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LAMAR ADVERTISING CO/NEW - Quarter Report: 2007 September (Form 10-Q)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
     
þ   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2007
or
     
o   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
Delaware
(State or other jurisdiction of incorporation or
organization)
  72-1449411
72-1205791
(I.R.S Employer
Identification No.)
     
5551 Corporate Blvd., Baton Rouge, LA
(Address of principle executive offices)
  70808
(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 Lamar Advertising Company is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ          Accelerated filer o          Non-accelerated filer o          
Indicate by check mark whether Lamar Media Corp. is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o          Accelerated filer o          Non-accelerated filer þ          
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 November 1, 2007: 79,089,952
The number of shares of the Lamar Advertising Company’s Class B common stock outstanding as of November 1, 2007: 15,397,865
The number of shares of Lamar Media Corp. common stock outstanding as of November 1, 2007: 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.
 
 

 


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NOTE REGARDING FORWARD-LOOKING STATEMENTS
This combined Quarterly Report on Form 10-Q of Lamar Advertising Company (“Lamar Advertising” or the “Company”) and Lamar Media Corp. (“Lamar Media”) 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:
    expected operating results;
 
    market opportunities;
 
    acquisition opportunities;
 
    stock repurchase program;
 
    ability to compete; and
 
    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:
    risks and uncertainties relating to the Company’s significant indebtedness;
 
    the demand for outdoor advertising;
 
    the performance of the U.S. economy generally and the level of expenditures on outdoor advertising particularly;
 
    the Company’s ability to renew expiring contracts at favorable rates;
 
    the integration of companies that the Company acquires and its ability to recognize cost savings or operating efficiencies as a result of these acquisitions;
 
    the Company’s need for and ability to obtain additional funding for acquisitions or operations;
 
    the market price of the Company’s Class A common stock;
 
    the existence and nature of investment and digital deployment opportunities available to the Company from time to time; and
 
    the regulation of the outdoor advertising industry by federal, state and local governments.
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, 2006 of the Company and Lamar Media (the “2006 Combined Form 10-K”).
The forward-looking statements contained in this combined Quarterly Report on Form 10-Q speak only as of the date of this combined report. Lamar Advertising Company and Lamar Media Corp. expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained in this combined Quarterly 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, except as may be required by law.

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CONTENTS
             
        Page
PART I — FINANCIAL INFORMATION        
 
           
  FINANCIAL STATEMENTS        
 
  Lamar Advertising Company        
 
  Condensed Consolidated Balance Sheets as of September 30, 2007 and December 31, 2006     4  
 
  Condensed Consolidated Statements of Operations for the three months and nine months ended September 30, 2007 and 2006     5  
 
  Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2007 and 2006     6  
 
  Notes to Condensed Consolidated Financial Statements     7-12  
 
  Lamar Media Corp.        
 
  Condensed Consolidated Balance Sheets as of September 30, 2007 and December 31, 2006     13  
 
  Condensed Consolidated Statements of Operations for the three months and nine months ended September 30, 2007 and 2006     14  
 
  Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2007 and 2006     15  
 
  Note to Condensed Consolidated Financial Statements     16  
  Management’s Discussion and Analysis of Financial Condition and Results of Operations     17-25  
 
           
  Quantitative and Qualitative Disclosures About Market Risks     26  
 
           
  Controls and Procedures     26  
 
           
PART II — OTHER INFORMATION        
 
           
  Unregistered Sales of Equity Securities and Use of Proceeds     27  
 
           
  Exhibits     27  
 Statement Regarding Computation of Earnings to Fixed Charges
 Statement Regarding Computation of Earnings to Fixed Charges - Lamar Media
 Certification of CEO Pursuant to Section 302
 Certification of CFO Pursuant to Section 302
 Certification Pursuant to 18 U.S.C. Section 1350

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PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                 
    September 30,     December 31,  
    2007     2006  
    (Unaudited)          
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 10,758     $ 11,796  
Receivables, net of allowance for doubtful accounts of $8,321 and $6,400 in 2007 and 2006, respectively
    153,777       127,552  
Prepaid expenses
    56,183       38,215  
Deferred income tax assets
    15,887       34,224  
Other current assets
    14,515       18,983  
 
           
Total current assets
    251,120       230,770  
 
           
 
               
Property, plant and equipment
    2,643,989       2,432,977  
Less accumulated depreciation and amortization
    (1,135,867 )     (1,027,029 )
 
           
Net property, plant and equipment
    1,508,122       1,405,948  
 
           
 
               
Goodwill
    1,362,271       1,357,706  
Intangible assets
    819,844       860,850  
Deferred financing costs, net of accumulated amortization of $30,491 and $27,143 in 2007 and 2006, respectively
    25,970       25,990  
Other assets
    37,710       42,964  
 
           
Total assets
  $ 4,005,037     $ 3,924,228  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Trade accounts payable
  $ 22,931     $ 14,567  
Current maturities of long-term debt
    31,738       8,648  
Accrued expenses
    76,418       69,940  
Deferred income
    20,995       17,824  
 
           
Total current liabilities
    152,082       110,979  
 
           
 
               
Long-term debt
    2,607,788       1,981,820  
Deferred income tax liabilities
    127,975       140,019  
Asset retirement obligation
    147,664       141,503  
Other liabilities
    13,206       11,374  
 
           
Total liabilities
    3,048,715       2,385,695  
 
           
Stockholders’ equity:
               
Series AA preferred stock, par value $.001, $63.80 cumulative dividends, authorized 5,720 shares; 5,720 shares issued and outstanding at 2007 and 2006
           
Class A preferred stock, par value $638, $63.80 cumulative dividends, 10,000 shares authorized; 0 shares issued and outstanding at 2007 and 2006
           
Class A common stock, par value $.001, 175,000,000 shares authorized, 92,464,342 and 91,796,429 shares issued at 2007 and 2006, respectively; 79,089,952 and 84,335,679 outstanding at 2007 and 2006, respectively
    92       92  
Class B common stock, par value $.001, 37,500,000 shares authorized, 15,397,865 shares issued and outstanding at 2007 and 2006
    15       15  
Additional paid-in capital
    2,285,453       2,250,716  
Accumulated comprehensive income
    6,020       2,253  
Accumulated deficit
    (591,903 )     (315,072 )
Cost of shares held in treasury, 13,374,390 and 7,460,750 shares in 2007and 2006, respectively
    (743,355 )     (399,471 )
 
           
Stockholders’ equity
    956,322       1,538,533  
 
           
Total liabilities and stockholders’ equity
  $ 4,005,037     $ 3,924,228  
 
           
See accompanying notes to condensed consolidated financial statements.

