We have audited the accompanying consolidated balance sheets of Lamar Advertising Company and subsidiaries as of
December 31, 2013 and 2012, and the related consolidated statements of operations and comprehensive income, stockholders equity and cash flows for each of the years in the three-year period ended December 31, 2013. In connection with
our audits of the consolidated financial statements, we also have audited the financial statement schedule. These consolidated financial statements and financial statement schedule are the responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, 2013 and 2012, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2013, in
conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), Lamar Advertising Companys internal control over financial reporting as of December 31, 2013, based on criteria established in
Internal Control Integrated Framework
(1992)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 27, 2014, expressed an unqualified opinion on the effectiveness of the Companys internal control over
financial reporting.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(1) Significant Accounting Policies
(a) Nature of Business
Lamar Advertising Company (the Company) is engaged in the outdoor advertising business, operating over 145,000 billboard advertising displays
in 44 states, Canada and Puerto Rico. The Companys operating strategy is to be the leading provider of outdoor advertising services in the markets it serves.
In addition, the Company operates a logo sign business in 22 states throughout the United States and the province of Ontario, Canada and
operates over 38,000 transit advertising displays in 16 states, Canada and Puerto Rico. 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 Companys logo sign business are tourism signing contracts. The Company provides transit advertising on bus shelters, benches and buses in the markets it serves.
(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 inter-company transactions and balances have been eliminated in consolidation.
An
operating segment is a component of an enterprise:
|
|
|
that engages in business activities from which it may earn revenues and incur expenses;
|
|
|
|
whose operating results are regularly reviewed by the enterprises chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance; and
|
|
|
|
for which discrete financial information is available.
|
We define the term chief
operating decision maker to be our executive management group, which consist of our Chief Executive Officer, President and Chief Financial Officer. Currently, all operations are reviewed on a consolidated basis for budget and business plan
performance by our executive management group. Additionally, operational performance at the end of each reporting period is viewed in the aggregate by our management group. Any decisions related to changes in invested capital, personnel, operational
improvement or training, or to allocate other company resources are made based on the combined results.
We operate in a single operating
and reporting segment, advertising. We sell advertising on billboards, buses, shelters and benches and logo plates.
(c) Adjustment to Previously
Reported Amounts
Immaterial Correction of an Error.
During the fourth quarter of 2013, the Company revised previously
reported amounts due to a change from recognizing revenue on a monthly basis over the term of the advertising contract to recognizing revenue on a daily basis over the term of the advertising contract. In accordance with Staff Accounting Bulletin
(SAB) No. 99,
Materiality,
and SAB No. 108,
Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements
, management evaluated the materiality of the
error from qualitative and quantitative perspectives, and concluded the error was immaterial to the current and prior periods. The correction of the immaterial error resulted in an increase to deferred income liability of $21,651 and $18,486 at
December 31, 2012 and 2011, respectively, an increase of accumulated deficit of $13,208 and $11,277 and a reduction in net revenue and net income of $3,165 and $2,773 and $1,931 and $1,692, for the years ended December 31, 2012 and 2011,
respectively. The correction also resulted in a decrease of $0.02 in earnings per basic and dilutive share for the years ended December 31, 2012 and 2011.
Consequently, the Company revised its historical financial statements for fiscal 2012, fiscal 2011 herein, and will revise the quarters within
fiscal 2013, when they are published in future filings. The Company recognized the cumulative effect of the error on periods prior to those that are presented herein by increasing deferred income liability and accumulated deficit by $15,713 and
$9,585, respectively, as of December 31, 2010.
(d) 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.
43
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(e) Goodwill and Intangible Assets
Goodwill is subject to an annual impairment test. The Company designated December 31 as the date of its annual goodwill impairment test.
Impairment testing involves various estimates and assumptions, which could vary, and an analysis of relevant market data and market capitalization. If industry and economic conditions deteriorate, the Company may be required to assess goodwill
impairment before the next annual test, which could result in impairment charges.
The Company is required to identify its reporting units
and determine the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units. The Company is required to determine the fair value of each reporting
unit and compare it to the carrying amount of the reporting unit. To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit, the Company would be required to perform the second step of the impairment test, as
this is an indication that the reporting unit goodwill may be impaired. The fair value of each reporting unit exceeded its carrying amount at its annual impairment test date on December 31, 2013 and 2012; therefore, the Company was not required
to recognize an impairment loss.
Intangible assets, consisting primarily of 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 3 to 15 years.
(f)
Impairment of Long-Lived Assets
Long-lived assets, such as property, plant and equipment, and purchased intangibles subject to
amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying
amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset or asset group before interest expense. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is
recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset or asset group. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or
fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet.
(g) Deferred Income
Deferred
income consists principally of advertising revenue invoiced 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.
(h) Revenue Recognition
The Company recognizes outdoor advertising revenue on an accrual basis ratably over the term of the contracts, as services are provided.
Production revenue and the related expense for the advertising copy are recognized upon completion of the sale.
The Company engages in
barter transactions where the Company trades advertising space for goods and services. The Company recognizes revenues and expenses from barter transactions at fair value, which is determined based on the Companys own historical practice of
receiving cash for similar advertising space from buyers unrelated to the party in the barter transaction. The amount of revenue and expense recognized for advertising barter transactions is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Net revenues
|
|
$
|
7,862
|
|
|
$
|
6,798
|
|
|
$
|
7,153
|
|
Direct advertising expenses
|
|
$
|
3,005
|
|
|
$
|
2,900
|
|
|
$
|
2,766
|
|
General and administrative expenses
|
|
$
|
4,417
|
|
|
$
|
3,699
|
|
|
$
|
3,524
|
|
(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 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.
44
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(j) 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. For the years ended December 31, 2013, December 31, 2012 and December 31, 2011, there were no dilutive shares excluded from the calculation.
(k) Share Based Compensation
Compensation expense for share-based awards is recognized based on the grant date fair value of those awards. Share-based compensation expense
includes an estimate for pre-vesting forfeitures and is recognized over the requisite service periods of the awards on a straight-line basis, which is generally commensurate with the vesting term. Non-cash compensation expense recognized during the
years ended December 31, 2013, 2012, and 2011 were $24,936, $14,466 and $11,650. The $24,936 expensed during the year ended December 31, 2013 consists of (i) $17,340 related to stock options, (ii) $7,231 related to stock grants,
made under the Companys performance-based stock incentive program in 2013 (iii) $365 related to stock awards to directors. See Note 14 for information on the assumptions we used to calculate the fair value of stock-based compensation.
(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) Foreign Currency Translation
Local currencies generally are considered the functional currencies outside the United States. Assets and liabilities for operations in
local-currency environments are translated at year-end exchange rates. Income and expense items are translated at average rates of exchange prevailing during the year. Foreign currency translation adjustments are recorded as a component of other
comprehensive income in the Consolidated Statement of Operations and Comprehensive Income and as a component of accumulated other comprehensive income in Consolidated Statement of Stockholders Equity.
(n) Asset Retirement Obligations
The Company is required to record the present value of obligations associated with the retirement of tangible long-lived assets in the period
in which it is incurred. The liability is capitalized as part of the related long-lived assets carrying amount. Over time, accretion of the liability is recognized as an operating expense and the capitalized cost is depreciated over the
expected useful life of the related asset. The Companys asset retirement obligations relate primarily to the dismantlement, removal, site reclamation and similar activities of its properties.
(o) Use of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.
(p) Comprehensive Income
Total
comprehensive income is presented in the Consolidated Statements of Operations and Comprehensive Income and the components of accumulated other comprehensive income are presented in the Consolidated Statements of Stockholders Equity.
Comprehensive Income is composed of foreign currency translation effects.
(q) Subsequent Events
The Company has performed an evaluation of subsequent events through the date on which the financial statements are issued.
45
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, 2013
During the twelve months ended December 31, 2013, the Company completed several acquisitions of outdoor advertising assets for a total
purchase price of $97,230, of which $92,248 was in cash and $4,982 in non-cash consideration consisting principally of exchanges of outdoor advertising assets. As a result of the acquisitions, a gain of $67 was recorded for transactions which
involved the exchange of outdoor advertising assets during the year ended December 31, 2013.
Each of these acquisitions was
accounted for under the acquisition method of accounting, and, accordingly, the accompanying consolidated financial statements include the results of operations of each acquired entity from the date of acquisition. The acquisition costs have been
allocated to assets acquired and liabilities assumed based on preliminary fair market value estimates at the dates of acquisition. The allocations are pending final determination of the fair value of certain assets and liabilities. The following is
a summary of the allocation of the acquisition costs in the above transactions.
|
|
|
|
|
|
|
Total
|
|
Property, plant and equipment
|
|
$
|
18,196
|
|
Goodwill
|
|
|
18,631
|
|
Site locations
|
|
|
50,333
|
|
Non-competition agreements
|
|
|
430
|
|
Customer lists and contracts
|
|
|
10,390
|
|
Other assets
|
|
|
1,408
|
|
Current liabilities
|
|
|
(2,158
|
)
|
|
|
|
|
|
|
|
$
|
97,230
|
|
|
|
|
|
|
Total acquired intangible assets for the year ended December 31, 2013 were $79,784, of which $18,631 was
assigned to goodwill. Although goodwill is not amortized for financial statement purposes, $18,582 is expected to be fully deductible for tax purposes. The remaining $61,153 of acquired intangible assets have a weighted average useful life of
approximately 14 years. The intangible assets include customer lists and contracts of $10,390 (7 year weighted average useful life) and site locations of $50,333 (15 year weighted average useful life). The aggregate amortization expense related to
the 2013 acquisitions for the year ended December 31, 2013 was approximately $2,158.
The following unaudited pro forma financial
information for the Company gives effect to the 2013 and 2012 acquisitions as if they had occurred on January 1, 2012. 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 Companys results of operations for any future period.
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
Net revenues
|
|
$
|
1,255,376
|
|
|
$
|
1,225,958
|
|
Net income applicable to common stock
|
|
$
|
40,725
|
|
|
$
|
12,098
|
|
Net loss per common share basic
|
|
$
|
0.43
|
|
|
$
|
0.13
|
|
Net loss per common share diluted
|
|
$
|
0.43
|
|
|
$
|
0.13
|
|
Year Ended December 31, 2012
During the twelve months ended December 31, 2012, the Company completed several acquisitions of outdoor advertising assets for a total
purchase price of approximately $230,009, of which $206,068 was in cash and $23,941 in non-cash consideration consisting principally of exchanges of outdoor advertising assets. As a result of the acquisitions, a gain of $9,805 was recorded for
transactions which involved the exchange of outdoor advertising assets during the year ended December 31, 2012.
Each of these
acquisitions was accounted for under the acquisition method of accounting, and, accordingly, the accompanying consolidated financial statements include the results of operations of each acquired entity from the date of acquisition. The acquisition
costs have been allocated to assets acquired and liabilities assumed based on preliminary fair market value estimates at the dates of acquisition. The allocations are pending final determination of the fair value of certain assets and liabilities.
The following is a summary of the preliminary allocation of the acquisition costs in the above transactions.
46
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
|
|
|
|
|
|
|
Total
|
|
Property, plant and equipment
|
|
$
|
74,326
|
|
Goodwill
|
|
|
60,968
|
|
Site locations
|
|
|
78,288
|
|
Non-competition agreements
|
|
|
80
|
|
Customer lists and contracts
|
|
|
18,148
|
|
Other asset
|
|
|
7,763
|
|
Current liabilities
|
|
|
(3,424
|
)
|
Long-term liabilities
|
|
|
(6,140
|
)
|
|
|
|
|
|
|
|
$
|
230,009
|
|
|
|
|
|
|
Total acquired intangible assets for the year ended December 31, 2012 were $157,484, of which $60,968 was
assigned to goodwill. Although goodwill is not amortized for financial statement purposes, $23,937 is expected to be fully deductible for tax purposes. The remaining $96,516 of acquired intangible assets have a weighted average useful life of
approximately 14 years. The intangible assets include customer lists and contracts of $18,148 (7 year weighted average useful life) and site locations of $78,288 (15 year weighted average useful life). The aggregate amortization expense related to
the 2012 acquisitions for the year ended December 31, 2012 was approximately $679.
