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LAMAR ADVERTISING CO/NEW - Quarter Report: 2016 March (Form 10-Q)

Form 10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 March 31, 2016

or

 

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     

Commission File Number 1-36756

 

 

Lamar Advertising Company

 

 

Commission File Number 1-12407

 

 

Lamar Media Corp.

(Exact name of registrants as specified in their charters)

 

 

 

Delaware   72-1449411
Delaware   72-1205791

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S Employer

Identification No.)

5321 Corporate Blvd., Baton Rouge, LA   70808
(Address of principal executive offices)   (Zip Code)

Registrants’ telephone number, including area code: (225) 926-1000

 

 

Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether each registrant has submitted electronically and posted on their corporate web sites, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether Lamar Advertising Company is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   þ    Accelerated filer   ¨
Non-accelerated filer   ¨  (Do not check if a smaller reporting company)    Smaller reporting company   ¨

Indicate by check mark whether Lamar Media Corp. is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   ¨    Accelerated filer   ¨
Non-accelerated filer   þ  (Do not check if a smaller reporting company)    Smaller reporting company   ¨

Indicate by check mark whether Lamar Advertising Company is a shell company (as defined in Rule 12b-2 of the Exchange Act):    Yes  ¨    No  x

Indicate by check mark whether Lamar Media Corp. is a shell company (as defined in Rule 12b-2 of the Exchange Act):    Yes  ¨    No  x

The number of shares of Lamar Advertising Company’s Class A common stock outstanding as of May 1, 2016: 82,433,667

The number of shares of the Lamar Advertising Company’s Class B common stock outstanding as of May 1, 2016: 14,610,365

The number of shares of Lamar Media Corp. common stock outstanding as of May 1, 2016: 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.

 

 

 


Table of Contents

In this report, except as the context otherwise requires or as otherwise noted, “Lamar Advertising Company”, “we”, “us” and “our” refer to Lamar Advertising Company and its subsidiaries. Lamar Media Corp. is referred to herein as “Lamar Media.”

NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information included in this report is forward-looking in nature within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. This report uses terminology such as “anticipates,” “believes,” “plans,” “expects,” “future,” “intends,” “may,” “will,” “should,” “estimates,” “predicts,” “potential,” “continue” and similar expressions to identify forward-looking statements. Examples of forward-looking statements in this report include statements about:

 

    our future financial performance and condition;

 

    our business plans, objectives, prospects, growth and operating strategies;

 

    our future capital expenditures and level of acquisition activity;

 

    market opportunities and competitive positions;

 

    our future cash flows and expected cash requirements;

 

    estimated risks;

 

    our ability to maintain compliance with applicable covenants and restrictions included in Lamar Media’s senior credit facility and the indentures relating to its outstanding notes;

 

    stock price;

 

    estimated future dividend distributions; and

 

    our ability to remain qualified as a Real Estate Investment Trust (“REIT”).

Forward-looking statements are subject to known and unknown risks, uncertainties and other important factors, including but not limited to the following, any of which may cause our actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements:

 

    the state of the economy and financial markets generally and their effects on the markets in which we operate and the broader demand for advertising;

 

    the levels of expenditures on advertising in general and outdoor advertising in particular;

 

    risks and uncertainties relating to our significant indebtedness;

 

    the demand for outdoor advertising and its continued popularity as an advertising medium;

 

    our need for, and ability to obtain, additional funding for acquisitions, operations and debt refinancing;

 

    increased competition within the outdoor advertising industry;

 

    the regulation of the outdoor advertising industry by federal, state and local governments;

 

    our ability to renew expiring contracts at favorable rates;

 

    the integration of businesses that we acquire and our ability to recognize cost savings and operating efficiencies as a result of these acquisitions;

 

    our ability to successfully implement our digital deployment strategy;

 

    the market for our Class A common stock;

 

    changes in accounting principles, policies or guidelines;

 

    our ability to effectively mitigate the threat of and damages caused by hurricanes and other kinds of severe weather;

 

    our ability to qualify as a REIT and maintain our status as a REIT; and

 

    changes in tax laws applicable to REIT’s or in the interpretation of those laws.

The forward-looking statements in this report are based on our current good faith beliefs; however, actual results may differ due to inaccurate assumptions, the factors listed above or other foreseeable or unforeseeable factors. Consequently, we cannot guarantee that any of the forward-looking statements will prove to be accurate. The forward-looking statements in this report speak only as of the date of this report, and Lamar Advertising Company and Lamar Media Corp. expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained in this report, except as required by law.

For a further description of these and other risks and uncertainties, the Company encourages you to read carefully Item 1A to the combined Annual Report on Form 10-K for the year ended December 31, 2015 of the Company and Lamar Media (the “2015 Combined Form 10-K”), filed on February 25, 2016 and as such risk factors may be updated or supplemented, from time to time, in our combined Quarterly Reports on Form 10-Q.

 

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Table of Contents

TABLE OF CONTENTS

 

     Page  

PART I — FINANCIAL INFORMATION

  

ITEM 1. FINANCIAL STATEMENTS

  

Lamar Advertising Company

  

Condensed Consolidated Balance Sheets as of March  31, 2016 and December 31, 2015

     4   

Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2016 and 2015

     5   

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015

     6   

Notes to Condensed Consolidated Financial Statements

     7-14   

Lamar Media Corp.

  

Condensed Consolidated Balance Sheets as of March  31, 2016 and December 31, 2015

     15   

Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2016 and 2015

     16   

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015

     17   

Note to Condensed Consolidated Financial Statements

     18   

ITEM  2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     19-28   

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

     29   

ITEM 4. Controls and Procedures

     30   

PART II — OTHER INFORMATION

  

ITEM 1A. Risk Factors

     30   

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

     30   

ITEM 6. Exhibits

     30   

 

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Table of Contents

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) 

 

     March 31,
2016
    December 31,
2015
 
     (Unaudited)        

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 28,420      $ 22,327   

Receivables, net of allowance for doubtful accounts of $9,542 and $8,984 in 2016 and 2015, respectively

     181,080        174,398   

Prepaid expenses

     71,119        44,437   

Deferred income tax assets

     1,128        1,352   

Other current assets

     45,510        39,218   
  

 

 

   

 

 

 

Total current assets

     327,257        281,732   
  

 

 

   

 

 

 

Property, plant and equipment

     3,225,645        3,139,239   

Less accumulated depreciation and amortization

     (2,058,597     (2,044,102
  

 

 

   

 

 

 

Net property, plant and equipment

     1,167,048        1,095,137   
  

 

 

   

 

 

 

Goodwill

     1,705,301        1,546,594   

Intangible assets

     656,155        402,886   

Other assets

     38,751        37,395   
  

 

 

   

 

 

 

Total assets

   $ 3,894,512      $ 3,363,744   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current liabilities:

    

Trade accounts payable

   $ 18,912      $ 17,452   

Current maturities of long-term debt, net of deferred financing costs of $5,293 and $4,823 in 2016 and 2015, respectively

     17,856        16,509   

Accrued expenses

     90,262        115,208   

Deferred income

     89,979        87,661   
  

 

 

   

 

 

 

Total current liabilities

     217,009        236,830   
  

 

 

   

 

 

 

Long-term debt, net of deferred financing costs of $27,233 and $23,211 in 2016 and 2015, respectively

     2,420,294        1,874,941   

Deferred income tax liabilities

     1,466        2,052   

Asset retirement obligation

     210,260        206,234   

Other liabilities

     24,500        22,628   
  

 

 

   

 

 

 

Total liabilities

     2,873,529        2,342,685   
  

 

 

   

 

 

 

Stockholders’ equity:

    

Series AA preferred stock, par value $.001, $63.80 cumulative dividends, authorized 5,720 shares; 5,720 shares issued and outstanding at 2016 and 2015

     —         —    

Class A common stock, par value $.001, 362,500,000 shares authorized, 82,648,355 and 82,188,372 shares issued at 2016 and 2015, respectively; 82,432,267 and 82,083,536 issued and outstanding at 2016 and 2015, respectively

     83        82   

Class B common stock, par value $.001, 37,500,000 shares authorized, 14,610,365 shares issued and outstanding at 2016 and 2015

     15        15   

Additional paid-in capital

     1,690,208        1,664,038   

Accumulated comprehensive income (loss)

     290        (1,178

Accumulated deficit

     (657,310     (635,799

Cost of shares held in treasury, 216,088 and 104,836 shares at 2016 and 2015, respectively

     (12,303     (6,099
  

 

 

   

 

 

 

Stockholders’ equity

     1,020,983        1,021,059   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 3,894,512      $ 3,363,744   
  

 

 

   

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

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LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)

(In thousands, except share and per share data) 

 

     Three months ended
March 31,
 
     2016     2015  

Statements of Income

    

Net revenues

   $ 338,533      $ 302,477   
  

 

 

   

 

 

 

Operating expenses (income)

    

Direct advertising expenses (exclusive of depreciation and amortization)

     128,725        113,232   

General and administrative expenses (exclusive of depreciation and amortization)

     66,790        59,206   

Corporate expenses (exclusive of depreciation and amortization)

     16,026        15,391   

Depreciation and amortization

     51,489        49,230   

Gain on disposition of assets

     (11,327     (1,836
  

 

 

   

 

 

 
     251,703        235,223   
  

 

 

   

 

 

 

Operating income

     86,830        67,254   

Other expense (income)

    

Loss on extinguishment of debt

     3,142        —    

Interest income

     (1     (2

Interest expense

     30,068        24,532   
  

 

 

   

 

 

 
     33,209        24,530   
  

 

 

   

 

 

 

Income before income tax expense

     53,621        42,724   

Income tax expense

     2,307        2,008   
  

 

 

   

 

 

 

Net income

     51,314        40,716   

Preferred stock dividends

     91        91   
  

 

 

   

 

 

 

Net income applicable to common stock

   $ 51,223      $ 40,625   
  

 

 

   

 

 

 

Earnings per share:

    

Basic and diluted earnings per share

   $ 0.53      $ 0.42   
  

 

 

   

 

 

 

Cash dividends declared per share of common stock

   $ 0.75      $ 0.68   
  

 

 

   

 

 

 

Weighted average common shares used in computing earnings per share:

    

Weighted average common shares outstanding basic

     96,793,244        95,704,850   

Weighted average common shares outstanding diluted

     97,378,135        95,742,148   

Statements of Comprehensive Income

    

Net income

   $ 51,314      $ 40,716   

Other comprehensive income (loss)

    

Foreign currency translation adjustments

     1,468        (1,610
  

 

 

   

 

 

 

Comprehensive income

   $ 52,782      $ 39,106   
  

 

 

   

 

 

 

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)

 

     Three months ended
March 31,
 
     2016     2015  

Cash flows from operating activities:

    

Net income

   $ 51,314      $ 40,716   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     51,489        49,230   

Stock-based compensation

     3,199        3,901   

Amortization included in interest expense

     1,382        1,158   

Gain on disposition of assets and investment

     (11,327     (1,836

Loss on extinguishment of debt

     3,142        —    

Deferred tax benefit

     (182     (1,187

Provision for doubtful accounts

     1,709        1,672   

Changes in operating assets and liabilities:

