##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 For the fiscal year ended December 31, 2005
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the transition period fromto
 Commission File Number 0-30242
 Lamar
Advertising Company
 Commission File Number 1-12407
 Lamar Media Corp.
  Delaware
    
    72-1449411Delaware
    
    72-1205791(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No)5551 Corporate Blvd., Baton Rouge, LA
    
    70808(Address of principal executive offices)
    
    (Zip Code)
  SECURITIES OF LAMAR ADVERTISING COMPANY
REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
 SECURITIES OF LAMAR ADVERTISING COMPANY
REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
 SECURITIES OF LAMAR MEDIA CORP.
REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
 SECURITIES OF LAMAR MEDIA CORP.
REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
 þ o
 o þ
 o þ
 o þ
 þ o
 o
 þ o o
 o o þ
 o þ
    Class
    
    Outstanding at March 3, 2006Lamar Advertising Company Class A common stock, $0.001 par value per share
    
    90,275,194 sharesLamar Advertising Company Class B common stock, $0.001 par value per share
    
    15,647,865 sharesLamar Media Corp. common stock, $0.001 par value per share
    
    100 shares
 DOCUMENTS INCORPORATED BY REFERENCE
 Document
    
    Parts Into Which IncorporatedProxy Statement for the Annual Meeting of
Stockholders to be held on May 25, 2006
(Proxy Statement)
    
    Part III
 This combined Form 10-K is separately filed by (i) Lamar Advertising Company and (ii) Lamar Media
Corp. (which is a wholly owned subsidiary of Lamar Advertising Company). Lamar Media Corp. meets
the conditions set forth in general instruction I(1) (a) and (b) of Form 10-K and is, therefore,
filing this form with the reduced disclosure format permitted by such instruction.




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NOTE REGARDING FORWARD-LOOKING STATEMENTS
  
    
    the Companys future financial performance and condition;
    
    the Companys business plans, objectives, prospects, growth and operating strategies;
    
    market opportunities and competitive positions;
    
    estimated risks; and
    
    stock price.
  
    
    national and local economic conditions that may affect the markets in which the Company operates;
    
    the levels of expenditures on advertising in general and outdoor advertising in particular;
    
    increased competition within the outdoor advertising industry;
    
    the regulation of the outdoor advertising industry;
    
    the Companys need for, and ability to obtain, additional funding for acquisitions and operations;
    
    risks and uncertainties relating to the Companys significant indebtedness;
    
    the Companys ability to renew expiring contracts at favorable rates;
    
    the integration of businesses that the Company acquires and its ability to recognize
cost savings and operating efficiencies as a result of these acquisitions; and
    
    changes in accounting principles, policies or guidelines.
  INDUSTRY AND MARKET DATA
  2




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TABLE OF CONTENTS  PART IITEM 1. BUSINESSITEM 1A. RISK FACTORSITEM 1B. UNRESOLVED STAFF COMMENTSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERSITEM 6. SELECTED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS (following on next page)ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESITEM 9B. OTHER INFORMATIONPART IIIITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTITEM 11. EXECUTIVE COMPENSATIONITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESSIGNATURESINDEX TO EXHIBITSRestated Certificate of Incorporation of the CompanyRelease of GuarantyRelease of GuarantyCredit AgreementSeries A Incremental Loan AgreementForm of Restricted Stock AgreementStatement Regarding Computation of Per Share EarningsStatement Regarding Computation of Earnings to Fixed ChargesStatement re: Computation of Earnings to Fixed ChargesSubsidiariesConsent of KPMG LLPCertification of the CEO Pursuant to Section 302Certification of the CFO Pursuant to Section 302Certification Pursuant to 18 U.S.C. Section 1350    Table of Contents  
 PART I
 
 ITEM 1. BUSINESS
 General
  The Companys Business
  Billboards
 
    
    Bulletinsare generally large, illuminated advertising structures that
are located on major highways and target vehicular traffic.
    
    Postersare generally smaller advertising structures that are located
on major traffic arteries and city streets and target vehicular and pedestrian
traffic.
  Logo signs
 
    
    Logo signsgenerally advertise nearby gas, food, camping, lodging and
other attractions.
  Transit advertising displays
 Corporate History
   Where you can find more information
  3




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Operating Strategies
  Continuing to provide high quality local sales and service.
 Continuing a centralized control and decentralized management structure.
 Continuing to focus on internal growth.
  Continuing to pursue strategic acquisitions.
 Continuing to pursue other outdoor advertising opportunities.
 COMPANY OPERATIONS
 Billboard Advertising
  Bulletins
  4




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Posters
  .
    Logo Sign Advertising
   Colorado
    
    Kentucky
    
    Missouri
    
    OklahomaDelaware
    
    Maine
    
    Nebraska
    
    TexasFlorida
    
    Michigan
    
    Nevada
    
    UtahGeorgia
    
    Minnesota
    
    New Jersey
    
    VirginiaKansas
    
    Mississippi
    
    Ohio
 
 (1)
    
    The logo sign contract in Missouri is operated by a 66 2/3% owned
partnership.  5




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##### Table of Contents



.
   Transit Advertising
    COMPETITION
   
    
    Larger outdoor advertising providers, such as (i) Clear Channel Outdoor
Holdings, Inc., which operates billboards, street furniture displays, transit displays and
other out-of-home advertising displays in North America and worldwide, and (ii) CBS
Outdoor, a division of CBS Corporation, which operates
traditional outdoor,
street furniture and transit advertising properties in North America and worldwide. Clear
Channel Outdoor and CBS Outdoor each have corporate relationships with large media
conglomerates and may have greater total resources, product offerings and opportunities for
cross-selling than we do.
    