The following unaudited pro forma financial
information for the Company gives effect to the 2012 and 2011 acquisitions as if they had occurred on January 1, 2011. 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 Companys results of operations for any future period.
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
Net revenues
|
|
$
|
1,209,540
|
|
|
$
|
1,174,520
|
|
Net income applicable to common stock
|
|
$
|
8,161
|
|
|
$
|
6,626
|
|
Net loss per common share basic
|
|
$
|
0.09
|
|
|
$
|
0.07
|
|
Net loss per common share diluted
|
|
$
|
0.09
|
|
|
$
|
0.07
|
|
(3) Non-cash Financing and Investing Activities
For the period ended December 31, 2013 and December 31, 2012, the Company had $4,982 and $23,941 non-cash
investing activities related to acquisitions of outdoor advertising assets. For the year ended December 31, 2011, the Company had non-cash investing activities of $4,000 and $1,900 related to deposits paid in prior periods for the purchase of
an aircraft in January 2011 that had a total purchase price of $11,539 and settlement of a notes receivable by a transfer of land, respectively.
(4) Property, Plant and Equipment
Major categories of property, plant and equipment at December 31, 2013 and 2012 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Life
(Years)
|
|
2013
|
|
|
2012
|
|
Land
|
|
|
|
$
|
312,883
|
|
|
$
|
317,223
|
|
Building and improvements
|
|
10 39
|
|
|
125,724
|
|
|
|
115,646
|
|
Advertising structures
|
|
5 15
|
|
|
2,459,313
|
|
|
|
2,378,940
|
|
Automotive and other equipment
|
|
3 7
|
|
|
138,424
|
|
|
|
128,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,036,344
|
|
|
$
|
2,940,449
|
|
|
|
|
|
|
|
|
|
|
|
|
47
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(5) Goodwill and Other Intangible Assets
The following is a summary of intangible assets at December 31, 2013 and December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
Life
(Years)
|
|
|
2013
|
|
|
2012
|
|
|
|
|
Gross Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Gross Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
Amortizable Intangible Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer lists and contracts
|
|
|
7 10
|
|
|
$
|
492,299
|
|
|
$
|
463,188
|
|
|
$
|
482,883
|
|
|
$
|
455,549
|
|
Non-competition agreements
|
|
|
3 15
|
|
|
|
63,933
|
|
|
|
62,914
|
|
|
|
63,519
|
|
|
|
62,566
|
|
Site locations
|
|
|
15
|
|
|
|
1,495,635
|
|
|
|
1,106,947
|
|
|
|
1,449,181
|
|
|
|
1,009,631
|
|
Other
|
|
|
5 15
|
|
|
|
14,008
|
|
|
|
13,441
|
|
|
|
13,608
|
|
|
|
13,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,065,875
|
|
|
$
|
1,646,490
|
|
|
$
|
2,009,191
|
|
|
$
|
1,540,879
|
|
Unamortizable Intangible Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
|
|
|
$
|
1,757,089
|
|
|
$
|
253,536
|
|
|
$
|
1,738,686
|
|
|
$
|
253,536
|
|
The changes in the gross carrying amount of goodwill for the year ended December 31, 2013 are as follows:
|
|
|
|
|
Balance as of December 31, 2012
|
|
$
|
1,738,686
|
|
Goodwill acquired during the year
|
|
|
18,631
|
|
Purchase price adjustments and other
|
|
|
(228
|
)
|
Impairment losses
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2013
|
|
$
|
1,757,089
|
|
|
|
|
|
|
Amortization expense for the years ended December 31, 2013, 2012 and 2011 was $106,533, $102,941 and
$102,918, respectively. The following is a summary of the estimated amortization expense for future years:
|
|
|
|
|
2014
|
|
$
|
94,763
|
|
2015
|
|
|
58,713
|
|
2016
|
|
|
48,503
|
|
2017
|
|
|
43,255
|
|
2018
|
|
|
38,542
|
|
Thereafter
|
|
|
135,609
|
|
|
|
|
|
|
Total
|
|
$
|
419,385
|
|
|
|
|
|
|
(6) Leases
The Company is party to various operating leases for production facilities, vehicles and sites upon which advertising
structures are built. The leases expire at various dates, and have varying options to renew and to cancel and may contain escalation provisions. 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, 2013:
|
|
|
|
|
2014
|
|
$
|
155,374
|
|
2015
|
|
$
|
125,503
|
|
2016
|
|
$
|
109,737
|
|
2017
|
|
$
|
94,932
|
|
2018
|
|
$
|
80,956
|
|
Thereafter
|
|
$
|
595,410
|
|
Rental expense related to the Companys operating leases was $222,638, $209,110, and $205,378 for the
years ended December 31, 2013, 2012 and 2011, respectively.
48
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(7) Accrued Expenses
The following is a summary of accrued expenses at December 31, 2013 and 2012:
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
Payroll
|
|
$
|
11,311
|
|
|
$
|
12,854
|
|
Interest
|
|
|
23,451
|
|
|
|
31,888
|
|
Insurance benefits
|
|
|
13,090
|
|
|
|
12,537
|
|
Accrued lease expense
|
|
|
37,346
|
|
|
|
32,100
|
|
Other
|
|
|
13,726
|
|
|
|
10,082
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
98,924
|
|
|
$
|
99,461
|
|
|
|
|
|
|
|
|
|
|
(8) Long-term Debt
Long-term debt consists of the following at December 31, 2013 and 2012:
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
Senior Credit Agreement
|
|
$
|
502,106
|
|
|
$
|
384,664
|
|
7 7/8% Senior Subordinated Notes
|
|
|
400,000
|
|
|
|
400,000
|
|
5 7/8% Senior Subordinated Notes
|
|
|
500,000
|
|
|
|
500,000
|
|
5% Senior Subordinated Notes
|
|
|
535,000
|
|
|
|
535,000
|
|
9 3/4% Senior Notes
|
|
|
|
|
|
|
339,121
|
|
Other notes with various rates and terms
|
|
|
1,696
|
|
|
|
2,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,938,802
|
|
|
|
2,160,854
|
|
Less current maturities
|
|
|
(55,935
|
)
|
|
|
(33,134
|
)
|
|
|
|
|
|
|
|
|
|
Long-term debt excluding current maturities
|
|
$
|
1,882,867
|
|
|
$
|
2,127,720
|
|
|
|
|
|
|
|
|
|
|
Long-term debt matures as follows:
|
|
|
|
|
2014
|
|
$
|
55,935
|
|
2015
|
|
$
|
335,698
|
|
2016
|
|
$
|
27,142
|
|
2017
|
|
$
|
85,000
|
|
2018
|
|
$
|
400,000
|
|
Later years
|
|
$
|
1,035,027
|
|
9 3/4% Senior Notes
On March 27, 2009, Lamar Media completed an institutional private placement of $350,000 in aggregate principal amount ($314,927 gross
proceeds) of 9 3/4% Senior Notes due 2014. The institutional private placement resulted in net proceeds to Lamar Media of approximately $307,489. The senior notes mature on April 1, 2014 and bear interest at a rate of 9 3/4% per annum,
which is payable semi-annually on April 1 and October 1 of each year, beginning October 1, 2009. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. The terms of the senior notes will, among
other things, limit Lamar Medias and its restricted subsidiaries ability to (i) incur additional debt and issue preferred stock; (ii) make certain distributions, investments and other restricted payments; (iii) create
certain liens; (iv) enter into transactions with affiliates; (v) have the restricted subsidiaries make payments to Lamar Media; (vi) merge, consolidate or sell substantially all of Lamar Medias or the restricted
subsidiaries assets; and (vii) sell assets. These covenants are subject to a number of exceptions and qualifications.
Lamar
Media may redeem up to 35% of the aggregate principal amount of the senior notes, at any time and from time to time, at a price equal to 109.75% of the aggregate principal amount so redeemed, plus accrued and unpaid interest thereon (including
additional interest, if any), with the net cash proceeds of certain public equity offerings completed before April 1, 2012. At any time prior to April 1, 2014, Lamar Media may redeem some or all of the senior notes at a price equal to 100%
of the principal amount plus a make-whole premium. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holders senior notes at a price equal to 101% of the
principal amount of the senior notes, plus accrued and unpaid interest (including additional interest, if any), up to but not including the repurchase date.
49
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
On December 4, 2013, Lamar Media redeemed in full all $350,000 in aggregate principal
amount of its 9 3/4% Senior Notes. A loss of $14,345 was recorded as a result of this transaction, of which $3,962 was non-cash. No 9 3/4% Senior Notes remained outstanding at December 31, 2013.
7 7/8% Senior Subordinated Notes
On April 22, 2010, Lamar Media completed an institutional private placement of $400,000 aggregate principal amount of 7 7/8% Senior
Subordinated Notes due 2018. The institutional private placement resulted in net proceeds to Lamar Media of approximately $392,000.
Lamar
Media may redeem up to 35% of the aggregate principal amount of the Notes, at any time and from time to time, at a price equal to 107.875% of the aggregate principal amount so redeemed, plus accrued and unpaid interest thereon (including additional
interest, if any), with the net cash proceeds of certain public equity offerings completed before April 15, 2013, provided that following the redemption at least 65% of the 7 7/8% Senior Subordinated Notes that were originally issued remain
outstanding. At any time prior to April 15, 2014, Lamar Media may redeem some or all of the 7 7/8% Senior Subordinated Notes at a price equal to 100% of the principal amount plus a make-whole premium. On or after April 15, 2014, Lamar
Media may redeem the 7 7/8% Senior Subordinated Notes, in whole or part, in cash at redemption prices specified in the Indenture.
5 7/8% Senior
Subordinated Notes
On February 9, 2012, Lamar Media completed an institutional private placement of $500,000 aggregate
principle amount of 5 7/8% Senior Subordinated Notes, due 2022. The institutional private placement resulted in net proceeds to Lamar Media of approximately $489,000.
Lamar Media may redeem up to 35% of the aggregate principal amount of the Notes, at any time and from time to time, at a price equal to
105.875% of the aggregate principal amount so redeemed, plus accrued and unpaid interest thereon, with the net cash proceeds of certain public equity offerings completed before February 1, 2015, provided that following the redemption, at least
65% of the Notes that were originally issued remain outstanding. At any time prior to February 1, 2017, Lamar Media may redeem some or all of the Notes at a price equal to 100% of the aggregate principal amount plus a make-whole premium. On or
after February 1, 2017, Lamar Media may redeem the Notes, in whole or in part, in cash at redemption prices specified in the Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an
offer to purchase each holders Notes at a price equal to 101% of the principal amount of the Notes, plus accrued and unpaid interest, up to but not including the repurchase date.
5% Senior Subordinated Notes
On
October 30, 2012, Lamar Media completed an institutional private placement of $535,000 aggregate principal amount of 5% Senior Subordinated Notes due 2023. The institutional private placement resulted in net proceeds to Lamar Media of
approximately $527,100.
Lamar Media may redeem up to 35% of the aggregate principal amount of the Notes, at any time and from time to
time, at a price equal to 105% of the aggregate principal amount so redeemed, plus accrued and unpaid interest thereon, with the net cash proceeds of certain public equity offerings completed before November 1, 2015, provided that following the
redemption, at least 65% of the Notes that were originally issued remain outstanding. At any time prior to May 1, 2018, Lamar Media may redeem some or all of the Notes at a price equal to 100% of the aggregate principal amount plus a make-whole
premium. On or after May 1, 2018, Lamar Media may redeem the Notes, in whole or in part, in cash at redemption prices specified in the Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required
to make an offer to purchase each holders Notes at a price equal to 101% of the principal amount of the Notes, plus accrued and unpaid interest, up to but not including the repurchase date.