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LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                                 
    Three months ended     Nine months ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
Net revenues
  $ 314,253     $ 292,038     $ 904,663     $ 832,948  
 
                       
Operating expenses (income)
                               
Direct advertising expenses (exclusive of depreciation and amortization)
    102,121       98,550       305,673       290,174  
General and administrative expenses (exclusive of depreciation and amortization)
    52,748       51,515       159,425       146,751  
Corporate expenses (exclusive of depreciation and amortization)
    15,272       14,062       44,707       36,751  
Depreciation and amortization
    74,352       76,030       220,820       223,297  
Gain on disposition of assets
    (675 )     (7,504 )     (2,506 )     (9,894 )
 
                       
 
    243,818       232,653       728,119       687,079  
 
                       
Operating income
    70,435       59,385       176,544       145,869  
Other expense (income)
                               
Gain on disposition of investment
                (15,448 )      
Interest income
    (302 )     (374 )     (1,046 )     (979 )
Interest expense
    42,537       29,763       117,674       81,732  
 
                       
 
    42,235       29,389       101,180       80,753  
 
                       
 
                               
Income before income tax expense
    28,200       29,996       75,364       65,116  
Income tax expense
    13,675       13,157       33,620       28,365  
 
                       
 
                               
Net income
    14,525       16,839       41,744       36,751  
Preferred stock dividends
    91       91       273       273  
 
                       
Net income applicable to common stock
  $ 14,434     $ 16,748     $ 41,471     $ 36,478  
 
                       
Earnings per share:
                               
Basic earnings per share
  $ 0.15     $ 0.16     $ 0.42     $ 0.35  
 
                       
Diluted earnings per share
  $ 0.15     $ 0.16     $ 0.42     $ 0.35  
 
                       
Cash dividends declared per share of common stock (Note 11)
  $     $     $ 3.25     $  
 
                       
Weighted average common shares used in computing earnings per share:
                               
Weighted average common shares outstanding
    96,194,236       101,994,265       97,676,898       103,416,169  
Incremental common shares from dilutive stock options and warrants
    893,959       914,507       801,280       974,499  
Incremental common shares from convertible debt
                       
 
                       
Weighted average common shares diluted
    97,088,195       102,908,772       98,478,178       104,390,668  
 
                       
See accompanying notes to condensed consolidated financial statements.

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LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
                 
    Nine months ended  
    September 30,  
    2007     2006  
Cash flows from operating activities:
               
Net income
  $ 41,744     $ 36,751  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    220,820       223,297  
Non-cash equity based compensation
    21,754       12,212  
Amortization included in interest expense
    3,340       3,878  
Gain on disposition of assets and investments
    (17,954 )     (9,894 )
Deferred tax expense
    6,293       5,412  
Provision for doubtful accounts
    4,616       3,807  
Changes in operating assets and liabilities:
               
(Increase) decrease in:
               
Receivables
    (30,167 )     (21,042 )
Prepaid expenses
    (18,516 )     (18,450 )
Other assets
    (3,471 )     9,278  
Increase (decrease) in:
               
Trade accounts payable
    8,729       10,153  
Accrued expenses
    5,927       2,465  
Other liabilities
    2,489       6,038  
 
           
Net cash provided by operating activities
    245,604       263,905  
 
           
 
               
Cash flows from investing activities:
               
Acquisitions
    (107,419 )     (158,949 )
Capital expenditures
    (173,445 )     (173,590 )
Proceeds from disposition of assets
    22,175       12,560  
Payments received on (increase in) notes receivable
    9,378       (3,681 )
 
           
Net cash used in investing activities
    (249,311 )     (323,660 )
 
           
 
               
Cash flows from financing activities:
               
Debt issuance costs
    (3,426 )     (3,272 )
Cash used for purchase of treasury stock
    (337,152 )     (240,621 )
Net proceeds from issuance of common stock
    12,946       26,106  
Net increase in notes payable
    649,057       265,335  
Dividends
    (318,576 )     (273 )
 
           
Net cash provided by financing activities
    2,849       47,275  
 
           
 
               
Effect of exchange rate changes in cash and cash equivalents
    (180 )      
 
               
Net decrease in cash and cash equivalents
    (1,038 )     (12,480 )
Cash and cash equivalents at beginning of period
    11,796       19,419  
 
           
Cash and cash equivalents at end of period
  $ 10,758     $ 6,939  
 
           
 
               
Supplemental disclosures of cash flow information:
               
Cash paid for interest
  $ 121,130     $ 89,077  
 
           
Cash paid for foreign, state and federal income taxes
  $ 22,143     $ 9,085  
 
           
Common stock issuance related to acquisitions
  $     $  
 
           
See accompanying notes to condensed consolidated financial statements.

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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 2006 Combined Form 10-K.
2. Stock-Based Compensation
Equity Incentive Plan. Lamar’s 1996 Equity Incentive Plan has reserved 10 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 which primarily includes 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 under Statement of Financial Accounting Standard No. 123(R), Shared-based Payment, (“SFAS 123(R)”). 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 52,000 shares of its Class A common stock during the nine months ended September 30, 2007.
Stock Purchase Plan. Lamar’s 2000 Employee Stock Purchase Plan has reserved 924,000 shares of common stock for issuance to employees. The following is a summary of ESPP share activity for the nine months ended September 30, 2007:
         
    Shares
Available for future purchases, January 1, 2007
    469,646  
Purchases
    (56,642 )
 
       
Available for future purchases, September 30, 2007
    413,004  
 
       
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 based on the achievement of certain Company performance measures for fiscal 2007. The number of shares to be issued, if any, will be dependent on the level of achievement of these performance measures for key officers and employees, as determined by the Company’s Compensation Committee based on our 2007 results. Any shares issued based on the achievement of performance goals will be issued in the first quarter of 2008. 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. Through September 30, 2007, the Company has recorded $9,284 as compensation expense related to both the executive performance based and non-employee director agreements.
Stock grants to option holders. On March 30, 2007, the Company issued Class A common stock in respect of all shares underlying vested, unexercised options held as of March 22, 2007 (the “vested option shares”) by an active employee, consultant or director of the Company. Holders of vested option shares received a stock award with a fair market value of $3.25 multiplied by the number of vested option shares held by such holder. The Company determined the number of shares issuable based on a fair market value of $63.77 per share, which was the average of the closing prices of the Class A common stock during the period from March 1, 2007 through and including March 21, 2007. The Company recorded $6,960 as expense related to this grant.

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LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
The table below summarizes the impact on our results of operations for the nine months ended September 30, 2007 and 2006 of outstanding stock options and stock grants and stock grants under our 1996 Plan and issuances under our ESPP recognized under the provisions of SFAS 123(R):
                 
    Nine months     Nine months  
    ended     ended  
    September 30, 2007     September 30, 2006  
Stock-based compensation expense:
               
Issuances under employee stock purchase plan
  $ 606     $ 615  
Employee stock options
    4,904       5,070  
Reserved for stock awards
    9,284       6,527  
Issuance to options holders
    6,960        
Income tax benefit
    (7,245 )     (2,846 )
 
           
Net decrease in net income
  $ 14,509     $ 9,366  
 
           
Decrease in earnings per common share:
               
Basic
  $ 0.15     $ 0.09  
Diluted
  $ 0.15     $ 0.09  
3. Acquisitions
During the nine months ended September 30, 2007, the Company completed several acquisitions of outdoor advertising assets for a total cash purchase price of approximately $107,419.
Each of these acquisitions was accounted for under the purchase method of accounting, and, accordingly, the accompanying condensed consolidated financial statements include the results of operations of each acquired entity from the date of acquisition. The acquisition costs have been allocated to assets acquired and liabilities assumed based on fair value at the dates of acquisition. The following is a summary of the preliminary allocation of the acquisition costs in the above transactions.
         
    Total  
Assets
  $ 113  
Property, plant and equipment
    62,113  
Goodwill
    4,490  
Site locations
    34,578  
Non-competition agreements
    268  
Customer lists and contracts
    5,857  
 
     
 
  $ 107,419  
 
     

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LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
3. Acquisitions (cont’d)
Summarized below are certain unaudited pro forma statements of operations data for the nine months ended September 30, 2007 and September 30, 2006 as if each of the above acquisitions and the acquisitions occurring in 2006, which were fully described in the 2006 Combined Form 10-K, had been consummated as of January 1, 2006. This pro forma information does not purport to represent what the Company’s results of operations actually would have been had such transactions occurred on the date specified or to project the Company’s results of operations for any future periods.
                                 
