|
15 |
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|
15 |
|
Additional paid-in capital |
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|
2,392,778 |
|
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2,389,125 |
|
Accumulated comprehensive income |
|
|
6,842 |
|
|
|
6,110 |
|
Accumulated deficit |
|
|
(705,115 |
) |
|
|
(691,784 |
) |
Cost of shares held in treasury, 17,082,652 and 16,998,850 shares in 2011 and 2010, respectively |
|
|
(888,518 |
) |
|
|
(885,037 |
) |
|
|
|
|
|
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Stockholders’ equity |
|
|
806,097 |
|
|
|
818,523 |
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|
|
|
|
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Total liabilities and stockholders’ equity |
|
$ |
3,577,463 |
|
|
$ |
3,648,961 |
|
|
|
|
|
|
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|
See accompanying notes to condensed consolidated financial statements.
4
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
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Three months ended |
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March 31, |
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2011 |
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|
2010 |
|
Net revenues |
|
$ |
255,202 |
|
|
$ |
244,103 |
|
|
|
|
|
|
|
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|
|
|
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Operating expenses (income) |
|
|
|
|
|
|
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Direct advertising expenses (exclusive of depreciation and amortization) |
|
|
99,551 |
|
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|
98,552 |
|
General and administrative expenses (exclusive of depreciation and amortization) |
|
|
51,067 |
|
|
|
47,071 |
|
Corporate expenses (exclusive of depreciation and amortization) |
|
|
11,551 |
|
|
|
10,472 |
|
Depreciation and amortization |
|
|
73,873 |
|
|
|
78,342 |
|
Gain on disposition of assets |
|
|
(6,447 |
) |
|
|
(1,173 |
) |
|
|
|
|
|
|
|
|
|
|
229,595 |
|
|
|
233,264 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Operating income |
|
|
25,607 |
|
|
|
10,839 |
|
|
|
|
|
|
|
|
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Other expense (income) |
|
|
|
|
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|
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|
Loss on extinguishment of debt |
|
|
— |
|
|
|
261 |
|
Interest income |
|
|
(32 |
) |
|
|
(89 |
) |
Interest expense |
|
|
43,620 |
|
|
|
49,330 |
|
|
|
|
|
|
|
|
|
|
|
43,588 |
|
|
|
49,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax benefit |
|
|
(17,981 |
) |
|
|
(38,663 |
) |
Income tax benefit |
|
|
(4,741 |
) |
|
|
(13,836 |
) |
|
|
|
|
|
|
|
Net loss |
|
|
(13,240 |
) |
|
|
(24,827 |
) |
Preferred stock dividends |
|
|
91 |
|
|
|
91 |
|
|
|
|
|
|
|
|
Net loss applicable to common stock |
|
$ |
(13,331 |
) |
|
$ |
(24,918 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share: |
|
|
|
|
|
|
|
|
Basic and diluted loss per share |
|
$ |
(0.14 |
) |
|
$ |
(0.27 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Weighted average common shares used in computing earnings per share: |
|
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
92,681,351 |
|
|
|
91,983,549 |
|
Incremental common shares from dilutive stock options |
|
|
— |
|
|
|
— |
|
Incremental common shares from convertible debt |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
Weighted average common shares diluted |
|
|
92,681,351 |
|
|
|
91,983,549 |
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial statements.
5
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
| |
|
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|
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|
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Three months ended |
|
| |
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March 31, |
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| |
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2011 |
|
|
2010 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
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|
Net loss |
|
$ |
(13,240 |
) |
|
$ |
(24,827 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
73,873 |
|
|
|
78,342 |
|
Non-cash equity-based compensation |
|
|
2,132 |
|
|
|
2,761 |
|
Amortization included in interest expense |
|
|
4,534 |
|
|
|
3,949 |
|
Gain on disposition of assets and investments |
|
|
(6,447 |
) |
|
|
(1,173 |
) |
Loss on extinguishment of debt |
|
|
— |
|
|
|
261 |
|
Deferred tax benefit |
|
|
(5,275 |
) |
|
|
(14,447 |
) |
Provision for doubtful accounts |
|
|
1,175 |
|
|
|
2,011 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
(Increase) decrease in: |
|
|
|
|
|
|
|
|
Receivables |
|
|
(4,281 |
) |
|
|
1,734 |
|
Prepaid expenses |
|
|
(18,736 |
) |
|
|
(17,428 |
) |
Other assets |
|
|
(2,097 |
) |
|
|
(1,017 |
) |
Increase (decrease) in: |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
|
106 |
|
|
|
446 |
|
Accrued expenses |
|
|
(8,794 |
) |
|
|
(18,781 |
) |
Other liabilities |
|
|
2,876 |
|
|
|
(4,180 |
) |
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
25,826 |
|
|
|
7,651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Acquisitions |
|
|
(6,742 |
) |
|
|
(1,326 |
) |
Capital expenditures |
|
|
(28,813 |
) |
|
|
(8,341 |
) |
Proceeds from disposition of assets and investments |
|
|
7,072 |
|
|
|
1,468 |
|
Payments received on notes receivable |
|
|
148 |
|
|
|
157 |
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(28,335 |
) |
|
|
(8,042 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Cash used for purchase of treasury stock |
|
|
(3,481 |
) |
|
|
(1,629 |
) |
Net proceeds from issuance of common stock |
|
|
1,522 |
|
|
|
2,363 |
|
Principal payments on long term debt |
|
|
(54,955 |
) |
|
|
(79,755 |
) |
Debt issuance costs |
|
|
— |
|
|
|
(19 |
) |
Dividends |
|
|
(91 |
) |
|
|
(91 |
) |
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(57,005 |
) |
|
|
(79,131 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes in cash and cash equivalents |
|
|
276 |
|
|
|
233 |
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
|
(59,238 |
) |
|
|
(79,289 |
) |
Cash and cash equivalents at beginning of period |
|
|
91,679 |
|
|
|
112,253 |
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
32,441 |
|
|
$ |
32,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
37,494 |
|
|
$ |
58,533 |
|
|
|
|
|
|
|
|
Cash paid for foreign, state and federal income taxes |
|
$ |
739 |
|
|
$ |
704 |
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial statements.
6
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
1. Significant Accounting Policies
The information included in the foregoing interim condensed consolidated financial statements is
unaudited. In the opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of the Company’s financial position and results of
operations for the interim periods presented have been reflected herein. The results of operations
for interim periods are not necessarily indicative of the results to be expected for the entire
year. These interim condensed consolidated financial statements should be read in conjunction with
the Company’s consolidated financial statements and the notes thereto included in the 2010 Combined
Form 10-K. Subsequent events, if any, are evaluated through the date on which the financial
statements are issued.
2. Stock-Based Compensation
Equity Incentive Plan. Lamar’s 1996 Equity Incentive Plan has reserved 13 million shares of Class A
common stock for issuance to directors and employees, including shares underlying granted options
and common stock reserved for issuance under its performance-based incentive program. Options
granted under the plan expire ten years from the grant date with vesting terms ranging from three
to five years and include 1) options that vest in one-fifth increments beginning on the grant date
and continuing on each of the first four anniversaries of the grant date and 2) options that
cliff-vest on the fifth anniversary of the grant date. All grants are made at fair market value
based on the closing price of our Class A common stock as reported on the NASDAQ Global Select
Market on the date of grant.
We use a Black-Scholes-Merton option pricing model to estimate the fair value of share-based
awards. The Black-Scholes-Merton option pricing model incorporates various and highly subjective
assumptions, including expected term and expected volatility. The Company granted options for an
aggregate of 13,500 shares of its Class A common stock during the three months ended March 31,
2011.