    

(Increase) decrease in:

    

Receivables

     (8,410     (1,438

Prepaid expenses

     (22,936     (22,926

Other assets

     (3,572     (8,787

Increase (decrease) in:

    

Trade accounts payable

     720        1,714   

Accrued expenses

     (14,211     (10,099

Other liabilities

     (780     2,613   
  

 

 

   

 

 

 

Net cash provided by operating activities

     51,537        54,731   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Acquisitions

     (502,138     (19,647

Capital expenditures

     (20,619     (29,041

Proceeds from disposition of assets and investments

     5,196        4,414   

Decrease in notes receivable

     8        4   
  

 

 

   

 

 

 

Net cash used in investing activities

     (517,553     (44,270
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Cash used for purchase of treasury stock

     (6,204     (6,099

Net proceeds from issuance of common stock

     7,909        15,529   

Principal payments on long term debt

     (3,755     (3,755

Payment on revolving credit facility

     (125,000     (35,000

Proceeds received from revolving credit facility

     280,000        92,000   

Proceeds received from note offering

     400,000        —     

Proceeds received from senior credit facility term A-1 loan

     300,000        —     

Payment on senior credit facility term A-1 loan

     (300,000     —     

Debt issuance costs

     (9,017     —     

Distributions to non-controlling interest

     (105     (180

Dividends/distributions

     (72,825     (65,314
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     471,003        (2,819
  

 

 

   

 

 

 

Effect of exchange rate changes in cash and cash equivalents

     1,106        (1,131
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     6,093        6,511   

Cash and cash equivalents at beginning of period

     22,327        26,035   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 28,420      $ 32,546   
  

 

 

   

 

 

 

Supplemental disclosures of cash flow information:

    

Cash paid for interest

   $ 31,893      $ 30,869   
  

 

 

   

 

 

 

Cash paid for foreign, state and federal income taxes

   $ 4,079      $ 587   
  

 

 

   

 

 

 

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 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 2015 Combined Form 10-K. Subsequent events, if any, are evaluated through the date on which the financial statements are issued.

2. Acquisitions

During the three months ended March 31, 2016, the Company completed several acquisitions of outdoor advertising assets for a total purchase price of $511,138, of which $502,138 was in cash and $9,000 in non-cash consideration consisting principally of exchanges of outdoor advertising assets. The purchases included the acquisition of assets in five U.S. markets from Clear Channel Outdoor Holdings, Inc. for an aggregate cash purchase price of approximately $458,500. As a result of the acquisitions, a gain of $8,599 was recorded for transactions which involved the exchanges of outdoor advertising assets during the three months ended March 31, 2016.

Each of these acquisitions was accounted for under the acquisition method of accounting, and, accordingly, the accompanying 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 preliminary fair market value estimates at the dates of acquisition. The following is a summary of the allocation of the acquisition costs in the above transactions.

 

     Total  

Property, plant and equipment

   $ 78,571   

Goodwill

     158,545   

Site locations

     234,584   

Non-competition agreements

     20   

Customer lists and contracts

     39,294   

Current assets

     4,646   

Current liabilities

     (4,522
  

 

 

 
   $ 511,138   
  

 

 

 

The following unaudited pro forma financial information for the Company gives effect to the 2016 and 2015 acquisitions as if they had occurred on January 1, 2015. These pro forma results do not purport to be indicative of the results of operations which actually would have resulted had the acquisitions occurred on such date or to project the Company’s results of operations for any future period.

 

     Three months ended
March 31,
 
     2016      2015  
     (unaudited)  

Net revenues

   $ 340,216       $ 331,302   

Net income applicable to common stock

   $ 51,849       $ 40,956   

Net income per common share — basic

   $ 0.54       $ 0.43   

Net income per common share — diluted

   $ 0.54       $ 0.43   

3. Stock-Based Compensation

Equity Incentive Plan. Lamar Advertising’s 1996 Equity Incentive Plan, as amended (the “Incentive Plan”) has reserved 15.5 million shares of Class A common stock for issuance to directors and employees, including shares underlying granted options and common stock reserved for issuance under its performance-based incentive program. Options granted under the plan expire ten years from the grant date with vesting terms ranging from three to five years and include 1) options that vest in one-fifth increments beginning on the grant date and continuing on each of the first four anniversaries of the grant date and 2) options that cliff-vest on the fifth anniversary of the grant date. All grants are made at fair market value based on the closing price of our Class A common stock as reported on the NASDAQ Global Select Market on the date of grant.

 

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LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share data)

 

We use a Black-Scholes-Merton option pricing model to estimate the fair value of share-based awards. The Black-Scholes-Merton option pricing model incorporates various and highly subjective assumptions, including expected term and expected volatility. The Company granted options for an aggregate of 9,000 shares of its Class A common stock during the three months ended March 31, 2016. At March 31, 2016, a total of 2,278,515 shares were available for future grants.

Stock Purchase Plan. Lamar Advertising’s 2009 Employee Stock Purchase Plan or 2009 ESPP was approved by our shareholders on May 28, 2009. The number of shares of Class A common stock available under the 2009 ESPP was automatically increased by 82,084 shares on January 1, 2016 pursuant to the automatic increase provisions of the 2009 ESPP.

The following is a summary of 2009 ESPP share activity for the period ended March 31, 2016:

 

     Shares  

Available for future purchases, January 1, 2016

     279,589   

Additional shares reserved under 2009 ESPP

     82,084   

Purchases

     (33,923
  

 

 

 

Available for future purchases, March 31, 2016

     327,750   
  

 

 

 

Performance-based compensation. Unrestricted shares of our Class A common stock may be awarded to key officers, employees and directors under our 1996 Equity Incentive Plan. The number of shares to be issued, if any, will be dependent on the level of achievement of performance measures for key officers and employees, as determined by the Company’s Compensation Committee based on our 2016 results. Any shares issued based on the achievement of performance goals will be issued in the first quarter of 2017. The shares subject to these awards can range from a minimum of 0% to a maximum of 100% of the target number of shares depending on the level at which the goals are attained. For the three months ended March 31, 2016, the Company has recorded $670 as stock-based compensation expense related to performance based awards. In addition, each non-employee director automatically receives upon election or re-election a restricted stock award of our Class A common stock. The awards vest 50% on grant date and 50% on the last day of each director’s one-year term. The Company recorded $32 as stock-based compensation expense related to these non-employee director awards for the three months ended March 31, 2016.

4. Depreciation and Amortization

The Company includes all categories of depreciation and amortization on a separate line in its Statements of Income and Comprehensive Income. The amounts of depreciation and amortization expense excluded from the following operating expenses in its Statements of Income and Comprehensive Income are:

 

     Three months ended
March 31,
 
     2016      2015  

Direct advertising expenses

   $ 47,798       $ 45,085   

General and administrative expenses

     881         723   

Corporate expenses

     2,810         3,422   
  

 

 

    

 

 

 
   $ 51,489       $ 49,230   
  

 

 

    

 

 

 

 

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LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share data)

 

5. Goodwill and Other Intangible Assets

The following is a summary of intangible assets at March 31, 2016 and December 31, 2015:

 

     Estimated
Life
(Years)
     March 31, 2016      December 31, 2015  
      Gross Carrying
Amount
     Accumulated
Amortization
     Gross Carrying
Amount
     Accumulated
Amortization
 

Amortizable Intangible Assets:

              

Customer lists and contracts

     7 – 10       $ 553,263       $ 480,418       $ 513,832       $ 477,006   

Non-competition agreements

     3 – 15         64,538         63,521         64,514         63,453   

Site locations

     15         1,851,909         1,270,085         1,616,345         1,251,825   

Other

     5 – 15         14,008         13,539         14,008         13,529   
     

 

 

    

 

 

    

 

 

    

 

 

 
      $ 2,483,718       $ 1,827,563       $ 2,208,699       $ 1,805,813   

Unamortizable Intangible Assets:

              

Goodwill

      $ 1,958,837       $ 253,536       $ 1,800,130       $ 253,536   

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, 2015

   $  206,234   

Additions to asset retirement obligations

     4,562   

Accretion expense

     1,069   

Liabilities settled

     (1,605
  

 

 

 

Balance at March 31, 2016

   $ 210,260   
  

 

 

 

7. Summarized Financial Information of Subsidiaries

Separate financial statements of each of the Company’s direct or indirect wholly owned subsidiaries that have guaranteed Lamar Media’s obligations with respect to its publicly issued notes (collectively, the “Guarantors”) are not included herein because the Company has no independent assets or operations, the guarantees are full and unconditional and joint and several, and the only subsidiaries that are not guarantors are in the aggregate minor.

Lamar Media’s ability to make distributions to Lamar Advertising is restricted under both the terms of the indentures relating to Lamar Media’s outstanding notes and by the terms of its senior credit facility. As of March 31, 2016 and December 31, 2015, Lamar Media was permitted under the terms of its outstanding senior subordinated and senior notes to make transfers to Lamar Advertising in the form of cash dividends, loans or advances in amounts up to $2,506,186 and $2,487,196, respectively.

As of March 31, 2016, transfers to Lamar Advertising are permitted under Lamar Media’s senior credit facility and as defined therein, unless, after giving effect to such distributions, (i) the total debt ratio is equal to or greater than 6.0 to 1 or (ii) the senior debt ratio is equal to or greater than 3.5 to 1. As of March 31, 2016, the total debt ratio was less than 6.0 to 1 and Lamar Media’s senior debt ratio was less than 3.5 to 1; therefore, dividends or distributions to Lamar Advertising were not subject to any additional restrictions under the senior credit facility. In addition, as of March 31, 2016 the senior credit facility allows Lamar Media to conduct its affairs in a manner that would allow Lamar Advertising to qualify and remain qualified for taxation as a REIT, including by allowing Lamar Media to make distributions to Lamar Advertising required for Lamar Advertising to qualify and remain qualified for taxation as a REIT, subject to certain restrictions.

8. Earnings Per Share

The calculation of basic earnings per share excludes any dilutive effect of stock options, while diluted earnings per share includes the dilutive effect of stock options. There were no anti-dilutive shares excluded from the calculation for the three months ended March 31, 2016 and 2015.