Senior Credit Facility (as of December 31, 2013)
On February 9, 2012, Lamar Media entered into a restatement agreement with respect to its existing senior credit facility in order to fund
a new $100,000 Term loan A facility and to make certain covenant changes to the senior credit facility, which was entered into on April 28, 2010, as amended on June 11, 2010, November 18, 2010 and February 9, 2012 and further
amended on October 24, 2013, for which JPMorgan Chase Bank, N.A. serves as administrative agent. The senior credit facility consists of a $250,000 revolving credit facility, a $270,000 term loan A-1 facility, a $30,000 term loan A-2 facility, a
$100,000 term loan A-3 facility, a $575,000 term loan B facility and a $300,000
50
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
incremental facility, which may be increased by up to an additional $200,000 based upon our satisfaction of a senior debt ratio test (defined as total consolidated senior debt of Lamar Media and
its restricted subsidiaries to EBITDA, as defined in the senior credit facility for the most recent four fiscal quarters then ended) of less than or equal to 3.25 to 1. Lamar Media is the borrower under the senior credit facility, except with
respect to the $30,000 term loan A-2 facility for which Lamar Medias wholly owned subsidiary, Lamar Advertising of Puerto Rico, Inc. is the borrower. We may also from time to time designate additional wholly owned subsidiaries as subsidiary
borrowers under the incremental loan facility that can borrow up to $110,000 of the incremental facility. Incremental loans may be in the form of additional term loan tranches or increases in the revolving credit facility. Our lenders have no
obligation to make additional loans to us, or any designated subsidiary borrower, under the incremental facility, but may enter into such commitments in their sole discretion.
The remaining quarterly amortizations of the Term facilities as of December 31, 2013 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term A-1
|
|
|
Term A-2
|
|
|
Term A-3
|
|
|
Term B
|
|
March 31, 2014
|
|
$
|
6,750
|
|
|
$
|
750
|
|
|
$
|
625
|
|
|
$
|
57.5
|
|
June 30, 2014 December 31, 2014
|
|
$
|
13,500
|
|
|
$
|
1,500
|
|
|
$
|
625
|
|
|
$
|
57.4
|
|
March 31, 2015
|
|
$
|
13,500
|
|
|
$
|
1,500
|
|
|
$
|
1,250
|
|
|
$
|
57.5
|
|
June 30, 2015 September 30, 2015
|
|
$
|
37,125
|
|
|
$
|
4,125
|
|
|
$
|
1,250
|
|
|
$
|
57.4
|
|
December 31, 2015
|
|
$
|
74,250
|
|
|
$
|
8,250
|
|
|
$
|
1,250
|
|
|
$
|
57.4
|
|
March 31, 2016 September 30, 2016
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,250
|
|
|
$
|
57.4
|
|
December 31, 2016
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,250
|
|
|
$
|
21,474.7
|
|
March 31, 2017 June 30, 2017
|
|
$
|
|
|
|
$
|
|
|
|
$
|
21,250
|
|
|
$
|
|
|
August 9, 2017
|
|
$
|
|
|
|
$
|
|
|
|
$
|
42,500
|
|
|
$
|
|
|
In addition to the amortizations of our Term facilities, Lamar Media may be required to make certain mandatory
prepayments on loans outstanding under the senior credit facility that would be applied first to any outstanding term loans, commencing with the year ended December 31, 2010. These payments, if any, are determined annually and are calculated
based on a percentage of Consolidated Excess Cash Flow (as defined in the senior credit facility) at the end of each fiscal year. For fiscal years ending on or after December 31, 2012, the percentage of Consolidated Excess Cash Flow that must
be applied is subject to a reduction to 0% if the total holdings debt ratio, as described above, is less than or equal to 5.00 to 1.00 as of the last day of such fiscal year. The Company will not be required to make a mandatory prepayment in respect
of Consolidated Excess Cash Flow for the fiscal year ended December 31, 2013 since there was a consolidated cash flow deficit, in accordance with the calculation as defined in the senior credit facility and the total holdings debt ratio was
less than 5.0 to 1.0.
As of December 31, 2013, there were $150,000 revolving credit loans outstanding under the revolving senior
credit facility. The revolving facility terminates April 28, 2015. Availability under the revolving facility is reduced by the amount of letters of credit outstanding. The Company had $6,973 letters of credit outstanding as of December 31,
2013 and $93,027 availability under its revolving facility. Revolving credit loans may be requested under the revolving credit facility at any time prior to maturity. The loans bear interest, at the Companys option, at the LIBOR Rate or
JPMorgan Chase Prime Rate plus applicable margins, such margins being set from time to time based on the Companys ratio of debt to trailing twelve month EBITDA, as defined in the senior credit facility.
The terms of Lamar Medias senior credit facility and the indenture relating to Lamar Medias outstanding notes restrict, among
other things, the ability of Lamar Advertising and Lamar Media to:
51
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
Lamar Medias ability to make distributions to Lamar Advertising is also restricted
under the terms of these agreements. Under Lamar Medias senior credit facility the Company must maintain specified financial ratios and levels including:
|
|
|
fixed charges coverage ratio;
|
|
|
|
total holdings debt ratio.
|
Lamar Advertising and Lamar Media were in compliance with all of
the terms of all of the indentures and the applicable senior credit agreement during the periods presented.
(9) Asset Retirement Obligation
The Companys asset retirement obligation includes the costs associated with the removal of its structures, resurfacing
of the land and retirement cost, if applicable, related to the Companys outdoor advertising portfolio. The following table reflects information related to our asset retirement obligations:
|
|
|
|
|
Balance at December 31, 2011
|
|
$
|
180,662
|
|
Additions to asset retirement obligations
|
|
|
5,434
|
|
Accretion expense
|
|
|
10,871
|
|
Liabilities settled
|
|
|
(7,308
|
)
|
|
|
|
|
|
Balance at December 31, 2012
|
|
|
189,659
|
|
Additions to asset retirement obligations
|
|
|
3,741
|
|
Accretion expense
|
|
|
11,046
|
|
Liabilities settled
|
|
|
(3,615
|
)
|
|
|
|
|
|
Balance at December 31, 2013
|
|
$
|
200,831
|
|
|
|
|
|
|
(10) Depreciation and Amortization
The Company includes all categories of depreciation and amortization on a separate line in its Statements of Operations. The
amounts of depreciation and amortization expense excluded from the following operating expenses in its Statements of Operations are:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Direct expenses
|
|
$
|
283,280
|
|
|
$
|
277,662
|
|
|
$
|
283,720
|
|
General and administrative expenses
|
|
|
4,684
|
|
|
|
4,137
|
|
|
|
4,224
|
|
Corporate expenses
|
|
|
12,615
|
|
|
|
14,284
|
|
|
|
11,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
300,579
|
|
|
$
|
296,083
|
|
|
$
|
299,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(11) Income Taxes
Income tax expense (benefit) consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
Deferred
|
|
|
Total
|
|
Year ended December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. federal
|
|
$
|
930
|
|
|
$
|
21,681
|
|
|
$
|
22,611
|
|
State and local
|
|
|
1,609
|
|
|
|
1,165
|
|
|
|
2,774
|
|
Foreign
|
|
|
1,553
|
|
|
|
(4,097
|
)
|
|
|
(2,544
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,092
|
|
|
$
|
18,749
|
|
|
$
|
22,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. federal
|
|
$
|
|
|
|
$
|
6,743
|
|
|
$
|
6,743
|
|
State and local
|
|
|
823
|
|
|
|
826
|
|
|
|
1,649
|
|
Foreign
|
|
|
1,103
|
|
|
|
(1,253
|
)
|
|
|
(150
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,926
|
|
|
$
|
6,316
|
|
|
$
|
8,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. federal
|
|
$
|
|
|
|
$
|
1,883
|
|
|
$
|
1,883
|
|
State and local
|
|
|
1,074
|
|
|
|
1,125
|
|
|
|
2,199
|
|
Foreign
|
|
|
1,847
|
|
|
|
(387
|
)
|
|
|
1,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,921
|
|
|
$
|
2,621
|
|
|
$
|
5,542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2013 and December 31, 2012, the Company had income taxes payable of $848 and
$252, respectively, included in accrued expenses.
The U.S. and foreign components of earnings before income taxes are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
U.S.
|
|
$
|
62,506
|
|
|
$
|
17,279
|
|
|
$
|
13,868
|
|
Foreign
|
|
|
474
|
|
|
|
(1,147
|
)
|
|
|
(1,468
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
62,980
|
|
|
$
|
16,132
|
|
|
$
|
12,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of significant differences between the reported amount of income tax expense and the expected
amount of income tax expense that would result from applying the U.S. federal statutory income tax rate of 35 percent to income before taxes is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Income tax expense at U.S. federal statutory rate
|
|
$
|
22,043
|
|
|
$
|
5,646
|
|
|
$
|
4,340
|
|
State and local income taxes, net of federal income tax benefit
|
|
|
3,585
|
|
|
|
1,541
|
|
|
|
847
|
|
Book expenses not deductible for tax purposes
|
|
|
1,351
|
|
|
|
1,058
|
|
|
|
746
|
|
Stock-based compensation
|
|
|
65
|
|
|
|
270
|
|
|
|
464
|
|
Undistributed earnings of Canadian subsidiaries (a)
|
|
|
|
|
|
|
|
|
|
|
(4,023
|
)
|
Valuation allowance
|
|
|
(1,097
|
)
|
|
|
(331
|
)
|
|
|
382
|
|
Rate change (b)
|
|
|
(2,565
|
)
|
|
|
49
|
|
|
|
1,743
|
|
Other differences, net
|
|
|
(541
|
)
|
|
|
9
|
|
|
|
1,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
$
|
22,841
|
|
|
$
|
8,242
|
|
|
$
|
5,542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(a)
|
For the period ended December 31, 2011, management asserted that the undistributed earnings of our Canadian subsidiaries were permanently reinvested and a deferred tax benefit of $4,023 was recognized from the
release of the December 31, 2010 deferred tax liability. In periods prior to December 31, 2011, the undistributed earnings of our Canadian subsidiaries were not designated as permanently reinvested.
|
(b)
|
In 2013, the Tax Burden Adjustment and Redistribution Act was signed into law. Under the enacted legislation, the Puerto Rico corporate income tax rate was increased to 39% from 30%. As a result, a non-cash
benefit of $2,479 to income tax expense was recorded for the increase of the Puerto Rico net deferred tax asset. Also in 2013, British Columbia Bill 2 was signed into law. The enacted legislation increased the general corporate income tax rate to
11% from 10%. As a result, a non-cash benefit of $86 to income tax expense was recorded for the increase of the Canadian net deferred tax asset.
|
|
In 2012, Ontario Bill 114 was signed into law. The enacted legislation freezes the general corporate income tax rate at 11.5%, cancelling the previously enacted rate reductions for 2012 and 2013 to 11% and 10%,
respectively. As a result, a non-cash charge of $49 to income tax expense was recorded for the increase of the Canadian net deferred tax liability.
|
|
In 2011, the Internal Revenue Code for a New Puerto Rico was signed into law. Under the enacted legislation, the Puerto Rico corporate income tax rate was lowered from 39% to 30%. As a result, a non-cash
charge of $1,743 to income tax expense was recorded for the reduction of the Puerto Rico net deferred tax asset.
|
The tax
effect of temporary differences that give rise to significant portions of the deferred tax assets and (liabilities) are presented below:
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
$
|
2,972
|
|
|
$
|
2,964
|
|
Accrued liabilities not deducted for tax purposes
|
|
|
37,764
|
|
|
|
35,580
|
|
Asset retirement obligation
|
|
|
70,166
|
|
|
|
65,994
|
|
Net operating loss carry forwards
|
|
|
138,865
|
|
|
|
163,597
|
|
Tax credit carry forwards
|
|
|
4,844
|
|
|
|
3,765
|
|
Charitable contributions carry forward
|
|
|
9
|
|
|
|
592
|
|
|
|
|
|
|
|
|
|
|
Gross deferred tax assets
|
|
|
254,620
|
|
|
|
272,492
|
|
Less: valuation allowance
|
|
|
(2,331
|
)
|
|
|
(3,424
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
|
252,289
|
|
|
|
269,068
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
(45,160
|
)
|
|
|
(48,271
|
)
|
Intangibles
|
|
|
(314,382
|
)
|
|
|
(308,266
|
)
|
Investment in partnerships
|
|
|
(1,519
|
)
|
|
|
(1,244
|
)
|
|
|
|
|
|
|
|
|
|
Gross deferred tax liabilities
|
|
|
(361,061
|
)
|
|
|
(357,781
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax liabilities
|
|
$
|
(108,772
|
)
|
|
$
|
(88,713
|
)
|
|
|
|
|
|
|
|
|
|
Classification in the consolidated balance sheets:
|
|
|
|
|
|
|
|
|
Current deferred tax assets
|
|
$
|
10,378
|
|
|
$
|
10,817
|
|
Current deferred tax liabilities
|
|
|
|
|
|
|
|
|
Noncurrent deferred tax assets
|
|
|
|
|
|
|
|
|
Noncurrent deferred tax liabilities
|
|
|
(119,150
|
)
|
|
|
(99,530
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax liabilities
|
|
$
|
(108,772
|
)
|
|
$
|
(88,713
|
)
|
|
|
|
|
|
|
|
|
|
During 2013, we utilized $65,641 of U.S. net operating losses, leaving $305,172 of U.S. net operating loss
carry forwards remaining at December 31, 2013 to offset future taxable income. Of this amount, $13,049 is subject to an IRC §382 limitation, but will be available to be fully utilized by no later than 2017. These carry forwards expire
between 2020 through 2032. In addition, we have $4,443 of various credits available to offset future U.S. federal income tax.