Stock Purchase Plan. Lamar’s 2000 Employee Stock Purchase Plan reserved 924,000 shares of Class A
common stock for issuance to employees. The 2000 ESPP was terminated following the issuance of all
shares that were subject to the offer that commenced under the 2000 ESPP on January 1, 2009 and
ended June 30, 2009. In 2009 we adopted a new employee stock purchase plan, which reserved 500,000
additional shares of common stock for issuance to employees. Our 2009 Employee Stock Purchase Plan
(2009 ESPP) was adopted by our Board of Directors in February 2009 and approved by our shareholders
on May 28, 2009. The terms of the 2009 ESPP are substantially the same as the 2000 ESPP. The
following is a summary of ESPP share activity for the three months ended March 31, 2011:
| |
|
|
|
|
| |
|
Shares |
Available for future purchases, January 1, 2011 |
|
|
331,795 |
|
Purchases |
|
|
35,302 |
|
|
|
|
|
|
Available for future purchases, March 31, 2011 |
|
|
296,493 |
|
|
|
|
|
|
Performance-based compensation. Unrestricted shares of our Class A common stock may be awarded to
key officers, employees and directors under our 1996 Equity Incentive Plan. The number of shares to
be issued, if any, will be dependent on the level of achievement of performance measures for key
officers and employees, as determined by the Company’s Compensation Committee based on our 2011
results. Any shares issued based on the achievement of performance goals will be issued in the
first quarter of 2012. The shares subject to these awards can range from a minimum of 0% to a
maximum of 100% of the target number of shares depending on the level at which the goals are
attained. For the three months ended March 31, 2011, the Company has recorded $83 as non-cash
compensation expense related to performance based awards. In addition, each non-employee director
automatically receives upon election or re-election a restricted stock award of our Class A common
stock. The awards vest 50% on grant date and 50% on the last day of each of the director’s one-year
term. The Company recorded $32 non-cash compensation expense related to these awards for the three
months ended March 31, 2011.
7
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
3. Depreciation and Amortization
The Company includes all categories of depreciation and amortization on a separate line in its
Statement of Operations. The amounts of depreciation and amortization expense excluded from the
following operating expenses in its Statement of Operations are:
| |
|
|
|
|
|
|
|
|
| |
|
Three months ended |
|
| |
|
March 31, |
|
| |
|
2011 |
|
|
2010 |
|
Direct advertising expenses |
|
$ |
69,571 |
|
|
$ |
74,640 |
|
General and administrative expenses |
|
|
1,011 |
|
|
|
1,266 |
|
Corporate expenses |
|
|
3,291 |
|
|
|
2,436 |
|
|
|
|
|
|
|
|
|
|
$ |
73,873 |
|
|
$ |
78,342 |
|
|
|
|
|
|
|
|
4. Goodwill and Other Intangible Assets
The following is a summary of intangible assets at March 31, 2011 and December 31, 2010:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Estimated |
|
|
March 31, 2011 |
|
|
December 31, 2010 |
|
| |
|
Life |
|
|
Gross Carrying |
|
|
Accumulated |
|
|
Gross Carrying |
|
|
Accumulated |
|
| |
|
(Years) |
|
|
Amount |
|
|
Amortization |
|
|
Amount |
|
|
Amortization |
|
Amortizable Intangible Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer lists and contracts |
|
|
7 – 10 |
|
|
$ |
467,094 |
|
|
$ |
444,431 |
|
|
$ |
466,412 |
|
|
$ |
441,641 |
|
Non-competition agreements |
|
|
3 – 15 |
|
|
|
63,496 |
|
|
|
61,194 |
|
|
|
63,493 |
|
|
|
60,955 |
|
Site locations |
|
|
15 |
|
|
|
1,377,928 |
|
|
|
856,588 |
|
|
|
1,375,298 |
|
|
|
833,418 |
|
Other |
|
|
5 – 15 |
|
|
|
13,608 |
|
|
|
13,081 |
|
|
|
13,608 |
|
|
|
13,074 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,922,126 |
|
|
$ |
1,375,294 |
|
|
$ |
1,918,811 |
|
|
$ |
1,349,088 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unamortizable Intangible Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
|
|
|
$ |
1,680,339 |
|
|
$ |
253,635 |
|
|
$ |
1,679,770 |
|
|
$ |
253,635 |
|
5. Asset Retirement Obligations
The Company’s asset retirement obligations include the costs associated with the removal of its
structures, resurfacing of the land and retirement cost, if applicable, related to the Company’s
outdoor advertising portfolio. The following table reflects information related to our asset
retirement obligations:
| |
|
|
|
|
|
Balance at December 31, 2010 |
|
$ |
173,673 |
|
Additions to asset retirement obligations |
|
|
200 |
|
Accretion expense |
|
|
2,618 |
|
Liabilities settled |
|
|
(844 |
) |
|
|
|
|
Balance at March 31, 2011 |
|
$ |
175,647 |
|
|
|
|
|
6. Summarized Financial Information of Subsidiaries
Separate financial statements of each of the Company’s direct or indirect wholly owned subsidiaries
that have guaranteed Lamar Media’s obligations with respect to its publicly issued notes
(collectively, the “Guarantors”) are not included herein because the Company has no independent
assets or operations, the guarantees are full and unconditional and joint and several and the only
subsidiaries that are not guarantors are in the aggregate minor.
8
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
Lamar Media’s ability to make distributions to Lamar Advertising is restricted under both the terms
of the indentures relating to Lamar Media’s outstanding notes and by the terms of its senior credit
facility. As of March 31, 2011 and December 31, 2010, Lamar Media was permitted under the terms of
its outstanding senior subordinated notes to make transfers to Lamar Advertising in the form of cash
dividends, loans or advances in amounts up to $1,415,847 and $1,380,705, respectively.
Transfers to Lamar Advertising are subject to additional restrictions if, (i)
under Lamar Media’s senior credit facility
and as defined therein, (x) the total holdings debt ratio is greater
than 5.75 to 1 or (y) the senior debt ratio is greater
than 3.25 to 1.0, and (ii) if under the indenture for Lamar
Media’s 9 3/4% senior notes and as defined therein, its
senior leverage ratio is greater than or equal to 3.0 to 1.
As of March 31, 2011, the total holdings debt ratio was less
than 5.75 to 1 and Lamar Media’s senior debt ratio was less
than 3.25 to 1 and its senior leverage ratio was less than
3.0 to 1; therefore, transfers to Lamar Advertising were not subject
to any additional restrictions under the senior
credit facility or pursuant to the indenture governing
the 9 3/4% senior notes.
7. 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 options and
convertible debt. The number of dilutive shares excluded from this calculation resulting from the
dilutive effect of options is 475,701 and 514,610 for the three months ended March 31, 2011 and
2010. Diluted earnings per share should also reflect the potential dilution that could occur if the
Company’s convertible debt was converted to common stock. The number of potentially dilutive shares
related to the Company’s convertible debt excluded from the calculation of dilutive earnings per
share because of their antidilutive effect is 0 and 66,169 for the three months ended March 31,
2011 and March 31, 2010, respectively.
8. Long-term Debt
Long-term debt consists of the following at March 31, 2011 and December 31, 2010:
| |
|
|
|
|
|
|
|
|
| |
|
2011 |
|
|
2010 |
|
Senior Credit Agreement |
|
$ |
753,941 |
|
|
$ |
808,875 |
|
7 7/8% Senior Subordinated Notes |
|
|
400,000 |
|
|
|
400,000 |
|
6 5/8% Senior Subordinated Notes |
|
|
400,000 |
|
|
|
400,000 |
|
6 5/8% Senior Subordinated Notes — Series B |
|
|
207,112 |
|
|
|
206,689 |
|
6 5/8% Senior Subordinated Notes — Series C |
|
|
266,094 |
|
|
|
265,672 |
|
9 3/4% Senior Notes |
|
|
326,461 |
|
|
|
324,866 |
|
Other notes with various rates and terms |
|
|
2,972 |
|
|
|
3,038 |
|
|
|
|
|
|
|
|
|
|
|
2,356,580 |
|
|
|
2,409,140 |
|
Less current maturities |
|
|
(5,523 |
) |
|
|
(5,694 |
) |
|
|
|
|
|
|
|
Long-term debt, excluding current maturities |
|
$ |
2,351,057 |
|
|
$ |
2,403,446 |
|
|
|
|
|
|
|
|
6 5/8% Senior Subordinated Notes
On August 16, 2005, Lamar Media Corp., issued $400,000 aggregate principal amount of 6 5/8% Senior
Subordinated Notes due 2015. These notes are unsecured senior subordinated obligations and will be
subordinated to all of Lamar Media’s existing and future senior debt, rank equally with all of
Lamar Media’s existing and future senior subordinated debt and rank senior to all of our existing
and any future subordinated debt of Lamar Media. These notes are redeemable at the company’s option
anytime on or after August 15, 2010.