    Other forms of media, such as broadcast and cable television, radio, print
media, direct mail marketing, telephone directories and the Internet.
    
    An increasing variety of out-of-home advertising media, such as advertising
displays in shopping centers, malls, airports, stadiums, movie theaters and supermarkets
and advertising displays on taxis, trains and buses.
 6




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CUSTOMERS
  Percentage of Net BillboardCategories
    
    Advertising RevenuesRestaurants
    
    
    11
    %Retailers
    
    
    10
    %Automotive
    
    
    9
    %Real Estate Companies
    
    
    7
    %Hotels and Motels
    
    
    6
    %Health Care
    
    
    6
    %Service
    
    
    6
    %Gaming
    
    
    6
    %Financial  Banks/Credit Unions
    
    
    5
    %Amusement  Entertainment/Sports
    
    
    5
    %71
    %
 REGULATION
     7




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EMPLOYEES
   INFLATION
  SEASONALITY
  8




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##### Table of Contents



ITEM 1A. RISK FACTORS
 The Companys substantial debt may adversely affect its business, financial condition and financial
results.
   
    
    limit the cash flow available to fund the Companys working capital, capital
expenditure or other general corporate requirements;
    
    limit the Companys ability to obtain additional financing to fund future
working capital, capital expenditure or other general corporate requirements;
    
    inhibit the Companys ability to fund or finance an appropriate level of
acquisition activity, which has traditionally been a significant component of the Companys
year-to-year revenue growth;
    
    place the Company at a competitive disadvantage relative to those of its
competitors that have less debt;
    
    make it more difficult for the Company to comply with the financial covenants
in its bank credit facility, which could result in a default and an acceleration of all
amounts outstanding under the facility;
    
    force the Company to seek and obtain alternate or additional sources of
funding, which may be unavailable, or may be on less favorable terms, or may require the
Company to obtain the consent of lenders under its bank credit facility or the holders of
its other debt;
    
    limit the Companys flexibility in planning for, or reacting to, changes in its business and industry; and
    
    increase the Companys vulnerability to general adverse economic and industry conditions.
  Restrictions in the Companys and Lamar Medias debt agreements reduce operating flexibility and
contain covenants and restrictions that create the potential for defaults, which could adversely
affect the Companys business, financial condition and financial results.
  
    
    incur or repay debt;
    
    dispose of assets;
    
    create liens;
    
    make investments;
    
    enter into affiliate transactions; and
    
    pay dividends and make inter-company distributions.
 Managements Discussion and Analysis of Financial Condition
and Results of Operations  Liquidity and Capital Resources
   9




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The Companys revenues are sensitive to general economic conditions and other external events
beyond the Companys control.
  
    
    a decline in general economic conditions, which could reduce national
advertising spending disproportionately;
    
    a decline in economic conditions in specific geographical markets, which could
reduce local advertising spending in those particular markets disproportionately;
    
    a widespread reallocation of advertising expenditures to other available media
by significant users of the Companys displays;
    
    a decline in the amount spent on advertising in general or outdoor advertising
in particular; and
    
    increased regulation of the subject matter, location or operation of outdoor
advertising displays and taxation on outdoor advertising.
 The Companys continued growth through acquisitions may become more difficult, which could
adversely affect the Companys future financial performance.
   
    
    the pool of suitable acquisition candidates is dwindling, and the Company may
have a more difficult time negotiating acquisitions on favorable terms;
    
    the Company may face increased competition for acquisition candidates from
other outdoor advertising companies, some of which have greater financial resources than
the Company, which may result in higher prices for those businesses and assets;
    
    the Company may not have access to the capital needed to finance potential
acquisitions and may be unable to obtain any required consents from its current lenders to
obtain alternate financing;
    
    the Company may be unable to integrate acquired businesses and assets
effectively with its existing operations and systems as a result of unforeseen difficulties
that could divert significant time, attention and effort from management that could
otherwise be directed at developing existing business;
    
    the Company may be unable to retain key personnel of acquired businesses;
    
    the Company may not realize the benefits and cost savings anticipated in its acquisitions; and
    
    as the industry consolidates further, larger mergers and acquisitions may face substantial scrutiny under antitrust laws.
  The Company faces competition from larger and more diversified outdoor advertisers and other forms
of advertising that could hurt its performance.
    10




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Federal, state and local regulation impact the Companys operations, financial condition and
financial results.
   The Companys logo sign contracts are subject to state award and renewal.
   The Company is controlled by significant stockholders who have the power to determine the outcome
of all matters submitted to the stockholders for approval and whose interest in the Company may be
different than yours.
  
    
    elect the Companys entire board of directors;
    
    control the Companys management and policies; and
    
    determine the outcome of any corporate transaction or other matter requiring
stockholder approval, including charter amendments, mergers, consolidations and asset
sales.
  If the Companys contingency plans relating to hurricanes fail, the resulting losses could hurt the
Companys business.
  11




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ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
   
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  12




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##### Table of Contents



PART II
 
 ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 Lamar Class A Common Stock
   High
    
    LowYear ended December 31, 2004:First Quarter
    
    $
    41.85
    
    
    $
    36.56Second Quarter
    
    
    44.66
    
    
    