 

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LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share data)

 

9. Long-term Debt

Long-term debt consists of the following at March 31, 2016 and December 31, 2015:

 

     March 31, 2016  
     Debt      Deferred
financing costs
     Debt, net of
deferred
financing costs
 

Senior Credit Facility

   $ 525,000       $ 6,485       $ 518,515   

5 7/8% Senior Subordinated Notes

     500,000         7,939         492,061   

5% Senior Subordinated Notes

     535,000         6,269         528,731   

5 3/8% Senior Notes

     510,000         6,148         503,852   

5 3/4% Senior Notes

     400,000         5,685         394,315   

Other notes with various rates and terms

     676         —           676   
  

 

 

    

 

 

    

 

 

 
     2,470,676         32,526         2,438,150   

Less current maturities

     (23,149      (5,293      (17,856
  

 

 

    

 

 

    

 

 

 

Long-term debt, excluding current maturities

   $ 2,447,527       $ 27,233       $ 2,420,294   
  

 

 

    

 

 

    

 

 

 

 

     December 31, 2015  
     Debt      Deferred
financing costs
     Debt, net of
deferred
financing costs
 

Senior Credit Facility

   $ 373,750       $ 7,058       $ 366,692   

5 7/8% Senior Subordinated Notes

     500,000         8,219         491,781   

5% Senior Subordinated Notes

     535,000         6,451         528,549   

5 3/8% Senior Notes

     510,000         6,306         503,694   

Other notes with various rates and terms

     734         —           734   
  

 

 

    

 

 

    

 

 

 
     1,919,484         28,034         1,891,450   

Less current maturities

     (21,332      (4,823      (16,509
  

 

 

    

 

 

    

 

 

 

Long-term debt, excluding current maturities

   $ 1,898,152       $ 23,211       $ 1,874,941   
  

 

 

    

 

 

    

 

 

 

During the period ended March 31, 2016, the Company adopted the FASB’s Accounting Standards Update No. 2015-03, Interest – Imputation of interest: Simplifying the Presentation of Debt Issuance Costs. The pronouncement requires the Company to present debt issuance costs related to a note as a direct deduction from the face amount of the note presented in the balance sheet. The Company has applied the new guidance on a retrospective basis. The effects of the adoption to the Company’s Condensed Consolidated Balance Sheet as of December 31, 2015 were a decrease in total assets, current maturities of long-term debt and long term debt of $28,034, $4,823 and $23,211, respectively.

5 7/8% Senior Subordinated Notes

On February 9, 2012, Lamar Media completed an institutional private placement of $500,000 aggregate principal amount of 5 7/8% Senior Subordinated Notes, due 2022 (the “5 7/8% Notes”). The institutional private placement resulted in net proceeds to Lamar Media of approximately $489,000.

At any time prior to February 1, 2017, Lamar Media may redeem some or all of the 5 7/8% Notes at a price equal to 100% of the aggregate principal amount plus a make-whole premium. On or after February 1, 2017, Lamar Media may redeem the 5 7/8% Notes, in whole or in part, in cash at redemption prices specified in the 5 7/8% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder’s 5 7/8% Notes at a price equal to 101% of the principal amount of the 5 7/8% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.

 

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LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share data)

 

5% Senior Subordinated Notes

On October 30, 2012, Lamar Media completed an institutional private placement of $535,000 aggregate principal amount of 5% Senior Subordinated Notes due 2023 (the “5% Notes”). The institutional private placement resulted in net proceeds to Lamar Media of approximately $527,100.

At any time prior to May 1, 2018, Lamar Media may redeem some or all of the 5% Notes at a price equal to 100% of the aggregate principal amount plus a make-whole premium. On or after May 1, 2018, Lamar Media may redeem the 5% Notes, in whole or in part, in cash at redemption prices specified in the 5% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder’s 5% Notes at a price equal to 101% of the principal amount of the 5% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.

5 3/8% Senior Notes

On January 10, 2014, Lamar Media completed an institutional private placement of $510,000 aggregate principal amount of 5 3/8% Notes due 2024 (the “5 3/8% Notes”). The institutional private placement resulted in net proceeds to Lamar Media of approximately $502,300.

Lamar Media may redeem up to 35% of the aggregate principal amount of the 5 3/8% Notes, at any time and from time to time, at a price equal to 105.375% of the aggregate principal amount so redeemed, plus accrued and unpaid interest thereon, with the net cash proceeds of certain public equity offerings completed before January 15, 2017, provided that following the redemption, at least 65% of the 5 3/8% Notes that were originally issued remain outstanding and any such redemption occurs within 120 days following the closing of any such public offering. At any time prior to January 15, 2019, Lamar Media may redeem some or all of the 5 3/8% Notes at a price equal to 100% of the aggregate principal amount, plus accrued and unpaid interest thereon plus a make-whole premium. On or after January 15, 2019, Lamar Media may redeem the 5 3/8% Notes, in whole or in part, in cash at redemption prices specified in the 5 3/8% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder’s 5 3/8% Notes at a price equal to 101% of the principal amount of the 5 3/8% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.

5 3/4% Senior Notes

On January 28, 2016, Lamar Media completed an institutional private placement of $400,000 aggregate principal amount of 5 3/4% Senior Notes (the “5 3/4% Notes”) due 2026. The institutional private placement resulted in net proceeds to Lamar Media of approximately $394,500.

Lamar Media may redeem up to 35% of the aggregate principal amount of the 5 3/4% Notes, at any time and from time to time, at a price equal to 105.750% of the aggregate principal amount so redeemed, plus accrued and unpaid interest thereon, with the net cash proceeds of certain public equity offerings completed before February 1, 2019, provided that following the redemption, at least 65% of the 5 3/4% Notes that were originally issued remain outstanding and any such redemption occurs within 120 days following the closing of any such public equity offering. At any time prior to February 1, 2021, Lamar Media may redeem some or all of the 5 3/4% Notes at a price equal to 100% of the aggregate principal amount, plus accrued and unpaid interest thereon plus a make-whole premium. On or after February 1, 2021, Lamar Media may redeem the 5 3/4% Notes, in whole or in part, in cash at redemption prices specified in the 5 3/4% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder’s 5 3/4% Notes at a price equal to 101% of the principal amount of the 5 3/4% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.

Senior Credit Facility

On January 7, 2016, Lamar Media entered into a new incremental Term A-1 loan of $300,000 to partially fund the purchase of certain Clear Channel Outdoor Holdings, Inc. assets. The Term A-1 loan was repaid in full on January 28, 2016 by using proceeds received from the issuance of the 5 3/4% Notes. For the period ended March 31, 2016, the Company incurred a loss of $3,142 related to the repayment of the Term A-1 loan.

 

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LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share data)

 

On February 3, 2014, Lamar Media entered into a Second Restatement Agreement (the “Second Restatement Agreement”) with the Company, certain of Lamar Media’s subsidiaries as Guarantors, JPMorgan Chase Bank, N.A., as Administrative Agent and the Lenders named therein, under which the parties agreed to amend and restate Lamar Media’s existing senior credit facility on the terms set forth in the Second Amended and Restated Credit Agreement attached as Exhibit A to the Second Restatement Agreement (such Second and Amended and Restated Credit Agreement, as subsequently amended, together with the Second Restatement Agreement being herein referred to as the “senior credit facility”). Under the Second Restatement Agreement, the senior credit facility consisted of a $400,000 revolving credit facility and a $500,000 incremental facility. Lamar Media is the borrower under the senior credit facility. We may also from time to time designate wholly owned subsidiaries as subsidiary borrowers under the incremental loan facility. Incremental loans may be in the form of additional term loan tranches or increases in the revolving credit facility. Our lenders have no obligation to make additional loans to us, or any designated subsidiary borrower, under the incremental facility, but may enter into such commitments in their sole discretion.

On April 18, 2014, Lamar Media entered into Amendment No. 1 to the Second Amended and Restated Credit Agreement (the “First Amendment”) under which the parties agreed to amend Lamar Media’s existing senior credit agreement on the terms set forth therein. The First Amendment created a new $300,000 Term A Loan facility (the “Term A Loans”) and made certain other amendments. Lamar Media borrowed $300,000 in Term A Loans on April 18, 2014. The net loan proceeds of this borrowing, together with borrowings under the revolving portion of the senior credit facility and cash on hand, were used to fund the redemption and retirement of all $400,000 in outstanding principal amount of Lamar Media’s 7 7/8% Notes due 2018 on April 21, 2014. On March 4, 2016, Lamar Media entered into Amendment No. 2 to the Second Amended and Restated Credit Agreement (the “Second Amendment”) under which the parties agreed to amend Lamar Media’s existing senior credit agreement on the terms set forth therein. Among certain other amendments, the Second Amendment eliminated the $500,000 cap on incremental loans with the result that Lamar Media may borrow incremental term and revolving loans without monetary limits, so long as Lamar Advertising’s Senior Debt Ratio does not exceed 3.5 to 1.0.

The Term A Loans began amortizing on June 30, 2014 in quarterly installments on each September 30, December 31, March 31, and June 30 thereafter, as follows:

 

Principal Payment Date

   Principal Amount  

June 30, 2016- March 31, 2017

   $ 5,625   

June 30, 2017-December 31, 2018

   $ 11,250   

Term A Loan Maturity Date

   $ 168,750   

The Term A Loans bear interest at rates based on the Adjusted LIBO Rate (“Eurodollar loans”) or the Adjusted Base Rate (“Base Rate loans”), at Lamar Media’s option. Eurodollar loans bear interest at a rate per annum equal to the Adjusted LIBO Rate plus 2.0%; (or the Adjusted LIBO Rate plus 1.75% at any time the Total Debt Ratio is less than or equal to 3.00 to 1). Base Rate Loans bear interest at a rate per annum equal to the Adjusted Base Rate plus 1.00% (or the Adjusted Base Rate plus 0.75% at any time the Total Debt Ratio is less than or equal to 3.00 to 1). The revolving credit facility bears interest at rates based on the Adjusted LIBO Rate (“Eurodollar loans”) or the Adjusted Base Rate (“Base Rate loans”), at Lamar Media’s option. Eurodollar loans bear interest at a rate per annum equal to the Adjusted LIBO Rate plus 2.25% (or the Adjusted LIBO Rate plus 2.00% at any time the Total Debt Ratio is less than or equal to 4.25 to 1; or the Adjusted LIBO Rate plus 1.75% at any time the Total Debt Ratio is less than or equal to 3.00 to 1). Base Rate Loans bear interest at a rate per annum equal to the Adjusted Base Rate plus 1.25% (or the Adjusted Base Rate plus 1.0% at any time the total debt ratio is less than or equal to 4.25 to 1, or the Adjusted Base Rate plus 0.75% at any time the Total Debt Ratio is less than or equal to 3.00 to 1). The guarantees, covenants, events of default and other terms of the senior credit facility apply to the Term A Loans and revolving credit facility.

As of March 31, 2016, there was $255,000 outstanding under the revolving credit facility. Availability under the revolving facility is reduced by the amount of any letters of credit outstanding. Lamar Media had $8,919 in letters of credit outstanding as of March 31, 2016 resulting in $136,081 of availability under its revolving facility. Revolving credit loans may be requested under the revolving credit facility at any time prior to its maturity on February 2, 2019, and bear interest, at Lamar Media’s option, at the Adjusted LIBO Rate or the Adjusted Base Rate plus applicable margins, such margins are set at an initial rate with the possibility of a step down based on Lamar Media’s ratio of debt to trailing four quarters EBITDA, as defined in the senior credit facility.

 

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Table of Contents

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share data)

 

The terms of Lamar Media’s senior credit facility and the indentures relating to Lamar Media’s outstanding notes restrict, among other things, the ability of Lamar Advertising and Lamar Media to:

 

    dispose of assets;

 

    incur or repay debt;

 

    create liens;

 

    make investments; and

 

    pay dividends.