9
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
On August 17, 2006, Lamar Media Corp. issued $216,000 aggregate principal amount of 6 5/8% Senior
Subordinated Notes due 2015-Series B. These notes are unsecured senior subordinated obligations and
will be subordinated to all of Lamar Media’s existing and future senior debt, rank equally with all
of Lamar Media’s existing and future senior subordinated debt and rank senior to all of our
existing and any future subordinated debt of Lamar Media. These notes are redeemable at the
company’s option anytime on or after August 15, 2010. The net proceeds from this issuance were used
to reduce borrowings under Lamar Media’s bank credit facility and repurchase the Company’s Class A
common stock pursuant to its repurchase plan.
On October 11, 2007, Lamar Media Corp. issued $275,000 aggregate principal amount of 6 5/8% Senior
Subordinated Notes due 2015—Series C. These notes are unsecured senior subordinated obligations
and will be subordinated to all of Lamar Media’s existing and future senior debt, rank equally with
all of Lamar Media’s existing and future senior subordinated debt and rank senior to all of the
existing and any future subordinated debt of Lamar Media. These notes are redeemable at the
company’s option anytime on or after August 15, 2010. A portion of the net proceeds from the
offering of the Notes was used to repay a portion of the amounts outstanding under Lamar Media’s
revolving senior credit facility.
9 3/4% Senior Notes
On March 27, 2009, Lamar Media issued $350,000 in aggregate principal amount ($314,927 gross
proceeds) of 9 3/4% Senior Notes due 2014. These notes are unsecured obligations and rank senior
to all of our existing and future debt that is expressly subordinated in right of payment to the
notes, including our 6 5/8% Senior Subordinated Notes due 2015, our 6 5/8% Senior Subordinated
Notes due 2015 — Series B, our 6 5/8% Senior Subordinated
Notes due 2015 — Series C and our 7 7/8% Senior
Subordinated Notes due 2018. The
notes will rank equally with all of our existing and future liabilities that are not so
subordinated and will be effectively subordinated to all of our secured debt (to the extent of the
value of the collateral securing such debt), including our senior credit facility, and structurally
subordinated to all of the liabilities of any of our subsidiaries that do not guarantee the notes.
The institutional private placement resulted in net proceeds to Lamar Media of approximately
$307,489. The terms of the senior notes will, among other things, limit Lamar Media’s and its
restricted subsidiaries’ ability to (i) incur additional debt and issue preferred stock; (ii) make
certain distributions, investments and other restricted payments; (iii) create certain liens; (iv)
enter into transactions with affiliates; (v) have the restricted subsidiaries make payments to
Lamar Media; (vi) merge, consolidate or sell substantially all of Lamar Media’s or the restricted
subsidiaries’ assets; and (vii) sell assets. These covenants are subject to a number of exceptions
and qualifications.
Lamar Media may redeem up to 35% of the aggregate principal amount of the senior notes, at any time
and from time to time, at a price equal to 109.75% of the aggregate principal amount so redeemed,
plus accrued and unpaid interest thereon (including additional interest, if any), with the net cash
proceeds of certain public equity offerings completed before April 1, 2012. At any time prior to
April 1, 2014, Lamar Media may redeem some or all of the senior notes at a price equal to 100% of
the principal amount plus a make-whole premium. In addition, if the Company or Lamar Media
undergoes a change of control, Lamar Media may be required to make an offer to purchase each
holder’s senior notes at a price equal to 101% of the principal amount of the senior notes, plus
accrued and unpaid interest (including additional interest, if any), up to but not including the
repurchase date.
Certain obligations of the Company’s wholly-owned subsidiary, Lamar Media Corp. are guaranteed by
its wholly owned domestic subsidiaries.
7 7/8% Senior Subordinated Notes
On April 22, 2010, Lamar Media issued $400,000 in aggregate principal amount of 7 7/8% Senior
Subordinated Notes due 2018. The institutional private placement resulted in net proceeds to Lamar
Media of approximately $392,000.
Lamar Media may redeem up to 35% of the aggregate principal amount of the Notes, at any time and
from time to time, at a price equal to 107.875% of the aggregate principal amount so redeemed, plus
accrued and unpaid interest thereon (including additional interest, if any), with the net cash
proceeds of certain public equity offerings completed before April 15, 2013, provided that
following the redemption at least 65% of the 7 7/8% Notes that were originally issued remain
outstanding. At any time prior to April 15, 2014,
10
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
Lamar Media may redeem some or all of the 7 7/8% Notes at a price equal to 100% of the principal
amount plus a make-whole premium. On or after April 15, 2014, Lamar Media may redeem the 7 7/8%
Notes, in whole or part, in cash at redemption prices specified in the Indenture.
The Company used the proceeds of this offering, after the payment of fees and expenses, to
repurchase all of its outstanding 7 1/4% Senior Subordinated Notes due 2013.
2010 Senior Credit Facility
On April 28, 2010, Lamar Media Corp. refinanced its existing senior credit facility with a new
senior credit facility. The senior credit facility, for which JPMorgan Chase Bank, N.A. serves as
administrative agent, consists of (i) a $250,000 revolving credit facility, (ii) a $270,000 term
loan A-1 facility, a $30,000 term loan A-2 facility and a $575,000 term loan B facility
(collectively, the “Term facilities”) and (iii) a $300,000 incremental facility, which may be
increased by up to an additional $200,000, based upon our satisfaction of a senior debt ratio test
(as described below), of less than or equal to 3.25 to 1. Lamar Media is the borrower under the
senior credit facility, except with respect to the $30,000 term loan A-2 facility for which Lamar
Media’s wholly-owned subsidiary, Lamar Advertising of Puerto Rico, Inc. is the borrower. We may
also from time to time designate additional wholly-owned subsidiaries as subsidiary borrowers under
the incremental loan facility that can borrow up to $110,000 of the incremental facility.
Incremental loans may be in the form of additional term loan tranches or increases in the revolving
credit facility. Our lenders have no obligation to make additional loans to us, or any designated
subsidiary borrower, under the incremental facility, but may enter into such commitments in their
sole discretion.
The remaining quarterly amortizations of the Term facilities as of March 31, 2011 is as follows:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Term A-1 |
|
Term A-2 |
|
Term B |
March 31, 2012 |
|
$ |
3,375 |
|
|
$ |
375 |
|
|
$ |
1,183.7 |
|
June 30, 2012 — March 31, 2014 |
|
$ |
6,750 |
|
|
$ |
750 |
|
|
$ |
1,183.7 |
|
June 30, 2014 — March 31, 2015 |
|
$ |
13,500 |
|
|
$ |
1,500 |
|
|
$ |
1,183.7 |
|
June 30, 2015 — September 30, 2015 |
|
$ |
37,125 |
|
|
$ |
4,125 |
|
|
$ |
1,183.7 |
|
December 31, 2015 |
|
$ |
74,250 |
|
|
$ |
8,250 |
|
|
$ |
1,183.7 |
|
March 31, 2016 — September 30, 2016 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,183.7 |
|
December 31, 2016 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
442,701.0 |
|
In addition to the amortizations of our Term facilities, Lamar Media may be required to make
certain mandatory prepayments on loans outstanding under its senior credit facility that would be
applied first to any outstanding term loans. These payments, if any, will be calculated based on a
percentage of Consolidated Excess Cash Flow (as defined in the senior credit facility) at the end
of each fiscal year.
As of March 31, 2011, there was $0 outstanding under the revolving facility. The revolving facility
terminates April 28, 2015. Availability under the revolving facility is reduced by the amount of
any letters of credit outstanding. The company had $9,561 letters of credit outstanding as of March
31, 2011 resulting in $240,439 of availability under its revolving facility. Revolving credit loans
may be requested under the revolving credit facility at any time prior to maturity. The loans bear
interest, at the Company’s option, at the LIBOR Rate or JPMorgan 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.