    38.83Third Quarter
    
    
    44.11
    
    
    
    38.62Fourth Quarter
    
    
    43.95
    
    
    
    39.13Year ended December 31, 2005:First Quarter
    
    $
    43.98
    
    
    $
    37.62Second Quarter
    
    
    43.25
    
    
    
    36.63Third Quarter
    
    
    45.97
    
    
    
    39.24Fourth Quarter
    
    
    48.15
    
    
    
    42.80
   Issuer Purchases of Equity Securities
   (a)
    
    (b)
    
    (c)
    
    (d)Total No. of Shares
    
    Approximate DollarPurchased as Part
    
    Value of Sharesof Publicly
    
    that May Yet BeTotal No. of Shares
    
    Average Price Paid
    
    Announced Plans or
    
    Purchased Under thePeriod
    
    Purchased
    
    per Share
    
    Programs
    
    Plans or ProgramsNovember 1 through
November 30, 2005
    
    
    154,000
    
    
    $
    45.92
    
    
    
    154,000
    
    
    $
    242,927,289December 1 through
December 31, 2005
    
    
    390,770
    
    
    $
    47.21
    
    
    
    390,770
    
    
    $
    224,477,567
 13




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ITEM 6. SELECTED FINANCIAL DATA
 Lamar Advertising Company
  
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Net revenues
    
    $
    1,021,656
    
    
    $
    883,510
    
    
    $
    810,139
    
    
    $
    775,682
    
    
    $
    729,050Operating expenses:Direct advertising expenses
    
    
    353,139
    
    
    
    302,157
    
    
    
    292,017
    
    
    
    274,772
    
    
    
    251,483General and administrative expenses
    
    
    212,727
    
    
    
    188,320
    
    
    
    171,520
    
    
    
    167,182
    
    
    
    151,048Depreciation and amortization
    
    
    290,089
    
    
    
    294,056
    
    
    
    284,947
    
    
    
    271,832
    
    
    
    349,550Gain on disposition of assets
    
    
    (1,119
    )
    
    
    (1,067
    )
    
    
    (1,946
    )
    
    
    (336
    )
    
    
    (923
    )Total operating expenses
    
    
    854,836
    
    
    
    783,466
    
    
    
    746,538
    
    
    
    713,450
    
    
    
    751,158Operating
income (loss)
    
    
    166,820
    
    
    
    100,044
    
    
    
    63,601
    
    
    
    62,232
    
    
    
    (22,108
    )Other expense (income):Loss on extinguishment of debt
    
    
    3,982
    
    
    
    
    
    
    
    33,644
    
    
    
    5,850
    
    
    
    Interest income
    
    
    (1,511
    )
    
    
    (495
    )
    
    
    (502
    )
    
    
    (929
    )
    
    
    (640
    )Interest expense
    
    
    90,671
    
    
    
    76,079
    
    
    
    93,787
    
    
    
    113,333
    
    
    
    132,840Total other expense
    
    
    93,142
    
    
    
    75,584
    
    
    
    126,929
    
    
    
    118,254
    
    
    
    132,200Income (loss) before income taxes and cumulative
effect of a change in accounting principle
    
    
    73,678
    
    
    
    24,460
    
    
    
    (63,328
    )
    
    
    (56,022
    )
    
    
    (154,308
    )Income tax expense (benefit)
    
    
    31,899
    
    
    
    11,305
    
    
    
    (23,573
    )
    
    
    (19,694
    )
    
    
    (45,674
    )Income (loss) before cumulative effect of a change in
change in accounting principle
    
    
    41,779
    
    
    
    13,155
    
    
    
    (39,755
    )
    
    
    (36,328
    )
    
    
    (108,634
    )Cumulative effect of a change in accounting
principle, net
    
    
    
    
    
    
    
    
    
    
    40,240
    
    
    
    
    
    
    
    Net income (loss)
    
    
    41,779
    
    
    
    13,155
    
    
    
    (79,995
    )
    
    
    (36,328
    )
    
    
    (108,634
    )Preferred stock dividends
    
    
    365
    
    
    
    365
    
    
    
    365
    
    
    
    365
    
    
    
    365Net income (loss) applicable to common stock
    
    $
    41,414
    
    
    $
    12,790
    
    
    $
    (80,360
    )
    
    $
    (36,693
    )
    
    $
    (108,999
    )Income (loss) per common share  basic
and diluted:Income (loss) before cumulative effect of a change
in accounting principle
    
    $
    0.39
    
    
    $
    0.12
    
    
    $
    (0.39
    )
    
    $
    (0.36
    )
    
    $
    (1.11
    )Cumulative effect of a change in accounting
principle
    
    
    
    
    
    
    
    
    
    
    (0.39
    )
    
    
    
    
    
    
    Net income (loss)
    
    $
    0.39
    
    
    $
    0.12
    
    
    $
    (0.78
    )
    
    $
    (0.36
    )
    
    $
    (1.11
    )Statement of Cash Flow Data:Cash flows provided by operating activities (1)
    
    $
    347,257
    
    
    $
    323,164
    
    
    $
    260,075
    
    
    $
    240,443
    
    
    $
    190,632Cash flows used in investing activities (1)
    
    $
    267,970
    
    
    $
    263,747
    
    
    $
    210,041
    
    
    $
    155,763
    
    
    $
    382,471Cash flows (used in) provided by financing
activities (1)
    