    Three months ended     Nine months ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
Pro forma net revenues
  $ 314,328     $ 293,631     $ 905,733     $ 840,604  
 
                       
 
                               
Pro forma net income applicable to common stock
  $ 14,387     $ 15,786     $ 41,109     $ 33,130  
 
                       
 
                               
Pro forma net income per common share — basic
  $ 0.15     $ 0.15     $ 0.42     $ 0.32  
 
                       
 
                               
Pro forma net income per common share — diluted
  $ 0.15     $ 0.15     $ 0.42     $ 0.32  
 
                       
4. 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     Nine months ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
Direct advertising expenses
  $ 69,923     $ 71,852     $ 207,538     $ 212,000  
General and administrative expenses
    1,578       1,714       5,139       5,013  
Corporate expenses
    2,851       2,464       8,143       6,284  
 
                       
 
  $ 74,352     $ 76,030     $ 220,820     $ 223,297  
 
                       
5. Goodwill and Other Intangible Assets
The following is a summary of intangible assets at September 30, 2007 and December 31, 2006.
                                         
    Estimated     September 30, 2007     December 31, 2006  
    Life     Gross Carrying     Accumulated     Gross Carrying     Accumulated  
    (Years)     Amount     Amortization     Amount     Amortization  
Customer lists and contracts
    7 — 10     $ 450,032     $ 395,783     $ 444,167     $ 380,374  
Non-competition agreements
    3 — 15       60,547       56,642       60,279       55,466  
Site locations
    15       1,297,228       538,538       1,262,525       474,151  
Other
    5 — 15       13,600       10,600       13,537       9,667  
 
                               
 
            1,821,407       1,001,563       1,780,508       919,658  
Unamortizable Intangible Assets:
                                       
Goodwill
          $ 1,615,906     $ 253,635     $ 1,611,341     $ 253,635  
The changes in the gross carrying amount of goodwill for the nine months ended September 30, 2007 are as follows:
         
Balance as of December 31, 2006
  $ 1,611,341  
Goodwill acquired during the nine months ended September 30, 2007
    4,565  
 
     
Balance as of September 30, 2007
  $ 1,615,906  
 
     

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LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
6. 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, 2006
  $ 141,503  
Additions to asset retirement obligations
    1,250  
Accretion expense
    6,963  
Liabilities settled
    (2,052 )
 
     
Balance at September 30, 2007
  $ 147,664  
 
     
7. Long Term Debt
On March 28, 2007, Lamar Media Corp., a wholly-owned subsidiary of Lamar Advertising Company, entered into a Series E Incremental Loan Agreement with its lenders, in the aggregate amount of $250,000 which was funded on March 28, 2007. The Series E Incremental Loans will begin amortizing in quarterly installments paid on each June 30, September 30, December 31 and March 31 as follows:
         
Principal Payment Date   Principal Amount
 
June 30, 2009 — March 31, 2010
  $ 3,125  
June 30, 2010 — March 31, 2011
  $ 6,250  
June 30, 2011 — March 31, 2012
  $ 9,375  
June 30, 2012 — March 31, 2013
  $ 43,750  
The Series E Incremental Loans will mature March 31, 2013.
Also, on March 28, 2007, Lamar Media Corp. entered into a Series F Incremental Loan Agreement in the aggregate amount of $325,000 which was funded on March 28, 2007. The Series F Incremental Loans will begin amortizing in quarterly installments paid on each June 30, September 30, December 31, and March 31 as follows:
         
Principal Payment Date   Principal Amount
 
June 30, 2009 — December 31, 2013
  $ 812.5  
March 31, 2014
  $ 309,562.5  
The Series F Incremental Loans will mature on March 31, 2014.
In conjunction with the Series E and F Term loans described above, the Company’s credit agreement dated as of September 30, 2005, was further amended by Amendment No. 3 dated March 28, 2007, to (i) permit the Series E and Series F Incremental Loans to be borrowed up to an aggregate of $575,000 and restore the amount available for additional incremental loans to $500,000 and (ii) delete the “Interest Coverage Ratio”, and the “Senior Coverage Ratio” financial covenants and the step-down to 5.75x from 6.0x in the “Total Debt Ratio” financial covenant.
On July 3, 2007, the Company accepted for exchange $287,209 aggregate principal amount of its outstanding 2 7/8% Convertible Notes due 2010 (the “outstanding notes”), for newly issued 2 7/8% Convertible Notes due 2010—Series B (the “new notes”) and cash pursuant to an exchange offer commenced on May 31, 2007. The settlement and exchange of new notes and payment of cash for the outstanding notes was made on July 3, 2007. Approximately 99% of the total outstanding notes were exchanged pursuant to the exchange offer, with approximately $291 aggregate principal amount of outstanding notes remaining outstanding immediately after the consummation of the exchange offer and the total debt outstanding unchanged.
The purpose of the exchange offer was to exchange the outstanding notes for new notes with certain different terms, including the type of consideration the Company may use to pay holders who convert their notes. Among their features, the new notes are convertible into Class A common stock, cash or a combination thereof, at the Company’s option, subject to certain conditions, while the outstanding notes are convertible solely into Class A common stock.

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LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
8. 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 a guarantors are in the aggregate 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. As of September 30, 2007 and December 31, 2006, the net assets restricted as to transfers from Lamar Media to the Company in the form of cash dividends, loans or advances were $179,761 and $407,894, respectively.
9. Earnings Per Share
Earnings per share are computed in accordance with SFAS No. 128, “Earnings Per Share.” Basic earnings per share are computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. The number of dilutive shares resulting from this calculation is 893,959 and 914,507 for the three months ended September 30, 2007 and 2006 and 801,280 and 974,499 for the nine months ended September 30, 2007 and 2006. 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 because of their antidilutive effect is 5,879,893 and 5,581,755 for the three months ended September 30, 2007 and 2006, respectively and 5,791,434 and 5,581,755 for the nine months ended September 30, 2007 and 2006 respectively.
10. Income Taxes
Effective January 1, 2007, the Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an Interpretation of Statement No. 109, (“FIN 48”). Upon the adoption of FIN 48, the Company commenced a review of all open tax years in all jurisdictions. The adoption of FIN 48 did not have a material effect on our consolidated financial position or results of operations. As a result of the adoption, the Company’s total balance for unrecognized tax benefits is $800 as of September 30, 2007. If the benefits were recognized in future periods they would have an impact on the Company’s future effective tax rate.
In addition, management has accrued in the consolidated financial statements any penalties and interest, to the extent they would be assessed, on any underpayment of income tax. Such accruals have been and will continue to be the Company’s accounting policy into the future. As of September 30, 2007, management had accrued $100 of interest and penalties relating to unrecognized income tax benefits, which was included in our accrued current tax liability in the accompanying consolidated balance sheet.
As of September 30, 2007, management does not anticipate any significant changes in the balance of unrecognized tax benefits during the next twelve months.
The Company files federal and state income tax returns in the U. S. as well as in Canada. The Company also files income tax returns in the Commonwealth of Puerto Rico. With few exceptions, the Company is no longer subject to federal or state income tax examinations by tax authorities for years before 2002. Due to net operating loss carryovers, the Company is subject to examination adjustments to its net operating loss carryovers by tax authorities going back to 1997.
The Internal Revenue Service (“IRS”) completed an examination of our federal income tax return for 2003 with no changes to taxable income. The State of New York has completed an audit of our 2004 income tax return and taxable income has not changed as a result of the audit.