The senior credit facility contains provisions that allow Lamar Media to conduct its affairs in a manner that allows Lamar Advertising to qualify and remain qualified as a REIT, including by allowing Lamar Media to make distributions to Lamar Advertising required for the Company to qualify and remain qualified for taxation as a REIT, subject to certain restrictions.

Lamar Media’s ability to make distributions to Lamar Advertising is also restricted under the terms of these agreements. Under Lamar Media’s senior credit facility the Company must maintain a specified senior debt ratio at all times and in addition, must satisfy a total debt ratio in order to incur debt, make distributions or make certain investments.

Lamar Advertising and Lamar Media were in compliance with all of the terms of their indentures and the senior credit facility provisions during the periods presented.

10. Fair Value of Financial Instruments

At March 31, 2016 and December 31, 2015, the Company’s financial instruments included cash and cash equivalents, marketable securities, accounts receivable, investments, accounts payable and borrowings. The fair values of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings and current portion of long-term debt approximated carrying values because of the short-term nature of these instruments. Investments are reported at fair values. Fair values for investments held at cost are not readily available, but are estimated to approximate fair value. The estimated fair value of the Company’s long term debt (including current maturities) was $2,554,377 which exceeded the carrying amount of $2,470,676 as of March 31, 2016. The majority of the fair value is determined using observed market prices of publicly traded debt (level 1 in the fair value hierarchy) and the remaining is valued based on quoted prices for similar debt (level 2 in the fair value hierarchy).

11. Information about Geographic Areas

Revenues from external customers attributable to foreign countries totaled $6,868 and $6,442 for the three months ended March 31, 2016 and 2015, respectively. Net carrying value of long lived assets located in foreign countries totaled $5,719 and $5,613 as of March 31, 2016 and December 31, 2015, respectively. All other revenues from external customers and long lived assets relate to domestic operations.

12. New Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. Generally Accepted Accounting Principles (“GAAP”) when it becomes effective. In August 2015, the FASB issued ASU No. 2015-14 deferring the effective date from January 1, 2017 to January 1, 2018, while allowing for early adoption as of January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU No. 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

In February 2016, the FASB issued ASU No. 2016-02, Leases. The update is to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about lease arrangements. The amendments in this update are effective beginning January 1, 2019 with retrospective application. The Company is currently evaluating the impact of this update to determine the effect on its consolidated financial statements.

 

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LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share data)

 

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The update is designed to simplify accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The update is effective for annual periods beginning January 1, 2017 with early adoption permitted. The Company does not expect the adoption of this update will have a material impact on the consolidated financial statements.

13. Dividends/Distributions

During the three months ended March 31, 2016 and March 31, 2015, the Company declared and paid distributions of its REIT taxable income of an aggregate of $72,734 or $0.75 per share and $65,223 or $0.68 per share, respectively. The amount, timing and frequency of future distributions will be at the sole discretion of the Board of Directors and will be declared based upon various factors, a number of which may be beyond the Company’s control, including the financial condition and operating cash flows, the amount required to maintain REIT status and reduce any income and excise taxes that the Company otherwise would be required to pay, limitations on distributions in our existing and future debt instruments, the Company’s ability to utilize net operating losses (“NOLs”) to offset, in whole or in part, the Company’s distribution requirements, limitations on its ability to fund distributions using cash generated through its taxable REIT subsidiaries (“TRSs”) and other factors that the Board of Directors may deem relevant. During the three months ended March 31, 2016 and March 31, 2015, the Company paid cash dividend distributions to holders of its Series AA Preferred Stock of $91 or $15.95 per share.

 

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LAMAR MEDIA CORP.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data) 

 

     March 31,
2016
    December 31,
2015
 
     (Unaudited)        

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 27,920      $ 21,827   

Receivables, net of allowance for doubtful accounts of $9,542 and $8,984 in 2016 and 2015, respectively

     181,080        174,398   

Prepaid expenses

     71,119        44,437   

Deferred income tax assets

     1,128        1,352   

Other current assets

     45,510        39,218   
  

 

 

   

 

 

 

Total current assets

     326,757        281,232   
  

 

 

   

 

 

 

Property, plant and equipment

     3,225,645        3,139,239   

Less accumulated depreciation and amortization

     (2,058,597     (2,044,102
  

 

 

   

 

 

 

Net property, plant and equipment

     1,167,048        1,095,137   
  

 

 

   

 

 

 

Goodwill

     1,695,150        1,536,443   

Intangible assets

     655,687        402,418   

Other assets

     33,464        32,110   
  

 

 

   

 

 

 

Total assets

   $ 3,878,106      $ 3,347,340   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDER’S EQUITY

    

Current liabilities:

    

Trade accounts payable

   $ 18,912      $ 17,452   

Current maturities of long-term debt, net of deferred financing costs of $5,293 and $4,823 in 2016 and 2015, respectively

     17,856        16,509   

Accrued expenses

     87,551        110,728   

Deferred income

     89,979        87,661   
  

 

 

   

 

 

 

Total current liabilities

     214,298        232,350   

Long-term debt, net of deferred financing costs of $27,233 and $21,257 in 2016 and 2015, respectively

     2,420,294        1,876,895   

Deferred income tax liabilities

     1,466        2,052   

Asset retirement obligation

     210,260        206,234   

Other liabilities

     24,500        22,628   
  

 

 

   

 

 

 

Total liabilities

     2,870,818        2,340,159   
  

 

 

   

 

 

 

Stockholder’s equity:

    

Common stock, par value $.01, 3,000 shares authorized, 100 shares issued and outstanding at 2016 and 2015

     —         —    

Additional paid-in-capital

     2,760,649        2,734,479   

Accumulated comprehensive income (loss)

     290        (1,178

Accumulated deficit

     (1,753,651     (1,726,120
  

 

 

   

 

 

 

Stockholder’s equity

     1,007,288        1,007,181   
  

 

 

   

 

 

 

Total liabilities and stockholder’s equity

   $ 3,878,106      $ 3,347,340   
  

 

 

   

 

 

 

See accompanying note to condensed consolidated financial statements.

 

15


Table of Contents

LAMAR MEDIA CORP.

AND SUBSIDIARIES

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)

(In thousands, except share and per share data)

 

     Three months ended
March 31,
 
     2016     2015  

Statements of Income

    

Net revenues

   $ 338,533      $ 302,477   
  

 

 

   

 

 

 

Operating expenses (income)

    

Direct advertising expenses (exclusive of depreciation and amortization)

     128,725        113,232   

General and administrative expenses (exclusive of depreciation and amortization)

     66,790        59,206   

Corporate expenses (exclusive of depreciation and amortization)

     15,933        15,303   

Depreciation and amortization

     51,489        49,230   

Gain on disposition of assets

     (11,327     (1,836
  

 

 

   

 

 

 
     251,610        235,135   
  

 

 

   

 

 

 

Operating income

     86,923        67,342   

Other expense (income)

    

Loss on extinguishment of debt

     3,142        —    

Interest income

     (1     (2

Interest expense

     30,068        24,532   
  

 

 

   

 

 

 
     33,209        24,530   
  

 

 

   

 

 

 

Income before income tax expense

     53,714        42,812   

Income tax expense

     2,307        2,008   
  

 

 

   

 

 

 

Net income

   $ 51,407      $ 40,804   
  

 

 

   

 

 

 

Statements of Comprehensive Income

    

Net income

   $ 51,407      $ 40,804   

Other comprehensive income (loss)

    

Foreign currency translation adjustments

     1,468        (1,610
  

 

 

   

 

 

 

Comprehensive income

   $ 52,875      $ 39,194   
  

 

 

   

 

 

 

See accompanying note to condensed consolidated financial statements.

 

16


Table of Contents

LAMAR MEDIA CORP.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands) 

 

     Three months ended
March 31,
 
     2016     2015  

Cash flows from operating activities:

    

Net income

   $ 51,407      $ 40,804   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     51,489        49,230   

Stock-based compensation

     3,199        3,901   

Amortization included in interest expense

     1,382        1,158   

Gain on disposition of assets and investments

     (11,327     (1,836

Loss on extinguishment of debt

     3,142        —    

Deferred tax benefit

     (182     (1,187

Provision for doubtful accounts

     1,709        1,672   

Changes in operating assets and liabilities:

    

(Increase) decrease in:

    

Receivables

     (8,410     (1,438

Prepaid expenses

     (22,936     (22,926

Other assets

     (3,572     (8,787

Increase (decrease) in:

    

Trade accounts payable

     720        1,714   

Accrued expenses

     (14,211     (10,099

Other liabilities

     (19,225     (14,065
  

 

 

   

 

 

 

Net cash provided by operating activities

     33,185        38,141   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Acquisitions

     (502,138     (19,647

Capital expenditures

     (20,619     (29,041

Proceeds from disposition of assets and investments

     5,196        4,414   

Decrease in notes receivable

     8        4   
  

 

 

   

 

 

 

Net cash used in investing activities

     (517,553     (44,270
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Principal payments on long-term debt

     (3,755     (3,755

Payment on revolving credit facility

     (125,000     (35,000

Proceeds received from revolving credit facility

     280,000        92,000   

Proceeds received from note offering

     400,000        —    

Proceeds received from senior credit facility term A-1 loan

     300,000        —    

Payment on senior credit facility term A-1 loan

     (300,000     —    

Debt issuance costs

     (9,017     —    

Distributions to non-controlling interest

     (105     (180

Dividend to parent

     (78,938     (71,322

Contributions from parent

     26,170        32,028   
  

 

 

   

 

 

 

Net cash provided by financing activities

     489,355        13,771   
  

 

 

   

 

 

 

Effect of exchange rate changes in cash and cash equivalents

     1,106        (1,131
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     6,093        6,511   

Cash and cash equivalents at beginning of period

     21,827        25,535   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 27,920      $ 32,046   
  

 

 

   

 

 

 

Supplemental disclosures of cash flow information:

    

Cash paid for interest

   $ 31,893      $ 30,869   
  

 

 

   

 

 

 

Cash paid for foreign, state and federal income taxes

   $ 4,079      $ 587   
  

 

 

   

 

 

 

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 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 2015 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, 9, 10, 11 and 12 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 report 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 2015 Combined Form 10-K filed on February 25, 2016, as supplemented by any risk factors contained in our combined Quarterly Reports on Form 10-Q. You should carefully consider each of these risks and uncertainties in evaluating the Company’s and Lamar Media’s financial conditions and results of operations. Investors are cautioned not to place undue reliance on the forward-looking statements contained in this document. These statements speak only as of the date of this document, and the Company undertakes no obligation to update or revise the statements, except as may be required by law.

LAMAR ADVERTISING COMPANY

The following is a discussion of the consolidated financial condition and results of operations of the Company for the three months ended March 31, 2016 and 2015. This discussion should be read in conjunction with the consolidated financial statements of the Company and the related notes thereto.

