SEC Filing | Lamar Advertising

1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 ----------------- ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number 0-30242 Lamar Advertising Company Commission File Number 1-12407 Lamar Media Corp. (Exact name of registrants as specified in its charter) Delaware 72-1449411 Delaware 72-1205791 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 5551 Corporate Blvd., Baton Rouge, LA 70808 (Address of principal executive offices) (Zip Code) Registrants' telephone number, including area code: (225) 926-1000 SECURITIES OF LAMAR ADVERTISING COMPANY REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Name of each Exchange Title of Each Class: On Which Registered: - ------------------- ---------------------- Class A common stock, Nasdaq National Market $.001 par value SECURITIES OF LAMAR ADVERTISING COMPANY REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None SECURITIES OF LAMAR MEDIA CORP. REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Name of each Exchange Title of Each Class: On Which Registered: - ------------------- -------------------- None N/A SECURITIES OF LAMAR MEDIA CORP. REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: 9 5/8% Senior Subordinated Notes due 2006 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ) Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ( ) The aggregate market value of the voting stock held by nonaffiliates of Lamar Advertising Company as of March 8, 2000: $1,962,907,848 The number of shares of Lamar Advertising Company's Class A common stock outstanding as of March 8, 2000: 71,555,810 The number of shares of the Lamar Advertising Company's Class B common stock outstanding as of March 8, 2000: 17,000,000 This combined Form 10-K is separately filed by (i) Lamar Advertising Company and (ii) Lamar Media Corp. (which is a wholly-owned subsidiary of Lamar Advertising Company). Lamar Media Corp. meets the conditions set forth in general instruction I(1) (A) and (B) of Form 10-K and is, therefore, filing this form with the reduced disclosure format permitted by such instruction.

2 On July 20, 1999, Lamar Advertising Company completed a corporate reorganization to create a new holding company structure. The reorganization was accomplished through a merger under section 251(g) of the Delaware General Corporation Law. At the effective time of the merger, all stockholders of Lamar Advertising Company became stockholders in a new holding company and Lamar Advertising Company became a wholly-owned subsidiary of the new holding company. The new holding company took the Lamar Advertising Company name and the old Lamar Advertising Company was renamed Lamar Media Corp. In the merger, all outstanding shares of old Lamar Advertising Company's capital stock were converted into shares of the new holding company with the same voting powers, designations, preferences and rights, and the same qualifications, restrictions and limitations, as the shares of old Lamar Advertising Company. Following the restructuring, the Class A common stock of the new holding company trades under the symbol "LAMR" on the Nasdaq National Market with the same CUSIP number as the old Lamar Advertising Company's Class A common stock. In this annual report, "Lamar," the "Company," "we," "us" and "our" refer to Lamar Advertising Company and its consolidated subsidiaries with respect to periods following the reorganization and to old Lamar Advertising Company with respect to periods prior to the reorganization, except where we make it clear that we are only referring to Lamar Media Corp. or a particular subsidiary. In addition, "Lamar Media" and "Media" refer to Lamar Media Corp. and its consolidated subsidiaries with respect to periods following the reorganization and to old Lamar Advertising Company with respect to periods prior to the reorganization, except where we make it clear that we are only referring to Lamar Media Corp. or a particular subsidiary. DOCUMENTS INCORPORATED BY REFERENCE Portions of Lamar Advertising Company's proxy statement for the Annual Meeting of Stockholders to be held on May 25, 2000 are incorporated by reference into Part III of this Form 10-K. NOTE REGARDING FORWARD-LOOKING STATEMENTS This combined Annual Report on Form 10-K of Lamar Advertising Company and Lamar Media Corp. contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These are statements that relate to future periods and include statements about the Company's, and Lamar Media's: o expected operating results; o market opportunities; o acquisition opportunities; o ability to compete; and o stock price. Generally, the words "anticipates," "believes," "expects," "intends," "estimates," "projects," "plans" and similar expressions identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the Company's actual results, performance or achievements or industry results, to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. These risks, uncertainties and other important factors include, among others: (1) risks and uncertainties relating to the Company's significant indebtedness; (2) the need for additional funds; (3) the integration of companies that the Company acquires and the Company's ability to recognize cost savings or operating efficiencies as a result of -2-

3 such acquisitions; (4) the continued popularity of outdoor advertising as an advertising medium; (5) the regulation of the outdoor advertising industry and (6) the risks and uncertainties described below under the caption "Factors Affecting Future Operating Results" under Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations. The forward-looking statements contained in this Annual Report on Form 10-K speak only as of the date of this Annual Report. Lamar Advertising Company and Lamar Media expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained in this Annual Report to reflect any change in their expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based. PART I ITEM 1. BUSINESS GENERAL Lamar is one of the largest and most experienced owners and operators of outdoor advertising structures in the United States. The Company conducts a business that has operated under the Lamar name since 1902. As of December 31, 1999, the Company operated approximately 116,800 outdoor advertising displays in 42 states. The Company also operates the largest logo sign business in the United States. Logo signs are signs located near highway exits which deliver brand name information on available gas, food, lodging and camping services. As of December 31, 1999, the Company maintained over 79,500 logo sign displays in 20 states. The Company also operates transit advertising displays on bus shelters, bus benches and buses in several markets. BUSINESS STRATEGY OUTDOOR ADVERTISING The Company's overall business strategy is to be the leading provider of outdoor advertising in the markets it serves. This strategy includes the following elements: OPERATING STRATEGY: HIGH QUALITY LOCAL SALES AND SERVICE. Local advertising constituted approximately 86% of the Company's net revenues in 1999, which management believes is higher than the industry average. The Company attempts to identify and closely monitor the needs of its customers and seeks to provide them with quality advertising products at a lower cost than competitive media. At December 31, 1999, the Company's 526-person sales force was supported by 126 full- service offices. Each salesperson is compensated under a performance-based compensation system and supervised by a sales manager executing a coordinated marketing plan. Art departments assist local customers in the development and production of creative, effective advertisements. CENTRALIZED CONTROL/DECENTRALIZED MANAGEMENT. Management believes that in 126 of the 139 markets in which the Company operated at December 31, 1999, the Company is the only outdoor advertising company offering a full complement of outdoor advertising services coupled with local production facilities, management and account executives. Local offices operate in defined geographic areas and function essentially as independent business units, consistent with senior management's philosophy that a decentralized organization is more responsive to particular local market demands. -3-

4 The Company maintains centralized accounting and financial control over its local operations, but local managers are responsible for the day-to-day operations in each local market and are compensated according to that market's financial performance. Each local manager reports to one of nine regional managers who in turn report to the Company's Chief Executive Officer. GROWTH STRATEGY: INTERNAL GROWTH. Within its existing markets, the Company enhances revenue and cash flow growth by employing highly targeted local marketing efforts to improve display occupancy rates and by increasing advertising rates. This strategy is facilitated through its local sales and service offices, which allow management to respond quickly to the demands of its local customer base. In addition, the Company routinely invests in upgrading its existing structures and constructing new display faces in order to provide quality service to its current customers and to attract new advertisers. ACQUISITIONS. Aggressive internal growth is enhanced by focused strategic acquisitions, resulting in increased operating efficiencies, greater geographic diversification and increased market penetration. The Company has completed over 220 acquisitions of outdoor advertising businesses since 1983. In addition to acquiring positions in new markets, the Company purchases smaller outdoor advertising properties within existing or contiguous markets. Acquisitions offer opportunities for inter-market cross-selling and the opportunity to centralize and combine accounting and administrative functions, thereby achieving economies of scale. In addition, the Company leverages its reputation for high quality local sales and service by taking advantage of opportunities to acquire high-profile bulletin displays that may become available in larger markets. Although the acquisition market is becoming more competitive, the Company believes that there will be future opportunities for implementing the Company's acquisition strategy given the industry's fragmentation and current consolidation trends. During 1999, the Company increased the number of outdoor advertising displays it operates by approximately 62% by acquiring outdoor advertising assets, including the completion of 77 strategic acquisitions of outdoor advertising businesses as well as isolated purchases of outdoor advertising displays. Certain of the Company's principal acquisitions since January 1, 1999 are described below: American Displays, Inc. On January 5, 1999, the Company purchased all of the outdoor advertising assets of American Displays, Inc. for a cash purchase price of approximately $14.5 million. The acquisition consisted of displays in Grand Rapids, Michigan. KJS, LLC. On February 1, 1999, the Company purchased all of the outdoor advertising assets of KJS, LLC for a cash purchase price of $40.5 million. The approximately 1,400 displays were located in Lincoln and Omaha, Nebraska. Frank Hardie, Inc. On April 1, 1999, the Company purchased all of the assets of Frank Hardie, Inc. for a cash purchase price of approximately $20.3 million. The acquisition included approximately 900 displays in Dubuque and Waterloo, Iowa. -4-

5 Vivid, Inc. On June 1, 1999, the Company purchased the assets of Vivid, Inc. for a cash purchase price of approximately $22.1 million. The approximately 1,000 displays are located in Quad Cities, Illinois; Rockford, Illinois; and Rapid City, South Dakota. Chancellor Media Outdoor Corporation On September 15, 1999, Lamar Media Corp. purchased the capital stock of Chancellor Media Outdoor Corporation and Chancellor Media Whiteco Outdoor Corporation, ("Chancellor Outdoor") for a combination of approximately $700 million in cash and 26,227,273 shares of the Company's Class A common stock valued at approximately $947 million. The acquisition included approximately 36,000 outdoor advertising displays which gave the Company a presence in 8 additional states and established 31 new markets. LOGO SIGNS The Company entered the business of logo sign advertising in 1988. The Company is now the largest provider of logo sign services in the United States, operating 20 of the 25 privatized state logo sign contracts. The Company also operates the tourism signing contracts in six states and the province of Ontario, Canada. The Company plans to pursue additional logo sign contracts, through both new contract awards and, possibly, the acquisition of other logo sign operators. Logo sign opportunities arise periodically, both from states initiating new logo sign programs and states converting from government owned and operated programs to privately owned and operated programs. Furthermore, the Company plans to pursue additional tourism signing programs in Canada and is seeking to expand into other state-authorized signage programs, such as those involving directional signs providing tourist information. TRANSIT AND OTHER The Company has recently expanded into the transit advertising business through the operation of displays on bus shelters, benches and buses in 22 of its outdoor advertising markets, three markets in South Carolina, two markets in Utah, one market in California, one market in Florida and one in Colorado. The Company plans to continue pursuing transit advertising opportunities that arise in its primary markets and to expand into other markets. -5-

6 MARKETS As of December 31, 1999, the Company's 139 primary outdoor advertising markets were: Birmingham, Alabama Paducah, Kentucky Oklahoma City, Oklahoma Gadsden, Alabama Alexandria, Louisiana Allentown, Pennsylvania Huntsville, Alabama Baton Rouge, Louisiana Altoona, Pennsylvania Mobile, Alabama Hammond, Louisiana Erie, Pennsylvania Montgomery, Alabama Houma, Louisiana Harrisburg, Pennsylvania Shoals, Alabama Lafayette, Louisiana Pittsburgh, Pennsylvania Tuscaloosa, Alabama Lake Charles, Louisiana Reading, Pennsylvania Phoenix, Arizona Monroe, Louisiana Scranton, Pennsylvania Yuma, Arizona New Orleans, Louisiana Williamsport, Pennsylvania Bakersfield, California Shreveport, Louisiana York, Pennsylvania Lancaster, California Slidell, Louisiana Providence, Rhode Island Sacramento, California Detroit, Michigan Anderson, South Carolina San Bernardino, California Escanaba, Michigan Columbia, South Carolina Colorado Springs, Colorado Muskegon, Michigan Rapid City, South Dakota Denver, Colorado Port Huron, Michigan Clarksville, Tennessee Hartford, Connecticut Saginaw, Michigan Cookeville, Tennessee Daytona Beach, Florida Traverse City, Michigan Jackson, Tennessee Fort Myers, Florida Duluth, Minnesota Johnson City, Tennessee Fort Walton, Florida St. Cloud, Minnesota Knoxville, Tennessee Lakeland, Florida Columbus, Mississippi Murfreesboro, Tennessee Ocala, Florida Corinth, Mississippi Nashville, Tennessee Panama City, Florida Greenville, Mississippi Abilene, Texas Pensacola, Florida Gulfport, Mississippi Amarillo, Texas Tallahassee, Florida Hattiesburg, Mississippi Beaumont, Texas Albany, Georgia Jackson, Mississippi Brownsville, Texas Anderson, Georgia Meridian, Mississippi Corpus Christi, Texas Athens, Georgia Bonne Terre, Missouri Dallas, Texas Atlanta, Georgia Hannibal, Missouri Houston, Texas Augusta, Georgia Joplin, Missouri Laredo, Texas Brunswick, Georgia Kansas City, Missouri Lubbock, Texas Macon, Georgia Osage Beach, Missouri Midland, Texas Rome, Georgia Springfield, Missouri San Angelo, Texas Savannah, Georgia Billings, Montana Tyler, Texas Valdosta, Georgia Lincoln, Nebraska Wichita Falls, Texas Boise, Idaho Omaha, Nebraska Richmond, Virginia Decatur, Illinois Las Vegas, Nevada Roanoke, Virginia Janesville, Illinois Laughlin/Bullhead, Nevada Spokane, Washington Evansville, Indiana Albany, New York Tacoma, Washington Gary, Indiana Buffalo, New York Bluefield, West Virginia Terre Haute, Indiana Rochester, New York Bridgeport, West Virginia Cedar Rapids, Iowa Syracuse, New York Huntington, West Virginia Davenport/Quad Cities, Iowa Asheville, North Carolina Wheeling, West Virginia Dubuque, Iowa Elizabethtown, N. Carolina Eau Claire, Wisconsin Waterloo, Iowa Cincinnati, Ohio Milwaukee, Wisconsin Topeka, Kansas Columbus, Ohio Casper, Wyoming Lexington, Kentucky Dayton, Ohio Louisville, Kentucky Youngstown, Ohio As of December 31, 1999, the Company operated the following logo sign contracts: Colorado Kentucky Nebraska Oklahoma Delaware Michigan Nevada South Carolina Florida Minnesota New Jersey Texas Georgia Mississippi New Mexico Utah Kansas Missouri Ohio Virginia Ontario -6-

7 COMPANY OPERATIONS OUTDOOR ADVERTISING INVENTORY: The Company operates the following types of outdoor advertising displays: BULLETINS generally are 14 feet high and 48 feet wide (672 square feet) and consist of panels on which advertising copy is displayed. The advertising copy is either hand painted onto the panels at the Company's facilities in accordance with design specifications supplied by the advertiser and attached to the outdoor advertising structure, or printed with computer-generated graphics on a single sheet of vinyl that is wrapped around the structure. On occasion, to attract more attention, some of the panels may extend beyond the linear edges of the display face and may include three-dimensional embellishments. Because of their greater impact and higher cost, bulletins are usually located on major highways. STANDARDIZED POSTERS generally are 12 feet high by 25 feet wide (300 square feet) and are the most common type of billboard. Advertising copy for these posters consists of lithographed or silk-screened paper sheets supplied by the advertiser that are pasted and applied like wallpaper to the face of the display, or single sheets of vinyl with computer-generated advertising copy that are wrapped around the structure. Standardized posters are concentrated on major traffic arteries. JUNIOR POSTERS usually are 6 feet high by 12 feet wide (72 square feet). Displays are prepared and mounted in the same manner as standardized posters, except that vinyl sheets are not typically used on junior posters. Most junior posters, because of their smaller size, are concentrated on city streets and target pedestrian traffic. For the year ended December 31, 1999, approximately 65% of the Company's outdoor advertising net revenues were derived from bulletin sales and 35% from poster sales. The Company regularly donates unoccupied display space for use by charitable and civic organizations. The physical structures are owned by the Company and are built on locations the Company either owns or leases. In each local office one employee typically performs site leasing activities for the markets served by that office. See Item 2. -- "Properties." Bulletin space is generally sold as individually selected displays for the duration of the advertising contract. Bulletins may also be sold as part of a rotary plan where advertising copy is periodically rotated from one location to another within a particular market. Poster space is generally sold in packages called "showings," which comprise a given number of displays in a market area. Posters provide advertisers with access either to a specified percentage of the general population or to a specific targeted audience. Displays making up a showing are placed in well-traveled areas and are distributed so as to reach a wide audience in a particular market. Bulletin space is generally sold for 12 month periods. Poster space averages between 30 and 90 days. PRODUCTION: The Company's local production staffs in 126 of its markets perform the full range of activities required to create and install outdoor advertising. Production work includes creating the advertising copy design and layout, painting the design or coordinating its printing and installing the designs on displays. The Company provides its production services to local advertisers and to advertisers that are not represented by advertising agencies, since national advertisers represented by advertising agencies often use preprinted designs that require only installation. -7-

8 The Company's creative and production personnel typically develop new designs or adopt copy from other media for use on billboards. The Company's artists also often assist in the development of marketing presentations, demonstrations and strategies to attract new advertisers. With the increased use of vinyl and pre-printed advertising copy furnished to the outdoor advertising company by the advertiser or its agency, outdoor advertising companies require less labor-intensive production work. In addition, increased use of vinyl and preprinted copy is also attracting more customers to the outdoor advertising medium. The Company believes that this trend over time will reduce operating expenses associated with production activities. CATEGORIES OF BUSINESS: The following table sets forth the top ten categories of business from which the Company derived its outdoor advertising revenues for 1999 and the respective percentages of such revenue. These business categories accounted for approximately 72% of the Company's total outdoor advertising net revenues in the year ended December 31, 1999. No one advertiser accounted for more than 3.0% of the Company's total outdoor advertising net revenues in that period. PERCENTAGE NET ADVERTISING CATEGORIES REVENUES Restaurants 12% Retailers 10% Hotels and motels 9% Automotive 9% Miscellaneous 8% Service 7% Hospitals and medical care 5% Gambling 4% Amusement - entertainment and sport 4% Media 4% ---- Total 72% ==== LOGO SIGNS The Company is the largest provider of logo sign services in the United States and operates over 24,800 logo sign structures containing over 79,500 logo advertising displays. The Company has been awarded contracts to erect and operate logo signs in the states of Colorado, Delaware, Florida, Georgia, Michigan, Minnesota, Mississippi, Nebraska, New Jersey, New Mexico, Ohio, Oklahoma, South Carolina, Texas, Utah and Virginia, the providence of Ontario, Canada, and through a 66.7% owned partnership in the state of Missouri. In addition, the Company has acquired the logo sign contracts in Kansas, Kentucky, and Nevada. The Company also operates the tourism signing contracts for the states of Colorado, Kentucky, Michigan, Nebraska, New Jersey and Ohio as well as for the province of Ontario, Canada. State logo sign contracts represent the contract right to erect and operate logo signs within a state. The term of the contracts vary, but generally range from ten to twenty years, including renewal terms. The logo sign contracts generally provide for termination by the state prior to the end of the term of the contract, in most cases with compensation to be paid to the Company. Typically, at the end of the term of the contract, ownership of the structures is transferred to the state without compensation to the Company. Of the Company's logo sign contracts, one is due to terminate in December, 2000, and three are subject to renewal over the next year, one in April, 2000, one in June, 2000 and another in October, 2000. -8-

9 The Company also designs and produces logo sign plates for customers throughout the country, including for use in states which have not yet privatized their logo sign programs. EMPLOYEES The Company employed approximately 2,600 persons at December 31, 1999. Of these, 110 were engaged in overall management and general administration at the Company's management headquarters and the remainder were employed in the Company's operating offices. Of these, approximately 526 were direct sales and marketing personnel. The Company has 11 local offices covered by collective bargaining agreements, consisting of painters, billposters and construction personnel. The Company believes that its relations with its employees, including its 121 unionized employees, are good, and the Company has never experienced a strike or other labor dispute. COMPETITION OUTDOOR ADVERTISING The Company competes in each of its markets with other outdoor advertisers as well as other media, including broadcast and cable television, radio, print media and direct mail marketers. In addition, the Company also competes with a wide variety of out-of-home media, including advertising in shopping centers, malls, airports, stadiums, movie theaters and supermarkets, as well as on taxis, trains and buses. Advertisers compare relative costs of available media and cost-per-thousand impressions, particularly when delivering a message to customers with distinct demographic characteristics. In competing with other media, outdoor advertising relies on its relative cost efficiency and its ability to reach a broad segment of the population in a specific market or to target a particular geographic area or population with a particular set of demographic characteristics within that market. The outdoor advertising industry is fragmented, consisting of several large outdoor advertising and media companies with operations in multiple markets as well as smaller and local companies operating a limited number of structures in single or a few local markets. Although some consolidation has occurred over the past few years, according to the Outdoor Advertising Association of America ("OAAA") there are approximately 600 companies in the outdoor advertising industry operating approximately 465,000 billboard displays. In several of its markets, the Company encounters direct competition from other major outdoor media companies, including Infinity Broadcasting Corp. (formerly Outdoor Systems, Inc.) and Clear Channel Communications, Inc. (formerly Eller Media) both of which may have greater total resources than the Company. The Company believes that its strong emphasis on sales and customer service and its position as a major provider of advertising services in each of its primary markets enables it to compete effectively with the other outdoor advertising companies, as well as other media, within those markets. LOGO SIGNS The Company faces competition in obtaining new logo sign contracts and in bidding for renewals of expiring contracts. The Company faces competition from two other national providers of logo signs in seeking state-awarded logo service contracts. In addition, local companies within each of the states that solicit bids will compete against the Company in the open-bid process. Competition from these sources is also encountered at the end of each contract period. In marketing logo signs to advertisers, the Company competes with the other forms of out-of-home advertising described above. -9-

10 REGULATION Outdoor advertising is subject to governmental regulation at the federal, state and local levels. Federal law, principally the Highway Beautification Act of 1965 (the "HBA") regulates outdoor advertising on federally aided primary and interstate highways. The HBA requires, as a condition to federal highway assistance, states to restrict billboards on such highways to commercial and industrial areas, and requires certain additional size, spacing and other limitations. All states have passed state billboard control statutes and regulations at least as restrictive as the federal requirements, including removal at the owner's expense and without compensation of any illegal signs on such highways. The Company believes that the number of its billboards that may be subject to removal as illegal is immaterial. No state in which the Company operates has banned billboards, but some have adopted standards more restrictive than the federal requirements. Municipal and county governments generally also have sign controls as part of their zoning laws. Some local governments prohibit construction of new billboards and some allow new construction only to replace existing structures, although most allow construction of billboards subject to restrictions on zones, size, spacing and height. Federal law does not require removal of existing lawful billboards, but does require payment of compensation if a state or political subdivision compels the removal of a lawful billboard along a federally aided primary or interstate highway. State governments have purchased and removed legal billboards for beautification in the past, using federal funding for transportation enhancement programs, and may do so in the future. Governmental authorities from time to time use the power of eminent domain to remove billboards. Thus far, the Company has been able to obtain satisfactory compensation for any of its billboards purchased or removed as a result of governmental action, although there is no assurance that this will continue to be the case in the future. Local governments do not generally purchase billboards for beautification, but some have attempted to force removal of legal but nonconforming billboards (billboards which conformed with applicable zoning regulations when built but which do not conform to current zoning regulations) after a period of years under a concept called "amortization," by which the governmental body asserts that just compensation is earned by continued operation over time. Although there is some question as to the legality of amortization under federal and many state laws, amortization has been upheld in some instances. The Company generally has been successful in negotiating settlements with municipalities for billboards required to be removed. Restrictive regulations also limit the Company's ability to rebuild or replace nonconforming billboards. The outdoor advertising industry is heavily regulated and at various times and in various markets can be expected to be subject to varying degrees of regulatory pressure affecting the operation of advertising displays. Accordingly, although the Company's experience to date is that the regulatory environment can be managed, no assurance can be given that existing or future laws or regulations will not materially and adversely affect the Company. A new national tobacco settlement eliminated outdoor advertising of tobacco products in the U.S. in November, 1998. As of April 1, 1999, the Company removed all of its outdoor advertising of tobacco products. Our tobacco revenues as a percentage of consolidated net revenues were 7% for the year ended December 31, 1998 and 3% for the year ended December 31, 1999. The Company expects to have no tobacco revenues in fiscal 2000. -10-