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LAMAR ADVERTISING COMPANY AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
11. Dividend to Common Shareholders
The Company’s board of directors declared a special dividend of $3.25 per share of Common Stock in February 2007. The dividend was paid on March 30, 2007 to stockholders of record on March 22, 2007 in the aggregate amount of $318,303.
12. New Accounting Pronouncements
In February 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Accounting Standard No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115” (“Statement 159”). This Statement permits entities to choose to measure many financial instruments and certain other items at fair value and report unrealized gains and losses on these instruments in earnings. Statement 159 is effective as of January 1, 2008. The Company does not expect any material financial statement implications relating to the adoption of this Statement.
In September 2006, the FASB issued Statement of Accounting Standards No. 157, Fair Value Measurements (“Statement 157”). Statement 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles “(GAAP)”, and expands disclosures about fair value measurements. Statement 157 applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, Statement 157 does not require any new fair value measurements. However, for some entities, the application of Statement 157 will change current practice. Statement 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within these fiscal years. We are assessing the impact of Statement 157, which we do not expect to have an impact on our financial position, results or operations or cash flows.
13. Subsequent Event
On October 11, 2007, Lamar Media Corp. completed an institutional private placement of $275,000 aggregate principal amount of 6 5/8% Senior Subordinated Notes due 2015—Series C (the “Notes”). A portion of the approximately $256,700 of net proceeds from the offering of the Notes was used to repay a portion of the amounts outstanding under Lamar Media’s revolving bank credit facility. The Notes mature on August 15, 2015 and bear interest at a rate of 6 5/8% per annum, which is payable semi-annually on February 15 and August 15 of each year, beginning February 15, 2008.

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LAMAR MEDIA CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
                 
    September 30,     December 31,  
    2007     2006  
    (Unaudited)          
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 10,758     $ 11,796  
Receivables, net of allowance for doubtful accounts of $8,321 and $6,400 in 2007 and 2006, respectively
    153,777       127,552  
Prepaid expenses
    56,183       38,215  
Deferred income tax assets
    15,882       26,884  
Other current assets
    14,477       18,095  
 
           
Total current assets
    251,077       222,542  
 
           
 
               
Property, plant and equipment
    2,643,989       2,432,977  
Less accumulated depreciation and amortization
    (1,135,867 )     (1,027,029 )
 
           
Net property, plant and equipment
    1,508,122       1,405,948  
 
           
 
               
Goodwill
    1,352,323       1,347,775  
Intangible assets
    819,246       860,237  
Deferred financing costs net of accumulated amortization of $18,374 and $15,744 in 2007 and 2006, respectively
    20,135       20,186  
Other assets
    36,148       39,299  
 
           
Total assets
  $ 3,987,051     $ 3,895,987  
 
           
 
               
LIABILITIES AND STOCKHOLDER’S EQUITY
               
Current liabilities:
               
Trade accounts payable
  $ 22,931     $ 14,567  
Current maturities of long-term debt
    31,738       8,648  
Accrued expenses
    83,892       77,612  
Deferred income
    20,995       17,824  
 
           
Total current liabilities
    159,556       118,651  
 
           
 
               
Long-term debt
    2,607,788       1,981,820  
Deferred income tax liabilities
    143,782       148,310  
Asset retirement obligation
    147,664       141,503  
Other liabilities
    52,157       13,236  
 
           
Total liabilities
    3,110,947       2,403,520  
 
           
 
               
Stockholder’s equity:
               
Common stock, par value $.01, 3,000 shares authorized, 100 shares issued and outstanding at 2007 and 2006
           
Additional paid-in-capital
    2,444,485       2,444,485  
Accumulated comprehensive income
    6,020       2,253  
Accumulated deficit
    (1,574,401 )     (954,271 )
 
           
Stockholder’s equity
    876,104       1,492,467  
 
           
Total liabilities and stockholder’s equity
  $ 3,987,051     $ 3,895,987  
 
           
See accompanying note to condensed consolidated financial statements.

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LAMAR MEDIA CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
                                 
    Three months ended     Nine months ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
 
                               
Net revenues
  $ 314,253     $ 292,038     $ 904,663     $ 832,948  
 
                       
 
                               
Operating expenses (income)
                               
Direct advertising expenses (exclusive of depreciation and amortization)
    102,121       98,550       305,673       290,174  
General and administrative expenses (exclusive of depreciation and amortization)
    52,748       51,515       159,425       146,751  
Corporate expenses (exclusive of depreciation and amortization)
    15,144       13,859       44,287       36,295  
Depreciation and amortization
    74,352       76,030       220,820       223,297  
Gain on disposition of assets
    (675 )     (7,504 )     (2,506 )     (9,894 )
 
                       
 
    243,690       232,450       727,699       686,623  
 
                       
Operating income
    70,563       59,588       176,964       146,325  
 
                               
Other expense (income)
                               
Gain on disposition of investment
                (15,448 )      
Interest income
    (302 )     (374 )     (1,046 )     (979 )
Interest expense
    42,400       29,247       116,955       80,185  
 
                       
 
    42,098       28,873       100,461       79,206  
 
                       
 
                               
Income before income tax expense
    28,465       30,715       76,503       67,119  
Income tax expense
    14,137       13,425       34,356       29,093  
 
                       
Net income
  $ 14,328     $ 17,290     $ 42,147     $ 38,026  
 
                       
See accompanying note to condensed consolidated financial statements.

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LAMAR MEDIA CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
                 
    Nine months ended  
    September 30,  
    2007     2006  
Cash flows from operating activities:
               
Net income
  $ 42,147     $ 38,026  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    220,820       223,297  
Non-cash equity based compensation
    21,754       12,212  
Amortization included in interest expense
    2,629       2,331  
Gain on disposition of assets and investments
    (17,954 )     (9,894 )
Deferred tax (benefit) expense
    6,474       (8,959 )
Provision for doubtful accounts
    4,616       3,807  
Changes in operating assets and liabilities:
               
(Increase) decrease in:
               
Receivables
    (30,167 )     (21,042 )
Prepaid expenses
    (18,516 )     (18,450 )
Other assets
    (6,422 )     4,798  
Increase (decrease) in:
               
Trade accounts payable
    8,729       10,153  
Accrued expenses
    5,729       20,194  
Other liabilities
    24,399       36,812  
 
           
Net cash provided by operating activities
    264,238       293,285  
 
           
 
               
Cash flows from investing activities:
               
Acquisitions
    (107,419 )     (158,949 )
Capital expenditures
    (173,445 )     (173,894 )
Proceeds from disposition of assets
    22,175       12,560  
Payment received on (increase) in notes receivable
    9,378       (3,681 )
 
           
Net cash used in investing activities
    (249,311 )     (323,964 )
 
           
 
               
Cash flows from financing activities:
               
Debt issuance costs
    (2,564 )     (3,272 )
Net increase in long-term debt
    649,057       265,335  
Dividend to parent
    (662,278 )     (243,864 )
 
           
Net cash (used in) provided by financing activities
    (15,785 )     18,199  
 
           
 
               
Effect of exchange rate changes in cash and cash equivalents
    (180 )      
 
               
Net decrease in cash and cash equivalents
    (1,038 )     (12,480 )
Cash and cash equivalents at beginning of period
    11,796       19,419  
 
           
Cash and cash equivalents at end of period
  $ 10,758     $ 6,939  
 
           
 
               
Supplemental disclosures of cash flow information:
               
Cash paid for interest
  $ 121,130     $ 89,077  
 
           
Cash paid for foreign, state and federal income taxes
  $ 22,143     $ 9,085  
 
           
Parent company stock issued related to acquisitions
  $     $  
 
           
See accompanying note to condensed consolidated financial statements.