    $
    (104,069
    )
    
    $
    (23,013
    )
    
    $
    (57,847
    )
    
    $
    (81,955
    )
    
    $
    132,384Balance
Sheet Data(1) (2)Cash and cash equivalents
    
    $
    19,419
    
    
    $
    44,201
    
    
    $
    7,797
    
    
    $
    15,610
    
    
    $
    12,885Cash deposit for debt extinguishment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    266,657
    
    
    
    Working capital
    
    
    93,816
    
    
    
    34,476
    
    
    
    69,902
    
    
    
    95,922
    
    
    
    27,261Total assets
    
    
    3,737,079
    
    
    
    3,689,472
    
    
    
    3,669,373
    
    
    
    3,888,106
    
    
    
    3,671,652Total debt (including current maturities)
    
    
    1,576,326
    
    
    
    1,659,934
    
    
    
    1,704,863
    
    
    
    1,994,433
    
    
    
    1,811,585Total long-term obligations
    
    
    1,826,138
    
    
    
    1,805,021
    
    
    
    1,905,497
    
    
    
    1,856,372
    
    
    
    1,877,532Stockholders equity
    
    
    1,817,482
    
    
    
    1,736,347
    
    
    
    1,689,661
    
    
    
    1,709,173
    
    
    
    1,672,221
 
 (1)
    
    As of the end of the period.(2)
    
    Certain balance sheet reclassifications were made in order to be comparable to the current year presentation. 14




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 This report contains forward-looking statements. These statements are subject to risks and
uncertainties including those described in Item 1A under the heading Risk Factors, and elsewhere
in this report, that could cause actual results to differ materially from those projected in these
forward-looking statements. The Company cautions investors not to place undue reliance on the
forward-looking statements contained in this document. These statements speak only as of the date
of this document, and the Company undertakes no obligation to update or revise the statements,
except as may be required by law.
 Lamar Advertising Company
  OVERVIEW
    In Thousands2005
    
    
    2004
    
    
    2003Billboard
    
    $
    88,493
    
    
    $
    57,195
    
    
    $
    51,390Logos
    
    
    7,249
    
    
    
    6,320
    
    
    
    7,315Transit
    
    
    1,057
    
    
    
    1,190
    
    
    
    1,982Land and buildings
    
    
    13,966
    
    
    
    10,896
    
    
    
    9,823PP&E
    
    
    10,352
    
    
    
    6,430
    
    
    
    7,765Total capital expenditures
    
    $
    121,117
    
    
    $
    82,031
    
    
    $
    78,275
  15




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RESULTS OF OPERATIONS
  Year ended December 31,2005
    
    2004
    
    2003Net revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Direct advertising expenses
    
    
    34.6
    
    
    
    34.2
    
    
    
    36.0General and administrative expenses
    
    
    17.2
    
    
    
    17.9
    
    
    
    18.0Corporate expenses
    
    
    3.6
    
    
    
    3.4
    
    
    
    3.2Depreciation and amortization
    
    
    28.4
    
    
    
    33.3
    
    
    
    35.2Operating income
    
    
    16.3
    
    
    
    11.3
    
    
    
    7.9Interest expense
    
    
    8.9
    
    
    
    8.6
    
    
    
    11.6Net income (loss)
    
    
    4.1
    
    
    
    1.5
    
    
    
    (9.9
    )
 Year ended December 31, 2005 compared to Year ended December 31, 2004
           16




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Reconciliations:
    Reconciliation of Reported Net Revenue to Acquisition-Adjusted Net Revenue
 Year endedDecember 31,2004(in thousands)Reported net revenue
    
    $
    883,510Acquisition net revenue, excluding the Obie markets
    
    
    32,120Acquisition-adjusted net revenue
    
    $
    915,630
 Reconciliation of Reported Net Revenue to Net Revenue (excluding revenues from the Obie
markets)
 Year endedDecember 31,2005(in thousands)Reported net revenue
    
    $
    1,021,656Less net revenue  Obie markets
    
    
    (46,261
    )Net revenue (excluding the Obie markets)
    
    $
    975,395
 Comparison of 2005 Net Revenue (excluding revenues from the Obie markets) to 2004
Acquisition-Adjusted Net Revenue
 Year endedDecember 31,2005
    
    
    2004(in thousands)Reported net revenue
    
    $
    1,021,656
    
    
    $
    883,510Acquisition net revenue, excluding the Obie markets
    
    
    
    
    
    
    32,120Less net
revenue  Obie markets
    
    
    (46,261
    )
    
    
    Adjusted totals
    
    $
    975,395
    
    
    $
    915,630
 17




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##### Table of Contents



Year ended December 31, 2004 compared to year ended December 31, 2003
      1 4
    Reconciliations:
  18




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Reconciliation of 2003 Reported Net Revenue to 2003 Acquisition-Adjusted Net Revenue as Compared to
2004 Reported Net Revenue:
 2004
    
    
    2003(in thousands)Reported net revenue
    
    $
    883,510
    
    
    $
    810,139Acquisition net revenue
    
    
    
    
    
    
    15,9942004
reported net revenue as compared to 2003 acquisition  adjusted net revenue
    
    $
    883,510
    
    
    $
    826,133
 LIQUIDITY AND CAPITAL RESOURCES
 Overview
  Sources of Cash
 Total Liquidity at December 31, 2005
 Cash Generated by Operations
 Credit Facilities
  Proceeds from the Sale of Debt and Equity Securities
  19