11 ITEM 1A. EXECUTIVE OFFICERS OF THE REGISTRANT Name Age Title - ---- --- ----- Kevin P. Reilly, Jr. 45 Chairman, President and Chief Executive Officer Keith A. Istre 47 Chief Financial Officer and Treasurer Sean E. Reilly 38 Director of Mergers and Acquisitions and President of the Real Estate Division Each officer's term of office extends until the meeting of the Board of Directors following the next annual meeting of stockholders and until a successor is elected and qualified or until his or her earlier resignation or removal. Kevin P. Reilly, Jr. has served as the Company's President and Chief Executive Officer since February 1989 and as a director of the Company since February 1984. Mr. Reilly served as President of the Company's Outdoor Division from 1984 to 1989. Mr. Reilly, an employee of the Company since 1978, has also served as Assistant and General Manager of the Company's Baton Rouge Region and Vice President and General Manager of the Louisiana region. Mr. Reilly received a B.A. from Harvard University in 1977. Keith A. Istre has been Chief Financial Officer of the Company since February 1989 and a director of the Company since February 1991. Mr. Istre joined the Company as Controller in 1978. Prior to joining the Company, Mr. Istre was employed by a public accounting firm in Baton Rouge from 1975 to 1978. Mr. Istre graduated from the University of Southwestern Louisiana in 1974 with a B.S. in accounting. Sean E. Reilly is Director of Mergers and Acquisitions and President of the Company's real estate division, TLC Properties, Inc. He began working with the Company as Vice President of Mergers and Acquisitions in 1987 and served in that capacity until 1994. He served as a director of the Company from 1989 to 1996. Mr. Reilly was the Chief Executive Officer of Wireless One, Inc., a wireless cable television company, from 1994 to 1997. Mr. Reilly received a B.A. from Harvard University in 1984 and a J.D. from Harvard Law School in 1989. ITEM 2. PROPERTIES The Company's 53,500 square foot management headquarters is located in suburban Baton Rouge, Louisiana. The Company occupies approximately 67% of the space in this facility and leases the remaining space. The Company owns 66 local operating facilities with front office administration and sales office space connected to back-shop poster and bulletin production space. In addition, the Company leases an additional 106 operating facilities at an aggregate lease expense for 1999 of approximately $2,125,000. The Company owns approximately 2,128 parcels of property beneath outdoor structures. As of December 31, 1999, the Company had approximately 62,755 active outdoor site leases accounting for a total annual lease expense of $61.1 million. This amount represented 14% of total outdoor advertising net revenues for that period, which is consistent with the Company's historical lease expense experience. The Company's leases are for varying terms ranging from month-to-month to in some cases a term of over ten years, and many provide the Company with renewal options. There is no significant concentration of displays under any one lease or subject to negotiation with any one landlord. The Company believes that an important part of its management activity is to manage its lease portfolio and negotiate suitable lease renewals and extensions. -11-

12 ITEM 3. LEGAL PROCEEDINGS The Company from time to time is involved in litigation in the ordinary course of business, including disputes involving advertising contracts, site leases, employment claims and construction matters. The Company is also involved in routine administrative and judicial proceedings regarding billboard permits, fees and compensation for condemnations. The Company is not a party to any lawsuit or proceeding which, in the opinion of management, is likely to have a material adverse effect on the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report. -12-

13 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Since August 2, 1996, the Company's Class A common stock has traded on the over-the-counter market and prices have been quoted on the Nasdaq National Market under the symbol "LAMR." Prior to August 2, 1996, the day on which the Class A common stock was first publicly traded, there was no public market for the Class A common stock. On December 31, 1997, the Company declared a 3-for-2 stock split of shares of Class A common stock, which was paid in the form of a 50% stock dividend on February 27, 1998. All share and per share amounts included herein have been restated to reflect this split. As of March 14, 2000, the Class A common stock was held by 202 shareholders of record. The Company believes, however, that the actual number of beneficial holders of the Class A common stock may be substantially greater than the stated number of holders of record because a substantial portion of the Class A common stock is held in "street name." The following table sets forth, for the periods indicated, the high and low bid prices for the Class A common stock as reported on the Nasdaq National Market. HIGH LOW ------ ------ Fiscal year ended December 31, 1998: First Quarter $38.50 $24.42 Second Quarter 36.75 29.25 Third Quarter 41.50 24.50 Fourth Quarter 39.25 19.25 Fiscal year ended December 31, 1999: First Quarter $41.63 $32.25 Second Quarter 43.00 27.75 Third Quarter 50.69 35.25 Fourth Quarter 64.50 44.63 The Company's Class B common stock is not publicly traded and is held of record by one entity. The Company does not anticipate paying dividends on either class of its common stock in the foreseeable future. The Company's Series AA preferred stock is entitled to preferential dividends, in an annual aggregate amount of $364,903, before any dividends may be paid on the common stock. In addition, the Company's bank credit facilities and other indebtedness have terms restricting the payment of dividends. Any future determination as to the payment of dividends will be subject to such limitations, will be at the discretion of the Company's Board of Directors and will depend on the Company's results of operations, financial condition, capital requirements and other factors deemed relevant by the Board of Directors. ITEM 6. SELECTED FINANCIAL DATA LAMAR ADVERTISING COMPANY The selected consolidated statement of operations and balance sheet data presented below are derived from the audited consolidated financial statements of the Company. Effective January 1, 1997, the Company changed its fiscal year from a twelve-month period ending October 31 to a twelve-month period ending December 31. The year end change was made to conform to the predominant fiscal year end for companies within the outdoor advertising industry. The results of operations for the two-month transition period ended December 31, 1996 are presented in the audited consolidated financial statements as filed previously on Form 10-K. The data presented below should be read in conjunction with the audited consolidated financial statements, related notes and Management's Discussion and Analysis of Financial Condition and Results of Operations included herein. -13-

14 STATEMENT OF OPERATIONS DATA: For the Years Ended (Dollars in thousands) December 31, October 31, ------------------------------------------- --------------------------- 1999 1998 1997 1996 1995 ----------- ----------- ----------- ----------- ----------- Net revenues $ 444,135 $ 288,588 201,062 120,602 102,408 Operating expenses: Direct advertising expenses 143,090 92,849 63,390 41,184 34,386 General & administrative expenses 94,372 60,935 45,368 29,466 27,057 Depreciation & amortization 177,138 88,791 48,317 16,712 15,597 ----------- ----------- ----------- ----------- ----------- Total operating expenses 414,600 242,575 157,075 87,362 77,040 ----------- ----------- ----------- ----------- ----------- Operating income 29,535 46,013 43,987 33,240 25,368 ----------- ----------- ----------- ----------- ----------- Other expense (income): Interest income (1,421) (762) (1,723) (240) (199) Interest expense 89,619 60,008 38,230 15,441 15,783 Loss (gain) on disposition of assets (5,481) (1,152) (15) 91 1,476 ----------- ----------- ----------- ----------- ----------- Total other expense 82,717 58,094 36,492 15,292 17,060 ----------- ----------- ----------- ----------- ----------- Earnings (loss) before income taxes, extraordinary item and cumulative effect of an accounting change (53,182) (12,081) 7,495 17,948 8,308 Income tax expense (benefit) (9,596) (191) 4,654 7,099 (2,390) ----------- ----------- ----------- ----------- ----------- Earnings (loss) before extraordinary item and cumulative effect of an accounting change (43,586) (11,890) 2,841 10,849 10,698 Extraordinary loss on debt extinguishment (182) -- -- -- -- ----------- ----------- ----------- ----------- ----------- Earnings (loss) before cumulative effect of an accounting change (43,768) (11,890) 2,841 10,849 10,698 Cumulative effect of an accounting change (767) -- -- -- -- ----------- ----------- ----------- ----------- ----------- Net earnings (loss) (44,535) (11,890) 2,841 10,849 10,698 Preferred stock dividends (365) (365) (365) (365) -- ----------- ----------- ----------- ----------- ----------- Net earnings (loss) applicable to common stock $ (44,900) $ (12,255) $ 2,476 $ 10,484 $ 10,698 =========== =========== =========== =========== =========== Earnings (loss) per common share - basic and diluted: Earnings (loss) before extraordinary item and accounting change (1) $ (.64) $ (.24) $ 0.05 $ 0.25 $ 0.21 Extraordinary loss on debt extinguishment (1) -- -- -- -- -- Cumulative effect of a change in accounting principle (1) $ (.01) $ -- $ -- $ -- $ -- ----------- ----------- ----------- ----------- ----------- Net earnings (loss) (1) $ (.65) $ (.24) $ 0.05 $ 0.25 $ 0.21 =========== =========== =========== =========== =========== Other Data: EBITDA (2) $ 206,673 $ 134,804 92,304 49,952 40,965 EBITDA margin 47% 47% 46% 41% 40% Cash flows from operating activities (3) $ 110,551 $ 72,498 45,783 32,493 25,065 Cash flows from investing activities (3) $ (950,650) $ (535,217) (370,228) (48,124) (17,817) Cash flows from financing activities (3) $ 719,903 $ 584,070 250,684 18,175 (9,378) BALANCE SHEET DATA (4): Cash & cash equivalents $ 8,401 $ 128,597 7,246 8,430 5,886 Working capital 40,787 94,221 18,662 1,540 1,737 Total assets 3,206,945 1,413,377 651,336 173,189 133,885 Total debt (including current maturities) 1,615,781 876,532 539,200 131,955 146,051 Total long-term obligations 1,730,710 857,760 551,865 130,211 143,944 Stockholders' equity (deficit) 1,391,529 466,779 68,713 19,041 (28,154) (1) After giving effect to the three-for-two split of the Company's Class A and Class B common stock effected in February 1998. (2) "EBITDA" is defined as operating income before depreciation and amortization. It represents a measure which management believes is customarily used to evaluate the financial performance of companies in the media industry. However, EBITDA is not a measure of financial performance under generally accepted accounting principles and should not be considered an alternative to operating income or net earnings as an indicator of the Company's operating performance or to net cash provided by operating activities as a measure of its liquidity. (3) Cash flows from operating, investing, and financing activities are obtained from the Company's consolidated statements of cash flows prepared in accordance with generally accepted accounting principles. (4) As of the end of the period. -14-

15 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LAMAR ADVERTISING COMPANY The following is a discussion of the consolidated financial condition and results of operations of the Company for the years ended December 31, 1999, 1998 and 1997. This discussion should be read in conjunction with the consolidated financial statements of the Company and the related notes. OVERVIEW The Company's net revenues, which represent gross revenues less commissions paid to advertising agencies that contract for the use of advertising displays on behalf of advertisers, are derived primarily from the sale of advertising on outdoor advertising displays owned and operated by the Company. In recent years, the Company's logo sign business has expanded rapidly and may in the future have an increasing impact on the Company's revenues and operating income. The Company has grown significantly during the last three years, primarily as the result of (i) internal growth in its existing outdoor advertising business resulting from construction of additional outdoor advertising displays, operating efficiency and increases in advertising rates, (ii) acquisitions of outdoor advertising businesses and structures, and (iii) the rapid expansion of the Company's logo sign business. The Company's net advertising revenues increased by $243.0 million from $201.1 million for the fiscal year ended December 31, 1997 to $444.1 million for the fiscal year ended December 31, 1999, representing a compound annual growth rate of approximately 49%. During the same period, EBITDA increased $114.4 million from $92.3 million for the fiscal year ended December 31, 1997 to $206.7 million for the fiscal year ended December 31, 1999, representing a compound annual growth rate of approximately 50%. The Company plans to continue a strategy of expanding through both internal growth and acquisitions. As a result of acquisitions, the operating performance of individual markets and of the Company as a whole are not necessarily comparable on a year-to-year basis. All recent acquisitions have been accounted for using the purchase method of accounting and, consequently, operating results from acquired operations are included from the respective dates of those acquisitions. Since December 31, 1998, the Company has increased the number of outdoor advertising displays it operates by approximately 62% by completing 77 strategic acquisitions of outdoor advertising and transit assets for an aggregate cash purchase price of approximately $889 million and the issuance of 26,407,650 shares of Class A common stock valued at approximately $955 million. The Company has financed its recent acquisitions and intends to finance its acquisition activity from available cash and borrowings under the New Bank Credit Agreement (as defined below) which the Company entered into in August, 1999. See "Liquidity and Capital Resources" below. The Company relies on sales of advertising space for its revenues, and its operating results are therefore affected by general economic conditions, as well as trends in the advertising industry. A national tobacco settlement eliminated outdoor advertising of tobacco products in the U.S. in November, 1998. As of April 1, 1999, the Company has eliminated all of its outdoor advertising of tobacco products. As a result the Company's tobacco revenues, as a percentage of billboard advertising net revenues, declined from 17% in fiscal 1991 to 3% in fiscal 1999. The Company expects to have no tobacco revenues in fiscal 2000, but the Company has been successful in replacing the tobacco advertising removed with substitute advertising at comparable rates. -15-

16 Growth of the Company's business requires capital expenditures for maintenance and capitalized costs associated with new billboard displays and new logo sign contracts. The Company expended $36.7 million in fiscal 1997, $55.2 million in fiscal 1998 and $77.2 million in fiscal 1999. Of these amounts,$10.4 million, $10.6 million and $11.3 million, respectively, were attributable to the logo sign business. See "Liquidity and Capital Resources." The following table presents certain items in the Consolidated Statements of Operations as a percentage of net revenues for the years ended December 31, 1999, 1998 and 1997: Year Ended December 31, ------------------------ 1999 1998 1997 ---- ---- ---- Net revenues 100.0% 100.0% 100.0% Operating expenses: Direct advertising expenses 32.2 32.2 31.5 General & administrative expenses 21.2 21.1 22.6 EBITDA (1) 46.5 46.7 45.9 Depreciation and amortization 39.8 30.8 24.0 Operating income 6.7 15.9 21.9 Interest expense 20.2 20.8 19.0 Other expense 18.6 20.1 18.2 Net earnings (loss) (10.0) (4.1) 1.4 (1) "EBITDA" is defined as operating income before depreciation and amortization. It represents a measure which management believes is customarily used to evaluate the financial performance of companies in the media industry. However, EBITDA is not a measure of financial performance under generally accepted accounting principles and should not be considered an alternative to operating income or net earnings as an indicator of the Company's operating performance or to net cash provided by operating activities as a measure of its liquidity. -16-

17 YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998 Total revenues increased $155.5 million or 53.9% to $444.1 million for the year ended December 31, 1999 from $288.6 million for the same period in 1998. This increase was predominantly attributable to (i) an increase in billboard net revenues of $150.5 million or 57.5%, which was attributable to the Company's acquisitions during 1999 and 1998 and internal growth within the Company's previously existing markets, and (ii) a $4.0 million increase in logo sign revenue, which represents a 16.6% increase over the prior year. The increase in logo sign revenue was due to the completion of development of the new logo sign contracts awarded in 1999 and 1998 and the continued expansion of the Company's existing logo sign contracts. Operating expenses, exclusive of depreciation and amortization, increased $83.7 million or 54.4% to $237.5 million for the year ended December 31, 1999 from $153.8 million for the same period in 1998. This increase was the result of (i) an increase in personnel costs, sign site rent and other costs related to the increase in revenue and (ii) additional operating expenses related to the Company's recent acquisitions and the continued development of the logo sign business. Depreciation and amortization expense increased $88.3 million or 99.4% from $88.8 million for the year ended December 31, 1998 to $177.1 million for the year ended December 31, 1999 as a result of an increase in capital assets resulting from the Company's recent acquisition activity. Due to the above factors, operating income decreased $16.5 million or 35.8% from $46.0 million for the year ended December 31, 1998 to $29.5 million for the year ended December 31, 1999. Interest income increased $.7 million as a result of an increase in excess cash investments made during the period. Interest expense increased $29.6 million from $60.0 million for the year ended December 31, 1998 to $89.6 million for the year ended December 31, 1999 as a result of interest expense on the Company's 5 1/4% Convertible Notes due 2006 and greater amounts outstanding under the New Bank Credit Agreement to finance recent acquisitions. The decrease in operating income and the increase in interest expense described above resulted in a $41.1 million decrease in earnings before income taxes, extraordinary item and cumulative effect of a change in accounting principle. The decrease in earnings before income taxes, resulted in an increase in the income tax benefit of $9.4 million for the year ended December 31, 1999 over the same period in 1998. An extraordinary loss on debt extinguishment of $.2 million net of income tax benefit of $.1 million, was incurred during the year ended December 31, 1999, as a result of the extinguishment of a portion of the Company's 9 1/4% Senior Subordinated Notes due 2007 in connection with a change of control tender offer in July, 1999. Due to the adoption of SOP 98-5 "Reporting on the Costs of Start-Up Activities" which requires costs of start-up activities and organization costs to be expensed as incurred, the Company recognized an expense of $.8 million as a cumulative effect of a change in accounting principle. This expense is a one time adjustment to recognize start-up activities and organization costs that were capitalized in prior periods. As a result of the foregoing factors, the Company recognized a net loss for the year ended December 31, 1999 of $44.5 million, as compared to a net loss of $11.9 million for the same period in 1998. -17-

18 YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997 Total revenues increased $87.5 million or 43.5% to $288.6 million for the year ended December 31, 1998 from $201.1 million for the same period in 1997. This increase was predominantly attributable to (i) an increase in billboard net revenues of $84.5 million or 47.6%, which was attributable to the Company's acquisitions during 1997 and 1998 and internal growth within the Company's previously existing markets, and (ii) a $3.5 million increase in logo sign revenue, which represents a 16.8% increase over the prior year. The increase in logo sign revenue was due to the completion of development of the new logo sign contracts awarded in 1997 and 1998 and the continued expansion of the Company's existing logo sign contracts. Operating expenses, exclusive of depreciation and amortization, increased $45.0 million or 41.4% to $153.8 million for the year ended December 31, 1998 from $108.8 million for the same period in 1997. This increase was the result of (i) an increase in personnel costs, sign site rent and other costs related to the increase in revenue and (ii) additional operating expenses related to the Company's recent acquisitions and the continued development of the logo sign business. Depreciation and amortization expense increased $40.5 million or 83.9% from $48.3 million for the year ended December 31, 1997 to $88.8 million for the year ended December 31, 1998 as a result of an increase in capital assets resulting from the Company's recent acquisition activity. Due to the above factors, operating income increased $2.0 million or 4.5% from $44.0 million for the year ended December 31, 1997 to $46.0 million for the twelve months ended December 31, 1998. Interest income decreased $1.0 million as a result of a decrease in excess cash investments made during the period. Interest expense increased $21.8 million from $38.2 million for the year ended December 31, 1997 to $60.0 million for the year ended December 31, 1998 as a result of interest expense on the Company's 8 5/8% Senior Subordinated Notes due 2007 (the "1997 Notes") and greater amounts outstanding under the Senior Credit Facility (as defined below) and the New Bank Credit Agreement to finance recent acquisitions. The increase in operating income was offset by the increase in interest expense described above resulting in a $19.6 million decrease in earnings before income taxes. Due to the decrease in earnings before income taxes, income tax expense for the twelve months ended December 31, 1998 decreased $4.8 million over the same period in 1997. As a result of the foregoing factors, the Company recognized a net loss for the year ended December 31, 1998 of $11.9 million, as compared to net earnings of $2.8 million for the same period in 1997. LIQUIDITY AND CAPITAL RESOURCES The Company has historically satisfied its working capital requirements with cash from operations, offerings of its Class A common stock and debt securities and borrowings under its bank credit facilities. The Company's acquisitions have been financed primarily with funds borrowed under its bank credit facilities and issuance of its Class A common stock. The Company's net cash provided by operating activities increased to $110.6 million in fiscal 1999 due primarily to an increase in noncash items of $79.9 million, which includes an increase in depreciation and amortization of $88.3 million offset by a -18-

19 decrease in deferred tax expense of $6.0 million and an increase in gain on disposition of assets of $4.3 million. There was also a decrease in net earnings of $32.6 million, an increase in receivables of $16.6 million, an increase in other assets of $2.2 million, an increase in trade accounts payable of $3.2 million, an increase in accrued expenses of $14.3 million, and a decrease in deferred income of $9.3 million. Net cash used in investing activities increased $415.5 million from $535.2 million in fiscal 1998 to $950.7 million in fiscal 1999. This increase was due to a $395.6 million increase in purchase of outdoor advertising assets and a $22.0 million increase in capital expenditures offset by an increase in proceeds from the sale of property and equipment of $2.1 million. Net cash provided by financing activities increased $135.8 million in fiscal 1999 due to a $279.5 million increase in proceeds from issuance of long-term debt due to the net proceeds from the August, 1999 offering of 5 1/4% Convertible Notes due 2006 of $279.6 million, and a $335.0 million increase in principal borrowings under credit agreements, offset by a $395.2 million decrease in proceeds from issuance of common stock. During the year ended December 31, 1999, the Company financed its acquisition activity of approximately $1.9 billion with remaining proceeds from the December, 1998 equity offering, borrowings under the Company's bank credit facility and the issuance of approximately 26.4 million shares of common stock. At December 31, 1999, following these acquisitions, the Company had $223 million available under the revolving bank credit facility. On August 13, 1999, the Company replaced the 1998 bank credit facility with a new bank credit facility under which The Chase Manhattan Bank serves as administrative agent. The new $1 billion bank credit facility consists of (1) a $350 million revolving bank credit facility and (2) a $650 million term facility with two tranches, a $450 million Term A facility and a $200 million Term B facility. As a result of the holding company reorganization completed on July 20, 1999, the existing bank credit facility and the new bank credit facility are obligations of Lamar Media Corp., a wholly owned subsidiary, of Lamar Advertising Company. As of December 31, 1999, Lamar Media had borrowings under this agreement of $776 million. On August 10, 1999, the Company completed an offering of $287.5 million 5 1/4% Convertible Notes due 2006. The net proceeds of approximately $279.6 million of the convertible notes were used to pay down existing bank debt. The convertible notes are convertible into Lamar Advertising Company Class A common stock at an initial conversion price of $46.25 per share. In connection with the reorganization of Lamar Advertising Company into a new holding company structure, Lamar Media Corp. (formerly known as Lamar Advertising Company) made a change of control tender offer to the holders of its 9 1/4% Senior Subordinated Notes due 2007 in aggregate principal amount of approximately $103.9 million. Pursuant to the change of control tender offer and in accordance with the Indenture, Lamar Media Corp. offered to repurchase the Notes for 101% of the principal amount plus accrued interest. A total of $29.9 million aggregate principal amount of Notes were tendered for payment on August 19, 1999, and the related 1% prepayment penalty is reflected as an extraordinary item in the Company's income statement, net of tax. LAMAR MEDIA CORP. On July 20, 1999, Lamar Advertising Company completed a corporate reorganization to create a new holding company structure. The reorganization was accomplished through a merger under section 251(g) of the Delaware General Corporation Law. At the effective time of the merger, all stockholders of Lamar Advertising Company became stockholders in a new holding company and Lamar Advertising Company became a wholly-owned subsidiary of the new holding company. The new holding company took the Lamar Advertising Company -19-