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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 2006 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, 7, 8, 10, 11, 12 and 13 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.

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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 2006 Combined Form 10-K. You should carefully consider each of these risks and uncertainties in evaluating the Company’s and Lamar Media’s financial conditions and results of operations. Investors are cautioned not to place undue reliance on the forward-looking statements contained in this document. These statements speak only as of the date of this document, and the Company undertakes no obligation to update or revise the statements, except as may be required by law.
Lamar Advertising Company
The following is a discussion of the consolidated financial condition and results of operations of the Company for the nine months and three months ended September 30, 2007 and 2006. 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 occupancy on its displays.
Since December 31, 2001, the Company has increased the number of outdoor advertising displays it operates by over 5% by completing strategic acquisitions of outdoor advertising and transit assets for an aggregate purchase price of approximately $1.0 billion, which included the issuance of 4,050,958 shares of Lamar Advertising Company Class A common stock valued at the time of issuance at approximately $152.5 million and warrants valued at the time of issuance of approximately $1.8 million. The Company has financed its recent acquisitions and intends to finance its future acquisition activity from available cash, borrowings under its bank credit agreement and the issuance of Class A common stock. See “Liquidity and Capital Resources” below. As a result of acquisitions, the operating performances of individual markets and of the Company as a whole are not necessarily comparable on a year-to-year basis. The Company expects to continue to pursue acquisitions that complement the Company’s business.
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 and nine months ended September 30, 2007 and 2006:
                                 
    Three months ended     Nine months ended  
    September 30,     September 30,  
    (in thousands)     (in thousands)  
    2007     2006     2007     2006  
Total capital expenditures:
                               
Billboard — traditional
  $ 17,581     $ 23,138     $ 54,674     $ 67,299  
Billboard — digital
    35,382       25,185       76,171       62,236  
Logos
    2,772       2,025       7,571       5,978  
Transit
    517       154       1,103       507  
Land and buildings
    3,614       6,728       22,424       18,287  
Operating equipment
    3,574       2,607       11,502       19,283  
 
                       
Total capital expenditures
  $ 63,440     $ 59,837     $ 173,445     $ 173,590  
 
                       
RESULTS OF OPERATIONS

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Nine Months ended September 30, 2007 compared to Nine Months ended September 30, 2006
Net revenues increased $71.8 million or 8.6% to $904.7 million for the nine months ended September 30, 2007 from $832.9 million for the same period in 2006. This increase was attributable primarily to an increase in billboard net revenues of $71.0 million or 9.4% over the prior period, an increase in logo sign revenue of $0.3 million, which represents an increase of 0.7% over the prior period, and a $0.5 million increase in transit revenue over the prior period, which represents an increase of 1% over the prior period.
The increase in billboard net revenue of $71.0 million was generated by acquisition activity of approximately $12.2 million and internal growth of approximately $58.8 million, while the increase in logo sign revenue of $0.3 million was generated by internal growth across various markets within the logo sign programs of $3.4 million, which was offset by the loss of $3.1 million of revenue due to the loss of the Company’s Texas logo contract. The increase in transit revenue of approximately $0.5 million was due to internal growth of approximately $3.0 million offset by the loss of approximately $2.5 million of revenue due to the loss of various transit contracts.
Net revenues for the nine months ended September 30, 2007, as compared to acquisition-adjusted net revenue for the nine months ended September 30, 2006, increased $65.0 million or 7.7% as a result of net revenue internal growth. See “Reconciliations” below.
Operating expenses, exclusive of depreciation and amortization and gain on sale of assets, increased $36.1 million or 7.6% to $509.8 million for the nine months ended September 30, 2007 from $473.7 million for the same period in 2006. There was a $28.1 million increase as a result of additional operating expenses related to the operations of acquired outdoor advertising assets and increases in costs in operating the Company’s core assets and a $8.0 million increase in corporate expenses. The increase in corporate expenses is primarily a result of additional expenses related to the Company’s adoption of SFAS 123(R).
Depreciation and amortization expense remained relatively constant for the nine months ended September 30, 2007, as compared to the nine months ended September 30, 2006, due to constant levels of capital expenditures between the two periods presented.
Due to the above factors, operating income increased $30.6 million to $176.5 million for nine months ended September 30, 2007 compared to $145.9 million for the same period in 2006.
During the first quarter of 2007, the Company recognized a $15.4 million gain as a result of the sale of a private company in which the Company had an ownership interest.
Interest expense increased $36.0 million from $81.7 million for the nine months ended September 30, 2006 to $117.7 million for the nine months ended September 30, 2007, due to an increase in interest rates and total indebtedness.
The increase in operating income and the gain on disposition of investment, offset by the increase in interest expense described above resulted in a $10.2 million increase in income before income taxes. This increase in income resulted in an increase in income tax expense of $5.3 million for the nine months ended September 30, 2007 over the same period in 2006. The effective tax rate for the nine months ended September 30, 2007 was 44.6%, which is greater than the statutory rates due to permanent differences resulting from non deductible compensation expense related to stock options in accordance with SFAS 123(R) and other non-deductible expenses and amortization. In addition, our effective tax rate is higher due to limitations on our ability to utilize foreign tax credits on our foreign service income.
As a result of the above factors, the Company recognized net income for the nine months ended September 30, 2007 of $41.7 million, as compared to net income of $36.8 million for the same period in 2006.
In February 2007, the Company’s board of directors declared a special cash dividend of $3.25 per share of Common Stock. The aggregate dividend of $318.3 million was paid on March 30, 2007 to stockholders of record on March 22, 2007. Lamar had approximately 82.5 million shares of Class A Common Stock and 15.4 million shares of Class B Common Stock, which is convertible into Class A Common Stock on a one-for-one basis at the option of its holder, outstanding on the record date.

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Three Months ended September 30, 2007 compared to Three Months ended September 30, 2006
Net revenues increased $22.2 million or 7.6% to $314.3 million for the three months ended September 30, 2007 from $292.0 million for the same period in 2006. This increase was attributable primarily to an increase in billboard net revenues of $21.9 million or 8.3% over the prior period, a decrease of $0.5 million in logo sign revenue or a 3.8% decrease over the prior period and a $0.8 million increase in transit revenue over the prior period, which represents an increase of 5.3%.
The increase in billboard net revenue of $21.9 million was generated by acquisition activity of approximately $3.3 million and internal growth of approximately $18.6 million, while the decrease in logo sign revenue of $0.5 million was generated by internal growth across various markets within the logo sign programs of $0.5 million, which was offset by the loss of $1.0 million in revenue due to the loss of the Company’s Texas Logo contract. The increase in transit revenue of approximately $0.8 million was due to internal growth of approximately $1.3 million offset by the loss of approximately $0.5 million in revenue due to the loss of various transit contracts.
Net revenues for the three months ended September 30, 2007, as compared to acquisition-adjusted net revenue for the three months ended September 30, 2006, increased $20.5 million or 7.0% as a result of net revenue internal growth. See “Reconciliations” below.
Operating expenses, exclusive of depreciation and amortization and gain on sale of assets, increased $6.0 million or 3.7% to $170.1 million for the three months ended September 30, 2007 from $164.1 million for the same period in 2006. There was a $4.8 million increase as a result of additional operating expenses related to the operations of acquired outdoor advertising assets and increases in costs in operating the Company’s core assets and a $1.2 million increase in corporate expenses. The increase in corporate expenses is primarily a result of additional expenses related to the Company’s adoption of SFAS 123(R).
Depreciation and amortization expense remained relatively constant for the three months ended September 30, 2007, as compared to the three months ended September 30, 2006 due to consistent levels of capital expenditures between the two periods presented.
Due to the above factors, operating income increased $11.0 million to $70.4 million for three months ended September 30, 2007 compared to $59.4 million for the same period in 2006.
Interest expense increased $12.7 million from $29.8 million for the three months ended September 30, 2006 to $42.5 million for the three months ended September 30, 2007, due to an increase in interest rates and total indebtedness.
The increase in operating income was offset by the increase in interest expense described above resulting in a $1.8 million decrease in income before income taxes. The effective tax rate for the three months ended September 30, 2007 was 48.5% which resulted in a $0.5 million increase in income tax expense over the same period in 2006.
As a result of the above factors, the Company’s net income for the three months ended September 30, 2007 is $14.5 million as compared to net income of $16.8 million for the same period in 2006.