54
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
As of December 31, 2013 we have approximately $430,191 of state net operating loss carry
forwards before valuation allowances. These state net operating losses are available to reduce future taxable income and expire at various times and amounts. In addition, we have $247 of various credits available to offset future state income tax.
Management has determined that a valuation allowance related to state net operating loss carry forwards in certain jurisdictions is necessary. The valuation allowance for these deferred tax assets as of December 31, 2013 and December 31,
2012, was $2,323 and $3,410, respectively. The net change in the total valuation allowance for each of the years ended December 31, 2013, 2012, and 2011 was a (decrease) increase of $(1,087), $(332) and $410, respectively.
During 2013, we generated $3,285 of Puerto Rico net operating losses. As of December 31, 2013, we had approximately $28,523 of Puerto
Rico net operating losses available to offset future taxable income. These carry forwards expire between 2016 and 2023. In addition, we have $154 of alternative minimum tax credits available to offset future Puerto Rico income tax.
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 in those jurisdictions during the periods in which those temporary differences become deductible.
Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carry back and carry forward periods), projected future taxable income, and tax-planning strategies in making this assessment. In order to
fully realize the deferred tax assets, the Company will need to generate future taxable income before the expiration of the carry forwards governed by the tax code. Based on the current level of pretax earnings and projected decreases in future
depreciation and amortization, the Company will generate the minimum amount of future taxable income to support the realization of the deferred tax assets. Additionally, the Company has a significant amount of deferred tax liabilities that will
reverse during the same period and jurisdiction and are of the same character as the temporary differences giving rise to the deferred tax assets. As a result, management believes that it is more likely than not that we will realize the benefits of
these deferred tax assets, net of the existing valuation allowances at December 31, 2013. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the
carry forward period are reduced.
We have not recognized a deferred tax liability of approximately $7,583 for the undistributed earnings
of our Canadian operations that arose in 2013 and prior years as management considers these earnings to be indefinitely invested outside the U.S. As of December 31, 2013, the undistributed earnings of these subsidiaries were approximately
$21,665.
Under ASC 740, we provide for uncertain tax positions, and the related interest, and adjust recognized tax benefits and accrued
interest accordingly. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|
|
|
|
|
Balance as of December 31, 2011
|
|
$
|
135
|
|
Additions for tax positions related to current year
|
|
|
3
|
|
Additions for tax positions related to prior years
|
|
|
|
|
Reductions for tax positions related to prior years
|
|
|
|
|
Lapse of statute of limitations
|
|
|
(63
|
)
|
Settlements
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2012
|
|
$
|
75
|
|
Additions for tax positions related to current year
|
|
|
1
|
|
Additions for tax positions related to prior years
|
|
|
|
|
Reductions for tax positions related to prior years
|
|
|
|
|
Lapse of statute of limitations
|
|
|
(41
|
)
|
Settlements
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2013
|
|
$
|
35
|
|
|
|
|
|
|
Included in the balance of unrecognized benefits at December 31, 2013 is $35 of tax benefits that, if
recognized in future periods, would impact our effective tax rate.
During the years ended December 31, 2013 and December 31,
2012, we recognized interest and penalties of $1 and $3, respectively, as components of income tax expense in connection with our liabilities related to uncertain tax positions. Interest and penalties included in the balance at December 31,
2013 and December 31, 2012, was $4 and $14, respectively.
55
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
We are subject to income taxes in the U.S. and nearly all states. In addition, the Company is
subject to income taxes in Canada and the Commonwealth of Puerto Rico. We are no longer subject to U.S federal income tax examinations by tax authorities for years before 2010 since the IRS has completed review of our income tax returns through
2009, or for any U.S. state income tax audit prior to 2002. With respect to Canada and Puerto Rico, we are no longer subject to income tax audits for years before 2009 and 2008, respectively.
Within the next twelve months, it is reasonably possible, that we could decrease our unrecognized tax benefits up to $35 as a result of the
expiration of statute of limitations.
(12) 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.
Prior to 1996, the Company entered into various related party
transactions for the purchase and sale of advertising structures whereby any resulting gains were deferred at that date. As of December 31, 2013 and 2012, the deferred gains related to these transactions were $85, respectively, and are included
in deferred income on the balance sheets. No gains related to these transactions have been realized in the Statements of Operations for the years ended December 31, 2013, 2012 and 2011.
In addition, the Company had receivables from employees of $126 and $57 at December 31, 2013 and 2012, respectively. These receivables
are primarily relocation loans for employees. The Company does not have any receivables from its current executive officers.
In June
2011, the Company entered into a service contract with Joule Energy LA, LLC (Joule), of which Ross L. Reilly is a member and owns 26.66% interest. Joule provides services related to the Companys installation of solar arrays in the
State of Louisiana, which services are expected to be completed in 2012 and 2013. In addition, from time to time beginning in 2012, Joule provides lighting installation services for certain of Lamar Advertisings billboards in the state of
Louisiana. As of December 31, 2013, the aggregate amount paid to Joule under the service contract was approximately $1,538. Ross L. Reilly is the son of Kevin P. Reilly, Jr., our Chairman of the Board of Directors and President.
(13) Stockholders Equity
On July 16, 1999, the Board of Directors designated 5,720 shares of the 1,000,000 shares of previously undesignated
preferred stock, par value $.001, as Series AA preferred stock. The Class A preferred stock, par value $638, was exchanged for the new Series AA preferred stock and no shares of Class A preferred stock are currently outstanding. The new
Series AA preferred stock and the class A preferred stock rank senior to the Class A common stock and Class B common stock with respect to dividends and upon liquidation. Holders of Series AA preferred stock and Class A preferred stock are
entitled to receive, on a pari passu basis, dividends at the rate of $15.95 per share per quarter when, as and if declared by the Board of Directors. The Series AA preferred stock and the Class A preferred stock are also entitled to receive, on
a pari passu basis, $638 plus a further amount equal to any dividend accrued and unpaid to the date of distribution before any payments are made or assets distributed to the Class A common stock or Class B stock upon voluntary or involuntary
liquidation, dissolution or winding up of the Company. The liquidation value of the outstanding Series AA preferred stock at December 31, 2013 was $3,649. The Series AA preferred stock and the Class A preferred stock are identical, except
that the Series AA preferred stock is entitled to one vote per share and the Class A preferred stock is not entitled to vote.
All of
the outstanding shares of common stock are fully paid and nonassessable. In the event of the liquidation or dissolution of the Company, following any required distribution to the holders of outstanding shares of preferred stock, the holders of
common stock are entitled to share pro rata in any balance of the corporate assets available for distribution to them. The Company may pay dividends if, when and as declared by the Board of Directors from funds legally available therefore, subject
to the restrictions set forth in the Companys existing indentures and the senior credit facility. Subject to the preferential rights of the holders of any class of preferred stock, holders of shares of common stock are entitled to receive such
dividends as may be declared by the Companys Board of directors out of funds legally available for such purpose. No dividend may be declared or paid in cash or property on any share of either class of common stock unless simultaneously the
same dividend is declared or paid on each share of the other class of common stock, provided that, in the event of stock dividends, holders of a specific class of common stock shall be entitled to receive only additional shares of such class.
56
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
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 Companys certificate of incorporation, as amended).
(14) Stock Compensation Plans
Equity Incentive Plan.
Lamars 1996 Equity Incentive Plan, as amended, (the Incentive Plan) has
reserved 15.5 million shares of common stock for issuance to directors and employees, including options granted and common stock reserved for issuance under its performance-based incentive program. Options granted under the plan expire ten
years from the grant date with vesting terms ranging from three to five years which primarily includes 1) options that vest in one-fifth increments beginning on the grant date and continuing on each of the first four anniversaries of the grant date
and 2) options that cliff-vest on the fifth anniversary of the grant date. All grants are made at fair market value based on the closing price of our Class A common stock as reported on the NASDAQ Global Select Market on the date of grant.
In May 2013, the Incentive Plan was amended to increase the number of shares available by 2.5 million shares. In February 2013, the plan
was amended to eliminate the provision that limited the amount of Class A Common Stock, including shares retained from an award, that could be withheld to satisfy tax withholding obligations to the minimum tax obligations required by law
(except with respect to option awards). In accordance with ASC 718, the Company is required to classify the awards affected by the amendment as liability-classified awards at fair value each period prior to their settlement. As of December 31,
2013, the Company recorded a liability, in accrued expenses, of $6,757 related to its equity incentive awards affected by this amendment.
We use a Black-Scholes-Merton option pricing model to estimate the fair value of share-based awards. The Black-Scholes-Merton option pricing
model incorporates various highly subjective assumptions, including expected term and expected volatility. We have reviewed our historical pattern of option exercises and have determined that meaningful differences in option exercise activity
existed among vesting schedules. Therefore, for all stock options granted after January 1, 2006, we have categorized these awards into two groups of vesting 1) 5-year cliff vest and 2) 4-year graded vest, for valuation purposes. We have
determined there were no meaningful differences in employee activity under our ESPP due to the nature of the plan.
We estimate the
expected term of options granted using an implied life derived from the results of a hypothetical mid-point settlement scenario, which incorporates our historical exercise, expiration and post-vesting employment termination patterns, while
accommodating for partial life cycle effects. We believe these estimates will approximate future behavior.
We estimate the expected
volatility of our Class A common stock at the grant date using a blend of 75% historical volatility of our Class A common stock and 25% implied volatility of publicly traded options with maturities greater than six months on our
Class A common stock as of the option grant date. Our decision to use a blend of historical and implied volatility was based upon the volume of actively traded options on our common stock and our belief that historical volatility alone may not
be completely representative of future stock price trends.
Our risk-free interest rate assumption is determined using the Federal Reserve
nominal rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued. We assumed an expected dividend yield of zero since the Company has historically not paid dividends on Class A
common stock, except for special dividends in 2007.
We estimate option forfeitures at the time of grant and periodically revise those
estimates in subsequent periods if actual forfeitures differ from those estimates. We record stock-based compensation expense only for those awards expected to vest using an estimated forfeiture rate based on our historical forfeiture data.