11
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
The terms of Lamar Media’s senior 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:
Lamar Media’s ability to make distributions to Lamar Advertising is also restricted under the terms
of these agreements. Under Lamar Media’s senior credit facility the Company must maintain specified
financial ratios and levels including:
| |
• |
|
a senior debt ratio; and |
| |
• |
|
a total holdings debt ratio. |
Lamar Advertising and Lamar Media were in compliance with all of the terms of their indentures and
the applicable senior credit agreement during the periods presented.
9. Fair Value of Financial Instruments
At March 31, 2011 and December 31, 2010, the Company’s financial instruments included cash and cash
equivalents, marketable securities, accounts receivable, investments,
accounts payable and borrowings. The fair values of cash and cash equivalents, accounts receivable,
accounts payable and short-term borrowings and current portion of long-term debt approximated
carrying values because of the short-term nature of these instruments. Investments and derivative
contracts are reported at fair values. Fair values for investments held at cost are not readily
available, but are estimated to approximate fair value. The estimated fair value of the Company’s
long term debt (including current maturities) was $2,500,552, which exceeded both the gross and
carrying amounts of $2,397,913 and $2,356,580, respectively, as of March 31, 2011.
10. Non-Cash Financing and Investing Activities
For the period ended March 31, 2011, the Company had a non-cash investing activity of $4,000
related to the purchase of an aircraft in January 2011 that had a total purchase price of $11,539.
The non-cash portion of the purchase is related to deposits paid in prior periods.
12
LAMAR MEDIA CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
| |
|
|
|
|
|
|
|
|
| |
|
March 31, |
|
|
December 31, |
|
| |
|
2011 |
|
|
2010 |
|
| |
|
(Unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
32,041 |
|
|
$ |
88,565 |
|
Receivables, net of allowance for doubtful accounts of $8,400 and $8,100 in 2011 and 2010 |
|
|
144,100 |
|
|
|
141,166 |
|
Prepaid expenses |
|
|
59,094 |
|
|
|
40,046 |
|
Deferred income tax assets |
|
|
9,205 |
|
|
|
9,241 |
|
Other current assets |
|
|
19,824 |
|
|
|
20,391 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
264,264 |
|
|
|
299,409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
2,809,052 |
|
|
|
2,796,935 |
|
Less accumulated depreciation and amortization |
|
|
(1,561,094 |
) |
|
|
(1,539,484 |
) |
|
|
|
|
|
|
|
Net property, plant and equipment |
|
|
1,247,958 |
|
|
|
1,257,451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
1,416,552 |
|
|
|
1,415,983 |
|
Intangible assets |
|
|
546,306 |
|
|
|
569,189 |
|
Deferred financing costs net of accumulated amortization of $13,028 and $10,933 in 2011 and
2010, respectively |
|
|
39,136 |
|
|
|
41,218 |
|
Other assets |
|
|
35,472 |
|
|
|
37,787 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
3,549,688 |
|
|
$ |
3,621,037 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDER’S EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
13,359 |
|
|
$ |
13,208 |
|
Current maturities of long-term debt |
|
|
5,523 |
|
|
|
5,694 |
|
Accrued expenses |
|
|
77,953 |
|
|
|
85,803 |
|
Deferred income |
|
|
40,948 |
|
|
|
38,136 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
137,783 |
|
|
|
142,841 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
2,351,057 |
|
|
|
2,403,446 |
|
Deferred income tax liabilities |
|
|
114,743 |
|
|
|
120,083 |
|
Asset retirement obligation |
|
|
175,647 |
|
|
|
173,673 |
|
Other liabilities |
|
|
14,229 |
|
|
|
12,505 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
2,793,459 |
|
|
|
2,852,548 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholder’s equity: |
|
|
|
|
|
|
|
|
Common stock, par value $.01, 3,000 shares authorized, 100 shares issued and outstanding
at 2011 and 2010 |
|
|
— |
|
|
|
— |
|
Additional paid-in-capital |
|
|
2,566,418 |
|
|
|
2,562,765 |
|
Accumulated comprehensive income |
|
|
6,842 |
|
|
|
6,110 |
|
Accumulated deficit |
|
|
(1,817,031 |
) |
|
|
(1,800,386 |
) |
|
|
|
|
|
|
|
Total stockholder’s equity |
|
|
756,229 |
|
|
|
768,489 |
|
|
|
|
|
|
|
|
Total liabilities and stockholder’s equity |
|
$ |
3,549,688 |
|
|
$ |
3,621,037 |
|
|
|
|
|
|
|
|
See accompanying note to condensed consolidated financial statements.
13
LAMAR MEDIA CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
| |
|
|
|
|
|
|
|
|
| |
|
Three months ended |
|
| |
|
March 31, |
|
| |
|
2011 |
|
|
2010 |
|
Net revenues |
|
$ |
255,202 |
|
|
$ |
244,103 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (income) |
|
|
|
|
|
|
|
|
Direct advertising expenses (exclusive of depreciation and amortization) |
|
|
99,551 |
|
|
|
98,552 |
|
General and administrative expenses (exclusive of depreciation and amortization) |
|
|
51,067 |
|
|
|
47,071 |
|
Corporate expenses (exclusive of depreciation and amortization) |
|
|
11,479 |
|
|
|
10,472 |
|
Depreciation and amortization |
|
|
73,873 |
|
|
|
78,342 |
|
Gain on disposition of assets |
|
|
(6,447 |
) |
|
|
(1,173 |
) |
|
|
|
|
|
|
|
|
|
|
229,523 |
|
|
|
233,264 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
25,679 |
|
|
|
10,839 |
|
|
|
|
|
|
|
|
|
|
Other expense (income) |
|
|
|
|
|
|
|
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
265 |
|
Interest income |
|
|
(32 |
) |
|
|
(87 |
) |
Interest expense |
|
|
43,620 |
|
|
|
49,294 |
|
|
|
|
|
|
|
|
|
|
|
43,588 |
|
|
|
49,472 |
|
|
|
|
|
|
|
|
Loss before income tax benefit |
|
|
(17,909 |
) |
|
|
(38,633 |
) |
|
|
|
|
|
|
|
|
|
Income tax benefit |
|
|
(4,745 |
) |
|
|
(13,735 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(13,164 |
) |
|
$ |
(24,898 |
) |
|
|
|
|
|
|
|
See accompanying note to condensed consolidated financial statements.
14
LAMAR MEDIA CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
| |
|
|
|
|
|
|
|
|
| |
|
Three months ended |
|
| |
|
March 31, |
|
| |
|
2011 |
|
|
2010 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(13,164 |
) |
|
$ |
(24,898 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
73,873 |
|
|
|
78,342 |
|
Non-cash equity based compensation |
|
|
2,132 |
|
|
|
2,761 |
|
Amortization included in interest expense |
|
|
4,534 |
|
|
|
3,919 |
|
Gain on disposition of assets and investments |
|
|
(6,447 |
) |
|
|
(1,173 |
) |
Loss on extinguishment of debt |
|
|
— |
|
|
|
265 |
|
Deferred tax benefit |
|
|
(5,293 |
) |
|
|
(14,346 |
) |
Provision for doubtful accounts |
|
|
1,175 |
|
|
|
2,011 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
(Increase) decrease in: |
|
|
|
|
|
|
|
|
Receivables |
|
|
(4,281 |
) |
|
|
1,734 |
|
Prepaid expenses |
|
|
(18,736 |
) |
|
|
(17,428 |
) |
Other assets |
|
|
(2,083 |
) |
|
|
(273 |
) |
Increase (decrease) in: |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
|
106 |
|
|
|
446 |
|
Accrued expenses |
|
|
(8,794 |
) |
|
|
(19,620 |
) |
Other liabilities |
|
|
3,296 |
|
|
|
(4,086 |
) |
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
26,318 |
|
|
|
7,654 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Acquisitions |
|
|
(6,742 |
) |
|
|
(1,326 |
) |
Capital expenditures |
|
|
(28,813 |
) |
|
|
(8,341 |
) |
Proceeds from disposition of assets |
|
|
7,072 |
|
|
|
1,468 |
|
Payment received on notes receivable |
|
|
148 |
|
|
|
157 |
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(28,335 |
) |
|
|
(8,042 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Principle
payments on long-term debt |
|
|
(54,955 |
) |
|
|
(78,755 |
) |
Debt issuance costs |
|
|
— |
|
|
|
(19 |
) |
Dividend to parent |
|
|
(3,481 |
) |
|
|
(1,629 |
) |
Contributions from parent |
|
|
3,653 |
|
|
|
2,363 |
|
|
|
|
|
|
|
|
Net cash used in by financing activities |
|
|
(54,783 |
) |
|
|
(78,040 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes in cash and cash equivalents |
|
|
276 |
|
|
|
233 |
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
|
(56,524 |
) |
|
|
(78,195 |
) |
Cash and cash equivalents at beginning of period |
|
|
88,565 |
|
|
|
105,306 |
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
32,041 |
|
|
$ |
27,111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
37,494 |
|
|
$ |
58,527 |
|
|
|
|
|
|
|
|
Cash paid for foreign, state and federal income taxes |
|
$ |
739 |
|
|
$ |
704 |
|
|
|
|
|
|
|
|
See accompanying note to condensed consolidated financial statements.