Overview

The Company’s net revenues are derived primarily from the rental of advertising space on outdoor advertising displays owned and operated by the Company. Revenue growth is based on many factors that include the Company’s ability to increase occupancy of its existing advertising displays; raise advertising rates; and acquire new advertising displays 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 that the Company is able to charge for advertising on its displays and its ability to maximize advertising sales or occupancy on its displays.

Historically, the Company has made strategic acquisitions of outdoor advertising assets to increase the number of outdoor advertising displays it operates in existing and new markets. The Company continues to evaluate and pursue strategic acquisition opportunities as they arise. The Company has financed its historical acquisitions and intends to finance any future acquisition activity from available cash, borrowings under its senior credit facility or the issuance of debt or equity securities. See “Liquidity and Capital Resources” below. During the three months ended March 31, 2016, the Company completed eight acquisitions for a total cash purchase price of approximately $502.1 million. See—“Uses of Cash – Acquisitions” for more information.

The Company’s business requires expenditures for maintenance and capitalized costs associated with the construction of new billboard displays, the entrance into and renewal of logo sign and transit contracts, and the purchase of real estate and operating equipment.

The following table presents a breakdown of capitalized expenditures for the three months ended March 31, 2016 and 2015:

 

     Three months ended
March 31,
 
     2016      2015  
     (in thousands)  

Total capital expenditures:

  

Billboard — traditional

   $ 6,874       $ 5,809   

Billboard — digital

     6,548         14,262   

Logos

     1,431         2,942   

Transit

     130         130   

Land and buildings

     3,893         3,171   

Operating equipment

     1,743         2,727   
  

 

 

    

 

 

 

Total capital expenditures

   $ 20,619       $ 29,041   
  

 

 

    

 

 

 

Non-GAAP Financial Measures

Our management reviews our performance by focusing on several key performance indicators not prepared in conformity with Generally Accepted Accounting Principles in the United States (“GAAP”). We believe these non-GAAP performance indicators are meaningful supplemental measures of our operating performance and should not be considered in isolation of, or as a substitute for their most directly comparable GAAP financial measures.

Included in our analysis of our results of operations are discussions regarding earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), Funds From Operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts, Adjusted Funds From Operations (“AFFO”) and acquisition-adjusted net revenue.

 

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We define Adjusted EBITDA as net income before income tax expense (benefit), interest expense (income), gain (loss) on extinguishment of debt and investments, stock-based compensation, depreciation and amortization and gain or loss on disposition of assets and investments.

FFO is defined as net income before gains or losses from the sale or disposal of real estate assets and investments and real estate related depreciation and amortization and including adjustments to eliminate unconsolidated affiliates and non-controlling interest.

We define AFFO as FFO before (i) straight-line revenue and expense; (ii) stock-based compensation expense; (iii) non-cash portion of tax provision; (iv) non-real estate related depreciation and amortization; (v) amortization of deferred financing costs, (vi) loss on extinguishment of debt; (vii) non-recurring infrequent or unusual losses (gains); (viii) less maintenance capital expenditures; and (ix) an adjustment for unconsolidated affiliates and non-controlling interest.

Acquisition-adjusted net revenue adjusts our net revenue for the prior period by adding to it the net revenue generated by the acquired assets before our acquisition of these assets for the same time frame that those assets were owned in the current period. In calculating acquisition-adjusted revenue, therefore, we include revenue generated by assets that we did not own in the period but acquired in the current period. We refer to the amount of pre-acquisition revenue generated by the acquired assets during the prior period that corresponds with the current period in which we owned the assets (to the extent within the period to which this report relates) as “acquisition net revenue”. In addition, we also adjust the prior period to subtract revenue generated by the assets that have been divested since the prior period and, therefore, no revenue derived from those assets is reflected in the current period.

Adjusted EBITDA, FFO, AFFO and acquisition-adjusted net revenue are not intended to replace net income or any other performance measures determined in accordance with GAAP. Neither FFO nor AFFO represent cash flows from operating activities in accordance with GAAP and, therefore, these measures should not be considered indicative of cash flows from operating activities as a measure of liquidity or of funds available to fund our cash needs, including our ability to make cash distributions. Rather, Adjusted EBITDA, FFO, AFFO and acquisition-adjusted net revenue are presented as we believe each is a useful indicator of our current operating performance. We believe that these metrics are useful to an investor in evaluating our operating performance because (1) each is a key measure used by our management team for purposes of decision making and for evaluating our core operating results; (2) Adjusted EBITDA is widely used in the industry to measure operating performance as depreciation and amortization may vary significantly among companies depending upon accounting methods and useful lives, particularly where acquisitions and non-operating factors are involved; (3) acquisition-adjusted net revenue is a supplement to net revenue to enable investors to compare period over period results on a more consistent basis without the effects of acquisitions and divestures, which reflects our core performance and organic growth (if any) during the period in which the assets were owned and managed by us; (4) Adjusted EBITDA, FFO and AFFO each provides investors with a meaningful measure for evaluating our period-to-period operating performance by eliminating items that are not operational in nature; and (5) each provides investors with a measure for comparing our results of operations to those of other companies.

Our measurement of Adjusted EBITDA, FFO, AFFO and acquisition-adjusted net revenue may not, however, be fully comparable to similarly titled measures used by other companies. Reconciliations of Adjusted EBITDA, FFO, AFFO and acquisition-adjusted net revenue to net income, the most directly comparable GAAP measure, have been included herein.

RESULTS OF OPERATIONS

Three Months ended March 31, 2016 compared to Three Months ended March 31, 2015

Net revenues increased $36.1 million or 11.9% to $338.5 million for the three months ended March 31, 2016 from $302.5 million for the same period in 2015. This increase was attributable primarily to an increase in billboard net revenues of $28.8 million, which represents an increase of 10.8% over the same period in 2015, primarily due to the acquisition of assets in five new U.S. markets in January 2016 from Clear Channel Outdoor Holdings, Inc. In addition, logo sign revenue increased $1.2 million, which represents an increase of 6.6% over the prior period and there was a $6.1 million increase in transit revenue, which represents an increase of 34.9% over the prior period.

For the three months ended March 31, 2016, there was an $8.6 million increase in net revenues as compared to acquisition-adjusted net revenue for the three months ended March 31, 2015, which represents an increase of 2.6%. See “Reconciliations” below. The 2.6% increase is primarily due to an increase in local sales and digital revenue for three months ended March 31, 2016, as compared to the same period in 2015. The $8.6 million increase in revenue primarily consists of an $8.2 million increase in billboard revenue and a $0.7 million increase in logo revenue over the acquisition-adjusted net revenue for the comparable period in 2015.

Total operating expenses, exclusive of depreciation and amortization and gain on sale of assets, increased $23.7 million, or 12.6% to $211.5 million for the three months ended March 31, 2016 from $187.8 million in the same period in 2015. The $23.7 million increase over the prior year is comprised of a $23.1 million increase in direct and general and administrative operating expenses related to the operations of our outdoor advertising assets and corporate expense increases of $0.6 million.

Depreciation and amortization expense increased $2.3 million, or 4.6% for the three months ended March 31, 2016, as compared to the three months ended March 31, 2015, primarily due to amortization and depreciation on the assets acquired in the five new U.S. markets purchased in January 2016.

 

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Due to the above factors, operating income increased to $86.8 million for the three months ended March 31, 2016 compared to $67.3 million for the same period in 2015.

During the three months ended March 31, 2016, the Company recognized a $3.1 million loss on extinguishment of debt related to the prepayment of Lamar Media’s Term A-1 loan under its senior credit facility.

Interest expense increased $5.5 million from $24.5 million for the three months ended March 31, 2015, to $30.1 million for the three months ended March 31, 2016, primarily resulting from the January 2016 issuance of Lamar Media’s $400 million in aggregate 5 3/4% Senior Notes due in 2026 (the “5 3/4% Senior Notes”).

The increases in operating income, interest expense and loss on debt extinguishment resulted in a $10.9 million increase in net income before income taxes. This increase in income resulted in an increase in income tax expense of $0.3 million for the three months ended March 31, 2016 over the same period in 2015. The effective tax rate for the three months ended March 31, 2016 was 4.3%, which differs from the federal statutory rate primarily due to our qualification for taxation as a REIT and adjustments for foreign items.

As a result of the above factors, the Company recognized net income for the three months ended March 31, 2016 of $51.3 million, as compared to net income of $40.7 million for the same period in 2015.

Reconciliations:

Because acquisitions occurring after December 31, 2014 (the “acquired assets”) have contributed to our net revenue results for the periods presented, we provide 2015 acquisition-adjusted net revenue, which adjusts our 2015 net revenue for the three months ended March 31, 2015 by adding to or subtracting from it the net revenue generated by the acquired or divested assets prior to our acquisition or divestiture of these assets for the same time frame that those assets were owned in the three months ended March 31, 2016.

Reconciliations of 2015 reported net revenue to 2015 acquisition-adjusted net revenue for the three months ended March 31, as well as a comparison of 2015 acquisition-adjusted net revenue to 2016 reported net revenue for the three months ended March 31, are provided below:

Reconciliation and Comparison of Reported Net Revenue to Acquisition-Adjusted Net Revenue 

 

     Three months ended
March 31,
 
     2016      2015  
     (in thousands)  

Reported net revenue

   $ 338,533       $ 302,477   

Acquisition net revenue

     —           27,426   
  

 

 

    

 

 

 

Acquisition-adjusted net revenue

   $ 338,533       $ 329,903   
  

 

 

    

 

 

 

Key Performance Indicators

Net Income/Adjusted EBITDA

(in thousands)

 

     Three Months Ended
March 31,
     Amount of
Increase
(Decrease)
     Percent
Increase
 
     2016      2015        

Net income

   $ 51,314       $ 40,716       $ 10,598         26.0

Income tax expense

     2,307         2,008         299      

Loss on debt extinguishment

     3,142         —          3,142      

Interest expense (income), net

     30,067         24,530         5,537      

Gain on disposition of assets

     (11,327      (1,836      (9,491   

Depreciation and amortization

     51,489         49,230         2,259      

Stock-based compensation expense

     3,199         3,901         (702   
  

 

 

    

 

 

    

 

 

    

Adjusted EBITDA

   $ 130,191       $ 118,549       $ 11,642         9.8
  

 

 

    

 

 

    

 

 

    

Adjusted EBITDA for the three months ended March 31, 2016 increased 9.8% to $130.2 million. The increase in Adjusted EBITDA was primarily attributable to the increase in our gross margin (net revenue less direct advertising expense) of $20.6 million, and was partially offset by an increase in general administrative and corporate expenses of $8.9 million, excluding the impact of stock-based compensation expense.