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions used:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Year
|
|
Dividend
Yield
|
|
|
Expected
Volatility
|
|
|
Risk Free
Interest Rate
|
|
|
Expected
Lives
|
|
2013
|
|
|
0
|
%
|
|
|
51
|
%
|
|
|
1
|
%
|
|
|
6
|
|
2012
|
|
|
0
|
%
|
|
|
52
|
%
|
|
|
2
|
%
|
|
|
5
|
|
2011
|
|
|
0
|
%
|
|
|
52
|
%
|
|
|
2
|
%
|
|
|
5
|
|
57
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 year ended December 31, 2013 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Contractual
Life
|
|
Outstanding, beginning of year
|
|
|
2,124,886
|
|
|
$
|
22.36
|
|
|
|
|
|
Granted
|
|
|
1,807,000
|
|
|
|
42.31
|
|
|
|
|
|
Exercised
|
|
|
(682,263
|
)
|
|
|
24.90
|
|
|
|
|
|
Canceled
|
|
|
(17,200
|
)
|
|
|
38.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, end of year
|
|
|
3,232,423
|
|
|
$
|
32.89
|
|
|
|
7.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at end of year
|
|
|
1,737,823
|
|
|
$
|
25.16
|
|
|
|
5.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2013 there was $24,107 of unrecognized compensation cost related to stock options granted
which is expected to be recognized over a weighted-average period of 2.00 years.
Shares available for future stock option and restricted
share grants to employees and directors under existing plans were 2,797,768 at December 31, 2013. The aggregate intrinsic value of options outstanding as of December 31, 2013 was $62,609, and the aggregate intrinsic value of options
exercisable was $47,085. Total intrinsic value of options exercised was $15,362 for the year ended December 31, 2013.
Stock
Purchase Plan.
In 2009 our board of directors adopted a new employee stock purchase plan, the 2009 Employee Stock Purchase Plan or 2009 ESPP, which was approved by our shareholders on May 28, 2009. The 2009 ESPP reserved 588,154 shares of
Class A common stock for issuance to our employees, which included 88,154 shares of Class A common stock that had been available for issuance under our 2000 Employee Stock Purchase Plan or 2000 ESPP. The 2000 ESPP was terminated following
the issuance of all shares that were subject to the offer that commenced under the 2000 ESPP on January 1, 2009 and ended June 30, 2009. The terms of the 2009 ESPP are substantially the same as the 2000 ESPP.
The number of shares of Class A common stock available under the 2009 ESPP was automatically increased by 78,963 shares on
January 1, 2013 pursuant to the automatic increase provisions of the 2009 ESPP.
The following is a summary of 2009 ESPP share
activity for the year ended December 31, 2013:
|
|
|
|
|
|
|
Shares
|
|
Available for future purchases, January 1, 2013
|
|
|
358,950
|
|
Additional shares reserved under 2009 ESPP
|
|
|
78,963
|
|
Purchases
|
|
|
(110,224
|
)
|
|
|
|
|
|
Available for future purchases, December 31, 2013
|
|
|
327,689
|
|
|
|
|
|
|
Performance-based compensation.
Unrestricted shares of our Class A common stock may be awarded to
key officers and employees under our 1996 Plan based on certain Company performance measures for fiscal 2013. The number of shares to be issued; if any, are dependent on the level of achievement of these performance measures as determined by the
Companys Compensation Committee based on our 2013 results and were issued in the first quarter of 2014. The shares subject to these awards can range from a minimum of 0% to a maximum of 100% of the target number of shares depending on the
level at which the goals are attained. Based on the Companys performance measures achieved through December 31, 2013, the Company has accrued $7,231 as compensation expense related to these agreements.
(15) Benefit Plans
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. 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. As of December 31, 2013, the Company maintained $6,751 in letters of credit with a bank to meet requirements
of the Companys workers compensation and general liability insurance carrier.
58
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
Savings and Profit Sharing Plan
The Company sponsors The Lamar Corporation Savings and Profit Sharing Plan covering eligible employees who have completed one year of service
and are at least 21 years of age. The Company has the option to match 50% of employees contributions up to 5% of eligible compensation. Employees can contribute up to 100% of compensation. Full vesting on the Companys matched
contributions occurs after three years for contributions made after January 1, 2002. Annually, at the Companys discretion, an additional profit sharing contribution may be made on behalf of each eligible employee. The Company matched
contributions of $3,581, $3,184 and $2,870 for the years ended December 31, 2013, 2012 and 2011, respectively.
Deferred Compensation Plan
The Company sponsors a Deferred Compensation Plan for the benefit of certain of its board-elected officers who meet specific age
and years of service and other criteria. Officers that have attained the age of 30 and have a minimum of 10 years of service to the Company and satisfying additional eligibility guidelines are eligible for annual contributions to the Plan generally
ranging from $3 to $8, depending on the employees length of service. The Companys contributions to the Plan are maintained in a rabbi trust and, accordingly, the assets and liabilities of the Plan are reflected in the balance sheet of
the Company in other assets and other liabilities. Upon termination, death or disability, participating employees are eligible to receive an amount equal to the fair market value of the assets in the employees deferred compensation account.
For the years ended December 31, 2013, 2012 and 2011, the Company contributed $1,323, $1,260 and $1,223, respectively.
On
December 8, 2005, the Companys Board of Directors approved an amendment to the Lamar Deferred Compensation Plan in order to (1) to comply with the requirements of Section 409A of the Internal Revenue Code (Section
409A) applicable to deferred compensation and (2) to reflect changes in the administration of the Plan. The Companys Board of Directors also approved the adoption of a grantor trust pursuant to which amounts may be set aside, but
remain subject to claims of the Companys creditors, for payments of liabilities under the new plan, including amounts contributed under the old plan. The plan was further amended in August 2007 to make certain amendments to reflect
Section 409A regulations issued on April 10, 2007. An additional clarifying amendment was made to the plan in December 2013.
(16) Commitment and Contingencies
The Company is involved in various other claims and legal actions arising in the ordinary course of business. In the opinion
of management, the ultimate disposition of these matters will not have a material adverse effect on the Companys consolidated financial position, results of operations, or liquidity.
(17) Summarized Financial Information of Subsidiaries
Separate financial statements of each of the Companys direct or indirect wholly owned subsidiaries that have
guaranteed Lamar Medias obligations with respect to its publicly issued notes (collectively, the Guarantors) are not included herein because the Company has no independent assets or operations, the guarantees are full and
unconditional and joint and several and the only subsidiaries that are not guarantors are in the aggregate minor.
Lamar Medias
ability to make distributions to Lamar Advertising is restricted under both the terms of the indentures relating to Lamar Medias outstanding notes and by the terms of the senior credit facility. As of December 31, 2013 and
December 31, 2012, Lamar Media was permitted under the terms of its outstanding senior subordinated notes to make transfers to Lamar Advertising in the form of cash dividends, loans or advances in amounts up to $2,072,542 and $1,706,875,
respectively. Transfers to Lamar Advertising are subject to additional restrictions if, under the senior credit facility and as defined therein, (x) the total holdings debt ratio is greater than 5.75 to 1 or (y) the senior debt ratio is
greater than 3.25 to 1.0. As of December 31, 2013, the total holdings debt ratio was less than 5.75 to 1 and Lamar Medias senior debt ratio was less than 3.25 to 1; therefore, transfers to Lamar Advertising were not subject to any
additional restrictions under the senior credit facility.
(18) Fair Value of Financial Instruments
At December 31, 2013 and 2012, the Companys financial instruments included cash and cash equivalents, marketable
securities, accounts receivable, investments, accounts payable and borrowings. The fair values of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings and current portion of long-term debt approximated carrying
values because of the short-term nature of these instruments. Investments are reported at fair values. Fair values for investments held at cost are not readily available, but are estimated to approximate fair value. The estimated fair value of the
Companys long term debt (including current maturities) was $1,948,040, which exceeded both the gross and carrying amount of $1,938,802 as of December 31, 2013.
59
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(19) Quarterly Financial Data (Unaudited)
The tables below represent the as adjusted balances for the selected quarterly financial data of the Company for
each reporting period in the years ended December 31, 2013 and 2012. See Note (1)(c)
Adjustment to Previously Reported Amounts
for further information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year 2013 Quarters
|
|
|
|
March 31
|
|
|
June 30
|
|
|
September 30
|
|
|
December 31
|
|
Net revenues
|
|
$
|
276,605
|
|
|
$
|
327,744
|
|
|
$
|
321,141
|
|
|
$
|
320,352
|
|
Net revenues less direct advertising expenses
|
|
$
|
170,086
|
|
|
$
|
217,021
|
|
|
$
|
211,501
|
|
|
$
|
210,390
|
|
Net (loss) income applicable to common stock
|
|
$
|
(10,354
|
)
|
|
$
|
23,031
|
|
|
$
|
17,003
|
|
|
$
|
10,094
|
|
Net (loss) income per common share basic
|
|
$
|
(0.11
|
)
|
|
$
|
0.24
|
|
|
$
|
0.18
|
|
|
$
|
0.11
|
|
Net (loss) income per common share diluted
|
|
$
|
(0.11
|
)
|
|
$
|
0.24
|
|
|
$
|
0.18
|
|
|
$
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year 2012 Quarters
|
|
|
|
March 31
|
|
|
June 30
|
|
|
September 30
|
|
|
December 31
|
|
Net revenues
|
|
$
|
262,465
|
|
|
$
|
301,106
|
|
|
$
|
309,526
|
|
|
$
|
306,639
|
|
Net revenues less direct advertising expenses
|
|
$
|
159,042
|
|
|
$
|
196,035
|
|
|
$
|
205,681
|
|
|
$
|
200,440
|
|
Net (loss) income applicable to common stock
|
|
$
|
(25,209
|
)
|
|
$
|
11,534
|
|
|
$
|
13,381
|
|
|
$
|
7,819
|
|
Net (loss) income per common share basic
|
|
$
|
(0.27
|
)
|
|
$
|
0.13
|
|
|
$
|
0.14
|
|
|
$
|
0.08
|
|
Net (loss) income per common share diluted
|
|
$
|
(0.27
|
)
|
|
$
|
0.13
|
|
|
$
|
0.14
|
|
|
$
|
0.08
|
|
The tables below represent the as previously reported balances for the selected quarterly
financial data of the Company for the quarters ended March 31, June 30 and September 30, 2013 and all reporting periods in the year ended December 31, 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year 2013 Quarters
|
|
|
|
March 31
|
|
|
June 30
|
|
|
September 30
|
|
Net revenues
|
|
$
|
283,479
|
|
|
$
|
324,684
|
|
|
$
|
323,184
|
|
Net revenues less direct advertising expenses
|
|
$
|
176,960
|
|
|
$
|
213,961
|
|
|
$
|
213,544
|
|
Net (loss) income applicable to common stock
|
|
$
|
(6,161
|
)
|
|
$
|
21,164
|
|
|
$
|
18,249
|
|
Net (loss) income per common share basic
|
|
$
|
(0.07
|
)
|
|
$
|
0.22
|
|
|
$
|
0.09
|
|
Net (loss) income per common share diluted
|
|
$
|
(0.07
|
)
|
|
$
|
0.22
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year 2012 Quarters
|
|
|
|
March 31
|
|
|
June 30
|
|
|
September 30
|
|
|
December 31
|
|
Net revenues
|
|
$
|
266,238
|
|
|
$
|
304,872
|
|
|
$
|
306,286
|
|
|
$
|
305,505
|
|
Net revenues less direct advertising expenses
|
|
$
|
162,815
|
|
|
$
|
199,801
|
|
|
$
|
202,441
|
|
|
$
|
199,306
|
|
Net (loss) income applicable to common stock
|
|
$
|
(22,907
|
)
|
|
$
|
13,831
|
|
|
$
|
11,405
|
|
|
$
|
7,127
|
|
Net (loss) income per common share basic
|
|
$
|
(0.25
|
)
|
|
$
|
0.15
|
|
|
$
|
0.12
|
|
|
$
|
0.08
|
|
Net (loss) income per common share diluted
|
|
$
|
(0.25
|
)
|
|
$
|
0.15
|
|
|
$
|
0.12
|
|
|
$
|
0.08
|
|
(20) Subsequent Events
On January 10, 2014, the Company completed an institutional private placement of $510,000 aggregate principal amount of
5 3/8% Senior Notes due 2024 of Lamar Media. The institutional private placement resulted in net proceeds to Lamar Media of approximately $502,300. Lamar Media used the proceeds of this offering to repay in full all amounts then outstanding
under its senior credit facility.