15
LAMAR MEDIA CORP.
AND SUBSIDIARIES
NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
1. Significant Accounting Policies
The information included in the foregoing interim condensed consolidated financial statements is
unaudited. In the opinion of management all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of Lamar Media’s financial position and results of
operations for the interim periods presented have been reflected herein. The results of operations
for interim periods are not necessarily indicative of the results to be expected for the entire
year. These interim condensed consolidated financial statements should be read in conjunction with
Lamar Media’s consolidated financial statements and the notes thereto included in the 2010 Combined
Form 10-K.
Certain notes are not provided for the accompanying condensed consolidated financial statements as
the information in notes 1, 2, 3, 4, 5, 6, 8, 9 and 10 to the condensed consolidated financial
statements of the Company included elsewhere in this report is substantially equivalent to that
required for the condensed consolidated financial statements of Lamar Media Corp. Earnings per
share data is not provided for Lamar Media, as it is a wholly owned subsidiary of the Company.
16
|
|
|
| ITEM 2. |
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
This discussion contains forward-looking statements. Actual results could differ materially from
those anticipated by the forward-looking statements due to risks and uncertainties described in the
section of this combined report on Form 10-Q entitled “Note Regarding Forward-Looking Statements”
and in Item 1A to the 2010 Combined Form 10-K filed on February 25, 2011, as supplemented by those
risk factors contained in our combined Quarterly Reports on Form 10-Q. You should carefully
consider each of these risks and uncertainties in evaluating the Company’s and Lamar Media’s
financial conditions and results of operations. Investors are cautioned not to place undue reliance
on the forward-looking statements contained in this document. These statements speak only as of the
date of this document, and the Company undertakes no obligation to update or revise the statements,
except as may be required by law.
Lamar Advertising Company
The following is a discussion of the consolidated financial condition and results of operations of
the Company for the three months ended March 31, 2011 and 2010. 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 are derived primarily from the sale of advertising on outdoor
advertising displays owned and operated by the Company. The Company relies on sales of advertising
space for its revenues, and its operating results are therefore affected by general economic
conditions, as well as trends in the advertising industry. Advertising spending is particularly
sensitive to changes in general economic conditions which affect the rates the Company is able to
charge for advertising on its displays and its ability to maximize advertising sales or occupancy
on its displays.
Historically, the Company has increased the number of outdoor advertising displays it operates by
completing strategic acquisitions of outdoor advertising assets. Since December 31, 2005, the
Company completed acquisitions for an aggregate purchase price of approximately $649.1 million. The
Company has financed its historical acquisitions and intends to finance any of its future
acquisition activity from available cash, borrowings under its senior credit facility and the
issuance of Class A common stock. See “Liquidity and Capital Resources” below. As a result of
acquisitions, the operating performance of individual markets and the Company as a whole are not
necessarily comparable on a year to year basis. However, during 2009 and 2010, the Company
reduced its acquisition activity significantly by completing acquisitions of outdoor advertising
assets for a total purchase price of $11.2 million, which was a reduction of approximately $392
million over the comparable two-year period ended 2008 and 2007. During the three months ended
March 31, 2011, the Company completed acquisitions for a total purchase price of approximately $6.7
million in cash.
Growth of the Company’s business requires expenditures for maintenance and capitalized costs
associated with the construction of new billboard displays, the replacement of damaged billboard
displays, the entrance into and renewal of logo sign and transit contracts, and the purchase of
real estate and operating equipment. The following table presents a breakdown of capitalized
expenditures for the three months ended March 31, 2011 and 2010:
| |
|
|
|
|
|
|
|
|
| |
|
Three months ended |
|
| |
|
March 31, |
|
| |
|
(in thousands) |
|
| |
|
2011 |
|
|
2010 |
|
Total capital expenditures: |
|
|
|
|
|
|
|
|
Billboard — traditional |
|
$ |
8,681 |
|
|
$ |
1,636 |
|
Billboard — digital |
|
|
8,433 |
|
|
|
1,733 |
|
Logos |
|
|
2,158 |
|
|
|
2,087 |
|
Transit |
|
|
208 |
|
|
|
636 |
|
Land and buildings |
|
|
599 |
|
|
|
579 |
|
Operating equipment |
|
|
8,734 |
|
|
|
1,670 |
|
|
|
|
|
|
|
|
Total capital expenditures |
|
$ |
28,813 |
|
|
$ |
8,341 |
|
|
|
|
|
|
|
|
17
RESULTS OF OPERATIONS
Three Months ended March 31, 2011 compared to Three Months ended March 31, 2010
Net revenues increased $11.1 million or 4.5% to $255.2 million for the three months ended March 31,
2011 from $244.1 million for the same period in 2010. This increase was attributable primarily
to an increase in billboard net revenues of $8.0 million or 3.6% over the prior period, an increase
in logo sign revenue of $1.7 million, which represents an increase of 14.3% over the prior period,
and a $1.4 million increase in transit revenue, which represents an increase of 12.9% over the
prior period.
For the three months ended March 31, 2011, there was a $10.2 million increase in net revenues as
compared to acquisition-adjusted net revenue for the three months ended March 31, 2010, which
represents an increase of 4.2%. See “Reconciliations” below. The $10.2 million increase in
revenue primarily consists of a $7.7 million increase in billboard revenue, a $1.4 million net
increase in transit revenue and a $1.0 million increase in logo revenue over the
acquisition-adjusted net revenue for the comparable period in 2010.
Operating expenses, exclusive of depreciation and amortization and gain on sale of assets,
increased $6.1 million or 3.9% to $162.2 million for the three months ended March 31, 2011 from
$156.1 million for the same period in 2010. There was a $5.0 million increase in operating expenses
related to the operations of our outdoor advertising assets and a $1.1 million increase in
corporate expenses.
Depreciation and amortization expense decreased $4.5 million for the three months ended March 31,
2011, as compared to the three months ended March 31, 2010, primarily due to the reduction in the
level of non performing structures dismantled during the first quarter of 2011 over the same period
in 2010.
The Company recorded a gain on disposition of assets of $6.4 million for the three months ended
March 31, 2011, primarily resulting from the sale of its corporate aircraft, which was replaced by
a new aircraft purchased in January 2011.
Due to the above factors, operating income increased $14.8 million to $25.6 million for the three
months ended March 31, 2011 compared to $10.8 million for the same period in 2010.
Interest expense decreased $5.7 million from $49.3 million for the three months ended March 31,
2010, to $43.6 million for the three months ended March 31, 2011, due to the reduction in total
debt outstanding in addition to a decrease in interest rates primarily resulting from the Company’s
refinancing of its senior credit facility in 2010.