 

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Net Income/FFO/AFFO

(in thousands)

 

     Three Months Ended
March 31,
     Amount of
Increase
(Decrease)
     Percent
Increase
 
     2016      2015        

Net income

   $ 51,314       $ 40,716       $ 10,598         26.0

Depreciation and amortization related to real estate

     47,767         45,414         2,353      

Gain from sale or disposal of real estate

     (11,267      (1,742      (9,525   

Adjustments for unconsolidated affiliates and non-controlling interest

     96         167         (71   
  

 

 

    

 

 

    

 

 

    

FFO

   $ 87,910       $ 84,555       $ 3,355         4.0
  

 

 

    

 

 

    

 

 

    

Straight line income

     (50      (36      (14   

Stock-based compensation expense

     3,199         3,901         (702   

Non-cash portion of tax provision

     (182      (1,187      1,005      

Non-real estate related depreciation and amortization

     3,722         3,816         (94   

Amortization of deferred financing costs

     1,382         1,158         224      

Loss on extinguishment of debt

     3,142         —          3,142      

Capital expenditures – maintenance

     (6,692      (13,156      6,464      

Adjustments for unconsolidated affiliates and non-controlling interest

     (96      (167      71      
  

 

 

    

 

 

    

 

 

    

AFFO

   $ 92,335       $ 78,884       $ 13,451         17.1
  

 

 

    

 

 

    

 

 

    

FFO for the three months ended March 31, 2016 was $87.9 million as compared to FFO of $84.6 million for the same period in 2015. AFFO for the three months ended March 31, 2016 increased 17.1% to $92.3 million as compared to $78.9 million for the same period in 2015. AFFO growth was primarily attributable to the increase in our gross margin (net revenue less direct advertising expense) and a reduction in capital expenditures, partially offset by increases in general and administrative expenses, corporate expenses and interest expense.

LIQUIDITY AND CAPITAL RESOURCES

Overview

The Company has historically satisfied its working capital requirements with cash from operations and borrowings under the senior credit facility. The Company’s wholly owned subsidiary, Lamar Media Corp., is the borrower under the senior credit facility and maintains all corporate operating cash balances. Any cash requirements of the Company, therefore, must be funded by distributions from Lamar Media.

Sources of Cash

Total Liquidity. As of March 31, 2016 we had approximately $164.5 million of total liquidity, which is comprised of approximately $28.4 million in cash and cash equivalents and approximately $136.1 million of availability under the revolving portion of Lamar Media’s senior credit facility. We are currently in compliance with the maintenance covenant included in the senior credit facility and we would remain in compliance after giving effect to borrowing the full amount available to us under the revolving portion of the senior credit facility.

Cash Generated by Operations. For the three months ended March 31, 2016 and 2015 our cash provided by operating activities was $51.5 million and $54.7 million, respectively. The decrease in cash provided by operating activities for the quarter ended March 31, 2016 over the same period in 2015 relates to an increase in revenues partially offset by an increase in operating expenses, (excluding depreciation and amortization) and an increase in working capital. We expect to generate cash flows from operations during 2016 in excess of our cash needs for operations, capital expenditures and dividends, as described herein.

Note Offerings. On January 28, 2016, Lamar Media completed an institutional private placement of $400 million aggregate principal amount of its 5 3/4% Senior Notes due 2026. The institutional private placement resulted in net proceeds to Lamar Media, after payment of fees and expenses of approximately $394.5 million. Lamar Media used the proceeds of this offering to repay and retire the $300 million term A-1 loan, which it borrowed on January 7, 2016 in order to fund the acquisition of certain assets of Clear Channel Outdoor Holdings, Inc.

 

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Credit Facilities. On January 7, 2016, Lamar Media entered into Incremental Amendment No. 1 to the Second Amended and Restated Credit Agreement, dated as of February 3, 2014 with the Company, certain of Lamar Media’s subsidiaries as guarantors, JPMorgan Chase Bank, N.A. as administrative agent and the lenders party thereto. The Incremental Amendment established a $300 million Term A-1 loan as a new class of incremental term loan. Lamar Media borrowed the $300 million in Term A-1 loans on January 7, 2016. The term A-1 loan was repaid in full and retired with the proceeds of an institutional private placement of senior notes on January 28, 2016. See—“Sources of Cash-Note Offerings” for more information.

Lamar Media’s Second Amended and Restated Credit Agreement dated as of February 3, 2014 (as amended, the “senior credit facility”) consists of a $400 million revolving credit facility and a $300 million Term A loan facility (the “Term A Loans”). The Term A Loans were established on April 18, 2014 under Amendment No. 1 to the Second Amended and Restated Credit Agreement. On March 4, 2016, Lamar Media entered into Amendment No. 2 to the Second Amended and Restated Credit Agreement, which eliminated the previously existing $500 million cap on incremental loans with the result that Lamar Media may borrow incremental term and revolving loans under its senior credit facility without monetary limits, so long as Lamar Advertising’s Senior Debt Ratio does not exceed 3.5 to 1.0. Lamar Media is the borrower under the senior credit facility and may also from time to time designate wholly-owned subsidiaries as subsidiary borrowers under the incremental loan facility. Incremental loans may be in the form of additional term loan tranches or increases in the revolving credit facility. Our lenders have no obligation to make additional loans to us, or any designated subsidiary borrower, under the incremental facility, but may enter into such commitments in their sole discretion.

As of March 31, 2016, Lamar Media had approximately $136.1 million of availability under the revolving credit facility included in the senior credit facility and approximately $8.9 million in letters of credit outstanding. As of March 31, 2016, Lamar Media had $270.0 million outstanding in Term A Loans and $255.0 million outstanding under the revolving credit facility.

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 Debt Securities. Lamar Media must comply with certain covenants and restrictions related to its outstanding debt securities. Currently Lamar Media has outstanding $500 million 5 7/8% Senior Subordinated Notes issued in February 2012 (the “5 7/8% Senior Subordinated Notes”), $535 million 5% Senior Subordinated Notes issued in October 2012 (the “5% Senior Subordinated Notes”), $510 million 5 3/8% Senior Notes issued in January 2014 (the “5 3/8% Senior Notes”) and the $400 million 5 3/4% Senior Notes issued January 2016.

The indentures relating to Lamar Media’s outstanding notes restrict its ability to incur additional indebtedness but permit the incurrence of indebtedness (including indebtedness under the senior credit facility), (i) if no default or event of default would result from such incurrence and (ii) if after giving effect to any such incurrence, the leverage ratio (defined as the sum of (x) total consolidated debt plus (y) the aggregate liquidation preference of any preferred stock of Lamar Media’s restricted subsidiaries to trailing four fiscal quarter EBITDA (as defined in the indentures)) would be less than 7.0 to 1. Currently, Lamar Media is not in default under the indentures of any of its outstanding notes and, therefore, would be permitted to incur additional indebtedness subject to the foregoing provision.

In addition to debt incurred under the provisions described in the preceding paragraph, the indentures relating to Lamar Media’s outstanding notes permit Lamar Media to incur indebtedness pursuant to the following baskets:

 

    up to $1.5 billion of indebtedness under the senior credit facility;

 

    indebtedness outstanding on the date of the indentures or debt incurred to refinance outstanding debt;

 

    inter-company debt between Lamar Media and its restricted subsidiaries or between restricted subsidiaries;

 

    certain purchase money indebtedness and capitalized lease obligations to acquire or lease property in the ordinary course of business that cannot exceed the greater of $50 million or 5% of Lamar Media’s net tangible assets; and

 

    additional debt not to exceed $75 million.

 

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Restrictions under Senior Credit Facility. Lamar Media is required to comply with certain covenants and restrictions under the senior credit facility. If the Company or Lamar Media fails to comply with these tests, the lenders under the senior credit facility will be entitled to exercise certain remedies, including the termination of the lending commitments and the acceleration of the debt payments under the senior credit facility. At March 31, 2016, and currently, we were in compliance with all such tests under the senior credit facility.

Lamar Media must maintain a senior debt ratio, defined as total consolidated debt (other than subordinated indebtedness) of Lamar Advertising and its restricted subsidiaries, minus the lesser of (x) $100 million and (y) the aggregate amount of unrestricted cash and cash equivalents of Lamar Advertising and its restricted subsidiaries to EBITDA, as defined below, for the period of four consecutive fiscal quarters then ended, of less than or equal to 3.5 to 1.0.

Lamar Media is also restricted from incurring additional indebtedness under certain circumstances unless, after giving effect to the incurrence of such indebtedness, it is in compliance with the senior debt ratio covenant and its total debt ratio, defined as (a) total consolidated debt of Lamar Advertising and its restricted subsidiaries as of any date minus the lesser of (i) $100 million and (ii) the aggregate amount of unrestricted cash and cash equivalents of Lamar Advertising and its restricted subsidiaries to (b) EBITDA, as defined below, for the most recent four fiscal quarters then ended is less than 6.0 to 1.0.

Under the senior credit facility “EBITDA” means, for any period, operating income for Lamar Advertising and its restricted subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) for such period (calculated before (i) taxes, (ii) interest expense, (iii) depreciation, (iv) amortization, (v) any other non-cash income or charges accrued for such period, (vi) charges and expenses in connection with the credit facility transactions, (vii) costs and expenses of Lamar Advertising associated with the REIT conversion, provided that the aggregate amount of costs and expenses that may be added back pursuant to this clause (vii) shall not exceed $10 million in the aggregate and (viii) the amount of cost savings, operating expense reductions and other operating improvements or synergies projected by Lamar Media in good faith to be realized as a result of any acquisition, investment, merger, amalgamation or disposition within 12 months of any such acquisition, investment, merger, amalgamation or disposition, net of the amount of actual benefits realized during such period from such action: provided, (a) the aggregate amount for all such cost savings, operating expense reductions and other operating improvements or synergies shall not exceed an amount equal to 15% of EBITDA for the applicable four quarter period and (b) any such adjustment to EBITDA may only take into account cost savings, operating expense reductions and other operating improvements synergies that are (I) directly attributable to such acquisition, investment, merger, amalgamation or disposition, (II) expected to have a continuing impact on Lamar Media and its restricted subsidiaries and (III) factually supportable, in each case all as certified by the chief financial officer of Lamar Media on behalf of Lamar Media, and (ix) any loss or gain relating to amounts paid or earned in cash prior to the stated settlement date of any swap agreement that has been reflected in operating income for such period) and (except to the extent received or paid in cash by Lamar Advertising and 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. For purposes of calculating EBITDA, the effect on such calculation of any adjustments required under Statement of Financial Accounting Standards No. 141R is excluded. If during any period for which EBITDA is being determined, Lamar Media shall have consummated any acquisition or disposition, EBITDA shall be determined on a pro forma basis as if such acquisition or disposition had been made or consummated on the first day of such period.

The Company believes that its current level of cash on hand, availability under the senior credit facility and future cash flows from operations are sufficient to meet its operating needs through fiscal 2016. All debt obligations are reflected on the Company’s balance sheet.

Uses of Cash

Capital Expenditures. Capital expenditures excluding acquisitions were approximately $20.6 million for the three months ended March 31, 2016. We anticipate our 2016 total capital expenditures will be approximately $110 million.