20 name and the old Lamar Advertising Company was renamed Lamar Media Corp. In the merger, all outstanding shares of old Lamar Advertising Company's capital stock were converted into shares of the new holding company with the same voting powers, designations, preferences and rights, and the same qualifications, restrictions and limitations, as the shares of old Lamar Advertising Company. The following is a discussion of the consolidated financial condition and results of operations of Lamar Media for the years ended December 31, 1999 and 1998. This discussion should be read in conjunction with the consolidated financial statements of Lamar Media and the related notes. YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998 Total revenues increased $155.5 million or 53.9% to $444.1 million for the year ended December 31, 1999 from $288.6 million for the same period in 1998. This increase was predominantly attributable to (i) an increase in billboard net revenues of $150.5 million or 57.5%, which was attributable to Lamar Media's acquisitions during 1999 and 1998 and internal growth within Lamar Media's previously existing markets, and (ii) a $4.0 million increase in logo sign revenue, which represents a 16.6% increase over the prior year. The increase in logo sign revenue was due to the completion of development of the new logo sign contracts awarded in 1999 and 1998 and the continued expansion of Lamar Media's existing logo sign contracts. Operating expenses, exclusive of depreciation and amortization, increased $83.6 million or 54.3% to $237.4 million for the year ended December 31, 1999 from $153.8 million for the same period in 1998. This increase was the result of (i) an increase in personnel costs, sign site rent and other costs related to the increase in revenue and (ii) additional operating expenses related to Lamar Media's recent acquisitions and the continued development of the logo sign business. Depreciation and amortization expense increased $87.4 million or 98.5% from $88.8 million for the year ended December 31, 1998 to $176.2 million for the year ended December 31, 1999 as a result of an increase in capital assets resulting from Lamar Media's recent acquisition activity. Due to the above factors, operating income decreased $15.5 million or 33.6% from $46.0 million for the year ended December 31, 1998 to $30.5 million for the year ended December 31, 1999. Interest income increased $.7 million as a result of an increase in excess cash investments made during the period. Interest expense increased $29.6 million from $60.0 million for the year ended December 31, 1998 to $89.6 million for the year ended December 31, 1999 as a result of interest expense on Lamar Media's obligation to Lamar Advertising Company and greater amounts outstanding under the New Bank Credit Agreement to finance recent acquisitions. The decrease in operating income and the increase in interest expense described above resulted in a $40.1 million decrease in earnings before income taxes, extraordinary item and cumulative effect of a change in accounting principle. The decrease in earnings before income taxes, resulted in an increase in the income tax benefit of $9.0 million for the year ended December 31, 1999 over the same period in 1998. An extraordinary loss on debt extinguishment of $.2 million net of income tax benefit of $.1 million, was incurred during the year ended December 31, 1999, as a result of the extinguishment of a portion of Lamar Media's 9 1/4% Senior Subordinated Notes due 2007 in connection with a change of control tender offer in July, 1999. -20-

21 Due to the adoption of SOP 98-5 "Reporting on the Costs of Start-Up Activities" which requires costs of start-up activities and organization costs to be expensed as incurred, Lamar Media recognized an expense of $.8 million as a cumulative effect of a change in accounting principle. This expense is a one time adjustment to recognize start-up activities and organization costs that were capitalized in prior periods. As a result of the foregoing factors, Lamar Media recognized a net loss for the year ended December 31, 1999 of $43.9 million, as compared to a net loss of $11.9 million for the same period in 1998. FACTORS AFFECTING FUTURE OPERATING RESULTS THE SIGNIFICANT FIXED PAYMENTS ON THE COMPANY'S DEBT INCREASES UNCERTAINTY AND REDUCES FLEXIBILITY IN ITS OPERATIONS. The Company has borrowed substantial amounts of money in the past and may borrow more money in the future. At December 31, 1999, the Company had approximately $1.6 billion of debt outstanding consisting of approximately $776 million in bank debt, $528 million in various series of senior subordinated notes, $287.5 million in convertible notes and $24 million in various other short-term and long-term debt. A large part of the Company's cash flow from operations must be used to make principal and interest payments on its debt. If the Company's operations make less money in the future, it may need to borrow to make these payments. In addition, the Company finances most of its acquisitions through borrowings under Lamar Media's bank credit facility which has a total committed amount of $1.0 billion in term and revolving credit loans. As of December 31, 1999, the Company had approximately $223 million available to borrow under this credit facility. Since its borrowing capacity under its credit facility is limited, the Company may not be able to continue to finance future acquisitions at its historical rate with borrowings under its credit facility. The Company may need to borrow additional amounts or seek other sources of financing to fund future acquisitions. The Company cannot guarantee that such additional financing will be available on favorable terms. The Company may need the consent of the banks under its credit facility, or the holders of other indebtedness, to borrow additional money. RESTRICTIONS IN THE COMPANY'S, AND ITS WHOLLY-OWNED, DIRECT SUBSIDIARY LAMAR MEDIA'S DEBT AGREEMENTS REDUCE OPERATING FLEXIBILITY AND CONTAIN COVENANTS AND RESTRICTIONS THAT CREATE THE POTENTIAL FOR DEFAULTS. The terms of the indenture relating to Lamar Advertising's outstanding notes, Lamar Media's bank credit facility and the indentures relating to Lamar Media's outstanding notes restrict, among other things, the ability of Lamar Advertising and Lamar Media to: o dispose of assets; o incur or repay debt; o create liens; o make investments; and o pay dividends. Lamar Media's ability to make distributions to Lamar Advertising is also restricted under the terms of these agreements. Under the Lamar Media's credit facility the Company must maintain specified financial ratios and levels including: o cash interest coverage; o fixed charge coverage; o senior debt ratios; and o total debt ratios. -21-

22 Failure to comply with these tests may cause all amounts outstanding under the credit facility to become immediately due. If this were to occur, it would create serious financial problems for the Company. The Company's ability to comply with these restrictions, and any similar restrictions in future agreements, depends on its operating performance. Because its performance is subject to prevailing economic, financial and business conditions and other factors that are beyond the Company's control, it may be unable to comply with these restrictions in the future. NEGATIVE TRENDS IN ADVERTISING EXPENDITURES COULD HURT THE COMPANY'S BUSINESS. The Company sells advertising space to generate revenues. A decrease in demand for advertising space could adversely affect the Company's business. General economic conditions and trends in the advertising industry affect the amount of advertising space purchased. A reduction in money spent on its displays could result from: o a general decline in economic conditions; o a decline in economic conditions in particular markets where the Company conducts business; o a reallocation of advertising expenditures to other available media by significant users of the Company's displays; or o a decline in the amount spent on advertising in general. THE REGULATION OF OUTDOOR ADVERTISING IMPACTS THE COMPANY'S OPERATIONS. The Company's operations are significantly impacted by federal, state and local government regulation of the outdoor advertising business. The federal government conditions federal highway assistance on states imposing location restrictions on the placement of billboards on primary and interstate highways. Federal laws also impose size, spacing and other limitations on billboards. Some states have adopted standards more restrictive than the federal requirements. Local governments generally control billboards as part of their zoning regulations. Some local governments have enacted ordinances which require removal of billboards by a future date. Others prohibit the construction of new billboards and the reconstruction of significantly damaged billboards, or allow new construction only to replace existing structures. Local laws which mandate removal of billboards at a future date often do not provide for payment to the owner for the loss of structures that are required to be removed. Certain federal and state laws require payment of compensation in such circumstances. Local laws that require the removal of a billboard without compensation have been challenged in state and federal courts with conflicting results. Accordingly, the Company may not be successful in negotiating acceptable arrangements when the Company's displays have been subject to removal under these types of local laws. Additional regulations may be imposed on outdoor advertising in the future. Legislation regulating the content of billboard advertisements has been introduced in Congress from time to time in the past. Additional regulations or changes in the current laws regulating and affecting outdoor advertising at the federal, state or local level may have a material adverse effect on the Company's results of operations. -22-

23 CONTINUING THE COMPANY'S GROWTH BY ACQUISITIONS MAY BECOME MORE DIFFICULT AND INVOLVES COSTS AND UNCERTAINTIES. The Company has substantially increased its inventory of advertising displays through acquisitions. The Company's operating strategy involves making purchases in markets where it currently competes as well as in new markets. However, the following factors may affect the Company's ability to continue to pursue this strategy effectively. o The outdoor advertising market has been consolidating, and this may adversely affect the Company's ability to find suitable candidates for purchase. o The Company is also likely to face increased competition from other outdoor advertising companies for the companies or assets it wishes to purchase. Increased competition may lead to higher prices for outdoor advertising companies and assets and decrease those it is able to purchase. o The Company does not know if it will have sufficient capital resources to make purchases, obtain any required consents from the Company's lenders, or find acquisition opportunities with acceptable terms. o From January 1, 1999 to December 31, 1999, the Company completed 77 transactions involving the purchase of complementary outdoor advertising businesses, the most significant of which was the acquisition on September 15, 1999, of Chancellor Outdoor for $1.6 billion. The Company has integrated these acquired assets and businesses into its existing operations, but cannot be certain that the benefits and cost savings that it anticipates from these purchases will develop. COMPETITION FROM LARGER OUTDOOR ADVERTISERS AND OTHER FORMS OF ADVERTISING COULD HURT THE COMPANY'S PERFORMANCE. The Company cannot be sure that in the future it will compete successfully against the current and future sources of outdoor advertising competition and competition from other media. The competitive pressure that it faces could adversely affect the Company's profitability or financial performance. The Company faces competition from other outdoor advertising companies, some of which may be larger and better financed than it is, as well as from other forms of media, including television, radio, newspapers and direct mail advertising. It must also compete with an increasing variety of other out-of-home advertising media that include advertising displays in shopping centers, malls, airports, stadiums, movie theaters and supermarkets, and on taxis, trains and buses. In the Company's logo sign business, it currently faces competition for state-awarded service contracts from two other logo sign providers as well as local companies. Initially, the Company competed for state-awarded service contracts as they are privatized. Because these contracts expire after a limited time, the Company must compete to keep its existing contracts each time they are up for renewal. POTENTIAL LOSSES RESULTING FROM THE FAILURE OF THE COMPANY'S CONTINGENCY PLANS RELATING TO HURRICANES COULD HURT THE COMPANY'S BUSINESS. Although the Company has developed contingency plans designed to deal with the threat posed to advertising structures by hurricanes, it cannot guarantee that these plans will work. If these plans fail, significant losses could result. A significant portion of its structures are located in the Mid-Atlantic and Gulf Coast regions of the United States. These areas are highly susceptible to hurricanes during the late summer and early fall. In the past, the Company has incurred significant losses -23-

24 due to severe storms. These losses resulted from structural damage, overtime compensation, loss of billboards that could not be replaced under applicable laws and reduced occupancy because billboards were out of service. The Company has determined that it is not economical to obtain insurance against losses from hurricanes and other storms. Instead, contingency plans have been developed to deal with the threat of hurricanes. For example, an attempt is made to remove the advertising faces on billboards at the onset of a storm, when possible, which permits the structures to better withstand high winds during a storm. These advertising faces are then replaced after the storm has passed. However, these plans may not be effective in the future and, if they are not, significant losses may result. NEW LOGO SIGN CONTRACTS ARE SUBJECT TO STATE AWARD AND MAY NOT BE AWARDED TO THE COMPANY; EXISTING CONTRACTS ARE SUBJECT TO RENEWAL AND MAY NOT BE RENEWED. A portion of the Company's revenues and operating income come from our state-awarded service contracts for logo signs. The Company cannot predict what remaining states, if any, will start logo sign programs or convert state-run logo sign programs to privately operated program. The Company competes with other parties for new state-awarded service contracts for logo signs. Even when it is awarded such a contract, the award may be challenged under state contract bidding requirements. If an award is challenged, the Company may incur delays and litigation costs. Generally, state-awarded logo sign contracts have a term, including renewal options, of ten to twenty years. States may terminate a contract early, but in most cases must pay compensation to the logo sign provider for early termination. Typically, at the end of the term of the contract, ownership of the structures is transferred to the state without compensation to the logo sign provider. Of our 20 logo sign contracts in place at December 31, 1999, three are subject to renewal in April, June and October, 2000 and one is due to terminate in December, 2000. There is no guarantee that the Company will be able to obtain new logo sign contracts or renew its existing contracts. In addition, after a new state-awarded logo contract is received, the Company generally incurs significant start-up costs. The Company cannot guarantee that it will continue to have access to the capital necessary to finance those costs. THE LOSS OF KEY EXECUTIVES COULD AFFECT THE COMPANY'S OPERATIONS. The Company's success depends to a significant extent upon the continued services of its executive officers and other key management and sales personnel. Kevin P. Reilly, Jr., the Chief Executive Officer, the nine regional managers and the manager of the logo sign business, in particular, are essential to the Company's continued success. Although incentive and compensation programs have been designed to retain key employees, there are no employment contracts with any employees and none of the executive officers have signed non-compete agreements. The Company does not maintain key man insurance on its executives. If any of the executive officers or other key management and sales personnel stopped working with the Company in the future, it could have an adverse effect on its business. INFLATION In the last three years, inflation has not had a significant impact on the Company. SEASONALITY The Company's revenues and operating results have exhibited some degree of seasonality in past periods. Typically, the Company experiences its strongest financial performance in the summer and its lowest in the winter. The Company expects this trend to continue in the future. Because a significant portion of the Company's expenses are fixed, a -24-

25 reduction in revenues in any quarter is likely to result in a period to period decline in operating performance and net earnings. IMPACT OF YEAR 2000 The Company has not experienced significant disruptions to its financial or operating activities caused by failure of its computerized systems resulting from Year 2000 issues. All missions critical systems and links with key suppliers and vendors operated as expected and execution of contingency plans was not required. -25-

26 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK LAMAR ADVERTISING COMPANY AND LAMAR MEDIA CORP. Lamar Advertising Company is exposed to interest rate risk in connection with variable rate debt instruments issued by its wholly-owned subsidiary Lamar Media Corp. The Company does not enter into market risk sensitive instruments for trading purposes. The information below summarizes the Company's interest rate risk associated with its principal variable rate debt instruments outstanding at December 31, 1999, and should be read in conjunction with Note 8 of the Notes to the Company's Consolidated Financial Statements. Loans under Lamar Media Corp.'s New Bank Credit Agreement bear interest at variable rates equal to the Chase Prime Rate or LIBOR plus the applicable margin. Because the Chase Prime Rate or LIBOR may increase or decrease at any time, the Company is exposed to market risk as a result of the impact that changes in these base rates may have on the interest rate applicable to borrowings under the New Bank Credit Agreement. Increases in the interest rates applicable to borrowings under the New Bank Credit Agreement would result in increased interest expense and a reduction in the Company's net income and after tax cash flow. At December 31, 1999, there was approximately $776 million of aggregate indebtedness outstanding under the New Bank Credit Agreement, or approximately 48.0% of the Company's outstanding long-term debt on that date, bearing interest at variable rates. The aggregate interest expense for 1999 with respect to borrowings under the New Bank Credit Agreement and Senior Credit Facility was $30.5 million, and the weighted average interest rate applicable to borrowings under these credit facilities during 1999 was 7.3%. Assuming that the weighted average interest rate was 200-basis points higher (that is 9.3% rather than 7.3%), then the Company's 1999 interest expense would have been approximately $8.2 million higher resulting in a $5.0 million decrease in the Company's 1999 net income and after tax cash flow. The Company attempts to mitigate the interest rate risk resulting from its variable interest rate long-term debt instruments by also issuing fixed rate long-term debt instruments and maintaining a balance over time between the amount of the Company's variable rate and fixed rate indebtedness. In addition, the Company has the capability under the New Bank Credit Agreement to fix the interest rates applicable to its borrowings at an amount equal to LIBOR plus the applicable margin for periods of up to twelve months, which would allow the Company to mitigate the impact of short-term fluctuations in market interest rates. In the event of an increase in interest rates, the Company may take further actions to mitigate its exposure. The Company cannot guarantee, however, that the actions that it may take to mitigate this risk will be feasible or that, if these actions are taken, that they will be effective. ITEM 8. FINANCIAL STATEMENTS (FOLLOWING ON NEXT PAGE) -26-

27 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Independent Auditors' Report.............................................. 28 Consolidated Balance Sheets as of December 31, 1999 and 1998 ............. 29 Consolidated Statements of Operations for the years ended December 31, 1999, 1998 and 1997................................................. 30 Consolidated Statements of Comprehensive Income for the years ended December 31, 1999, 1998 and 1997..................................... 31 Consolidated Statements of Stockholders' Equity for the years ended December 31, 1999, 1998 and 1997..................................... 32 Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997................................................. 33 Notes to Consolidated Financial Statements ...............................34-54 -27-

28 Independent Auditors' Report Board of Directors Lamar Advertising Company: We have audited the accompanying consolidated balance sheets of Lamar Advertising Company and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 1999. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Lamar Advertising Company and subsidiaries as of December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1999, in conformity with generally accepted accounting principles. As discussed in Note 17 to the consolidated financial statements, the Company changed its method of accounting for the costs of start-up activities in 1999. KPMG LLP New Orleans, Louisiana March 17, 2000 -28-

29 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except share and per share data) December 31, 1999 and 1998 Assets 1999 1998 - ------ ----------- ----------- Current assets: Cash and cash equivalents $ 8,401 $ 128,597 Receivables, net 81,226 40,380 Prepaid expenses 21,524 12,346 Other current assets 14,342 1,736 ----------- ----------- Total current assets 125,493 183,059 ----------- ----------- Property, plant and equipment (note 4) 1,412,605 661,324 Less accumulated depreciation and amortization (218,893) (153,972) ----------- ----------- Net property plant and equipment 1,193,712 507,352 ----------- ----------- Intangible assets (note 5) 1,874,177 705,934 Other assets - non-current 13,563 17,032 ----------- ----------- Total assets $ 3,206,945 $ 1,413,377 =========== =========== Liabilities and Stockholders' Equity Current liabilities: Trade accounts payable $ 11,492 $ 4,258 Current maturities of long-term debt (note 8) 4,318 49,079 Accrued expenses (note 7) 57,653 25,912 Deferred income 11,243 9,589 ----------- ----------- Total current liabilities 84,706 88,838 Long-term debt (note 8) 1,611,463 827,453 Deferred income taxes (note 9) 112,412 25,613 Deferred income 1,222 1,293 Other liabilities 5,613 3,401 ----------- ----------- Total liabilities 1,815,416 946,598 ----------- ----------- Stockholders' equity (note 11): Series AA preferred stock, par value $.001, $63.80 cumulative dividends, authorized $1,000,000 shares; 5,719.49 shares and no shares issued and outstanding at 1999 and 1998, respectively -- -- Class A preferred stock, par value $638, $63.80 cumulative dividends, 10,000 shares authorized, 0 shares and 5,719 shares issued and outstanding at 1999 and 1998 respectively -- 3,649 Class A common stock, par value $.001, 125,000,000 shares authorized, 70,576,251 and 43,392,876 shares issued and outstanding at 1999 and 1998, respectively 71 43 Class B common stock, par value $.001, 37,500,000 shares authorized, 17,449,997 and 17,699,997 shares issued and outstanding at 1999 and 1998, respectively 17 18 Additional paid-in capital 1,478,916 505,644 Accumulated deficit (87,475) (42,575) ----------- ----------- Stockholders' equity 1,391,529 466,779 ----------- ----------- Total liabilities and stockholders' equity $ 3,206,945 $ 1,413,377 =========== =========== See accompanying notes to consolidated financial statements. -29-

30 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Consolidated Statements of Operations (In thousands, except share and per share data) Years ended December 31, 1999, 1998 and 1997 1999 1998 1997 ------------ ------------ ------------ Net revenues $ 444,135 $ 288,588 $ 201,062 ------------ ------------ ------------ Operating expenses: Direct advertising expenses 143,090 92,849 63,390 General and administrative expenses 94,372 60,935 45,368 Depreciation and amortization 177,138 88,791 48,317 ------------ ------------ ------------ 414,600 242,575 157,075 ------------ ------------ ------------ Operating income 29,535 46,013 43,987 ------------ ------------ ------------ Other expense (income): Interest income (1,421) (762) (1,723) Interest expense 89,619 60,008 38,230 Gain on disposition of assets (5,481) (1,152) (15) ------------ ------------ ------------ 82,717 58,094 36,492 ------------ ------------ ------------ Earnings (loss) before income taxes, extraordinary item and cumulative effect of a change in accounting principle (53,182) (12,081) 7,495 Income tax expense (benefit) (note 9) (9,596) (191) 4,654 ------------ ------------ ------------ Earnings (loss) before extraordinary item and cumulative effect of a change in accounting principle (43,586) (11,890) 2,841 Extraordinary loss on debt extinguishment net of income tax benefit of $117 (182) -- -- ------------ ------------ ------------ Earnings (loss) before cumulative effect of a change in accounting principle (43,768) (11,890) 2,841 Cumulative effect of a change in accounting principle (767) -- -- ------------ ------------ ------------ Net earnings (loss) (44,535) (11,890) 2,841 Preferred stock dividends (365) (365) (365) ------------ ------------ ------------ Net earnings (loss) applicable to common stock $ (44,900) $ (12,255) $ 2,476 ============ ============ ============ Earnings (loss) per common share - basic and diluted: Earnings (loss) before extraordinary item and accounting change $ (.64) $ (.24) $ .05 Extraordinary loss on debt extinguishment -- -- -- Cumulative effect of a change in accounting principle (.01) -- -- ------------ ------------ ------------ Net earnings (loss) $ (.65) $ (.24) $ .05 ============ ============ ============ Weighted average common shares outstanding 69,115,764 51,361,522 47,037,497 Incremental common shares from dilutive stock options -- -- 363,483 Incremental common shares from convertible debt -- -- -- ------------ ------------ ------------ Weighted average common shares assuming dilution 69,115,764 51,361,522 47,400,980 ============ ============ ============ See accompanying notes to consolidated financial statements. -30-

31 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (In Thousands) Years ended December 31, 1999, 1998 and 1997 1999 1998 1997 -------- -------- -------- Net earnings (loss) applicable to common stock $(44,900) $(12,255) $ 2,476 Other comprehensive income - change in unrealized gain (loss) on investment securities (net of deferred tax expense (benefit) of $0, $217 and $(596) for the years ended December 31, 1999, 1998 and 1997 -- 354 (974) -------- -------- -------- Comprehensive income (loss) $(44,900) $(11,901) $ 1,502 ======== ======== ======== -31-