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##### Table of Contents



Factors Affecting Sources of Liquidity
 Internally Generated Funds.
 Restrictions Under Credit Facilities and Other Debt Securities.
 
    
    up to $1.3 billion of indebtedness under its bank credit facility;
    
    currently outstanding indebtedness or debt incurred to refinance outstanding debt;
    
    inter-company debt between Lamar Media and its subsidiaries or between subsidiaries;
    
    certain purchase money indebtedness and capitalized lease obligations to acquire or lease
property in the ordinary course of business that cannot exceed the greater of $20 million or
5% of Lamar Medias net tangible assets; and
    
    additional debt not to exceed $40 million.
   
    
    a total debt ratio, defined as total consolidated debt to EBITDA, as defined below, for the
most recent four fiscal quarters, of 6.00 to 1 through September 30, 2007 and 5.75 to 1 from October 1, 2007 and after; and
    
    a senior debt ratio, defined as total consolidated senior debt to EBITDA (as defined below) for
the most recent four fiscal quarters, of 3.25 to 1.
  
    
    an interest coverage ratio, defined as EBITDA (as defined below) for the most recent four
fiscal quarters to total consolidated accrued interest expense for that period, of at least
2.25 to 1; and
    
    a fixed charges coverage ratio, defined as the ratio of EBITDA (as defined below) for the
most recent four fiscal quarters to
 20




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##### Table of Contents



(1) the total payments of principal and interest on debt
for such period plus (2) capital expenditures made during such period
plus (3) income and franchise tax payments made during such period, of at least 1.05 to 1.
   Uses of Cash
 Capital Expenditures.
 Acquisitions.
 Stock Repurchase Program.
 Debt Service and Contractual Obligations.
 Payments Due by Period(in millions)Less than 1Contractual Obligations
    
    Total
    
    Year
    

13 Years
    

45 Years
    
    After 5 YearsLong-Term Debt
    
    
    1,576.3
    
    
    
    2.8
    
    
    
    27.2
    
    
    
    379.4
    
    
    
    1,166.9Interest obligations on long term debt(1)
    
    
    662.6
    
    
    
    92.4
    
    
    
    183.2
    
    
    
    173.1
    
    
    
    213.9Billboard site and other operating leases
    
    
    1,011.2
    
    
    
    136.4
    
    
    
    220.2
    
    
    
    161.6
    
    
    
    493.0Total payments due
    
    
    3,250.10
    
    
    
    231.6
    
    
    
    430.6
    
    
    
    714.1
    
    
    
    1,873.8
 
 (1)
    
    Interest rates on our variable rate instruments are assuming rates at the
December 2005 levels. Amount of Expiration Per Period(in millions)Total Amount
    
    Less than 1Other Commercial Commitments
    
    Committed
    
    Year
    

13 Years
    

45 Years
    

After
5 YearsRevolving Bank Facility(2)
    
    
    400.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    400.0Standby Letters of Credit (3)
    
    
    10.4
    
    
    
    1.7
    
    
    
    8.7
    
    
    
    
    
    
    
    
 
 (2)
    
    Lamar Media had $95 million outstanding at December 31, 2005.(3)
    
    The standby letters of credit are issued under Lamar Medias revolving bank facility
and reduce the availability of the facility by the same amount. 21




---



##### Table of Contents



Cash Flows
    CRITICAL ACCOUNTING ESTIMATES
  Long-Lived Asset Recovery.
 Intangible Assets.
 Goodwill Impairment.
 Deferred Taxes.
 22




---



##### Table of Contents



Asset Retirement Obligations.
  Allowance for Doubtful Accounts.
 NEW ACCOUNTING PRONOUNCEMENTS
   , .
  23




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24




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##### Table of Contents



Lamar Media Corp.
  RESULTS OF OPERATIONS
  Year ended December 31,2005
    
    2004
    
    2003Net revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Direct advertising expenses
    
    
    34.6
    
    
    
    34.2
    
    
    
    36.0General and administrative expenses
    
    
    17.2
    
    
    
    17.9
    
    
    
    18.0Corporate expenses
    
    
    3.5
    
    
    
    3.4
    
    
    
    3.1Depreciation and amortization
    
    
    28.4
    
    
    
    33.3
    
    
    
    35.2Operating income
    
    
    16.4
    
    
    
    11.4
    
    
    
    7.9Interest expense
    
    
    8.0
    
    
    
    7.3
    
    
    
    9.6Net income (loss)
    
    
    4.6
    
    
    
    2.7
    
    
    
    (7.7
    )
 Year ended December 31, 2005 compared to Year ended December 31, 2004
         25




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##### Table of Contents



Reconciliations:
    Reconciliation of Reported Net Revenue to Acquisition-Adjusted Net Revenue
 Year endedDecember 31,2004(in thousands)Reported net revenue
    
    $
    883,510Acquisition net revenue, excluding the Obie markets
    
    
    32,120Acquisition-adjusted net revenue
    
    $
    915,630
 Reconciliation of Reported Net Revenue to Net Revenue (excluding revenues from the Obie markets)
 Year endedDecember 31,2005(in thousands)Reported net revenue
    
    $
    1,021,656Less net revenue  Obie markets
    
    
    (46,261
    )Net revenue (excluding the Obie markets)
    
    $
    975,395
 Comparison of 2005 Net Revenue (excluding revenues from the Obie markets) to 2004
Acquisition-Adjusted Net Revenue
 Year endedDecember 31,2005
    