The increase in operating income and the decrease in interest expense resulted in a $20.7 million
decrease in net loss before income taxes. This decrease in loss resulted in a decrease in income
tax benefit of $9.1 million for the three months ended March 31, 2011 over the same period in 2010.
The effective tax rate for the three months ended March 31, 2011 was 26.4%, which is less than the
statutory rates due to permanent differences resulting from non deductible compensation expense
related to stock options in accordance with ASC 718 and other non-deductible expenses and
amortization.
As a result of the above factors, the Company recognized a net loss for the three months ended
March 31, 2011 of $13.2 million, as compared to a net loss of $24.8 million for the same period in
2010.
Reconciliations:
Because acquisitions occurring after December 31, 2009 (the “acquired assets”) have contributed to
our net revenue results for the periods presented, we provide 2010 acquisition-adjusted net
revenue, which adjusts our 2010 net revenue for the three months ended March 31, 2010 by adding to
it the net revenue generated by the acquired assets prior to our acquisition of them for the same
time frame that those assets were owned in the three months ended March 31, 2011. We provide this
information as a supplement to net revenues to enable investors to compare periods in 2011 and 2010
on a more consistent basis without the effects of acquisitions. Management uses this comparison to
assess how well we are performing within our existing assets.
18
Acquisition-adjusted net revenue is not determined in accordance with GAAP. For this adjustment, we
measure the amount of pre-acquisition revenue generated by the assets during the period in 2010
that corresponds with the actual period we have owned the assets in 2011 (to the extent within the
period to which this report relates). We refer to this adjustment as “acquisition net revenue.”
Reconciliations of 2010 reported net revenue to 2010 acquisition-adjusted net revenue for the three
months ended March 31, as well as a comparison of 2010 acquisition-adjusted net revenue to 2011
reported net revenue for the three months ended March 31, are provided below:
Reconciliation of Reported Net Revenue to Acquisition-Adjusted Net Revenue
| |
|
|
|
|
| |
|
Three months ended |
|
| |
|
March 31, 2010 |
|
| |
|
(in thousands) |
|
Reported net revenue |
|
$ |
244,103 |
|
Acquisition net revenue |
|
|
910 |
|
|
|
|
|
Acquisition-adjusted net revenue |
|
$ |
245,013 |
|
|
|
|
|
Comparison of 2011 Reported Net Revenue to 2010 Acquisition-Adjusted Net Revenue
| |
|
|
|
|
|
|
|
|
| |
|
Three months ended |
|
| |
|
March 31, |
|
| |
|
2011 |
|
|
2010 |
|
| |
|
(in thousands) |
|
Reported net revenue |
|
$ |
255,202 |
|
|
$ |
244,103 |
|
Acquisition net revenue |
|
|
— |
|
|
|
910 |
|
|
|
|
|
|
|
|
Adjusted totals |
|
$ |
255,202 |
|
|
$ |
245,013 |
|
|
|
|
|
|
|
|
LIQUIDITY AND CAPITAL RESOURCES
Overview
The Company has historically satisfied its working capital requirements with cash from operations
and borrowings under its senior credit facility. The Company’s wholly owned subsidiary, Lamar Media
Corp., is the principal borrower under the senior credit facility and maintains all corporate
operating cash balances. Any cash requirements of the Company, therefore, must be funded by
distributions from Lamar Media.
Sources of Cash
Total Liquidity at March 31, 2011. As of March 31, 2011 we had approximately $272.8 million of
total liquidity, which is comprised of approximately $32.4 million in cash and cash equivalents and
the ability to draw approximately $240.4 million under our revolving senior credit facility.
Cash Generated by Operations. For the three months ended March 31, 2011 and 2010 our cash provided
by operating activities was $25.8 million and $7.7 million, respectively. While our net loss was
approximately $13.2 million for the three months ended March 31, 2011, we generated cash from
operating activities of $25.8 million during that same period, primarily due to non-cash
adjustments needed to reconcile net loss to cash provided by operating activities of $70.0 million,
which primarily consisted of depreciation and amortization of $73.9 million partially offset by the
recognition of deferred tax benefits of $5.3 million. In addition, there was an increase in working
capital of $30.9 million. We expect to generate cash flows from operations during 2011 in excess of
our cash needs for operations and capital expenditures as described herein. We expect to use this
excess cash generated principally for reducing outstanding indebtedness. See “— Cash Flows” for
more information.
Credit Facilities. As of March 31, 2011, Lamar Media had approximately $240.4 million of unused
capacity under the revolving credit facility included in its senior credit facility. As of March
31, 2011, the aggregate balance outstanding under its senior credit facility was $753.9 million.
19
Factors Affecting Sources of Liquidity
Internally Generated Funds. The key factors affecting internally generated cash flow are
general economic conditions, specific economic conditions in the markets where the Company conducts
its business and overall spending on advertising by advertisers.
Credit Facilities and Other Debt Securities. Lamar must comply with certain covenants and
restrictions related to its senior credit facility and its outstanding debt securities.
Restrictions Under Debt Securities. Lamar must comply with certain covenants and restrictions
related to its outstanding debt securities. Currently Lamar Media has outstanding approximately
$400.0 million 6 5/8% Senior Subordinated Notes due 2015 issued August 2005, $216.0 million 6 5/8%
Senior Subordinated Notes due 2015 — Series B issued in August 2006 and $275.0 million 6 5/8%
Senior Subordinated Notes due 2015 — Series C issued in October 2007 (collectively, the “6 5/8%
Notes”), $350 million 9 3/4% Senior Notes due 2014 issued in March 2009 (the “9 3/4% Notes) and
$400 million 7 7/8% Senior Subordinated Notes due 2018 (the “7 7/8% Notes”). The indentures
relating to Lamar Media’s outstanding notes restrict its ability to incur additional indebtedness
but permit the incurrence of indebtedness (including indebtedness under its senior credit
facility), (i) if no default or event of default would result from such incurrence and (ii) if
after giving effect to any such incurrence, the leverage ratio (defined as total consolidated debt
to trailing four fiscal quarter EBITDA (as defined in the indentures)) would be less than (a) 6.5
to 1, pursuant to the 9 3/4% Notes indenture, and (b) 7.0 to 1, pursuant to the 6 5/8% Notes and
the 7 7/8% Notes indentures.