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Reconciliations:
Because acquisitions occurring after December 31, 2005 (the “acquired assets”) have contributed to our net revenue results for the periods presented, we provide 2006 acquisition-adjusted net revenue, which adjusts our 2006 net revenue for the three and nine months ended September 30, 2006 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 and nine months ended September 30, 2007. We provide this information as a supplement to net revenues to enable investors to compare periods in 2007 and 2006 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 2006 that corresponds with the actual period we have owned the assets in 2007 (to the extent within the period to which this report relates). We refer to this adjustment as “acquisition net revenue.”
Reconciliations of 2006 reported net revenue to 2006 acquisition-adjusted net revenue for each of the three and nine month periods ended September 30, as well as a comparison of 2006 acquisition-adjusted net revenue to 2007 reported net revenue for each of the three and nine month periods ended September 30, are provided below:
Reconciliation of Reported Net Revenue to Acquisition-Adjusted Net Revenue
                 
    Three months ended     Nine months ended  
    Sept. 30, 2006     Sept. 30, 2006  
    (in thousands)     (in thousands)  
Reported net revenue
  $ 292,038     $ 832,948  
Acquisition net revenue
    1,763       6,688  
 
           
Acquisition-adjusted net revenue
  $ 293,801     $ 839,636  
 
           
Comparison of 2007 Reported Net Revenue to 2006 Acquisition-Adjusted Net Revenue
                                 
    Three months ended     Nine months ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
    (in thousands)     (in thousands)  
Reported net revenue
  $ 314,253     $ 292,038     $ 904,663     $ 832,948  
Acquisition net revenue
          1,763             6,688  
 
                       
Adjusted totals
  $ 314,253     $ 293,801     $ 904,663     $ 839,636  
 
                       
LIQUIDITY AND CAPITAL RESOURCES
Overview
The Company has historically satisfied its working capital requirements with cash from operations and borrowings under its bank credit facility. The Company’s wholly owned subsidiary, Lamar Media Corp., is the borrower under the bank credit facility and maintains all corporate cash balances. Any cash requirements of the Company, therefore, must be funded by distributions from Lamar Media. The Company’s acquisitions have been financed primarily with funds borrowed under the bank credit facility and issuance of its Class A common stock and debt securities. If an acquisition is made by one of the Company’s subsidiaries using the Company’s Class A common stock, a permanent contribution of additional paid-in-capital of Class A common stock is distributed to that subsidiary.
Sources of Cash
Total Liquidity at September 30, 2007. As of September 30, 2007 we had approximately $228.8 million of total liquidity, which is comprised of approximately $10.8 million in cash and cash equivalents and the ability to draw approximately $218.0 million under our revolving bank credit facility.
Cash Generated by Operations. For the nine months ended September 30, 2007 and 2006 our cash provided by operating activities was $245.6 million and $263.9 million, respectively. While our net income was approximately $41.7 million for the nine months ended September 30, 2007, we generated cash from operating activities of $245.6 million during that same period, primarily due to non-cash adjustments needed to reconcile net income to cash provided by operating activities of $238.9 million, which primarily consisted of depreciation and amortization of $220.8 million. This was offset by a decrease in working capital of $35.0 million. We expect to generate cash flows from operations during 2007 in excess of our cash needs for operations and capital expenditures as described herein. We expect to use the excess cash generated principally for acquisitions and to fund repurchases under our stock repurchase program. See “— Cash Flows” for more information.

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Credit Facilities. As of September 30, 2007, Lamar Media had approximately $218.0 million of unused capacity under the revolving credit facility included in its bank credit facility. The bank credit facility was refinanced on September 30, 2005 and is comprised of a $400.0 million revolving bank credit facility and a $400.0 million term facility. The bank credit facility also includes a $500.0 million incremental facility, which permits Lamar Media to request that its lenders enter into commitments to make additional term loans, up to a maximum aggregate amount of $500.0 million. On January 17, 2007, Lamar Media entered into a Series D Incremental Loan Agreement and obtained commitments from its lenders for a term loan of $7.0 million, which was funded on January 17, 2007. On March 28, 2007, Lamar Media entered into Series E and Series F Incremental Loan Agreements and obtained commitments from their lenders for term loans of $250.0 million and $325.0 million, respectively, which were both funded on March 28, 2007. In addition, the $500.0 million incremental facility, which had previously been reduced by the aggregate amount of the Series C and Series D Incremental Loans and would have been reduced by the Series E and Series F Incremental Loans, was restored to $500.0 million. The lenders have no obligation to make additional term loans to Lamar Media under the incremental facility, but may enter into such commitments in their sole discretion.
Debt Securities. On May 31, 2007, the Company commenced an offer to exchange all of its outstanding 2 7/8% Convertible Notes due 2010 (the “outstanding notes”), for an equal amount of newly issued 2 7/8% Convertible Notes due 2010—Series B (the “new notes”) and cash. The new notes are a separate series of debt securities. The purpose of the exchange offer was to exchange outstanding notes for new notes with certain different terms, including the type of consideration the Company may use to pay holders who convert their notes. Among their features, the new notes are convertible into Class A common stock, cash or a combination thereof, at the Company’s option, subject to certain conditions, while the outstanding notes are convertible solely into the Company’s Class A common stock. This exchange was completed on July 3, 2007, when the Company accepted for exchange $287.2 million aggregate principal amount of outstanding notes, representing approximately 99.9 percent of the total outstanding notes with approximately $.3 million aggregate principal amount remaining outstanding.
On October 11, 2007, Lamar Media Corp. completed an institutional private placement of $275,000 aggregate principal amount of
6 5/8% Senior Subordinated Notes due 2015—Series C (the “Notes”). A portion of the $256,700 net proceeds from the offering of the Notes was used to repay a portion of the amounts outstanding under Lamar Media’s revolving bank credit facility. The Notes mature on August 15, 2015 and bear interest at a rate of 6 5/8% per annum, which is payable semi-annually on February 15 and August 15 of each year, beginning February 15, 2008.
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.
Restrictions Under Credit Facilities and Other Debt Securities. Currently Lamar Media has outstanding approximately $385.0 million 7 1/4 % Senior Subordinated Notes due 2013 issued in December 2002 and June 2003 and $400.0 million 6 5/8% Senior Subordinated Notes due 2015 issued in 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. The indentures relating to Lamar Media’s outstanding notes restrict its ability to incur indebtedness (i) unless no default or event of default would result from such incurrence and (ii) after giving effect to any such incurrence, the leverage ratio (defined as total consolidated debt to trailing four fiscal quarter EBITDA) would be less than 6.5 to 1. The indentures relating to Lamar Media’s outstanding notes also permit Lamar Media to incur indebtedness pursuant to the following baskets:
    up to $1.3 billion of indebtedness under its bank credit facility;
 
    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 $20 million or 5% of Lamar Media’s net tangible assets; and
 
    additional debt not to exceed $40 million.