Acquisitions. On January 7, 2016, the Company acquired the assets in five U.S. markets from Clear Channel Outdoor Holdings, Inc. for an aggregate cash purchase price of approximately $458.5 million. The cash purchase price was funded using borrowings from the Company’s revolving credit facility of $160 million and $300 million in borrowings under a Term A-1 incremental loan facility funded by JPMorgan Chase Bank, N.A. The Term A-1 loan was subsequently repaid in full and retired on January 28, 2016 using the net proceeds from Lamar Media’s issuance of $400 million in aggregate principal amount 5 3/4% Notes. See—“Sources of Cash-Note Offerings” for more information. A portion of the proceeds of the 5 3/4% Notes were applied to repay borrowings under the revolving credit facility.

The Company also completed seven additional acquisitions in the amount of $43.6 million during the first quarter of 2016, which were financed using available cash on hand or borrowings under its revolving credit facility.

 

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Term A Loans. The Term A Loans mature on February 2, 2019 and began amortizing on June 30, 2014. The remaining quarterly installments scheduled to be paid on each June 30, September 30, December 31 and March 31 are as follows:

 

Principal Payment Date

   Principal Amount  

June 30, 2016-March 31, 2017

   $ 5,625,000   

June 30, 2017-December 31, 2018

   $ 11,250,000   

Term A Loan Maturity Date

   $ 168,750,000   

The Term A Loans bear interest at rates based on the Adjusted LIBO Rate (“Eurodollar loans”) or the Adjusted Base Rate (“Base Rate loans”), at Lamar Media’s option. Eurodollar loans bear interest at a rate per annum equal to the Adjusted LIBO Rate plus 2.0%; (or the Adjusted LIBO Rate plus 1.75% at any time the Total Debt Ratio is less than or equal to 3.00 to 1). Base Rate Loans bear interest at a rate per annum equal to the Adjusted Base Rate plus 1.00% (or the Adjusted Base Rate plus 0.75% at any time the Total Debt Ratio is less than or equal to 3.00 to 1). The revolving credit facility bears interest at rates based on the Adjusted LIBO Rate (“Eurodollar loans”) or the Adjusted Base Rate (“Base Rate loans”), at Lamar Media’s option. Eurodollar loans bear interest at a rate per annum equal to the Adjusted LIBO Rate plus 2.25% (or the Adjusted LIBO Rate plus 2.00% at any time the Total Debt Ratio is less than or equal to 4.25 to 1; or the Adjusted LIBO Rate plus 1.75% at any time the Total Debt Ratio is less than or equal to 3.00 to 1). Base Rate Loans bear interest at a rate per annum equal to the Adjusted Base Rate plus 1.25% (or the Adjusted Base Rate plus 1.0% at any time the total debt ratio is less than or equal to 4.25 to 1, or the Adjusted Base Rate plus 0.75% at any time the Total Debt Ratio is less than or equal to 3.00 to 1). The guarantees, covenants, events of default and other terms of the senior credit facility apply to the Term A Loans and revolving credit facility.

Dividends. On February 25, 2016, Lamar Advertising Company’s Board of Directors declared a quarterly cash dividend of $0.75 per share payable on March 31, 2016 to its stockholders of record of its Class A common stock and Class B common stock on March 16, 2016. The Company expects aggregate quarterly distributions to stockholders in 2016, including the dividend paid on March 31, 2016, will total $3.02 per common share.

As a REIT, the Company must annually distribute to its stockholders an amount equal to at least 90% of its REIT taxable income (determined before the deduction for distributed earnings and excluding any net capital gain). The amount, timing and frequency of future distributions will be at the sole discretion of the Board of Directors and will be declared based upon various factors, a number of which may be beyond the Company’s control, including financial condition and operating cash flows, the amount required to maintain REIT status and reduce any income and excise taxes that the Company otherwise would be required to pay, limitations on distributions in our existing and future debt instruments, the Company’s ability to utilize net operating losses to offset, in whole or in part, the Company’s distribution requirements, limitations on its ability to fund distributions using cash generated through its Taxable REIT Subsidiaries (“TRSs”) and other factors that the Board of Directors may deem relevant.

Stock Repurchase Program. On December 11, 2014, the Company announced that its Board of Directors has authorized the repurchase of up to $250 million of the Company’s Class A common stock. There were no repurchases under the repurchase program for the three months ended March 31, 2016.

Off Balance Sheet Arrangements

The Company has no off-balance sheet arrangements with the exception of operating leases.

Commitments and Contingencies

Debt Service and Contractual Obligations. During the three months ended March 31, 2016, our outstanding debt increased to approximately $2.44 billion, net of deferred financing costs. In the future, Lamar Media has principal reduction obligations and revolver commitment reductions under the senior credit facility. In addition, it has fixed commercial commitments. These commitments are detailed as follows:

 

            Payments Due by Period  

Contractual Obligations

   Total      Less Than
1 Year
     1 - 3 Years      3 - 5 Years     After
5 Years
 
     (In millions)  

Long-Term Debt

   $ 2,438.2       $ 17.8       $ 491.8       $ (7.3   $ 1,935.9   

Interest obligations on long-term debt(1)

     873.9         124.2         247.5         220.4        281.8   

Billboard site and other operating leases

     1,349.5         159.7         272.4         214.1        703.3   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total payments due

   $ 4,661.6       $ 301.7       $ 1,011.7       $ 427.2      $ 2,921.0   

 

(1)  Interest rates on our variable rate instruments are assuming rates at the March 2016 levels.

 

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            Amount of Expiration Per Period  

Other Commercial Commitments

   Total Amount
Committed
     Less Than 1
Year
     1 - 3 Years      3 - 5 Years      After
5 Years
 
     (In millions)  

Revolving Bank Facility(2)

   $ 400.0       $  —         $ 400.0       $  —         $  —     

Standby Letters of Credit(3)

   $ 8.9       $ 8.5       $ 0.4       $  —         $  —     

 

(2)  Lamar Media had $255.0 million outstanding under the revolving facility at March 31, 2016.
(3)  The standby letters of credit are issued under Lamar Media’s revolving bank facility and reduce the availability of the facility by the same amount.

Accounting Standards Update

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In August 2015, the FASB issued ASU No. 2015-14 deferring the effective date from January 1, 2017 to January 1, 2018, while allowing for early adoption as of January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU No. 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

In February 2016, the FASB issued ASU No. 2016-02, Leases. The update is to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about lease arrangements. The amendments in this update are effective beginning January 1, 2019 with retrospective application. The Company is currently evaluating the impact of this update to determine the effect on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The update is designed to simplify accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The update is effective for annual periods beginning January 1, 2017 with early adoption permitted. The Company does not expect the adoption of this update will have a material impact on the consolidated financial statements.

LAMAR MEDIA CORP.

The following is a discussion of the consolidated financial condition and results of operations of Lamar Media for the three months ended March 31, 2016 and 2015. This discussion should be read in conjunction with the consolidated financial statements of Lamar Media and the related notes thereto.

RESULTS OF OPERATIONS

Three Months ended March 31, 2016 compared to Three Months ended March 31, 2015

Net revenues increased $36.1 million or 11.9% to $338.5 million for the three months ended March 31, 2016 from $302.5 million for the same period in 2015. This increase was attributable primarily to an increase in billboard net revenues of $28.8 million, which represents an increase of 10.8% over the same period in 2015, primarily due to the acquisition of assets in five new U.S. markets in January 2016 from Clear Channel Outdoor Holdings, Inc. In addition, logo sign revenue increased $1.2 million, which represents an increase of 6.6% over the prior period and there was a $6.1 million increase in transit revenue, which represents an increase of 34.9% over the prior period.

For the three months ended March 31, 2016, there was an $8.6 million increase in net revenues as compared to acquisition-adjusted net revenue for the three months ended March 31, 2015, which represents an increase of 2.6%. See “Reconciliations” below. The 2.6% increase is primarily due to an increase in local sales and digital revenue for three months ended March 31, 2016, as compared to the same period in 2015. The $8.6 million increase in revenue primarily consists of an $8.2 million increase in billboard revenue and a $0.7 million increase in logo revenue over the acquisition-adjusted net revenue for the comparable period in 2015.

Total operating expenses, exclusive of depreciation and amortization and gain on sale of assets, increased $23.7 million, or 12.6% to $211.4 million for the three months ended March 31, 2016 from $187.7 million in the same period in 2015. The $23.7 million increase over the prior year is comprised of a $23.1 million increase in direct and general and administrative operating expenses related to the operations of our outdoor advertising assets and corporate expense increases of $0.6 million.

 

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Depreciation and amortization expense increased $2.3 million, or 4.6% for the three months ended March 31, 2016, as compared to the three months ended March 31, 2015, primarily due to amortization and depreciation on the assets acquired in the five new U.S. markets purchased in January 2016.

Due to the above factors, operating income increased to $86.9 million for the three months ended March 31, 2016 compared to $67.3 million for the same period in 2015.

During the three months ended March 31, 2016, Lamar Media recognized a $3.1 million loss on extinguishment of debt related to the prepayment of Lamar Media’s Term A-1 loan under its senior credit facility.

Interest expense increased $5.5 million from $24.5 million for the three months ended March 31, 2015, to $30.1 million for the three months ended March 31, 2016, primarily resulting from the January 2016 issuance of $400 million in aggregate 5 3/4% Senior Notes due in 2026.

The increases in operating income, interest expense and loss on debt extinguishment resulted in a $10.9 million increase in net income before income taxes. This increase in income resulted in an increase in income tax expense of $0.3 million for the three months ended March 31, 2016 over the same period in 2015. The effective tax rate for the three months ended March 31, 2016 was 4.3%, which differs from the federal statutory rate primarily due to our qualification for taxation as a REIT and adjustments for foreign items.

As a result of the above factors, Lamar Media recognized net income for the three months ended March 31, 2016 of $51.4 million, as compared to net income of $40.8 million for the same period in 2015.

Reconciliations:

Because acquisitions occurring after December 31, 2014 (the “acquired assets”) have contributed to our net revenue results for the periods presented, we provide 2015 acquisition-adjusted net revenue, which adjusts our 2015 net revenue for the three months ended March 31, 2015 by adding to or subtracting from it the net revenue generated by the acquired or divested assets prior to our acquisition or divestiture of these assets for the same time frame that those assets were owned in the three months ended March 31, 2016.