60
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
On February 3, 2014, Lamar Media entered into a second restatement agreement with the
Company, certain of Lamar Medias subsidiaries as guarantors and the lenders named therein under which the parties agreed to amend and restate the existing senior credit facility for which JPMorgan Chase Bank, N.A. serves as administrative
agent; the second amended and restated senior credit agreement was entered into on April 28, 2010, amended and restated on February 9, 2012 and amended and restated on February 3, 2014 (as amended and restated, the senior credit
facility). Among other things, the amendments increased the revolving credit facility from $250,000 to $400,000 and extended its maturity date to February 2, 2019. The incremental facility was also increased from $300,000 to $500,000. In
addition, the senior credit facility was amended to include provisions that would allow Lamar Media to conduct its affairs in a manner that would allow Lamar Advertising to qualify and remain qualified as a REIT, subject to certain restrictions. It
also eliminated a requirement that Lamar Media make mandatory prepayments on loans in certain circumstances based on excess cash flow.
61
SCHEDULE 2
Lamar Advertising Company
And Subsidiaries
Valuation and Qualifying Accounts
Years Ended December 31, 2013, 2012 and 2011
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
Beginning
of Period
|
|
|
Charged to
Costs and
Expenses
|
|
|
Deductions
|
|
|
Balance at
End of
Period
|
|
Year ended December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deducted in balance sheet from trade accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
$
|
7,615
|
|
|
|
6,034
|
|
|
|
6,034
|
|
|
$
|
7,615
|
|
Deducted in balance sheet from intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
$
|
1,794,415
|
|
|
|
106,533
|
|
|
|
922
|
|
|
$
|
1,900,026
|
|
Year ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deducted in balance sheet from trade accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
$
|
7,500
|
|
|
|
5,484
|
|
|
|
5,369
|
|
|
$
|
7,615
|
|
Deducted in balance sheet from intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
$
|
1,705,402
|
|
|
|
102,941
|
|
|
|
13,928
|
|
|
$
|
1,794,415
|
|
Year ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deducted in balance sheet from trade accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
$
|
8,100
|
|
|
|
7,591
|
|
|
|
8,191
|
|
|
$
|
7,500
|
|
Deducted in balance sheet from intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
$
|
1,602,723
|
|
|
|
102,679
|
|
|
|
|
|
|
$
|
1,705,402
|
|
62
LAMAR MEDIA CORP.
AND SUBSIDIARIES
63
Managements Report on Internal Control Over Financial Reporting
The management of Lamar Media Corp. is responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act.
Lamar Medias management assessed the
effectiveness of Lamar Medias internal control over financial reporting as of December 31, 2013. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in
Internal-Control Integrated Framework (1992)
. Based on this assessment, Lamar Medias management has concluded that, as of December 31, 2013, Lamar Medias internal control over financial reporting is effective based
on those criteria. The effectiveness of Lamar Medias internal control over financial reporting as of December 31, 2013 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report, which is
included in Item 8 to this Annual Report.
64
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholder
Lamar Media Corp.:
We have audited the accompanying consolidated balance sheets of Lamar Media Corp. and subsidiaries as of December 31, 2013 and 2012, and
the related consolidated statements of operations and comprehensive income, stockholders equity and cash flows for each of the years in the three-year period ended December 31, 2013. In connection with our audits of the consolidated
financial statements, we also have audited the financial statement schedule. These consolidated financial statements and financial statement schedule are the responsibility of the Companys management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement schedule based on our audits.
We conducted our audits in
accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, 2013 and 2012, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2013, in conformity with U.S. generally
accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information
set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), Lamar Media Corp.s internal control over financial reporting as of December 31, 2013, based on criteria established in
Internal Control Integrated Framework (1992)
issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), and our report dated February 27, 2014, expressed an unqualified opinion on the effectiveness of the Companys internal control over financial reporting.
Baton Rouge, Louisiana
February 27, 2014
66
LAMAR MEDIA CORP.
AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2013 and 2012
(In thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
32,712
|
|
|
$
|
58,411
|
|
Receivables, net of allowance for doubtful accounts of $7,615 in both 2013 and 2012
|
|
|
161,741
|
|
|
|
159,829
|
|
Prepaid expenses
|
|
|
42,048
|
|
|
|
41,132
|
|
Deferred income tax assets (note 6)
|
|
|
10,378
|
|
|
|
10,817
|
|
Other current assets
|
|
|
34,679
|
|
|
|
30,546
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
281,558
|
|
|
|
300,735
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
3,036,456
|
|
|
|
2,940,449
|
|
Less accumulated depreciation and amortization
|
|
|
(1,914,527
|
)
|
|
|
(1,760,090
|
)
|
|
|
|
|
|
|
|
|
|
Net property, plant and equipment
|
|
|
1,121,929
|
|
|
|
1,180,359
|
|
|
|
|
|
|
|
|
|
|
Goodwill (note 3)
|
|
|
1,493,401
|
|
|
|
1,474,998
|
|
Intangible assets, net (note 3)
|
|
|
418,919
|
|
|
|
467,837
|
|
Deferred financing costs, net of accumulated amortization of $15,893 and $16,579 as of 2013 and 2012, respectively
|
|
|
28,336
|
|
|
|
35,834
|
|
Other assets
|
|
|
39,118
|
|
|
|
35,901
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
3,383,261
|
|
|
$
|
3,495,664
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Trade accounts payable
|
|
$
|
13,341
|
|
|
$
|
13,539
|
|
Current maturities of long-term debt (note 5)
|
|
|
55,935
|
|
|
|
33,134
|
|
Accrued expenses (note 4)
|
|
|
95,632
|
|
|
|
96,860
|
|
Deferred income
|
|
|
77,153
|
|
|
|
72,974
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
242,061
|
|
|
|
216,507
|
|
Long-term debt (note 5)
|
|
|
1,882,867
|
|
|
|
2,127,720
|
|
Deferred income tax liabilities (note 6)
|
|
|
152,541
|
|
|
|
132,785
|
|
Asset retirement obligation
|
|
|
200,831
|
|
|
|
189,659
|
|
Other liabilities
|
|
|
20,471
|
|
|
|
16,388
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,498,771
|
|
|
|
2,683,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
Common stock, $.01 par value, authorized 3,000 shares; 100 shares issued and outstanding at 2013 and 2012
|
|
|
|
|
|
|
|
|
Additional paid-in-capital
|
|
|
2,644,015
|
|
|
|
2,606,157
|
|
Accumulated comprehensive income
|
|
|
3,867
|
|
|
|
5,978
|
|
Accumulated deficit
|
|
|
(1,763,392
|
)
|
|
|
(1,799,530
|
)
|
|
|
|
|
|
|
|
|
|
Stockholders equity
|
|
|
884,490
|
|
|
|
812,605
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
3,383,261
|
|
|
$
|
3,495,664
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial
statements.
67
LAMAR MEDIA CORP.
AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income
Years Ended December 31, 2013, 2012 and 2011
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
1,245,842
|
|
|
$
|
1,179,736
|
|
|
$
|
1,130,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct advertising expenses (exclusive of depreciation and amortization)
|
|
|
436,844
|
|
|
|
418,538
|
|
|
|
409,052
|
|
General and administrative expenses (exclusive of depreciation and amortization)
|
|
|
231,574
|
|
|
|
211,320
|
|
|
|
202,437
|
|
Corporate expenses (exclusive of depreciation and amortization)
|
|
|
56,877
|
|
|
|
52,750
|
|
|
|
46,175
|
|
Depreciation and amortization
|
|
|
300,579
|
|
|
|
296,083
|
|
|
|
299,639
|
|
Gain on disposition of assets
|
|
|
(3,804
|
)
|
|
|
(13,817
|
)
|
|
|
(10,548
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,022,070
|
|
|
|
964,874
|
|
|
|
946,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
223,772
|
|
|
|
214,862
|
|
|
|
183,959
|
|
Other expense (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on extinguishment of debt
|
|
|
14,345
|
|
|
|
41,632
|
|
|
|
677
|
|
Interest income
|
|
|
(165
|
)
|
|
|
(331
|
)
|
|
|
(569
|
)
|
Interest expense
|
|
|
146,277
|
|
|
|
157,093
|
|
|
|
171,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
160,457
|
|
|
|
198,394
|
|
|
|
171,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax expense
|
|
|
63,315
|
|
|
|
16,468
|
|
|
|
12,758
|
|
Income tax expense (note 6)
|
|
|
22,977
|
|
|
|
8,353
|
|
|
|
5,838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
40,338
|
|
|
$
|
8,115
|
|
|
$
|
6,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statements of Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
40,338
|
|
|
$
|
8,115
|
|
|
$
|
6,920
|
|
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
(2,111
|
)
|
|
|
652
|
|
|
|
(784
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
$
|
38,227
|
|
|
$
|
8,767
|
|
|
$
|
6,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial
statements.
68
LAMAR MEDIA CORP.
AND SUBSIDIARIES
Consolidated Statements of Stockholders Equity
Years Ended December 31, 2013, 2012 and 2011
(In thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
Additional
Paid-In
Capital
|
|
|
Accumulated
Comprehensive
Income
|
|
|
Accumulated
Deficit
|
|
|
Total
|
|
Balance, December 31, 2010
|
|
$
|
|
|
|
$
|
2,562,765
|
|
|
$
|
6,110
|
|
|
$
|
(1,809,971
|
)
|
|
$
|
758,904
|
|
Contribution from parent
|
|
|
|
|
|
|
16,553
|
|
|
|
|
|
|
|
|
|
|
|
16,553
|
|
Foreign currency translations
|
|
|
|
|
|
|
|
|
|
|
(784
|
)
|
|
|
|
|
|
|
(784
|
)
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,920
|
|
|
|
6,920
|
|
Dividend to parent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,481
|
)
|
|
|
(3,481
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2011
|
|
$
|
|
|
|
$
|
2,579,318
|
|
|
$
|
5,326
|
|
|
$
|
(1,806,532
|
)
|
|
$
|
778,112
|
|
Contribution from parent
|
|
|
|
|
|
|
26,839
|
|
|
|
|
|
|
|
|
|
|
|
26,839
|
|
Foreign currency translations
|
|
|
|
|
|
|
|
|
|
|
652
|
|
|
|
|
|
|
|
652
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,115
|
|
|
|
8,115
|
|
Dividend to parent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,113
|
)
|
|
|
(1,113
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2012
|
|
$
|
|
|
|
$
|
2,606,157
|
|
|
$
|
5,978
|
|
|
$
|
(1,799,530
|
)
|
|
$
|
812,605
|
|
Contribution from parent
|
|
|
|
|
|
|
37,858
|
|
|
|
|
|
|
|
|
|
|
|
37,858
|
|
Foreign currency translations
|
|
|
|
|
|
|
|
|
|
|
(2,111
|
)
|
|
|
|
|
|
|
(2,111
|
)
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,338
|
|
|
|
40,338
|
|
Dividend to parent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,200
|
)
|
|
|
(4,200
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2013
|
|
$
|
|
|
|
$
|
2,644,015
|
|
|
$
|
3,867
|
|
|
$
|
(1,763,392
|
)
|
|
$
|
884,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial
statements.