In addition to debt incurred under the provisions described in the preceding sentence, the
indentures relating to Lamar Media’s outstanding notes permit Lamar Media to incur indebtedness
pursuant to the following baskets:
| |
• |
|
up to $1.3 billion of indebtedness under its senior credit facility is allowable under
the 6 5/8% Notes indenture, which limit is $1.4 billion under the 9 3/4% Notes indenture and
$1.5 billion under the 7 7/8% Notes indenture; |
| |
• |
|
currently outstanding indebtedness or debt incurred to refinance outstanding debt; |
| |
• |
|
inter-company debt between Lamar Media and its subsidiaries or between subsidiaries; |
| |
• |
|
certain purchase money indebtedness and capitalized lease obligations to acquire or lease
property in the ordinary course of business that cannot exceed the greater of $50 million or
5% of Lamar Media’s net tangible assets; and |
| |
• |
|
additional debt not to exceed $50 million ($75 million under the 7 7/8% Notes indenture). |
Restrictions under Senior Credit Facility. Lamar Media is required to comply with certain
covenants and restrictions under its senior credit facility. If the Company fails to comply with
these tests, the long term debt payments may be accelerated. At March 31, 2011 and currently,
Lamar Media was in compliance with all such tests. We must be in compliance with the following
financial ratios under our senior credit facility:
| |
• |
|
a total holdings debt ratio, defined as total consolidated debt of Lamar Advertising
Company and its restricted subsidiaries as of any date to EBITDA, as defined below, for the
most recent four fiscal quarters then ended as set forth below: |
| |
|
|
| Period |
|
Ratio |
March 31, 2011 through and including December 30, 2011 |
|
7.00 to 1.00 |
December 31, 2011 through and including March 30, 2012 |
|
6.75 to 1.00 |
March 31, 2012 through and including March 30, 2013 |
|
6.25 to 1.00 |
From and after March 31, 2013 |
|
6.00 to 1.00 |
20
| |
• |
|
a senior debt ratio, defined as total consolidated senior debt of Lamar Media and its
restricted subsidiaries to EBITDA, as defined below, for the most recent four fiscal
quarters then ended as set forth below: |
| |
|
|
| Period |
|
Ratio |
March 31, 2011 through and including September 29, 2011 |
|
3.50 to 1.00 |
September 30, 2011 through and including March 30, 2012 |
|
3.25 to 1.00 |
March 31, 2012 through and including March 30, 2013 |
|
3.00 to 1.00 |
From and after March 31, 2013 |
|
2.75 to 1.00 |
| |
• |
|
a fixed charges coverage ratio, defined as the ratio of EBITDA, (as defined below), for
the most recent four fiscal quarters to the sum of (1) the total payments of principal and
interest on debt for such period, plus (2) capital expenditures made during such period,
plus (3) income and franchise tax payments made during such period, plus (4) dividends, of
greater than 1.05 to 1. |
The definition of “EBITDA” under the new senior credit agreement is as follows: “EBITDA” means, for
any period, operating income for the Company and its restricted subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP) for such period (calculated before
taxes, interest expense, depreciation, amortization and any other non-cash income or charges
accrued for such period, one-time cash restructuring and cash severance changes in the fiscal year
ending December 31, 2009 of up to $2,500,000 aggregate amount, charges and expenses in connection
with the credit facility transactions and the repurchase or redemption of our 7 1/4% senior
subordinated notes due 2013, and (except to the extent received or paid in cash by us or any of our
restricted subsidiaries) income or loss attributable to equity in affiliates for such period)
excluding any extraordinary and unusual gains or losses during such period and excluding the
proceeds of any casualty events whereby insurance or other proceeds are received and certain
dispositions not in the ordinary course. For purposes of calculating EBITDA, the effect on such
calculation of any adjustments required under Statement of Accounting Standards No. 141R is
excluded.
Excess Cash Flow Payments. Lamar Media may be required to make certain mandatory prepayments
on loans outstanding under its senior credit facility that would be applied first to any
outstanding term loans, commencing with the year ended December 31, 2010. These payments, if any,
are determined annually and are calculated based on a percentage of Consolidated Excess Cash Flow
(as defined in the senior credit facility) at the end of each fiscal year. The percentage of
Consolidated Excess Cash Flow that must be applied to repay outstanding loans was set at 50% for
the fiscal year ended December 31, 2010. This percentage is subject to reduction as follows for
fiscal years ending on or after December 31, 2010: (i) to 25% if the total holdings debt ratio, as
described above, is less than or equal to 5.00 to 1.00 but greater than 4.00 to 1.00 as at the last
day of such fiscal year and (ii) to 0% if the total holdings debt ratio is less than or equal to
4.00 to 1.00 as at the last day of such fiscal year. At December 31, 2010, the Company was not
required to make a mandatory prepayment since there was a consolidated cash flow deficit, in
accordance with the calculation as defined in the senior credit facility. Currently we do not
anticipate that a mandatory prepayment will be required for the fiscal year ending 2011.
The Company believes that its current level of cash on hand, availability under its senior
credit facility and future cash flows from operations are sufficient to meet its operating needs
through fiscal 2011. All debt obligations are reflected on the Company’s balance sheet.
Uses of Cash
Capital Expenditures. Capital expenditures excluding acquisitions were approximately $28.8 million
for the three months ended March 31, 2011. We anticipate our 2011 total capital expenditures will
be approximately $100 million.
Acquisitions. During the three months ended March 31, 2011, the Company financed its acquisition
activity of $6.7 million with cash on hand. In light of the current economic environment, the
Company plans to continue to limit acquisition activity during 2011 with no material spending
currently planned for acquisitions.
Optional Prepayments. During the quarter ended March 31, 2011, Lamar Media reduced outstanding
indebtedness under its senior credit facility in the amount of $54.9 million, of which, $4.9
million was a prepayment of the scheduled December 2011 amortization and $50.0 million was an
optional prepayment under the Term Loan B facility.
21
Lamar Media Corp.
The following is a discussion of the consolidated financial condition and results of operations of
Lamar Media for the three months ended March 31, 2011 and 2010. This discussion should be read in
conjunction with the consolidated financial statements of Lamar Media and the related note.
RESULTS OF OPERATIONS
Three Months ended March 31, 2011 compared to Three Months ended March 31, 2010
Net revenues increased $11.1 million or 4.5% to $255.2 million for the three months ended March 31,
2011 from $244.1 million for the same period in 2010. This increase was attributable primarily to
an increase in billboard net revenues of $8.0 million or 3.6% over the prior period, an increase in
logo sign revenue of $1.7 million, which represents an increase of 14.3% over the prior period, and
a $1.4 million increase in transit revenue, which represents an increase of 12.9% over the prior
period.
For the three months ended March 31, 2011, there was a $10.2 million increase in net revenues as
compared to acquisition-adjusted net revenue for the three months ended March 31, 2010, which
represents an increase of 4.2%. See “Reconciliations” below. The $10.2 million increase in
revenue primarily consists of a $7.7 million increase in billboard revenue, a $1.4 million net
increase in transit revenue and a $1.0 million increase in logo revenue over the
acquisition-adjusted net revenue for the comparable period in 2010.
Operating expenses, exclusive of depreciation and amortization and gain on sale of assets,
increased $6.0 million or 3.8% to $162.1 million for the three months ended March 31, 2011 from
$156.1 million for the same period in 2010. There was a $5.0 million increase in operating expenses
related to the operations of our outdoor advertising assets and a $1.0 million increase in
corporate expenses.
Depreciation and amortization expense decreased $4.5 million for the three months ended March 31,
2011, as compared to the three months ended March 31, 2010, primarily due to the reduction in the
level of non performing structures dismantled during the first quarter of 2011 over the same period
in 2010.
Lamar Media recorded a gain on disposition of assets of $6.4 million for the three months ended
March 31, 2011, primarily resulting from the sale of its corporate aircraft, which was replaced by
a new aircraft purchased in January 2011.
Due to the above factors, operating income increased $14.9 million to $25.7 million for the three
months ended March 31, 2011 compared to $10.8 million for the same period in 2010.
Interest expense decreased $5.7 million from $49.3 million for the three months ended March 31,
2010, to $43.6 million for the three months ended March 31, 2011, due to the reduction in total
debt outstanding as well as a decrease in interest rates primarily resulting from the Company’s
refinancing of its senior credit facility in 2010.
The increase in operating income and the decrease in interest expense resulted in a $20.7 million
decrease in net loss before income taxes. This decrease in loss resulted in a decrease in income
tax benefit of $9.0 million for the three months ended March 31, 2011 over the same period in 2010.
The effective tax rate for the three months ended March 31, 2011 was 26.5%, which is less than the
statutory rates due to permanent differences resulting from non deductible compensation expense
related to stock options in accordance with ASC 718 and other non-deductible expenses and
amortization.
As a result of the above factors, Lamar Media recognized a net loss for the three months ended
March 31, 2011 of $13.2 million, as compared to a net loss of $24.9 million for the same period in
2010.
22
Reconciliations:
Because acquisitions occurring after December 31, 2009 (the “acquired assets”) have contributed to
our net revenue results for the periods presented, we provide 2010 acquisition-adjusted net
revenue, which adjusts our 2010 net revenue for the three months ended March 31, 2010 by adding to
it the net revenue generated by the acquired assets prior to our acquisition of them for the same
time frame that those assets were owned in the three months ended March 31, 2011. We provide this
information as a supplement to net revenues to enable investors to compare periods in 2011 and 2010
on a more consistent basis without the effects of acquisitions. Management uses this comparison to
assess how well we are performing within our existing assets.
Acquisition-adjusted net revenue is not determined in accordance with GAAP. For this adjustment, we
measure the amount of pre-acquisition revenue generated by the assets during the period in 2010
that corresponds with the actual period we have owned the assets in 2011 (to the extent within the
period to which this report relates). We refer to this adjustment as “acquisition net revenue.”