    
    2004(in thousands)Reported net revenue
    
    $
    1,021,656
    
    
    $
    883,510Acquisition net revenue, excluding the Obie markets
    
    
    
    
    
    
    32,120Less net revenue  Obie markets
    
    
    (46,261
    )
    
    
    Adjusted totals
    
    $
    975,395
    
    
    $
    915,630
 26




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##### Table of Contents



Year ended December 31, 2004 compared to year ended December 31, 2003
          Reconciliations:
  27




---



##### Table of Contents



2004
    
    
    2003(in thousands)Reported net revenue
    
    $
    883,510
    
    
    $
    810,139Acquisition net revenue
    
    
    
    
    
    
    15,9942004 reported net revenue as compared to 2003
acquisition  adjusted net revenue
    
    $
    883,510
    
    
    $
    826,133
 
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Lamar Advertising Company and Lamar Media Corp.
     
 ITEM 8. FINANCIAL STATEMENTS (following on next page)
 28




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LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
 Managements Report on Internal Control over Financial Reporting
    
    
    30Report of Independent Registered Public Accounting Firm  Internal Control over Financial Reporting
    
    
    31Report of Independent Registered Public Accounting Firm  Consolidated Financial Statements
    
    
    32Consolidated Balance Sheets as of December 31, 2005 and 2004
    
    
    33Consolidated Statements of Operations for the years ended December 31, 2005, 2004 and 2003
    
    
    34Consolidated Statements of Stockholders Equity for the years ended December 31, 2005, 2004 and 2003
    
    
    35Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003
    
    
    36Notes to Consolidated Financial Statements
    
    
    37-53Schedule 2  Valuation and Qualifying Accounts for the years ended December 31, 2005, 2004 and 2003
    
    
    54
 29




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Managements Report on Internal Control Over Financial Reporting
    30




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 .
    . .
  /s/ KPMG LLPKPMG LLPNew Orleans, LouisianaMarch 13, 2006
 31




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    .
 /s/ KPMG LLPKPMG LLPNew Orleans, LouisianaMarch 13, 2006
 32




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##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2005 and 2004
 2005
    
    
    2004ASSETSCurrent
assets:Cash and cash equivalents
    
    $
    19,419
    
    
    $
    44,201Receivables, net of allowance for doubtful accounts of $6,000 and $5,000 in
2005 and 2004
    
    
    114,733
    
    
    
    87,962Prepaid expenses
    
    
    35,763
    
    
    
    35,287Deferred income tax assets (note 11)
    
    
    7,128
    
    
    
    6,899Other current assets
    
    
    10,232
    
    
    
    8,231Total current assets
    
    
    187,275
    
    
    
    182,580Property, plant and equipment (note 4)
    
    
    2,191,443
    
    
    
    2,077,379Less accumulated depreciation and amortization
    
    
    (902,138
    )
    
    
    (807,735
    )Net property, plant and equipment
    
    
    1,289,305
    
    
    
    1,269,644Goodwill (note 5)
    
    
    1,295,050
    
    
    
    1,265,106Intangible assets (note 5)
    
    
    896,943
    
    
    
    920,373Deferred
financing costs net of accumulated amortization of $22,350 and $26,113 at 2005 and 2004, respectively
    
    
    26,549
    
    
    
    24,552Other assets
    
    
    41,957
    
    
    
    27,217Total assets
    
    $
    3,737,079
    
    
    $
    3,689,472LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Trade accounts payable
    
    $
    13,730
    
    
    $
    10,412Current maturities of long-term debt (note 8)
    
    
    2,788
    
    
    
    72,510Accrued expenses (note 7)
    
    
    61,996
    
    
    
    50,513Deferred income
    
    
    14,945
    
    
    
    14,669Total current liabilities
    
    
    93,459
    
    
    
    148,104Long-term debt (note 8)
    
    
    1,573,538
    
    
    
    1,587,424Deferred income tax liabilities (note 11)
    
    
    107,696
    
    
    
    76,240Asset retirement obligation (note 9)
    
    
    135,538
    
    
    
    132,700Other liabilities
    
    
    9,366
    
    
    
    8,657Total liabilities
    
    
    1,919,597
    
    
    
    1,953,125Stockholders equity (note 13):Series AA preferred stock, par value $.001, $63.80 cumulative dividends,
authorized 5,720 shares; 5,720 shares issued and outstanding at 2005 and 2004
    
    
    
    
    
    
    Class A preferred stock, par value $638, $63.80 cumulative dividends, 10,000
shares authorized, 0 shares issued and outstanding at 2005 and 2004
    
    
    
    
    
    
    Class A common stock, par value $.001, 175,000,000 shares authorized,
90,409,282 and 88,742,430 shares issued and outstanding at 2005 and 2004,
respectively
    
    
    90
    
    
    
    89Class B common stock, par value $.001, 37,500,000 shares authorized, 15,672,527 are
issued and outstanding at 2005 and 2004, respectively
    
    
    16
    
    
    
    16Additional paid-in-capital
    
    
    2,196,691
    
    
    
    2,131,449Accumulated deficit
    
    
    (353,793
    )
    
    
    (395,207
    )Cost of shares held in treasury, 544,770 shares and 0 shares in 2005 and 2004,
respectively
    
    
    (25,522
    )
    
    
    Stockholders equity
    
    
    1,817,482
    
    
    