32 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity (In thousands, except share and per share data) Years ended December 31, 1999, 1998 and 1997 Series Unrealized AA Class A Class A Class B Additional Gain (Loss) Preferred Preferred Common Common Paid-in Accumulated On Investment Stock Stock Stock Stock Capital Deficit Securities Total --------- --------- ------- ------- ----------- ----------- ------------- --------- Balance, December 31, 1996 $ -- 3,649 18 14 92,258 (32,796) 620 63,763 Exercise of stock options -- -- -- -- 3,448 -- -- 3,448 Conversion of 1,811,552 shares of Class B common stock to Class A common stock -- -- 1 (1) -- -- -- -- Net earnings -- -- -- -- -- 2,841 -- 2,841 Dividends ($63.80 per preferred share) -- -- -- -- -- (365) -- (365) Unrealized loss on investment securities, net of deferred taxes of $596 -- -- -- -- -- -- (974) (974) Three-for-two stock split (Note 11) -- -- 9 6 (15) -- -- -- ------- ------- ------ ----- --------- -------- -------- --------- Balance, December 31, 1997 -- 3,649 28 19 95,691 (30,320) (354) 68,713 ------- ------- ------ ----- --------- -------- -------- --------- Issuance of 13,338,005 shares of common stock -- -- 13 -- 399,288 -- -- 399,301 Exercise of stock options -- -- 1 -- 10,665 -- -- 10,666 Conversion of 1,062,912 shares of Class B common stock to Class A common stock -- -- 1 (1) -- -- -- -- Net loss -- -- -- -- -- (11,890) -- (11,890) Dividends ($63.80 per preferred share) -- -- -- -- -- (365) -- (365) Realized loss on investment securities, net of tax -- -- -- -- -- - 354 354 ------- ------- ------ ----- --------- -------- -------- --------- Balance December 31, 1998 -- 3,649 43 18 505,644 (42,575) -- 466,779 ------- ------- ------ ----- --------- -------- -------- --------- Issuance of 26,407,650 shares of common stock in acquisitions -- -- 26 -- 954,946 -- -- 954,972 Exercise of stock options -- -- 1 -- 14,677 -- -- 14,678 Conversion of 250,000 shares of Class B common stock to Class A common stock -- -- 1 (1) -- -- -- -- Conversion of Class A preferred stock into Series AA preferred stock -- (3,649) -- -- 3,649 -- -- -- Net loss -- -- -- -- -- (44,535) -- (44,535) Dividends ($63.80 per preferred share) -- -- -- -- -- (365) -- (365) ------- ------- ------ ----- --------- -------- -------- --------- Balance December 31, 1999 $ -- -- 71 17 1,478,916 (87,475) -- 1,391,529 ======= ======= ====== ===== ========= ======== ======== ========= See accompanying notes to consolidated financial statements. -32-

33 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands) Years ended December 31, 1999, 1998 and 1997 1999 1998 1997 --------- --------- --------- Cash flows from operating activities: Net earnings (loss) $ (44,535) (11,890) 2,841 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Depreciation and amortization 177,138 88,791 48,317 Gain on disposition of assets (5,481) (1,152) (15) Cumulative effect of accounting change 767 -- -- Deferred tax expense (benefit) (13,579) (7,537) (2,839) Provision for doubtful accounts 4,065 2,883 2,098 Changes in operating assets and liabilities: (Increase) decrease in: Receivables (19,091) (2,464) (7,646) Prepaid expenses 782 (521) (367) Other assets (4,337) (2,148) (251) Increase (decrease) in: Trade accounts payable 3,438 250 (1,951) Accrued expenses 18,597 4,326 6,063 Deferred income (7,184) 2,132 (425) Other liabilities (29) (172) (42) --------- --------- --------- Net cash provided by operating activities 110,551 72,498 45,783 --------- --------- --------- Cash flows from investing activities: Capital expenditures (77,186) (55,196) (36,654) Purchase of new markets (881,067) (485,514) (386,842) Proceeds from sale of property and equipment 7,603 5,493 53,268 --------- --------- --------- Net cash used in investing activities (950,650) (535,217) (370,228) --------- --------- --------- Cash flows from financing activities: Net proceeds from issuance of common stock 7,418 402,629 2,403 Proceeds from issuance of long-term debt 279,594 70 193,926 Principal payments on long-term debt (79,667) (6,229) -- Debt issuance costs (13,077) (3,035) -- Net borrowing (payments) under credit agreements 526,000 191,000 54,720 Dividends (365) (365) (365) --------- --------- --------- Net cash provided by financing activities 719,903 584,070 250,684 --------- --------- --------- Net increase (decrease) in cash and cash equivalents (120,196) 121,351 (73,761) Cash and cash equivalents at beginning of period 128,597 7,246 81,007 --------- --------- --------- Cash and cash equivalents at end of period $ 8,401 128,597 7,246 ========= ========= ========= Supplemental disclosures of cash flow information: Cash paid for interest $ 83,837 56,960 33,284 ========= ========= ========= Cash paid for income taxes $ 6,919 1,107 8,792 ========= ========= ========= See accompanying notes to consolidated financial statements. -33-

34 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (1) Significant Accounting Policies (a) Nature of Business Lamar Advertising Company ("LAC" or the "Company") is engaged in the outdoor advertising business operating approximately 116,800 outdoor advertising displays in 42 states. The Company's operating strategy is to be the leading provider of outdoor advertising services in most of the markets it serves. In addition, the Company operates a logo sign business in 20 states throughout the United States and in 1 province of Canada. Logo signs are erected pursuant to state-awarded service contracts on public rights-of-way near highway exits and deliver brand name information on available gas, food, lodging and camping services. Included i the Company's logo sign business are tourism signing contracts. (b) Principles of Consolidation The accompanying consolidated financial statements include Lamar Advertising Company, its wholly-owned subsidiary, Lamar Media Corp. ("Lamar Media"), and its majority-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. (c) Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is calculated using accelerated and straight-line methods over the estimated useful lives of the assets. (d) Intangible Assets Intangible assets, consisting primarily of goodwill, site locations, customer lists and contracts, and non-competition agreements are amortized using the straight-line method over the assets estimated useful lives, generally from 5 to 15 years. (Continued) -34-

35 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) Debt issuance costs are deferred and amortized over the terms of the related credit facilities using the interest method. (e) Investment Securities Investment securities at December 31, 1997 consisted of the Company's investment in approximately 340,000 shares of common stock of Wireless One, Inc., a publicly-held company in the wireless cable business. The Wireless One, Inc. shares were classified as available-for-sale at December 31, 1997 and were carried at fair value with the unrealized gain or loss, net of the related tax effect, reported as a separate component of stockholders' equity. These shares were sold in May, 1998, resulting in a realized loss of $875. (f) Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of The Company accounts for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and Long Lived Assets to be Disposed of." SFAS No. 121 requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicated that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. The Company assesses the recoverability of enterprise level goodwill by determining whether the unamortized goodwill balance can be recovered through undiscounted future results of the Company's operations. The amount of enterprise-level goodwill impairment, if any, is measured based on projected discounted future results using a discount rate reflecting the Company's average cost of funds. (g) Deferred Income Deferred income consists principally of advertising revenue received in advance and gains resulting from the sale of certain assets to related parties. Deferred advertising revenue is recognized in income as services are provided over the term of the contract. Deferred gains are recognized in income in the consolidated financial statements at the time the assets are sold to an unrelated party or otherwise disposed of. (h) Revenue Recognition The Company recognizes revenue from outdoor and logo sign advertising contracts, net of agency commissions, on an accrual basis ratably over the term of the contracts, as advertising services are provided. (i) Income Taxes The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets (Continued) -35-

36 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. (j) Earnings Per Share Earnings per share are computed in accordance with SFAS No. 128, "Earnings Per Share." The calculation of basic earnings per share excludes any dilutive effect of stock options and convertible debt, while diluted earnings per share includes the dilutive effect of stock options and convertible debt. (k) Stock Option Plan The Company accounts for its stock option plan in accordance with the provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees", and related interpretations. As such, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price. SFAS No. 123, "Accounting for Stock-Based Compensation", permits entities to recognize as expense over the vesting period the fair value of all stock- based awards on the date of grant. Alternatively, SFAS No. 123 also allows entities to continue to apply the provisions of APB Opinion No. 25 and provide pro forma net income and pro forma earnings per share disclosures for employee stock option grants made in 1995 and future years as if the fair-value-based method defined in SFAS No. 123 has been applied. The Company has elected to continue to apply the provisions of APB Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No. 123. (l) Cash and Cash Equivalents The Company considers all highly-liquid investments with original maturities of three months or less to be cash equivalents. (m) Reclassification of Prior Year Amounts Certain amounts in the prior years' consolidated financial statements have been reclassified to conform to the current year presentation. These reclassifications had no effect on previously reported net earnings. (n) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. -36-

37 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (2) Acquisitions Year ended December 31, 1997 Effective April 1, 1997, the Company acquired all of the outstanding capital stock of Penn Advertising, Inc. for a cash purchase price of approximately $167,000. The Company subsequently sold approximately 16% of the outdoor displays acquired to Universal Outdoor, Inc. for a cash purchase price of $46,500. On June 3, 1997, the Company purchased substantially all of the assets of Headrick Outdoor, Inc. for a cash purchase price of approximately $76,600. Simultaneous with the acquisition, the Company sold approximately 9% of the outdoor displays acquired for a total purchase price of $6,000. On August 15, 1997, the Company purchased from Outdoor Systems, Inc. ("OSI") for a cash purchase price of approximately $116,000 (excluding approximately $2,000 in capitalized costs), certain outdoor advertising assets that OSI had acquired from National Advertising Company, a division of Minnesota Mining and Manufacturing Company. During the year ended December 31, 1997, the Company completed 21 additional acquisitions of outdoor advertising assets, none of which were individually significant, for an aggregate cash purchase price of approximately $21,000. Each of these acquisitions were accounted for under the purchase method of accounting, and, accordingly, the accompanying financial statements include the results of operations of each acquired entity from the date of acquisition. The acquisition costs have been allocated to assets acquired and liabilities assumed based on fair market value at the dates of acquisition. The following is a summary of the allocation of the acquisition costs in the above transactions. Property Current Plant & Other Current Long-term Assets Equipment Goodwill Intangibles Liabilities Liabilities -------- --------- -------- ----------- ----------- ----------- Penn Advertising, Inc. $ 4,645 47,745 72,435 19,200 (1,144) (22,208) Headrick Outdoor, Inc. 825 46,553 1,640 22,585 -- -- Outdoor Systems, Inc. 6,243 27,091 63,148 23,611 (2,640) -- Other 370 17,106 5,132 3,378 (132) (5,127) $ 12,083 138,495 142,355 68,774 (3,916) (27,335) ======== ======= ======= ====== ====== ======= (Continued) -37-

38 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES COMPANY Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) Year Ended December 31, 1998 On January 2, 1998, the Company purchased all the outdoor advertising assets of Ragan Outdoor Advertising Company, Ragan Outdoor Advertising Company of Cedar Rapids, and Ragan Outdoor Advertising Company of Rockford, L.L.C. for a cash purchase price of $25,000. On January 30, 1998, the Company acquired all of the outdoor advertising assets of three related outdoor advertising companies (Pioneer Advertising Company, Superior Outdoor Advertising Company and Overland Outdoor Advertising Company, Inc.) located in Missouri and Arkansas for a cash purchase price of $19,200. On April 30, 1998, the Company purchased all the outdoor advertising assets of Northwest Outdoor Advertising, L.L.C. for a cash purchase price of approximately $70,000. The acquired displays are located in the states of Washington, Montana, Oregon, Idaho, Wyoming, Nebraska, Nevada and Utah. On May 15, 1998, the Company purchased the assets of Odegard Outdoor Advertising, L.L.C., for a cash purchase price of approximately $8,500. This acquisition increases the Company's presence in the Kansas City, Missouri market. On May 29, 1998, the Company entered into an agreement to purchase from Rainier Evergreen, Inc. or through its affiliates (i) all of the issued and outstanding common stock of American Signs, Inc., (ii) the assets of the Sun Media division and (iii) the assets of Sun Media of the Rockies, Inc. The asset purchases were closed on that date; while the stock purchase was delayed due to lease transfer issues involving the Bureau of Interior Affairs. The stock purchase was completed in September, 1998. The total purchase price was $26,550. On September 1, 1998, the Company entered into an agreement to purchase all of the outdoor advertising assets of Nichols & Vann Advertising. The Company paid a cash purchase price of $11,000 of which $6,100 is held on deposit as of December 31, 1998, and is included in other assets in the accompanying balance sheet at December 31, 1998. On October 1, 1998, the Company purchased all of the outstanding stock of OCI for a purchase price of $385,000. The purchase price included approximately $235,000 in cash, the assumption of OCI debt of approximately $105,000 and the issuance of notes in the aggregate amount of $45,000 to certain principal stockholders of OCI. Pursuant to this acquisition, the Company acquired approximately 14,700 displays in 12 states. Funds for this acquisition were provided from borrowings under the New Revolving Credit Facility and the Term Facility. During the year ended December 31, 1998, the Company completed 60 additional acquisitions of outdoor advertising assets, none of which were individually significant, for an aggregate cash purchase price of approximately $89 million and issuance of 63,005 shares of Class A common stock valued at approximately $2,400. (Continued) -38-

39 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) Each of these acquisitions were accounted for under the purchase method of accounting, and accordingly, the accompanying financial statements include the results of operations of each acquired entity from the date of acquisition. The acquisition costs have been allocated to assets acquired and liabilities assumed based on fair market value at the dates of acquisition. The following is a summary of the allocation of the acquisition costs in the above transactions. Property Current Plant & Other Other Current Long-term Assets Equipment Goodwill Intangibles Assets Liabilities Liabilities ------- --------- -------- ----------- ------ ----------- ----------- Ragan Companies $ 694 9,634 13,275 1,573 -- (176) -- Pioneer and related companies 307 15,062 264 4,046 -- (479) -- Northwest Outdoor Advertising, LLC 2,176 23,667 36,199 8,861 -- (697) (273) Odegard Outdoor Advertising, LLC 285 1,633 5,959 1,095 -- (272) (300) Rainier Evergreen, Inc. 359 3,205 21,681 1,855 -- (550) (50) Nichols & Vann Advertising -- 300 3,944 575 6,181 -- -- Outdoor Communications, Inc. 9,957 97,058 266,856 37,334 291 (54,112) (121,296) Other 1,036 33,227 46,756 14,405 2,010 (3,506) (2,549) -------- ------- ------- ------ ----- ------- -------- $ 14,814 183,786 394,934 69,744 8,482 (59,792) (124,468) ======== ======= ======= ====== ===== ======= ======== Year Ended December 31, 1999 On January 5, 1999, the Company purchased all of the outdoor advertising assets of American Displays, Inc. for a cash purchase price of approximately $14,500. On February 1, 1999, the Company purchased all of the outdoor advertising assets of KJS, LLC for a cash purchase price of $40,500. On April 1, 1999, the Company purchased all of the assets of Frank Hardie, Inc. for a cash purchase price of approximately $20,300. On June 1, 1999, the Company purchased the assets of Vivid, Inc. for a cash purchase price of approximately $22,100. On September 15, 1999, Lamar Media Corp. purchased the capital stock of Chancellor Media Outdoor Corporation and Chancellor Media Whiteco Outdoor Corporation, ("Chancellor Outdoor") for a combination of approximately $703,000 in cash and 26,227,273 shares of Class A common stock valued at approximately $947,000. The stock purchase agreement also contains a post-closing adjustment in the event that the net working capital of Chancellor Outdoor as shown on the closing balance sheet is greater or less than $12,000. As of December 31, 1999, the working capital adjustment to be paid by the Company is $15,750, and is included in accrued expenses in the accompanying balance sheet. (Continued) -39-

40 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) During the year ended December 31, 1999, the Company completed 72 additional acquisitions of outdoor advertising and transit assets for an aggregate cash purchase price of approximately $93,873 and the issuance of 180,377 shares of Class A common stock valued at approximately $7,981. Each of these acquisitions were accounted for under the purchase method of accounting, and, accordingly, the accompanying financial statements include the results of operations of each acquired entity from the date of acquisition. The purchase price has been allocated to assets acquired and liabilities assumed based on fair market value at the dates of acquisition. The following is a summary of the allocation of the purchase price in the above transactions. Property Current Plant & Other Other Current Long-term Assets Equipment Goodwill Intangibles Assets Liabilities Liabilities ------- --------- -------- ----------- ------ ----------- ----------- American Displays $ 87 899 10,532 3,277 -- (284) -- KJS, LLC 20 9,468 30,543 4,489 -- (2,079) (1,921) Frank Hardie 187 6,582 10,464 3,630 -- (525) -- Vivid, Inc. 357 9,706 8,526 4,085 -- (593) Chancellor 39,242 645,151 298,486 779,775(a) 169 (6,014) (106,102) Other 310 22,411 74,976 8,678 -- (1,301) (3,218) -------- ------- ------- ------ --- ------- -------- $ 40,203 694,217 433,527 803,934 169 (10,796) (111,241) ======== ======= ======= ======= === ======= ======== (a) Includes $615,946 of site locations. The following unaudited pro forma financial information for the Company gives effect to the 1999 and 1998 acquisitions as if they had occurred on January 1, 1998. 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. 1999 1998 --------- -------- Net revenues $ 601,584 576,838 ========= ======== Loss before extraordinary items $ (92,969) (93,822) ========= ======== Net loss applicable to common stock $ (94,283) (94,187) ========= ========= Net loss per common share $ (1.00) (1.83) (basic and diluted) ========= ========= (Continued) -40-

41 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (3) Noncash Financing and Investing Activities A summary of significant noncash financing and investing activities for the years ended December 31, 1999, 1998 and 1997 follows: 1999 1998 1997 ------- ------ ------ Disposition of assets $ 5,387 30 1,300 Acquisitions of assets 954,972 2,706 -- Issuance of Series AA preferred stock in exchange for Class A preferred stock 3,649 -- -- Conversion of note receivable to equity investment -- -- 500 Debt issuance costs 7,906 -- 4,750 (4) Property, Plant and Equipment Major categories of property, plant and equipment at December 31, 1999 and 1998 are as follows: Estimated life (years) 1999 1998 -------------- ---------- ---------- Land -- $ 48,024 $ 25,543 Building and improvements 10-39 42,292 28,924 Advertising structures 15 1,240,020 576,676 Automotive and other equipment 3-7 82,269 30,181 ---------- ---------- $1,412,605 $ 661,324 ========== ========== (5) Intangible Assets The following is a summary of intangible assets at December 31, 1999 and 1998: Estimated life (years) 1999 1998 -------------- ---------- ---------- Debt issuance costs and fees 7-10 $ 40,945 $ 19,962 Customer lists and contracts 7-10 286,301 108,903 Non-compete agreements 7-15 50,277 19,318 Goodwill 15 1,037,385 554,685 Site locations and other 5-15 630,585 3,066 ---------- ---------- $2,045,493 $ 705,934 ========== ========== Cost 2,045,493 778,655 Accumulated amortization (171,316) (72,721) $1,874,177 $ 705,934 ========== ========== (Continued) -41-

42 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (6) Leases The Company is party to various operating leases for production facilities and sites upon which advertising structures are built. The leases expire at various dates, generally during the next five years, and have varying options to renew and to cancel. The following is a summary of minimum annual rental payments required under those operating leases that have original or remaining lease terms in excess of one year as of December 31: 2000 $ 73,410 2001 57,634 2002 51,121 2003 44,528 2004 37,834 Thereafter 211,178 Rental expense related to the Company's operating leases were $63,193, $43,440 and $31,411 for the years ended December 31, 1999, 1998 and 1997, respectively. (7) Accrued Expenses The following is a summary of accrued expenses at December 31, 1999 and 1998: 1999 1998 ------- ------- Payroll $ 7,406 $ 4,863 Interest 17,411 11,629 Insurance benefits 4,460 3,715 Purchase price payable (note 2) 15,750 -- Other 12,626 5,705 ------- ------- $57,653 $25,912 ======= ======= (8) Long-term Debt Long-term debt consists of the following at December 31, 1999 and 1998: 1999 1998 ----------- ----------- 5-1/4% Convertible notes $ 287,500 $ -- 9-5/8% Senior subordinated notes (1996 Notes) 255,000 255,000 8-5/8% Senior subordinated notes (1997 Notes) 198,882 198,785 Bank Credit Agreement 776,000 250,000 9-1/4% Senior subordinated notes 74,073 103,949 8% unsecured subordinated notes (see note 12) 13,333 15,333 Other notes with various rates and terms 10,993 53,465 ----------- ----------- 1,615,781 876,532 Less current maturities (4,318) (49,079) ----------- ----------- Long-term debt, excluding current maturities $ 1,611,463 $ 827,453 =========== =========== (Continued) -42-

43 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) Long-term debt matures as follows: 2000 $ 4,318 2001 50,200 2002 49,950 2003 99,125 2004 116,772 Later years 1,295,416 In November 1996, the Company issued $255,000 in principal amount of 9 5/8% Senior Subordinated Notes due 2006 (the "1996 Notes"), with interest payable semi-annually on June 1 and December 1 of each year. The 1996 Notes are senior subordinated unsecured obligations of the Company and are subordinated in right of payment to all senior indebtedness of the Company, pari passu with the 1997 Notes (as defined below), and are senior to all existing and future subordinated indebtedness of the Company. In September 1997, the Company issued $200,000 in principal amount of 8 5/8% Senior Subordinated Notes due 2007 (the "1997 Notes") with interest payable semi-annually on March 15 and September 15 of each year, commencing March 15, 1998. The 1997 Notes were issued at a discount for $198,676. The Company is using the effective interest method to recognize the discount over the life of the 1997 Notes. The 1997 Notes are senior subordinated unsecured obligations of the Company, subordinated in right of payment to all senior indebtedness of the Company, pari passu with the 1996 Notes and are senior to all existing and future subordinated indebtedness of the Company. The 1996 and 1997 Notes are redeemable at the Company's option at any time on or after December 31, 2001 and September 15, 2002, respectively, at redemption prices specified by the indentures, and are required to be repurchased earlier in the event of a change of control of the Company. The indentures covering the 1996 and 1997 Notes include certain restrictive covenants which limit the Company's ability to incur additional debt, pay dividends and make other restricted payments, consummate certain transactions and other matters. In July, 1998, the Company replaced its previous credit agreement with a new Bank Credit Agreement (the "1998 Bank Credit Agreement") which consists of a committed $250,000 revolving credit facility (the "1998 Revolving Credit Facility"), a $150,000 term facility (the "Term Facility") and a $100,000 incremental facility (The 1998 "Incremental Facility") funded at the discretion of the lenders. As of December 31, 1998, the Company had borrowings outstanding of $150 million under the 1998 Term Facility, $100 million under the 1998 Incremental Facility, and $0 under the 1998 Revolving Credit Facility. The Incremental Facility and the Term Facility bear interest at a variable rate of interest based on the applicable margin over LIBOR or the prime rate. The weighted average interest rate on borrowings under the Bank Credit Agreement at December 31, 1998, was 7.37% (Continued) -43-