Reconciliations of 2010 reported net revenue to 2010 acquisition-adjusted net revenue for the three
months ended March 31, as well as a comparison of 2010 acquisition-adjusted net revenue to 2011
reported net revenue for the three months ended March 31, are provided below:
Reconciliation of Reported Net Revenue to Acquisition-Adjusted Net Revenue
| |
|
|
|
|
| |
|
Three months ended |
|
| |
|
March 31, 2010 |
|
| |
|
(in thousands) |
|
Reported net revenue |
|
$ |
244,103 |
|
Acquisition net revenue |
|
|
910 |
|
|
|
|
|
Acquisition-adjusted net revenue |
|
$ |
245,013 |
|
|
|
|
|
Comparison of 2011 Reported Net Revenue to 2010 Acquisition-Adjusted Net Revenue
| |
|
|
|
|
|
|
|
|
| |
|
Three months ended |
|
| |
|
March 31, |
|
| |
|
2011 |
|
|
2010 |
|
| |
|
(in thousands) |
|
Reported net revenue |
|
$ |
255,202 |
|
|
$ |
244,103 |
|
Acquisition net revenue |
|
|
— |
|
|
|
910 |
|
|
|
|
|
|
|
|
Adjusted totals |
|
$ |
255,202 |
|
|
$ |
245,013 |
|
|
|
|
|
|
|
|
23
|
|
|
| ITEM 3. |
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Lamar Advertising Company and Lamar Media Corp.
The Company is exposed to interest rate risk in connection with variable rate debt instruments
issued by its wholly owned subsidiary Lamar Media. The information below summarizes the Company’s
interest rate risk associated with its principal variable rate debt instruments outstanding at
March 31, 2011 and should be read in conjunction with Note 8 of the Notes to the Company’s
Consolidated Financial Statements in the 2010 Combined Form 10-K.
Loans under Lamar Media’s senior credit facility bear interest at variable rates equal to the
JPMorgan Chase Prime Rate or LIBOR plus the applicable margin. Because the JPMorgan Chase Prime
Rate or LIBOR may increase or decrease at any time, the Company is exposed to market risk as a
result of the impact that changes in these base rates may have on the interest rate applicable to
borrowings under the senior credit facility. Increases in the interest rates applicable to
borrowings under the senior credit facility would result in increased interest expense and a
reduction in the Company’s net income.
At March 31, 2011 there was approximately $753.9 million of aggregate indebtedness outstanding
under the senior credit facility, or approximately 32.0% of the Company’s outstanding long-term
debt on that date, bearing interest at variable rates. The aggregate interest expense for the three
months ended March 31, 2011 with respect to borrowings under the senior credit facility was $7.8
million, and the weighted average interest rate applicable to borrowings under this credit facility
during the three months ended March 31, 2011 was 3.7%. Assuming that the weighted average interest
rate was 200-basis points higher (that is 5.7% rather than 3.7%), then the Company’s three months
ended March 31, 2011 interest expense would have been approximately $3.9 million higher resulting
in a $2.8 million increase in the Company’s net loss for the three months ended March 31, 2011.
The Company attempted to mitigate the interest rate risk resulting from its variable interest rate
long-term debt instruments by issuing fixed rate long-term debt instruments and maintaining a
balance over time between the amount of the Company’s variable rate and fixed rate indebtedness. In
addition, the Company has the capability under the senior credit facility to fix the interest rates
applicable to its borrowings at an amount equal to LIBOR plus the applicable margin for periods of
up to twelve months (in certain cases with the consent of the lenders), which would allow the
Company to mitigate the impact of short-term fluctuations in market interest rates. In the event of
an increase in interest rates, the Company may take further actions to mitigate its exposure. The
Company cannot guarantee, however, that the actions that it may take to mitigate this risk will be
feasible or that, if these actions are taken, that they will be effective.
|
|
|
| ITEM 4. |
|
CONTROLS AND PROCEDURES |
a) Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures.
The Company’s and Lamar Media’s management, with the participation of the principal executive
officer and principal financial officer of the Company and Lamar Media, have evaluated the
effectiveness of the design and operation of the Company’s and Lamar Media’s disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (“the Exchange Act”)) as of the end of the period covered by this quarterly
report. Based on this evaluation, the principal executive officer and principal financial officer
of the Company and Lamar Media concluded that these disclosure controls and procedures are
effective and designed to ensure that the information required to be disclosed in the Company’s and
Lamar Media’s reports filed or submitted under the Exchange Act is recorded, processed, summarized
and reported within the requisite time periods.
b) Changes in Internal Control Over Financial Reporting.
There was no change in the internal control over financial reporting (as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act) of the Company and Lamar Media identified in connection with
the evaluation of the Company’s and Lamar Media’s internal control performed during the last fiscal
quarter that has materially affected, or is reasonably likely to materially affect, the Company’s
and Lamar Media’s internal control over financial reporting.
24
PART II — OTHER INFORMATION
The Exhibits filed as part of this report are listed on the Exhibit Index immediately following the
signature page hereto, which Exhibit Index is incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| |
|
|
|
|
| |
LAMAR ADVERTISING COMPANY
|
|
| DATED: May 4, 2011 |
BY: |
/s/ Keith A. Istre
|
|
| |
|
Chief Financial and Accounting Officer and Treasurer |
|
| |
|
|
| |
| |
LAMAR MEDIA CORP.
|
|
| DATED: May 4, 2011 |
BY: |
/s/ Keith A. Istre
|
|
| |
|
Chief Financial and Accounting Officer and Treasurer |
|
| |
|
|
25
INDEX TO EXHIBITS
| |
|
|
| Exhibit Number |
|
Description |
|
|
|
3.1
|
|
Restated Certificate of Incorporation of the Company.
Previously filed as Exhibit 3.1 to the Company’s Annual
Report on Form 10-K (File No. 0-30242) filed on March 15,
2006 and incorporated herein by reference. |
|
|
|
3.2
|
|
Amended and Restated Certificate of Incorporation of Lamar
Media. Previously filed as Exhibit 3.2 to the Company’s
Quarterly Report on Form 10-Q for the period ended March
31, 2007 (File No. 0-30242) filed on May 10, 2007 and
incorporated herein by reference. |
|
|
|
3.3
|
|
Amended and Restated Bylaws of the Company. Previously
filed as Exhibit 3.1 to the Company’s Current Report on
Form 8-K (File No. 0-30242) filed on August 27, 2007 and
incorporated herein by reference. |
|
|
|
3.4
|
|
Amended and Restated Bylaws of Lamar Media. 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. |
|
|
|
10.1
|
|
Summary of Compensatory
Arrangements. Previously filed on the Company’s Current Report
on Form 8-K (File No. 0-30242) filed on March 17, 2011 and
incorporated herein by reference. |
|
|
|
31.1
|
|
Certification of the Chief Executive Officer of Lamar
Advertising Company and Lamar Media pursuant to Securities
Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith. |
|
|
|
31.2
|
|
Certification of the Chief Financial Officer of Lamar
Advertising Company and Lamar Media pursuant to Securities
Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith. |
|
|
|
32.1
|
|
Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002. Filed herewith. |
|
|
|
101
|
|
The following materials from the combined Quarterly Report
of Lamar Advertising Company and Lamar Media Corp. on Form
10-Q for the quarter ended March 31, 2011, formatted in
XBRL (eXtensible Business Reporting Language): (i)
Condensed Consolidated Balance Sheets as of March 31, 2011
and December 31, 2010 of Lamar Advertising and Lamar Media,
(ii) Condensed Consolidated Statements of Operations for
the three months ended March 31, 2011 and 2010 of Lamar
Advertising and Lamar Media, (iii) Condensed Consolidated
Statements of Cash Flows for the three months ended March
31, 2011 and 2010 of Lamar Advertising and Lamar Media, and
(iv) Notes to Condensed Consolidated Financial Statements,
tagged as blocks of text of Lamar Advertising and Lamar
Media.* |
|
|
|
| * |
|
Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files in Exhibit 101 hereto are
deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or
12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of
the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability
under those sections. |
26