Reconciliations of 2015 reported net revenue to 2015 acquisition-adjusted net revenue for the three months ended March 31, as well as a comparison of 2015 acquisition-adjusted net revenue to 2016 reported net revenue for the three months ended March 31, are provided below:

Reconciliation and Comparison of Reported Net Revenue to Acquisition-Adjusted Net Revenue 

 

     Three months ended
March 31,
 
     2016      2015  
     (in thousands)  

Reported net revenue

   $ 338,533       $ 302,477   

Acquisition net revenue

     —           27,426   
  

 

 

    

 

 

 

Acquisition-adjusted net revenue

   $ 338,533       $ 329,903   
  

 

 

    

 

 

 

Key Performance Indicators

Net Income/Adjusted EBITDA

(in thousands)

 

     Three Months Ended
March 31,
    

Amount of

Increase

     Percent
Increase
 
     2016      2015      (Decrease)     

Net income

   $ 51,407       $ 40,804       $ 10,603         26.0

Income tax expense

     2,307         2,008         299      

Loss on debt extinguishment

     3,142         —           3,142      

Interest expense (income), net

     30,067         24,530         5,537      

Gain on disposition of assets

     (11,327      (1,836      (9,491   

Depreciation and amortization

     51,489         49,230         2,259      

Stock-based compensation expense

     3,199         3,901         (702   
  

 

 

    

 

 

    

 

 

    

Adjusted EBITDA

   $ 130,284       $ 118,637       $ 11,647         9.8
  

 

 

    

 

 

    

 

 

    

 

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Adjusted EBITDA for the three months ended March 31, 2016 increased 9.8% to $130.3 million. The increase in Adjusted EBITDA was primarily attributable to the increase in our gross margin (net revenue less direct advertising expense) of $20.6 million, and was partially offset by an increase in general administrative and corporate expenses of $8.9 million, excluding the impact of stock-based compensation expense.

Net Income/FFO/AFFO

(in thousands)

 

     Three Months Ended
March 31,
    

Amount of

Increase

     Percent
Increase
 
     2016      2015      (Decrease)     

Net income

   $ 51,407       $ 40,804       $ 10,603         26.0

Depreciation and amortization related to real estate

     47,767         45,414         2,353      

Gain from sale or disposal of real estate

     (11,267      (1,742      (9,525   

Adjustments for unconsolidated affiliates and non-controlling interest

     96         167         (71   
  

 

 

    

 

 

    

 

 

    

FFO

   $ 88,003       $ 84,643       $ 3,360         4.0
  

 

 

    

 

 

    

 

 

    

Straight line income

     (50      (36      (14   

Stock-based compensation expense

     3,199         3,901         (702   

Non-cash portion of tax provision

     (182      (1,187      1,005      

Non-real estate related depreciation and amortization

     3,722         3,816         (94   

Amortization of deferred financing costs

     1,382         1,158         224      

Loss on extinguishment of debt

     3,142         —          3,142      

Capital expenditures – maintenance

     (6,692      (13,156      6,464      

Adjustments for unconsolidated affiliates and non-controlling interest

     (96      (167      71      
  

 

 

    

 

 

    

 

 

    

AFFO

   $ 92,428       $ 78,972       $ 13,456         17.0
  

 

 

    

 

 

    

 

 

    

FFO for the three months ended March 31, 2016 was $88.0 million as compared to FFO of $84.6 million for the same period in 2015. AFFO for the three months ended March 31, 2016 increased 17.0% to $92.4 million as compared to $79.0 million for the same period in 2015. AFFO growth was primarily attributable to the increase in our gross margin (net revenue less direct advertising expense) and a reduction in capital expenditures, partially offset by increases in general and administrative expenses, corporate expenses and interest expense.

 

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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 March 31, 2016 and should be read in conjunction with Note 8 of the Notes to the Company’s Consolidated Financial Statements in the 2015 Combined Form 10-K.

Loans under Lamar Media’s senior credit facility bear interest at variable rates equal to the Adjusted LIBO Rate or Adjusted Base Rate plus the applicable margin. Because the Adjusted LIBO Rate or Adjusted Base Rate may increase or decrease at any time, the Company is exposed to market risk as a result of the impact that changes in these base rates may have on the interest rate applicable to borrowings under the senior credit facility. Increases in the interest rates applicable to borrowings under the senior credit facility would result in increased interest expense and a reduction in the Company’s net income.

At March 31, 2016, there was approximately $525.0 million of aggregate indebtedness outstanding under the senior credit facility or approximately 21.5% of the Company’s outstanding long-term debt on that date, bearing interest at variable rates. The aggregate interest expense for the three months ended March 31, 2016 with respect to borrowings under the senior credit facility was $3.7 million, and the weighted average interest rate applicable to borrowings under this credit facility during the three months ended March 31, 2016 was 2.4%. Assuming that the weighted average interest rate was 200-basis points higher (that is 4.4% rather than 2.4%), then the Company’s three months ended March 31, 2016 interest expense would have increased by $2.8 million for the three months ended March 31, 2016.

The Company attempted to mitigate the interest rate risk resulting from its variable interest rate long-term debt instruments by issuing fixed rate long-term debt instruments and maintaining a balance over time between the amount of the Company’s variable rate and fixed rate indebtedness. In addition, the Company has the capability under the senior credit facility to fix the interest rates applicable to its borrowings at an amount equal to LIBOR plus the applicable margin for periods of up to twelve months (in certain cases with the consent of the lenders), which would allow the Company to mitigate the impact of short-term fluctuations in market interest rates. In the event of an increase in interest rates, the Company may take further actions to mitigate its exposure. The Company cannot guarantee, however, that the actions that it may take to mitigate this risk will be feasible or that, if these actions are taken, that they will be effective.

 

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ITEM 4. CONTROLS AND PROCEDURES

a) Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures.

The Company’s and Lamar Media’s management, with the participation of the principal executive officer and principal financial officer of the Company and Lamar Media, have evaluated the effectiveness of the design and operation of the Company’s and Lamar Media’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this quarterly report. Based on this evaluation, the principal executive officer and principal financial officer of the Company and Lamar Media concluded that these disclosure controls and procedures are effective and designed to ensure that the information required to be disclosed in the Company’s and Lamar Media’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the requisite time periods.

b) Changes in Internal Control Over Financial Reporting.

There was no change in the internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) of the Company and Lamar Media identified in connection with the evaluation of the Company’s and Lamar Media’s internal control performed during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s and Lamar Media’s internal control over financial reporting.

PART II OTHER INFORMATION

 

ITEM 1A. RISK FACTORS

Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in our combined Annual Report on Form 10-K for the year ended December 31, 2015, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our Class A common stock. There have been no material changes to our risk factors since our combined Annual Report on Form 10-K for the year ended December 31, 2015.

 

ITEM. 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth the Company’s repurchases of its securities during the three-month period ending on March 31, 2016:

 

Period

   Total
Number of
Shares
Purchased (1)
     Average
Price Paid
Per Share (1)
     Total Number of
Shares
Purchased
as Part of
Publicly
Announced
Plans or
Programs
     Approximate
Dollar Value of
Shares that May
Yet Be
Purchased
Under the Plans
or Programs (2)
 

January 1-31, 2016

     —         $ —           —         $ 250,000,000   

February 1-29, 2016

     111,252         57.03         —           250,000,000   

March 1-31, 2016

     —           —           —           250,000,000   
  

 

 

       

 

 

    

 

 

 

Three months ended March 31, 2016

     111,252       $ 57.03         —         $ 250,000,000   
  

 

 

       

 

 

    

 

 

 

 

(1)  Represents the acquisition of an aggregate of 111,252 shares of the Company’s Class A Common Stock from individuals in order to satisfy tax withholding requirements in connection with the issuance of stock awards under equity compensation plans during the first quarter.
(2)  On December 11, 2014, the Company announced that its Board of Directors had approved a stock repurchase program authorizing the repurchase of up to $250 million of the Company’s Class A common stock. The stock repurchase program will expire on June 30, 2016 unless extended by the Board of Directors.

 

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: May 5, 2016     BY:  

/s/ Keith A. Istre

      Chief Financial and Accounting Officer and Treasurer
    LAMAR MEDIA CORP.
DATED: May 5, 2016     BY:  

/s/ Keith A. Istre

      Chief Financial and Accounting Officer and Treasurer

 

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INDEX TO EXHIBITS 

 

Exhibit

Number

 

Description

    2.1   Equity Purchase Agreement dated January 7, 2016 by and among CCOI Holdco Parent I, LLC, CCOI Holdco Sub I, LLC, and Lamar Media Corp (“Lamar Media”). Previously filed as Exhibit 2.1 to the Lamar Advertising Company’s (the “Company”) Current Report on Form 8-K (File No. 1-36756) filed on January 13, 2016 and incorporated herein by reference.
    2.2   Equity Purchase Agreement dated January 7, 2016 by and among CCOI Holdco Parent II, LLC, CCOI Holdco Sub II, LLC, and Lamar Media. Previously filed as Exhibit 2.2 to the Company’s Current Report on Form 8-K (File No. 1-36756) filed on January 13, 2016 and incorporated herein by reference.
    3.1   Amended and Restated Certificate of Incorporation of the Company, as filed with the Secretary of the State of Delaware effective as of November 18, 2014. Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 1-36756) filed on November 19, 2014 and incorporated herein by reference.
    3.2   Certificate of Merger, effective as of November 18, 2014. Previously filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 1-36756) filed on November 19, 2014 and incorporated herein by reference.
    3.3   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.
    3.4   Amended and Restated Bylaws of the Company, adopted as of November 18, 2014. Previously filed as Exhibit 3.3 to the Company’s Current Report on Form 8-K (File No. 1-36756) filed on November 19, 2014 and incorporated herein by reference.
    3.5   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 January 28, 2016, between Lamar Media, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee (including the Form of Note and Guarantee as Exhibit A thereto). Previously filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 1-36756) filed on February 1, 2016 and incorporated herein by reference.
  10.1   Incremental Amendment No. 1 dated January 7, 2016 to the Second Amended and Restated Credit Agreement, dated as of February 3, 2014, as amended by and among Lamar Media, the Company, the Subsidiary Guarantors named therein, the Lenders named therein, and JPMorgan Chase Bank, N.A., as Administrative Agent. Previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-36756) filed on January 13, 2016 and incorporated herein by reference.
  10.2   Registration Rights Agreement, dated as of January 28, 2016, between Lamar Media, the Guarantors named therein and J.P. Morgan Securities LLC, as representative for the Initial Purchasers named therein. Previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-36756) filed on February 1, 2016 and incorporated herein by reference.
  10.3   Amendment No. 2, dated as of March 4, 2016, to the Second Amended and Restated Credit Agreement, dated as of February 3, 2014, as amended by and among Lamar Media, the Company, certain of Lamar Media’s subsidiaries as Guarantors, JPMorgan Chase Bank, N.A. as Administrative Agent and the Lenders party thereto. Previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-36756) filed on March 8, 2016 and incorporated herein by reference.
  10.4   Summary of Compensatory Arrangements. Previously filed on the Company’s Current Report on Form 8-K (File No. 1-36756) filed on March 29, 2016 and incorporated herein by reference.
  12 (a)   Statement regarding computation of earnings to fixed charges for the Company. Filed herewith.
  12 (b)   Statement regarding computation of earnings to fixed charges for Lamar Media. Filed herewith.
  31.1   Certification of the Chief Executive Officer of the 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 the Company and Lamar Media pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
  32.1   Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.
101   The following materials from the combined Quarterly Report of the Company and Lamar Media on Form 10-Q for the quarter ended March 31, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015 of the Company and Lamar Media, (ii) Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2016 and 2015 of the Company and Lamar Media, (iii) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015 of the Company and Lamar Media, and (iv) Notes to Condensed Consolidated Financial Statements of the Company and Lamar Media.

 

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