44 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) In August 1999, the Company replaced the 1998 Bank Credit Agreement with a new bank credit facility under which The Chase Manhattan Bank serves as administrative agent. The new $1,000,000 bank credit facility consists of (1) a $350,000 revolving bank credit facility and (2) a $650,000 term facility with two tranches, a $450,000 Term A facility and a $200,000 Term B facility. As a result of the holding company reorganization completed on July 20, 1999 and explained in footnote 12, the existing bank credit facility and the new bank credit facility are obligations of Lamar Media Corp., a wholly owned subsidiary of Lamar Advertising Company. As of December 31, 1999, the Company had borrowings under this agreement of $776,000. Availability of the line under the New Revolving Credit Facility is reduced quarterly beginning with the quarter ended March 31, 2002, in the following amounts: March 31, 2002 - December 31, 2003 $ 8,750 March 31, 2004 - December 31, 2004 26,250 March 31, 2005 - December 31, 2005 30,625 March 31, 2006 52,500 The Tranch A Term Facility will begin to amortize quarterly beginning September 30, 2001 in the following quarterly amounts: September 30, 2001 - December 31, 2001 $ 22,500 March 31, 2002 - December 31, 2002 11,250 March 31, 2003 - December 31, 2003 22,500 March 31, 2004 - December 31, 2004 28,125 March 31, 2005 - December 31, 2005 31,500 March 31, 2006 - December 31, 2006 31,500 The Tranch B Term facility will begin to amortize quarterly beginning with the quarter ended September 30, 2001, in the following quarterly amounts: September 30, 2001 - December 31, 2001 $ 500 March 31, 2002 - December 31, 2002 500 March 31, 2003 - December 31, 2003 500 March 31, 2004 - December 31, 2004 500 March 31, 2005 - December 31, 2005 500 March 31, 2006 - June 30, 2006 500 August 1, 2006 190,000 (Continued) -44-

45 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) Revolving credit loans may be requested under the New Revolving Credit Facility at any time prior to maturity. The loans bear interest, at the Company's option, at the LIBOR Rate or Chase Prime Rate plus applicable margins, such margins being set from time to time based on the Company's ratio of debt to trailing twelve month EBITDA, as defined in the agreement. The terms of the indenture relating to Lamar Advertising's outstanding notes, Lamar Media's bank credit facility and the indentures relating to Lamar Media's outstanding notes restrict, among other things, the ability of Lamar Advertising and Lamar Media to: o dispose of assets; o incur or repay debt; o create liens; o make investments; and o pay dividends. Lamar Media's ability to make distributions to Lamar Advertising is also restricted under the terms of these agreements. Under Lamar Media's credit facility the Company must maintain specified financial ratios and levels including: o cash interest coverage; o fixed charge coverage; o senior debt ratios; and o total debt ratios. On August 10, 1999, Lamar Advertising Company, the new holding company, completed an offering of $287,500 5 1/4% Convertible Notes due 2006. The net proceeds of approximately $279,594 of the convertible notes were used to pay down existing bank debt. In connection with the reorganization of Lamar Advertising Company into a new holding company structure, Lamar Media Corp. (formerly known as Lamar Advertising Company) made a change of control tender offer to the holders of its 9 1/4% Senior Subordinated Notes due 2007 in aggregate principal amount of approximately $103,900. Pursuant to the change of control tender offer and in accordance with the Indenture, Lamar Media Corp. offered to repurchase the Notes for 101% of the principal amount plus accrued interest. A total of $29,876 aggregate principal amount of Notes were tendered for payment on August 19, 1999, and the related 1% prepayment penalty is reflected as an extraordinary item in the Company's statement of operations for the year ended December 31, 1999. The Company's obligations with respect to its publicly issued notes are not guaranteed by the Company's direct or indirect wholly-owned subsidiaries. Certain obligations of the Company's wholly-owned subsidiary, Lamar Media Corp. are guaranteed by its subsidiaries. (Continued) -45-

46 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (9) Income Taxes Income tax expense (benefit) for the years ended December 31, 1999, 1998 and 1997, consists of: Current Deferred Total -------- -------- -------- Year ended December 31, 1999: U.S. federal $ 3,083 (11,838) (8,755) State and local 900 (1,741) (841) -------- -------- -------- 3,983 (13,579) (9,596) ======== ======== ======== Year ended December 31, 1998: U.S. federal $ 6,269 (6,074) 195 State and local 1,077 (1,463) (386) -------- -------- -------- 7,346 (7,537) (191) Change in deferred tax attributable to unrealized losses on investment securities, included in stockholders' equity -- 217 217 -------- -------- -------- $ 7,346 (7,320) 26 ======== ======== ======== Year ended December 31, 1997: U.S. federal $ 6,108 (2,475) 3,633 State and local 1,385 (364) 1,021 -------- -------- -------- 7,493 (2,839) 4,654 Change in deferred tax attributable to unrealized losses on investment securities, included in stockholders' equity -- (596) (596) -------- -------- -------- $ 7,493 (3,435) 4,058 ======== ======== ======== Income tax expense (benefit) attributable to continuing operations for the years ended December 31, 1999, 1998 and 1997, differs from the amounts computed by applying the U.S. federal income tax rate of 34 percent to earnings before income taxes as follows: 1999 1998 1997 -------- -------- -------- Computed "expected" tax expense (benefit) $(18,081) (4,108) 2,548 Increase (reduction) in income taxes resulting from: Book expenses not deductible for tax purposes 121 450 92 Amortization of non-deductible goodwill 8,841 3,752 1,730 State and local income taxes, net of federal income tax benefit (555) (255) 674 Other differences, net 78 (30) (390) -------- -------- -------- $ (9,596) (191) 4,654 ======== ======== ======== (Continued) -46-

47 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 1999 and 1998 are presented below: 1999 1998 --------- --------- Deferred tax liabilities: Plant and equipment, principally due to differences in depreciation $ (3,942) $ (4,915) Plant and equipment, due to basis differences on acquisitions (134,323) (28,556) Employee benefit plans (1,058) -- --------- --------- Deferred tax liabilities (139,323) (33,471) Deferred tax assets: Intangibles, due to differences in amortizable lives 3,796 (5,058) Receivables, principally due to allowance for doubtful accounts 1,514 1,151 Plant and equipment, due to basis differences on acquisitions and costs capitalized for tax purposes 4,614 4,530 Investment in affiliates and plant and equipment, due to gains recognized for tax purposes and deferred for financial reporting purposes 941 941 Accrued liabilities not deducted for tax purposes 3,121 2,125 Net operating loss carryforward 11,844 3,563 Minimum tax credit 357 Other, net 724 606 --------- --------- Deferred tax assets 26,911 7,858 --------- --------- Net deferred tax liability $(112,412) $ (25,613) ========= ========= In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. (Continued) -47-

48 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (10) Related Party Transactions Affiliates, as used within these statements, are persons or entities that are affiliated with Lamar Advertising Company or its subsidiaries through common ownership and directorate control. As of December 31, 1999 and 1998, debentures and ten year subordinated notes totaling $14,318 and $16,749, respectively, are owned by shareholders, directors and employees. Interest expense under the debentures and ten year subordinated notes during the years ended December 31, 1999, 1998, and 1997 was $1,290, $1,497, and $1,719 respectively. In addition, the Company had receivables from affiliates, related parties and employees of $833 and $378 at December 31, 1999 and 1998, respectively. During 1999, the Company purchased a sign easement for approximately $94 from Jennifred Holdings, LLC, of which Kevin Reilly and Sean Reilly each hold a 50% interest. The Company purchased approximately $1,951, $1,810 and $3,462 of highway signs used in its logo sign business from Interstate Highway Signs Corp., ("IHS") during the years ended December 31, 1999, 1998 and 1997, respectively. IHS is a wholly-owned subsidiary of Sign Acquisition Corp. Kevin R. Reilly, Jr. has voting control over a majority of the outstanding shares of Sign Acquisition Corp. through a voting trust. (11) Stockholders' Equity On December 31, 1997, the Board of Directors approved a three-for-two split of its Class A and Class B common stock subject to the approval by the shareholders of an increase in the authorized number of shares of Class A and Class B common stock. On February 26, 1998, the shareholders approved an increase in the authorized number of shares of Class A common stock to 75,000,000 and Class B common stock to 37,500,000. The stock split, which was effected by means of a 50% stock dividend, was paid to shareholders on February 27, 1998. Par value of the common stock remained unchanged at $.001. Common stock and additional paid in capital were adjusted to reflect the split as of December 31, 1997. All references to share and per share information in the consolidated financial statements and related footnotes have been restated to reflect the effect of the split for all periods presented. During 1995 and 1996, the Company repurchased 3.6% and 12.9%, respectively, of its then outstanding common stock (1,830,750 and 5,427,305 shares, respectively) from certain of its existing stockholders for an aggregate purchase price of approximately $4 million. The terms of such repurchases entitled the selling stockholders to receive additional consideration from the Company in the event that the Company consummated a public offering of its common stock at a higher price within 24 months of the repurchase. In satisfaction of that obligation, upon completion of the Company's initial public equity offering in August 1996, the Company paid the selling stockholders an aggregate of $5.0 million in cash (Continued) -48-

49 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) and issued to them ten-year subordinated notes in the aggregate principal amount of $20,000. The notes bear interest at 8% (1% above the ten-year treasury note rate when issued) and are payable in monthly installments of $167, plus interest. The balance outstanding under these notes at December 31, 1999 and 1998, was $13,333 and $15,333, respectively. In June, 1998, the Company completed a public offering of 6,375,000 shares of Class A common stock at $29.00 per share. Net proceeds to the Company after underwriting discounts from the equity offering were $177.5 million. These proceeds were used to pay down outstanding bank debt of approximately $173.0 million with the remainder used for operations. In December, 1998, the Company completed a public offering of 6,900,000 shares of Class A common stock at $35 per share. Net proceeds to the Company after underwriting discounts from the equity offering were $219.8 million. These proceeds were used to pay down outstanding bank debt of approximately $99.0 million with the remainder used for debt reduction and acquisitions in 1999. On July 16, 1999, the Board of Directors amended the preferred stock of the Company by designating 5,720 shares of the 1,000,000 shares of previously undesignated preferred stock, par value $.001 as "Series AA preferred stock". The previously issued Class A preferred stock par value $638 was exchanged for the new Series AA preferred stock. The new Series AA preferred stock have the same liquidation preferences, dividends and other rights as the previously issued Class A preferred stock. Series AA preferred stock has a liquidation preference over Class A & B common stock. Liquidation value of the Series AA preferred stock at December 31, 1999 was $3,649. The new shares of Series AA preferred stock, however, are entitled to one vote per share. The rights of the Class A and Class B common stock are equal in all respects, except holders of Class B common stock have ten votes per share on all matters in which the holders of common stock are entitled to vote and holders of Class A common stock have one vote per share on such matters. The Class B common stock will convert automatically into Class A common stock upon the sale or transfer to persons other than permitted transferees (as defined in the Company's certificate of incorporation, as amended). On July 20, 1999, Lamar Advertising Company completed a corporate reorganization to create a new holding company structure. The reorganization was accomplished through a merger under section 251(g) of the Delaware General Corporation Law. At the effective time of the merger, all stockholders of Lamar Advertising Company became stockholders in a new holding company and Lamar Advertising Company became a wholly-owned subsidiary of the new holding company. The new holding company took the Lamar Advertising Company name and the old Lamar Advertising Company was renamed Lamar Media Corp. In the merger, all outstanding shares of old Lamar Advertising Company's capital stock were converted into shares of the new holding company with the same voting powers, designations, preferences and rights, and the same qualifications, restrictions and limitations, as the shares of old Lamar Advertising Company. Following the restructuring, the Class A common stock of the new holding company trades under the symbol "LAMR" on the Nasdaq National Market with the same CUSIP number as the old Lamar Advertising Company's Class A common stock. (Continued) -49-

50 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (12) Stock Option Plan In 1996, the Company adopted the 1996 Equity Incentive Plan (the "1996 Plan"). The purpose of the 1996 Plan is to attract and retain key employees and consultants of the Company. The 1996 Plan authorizes the grant of stock options, stock appreciation rights and restricted stock to employees and consultants of the Company capable of contributing to the Company's performance. Options granted under the 1996 Plan generally become exercisable over a five-year period and expire 10 years from the date of grant. The Company initially reserved an aggregate of 3,000,000 shares of Class A common stock (as adjusted for the Company's February 1998 three-for-two stock split) for awards under the 1996 Plan. In September, 1998, the Board of Directors of the Company voted to increase the number of shares reserved for issuance under the 1996 Plan by 1,000,000 shares to 4,000,000 shares. In August, 1999, the Board of Directors voted subject to stockholder approval, to increase the number of shares of Class A common stock reserved for issuance under the 1996 plan by 1,000,000 shares to 5,000,000 shares. The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation." Accordingly, no compensation cost has been recognized for the stock option grants. Had compensation cost for the Company's stock option plan been determined based on the fair value at the grant date consistent with the provisions of SFAS No. 123, the Company's net earnings (loss) and earnings (loss) per share would have been reduced to the pro forma amounts indicated below: 1999 1998 1997 -------- ------- -------- Net earnings (loss) applicable to common stock - as reported $(44,900) (12,255) 2,476 ======== ======= ======== Net earnings (loss) applicable to common stock - pro forma $(50,073) (15,145) (603) ======== ======= ======== Net earnings (loss) per common share - as reported (basic and diluted) $ (.65) (.24) .05 ======== ======= ======== Net earnings (loss) per common share - pro forma (basic and diluted) $ (.73) (.29) (.01) ======== ======= ======== The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used: Grant Dividend Expected Risk Free Expected Year Yield Volatility Interest Rate Lives ----- -------- ---------- ------------- ------- 1999 0% 54% 6% 4 1998 0% 59% 5% 4 1997 0% 40% 6% 3 (Continued) -50-

51 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) Information regarding the 1996 Plan for the years ended December 31, 1999, 1998 and 1997, is as follows: 1999 1998 1997 ---------------------- -------------------- ------------------------ Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price ------ ----- --------- -------- --------- -------- Outstanding, beginning of year 2,240,567 $19.25 1,868,804 $11.60 1,774,896 $10.85 Granted 1,115,000 37.94 950,500 29.88 399,000 15.20 Exercised (525,725) 15.16 (538,154) 10.84 (225,256) 10.67 Canceled (71,888) 30.84 (40,583) 18.24 (79,836) 10.96 --------- ------ --------- ------ --------- ------ Outstanding, end of year 2,757,954 $27.14 2,240,567 $19.25 1,868,804 $11.60 ========= ====== ========= ====== ========= ====== Price for exercised shares $ 15.16 $ 10.84 $ 10.67 Shares available for grant, end of year 920,570 963,682 873,599 Weighted average fair value of options granted during the year $ 23.19 $ 13.09 $ 7.18 The following table summarizes information about fixed-price stock options outstanding at December 31, 1999: Weighted Range Number Average Weighted Number Weighted Of Outstanding Remaining Average Exercisable Average Exercise At Contractual Exercise At Exercise Prices December 31, 1999 Life Price December 31, 1999 Price --------------- ----------------- ----------- -------- ----------------- -------- $ 10.67 583,704 6.62 $10.67 276,204 $10.67 10.67 - 30.34 556,900 7.95 21.24 30,875 24.26 30.34 545,000 8.42 30.34 133,700 30.34 33.38 651,550 9.41 33.38 105,550 33.38 34.16 - 47.75 420,800 9.57 43.99 1,800 47.75 No stock appreciation rights or restricted stock authorized by the 1996 Plan have been granted. (13) Commitments and Other Contingencies The Company sponsors a partially self-insured group health insurance program. The Company is obligated to pay all claims under the program, which are in excess of premiums, up to program limits of $150 per employee, per claim, per year. The Company is also self-insured with respect to its income disability benefits and against casualty losses on advertising structures. Amounts for expected losses, including a provision for losses incurred but not reported, is included in accrued expenses in the accompanying consolidated financial statements. The Company maintains a $500 letter of credit with a bank to meet requirements of the Company's worker's compensation insurance carrier. (Continued) -51-

52 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) The Company sponsors The Lamar Corporation Savings and Profit Sharing Plan covering employees who have completed one year of service and are at least 21 years of age. The Company matches 50% of employees' contributions up to 5% of related compensation. Employees can contribute up to 15% of compensation. Full vesting on the Company's matched contributions occurs after five years. Annually, at the Company's discretion, an additional profit sharing contribution may be made on behalf of each eligible employee. In total, for the years ended December 31, 1999, 1998 and 1997 the Company contributed $2,403, $1,608 and $1,192, respectively. The Company sponsors a Deferred Compensation Plan for the benefit of certain of its senior management who meet specific age and years of service criteria. Employees who have attained the age of 30 and have a minimum of 10 years of service are eligible for annual contributions to the Plan generally ranging from $3 to $8, depending on the employee's length of service. LAC's contributions to the Plan are maintained in a "rabbi" trust and, accordingly, the assets and liabilities of the Plan are reflected in the balance sheet of LAC. Upon termination, death or disability, participating employees are eligible to receive an amount equal to the fair market value of the assets in the employee's deferred compensation account. The Company has contributed $448, $406 and $190 to the Plan during the years ended December 31, 1999, 1998 and 1997, respectively. Contributions to the Deferred Compensation Plan are discretionary and are determined by the Board of Directors. The Company is the subject of litigation arising during the normal course of business. In the opinion of management and the general counsel of the Company, those claims will not have a material impact on the financial position, results of operations or liquidity of the Company. (14) Summarized Financial Information of Subsidiaries Except as set forth below, separate financial statements of each of the Company's direct or indirect subsidiaries that have guaranteed the Company's obligations under the 1996 Notes and the 1997 Notes (collectively, the "Guarantors") are not included herein because the Guarantors are jointly and severally liable under the guarantees, and the aggregate assets, liabilities, earnings and equity of the Guarantors are substantially equivalent to the assets, liabilities, earnings and equity of the Company on a consolidated basis. Summarized financial information for Missouri Logos, a Partnership, a 66-2/3% owned subsidiary of the Company and the only subsidiary of the Company that is not a Guarantor, is set forth below: Balance Sheet Information: 1999 1998 ------ ----- Current assets $ 288 $ 248 Total assets 333 297 Current liabilities 6 7 Total liabilities 6 7 Venturers' equity 327 290 Income Statement Information: 1999 1998 1997 ------ ----- ---- Revenues $1,152 1,038 991 Net income 671 523 540 (Continued) -52-

53 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES COMPANY Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (15) Disclosures About Fair Value of Financial Instruments The following table presents the carrying amounts and estimated fair values of the Company's financial instruments at December 31, 1999 and 1998. The fair value of the financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties. 1999 1998 ---------------------- ---------------------- Carrying Estimated Carrying Estimated Amount Fair Value Amount Fair Value ---------- ---------- --------- ---------- Long-term debt $1,611,463 $1,613,209 $ 827,453 $ 874,091 The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies as follows: o The carrying amounts of cash and cash equivalents, receivables, trade accounts payable, accrued expenses, and deferred income approximate fair value because of the short term nature of these items. o The fair value of long-term debt is based upon market quotes obtained from dealers where available and by discounting future cash flows at rates currently available to the Company for similar instruments when quoted market rates are not available. Fair value estimates are subject to inherent limitations. Estimates of fair values are made at a specific point in time, based on relevant market information and information about the financial instrument. The estimated fair values of financial instruments presented above are not necessarily indicative of amounts the Company might realize in actual market transactions. Estimates of fair value are subjective in nature and involve uncertainties and matters of significant judgement and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. (16) Quarterly Financial Data (Unaudited) Fiscal Year 1999 Quarters March 31 June 30 September 30 December 31 -------- ------- ------------ ----------- Net revenues $ 85,766 97,809 111,039 149,521 Net revenues less direct advertising expenses 56,002 67,328 77,803 99,912 Net earnings (loss) applicable to common stock (10,797) (5,161) (3,575) (25,367) Net earnings (loss) per common share (basic and diluted) (.18) (.08) (.05) (.29) (Continued) -53-

54 LAMAR ADVERTISING COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) Fiscal Year 1998 Quarters March 31 June 30 September 30 December 31 -------- ------- ------------ ----------- Net revenues $ 58,397 69,675 73,528 86,988 Net revenues less direct advertising expenses 37,567 48,066 51,271 58,835 Net earnings (loss) applicable to common stock (4,682) (1,253) 1,538 (7,858) Net earnings (loss) per common share (basic and diluted) (.10) (.02) .03 (.15) (17) New Accounting Pronouncements In April 1998, the American Institute of Certified Public Accountants issued Statement of Position ("SOP") 98-5, Reporting on the Costs of Start-Up Activities. SOP 98-5 is effective for financial statements for fiscal years beginning after December 15, 1998, and requires that the costs of start-up activities, including organizational costs, be expensed as incurred. The effect of SOP 98-5 was recorded in the first quarter of fiscal 1999 as the cumulative effect of a change in accounting principle in the amount of $(767), net of tax, as described in Accounting Principles Board Opinion No. 20 "Accounting Changes". -54-

55 SCHEDULE 2 Lamar Advertising Company Valuation and Qualifying Accounts The Years Ended December 31, 1999, 1998 and 1997 (in 000's) Balance at Charged to Beginning Costs and Balance at Description of Period Expenses Deductions End of Period ----------- --------- ----------- ---------- ------------- Year ended December 31, 1999 Deducted in balance sheet from trade accounts receivable: Allowance for doubtful accounts $ 2,722 4,065 2,859 3,928 Deducted in balance sheet from intangible assets: Amortization of intangible assets $72,721 100,019 824 171,316 Year ended December 31, 1998 Deducted in balance sheet from trade accounts receivable: Allowance for doubtful accounts $ 1,311 2,883 1,472 2,722 Deducted in balance sheet from intangible assets: Amortization of intangible assets $29,698 43,023 -- 72,721 Year ended December 31, 1997 Deducted in balance sheet from trade accounts receivable: Allowance for doubtful accounts $ 814 2,098 1,601 1,311 Deducted in balance sheet from intangible assets: Amortization of intangible assets $ 9,273 20,425 -- 29,698 -55-

56 LAMAR MEDIA CORP. Independent Auditors' Report ......................................................... 57 Consolidated Balance Sheets as of December 31, 1999 and 1998 ......................... 58 Consolidated Statements of Operations for the years ended December 31, 1999, 1998 and 1997 ................................................................... 59 Consolidated Statements of Comprehensive Income for the years ended December 31, 1999, 1998 and 1997 ................................................ 60 Consolidated Statements of Stockholders' Equity for the years ended December 31, 1997, 1998 and 1999 ................................................ 61 Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997 ............................................................. 62 Notes to Consolidated Financial Statements ...........................................63-68 -56-

57 Independent Auditors' Report Board of Directors Lamar Media Corp.: We have audited the accompanying consolidated balance sheets of Lamar Media Corp. and subsidiaries as of December 31, 1999, and 1998, and the related consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 1999. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Lamar Media Corp. and subsidiaries as of December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1999, in conformity with generally accepted accounting principles. As discussed in note 17 to the consolidated financial statements of Lamar Advertising Company, the Company changed its method of accounting for the costs of start-up activities in 1999. KPMG LLP New Orleans, Louisiana March 17, 2000 -57-