    1,736,347Total liabilities and stockholders equity
    
    $
    3,737,079
    
    
    $
    3,689,472
  33




---



##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Consolidated Statements of Operations
Years Ended December 31, 2005, 2004 and 2003
 2005
    
    
    2004
    
    
    2003Net revenues
    
    $
    1,021,656
    
    
    $
    883,510
    
    
    $
    810,139Operating expenses (income):Direct advertising expenses (exclusive of depreciation and amortization)
    
    
    353,139
    
    
    
    302,157
    
    
    
    292,017General and
administrative expenses (exclusive of depreciation and amortization)
    
    
    176,099
    
    
    
    158,161
    
    
    
    145,971Corporate expenses (exclusive of depreciation and amortization)
    
    
    36,628
    
    
    
    30,159
    
    
    
    25,549Depreciation and amortization (Note 10)
    
    
    290,089
    
    
    
    294,056
    
    
    
    284,947Gain on disposition of assets
    
    
    (1,119
    )
    
    
    (1,067
    )
    
    
    (1,946
    )854,836
    
    
    
    783,466
    
    
    
    746,538Operating income
    
    
    166,820
    
    
    
    100,044
    
    
    
    63,601Other expense (income):Loss on extinguishment of debt
    
    
    3,982
    
    
    
    
    
    
    
    33,644Interest income
    
    
    (1,511
    )
    
    
    (495
    )
    
    
    (502
    )Interest expense
    
    
    90,671
    
    
    
    76,079
    
    
    
    93,78793,142
    
    
    
    75,584
    
    
    
    126,929Income (loss) before income tax expense (benefit) and cumulative effect of a
change in accounting principle
    
    
    73,678
    
    
    
    24,460
    
    
    
    (63,328
    )Income tax expense (benefit) (note 11)
    
    
    31,899
    
    
    
    11,305
    
    
    
    (23,573
    )Income (loss) before cumulative effect of a change in accounting principle
    
    
    41,779
    
    
    
    13,155
    
    
    
    (39,755
    )Cumulative effect of a change in accounting principle, net of tax benefit of $25,727
    
    
    
    
    
    
    
    
    
    
    40,240Net income (loss)
    
    
    41,779
    
    
    
    13,155
    
    
    
    (79,995
    )Preferred stock dividends
    
    
    365
    
    
    
    365
    
    
    
    365Net income (loss) applicable to common stock
    
    $
    41,414
    
    
    $
    12,790
    
    
    $
    (80,360
    )Earnings (loss) per share:Basic:Before cumulative effect of a change in accounting principle
    
    $
    0.39
    
    
    
    0.12
    
    
    $
    (0.39
    )Cumulative effect of a change in accounting principle
    
    $
    
    
    
    
    
    
    
    $
    (0.39
    )Basic earnings (loss) per share
    
    $
    0.39
    
    
    $
    0.12
    
    
    $
    (0.78
    )Diluted:Before cumulative effect of a change in accounting principle
    
    $
    0.39
    
    
    
    0.12
    
    
    $
    (0.39
    )Cumulative effect of a change in accounting principle
    
    $
    
    
    
    
    
    
    
    $
    (0.39
    )Diluted earnings (loss) per share
    
    $
    0.39
    
    
    $
    0.12
    
    
    $
    (0.78
    )Weighted average common shares outstanding
    
    
    105,605,873
    
    
    
    104,041,030
    
    
    
    102,686,780Incremental common shares from dilutive stock options
    
    
    483,884
    
    
    
    530,453
    
    
    
    Incremental common shares from convertible debt
    
    
    
    
    
    
    
    
    
    
    Weighted average common shares assuming dilution
    
    
    106,089,757
    
    
    
    104,571,483
    
    
    
    102,686,780
  34




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##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Consolidated Statements of Stockholders Equity
Years Ended December 31, 2005, 2004 and 2003
 SERIES AA
    
    
    CLASS A
    
    
    CLASS A
    
    
    CLASS B
    
    
    
    
    
    
    ADDITIONALPREFERRED
    
    
    PREFERRED
    
    
    COMMON
    
    
    COMMON
    
    
    TREASURY
    
    
    PAID IN
    
    
    ACCUMULATEDSTOCK
    
    
    STOCK
    
    
    STOCK
    
    
    STOCK
    
    
    STOCK
    
    
    CAPITAL
    
    
    DEFICIT
    
    
    TOTALBalance, December 31, 2002
    
    $
    
    
    
    
    
    
    
    
    85
    
    
    
    16
    
    
    
    
    
    
    
    2,036,709
    
    
    
    (     327,637
    )
    
    
    1,709,173Issuance of 1,550,095
shares of common stock
in acquisitions
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    50,628
    
    
    
    
    
    
    
    50,630Exercise of 298,105 shares
of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,272
    
    
    
    
    
    
    
    8,272Conversion of 270,000
shares of Class B common
stock to Class A stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,946
    
    
    
    
    
    
    
    1,946Issuance of 72,025 shares of
common stock through
employee purchase plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (       79,995
    )
    
    
    (      79,995
    )Dividends ($63.80 per
preferred share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (          365
    )
    
    
    (          365
    )Balance, December 31, 2003
    
    $
    
    
    
    
    
    
    
    
    87
    
    
    
    16
    
    
    
    
    
    
    
    2,097,555
    
    
    
    (      407,997
    )
    