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Lamar Media is required to comply with certain covenants and restrictions under its bank credit agreement. If Lamar Media fails to comply with these tests, its obligations under the bank credit agreement may be accelerated. At June 30, 2007 and currently, Lamar Media is in compliance with all such tests.
Lamar Media cannot exceed the following financial ratios under its bank credit facility:
    a total debt ratio, defined as total consolidated debt to EBITDA, as defined below, for the most recent four fiscal quarters, of 6.00 to 1.
In addition, the bank credit facility requires that Lamar Media must maintain the following financial ratios:
    a fixed charges coverage ratio, defined as 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.
As defined under Lamar Media’s bank credit facility, EBITDA is, for any period, operating income for Lamar Media and its restricted subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) for such period (calculated before taxes, interest expense, interest in respect of mirror loan indebtedness, depreciation, amortization and any other non-cash income or charges accrued for such period and (except to the extent received or paid in cash by Lamar Media or any of its 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. Any restricted payment made by Lamar Media or any of its restricted subsidiaries to the Company during any period to enable the Company to pay certain qualified expenses on behalf of Lamar Media and its subsidiaries shall be treated as operating expenses of Lamar Media for the purposes of calculating EBITDA for such period. EBITDA under the bank credit agreement is also adjusted to reflect certain acquisitions or dispositions as if such acquisitions or dispositions were made on the first day of such period if and to the extent such operating expenses would be deducted in the calculation of EBTIDA if funded directly by Lamar Media or any restricted subsidiary.
The Company believes that its current level of cash on hand, availability under its bank credit agreement and future cash flows from operations are sufficient to meet its operating needs through the year 2007. All debt obligations are reflected on the Company’s balance sheet.
Uses of Cash
Capital Expenditures. Capital expenditures excluding acquisitions were approximately $173.4 million for the nine months ended September 30, 2007, which is relatively constant as compared to the prior period. We anticipate our 2007 total capital expenditures to be approximately $215 million, which includes approximately $95 million for digital capital expenditures.
Acquisitions. During the nine months ended September 30, 2007, the Company financed its acquisition activity of approximately $107.4 million with borrowings under Lamar Media’s revolving credit facility and cash on hand. In 2007, we expect to spend between $125.0 million and $150.0 million on acquisitions, which we may finance through borrowings, cash on hand, the issuance of Class A common stock, or some combination of the foregoing, depending on market conditions. We plan on continuing to invest in both capital expenditures and acquisitions that can provide high returns in light of existing market conditions.
Stock Repurchase Program. At January 1, 2007, the Company had approximately $100.7 million of repurchase capacity remaining under a repurchase plan adopted in August 2006. In addition to that plan, the Company’s board of directors approved a new stock repurchase program in February 2007, of up to $500.0 million of the Company’s Class A common stock over a period not to exceed 24 months. During the nine months ended September 30, 2007, the Company purchased approximately 5,913,640 shares for an aggregate purchase price of approximately $343.9 million. The Share repurchases under the plan may be made on the open market or in privately negotiated transactions. The timing and amount of any shares repurchased is determined by Lamar’s management based on its evaluation of market conditions and other factors. The repurchase program may be suspended or discontinued at any time. Any repurchased shares will be available for future use for general corporate and other purposes.
Special Cash Dividend. In February 2007, the Company’s board of directors declared a special cash dividend of $3.25 per share of Common Stock that was paid on March 30, 2007 to stockholders of record on March 22, 2007. Lamar had approximately 82.5 million shares of Class A Common Stock and 15.4 million shares of Class B Common Stock, which is convertible into Class A Common Stock on a one-for-one basis at the option of its holder, outstanding as of the record date resulting in an aggregate dividend payment of $318.3 million.

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Lamar Media Corp.
The following is a discussion of the consolidated financial condition and results of operations of Lamar Media for the nine months and three months ended September 30, 2007 and 2006. This discussion should be read in conjunction with the consolidated financial statements of Lamar Media and the related notes.
RESULTS OF OPERATIONS
Nine Months ended September 30, 2007 compared to Nine Months ended September 30, 2006
Net revenues increased $71.8 million or 8.6% to $904.7 million for the nine months ended September 30, 2007 from $832.9 million for the same period in 2006. This increase was attributable primarily to an increase in billboard net revenues of $71.0 million or 9.4% over the prior period, an increase in logo sign revenue of $0.3 million, which represents an increase of 0.7% over the prior period, and a $0.5 million increase in transit revenue over the prior period, which represents a increase of 1% over the prior period.
The increase in billboard net revenue of $71.0 million was generated by acquisition activity of approximately $12.2 million and internal growth of approximately $58.8 million, while the increase in logo sign revenue of $0.3 million was generated by internal growth across various markets within the logo sign programs of $3.4 million, which was offset by the loss of $3.1 million of revenue due to the loss of the Company’s Texas logo contract. The increase in transit revenue of approximately $0.5 million was due to internal growth of approximately $3.0 million offset by the loss of approximately $2.5 million of revenue due to the loss of various transit contracts.
Net revenues for the nine months ended September 30, 2007, as compared to acquisition-adjusted net revenue for the nine months ended September 30, 2006, increased $65.0 million or 7.7% as a result of net revenue internal growth. See “Reconciliations” below.
Operating expenses, exclusive of depreciation and amortization and gain on sale of assets, increased $36.2 million or 7.6% to $509.4 million for the nine months ended September 30, 2007 from $473.2 million for the same period in 2006. There was a $28.1 million increase as a result of additional operating expenses related to the operations of acquired outdoor advertising assets and increases in costs in operating Lamar Media’s core assets and a $8.0 million increase in corporate expenses. The increase in corporate expenses is primarily a result of additional expenses related to the Company’s adoption of SFAS 123(R).
Depreciation and amortization expense remained relatively constant for the nine months ended September 30, 2007, as compared to the nine months ended September 30, 2006, due to constant levels of capital expenditures between the two periods presented.
Due to the above factors, operating income increased $30.7 million to $177.0 million for nine months ended September 30, 2007 compared to $146.3 million for the same period in 2006.
During the first quarter of 2007, Lamar Media recognized a $15.4 million gain as a result of the sale of a private company in which it had an ownership interest.
Interest expense increased $36.8 million from $80.2 million for the nine months ended September 30, 2006 to $117.0 million for the nine months ended September 30, 2007, due to an increase in interest rates and total indebtedness.
The increase in operating income and the gain on disposition of investment, offset by the increase in interest expense described above resulted in a $9.4 million increase in income before income taxes. This increase in income resulted in an increase in income tax expense of $5.3 million for the nine months ended September 30, 2007 over the same period in 2006. The effective tax rate for the nine months ended September 30, 2007 was 44.9%, which is greater than the statutory rates due to permanent differences resulting from non deductible compensation expense related to stock options in accordance with SFAS 123(R) and other non-deductible expenses and amortization. In addition, our effective tax rate is higher due to limitations on our ability to utilize foreign tax credits on our foreign service income.
As a result of the above factors, Lamar Media recognized net income for the nine months ended September 30, 2007 of $42.1 million, as compared to net income of $38.0 million for the same period in 2006.