58 LAMAR MEDIA CORP. Consolidated Balance Sheets December 31, 1999 and 1998 (In thousands, except share and per share data) Assets 1999 1998 - ------ ----------- ----------- Current assets: Cash and cash equivalents $ 8,401 $ 128,597 Receivables, net 80,671 40,380 Prepaid expenses 21,524 12,346 Other current assets 25,193 1,736 ----------- ----------- Total current assets 135,789 183,059 ----------- ----------- Property, plant and equipment 1,412,605 661,324 Less accumulated depreciation and amortization (218,893) (153,972) ----------- ----------- Net property plant and equipment 1,193,712 507,352 ----------- ----------- Intangible assets (note 3) 1,851,965 705,934 Other assets - non-current 13,563 17,032 ----------- ----------- Total assets $ 3,195,029 $ 1,413,377 =========== =========== Liabilities and Stockholders' Equity Current liabilities: Trade accounts payable $ 11,492 $ 4,258 Current maturities of long-term debt (note 5) 4,318 49,079 Accrued expenses (note 4) 54,031 25,912 Deferred income 11,243 9,589 ----------- ----------- Total current liabilities 81,084 88,838 Long-term debt (note 5) 1,611,463 827,453 Deferred income taxes (note 6) 112,776 25,613 Deferred income 1,222 1,293 Other liabilities 5,613 3,401 ----------- ----------- Total liabilities 1,812,158 946,598 ----------- ----------- Stockholders' equity: Common stock, $.01 par value, authorized 3000 shares; issued and outstanding 100 shares at December 31, 1999 -- -- Class A preferred stock, par value $638, $63.80 cumulative dividends, 10,000 shares authorized, 5,719 shares issued and outstanding at December 31, 1998 -- 3,649 Class A common stock, par value $.001, 125,000,000 shares authorized, 43,392,876 shares issued and outstanding at December 31, 1998 -- 43 Class B common stock, par value $.001, 37,500,000 shares authorized, 17,699,997 shares at December 31, 1998 -- 18 Additional paid-in capital 1,469,606 505,644 Accumulated deficit (86,735) (42,575) ----------- ----------- Stockholders' equity 1,382,871 466,779 ----------- ----------- Total liabilities and stockholders' equity $ 3,195,029 $ 1,413,377 =========== =========== See accompanying notes to consolidated financial statements. -58-

59 LAMAR MEDIA CORP. Consolidated Statements of Operations Years ended December 31, 1999, 1998 and 1997 (In thousands, except share and per share data) 1999 1998 1997 --------- --------- --------- Net revenues $ 444,135 $ 288,588 $ 201,062 --------- --------- --------- Operating expenses: Direct advertising expenses 143,090 92,849 63,390 General and administrative expenses 94,264 60,935 45,368 Depreciation and amortization 176,233 88,791 48,317 --------- --------- --------- 413,587 242,575 157,075 --------- --------- --------- Operating income 30,548 46,013 43,987 --------- --------- --------- Other expense (income): Interest income (1,421) (762) (1,723) Interest expense 89,619 60,008 38,230 Gain on disposition of assets (5,481) (1,152) (15) --------- --------- --------- 82,717 58,094 36,492 --------- --------- --------- Earnings (loss) before income taxes, extraordinary item and cumulative effect of a change in accounting principle (52,169) (12,081) 7,495 Income tax expense (benefit) (note 6) (9,232) (191) 4,654 --------- --------- --------- Earnings (loss) before extraordinary item and cumulative effect of a change in accounting principle (42,937) (11,890) 2,841 Extraordinary loss on debt extinguishment net of income tax benefit of $117 (182) -- -- --------- --------- --------- Earnings (loss) before cumulative effect of a change in accounting principle (43,119) (11,890) 2,841 Cumulative effect of a change in accounting principle (767) -- -- --------- --------- --------- Net earnings (loss) (43,886) (11,890) 2,841 Preferred stock dividends (274) (365) (365) --------- --------- --------- Net earnings (loss) applicable to common stock $ (44,160) $ (12,255) $ 2,476 ========= ========= ========= See accompanying notes to consolidated financial statements. -59-

60 LAMAR MEDIA CORP. Consolidated Statements of Comprehensive Income Years ended December 31, 1999, 1998 and 1997 (In Thousands) 1999 1998 1997 -------- -------- -------- Net earnings (loss) applicable to common stock $(44,160) $(12,255) $ 2,476 Other comprehensive income - change in unrealized gain (loss) on investment securities (net of deferred tax expense (benefit) of $0, $217, and $(596), for the years ended December 31, 1999, 1998 and 1997 -- 354 (974) -------- -------- -------- Comprehensive income (loss) $(44,160) (11,901) 1,502 ======== ======== ======== -60-

61 LAMAR MEDIA CORP. Consolidated Statements of Stockholders' Equity Years ended December 31, 1999, 1998 and 1997 (In thousands, except share and per share data) Unrealized Class A Class A Class B Additional Gain (Loss) Common Preferred Common Common Paid-in Accumulated On Investment Stock Stock Stock Stock Capital Deficit Securities Total ------ --------- ------- ------- ---------- ----------- ------------- --------- Balance, December 31, 1996 $ -- 3,649 18 14 92,258 (32,796) 620 63,763 Exercise of stock options -- -- -- -- 3,448 -- -- 3,448 Conversion of 1,811,552 shares of Class B common stock to Class A common stock -- -- 1 (1) -- -- -- -- Net earnings -- -- -- -- -- 2,841 -- 2,841 Dividends ($63.80 per preferred share) -- -- -- -- -- (365) -- (365) Unrealized loss on investment securities, net of deferred taxes of $596 -- -- -- -- -- -- (974) (974) Three-for-two stock split -- -- 9 6 (15) -- -- -- ----- ------ ----- ------ --------- ------- -------- -------- Balance, December 31, 1997 -- 3,649 28 19 95,691 (30,320) (354) 68,713 ----- ------ ----- ------ --------- ------- -------- -------- Issuance of 13,338,005 shares of common stock -- -- 13 -- 399,288 -- -- 399,301 Exercise of stock options -- -- 1 -- 10,665 -- -- 10,666 Conversion of 1,062,912 shares of Class B common stock to Class A common stock -- -- 1 (1) -- -- -- -- Net loss -- -- -- -- -- (11,890) -- (11,890) Dividends ($63.80 per preferred share) -- -- -- -- -- (365) -- (365) Realized loss on investment securities, net of tax -- -- -- -- -- -- 354 354 ----- ------ ----- ------ --------- -------- -------- -------- Balance December 31, 1998 -- 3,649 43 18 505,644 (42,575) -- 466,779 ----- ------ ----- ------ --------- ------- -------- -------- Issuance of 13,023 shares of common stock in acquisitions -- -- -- -- 475 -- -- 475 Exercise of stock options -- -- -- -- 3,833 -- -- 3,833 Effect of Corporate restructuring -- (3,649) (43) (18) 3,710 -- -- -- Contributions from parent -- -- -- -- 955,944 -- -- 955,944 Net loss -- -- -- -- -- (43,886) -- (43,886) Dividends ($63.80 per preferred share) -- -- -- -- -- (274) -- (274) ----- ------ ----- ------ --------- ------- -------- --------- Balance December 31, 1999 $ -- -- -- -- 1,469,606 (86,735) -- 1,382,871 ===== ====== ===== ====== ========= ======= ======== ========= See accompanying notes to consolidated financial statements. -61-

62 LAMAR MEDIA CORP. Consolidated Statements of Cash Flows Years ended December 31, 1999, 1998 and 1997 (In thousands) 1999 1998 1997 --------- --------- --------- Cash flows from operating activities: Net earnings (loss) $ (43,886) (11,890) 2,841 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Depreciation and amortization 176,233 88,791 48,317 Loss (gain) on disposition of assets (5,481) (1,152) (15) Cumulative effect of accounting change 767 -- -- Deferred tax expense (benefit) (13,215) (7,537) (2,839) Provision for doubtful accounts 4,065 2,883 2,098 Changes in operating assets and liabilities: (Increase) decrease in: Receivables (19,091) (2,464) (7,646) Prepaid expenses 782 (521) (367) Other assets (10,937) (2,148) (251) Increase (decrease) in: Trade accounts payable 3,438 250 (1,951) Accrued expenses 14,974 4,326 6,063 Deferred income (7,184) 2,132 (425) Other liabilities (29) (172) (42) --------- --------- --------- Net cash provided by operating activities 100,436 72,498 45,783 --------- --------- --------- Cash flows from investing activities: Capital expenditures (77,186) (55,196) (36,654) Purchase of new markets (878,933) (485,514) (386,842) Proceeds from sale of property and equipment 7,603 5,493 53,268 --------- --------- --------- Net cash used in investing activities (948,516) (535,217) (370,228) --------- --------- --------- Cash flows from financing activities: Net proceeds from issuance of common stock 2,231 402,629 2,403 Proceeds from issuance of long-term debt 279,594 70 193,926 Principal payments on long-term debt (79,667) (6,229) -- Debt issuance costs -- (3,035) -- Net borrowing (payments) under credit agreements 526,000 191,000 54,720 Dividends (274) (365) (365) --------- --------- --------- Net cash provided by financing activities 727,884 584,070 250,684 --------- --------- --------- Net increase (decrease) in cash and cash equivalents (120,196) 121,351 (73,761) Cash and cash equivalents at beginning of period 128,597 7,246 81,007 --------- --------- --------- Cash and cash equivalents at end of period $ 8,401 128,597 7,246 ========= ========= ========= Supplemental disclosures of cash flow information: Cash paid for interest $ 83,837 56,960 33,284 ========= ========= ========= Cash paid for income taxes $ 6,919 1,107 8,792 ========= ========= ========= See accompanying notes to consolidated financial statements. -62-

63 LAMAR MEDIA CORP. Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (1) Significant Accounting Policies (a) Nature of Business On July 20, 1999, Lamar Advertising Company reorganized into a new holding company structure. As a result of this reorganization (1) the former Lamar Advertising Company became a wholly owned subsidiary of a newly formed holding company, (2) the name of the former Lamar Advertising Company was changed to Lamar Media Corp., (3) the name of the new holding company became Lamar Advertising Company, (4) the outstanding shares of capital stock of the former Lamar Advertising Company, including the Class A common stock, were automatically converted, on a share for share basis, into identical shares of capital stock of the new holding company and (5) the Class A common stock of the new holding company commenced trading on the Nasdaq National Market under the symbol "LAMR" instead of the Class A common stock of the former Lamar Advertising Company. In addition, following the holding company reorganization, substantially all of the former Lamar Advertising Company's debt obligations, including the bank credit facility and other long-term debt remained the obligations of Lamar Media. Under Delaware law, the reorganization did not require the approval of the stockholders of the former Lamar Advertising Company. The purpose of the reorganization was to provide Lamar Advertising Company with a more flexible capital structure and to enhance its financing options. The business operations of the former Lamar Advertising Company and its subsidiaries, including the Company, has not changed as a result of the reorganization. Lamar Media Corp. is engaged in the outdoor advertising business operating approximately 116,800 outdoor advertising displays in 42 states. Lamar Media's operating strategy is to be the leading provider of outdoor advertising services in most of the markets it serves. In addition, Lamar Media operates a logo sign business in 20 states throughout the United States and in 1 province of Canada. Logo signs are erected pursuant to state-awarded service contracts on public rights-of-way near highway exits and deliver brand name information on available gas, food, lodging and camping services. Included in the Company's logo sign business are tourism signing contracts. Certain footnotes are not provided for the accompanying financial statements as the information in notes 2, 4, 6, 11 through 15, 17 and portions of notes 1, 8 and 10 to the consolidated financial statements of Lamar Advertising Company included elsewhere in this Report is substantially equivalent to that required for the consolidated financial statements of Lamar Media Corp. Earnings per share data is not provided for the operating results of Lamar Media Corp. as it is a wholly owned subsidiary of Lamar Advertising Company. (Continued) -63-

64 LAMAR MEDIA CORP. Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (2) Noncash Financing and Investing Activities A summary of significant noncash financing and investing activities for the years ended December 31, 1999, 1998 and 1997 follows: 1999 1998 1997 ------ ------ ------ Disposition of assets $5,387 30 1,300 Acquisitions of assets 475 2,706 -- Recapitalization related to corporate restructure (note 1) 3,710 -- -- Conversion of note receivable to equity investment -- -- 500 Debt issuance costs -- -- 4,750 (3) Intangible Assets The following is a summary of intangible assets at December 31, 1999 and 1998: Estimated life (years) 1999 1998 --------------- ----------- ----------- Debt issuance costs and fees 7-10 $ 24,059 $ 20,081 Customer lists and contracts 7-10 286,301 108,903 Non-compete agreements 7-15 50,277 19,318 Goodwill 15 1,033,287 554,685 Site locations and other 5-15 628,451 2,947 ----------- ----------- $ 2,022,375 $ 705,934 =========== =========== Cost 2,022,375 778,655 Accumulated amortization (170,410) (72,721) ----------- ----------- $ 1,851,965 $ 705,934 =========== =========== (Continued) -64-

65 LAMAR MEDIA CORP. Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) (4) Accrued Expenses The following is a summary of accrued expenses at December 31, 1999 and 1998: 1999 1998 ------- ------- Payroll $ 7,406 $ 4,863 Interest 17,411 11,629 Insurance benefits 838 3,715 Purchase price payable (note 2) 15,750 -- Other 12,626 5,705 ------- ------- $54,031 $25,912 ======= ======= (5) Long-term Debt Long-term debt consists of the following at December 31, 1999 and 1998: 1999 1998 ----------- ----------- 5-1/4% Note to Lamar Advertising Company $ 287,500 $ -- 9-5/8% Senior subordinated notes (1996 Notes) 255,000 255,000 8-5/8% Senior subordinated notes (1997 Notes) 198,882 198,785 Bank Credit Agreement 776,000 250,000 9-1/4% Senior subordinated notes 74,073 103,949 8% unsecured subordinated notes (see Note 12) 13,333 15,333 Other notes with various rates and terms 10,993 53,465 ----------- ----------- 1,615,781 876,532 Less current maturities (4,318) (49,079) ----------- ----------- Long-term debt, excluding current maturities $ 1,611,463 $ 827,453 =========== =========== Long-term debt matures as follows: 2000 $ 4,318 2001 50,200 2002 49,950 2003 99,125 2004 116,772 Later years 1,295,416 (Continued) -65-

66 On August 10, 1999, Lamar Media Corp. borrowed from Lamar Advertising Company, its parent, $287,500 in exchange for a note payable bearing interest at 5 1/4% due 2006. The proceeds were used to pay down existing bank debt of the Company. (6) Income Taxes Income tax expense (benefit) for the years ended December 31, 1999, 1998 and 1997, consists of: Current Deferred Total -------- -------- -------- Year ended December 31, 1999: U.S. federal $ 3,083 (11,521) (8,438) State and local 900 (1,694) (794) -------- -------- -------- $ 3,983 (13,215) (9,232) ======== ======== ======== Year ended December 31, 1998: U.S. federal $ 6,269 (6,074) 195 State and local 1,077 (1,463) (386) -------- -------- -------- 7,346 (7,537) (191) Change in deferred tax attributable to unrealized losses on investment securities, included in stockholders' equity -- 217 217 -------- -------- -------- $ 7,346 (7,320) 26 ======== ======== ======== Year ended December 31, 1997: U.S. federal $ 6,108 (2,475) 3,633 State and local 1,385 (364) 1,021 -------- -------- -------- 7,493 (2,839) 4,654 Change in deferred tax attributable to unrealized losses on investment securities, included in stockholders' equity -- (596) (596) -------- -------- -------- $ 7,493 (3,435) 4,058 ======== ======== ======== (Continued) -66-

67 LAMAR MEDIA CORP. Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) Income tax expense (benefit) attributable to continuing operations for the years ended December 31, 1999, 1998 and 1997, differs from the amounts computed by applying the U.S. federal income tax rate of 34 percent to earnings before income taxes as follows: 1999 1998 1997 -------- -------- -------- Computed "expected" tax expense (benefit) $(17,737) (4,108) 2,548 Increase (reduction) in income taxes resulting from: Book expenses not deductible for tax purposes 122 450 92 Amortization of non-deductible goodwill 8,814 3,752 1,730 State and local income taxes, net of federal income tax benefit (534) (255) 674 Other differences, net 103 (30) (390) -------- -------- -------- $ (9,232) (191) 4,654 ======== ======== ======== The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 1999 and 1998 are presented below: 1999 1998 --------- --------- Deferred tax liabilities: Plant and equipment, principally due to differences in depreciation $ (3,942) $ (4,915) Plant and equipment, due to basis differences on acquisitions (134,323) (28,556) Employee benefit plans (1,058) -- --------- --------- Deferred tax liabilities (139,323) (33,471) Deferred tax assets: Intangibles, due to differences in amortizable lives 3,935 (5,058) Receivables, principally due to allowance for doubtful accounts 1,514 1,151 Plant and equipment, due to basis differences on acquisitions and costs capitalized for tax purposes 4,614 4,530 Investment in affiliates and plant and equipment, due to gains recognized for tax purposes and deferred for financial reporting purposes 941 941 Accrued liabilities not deducted for tax purposes 3,121 2,125 Net operating loss carryforward 11,340 3,563 Minimum tax credit 357 -- Other, net 725 606 --------- --------- Deferred tax assets 26,547 7,858 --------- --------- Net deferred tax liability $(112,776) $ (25,613) ========= ========= (Continued) -67-

68 LAMAR MEDIA CORP. Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share data) In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. (7) Related Party Transactions Affiliates, as used within these statements, are persons or entities that are affiliated with Lamar Media Corp. or its subsidiaries through common ownership and directorate control. As of December 31, 1999, there was a receivable from Lamar Advertising Company, its parent, in the amount of $10,851. (8) Quarterly Financial Data (Unaudited) Fiscal Year 1999 Quarters March 31 June 30 September 30 December 31 -------- ------- ------------ ----------- Net revenues $ 85,766 97,809 111,039 149,521 Net revenues less direct advertising expenses 56,002 67,328 77,803 99,912 Net earnings (loss) applicable to common stock (10,797) (5,161) (3,221) (24,981) Fiscal Year 1998 Quarters March 31 June 30 September 30 December 31 -------- ------- ------------ ----------- Net revenues $ 58,397 69,675 73,528 86,988 Net revenues less direct advertising expenses 37,567 48,066 51,271 58,835 Net earnings (loss) applicable to common stock (4,682) (1,253) 1,538 (7,858) -68-

69 SCHEDULE 2 Lamar Media Corp. Valuation and Qualifying Accounts The Years Ended December 31, 1999, 1998 and 1997 (in 000's) Balance at Charged to Beginning Costs and Balance at Description of Period Expenses Deductions End of Period ----------- --------- ----------- ---------- ------------- Year ended December 31, 1999 Deducted in balance sheet from trade accounts receivable: Allowance for doubtful accounts $ 2,722 4,065 2,859 3,928 Deducted in balance sheet from intangible assets: Amortization of intangible assets $72,721 99,113 824 170,410 Year ended December 31, 1998 Deducted in balance sheet from trade accounts receivable: Allowance for doubtful accounts $ 1,311 2,883 1,472 2,722 Deducted in balance sheet from intangible assets: Amortization of intangible assets $29,698 43,023 -- 72,721 Year ended December 31, 1997 Deducted in balance sheet from trade accounts receivable: Allowance for doubtful accounts $ 814 2,098 1,601 1,311 Deducted in balance sheet from intangible assets: Amortization of intangible assets $ 9,273 20,425 -- 29,698 -69-

70 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Lamar Advertising Company None Lamar Media Corp. None PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The response to this item is contained in part under the caption "Executive Officers of the Registrant" in Part I, Item 1A hereof and the remainder is incorporated herein by reference from the discussion responsive thereto under the captions "Election of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's Proxy Statement relating to the 2000 Annual Meeting of Stockholders. ITEM 11. EXECUTIVE COMPENSATION The response to this item is incorporated herein by reference from the discussion responsive thereto under the following captions in the Company's Proxy Statement relating to the 2000 Annual Meeting of Stockholders: "Election of Directors - Director Compensation," "Executive Compensation" and "Compensation Committee Interlocks and Insider Participation." ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The response to this item is incorporated herein by reference from the discussion responsive thereto under the caption "Share Ownership" in the Company's Proxy Statement relating to the 2000 Annual Meeting of Stockholders. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The response to this item is incorporated herein by reference from the discussion responsive thereto under the caption "Certain Relationships and Related Transactions" in the Company's Proxy Statement relating to the 2000 Annual Meeting of Stockholders. -70-

71 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (A) 1. FINANCIAL STATEMENTS The financial statements are listed under Part II, Item 8 of this Report. 2. FINANCIAL STATEMENT SCHEDULES The financial statement schedules are included under Part II, Item 8 of this Report. 3. EXHIBITS The exhibits are listed below under Part IV, Item 14(c) of this Report. (B) REPORTS ON FORM 8-K Reports on Form 8-K were filed with the Commission during the fourth quarter of 1999 to report the following items as of the dates indicated: On November 23, 1999, the Company and Lamar Media each filed a report on Form 8-K to announce the acquisition of all of the outstanding capital stock of Chancellor Media Outdoor Corporation and Chancellor Media Whiteco Outdoor Corporation for consideration consisting of approximately $700 million of cash and 26,227,273 shares of Lamar Advertising Company Class A common stock. In addition, the report presented under Item 7 the historical financial statements and related notes for Chancellor Outdoor as well as included pro forma financial information of the Company giving effect to the acquisition. -71-

72 (C) EXHIBITS INDEX TO EXHIBITS Exhibit No. Description - ----------- ------------ 2.1 Agreement and Plan of Merger dated as of July 20, 1999 among Lamar Media Corp., Lamar New Holding Co., and Lamar Holdings Merge Co. Previously filed as exhibit 2.1 to the Company's Current Report on Form 8-K filed on July 22, 1999 (File No. 0-30242) and incorporated herein by reference. 3.1 Certificate of Incorporation of Lamar New Holding Co. Previously filed as exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1999 (File No. 0-20833) filed on August 16, 1999 and incorporated herein by reference. 3.2 Certificate of Amendment of Certificate of Incorporation of Lamar New Holding Co. (whereby the name of Lamar New Holding Co. was changed to Lamar Advertising Company). Previously filed as exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1999 (File No. 0-20833) filed on August 16, 1999 and incorporated herein by reference. 3.3 Amended and Restated Bylaws of the Company. Previously filed as exhibit 3.3 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1999 (File No. 0-20833) filed on August 16, 1999 and incorporated herein by reference. 3.4 Amended and Restated Bylaws of Lamar Media Corp. Previously filed as exhibit 3.1 to Lamar Media's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 1-12407) filed on November 12, 1999 and incorporated herein by reference. 4.1 Specimen certificate for the shares of Class A common stock of the Company. Previously filed as Exhibit 4.1 to the Company's Registration Statement on Form S-1 (File No. 333-05479), and incorporated herein by reference. 4.2 Senior Secured Note dated May 19, 1993. Previously filed as Exhibit 4.1 to the Company's Registration Statement on Form S-1 (File No. 33-59624), and incorporated herein by reference. 4.3 Indenture dated May 15, 1993 relating to the Company's 11% Senior Secured Notes due May 15, 2003. Previously filed as Exhibit 4.3 to the Company's Registration Statement on Form S-1 (File No. 33-59624), and incorporated herein by reference. 4.4 First Supplemental Indenture dated July 30, 1996 relating to the Company's 11% Senior Secured Notes due May 15, 2003. Previously filed as Exhibit 4.5 to the Company's Registration Statement on Form S-1 (File No. 333-05479), and incorporated herein by reference. 4.5 Form of Second Supplemental Indenture in the form of an Amended and Restated Indenture dated November 8, 1996 relating to the Company's 11% Senior Secured Notes due May 15, 2003. Previously filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on November 15, 1996 (File No. 1-12407), and incorporated herein by reference. -72-