69
LAMAR MEDIA CORP.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended December 31, 2013, 2012 and 2011
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
40,338
|
|
|
$
|
8,115
|
|
|
$
|
6,920
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
300,579
|
|
|
|
296,083
|
|
|
|
299,639
|
|
Non-cash compensation
|
|
|
24,936
|
|
|
|
14,466
|
|
|
|
11,650
|
|
Amortization included in interest expense
|
|
|
14,667
|
|
|
|
17,741
|
|
|
|
18,517
|
|
Loss on extinguishment of debt
|
|
|
14,345
|
|
|
|
41,632
|
|
|
|
677
|
|
Gain on disposition of assets and investments
|
|
|
(3,804
|
)
|
|
|
(13,817
|
)
|
|
|
(10,548
|
)
|
Deferred income tax expense
|
|
|
18,885
|
|
|
|
6,426
|
|
|
|
2,916
|
|
Provision for doubtful accounts
|
|
|
6,034
|
|
|
|
5,484
|
|
|
|
7,591
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in:
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
(6,663
|
)
|
|
|
(13,233
|
)
|
|
|
(14,622
|
)
|
Prepaid expenses
|
|
|
788
|
|
|
|
1,903
|
|
|
|
1,201
|
|
Other assets
|
|
|
(4,970
|
)
|
|
|
(2,876
|
)
|
|
|
(1,863
|
)
|
Increase (decrease) in:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts payable
|
|
|
(89
|
)
|
|
|
(127
|
)
|
|
|
(489
|
)
|
Accrued expenses
|
|
|
(6,371
|
)
|
|
|
2,259
|
|
|
|
(630
|
)
|
Other liabilities
|
|
|
(21,300
|
)
|
|
|
5,301
|
|
|
|
(10,611
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by operating activities
|
|
|
377,375
|
|
|
|
369,357
|
|
|
|
310,348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(105,650
|
)
|
|
|
(105,570
|
)
|
|
|
(107,070
|
)
|
Acquisitions
|
|
|
(92,248
|
)
|
|
|
(206,068
|
)
|
|
|
(23,497
|
)
|
(Increase) decrease in notes receivable
|
|
|
(840
|
)
|
|
|
122
|
|
|
|
166
|
|
Proceeds from disposition of assets and investments
|
|
|
6,869
|
|
|
|
8,117
|
|
|
|
13,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in investing activities
|
|
|
(191,869
|
)
|
|
|
(303,399
|
)
|
|
|
(117,255
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments under credit agreement
|
|
|
(33,051
|
)
|
|
|
(311,275
|
)
|
|
|
(213,866
|
)
|
Net proceeds from senior credit facility
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
Proceeds received under revolving credit facility
|
|
|
184,000
|
|
|
|
15,000
|
|
|
|
|
|
Payments on revolving credit facility
|
|
|
(34,000
|
)
|
|
|
(15,000
|
)
|
|
|
|
|
Net payment on senior subordinated notes
|
|
|
(360,383
|
)
|
|
|
(861,019
|
)
|
|
|
(47,187
|
)
|
Debt issuance costs
|
|
|
(89
|
)
|
|
|
(22,500
|
)
|
|
|
|
|
Net proceeds from note offering
|
|
|
|
|
|
|
1,035,000
|
|
|
|
|
|
Dividends to parent
|
|
|
(4,200
|
)
|
|
|
(1,113
|
)
|
|
|
(3,481
|
)
|
Contributions from parent
|
|
|
37,858
|
|
|
|
19,668
|
|
|
|
16,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in financing activities
|
|
|
(209,865
|
)
|
|
|
(41,239
|
)
|
|
|
(247,981
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes in cash and cash equivalents
|
|
|
(1,340
|
)
|
|
|
315
|
|
|
|
(300
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(25,699
|
)
|
|
|
25,034
|
|
|
|
(55,188
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
58,411
|
|
|
|
33,377
|
|
|
|
88,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
32,712
|
|
|
$
|
58,411
|
|
|
$
|
33,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
140,048
|
|
|
$
|
143,589
|
|
|
$
|
153,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for state and federal income taxes
|
|
$
|
4,096
|
|
|
$
|
2,392
|
|
|
$
|
2,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial
statements.
70
LAMAR MEDIA CORP.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(1) Significant Accounting Policies
(a) Nature of Business
Lamar Media Corp. is a wholly owned subsidiary of Lamar Advertising Company. Lamar Media Corp. is engaged in the outdoor advertising business
operating approximately 145,000 outdoor advertising displays in 44 states. Lamar Medias operating strategy is to be the leading provider of outdoor advertising services in the markets it serves.
In addition, Lamar Media operates a logo sign business in 22 states throughout the United States as well as the province of Ontario, 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 Companys logo sign business
are tourism signing contracts. The Company provides transit advertising on bus shelters, benches and buses in the markets it serves.
Certain footnotes are not provided for the accompanying financial statements as the information in notes 2, 4, 6, 9, 10, 13, 14, 15, 16, 17
and 18 and portions of notes 1 and 12 to the consolidated financial statements of Lamar Advertising Company included elsewhere in this filing are 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.
(b) Principles of Consolidation
The accompanying consolidated financial statements include Lamar Media Corp., its wholly owned subsidiaries, The Lamar Company, LLC, Lamar
Central Outdoor, Inc., Lamar Oklahoma Holding Co., Inc., Lamar Advertising Southwest, Inc., Lamar DOA Tennessee Holdings, Inc., and Interstate Logos, LLC. and their majority-owned subsidiaries. All inter-company transactions and balances have been
eliminated in consolidation.
(2) Non-cash Financing and Investing Activities
For the period ended December 31, 2013 and December 31, 2012, the Company had non-cash investing activities of
$4,982 and $23,941 related to acquisitions of outdoor advertising assets. For the year ended December 31, 2011, the Company had non-cash investing activities of $4,000 and $1,900 related to deposits paid in prior periods for the purchase of an
aircraft in January 2011 that had a total purchase price of $11,539 and settlement of a notes receivable by a transfer of land, respectively.
(3) Goodwill and Other Intangible Assets
The following is a summary of intangible assets at December 31, 2013 and December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
Life
(Years)
|
|
|
2013
|
|
|
2012
|
|
|
|
Gross Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Gross Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
Amortizable Intangible Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer lists and contracts
|
|
|
710
|
|
|
$
|
492,299
|
|
|
$
|
463,188
|
|
|
$
|
482,883
|
|
|
$
|
455,549
|
|
Non-competition agreement
|
|
|
315
|
|
|
|
63,933
|
|
|
|
62,914
|
|
|
|
63,519
|
|
|
|
62,566
|
|
Site locations
|
|
|
15
|
|
|
|
1,495,635
|
|
|
|
1,106,945
|
|
|
|
1,449,181
|
|
|
|
1,009,631
|
|
Other
|
|
|
515
|
|
|
|
13,463
|
|
|
|
13,364
|
|
|
|
13,063
|
|
|
|
13,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,065,330
|
|
|
$
|
1,646,411
|
|
|
$
|
2,008,646
|
|
|
$
|
1,540,809
|
|
Unamortizable Intangible Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
|
|
|
$
|
1,746,068
|
|
|
$
|
252,667
|
|
|
$
|
1,727,665
|
|
|
$
|
252,667
|
|
The changes in the gross carrying amount of goodwill for the year ended December 31, 2013 are as follows:
|
|
|
|
|
Balance as of December 31, 2012
|
|
$
|
1,727,665
|
|
Goodwill acquired during the year
|
|
|
18,631
|
|
Purchase price adjustments and other
|
|
|
(228
|
)
|
Impairment losses
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2013
|
|
$
|
1,746,068
|
|
|
|
|
|
|
71
LAMAR MEDIA CORP.
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(4) Accrued Expenses
The following is a summary of accrued expenses at December 31, 2013 and 2012:
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
Payroll
|
|
$
|
11,311
|
|
|
$
|
12,854
|
|
Interest
|
|
|
23,451
|
|
|
|
31,888
|
|
Other
|
|
|
60,870
|
|
|
|
52,118
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
95,632
|
|
|
$
|
96,860
|
|
|
|
|
|
|
|
|
|
|
(5) Long-term Debt
Long-term debt consists of the following at December 31, 2013 and 2012:
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
Senior Credit Agreement
|
|
$
|
502,106
|
|
|
$
|
384,664
|
|
7 7/8% Senior Subordinated Notes
|
|
|
400,000
|
|
|
|
400,000
|
|
5 7/8% Senior Subordinated Notes
|
|
|
500,000
|
|
|
|
500,000
|
|
5% Senior Subordinated Notes
|
|
|
535,000
|
|
|
|
535,000
|
|
9 3/4% Senior Notes
|
|
|
|
|
|
|
339,121
|
|
Other notes with various rates and terms
|
|
|
1,696
|
|
|
|
2,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,938,802
|
|
|
|
2,160,854
|
|
Less current maturities
|
|
|
(55,935
|
)
|
|
|
(33,134
|
)
|
|
|
|
|
|
|
|
|
|
Long-term debt excluding current maturities
|
|
$
|
1,882,867
|
|
|
$
|
2,127,720
|
|
|
|
|
|
|
|
|
|
|
Long-term debt matures as follows:
|
|
|
|
|
2014
|
|
$
|
55,935
|
|
2015
|
|
$
|
335,698
|
|
2016
|
|
$
|
27,142
|
|
2017
|
|
$
|
85,000
|
|
2018
|
|
$
|
400,000
|
|
Later years
|
|
$
|
1,035,027
|
|
72
LAMAR MEDIA CORP.
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(6) Income Taxes
Income tax expense (benefit) consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
Deferred
|
|
|
Total
|
|
Year ended December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. federal
|
|
$
|
930
|
|
|
$
|
21,798
|
|
|
$
|
22,728
|
|
State and local
|
|
|
1,609
|
|
|
|
1,184
|
|
|
|
2,793
|
|
Foreign
|
|
|
1,553
|
|
|
|
(4,097
|
)
|
|
|
(2,544
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,092
|
|
|
$
|
18,885
|
|
|
$
|
22,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. federal
|
|
$
|
|
|
|
$
|
6,859
|
|
|
$
|
6,859
|
|
State and local
|
|
|
824
|
|
|
|
820
|
|
|
|
1,644
|
|
Foreign
|
|
|
1,103
|
|
|
|
(1,253
|
)
|
|
|
(150
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,927
|
|
|
$
|
6,426
|
|
|
$
|
8,353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. federal
|
|
$
|
|
|
|
$
|
2,007
|
|
|
$
|
2,007
|
|
State and local
|
|
|
1,075
|
|
|
|
1,295
|
|
|
|
2,370
|
|
Foreign
|
|
|
1,847
|
|
|
|
(386
|
)
|
|
|
1,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,922
|
|
|
$
|
2,916
|
|
|
$
|
5,838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2013 and December 31, 2012, the Company had income taxes payable of $630 and $0,
respectively, included in accrued expenses.
The U.S. and foreign components of earnings before income taxes are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
U.S.
|
|
$
|
62,841
|
|
|
$
|
17,615
|
|
|
$
|
14,226
|
|
Foreign
|
|
|
474
|
|
|
|
(1,147
|
)
|
|
|
(1,468
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
63,315
|
|
|
$
|
16,468
|
|
|
$
|
12,758
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of significant differences between the reported amount of income tax expense and the expected
amount of income tax expense that would result from applying the U.S. federal statutory income tax rate of 35 percent to income before taxes is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Income tax expense at U.S. federal statutory rate
|
|
$
|
22,160
|
|
|
$
|
5,764
|
|
|
$
|
4,465
|
|
State and local income taxes, net of federal income tax benefit
|
|
|
3,601
|
|
|
|
1,557
|
|
|
|
865
|
|
Book expenses not deductible for tax purposes
|
|
|
1,351
|
|
|
|
1,058
|
|
|
|
746
|
|
Stock-based compensation
|
|
|
65
|
|
|
|
270
|
|
|
|
464
|
|
Amortization of non-deductible goodwill
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Undistributed earnings of Canadian subsidiaries (a)
|
|
|
|
|
|
|
|
|
|
|
(4,023
|
)
|
Valuation allowance
|
|
|
(1,094
|
)
|
|
|
(354
|
)
|
|
|
382
|
|
Rate Change (b)
|
|
|
(2,565
|
)
|
|
|
49
|
|
|
|
1,743
|
|
Other differences, net
|
|
|
(541
|
)
|
|
|
9
|
|
|
|
1,195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
$
|
22,977
|
|
|
$
|
8,353
|
|
|
$
|
5,838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73
LAMAR MEDIA CORP.