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Three Months ended September 30, 2007 compared to Three Months ended September 30, 2006
Net revenues increased $22.2 million or 7.6% to $314.3 million for the three months ended September 30, 2007 from $292.0 million for the same period in 2006. This increase was attributable primarily to an increase in billboard net revenues of $21.9 million or 8.3% over the prior period, a decrease of $0.5 million in logo sign revenue or a 3.8% decrease over the prior period and a $0.8 million increase in transit revenue over the prior period, which represents an increase of 5.3%.
The increase in billboard net revenue of $21.9 million was generated by acquisition activity of approximately $3.3 million and internal growth of approximately $18.6 million, while the decrease in logo sign revenue of $0.5 million was generated by internal growth across various markets within the logo sign programs of $0.5 million, which was offset by the loss of $1.0 million in revenue due to the loss of the Company’s Texas Logo contract. The increase in transit revenue of approximately $0.8 million was due to internal growth of approximately $1.3 million offset by the loss of approximately $0.5 million in revenue due to the loss of various transit contracts.
Net revenues for the three months ended September 30, 2007, as compared to acquisition-adjusted net revenue for the three months ended September 30, 2006, increased $20.5 million or 7.0% as a result of net revenue internal growth. See “Reconciliations” below.
Operating expenses, exclusive of depreciation and amortization and gain on sale of assets, increased $6.1 million or 3.7% to $170.0 million for the three months ended September 30, 2007 from $163.9 million for the same period in 2006. There was a $4.8 million increase as a result of additional operating expenses related to the operations of acquired outdoor advertising assets and increases in costs in operating Lamar Media’s core assets and a $1.3 million increase in corporate expenses. The increase in corporate expenses is primarily a result of additional expenses related to the Company’s adoption of SFAS 123(R).
Depreciation and amortization expense remained relatively constant for the three months ended September 30, 2007, as compared to the three months ended September 30, 2006 due to consistent levels of capital expenditures between the two periods presented.
Due to the above factors, operating income increased $11.0 million to $70.6 million for three months ended September 30, 2007 compared to $59.6 million for the same period in 2006.
Interest expense increased $13.2 million from $29.2 million for the three months ended September 30, 2006 to $42.4 million for the three months ended September 30, 2007, due to an increase in interest rates and total indebtedness.
The increase in operating income was offset by the increase in interest expense described above resulting in a $2.3 million decrease in income before income taxes. The effective tax rate for the three months ended September 30, 2007 was 49.7% which resulted in a $0.7 million increase in income tax expense over the same period in 2006.
As a result of the above factors, Lamar Media’s net income for the three months ended September 30, 2007 is $14.3 million as compared to net income of $17.3 million for the same period in 2006.

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Reconciliations:
Because acquisitions occurring after December 31, 2005 (the “acquired assets”) have contributed to our net revenue results for the periods presented, we provide 2006 acquisition-adjusted net revenue, which adjusts our 2006 net revenue for the three and nine months ended September 30, 2006 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 and nine months ended September 30, 2007. We provide this information as a supplement to net revenues to enable investors to compare periods in 2007 and 2006 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 2006 that corresponds with the actual period we have owned the assets in 2007 (to the extent within the period to which this report relates). We refer to this adjustment as “acquisition net revenue.”
Reconciliations of 2006 reported net revenue to 2006 acquisition-adjusted net revenue for each of the three and nine month periods ended September 30, as well as a comparison of 2006 acquisition-adjusted net revenue to 2007 reported net revenue for each of the three and nine month periods ended September 30, are provided below:
Reconciliation of Reported Net Revenue to Acquisition-Adjusted Net Revenue
                 
    Three months ended     Nine months ended  
    Sept. 30, 2006     Sept. 30, 2006  
    (in thousands)     (in thousands)  
Reported net revenue
  $ 292,038     $ 832,948  
Acquisition net revenue
    1,763       6,688  
 
           
Acquisition-adjusted net revenue
  $ 293,801     $ 839,636  
 
           
Comparison of 2007 Reported Net Revenue to 2006 Acquisition-Adjusted Net Revenue
                                 
    Three months ended     Nine months ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
    (in thousands)     (in thousands)  
Reported net revenue
  $ 314,253     $ 292,038     $ 904,663     $ 832,948  
Acquisition net revenue
          1,763             6,688  
 
                       
Adjusted totals
  $ 314,253     $ 293,801     $ 904,663     $ 839,636  
 
                       

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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 September 30, 2007, and should be read in conjunction with Note 8 of the Notes to the Company’s Consolidated Financial Statements in the 2006 Combined Form 10-K.
Loans under Lamar Media’s bank credit agreement 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 bank credit agreement. Increases in the interest rates applicable to borrowings under the bank credit agreement would result in increased interest expense and a reduction in the Company’s net income.
At September 30, 2007, there was approximately $1.4 billion of aggregate indebtedness outstanding under the bank credit agreement, or approximately 51.4% of the Company’s outstanding long-term debt on that date, bearing interest at variable rates. The aggregate interest expense for the nine months ended September 30, 2007 with respect to borrowings under the bank credit agreement was $53.9 million, and the weighted average interest rate applicable to borrowings under this credit facility during the six months ended September 30, 2007 was 6.5%. Assuming that the weighted average interest rate was 200-basis points higher (that is 8.5% rather than 6.5%), then the Company’s nine months ended September 30, 2007 interest expense would have been approximately 16.3 million higher resulting in a $8.9 million decrease in the Company’s nine months ended September 30, 2007 net income.
The Company has 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 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, (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 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) 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 Securities Exchange Act of 1934 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 Securities Exchange Act of 1934, as amended) 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.

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PART II — OTHER INFORMATION
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
On February 22, 2007, the Board of Directors approved a new stock repurchase program of up to $500.0 million of the Company’s Class A common stock over a period not to exceed 24 months. The Company’s management determines the timing and amount of stock repurchases based on market conditions and other factors, and may terminate the program at any time before it expires.
The following table describes the Company’s repurchases of its registered Class A Common Stock during the quarter ended September 30, 2007, all of which occurred pursuant to the stock repurchase programs described above, except as otherwise noted:
                                 
                            Approximate
                    Total No.   Dollar Value of
                    of Shares Purchased   Shares that May
    Total No.   Avg. Price   as Part of   Yet Be Purchased
    of Shares   Paid   Publicly Announced   Under the
Period   Purchased   per Share   Plans or Programs   Plans or Programs
July 1 through July 31, 2007
                    $ 407,090,789  
August 1 through August 31, 2007
    1,947,182     $ 51.41       1,947,182     $ 306,980,412  
September 1 through September 30, 2007
    863,301     $ 50.05       863,301     $ 263,774,566  
ITEM 6. EXHIBITS
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.

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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: November 7, 2007  BY:   /s/ Keith A. Istre    
    Chief Financial and Accounting Officer and Treasurer   
     
         
  LAMAR MEDIA CORP.
 
 
DATED: November 7, 2007  BY:   /s/ Keith A. Istre    
    Chief Financial and Accounting Officer and Treasurer   
     

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Table of Contents

         
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 February 22, 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.
 
   
4.1
  Indenture, dated as of October 11, 2007, between Lamar Media, the Guarantors named therein and The Bank of New York Trust Company, N.A., as Trustee. Previously filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 0-30242) filed on October 16, 2007 and incorporated herein by reference.
 
   
10.1
  Lamar Deferred Compensation Plan (as amended). Previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 0-30242) filed on August 27, 2007 and incorporated herein by reference.
 
   
10.2
  Registration Rights Agreement, dated as of October 11, 2007, between Lamar Media, the Guarantors named therein and the Initial Purchasers named therein. Previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 0-30242) filed on October 16, 2007 and incorporated herein by reference.
 
   
12.1
  Statement regarding computation of earnings to fixed charges for the Company. Filed herewith.
 
   
12.2
  Statement regarding computation of earnings to fixed charges for Lamar Media. Filed herewith.
 
   
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.

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