73 Exhibit No. Description - ----------- ----------- 4.6 Notice of Trustee dated November 8, 1996 with respect to the release of the security interest in the Trustee on behalf of the holders of the Company's 11% Senior Secured Notes due May 15, 2003. Previously filed as Exhibit 4.2 to the Company's Current Report on Form 8-K filed on November 15, 1996 (File No. 1-12407), and incorporated herein by reference. 4.7 Form of Subordinated Note. Previously filed as Exhibit 4.8 to the Company's Registration Statement on Form S-1 (File No. 333-05479), and incorporated herein by reference. 4.8 Indenture dated as of November 15, 1996 between the Company, certain of its subsidiaries and State Street Bank and Trust Company, as trustee, relating to the Company's 9 5/8% Senior Subordinated Notes due 2006. Previously filed as Exhibit 4.11 to the Company's Registration Statement on Form S-3 (File No. 333-14789), and incorporated herein by reference. 4.9 Form of 9 5/8% Senior Subordinated Note due 2006. Previously filed as Exhibit 4.12 to the Company's Registration Statement on Form S-3 (File No. 333-14789), and incorporated herein by reference. 4.10 Form of 8 5/8% Senior Subordinated Note due 2007. Previously filed as Exhibit 4.10 to the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1997, (File No. 1-12407), and incorporated herein by reference. 4.11 Indenture dated as of September 25, 1997 between the Company, certain of its subsidiaries, and State Street Bank and Trust Company, as trustee, relating to the Company's 8 5/8% Senior Subordinated Notes due 2007. Previously filed as Exhibit 4.2 to the Company's Current Report on Form 8-K filed on September 30, 1997 (File No. 1-12407), and incorporated herein by reference. 4.12 Indenture dated August 15, 1997, relating to Outdoor Communications, Inc. 9 1/4% Senior Subordinated Notes. Previously filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference. 4.13 Supplemental Indenture to the Indenture dated August 15, 1997 among Outdoor Communications, Inc., certain of its subsidiaries and First Union National Bank as Trustee, dated October 1, 1998. Previously filed as Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference. 4.14 Supplemental Indenture to the Indenture dated August 15, 1997 among Outdoor Communications, Inc., certain of its subsidiaries and First Union National Bank, as Trustee, dated October 23, 1998. Previously filed as Exhibit 4.3 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference. 4.15 Supplemental Indenture to the Indenture dated November 15, 1996 among the Company, certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated October 23, 1998. Previously filed as Exhibit 4.4 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference. -73-

74 Exhibit No. Description - ----------- ----------- 4.16 Supplemental Indenture to the Indenture dated September 25, 1997 among the Company, certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated October 23, 1998. Previously filed as Exhibit 4.5 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference. 4.17 Indenture dated as of August 10, 1999 between the Company and State Street Bank and Trust Company, as Trustee. Previously filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1999 (File No. 0-20833) filed on August 16, 1999 and incorporated herein by reference. 4.18 First Supplemental Indenture dated as of August 10, 1999 between the Company and State Street Bank and Trust Company, as Trustee. Previously filed as Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1999 (File No. 0-20833) filed on August 16, 1999 and incorporated herein by reference. 4.19 Supplemental Indenture to the Indenture dated November 15, 1996 among Lamar Media Corp., certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated July 20, 1999. Previously filed as Exhibit 4.1 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.20 Supplemental Indenture to the Indenture dated September 25, 1997 among Lamar Media Corp., certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated September 15, 1999. Previously filed as Exhibit 4.2 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.21 Supplemental Indenture to the Indenture dated August 15, 1997 among Outdoor Communications, Inc., certain of its subsidiaries and First Union National Bank, as Trustee, dated September 15, 1999. Previously filed as Exhibit 4.3 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.22 Supplemental Indenture to the Indenture dated September 25, 1997 among Lamar Media Corp., certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated July 20, 1999. Previously filed as Exhibit 4.4 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.23 Supplemental Indenture to the Indenture dated August 15, 1997 among Outdoor Communications, Inc., certain of its subsidiaries and First Union National Bank, as Trustee, dated July 20, 1999. Previously filed as Exhibit 4.5 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. -74-

75 Exhibit No. Description - ----------- ----------- 4.24 Supplemental Indenture to the Indenture dated November 15, 1996 among Lamar Media Corp., certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated September 15, 1999. Previously filed as Exhibit 4.6 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.25 Supplemental Indentures to the Indenture dated September 25, 1997 among Lamar Media Corp., certain of its subsidiaries and State Street Bank and Trust Company, as Trustee. Previously filed as Exhibit 4.7 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.26 Supplemental Indentures to the Indenture dated November 15, 1996 among Lamar Media Corp., certain of its subsidiaries and State Street Bank and Trust Company, as Trustee. Previously filed as Exhibit 4.8 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.27 Supplemental Indentures to the Indenture dated August 15, 1997 among Outdoor Communications, Inc., certain of its subsidiaries and First Union National Bank, as Trustee. Previously filed as Exhibit 4.9 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.28 Supplemental Indenture to the Indenture dated August 15, 1997 among Outdoor Communications, Inc., certain of its subsidiaries and First Union National Bank, as Trustee, dated December 23, 1999. Filed herewith. 4.29 Supplemental Indenture to the Indenture dated November 15, 1996 among Lamar Media Corp., certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated December 23, 1999. Filed herewith. 4.30 Supplemental Indenture to the Indenture dated September 25, 1997 among Lamar Media Corp., certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated December 23, 1999. Filed herewith. 10.1 Consulting Agreement dated July 1, 1996 between the Lamar Texas Limited Partnership and the Reilly Consulting Company, L.L.C., of which Kevin P. Reilly, Sr. is the manager. Previously filed as Exhibit 10.2 to the Company's Registration Statement on Form S-1 (File No. 33-05479), and incorporated herein by reference. 10.2 Indenture dated as of September 24, 1986 relating to the Company's 8% Unsecured Subordinated Debentures. Previously filed as Exhibit 10.3 to the Company's Registration Statement on Form S-1 (File No. 33-59624), and incorporated herein by reference. 10.3* The Lamar Savings and Profit Sharing Plan Trust. Previously filed as Exhibit 10.4 to the Company's Registration Statement on Form S-1 (File No. 33-59624), and incorporated herein by reference. -75-

76 Exhibit No. Description - ----------- ----------- 10.4 Trust under The Lamar Corporation, its Affiliates and Subsidiaries Deferred Compensation Plan dated October 3, 1993. Previously filed as Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1995 (File No. 33-59624), and incorporated herein by reference. 10.5* 1996 Equity Incentive Plan. Previously filed as Exhibit 10.14 to the Company's Registration Statement on Form S-1 (File No. 333-05479), and incorporated herein by reference. 10.6 Bank Credit Agreement dated December 18, 1996 between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.18 to the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1996 (File No. 1-12407), and incorporated herein by reference. 10.7 Amendment No. 1 to the Bank Credit Agreement dated as of March 31, 1997 between the Company, the Subsidiary Guarantors party thereto, the Lenders party thereto and the Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1997 (File No. 1-12407), and incorporated herein by reference. 10.8 Amendment No. 2 to the Bank Credit Agreement dated as of September 12, 1997 between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed on September 30, 1997 (File No. 1-12407), and incorporated herein by reference. 10.9 Amendment No. 3 to the Bank Credit Agreement dated as of December 31, 1997 between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.9 to the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1997, (File No. 1-12407), and incorporated herein by reference. 10.10 Contract to Sell and Purchase, dated as of October 9, 1996, between the Company and Outdoor East L.P. Previously filed as Exhibit 10.16 to the Company's Registration Statement on Form S-3 (File No. 333-14677), and incorporated herein by reference. 10.11 Stock Purchase Agreement, dated as of September 25, 1996, between the Company and the shareholders of FKM Advertising, Co., Inc. Previously filed as Exhibit 10.17 to the Company's Registration Statement on Form S-3 (File No. 333-14677), and incorporated herein by reference. 10.12 Stock Purchase Agreement dated as of February 7, 1997 between the Company and the stockholders of Penn Advertising, Inc. named therein. Previously filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed on April 14, 1997 (File No. 1-12407), and incorporated herein by reference. 10.13 Asset Purchase Agreement dated as of August 15, 1997 between The Lamar Corporation and Outdoor Systems, Inc. Previously filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed on August 27, 1997 (File No. 1-12407), and incorporated herein by reference. -76-

77 Exhibit No. Description - ----------- ----------- 10.14 Bank Credit Agreement dated July 16, 1998, between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1998, (File No. 0-020833), and incorporated herein by reference. 10.15 Amendment No. 1 to the Amended and Restated Bank Credit Agreement dated September 15, 1998, between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998 (File No. 0-20833) and incorporated herein by reference. 10.16 Stock Purchase Agreement dated as of October 1, 1998, between the Company and the stockholders of Outdoor Communications, Inc. named therein. Previously filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed on October 15, 1998 (File No. 0-20833), and incorporated herein by reference. 10.17 Amendment No. 4 to Credit Agreement dated as of March 31, 1998, between Lamar Advertising Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1998 (File No. 1-12407), and incorporated herein by reference. 10.18 Second Amended and Restated Stock Purchase Agreement dated as of August 11, 1999 among the Company, Lamar Media Corp., Chancellor Media Corporation of Los Angeles and Chancellor Mezzanine Holdings Corporation. Previously filed as Appendix A to the Company's Schedule 14C Information Statement filed on August 13, 1999 and incorporated herein by reference. Pursuant to Item 601(b)(2) of Regulation S-K, the Schedules and Annexes A and B referred to in the Second Amended and Restated Stock Purchase Agreement are omitted. The Company hereby undertakes to furnish supplementary a copy of any omitted Schedule or Annex to the Commission upon request. 10.19 Bank Credit Agreement dated August 13, 1999, between Lamar Media Corp., certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.1 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 10.20 Stockholders Agreement dated as of September 15, 1999 by and among Lamar Advertising Company, Chancellor Media Corporation of Los Angeles, Chancellor Mezzanine Holdings Corporation and the Reilly Family Limited Partnership. Previously filed as Exhibit 10.2 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-030242) filed on November 12, 1999 and incorporated herein by reference. 10.21 Registration Rights Agreement dated as of September 15, 1999 among Lamar Advertising Company, Chancellor Media Corporation of Los Angeles and Chancellor Mezzanine Holdings Corporation. Previously filed as Exhibit 10.3 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-030242) filed on November 12, 1999 and incorporated herein by reference. -77-

78 Exhibit No. Description - ----------- ----------- 10.22 Assumption Agreement dated as of July 20, 1999 is by and among Lamar Advertising Company, Lamar Media Corp., and the direct and indirect subsidiaries of such corporations. Previously filed as Exhibit 10.4 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-030242) filed on November 12, 1999 and incorporated herein by reference. 10.23 Joinder Agreement to the Lamar Media Corp. Credit Agreement dated August 13, 1999 by Lamar Florida, Inc. in favor of The Chase Manhattan Bank, as Administrative Agent dated December 23, 1999. Filed herewith. 11.1 Statement regarding computation of per share earnings. Filed herewith. 21.1 Subsidiaries of the Company. Filed herewith. 23.1 Consent of KPMG LLP. Filed herewith. 27.1 Financial Data Schedule for the Company. Filed herewith. 27.2 Financial Data Schedule for Lamar Media Corp. Filed herewith. - -------------- * Management contract or compensatory plan or arrangement in which the executive officers or directors of the Company participate. -78-

79 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LAMAR ADVERTISING COMPANY March 27, 2000 By: /s/ Kevin P. Reilly, Jr. ------------------------ Kevin P. Reilly, Jr. President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. SIGNATURE TITLE DATE --------- ----- ---- /s/ Kevin P. Reilly, Jr. Chief Executive Officer and Director March 27,2000 - -------------------------- Kevin P. Reilly, Jr. /s/ Keith A. Istre Chief Financial and Accounting Officer and - -------------------------- Director March 27,2000 Keith A. Istre /s/ Charles W. Lamar, III Director March 27,2000 - -------------------------- Charles W. Lamar, III /s/ Gerald H. Marchand Director March 27,2000 - -------------------------- Gerald H. Marchand /s/ T. Everett Stewart, Jr. Director March 27,2000 - -------------------------- T. Everett Stewart, Jr. /s/ Sean E. Reilly Director March 27,2000 - -------------------------- Sean E. Reilly /s/ Wendell Reilly Director March 27,2000 - -------------------------- Wendell Reilly Director March __,2000 - -------------------------- Stephen P. Mumblow Director March __,2000 - -------------------------- Thomas O. Hicks Director March __,2000 - -------------------------- R. Steven Hicks -79-

80 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LAMAR MEDIA CORP. March 27, 2000 By: /s/ Kevin P. Reilly, Jr. ------------------------ Kevin P. Reilly, Jr. President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. SIGNATURE TITLE DATE --------- ----- ---- /s/ Kevin P. Reilly, Jr. Chief Executive Officer and Director March 27,2000 - -------------------------- Kevin P. Reilly, Jr. /s/ Keith A. Istre Chief Financial and Accounting Officer and - -------------------------- Director March 27,2000 Keith A. Istre /s/ Charles W. Lamar, III Director March 27,2000 - -------------------------- Charles W. Lamar, III /s/ Gerald H. Marchand Director March 27,2000 - -------------------------- Gerald H. Marchand /s/ T. Everett Stewart, Jr. Director March 27,2000 - -------------------------- T. Everett Stewart, Jr. /s/ Sean E. Reilly Director March 27,2000 - -------------------------- Sean E. Reilly /s/ Wendell Reilly Director March 27,2000 - -------------------------- Wendell Reilly Director March __,2000 - -------------------------- Stephen P. Mumblow -80-

81 INDEX TO EXHIBITS Exhibit No. Description - ----------- ----------- 2.1 Agreement and Plan of Merger dated as of July 20, 1999 among Lamar Media Corp., Lamar New Holding Co., and Lamar Holdings Merge Co. Previously filed as exhibit 2.1 to the Company's Current Report on Form 8-K filed on July 22, 1999 (File No. 0-30242) and incorporated herein by reference. 3.1 Certificate of Incorporation of Lamar New Holding Co. Previously filed as exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1999 (File No. 0-20833) filed on August 16, 1999 and incorporated herein by reference. 3.2 Certificate of Amendment of Certificate of Incorporation of Lamar New Holding Co. (whereby the name of Lamar New Holding Co. was changed to Lamar Advertising Company). Previously filed as exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1999 (File No. 0-20833) filed on August 16, 1999 and incorporated herein by reference. 3.3 Amended and Restated Bylaws of the Company. Previously filed as exhibit 3.3 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1999 (File No. 0-20833) filed on August 16, 1999 and incorporated herein by reference. 3.4 Amended and Restated Bylaws of Lamar Media Corp. Previously filed as exhibit 3.1 to Lamar Media's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 1-12407) filed on November 12, 1999 and incorporated herein by reference. 4.1 Specimen certificate for the shares of Class A common stock of the Company. Previously filed as Exhibit 4.1 to the Company's Registration Statement on Form S-1 (File No. 333-05479), and incorporated herein by reference. 4.2 Senior Secured Note dated May 19, 1993. Previously filed as Exhibit 4.1 to the Company's Registration Statement on Form S-1 (File No. 33-59624), and incorporated herein by reference. 4.3 Indenture dated May 15, 1993 relating to the Company's 11% Senior Secured Notes due May 15, 2003. Previously filed as Exhibit 4.3 to the Company's Registration Statement on Form S-1 (File No. 33-59624), and incorporated herein by reference. 4.4 First Supplemental Indenture dated July 30, 1996 relating to the Company's 11% Senior Secured Notes due May 15, 2003. Previously filed as Exhibit 4.5 to the Company's Registration Statement on Form S-1 (File No. 333-05479), and incorporated herein by reference. 4.5 Form of Second Supplemental Indenture in the form of an Amended and Restated Indenture dated November 8, 1996 relating to the Company's 11% Senior Secured Notes due May 15, 2003. Previously filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on November 15, 1996 (File No. 1-12407), and incorporated herein by reference.

82 Exhibit No. Description - ----------- ----------- 4.6 Notice of Trustee dated November 8, 1996 with respect to the release of the security interest in the Trustee on behalf of the holders of the Company's 11% Senior Secured Notes due May 15, 2003. Previously filed as Exhibit 4.2 to the Company's Current Report on Form 8-K filed on November 15, 1996 (File No. 1-12407), and incorporated herein by reference. 4.7 Form of Subordinated Note. Previously filed as Exhibit 4.8 to the Company's Registration Statement on Form S-1 (File No. 333-05479), and incorporated herein by reference. 4.8 Indenture dated as of November 15, 1996 between the Company, certain of its subsidiaries and State Street Bank and Trust Company, as trustee, relating to the Company's 9 5/8% Senior Subordinated Notes due 2006. Previously filed as Exhibit 4.11 to the Company's Registration Statement on Form S-3 (File No. 333-14789), and incorporated herein by reference. 4.9 Form of 9 5/8% Senior Subordinated Note due 2006. Previously filed as Exhibit 4.12 to the Company's Registration Statement on Form S-3 (File No. 333-14789), and incorporated herein by reference. 4.10 Form of 8 5/8% Senior Subordinated Note due 2007. Previously filed as Exhibit 4.10 to the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1997, (File No. 1-12407), and incorporated herein by reference. 4.11 Indenture dated as of September 25, 1997 between the Company, certain of its subsidiaries, and State Street Bank and Trust Company, as trustee, relating to the Company's 8 5/8% Senior Subordinated Notes due 2007. Previously filed as Exhibit 4.2 to the Company's Current Report on Form 8-K filed on September 30, 1997 (File No. 1-12407), and incorporated herein by reference. 4.12 Indenture dated August 15, 1997, relating to Outdoor Communications, Inc. 9 1/4% Senior Subordinated Notes. Previously filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference. 4.13 Supplemental Indenture to the Indenture dated August 15, 1997 among Outdoor Communications, Inc., certain of its subsidiaries and First Union National Bank as Trustee, dated October 1, 1998. Previously filed as Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference. 4.14 Supplemental Indenture to the Indenture dated August 15, 1997 among Outdoor Communications, Inc., certain of its subsidiaries and First Union National Bank, as Trustee, dated October 23, 1998. Previously filed as Exhibit 4.3 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference. 4.15 Supplemental Indenture to the Indenture dated November 15, 1996 among the Company, certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated October 23, 1998. Previously filed as Exhibit 4.4 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference.

83 Exhibit No. Description - ----------- ----------- 4.16 Supplemental Indenture to the Indenture dated September 25, 1997 among the Company, certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated October 23, 1998. Previously filed as Exhibit 4.5 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, (File No. 1-12407) and incorporated herein by reference. 4.17 Indenture dated as of August 10, 1999 between the Company and State Street Bank and Trust Company, as Trustee. Previously filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1999 (File No. 0-20833) filed on August 16, 1999 and incorporated herein by reference. 4.18 First Supplemental Indenture dated as of August 10, 1999 between the Company and State Street Bank and Trust Company, as Trustee. Previously filed as Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1999 (File No. 0-20833) filed on August 16, 1999 and incorporated herein by reference. 4.19 Supplemental Indenture to the Indenture dated November 15, 1996 among Lamar Media Corp., certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated July 20, 1999. Previously filed as Exhibit 4.1 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.20 Supplemental Indenture to the Indenture dated September 25, 1997 among Lamar Media Corp., certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated September 15, 1999. Previously filed as Exhibit 4.2 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.21 Supplemental Indenture to the Indenture dated August 15, 1997 among Outdoor Communications, Inc., certain of its subsidiaries and First Union National Bank, as Trustee, dated September 15, 1999. Previously filed as Exhibit 4.3 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.22 Supplemental Indenture to the Indenture dated September 25, 1997 among Lamar Media Corp., certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated July 20, 1999. Previously filed as Exhibit 4.4 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.23 Supplemental Indenture to the Indenture dated August 15, 1997 among Outdoor Communications, Inc., certain of its subsidiaries and First Union National Bank, as Trustee, dated July 20, 1999. Previously filed as Exhibit 4.5 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference.

84 Exhibit No. Description - ----------- ----------- 4.24 Supplemental Indenture to the Indenture dated November 15, 1996 among Lamar Media Corp., certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated September 15, 1999. Previously filed as Exhibit 4.6 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.25 Supplemental Indentures to the Indenture dated September 25, 1997 among Lamar Media Corp., certain of its subsidiaries and State Street Bank and Trust Company, as Trustee. Previously filed as Exhibit 4.7 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.26 Supplemental Indentures to the Indenture dated November 15, 1996 among Lamar Media Corp., certain of its subsidiaries and State Street Bank and Trust Company, as Trustee. Previously filed as Exhibit 4.8 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.27 Supplemental Indentures to the Indenture dated August 15, 1997 among Outdoor Communications, Inc., certain of its subsidiaries and First Union National Bank, as Trustee. Previously filed as Exhibit 4.9 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 4.28 Supplemental Indenture to the Indenture dated August 15, 1997 among Outdoor Communications, Inc., certain of its subsidiaries and First Union National Bank, as Trustee, dated December 23, 1999. Filed herewith. 4.29 Supplemental Indenture to the Indenture dated November 15, 1996 among Lamar Media Corp., certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated December 23, 1999. Filed herewith. 4.30 Supplemental Indenture to the Indenture dated September 25, 1997 among Lamar Media Corp., certain of its subsidiaries and State Street Bank and Trust Company, as Trustee, dated December 23, 1999. Filed herewith. 10.1 Consulting Agreement dated July 1, 1996 between the Lamar Texas Limited Partnership and the Reilly Consulting Company, L.L.C., of which Kevin P. Reilly, Sr. is the manager. Previously filed as Exhibit 10.2 to the Company's Registration Statement on Form S-1 (File No. 33-05479), and incorporated herein by reference. 10.2 Indenture dated as of September 24, 1986 relating to the Company's 8% Unsecured Subordinated Debentures. Previously filed as Exhibit 10.3 to the Company's Registration Statement on Form S-1 (File No. 33-59624), and incorporated herein by reference. 10.3* The Lamar Savings and Profit Sharing Plan Trust. Previously filed as Exhibit 10.4 to the Company's Registration Statement on Form S-1 (File No. 33-59624), and incorporated herein by reference.

85 Exhibit No. Description - ----------- ----------- 10.4 Trust under The Lamar Corporation, its Affiliates and Subsidiaries Deferred Compensation Plan dated October 3, 1993. Previously filed as Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1995 (File No. 33-59624), and incorporated herein by reference. 10.5* 1996 Equity Incentive Plan. Previously filed as Exhibit 10.14 to the Company's Registration Statement on Form S-1 (File No. 333-05479), and incorporated herein by reference. 10.6 Bank Credit Agreement dated December 18, 1996 between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.18 to the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1996 (File No. 1-12407), and incorporated herein by reference. 10.7 Amendment No. 1 to the Bank Credit Agreement dated as of March 31, 1997 between the Company, the Subsidiary Guarantors party thereto, the Lenders party thereto and the Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1997 (File No. 1-12407), and incorporated herein by reference. 10.8 Amendment No. 2 to the Bank Credit Agreement dated as of September 12, 1997 between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed on September 30, 1997 (File No. 1-12407), and incorporated herein by reference. 10.9 Amendment No. 3 to the Bank Credit Agreement dated as of December 31, 1997 between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.9 to the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1997, (File No. 1-12407), and incorporated herein by reference. 10.10 Contract to Sell and Purchase, dated as of October 9, 1996, between the Company and Outdoor East L.P. Previously filed as Exhibit 10.16 to the Company's Registration Statement on Form S-3 (File No. 333-14677), and incorporated herein by reference. 10.11 Stock Purchase Agreement, dated as of September 25, 1996, between the Company and the shareholders of FKM Advertising, Co., Inc. Previously filed as Exhibit 10.17 to the Company's Registration Statement on Form S-3 (File No. 333-14677), and incorporated herein by reference. 10.12 Stock Purchase Agreement dated as of February 7, 1997 between the Company and the stockholders of Penn Advertising, Inc. named therein. Previously filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed on April 14, 1997 (File No. 1-12407), and incorporated herein by reference. 10.13 Asset Purchase Agreement dated as of August 15, 1997 between The Lamar Corporation and Outdoor Systems, Inc. Previously filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed on August 27, 1997 (File No. 1-12407), and incorporated herein by reference.