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
(a)
|
In periods prior to December 31, 2011, the undistributed earnings of our Canadian subsidiaries were not designated as permanently reinvested. For the period ended December 31, 2011, management asserted that
the undistributed earnings of our Canadian subsidiaries were permanently reinvested and a deferred tax benefit of $4,023 was recognized from the release of the December 31, 2010 deferred tax liability.
|
(b)
|
In 2013, the Tax Burden Adjustment and Redistribution Act was signed into law. Under the enacted legislation, the Puerto Rico corporate income tax rate was increased to 39% from 30%. As a result, a non-cash
benefit of $2,479 to income tax expense was recorded for the increase of the Puerto Rico net deferred tax asset. Also in 2013, British Columbia Bill 2 was signed into law. The enacted legislation increased the general corporate income tax rate to
11% from 10%. As a result, a non-cash benefit of $86 to income tax expense was recorded for the increase of the Canadian net deferred tax asset.
|
In 2012, Ontario Bill 114 was signed into law. The enacted legislation freezes the general corporate income tax rate at 11.5%, cancelling the
previously enacted rate reductions for 2012 and 2013 to 11% and 10%, respectively. As a result, a non-cash charge of $49 to income tax expense was recorded for the increase of the Canadian net deferred tax liability.
In 2011, the Internal Revenue Code for a New Puerto Rico was signed into law. Under the enacted legislation, the Puerto Rico
corporate income tax rate was lowered from 39% to 30%. As a result, a non-cash charge of $1,743 to income tax expense was recorded for the reduction of the Puerto Rico net deferred tax asset.
The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and (liabilities) are presented
below:
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
$
|
2,972
|
|
|
$
|
2,964
|
|
Accrued liabilities not deducted for tax purposes
|
|
|
37,764
|
|
|
|
35,580
|
|
Asset retirement obligation
|
|
|
70,166
|
|
|
|
65,994
|
|
Net operating loss carry forwards
|
|
|
89,496
|
|
|
|
114,361
|
|
Tax credit carry forwards
|
|
|
19,615
|
|
|
|
18,537
|
|
Charitable contributions carry forward
|
|
|
9
|
|
|
|
592
|
|
|
|
|
|
|
|
|
|
|
Gross deferred tax assets
|
|
|
220,022
|
|
|
|
238,028
|
|
Less: valuation allowance
|
|
|
(1,760
|
)
|
|
|
(2,851
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
|
218,262
|
|
|
|
235,177
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
(45,160
|
)
|
|
|
(48,271
|
)
|
Intangibles
|
|
|
(313,746
|
)
|
|
|
(307,630
|
)
|
Investment in partnerships
|
|
|
(1,519
|
)
|
|
|
(1,244
|
)
|
|
|
|
|
|
|
|
|
|
Gross deferred tax liabilities
|
|
|
(360,425
|
)
|
|
|
(357,145
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax liabilities
|
|
$
|
(142,163
|
)
|
|
$
|
(121,968
|
)
|
|
|
|
|
|
|
|
|
|
Classification in the consolidated balance sheets:
|
|
|
|
|
|
|
|
|
Current deferred tax assets
|
|
$
|
10,378
|
|
|
$
|
10,817
|
|
Current deferred tax liabilities
|
|
|
|
|
|
|
|
|
Noncurrent deferred tax assets
|
|
|
|
|
|
|
|
|
Noncurrent deferred tax liabilities
|
|
|
(152,541
|
)
|
|
|
(132,785
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax liabilities
|
|
$
|
(142,163
|
)
|
|
$
|
(121,968
|
)
|
|
|
|
|
|
|
|
|
|
During 2013, we utilized $65,976 of U.S. net operating losses, leaving $169,411 of U.S. net operating loss
carry forwards remaining at December 31, 2013, to offset future taxable income. Of this amount, $13,049 is subject to an IRC §382 limitation, but will be available to be fully utilized by no later than 2017. These carry forwards expire
between 2020 and 2032. In addition, we have $19,214 of various credits available to offset future U.S. federal income tax.
74
LAMAR MEDIA CORP.
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
As of December 31, 2013, we have approximately $392,470 state net operating loss carry
forwards before valuation allowances. These state net operating losses are available to reduce future taxable income and expire at various times and amounts. In addition, we have $247 of various credits available to offset future state income tax.
Management has determined that a valuation allowance related to state net operating loss carry forwards is necessary. The valuation allowance for these deferred tax assets as of December 31, 2013 and December 31, 2012 was $1,751 and
$2,836, respectively. The net change in the total valuation allowance for each of the years ended December 31, 2013, 2012, and 2011 was a (decrease) increase of $(1,085), $(356) and $407, respectively.
During 2013, we generated $3,285 of Puerto Rico net operating losses. As of December 31, 2013, we had approximately $28,523 of Puerto
Rico net operating losses available to offset future taxable income. These carry forwards expire between 2016 and 2023. In addition, we have $154 of alternative minimum tax credits available to offset future Puerto Rico income tax.
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 in those jurisdictions during the periods in which those temporary differences become deductible.
Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carry back and carry forward periods), projected future taxable income, and tax-planning strategies in making this assessment. In order to
fully realize the deferred tax assets, the company will need to generate future taxable income before the expiration of the carry forwards governed by the tax code. Based on the current level of pretax earnings for financial reporting purposes and
projected decreases in future depreciation and amortization, we will generate the minimum amount of future taxable income to support the realization of the deferred tax assets. Additionally, the company has a significant amount of deferred tax
liabilities that will reverse during the same period and jurisdiction and is of the same character as the temporary differences giving rise to the deferred tax assets. As a result, management believes that it is more likely than not that we will
realize the benefits of these deferred tax assets, net of the existing valuation allowances at December 31, 2013. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future
taxable income during the carry forward period are reduced.
We have not recognized a deferred tax liability of approximately $7,583 for
the undistributed earnings of our Canadian operations that arose in 2013 and prior years as management considers these earnings to be indefinitely invested outside the U.S. As of December 31, 2013, the undistributed earnings of these
subsidiaries were approximately $21,665.
Under ASC 740, we provide for uncertain tax positions, and the related interest, and adjust
recognized tax benefits and accrued interest accordingly. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|
|
|
|
|
Balance as of December 31, 2011
|
|
$
|
135
|
|
Additions for tax positions related to current year
|
|
|
3
|
|
Additions for tax positions related to prior years
|
|
|
|
|
Reductions for tax positions related to prior years
|
|
|
|
|
Lapse of statute of limitations
|
|
|
(63
|
)
|
Settlements
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2012
|
|
$
|
75
|
|
Additions for tax positions related to current year
|
|
|
1
|
|
Additions for tax positions related to prior years
|
|
|
|
|
Reductions for tax positions related to prior years
|
|
|
|
|
Lapse of statute of limitations
|
|
|
(41
|
)
|
Settlements
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2013
|
|
$
|
35
|
|
|
|
|
|
|
Included in the balance of unrecognized benefits at December 31, 2013 is $35 of tax benefits that, if
recognized in future periods, would impact our effective tax rate.
During the years ended December 31, 2013 and December 31,
2012, we recognized interest and penalties of $1 and $3, respectively, as components of income tax expense in connection with our liabilities related to uncertain tax positions. Interest and penalties included in the balance at December 31,
2013 and December 31, 2012, was $4 and $14, respectively.
75
LAMAR MEDIA CORP.
AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
We are subject to income taxes in the U.S. and nearly all states. In addition, the Company is
subject to income taxes in Canada and the Commonwealth of Puerto Rico. We are no longer subject to U.S federal income tax examinations by tax authorities for years before 2010 since the IRS has completed review of our income tax returns through
2009, or for any U.S. state income tax audit prior to 2002. With respect to Canada and Puerto Rico, we are no longer subject to income tax audits for years before 2009 and 2008, respectively.
Within the next twelve months, it is reasonably possible, that we could decrease our unrecognized tax benefits up to $35 as a result of the
expiration of statute of limitations.
(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, 2013 and December 31, 2012, there was a
payable to Lamar Advertising Company, its parent, in the amount of $7,665 and $8,356, respectively.
Effective December 31, 2013 and
December 31, 2012, Lamar Advertising Company contributed $37,858 and $26,839 respectively, to Lamar Media which resulted in an increase in Lamar Medias additional paid-in capital.
(8) Quarterly Financial Data (Unaudited)
The tables below represent the as adjusted balances for the selected quarterly financial data of the Company for
each reporting period in the years ended December 31, 2013 and 2012. See Note (1)(c)
Adjustment to Previously Reported Amounts
for further information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year 2013 Quarters
|
|
|
|
March 31
|
|
|
June 30
|
|
|
September 30
|
|
|
December 31
|
|
Net revenues
|
|
$
|
276,605
|
|
|
$
|
327,744
|
|
|
$
|
321,141
|
|
|
$
|
320,352
|
|
Net revenues less direct advertising expenses
|
|
$
|
170,086
|
|
|
$
|
217,021
|
|
|
$
|
211,501
|
|
|
$
|
210,390
|
|
Net (loss) income
|
|
$
|
(10,212
|
)
|
|
$
|
23,178
|
|
|
$
|
17,144
|
|
|
$
|
10,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year 2012 Quarters
|
|
|
|
March 31
|
|
|
June 30
|
|
|
September 30
|
|
|
December 31
|
|
Net revenues
|
|
$
|
262,465
|
|
|
$
|
301,106
|
|
|
$
|
309,526
|
|
|
$
|
306,639
|
|
Net revenues less direct advertising expenses
|
|
$
|
159,042
|
|
|
$
|
196,035
|
|
|
$
|
205,681
|
|
|
$
|
200,440
|
|
Net (loss) income
|
|
$
|
(25,127
|
)
|
|
$
|
11,695
|
|
|
$
|
13,561
|
|
|
$
|
7,986
|
|
The tables below represent the as previously reported balances for the selected quarterly
financial data of the Company for the quarters ended March 31, June 30 and September 30, 2013 and all reporting periods in the year ended December 31, 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year 2013 Quarters
|
|
|
|
March 31
|
|
|
June 30
|
|
|
September 30
|
|
Net revenues
|
|
$
|
283,479
|
|
|
$
|
324,684
|
|
|
$
|
323,184
|
|
Net revenues less direct advertising expenses
|
|
$
|
176,960
|
|
|
$
|
213,961
|
|
|
$
|
213,544
|
|
Net (loss) income
|
|
$
|
(6,019
|
)
|
|
$
|
21,311
|
|
|
$
|
18,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year 2012 Quarters
|
|
|
|
March 31
|
|
|
June 30
|
|
|
September 30
|
|
|
December 31
|
|
Net revenues
|
|
$
|
266,238
|
|
|
$
|
304,872
|
|
|
$
|
306,286
|
|
|
$
|
305,505
|
|
Net revenues less direct advertising expenses
|
|
$
|
162,815
|
|
|
$
|
199,801
|
|
|
$
|
202,441
|
|
|
$
|
199,306
|
|
Net (loss) income
|
|
$
|
(22,825
|
)
|
|
$
|
13,992
|
|
|
$
|
11,585
|
|
|
$
|
7,294
|
|
76
SCHEDULE 2
Lamar Media Corp.
and
Subsidiaries
Valuation and Qualifying Accounts
Years Ended December 31, 2013, 2012 and 2011
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
Beginning of
Period
|
|
|
Charged to
Costs and
Expenses
|
|
|
Deductions
|
|
|
Balance
at end
of Period
|
|
Year Ended December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deducted in balance sheet from trade accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
$
|
7,615
|
|
|
|
6,034
|
|
|
|
6,034
|
|
|
$
|
7,615
|
|
Deducted in balance sheet from intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
$
|
1,793,476
|
|
|
|
106,533
|
|
|
|
929
|
|
|
$
|
1,899,080
|
|
Year Ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deducted in balance sheet from trade accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
$
|
7,500
|
|
|
|
5,484
|
|
|
|
5,369
|
|
|
$
|
7,615
|
|
Deducted in balance sheet from intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
$
|
1,704,492
|
|
|
|
102,941
|
|
|
|
13,957
|
|
|
$
|
1,793,476
|
|
Year Ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deducted in balance sheet from trade accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
$
|
8,100
|
|
|
|
7,591
|
|
|
|
8,191
|
|
|
$
|
7,500
|
|
Deducted in balance sheet from intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
$
|
1,601,843
|
|
|
|
102,649
|
|
|
|
|
|
|
$
|
1,704,492
|
|
77