86 Exhibit No. Description - ----------- ----------- 10.14 Bank Credit Agreement dated July 16, 1998, between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1998, (File No. 0-020833), and incorporated herein by reference. 10.15 Amendment No. 1 to the Amended and Restated Bank Credit Agreement dated September 15, 1998, between the Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998 (File No. 0-20833) and incorporated herein by reference. 10.16 Stock Purchase Agreement dated as of October 1, 1998, between the Company and the stockholders of Outdoor Communications, Inc. named therein. Previously filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed on October 15, 1998 (File No. 0-20833), and incorporated herein by reference. 10.17 Amendment No. 4 to Credit Agreement dated as of March 31, 1998, between Lamar Advertising Company, certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1998 (File No. 1-12407), and incorporated herein by reference. 10.18 Second Amended and Restated Stock Purchase Agreement dated as of August 11, 1999 among the Company, Lamar Media Corp., Chancellor Media Corporation of Los Angeles and Chancellor Mezzanine Holdings Corporation. Previously filed as Appendix A to the Company's Schedule 14C Information Statement filed on August 13, 1999 and incorporated herein by reference. Pursuant to Item 601(b)(2) of Regulation S-K, the Schedules and Annexes A and B referred to in the Second Amended and Restated Stock Purchase Agreement are omitted. The Company hereby undertakes to furnish supplementary a copy of any omitted Schedule or Annex to the Commission upon request. 10.19 Bank Credit Agreement dated August 13, 1999, between Lamar Media Corp., certain of its subsidiaries, the lenders party thereto and The Chase Manhattan Bank, as administrative agent. Previously filed as Exhibit 10.1 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-30242) filed on November 12, 1999 and incorporated herein by reference. 10.20 Stockholders Agreement dated as of September 15, 1999 by and among Lamar Advertising Company, Chancellor Media Corporation of Los Angeles, Chancellor Mezzanine Holdings Corporation and the Reilly Family Limited Partnership. Previously filed as Exhibit 10.2 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-030242) filed on November 12, 1999 and incorporated herein by reference. 10.21 Registration Rights Agreement dated as of September 15, 1999 among Lamar Advertising Company, Chancellor Media Corporation of Los Angeles and Chancellor Mezzanine Holdings Corporation. Previously filed as Exhibit 10.3 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-030242) filed on November 12, 1999 and incorporated herein by reference.

87 Exhibit No. Description - ----------- ----------- 10.22 Assumption Agreement dated as of July 20, 1999 is by and among Lamar Advertising Company, Lamar Media Corp., and the direct and indirect subsidiaries of such corporations. Previously filed as Exhibit 10.4 to Lamar Advertising Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 0-030242) filed on November 12, 1999 and incorporated herein by reference. 10.23 Joinder Agreement to the Lamar Media Corp. Credit Agreement dated August 13, 1999 by Lamar Florida, Inc. in favor of The Chase Manhattan Bank, as Administrative Agent dated December 23, 1999. Filed herewith. 11.1 Statement regarding computation of per share earnings. Filed herewith. 21.1 Subsidiaries of the Company. Filed herewith. 23.1 Consent of KPMG LLP. Filed herewith. 27.1 Financial Data Schedule for the Company. Filed herewith. 27.2 Financial Data Schedule for Lamar Media Corp. Filed herewith. - -------------- * Management contract or compensatory plan or arrangement in which the executive officers or directors of the Company participate.

1 EXHIBIT 4.28 SUPPLEMENTAL INDENTURE TO INDENTURE DATED AUGUST 15, 1997 THIS SUPPLEMENTAL INDENTURE dated as of December 23, 1999, is delivered pursuant to Section 4.11 of the Indenture dated as of August 15, 1997 (as heretofore or hereafter modified and supplemented and in effect from time to time, the "1997 Indenture") among OUTDOOR COMMUNICATIONS, INC., a Delaware corporation, certain of its subsidiaries (the "Guarantors") and FIRST UNION NATIONAL BANK, a national banking corporation, as Trustee (the "Trustee") (all terms used herein without definition having the meanings ascribed to them in the 1997 Indenture). The undersigned hereby agree that: 1. The undersigned is a Guarantor under the 1997 Indenture with all of the rights and obligations of the Guarantors thereunder. 2. The undersigned have granted, ratified and confirmed, in the form and substance of Exhibit B to the 1997 Indenture, the Guarantee provided for by Article XI of the 1997 Indenture. 3. The undersigned hereby represents and warrants that the representations and warranties set forth in the 1997 Indenture, to the extent relating to the undersigned as Guarantor, are correct on and as of the date hereof. 4. All notices, requests and other communications provided for in the 1997 Indenture should be delivered to the undersigned at the following address: Keith A. Istre Vice President - Finance and Chief Financial Officer Lamar Media Corp. and its Subsidiaries 5551 Corporate Blvd. Baton Rouge, LA 70808 5. A counterpart of this Supplemental Indenture may be attached to any counterpart of the 1997 Indenture. 6. This Supplemental Indenture shall be governed by and construed in accordance with the internal laws of the State of New York.

2 IN WITNESS WHEREOF, the undersigned have caused this Supplemental Indenture to be duly executed as of the day and year first above written. Guarantor: LAMAR FLORIDA, INC. a Florida corporation By: /s/ Keith A. Istre ------------------------------- Keith A. Istre Vice President - Finance and Chief Financial Office Attest: By: /s/ James R. McIlwain ------------------------------- James R. McIlwain, Secretary Accepted: FIRST UNION NATIONAL BANK, as Trustee By: /s/ JAMES LONG ------------------------------- Title: Corperate Trust Officer ----------------------------

1 EXHIBIT 4.29 SUPPLEMENTAL INDENTURE OF GUARANTORS THIS SUPPLEMENTAL INDENTURE dated as of December 23, 1999 is delivered pursuant to Section 10.04 of the Indenture dated as of November 15, 1996 (as heretofore or hereafter modified and supplemented and in effect from time to time, the "Indenture") among LAMAR MEDIA CORP., a Delaware corporation, (formerly Lamar Advertising Company) certain of its subsidiaries ("Guarantors") and STATE STREET BANK AND TRUST COMPANY, a Massachusetts banking corporation, as Trustee ("Trustee") (all terms used herein without definition having the meanings ascribed to them in the Indenture). The undersigned hereby agree that: 1. The undersigned is a Guarantor under the Indenture with all of the rights and obligations of a Guarantor thereunder. 2. The undersigned hereby grant, ratify and confirm the guarantee provided for by Article Ten of the Indenture to guarantee unconditionally, jointly and severally with the other Guarantors, to each Holder of a Note authenticated and delivered by the Trustee, and to the Trustee on behalf of such Holder, the due and punctual payment of the principal of (and premium, if any) and interest on such Note when and as the same shall become due and payable. 3. The undersigned hereby represents and warrants that the representations and warranties set forth in the Indenture, to the extent relating to the undersigned as Guarantor, are correct on and as of the date hereof. 4. All notices, requests and other communications provided for in the Indenture should be delivered to the undersigned at the address specified in Section 12.02 of the Indenture. 5. A counterpart of this Supplemental Indenture may be attached to any counterpart of the Indenture. 6. This Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York.

2 IN WITNESS WHEREOF, the undersigned have caused this Supplemental Indenture to be duly executed as of the day and year first above written. Guarantor: LAMAR FLORIDA, INC. a Florida corporation By: /s/ Keith A. Istre ------------------------------- Keith A. Istre Vice President - Finance and Chief Financial Office Attest: By: /s/ James R. McIlwain ------------------------------- James R. McIlwain, Secretary Accepted: STATE STREET BANK AND TRUST COMPANY, as Trustee By: /s/ ANDREW M. SINASKY ------------------------------- Title: Assistant Vice President -----------------------------

1 EXHIBIT 4.30 SUPPLEMENTAL INDENTURE OF GUARANTOR THIS SUPPLEMENTAL INDENTURE dated as of December 23, 1999, is delivered pursuant to Section 10.04 of the Indenture dated as of September 25, 1997 (as heretofore or hereafter modified and supplemented and in effect from time to time, the "Indenture") among LAMAR MEDIA CORP., a Delaware corporation, certain of its subsidiaries ("Guarantors") and STATE STREET BANK AND TRUST COMPANY, a Massachusetts banking corporation, as Trustee ("Trustee") (all terms used herein without definition having the meanings ascribed to them in the Indenture). The undersigned hereby agree that: 1. The undersigned are Guarantors under the Indenture with all of the rights and obligations of Guarantors thereunder. 2. The undersigned hereby grants, ratifies and confirms the guarantee provided for by Article Ten of the Indenture to guarantee unconditionally, jointly and severally with the other Guarantors, to each Holder of a Note authenticated and delivered by the Trustee, and to the Trustee on behalf of such Holder, the due and punctual payment of the principal of (and premium, if any) and interest on such Note when and as the same shall become due and payable. 3. The undersigned hereby represents and warrants that the representations and warranties set forth in the Indenture, to the extent relating to the undersigned as Guarantor, are correct on and as of the date hereof. 4. All notices, requests and other communications provided for in the Indenture should be delivered to the undersigned at the address specified in Section 12.02 of the Indenture. 5. A counterpart of this Supplemental Indenture may be attached to any counterpart of the Indenture. 6. This Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York.

2 IN WITNESS WHEREOF, the undersigned has caused this Supplemental Indenture to be duly executed as of the day and year first above written. Guarantor: Lamar Florida, Inc. a Florida corporation December 23, 1999 By: /s/ Keith A. Istre ------------------------------ Keith A. Istre Vice President - Finance and Chief Financial Officer Attest: By: /s/ James R. McIlwain -------------------------------- James R. McIlwain, Secretary Accepted: STATE STREET BANK AND TRUST COMPANY, as Trustee By: /s/ ANDREW M. SINASKY ------------------------------ Title: Assistant Vice President ---------------------------

1 EXHIBIT 10.23 JOINDER AGREEMENT JOINDER AGREEMENT dated as of December 23, 1999, by the undersigned, (the "Additional Subsidiary Guarantor"), in favor of The Chase Manhattan Bank, as administrative agent for the Lenders party to the Credit Agreement referred to below (in such capacity, together with its successors in such capacity, the "Administrative Agent"). Lamar Media Corp. (formerly Lamar Advertising Company), a Delaware corporation (the "Borrower"), and certain of its subsidiaries (collectively, the "Existing Subsidiary Guarantors" and, together with the Borrower, the "Securing Parties") are parties to a Credit Agreement dated August 13, 1999 (as modified and supplemented and in effect from time to time, the "Credit Agreement", providing, subject to the terms and conditions thereof, for extensions of credit (by means of loans and letters of credit) to be made by the lenders therein (collectively, together with any entity that becomes a "Lender" party to the Credit Agreement after the date hereof as provided therein, the "Lenders" and, together with Administrative Agent and any successors or assigns of any of the foregoing, the "Secured Parties") to the Borrower in an aggregate principal or face amount not exceeding $1,000,000,000 (which, in the circumstances contemplated by Section 2.01(d) thereof, may be increased to $1,400,000,000). In addition, the Borrower may from time to time be obligated to one or more of the Lenders under the Credit Agreement in respect of Hedging Agreements under and as defined in the Credit Agreement (collectively, the "Hedging Agreements"). In connection with the Credit Agreement, the Borrower, the Existing Subsidiary Guarantors and the Administrative Agent are parties to the Pledge Agreement dated September 15, 1999 (the "Pledge Agreement") pursuant to which the Securing Parties have, inter alia, granted a security interest in the Collateral (as defined in the Pledge Agreement) as collateral security for the Secured Obligations (as so defined). Terms defined in the Pledge Agreement are used herein as defined therein. To induce the Secured Parties to enter into the Credit Agreement, and to extend credit thereunder and to extend credit to the Borrower under Hedging Agreements, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Additional Subsidiary Guarantor has agreed to become a party to the Credit Agreement and the Pledge Agreement as a "Subsidiary Guarantor" thereunder, and to pledge and grant a security interest in the Collateral (as defined in the Pledge Agreement). Accordingly, the parties hereto agree as follows: Section 1. Definitions. Terms defined in the Credit Agreement are used herein as defined therein. Section 2. Joinder to Agreements. Effective upon the execution and delivery hereof, the Additional Subsidiary Guarantor hereby agrees that it shall become "Subsidiary Guarantor" under and for all purposes of the Credit Agreement and the Pledge Agreement with all the rights and obligations of a Subsidiary Guarantor thereunder. Without limiting the generality of the foregoing, the Additional Subsidiary Guarantor hereby:

2 (i) jointly and severally with the other Subsidiary Guarantors party to the Credit Agreement guarantees to each Secured Party and their respective successors and assigns the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of all Guaranteed Obligations in the same manner and to the same extent as is provided in Article III of the Credit Agreement; (ii) pledges and grants the security interests in all right, title and interest of the Additional Subsidiary Guarantor in all Collateral (as defined in the Pledge Agreement) now owned or hereafter acquired by the Additional Subsidiary Guarantor and whether now existing or hereafter coming into existence provided for by Article III of the Pledge Agreement as collateral security for the Secured Obligations and agrees that Annex 1 thereof shall be supplemented as provided in Appendix A hereto; (iii) makes the representations and warranties set forth in Article IV of the Credit Agreement and in Article II of the Pledge Agreement, to the extent relating to the Additional Subsidiary Guarantor or to the Pledged Equity evidenced by the certificates, if any, identified in Appendix A hereto; and (iv) submits to the jurisdiction of the courts, and waives jury trial, as provided in Sections 10.09 and 10.10 of the Credit Agreement. The Additional Subsidiary Guarantor hereby instructs its counsel to deliver the opinions referred to in Section 6.10(a)(iii) of the Credit Agreement to the Secured Parties.

3 IN WITNESS WHEREOF, the Additional Subsidiary Guarantor has caused this Joinder Agreement to be duly executed and delivered as of the day and year first above written. LAMAR FLORIDA, INC. a Florida corporation By: /s/ Keith A. Istre ------------------------------ Keith A. Istre Vice President - Finance and Chief Financial Officer Attested: By: /s/ James R. McIlwain ------------------------------- James R. McIlwain, Secretary Accepted and agreed: THE CHASE MANHATTAN BANK, as Administrative Agent By: /s/ WILLIAM E. ROTTINO ------------------------------ Title: Vice President

4 The undersigned hereby respectively pledge and grant a security interest in the stock and evidenced by the certificate listed in Appendix A hereto and agree that Annex 1 of the above-referenced Amended and Restated Pledge Agreement is hereby supplemented by adding thereto the information listed on Appendix A. Lamar Advertising of Mobile, Inc., Issuee of Stock By: /s/ Keith A. Istre Dated this day: December 23, 1999 ------------------ Keith A. Istre Title: Vice President-Finance

5 Supplement to Annex 1 Appendix A to Joinder Agreement Pledgor Ownership Issuer No. Shares Cert. No. % ----------------- ------ ---------- --------- --- Lamar Advertising of Mobile, Inc. Lamar Florida, Inc. 1000 2 100

1 EXHIBIT 11.1 Lamar Advertising Company and Subsidiaries Earnings Per Share Computation Information Years ended December 31, 1999, 1998 and 1997 Year Ended Year Ended Year Ended December 31, December 31, December 31, 1999 1998 1997 ------------ ------------ ------------ Net earnings (loss) applicable to common stock $(44,900,000) $(12,255,000) $ 2,476,000 ============ ============ ============ Weighted average common shares outstanding 69,115,764 51,361,522 47,037,497 Shares issuable upon exercise of stock options -- -- 363,486 Incremental shares from convertible debt -- -- -- ------------ ------------ ------------ Weighted average common shares and common equivalents outstanding 69,115,764 51,361,522 47,400,980 ============ ============ ============ Net earnings (loss) per common share basic and diluted $ (0.65) $ (0.24) $ 0.05 ============ ============ ============ The above earnings per share (EPS) calculations are submitted in accordance with Statement of Financial Accounting Standards No. 128. An EPS calculation in accordance with Regulation S-K item 601 (b) (11) is not shown above for the years ended December 31, 1999 and 1998 because it produces an antidilutive result. The following information is disclosed for purposes of calculating antidilutive EPS for that period. Year Ended Year Ended Year Ended December 31, December 31, December 31, 1999 1998 1997 ------------ ------------ ------------ Net earnings (loss) applicable to common stock $(44,900,000) $(12,255,000) $ 2,476,000 Income impact of assumed conversions 3,581,974 -- -- ------------ ------------ ------------ Earnings (loss) available to common shareholders + assumed conversion (41,318,026) (12,255,000) 2,476,000 ============ ============ ============ Weighted average common shares outstanding 69,115,764 51,361,522 47,037,497 Shares issuable upon exercise of stock options 599,363 505,558 363,483 Incremental shares from convertible debt 2,418,361 -- -- ------------ ------------ ------------ Weighted average common shares plus dilutive potential common shares 72,133,488 51,867,080 47,400,980 ============ ============ ============ Net earnings (loss) per common share - diluted $ (0.57) $ (0.24) $ 0.05 ============ ============ ============

1 EXHIBIT 21.1 Subsidiaries of Lamar Advertising Company and Lamar Media Corp. State of Other Jurisdiction of Name Incorporation or Organization ---- ------------------------------- Lamar Media Corp. Delaware The Lamar Company, LLC Louisiana Lamar Whiteco Outdoor Corporation Delaware Lamar Outdoor Corporation Delaware Lamar Advertising of Louisiana, LLC Louisiana Lamar Robinson, Inc. Missouri Lamar Advertising of Roland, Inc. Tennessee Lamar Advertising of Kentucky, Inc. Kentucky Lamar Advertising of Joplin, Inc. Missouri Ad Vantage Media Inc. Texas Lamar Martin Corporation Delaware Lamar Nevada Sign Corporation Delaware Lamar MW Sign Corporation Delaware Revolution Outdoor Advertising, Inc. Florida Triumph Outdoor Holdings, LLC Delaware Delaware Logos, LLC Delaware New Mexico Logos, Inc. New Mexico Colorado Logos, Inc. Colorado Lamar Tennessee Limited Partnership II Tennessee Lamar West, LP California Interstate Logos, Inc. Delaware Lamar Advertising of Colorado Springs, Inc. Colorado Lamar Advertising of Jackson, Inc. Mississippi Lamar Advertising of Mobile, Inc. Alabama Lamar Advertising of South Georgia, Inc. Georgia Lamar Advertising of South Mississippi, Inc. Mississippi Lamar Advertising of Youngstown, Inc. Delaware TLC Properties, Inc. Louisiana Missouri Logos, Inc. Missouri Missouri Logos, a Partnership Missouri Nebraska Logos, Inc. Nebraska Oklahoma Logo Signs, Inc. Oklahoma Utah Logos, Inc. Utah Ohio Logos, Inc. Ohio Georgia Logos, Inc. Georgia Kansas Logos, Inc. Kansas Lamar Air, LLC Louisiana Lamar Pensacola Transit, Inc. Florida Lamar Tennessee, LLC Tennessee Lamar Texas General Partner, Inc. Louisiana Lamar Texas Limited Partnership Texas Michigan Logos, Inc. Michigan Minnesota Logos, Inc. Minnesota Mississippi Logos, Inc. Mississippi New Jersey Logos, Inc. New Jersey South Carolina Logos, Inc. South Carolina Tennessee Logos, Inc. Tennessee Texas Logos, Inc. Texas TLC Properties II, Inc. Texas Virginia Logos, Inc. Virginia

2 State of Other Jurisdiction of Name Incorporation or Organization - ---- ------------------------------ Lamar Advertising of Huntington-Bridgeport, Inc. West Virginia Lamar Advertising of Penn, LLC Delaware Lamar Advertising of Michigan, Inc. Michigan Lamar Advertising of Missouri, Inc. Missouri Canadian TODS Limited Nova Scotia Canada Nevada Logos, Inc. Nevada Kentucky Logos, Inc. Kentucky Florida Logos, Inc. Florida Lamar Electrical, Inc. Louisiana Lamar Advertising of South Dakota, Inc. South Dakota TLC Properties, L.L.C. Louisiana Lamar OCI South Corporation Mississippi Lamar OCI North Corporation Delaware Lamar Advertising of Greenville, Inc. Mississippi Lamar Advertising of West Virginia, Inc. West Virginia Lamar Advertising of Ashland, Inc. Kentucky American Signs, Inc. Washington Dowling Company, Inc. Virginia Parsons Development Company Florida Hardin Development Corp. Florida Scenic Outdoor Marketing and Consulting, Inc. California Lindsay Outdoor Advertising, Inc. California Lamar Florida, Inc. Florida Outdoor Promotions West, LLC Delaware Transit America Las Vegas, LLC Delaware Triumph Outdoor Louisiana, LLC Delaware Triumph Outdoor Rhode Island, LLC Delaware Lamar Advan, Inc. Pennsylvania Lamar Advertising of Iowa, Inc. Iowa

1 Exhibit 23.1 INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULES AND CONSENT The Board of Directors Lamar Advertising Company: The audits referred to in our reports dated March 17, 2000, included the related financial statement schedules of (a) Lamar Advertising Company and subsidiaries, and (b) Lamar Media Corp. and subsidiaries for each of the years in the three-year period ended December 31, 1999. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits. In our opinion, such financial statement schedules of (a) Lamar Advertising Company and subsidiaries, and (b) Lamar Media Corp. and subsidiaries, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein. We consent to incorporation by reference in the Registration Statements of Lamar Advertising Company on Form S-8 (Nos. 333-10337 and 333-79571), the Registration Statements on Form S-3 (Nos. 333-52851, 333-66059 and 333-71929), and the Registration Statements on Form S-4 (Nos. 333-60331 and 333-30012) of our reports dated March 17, 2000, relating to (a) the consolidated balance sheets of Lamar Advertising Company and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1999, and (b) the consolidated balance sheets of Lamar Media Corp. and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1999, which reports appear in the December 31, 1999, annual report on Form 10-K of Lamar Advertising Company. Our reports refer to a change in the method of accounting for the costs of start-up activities. /s/ KPMG LLP New Orleans, Louisiana March 24, 2000

5 0001090425 LAMAR ADVERTISING COMPANY 1,000 YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 8,401 0 85,154 3,928 0 125,493 1,412,605 218,893 3,206,945 84,706 1,611,463 0 0 88 1,391,441 3,206,945 444,135 444,135 0 143,090 0 4,065 89,619 (53,182) (9,596) (43,586) 0 (182) (767) (44,535) (.65) (.65)

5 0000899045 LAMAR MEDIA CORP 1,000 US DOLLARS YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 1 8,401 0 84,599 3,928 0 135,789 1,412,605 218,893 3,195,029 81,084 1,611,463 0 0 0 1,469,606 3,195,029 444,135 444,135 0 143,090 0 4,065 89,619 (52,169) (9,232) (42,937) 0 (182) (767) (43,886) 0 0