    
    1,689,661Issuance of 68,986 shares
of common stock in
acquisitions
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    4,271
    
    
    
    
    
    
    
    4,272Exercise of
865,443 shares
of stock options
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    27,369
    
    
    
    
    
    
    
    27,370Conversion of 474,546
shares of Class B common
stock to Class A stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of 66,692 shares of
common stock through
employee purchase plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,254
    
    
    
    
    
    
    
    2,254Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,155
    
    
    
    13,155Dividends ($63.80 per
preferred share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (          365
    )
    
    
    (          365
    )Balance, December 31, 2004
    
    $
    
    
    
    
    
    
    
    
    89
    
    
    
    16
    
    
    
    
    
    
    
    2,131,449
    
    
    
    (      395,207
    )
    
    
    1,736,347Issuance of 1,026,413
shares of common stock in
acquisitions
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    43,313
    
    
    
    
    
    
    
    43,314Exercise of 552,781 shares
of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,151
    
    
    
    
    
    
    
    19,151Issuance of 78,194 shares of
common stock through
employee purchase plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,778
    
    
    
    
    
    
    
    2,778Purchase of 544,770 shares
of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (  25,522
    )
    
    
    
    
    
    
    
    
    
    
    (         25,522
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,779
    
    
    
    41,779Dividends ($63.80 per
preferred share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (       365
    )
    
    
    (            365
    )Balance, December 31, 2005
    
    $
    
    
    
    
    
    
    
    
    90
    
    
    
    16
    
    
    
    (    25,522
    )
    
    
    2,196,691
    
    
    
    (        353,793
    )
    
    
    1,817,482
  35




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##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended December 31, 2005, 2004 and 2003
 2005
    
    
    2004
    
    
    2003Cash flows from operating activities:Net income (loss)
    
    $
    41,779
    
    
    $
    13,155
    
    
    $
    (79,995
    )Adjustments to reconcile net income (loss) to net cash provided by
operating activities:Depreciation and amortization
    
    
    287,212
    
    
    
    294,056
    
    
    
    284,947Amortization included in interest expense
    
    
    5,335
    
    
    
    5,330
    
    
    
    6,037Gain on disposition of assets
    
    
    (1,119
    )
    
    
    (1,067
    )
    
    
    (1,946
    )Loss on extinguishment of debt
    
    
    3,982
    
    
    
    
    
    
    
    33,644Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    
    
    
    
    40,240Deferred income tax expenses (benefit)
    
    
    23,852
    
    
    
    7,748
    
    
    
    (23,531
    )Provision for doubtful accounts
    
    
    6,674
    
    
    
    7,772
    
    
    
    8,599Changes in operating assets and liabilities:(Increase) decrease in:Receivables
    
    
    (24,915
    )
    
    
    (4,824
    )
    
    
    (6,217
    )Prepaid expenses
    
    
    (448
    )
    
    
    (2,509
    )
    
    
    (2,923
    )Other assets
    
    
    (6,063
    )
    
    
    (887
    )
    
    
    (4,246
    )Increase (decrease) in:Trade accounts payable
    
    
    3,318
    
    
    
    1,600
    
    
    
    (1,238
    )Accrued expenses
    
    
    8,810
    
    
    
    3,024
    
    
    
    6,450Other liabilities
    
    
    (1,160
    )
    
    
    (234
    )
    
    
    254Cash flows provided by operating activities
    
    
    347,257
    
    
    
    323,164
    
    
    
    260,075Cash flows from investing activities:Capital expenditures
    
    
    (121,117
    )
    
    
    (82,031
    )
    
    
    (78,275
    )Acquisitions
    
    
    (145,228
    )
    
    
    (189,540
    )
    
    
    (137,595
    )Increase in notes receivable
    
    
    (7,175
    )
    
    
    
    
    
    
    Proceeds from sale of property and equipment
    
    
    5,550
    
    
    
    7,824
    
    
    
    5,829Cash flows used in investing activities
    
    
    (267,970
    )
    
    
    (263,747
    )
    
    
    (210,041
    )Cash flows from financing activities:Net proceeds from issuance of common stock
    
    
    18,672
    
    
    
    23,806
    
    
    
    8,798Cash used for purchase of treasury shares
    
    
    (25,522
    )
    
    
    
    
    
    
    Cash from deposits for debt extinguishment
    
    
    
    
    
    
    
    
    
    
    266,657Principle payments on long-term debt
    
    
    (485,539
    )
    
    
    (44,928
    )
    
    
    (771,388
    )Debt issuance costs
    
    
    (5,315
    )
    
    
    (1,526
    )
    
    
    (9,899
    )Net proceeds from note offerings and new notes payable
    
    
    394,000
    
    
    
    
    
    
    
    448,350Dividends
    
    
    (365
    )
    
    
    (365
    )
    
    
    (365
    )Cash flows used in financing activities
    
    
    (104,069
    )
    
    
    (23,013
    )
    
    
    (57,847
    )Net (decrease) increase in cash and cash equivalents
    
    
    (24,782
    )
    
    
    36,404
    
    
    
    (7,813
    )Cash and cash equivalents at beginning of period
    
    
    44,201
    
    
    
    7,797
    
    
    
    15,610Cash and cash equivalents at end of period
    
    $
    19,419
    
    
    $
    44,201
    
    
    $
    7,797Supplemental disclosures of cash flow information:Cash paid for interest
    
    $
    78,097
    
    
    $
    69,922
    
    
    $
    81,342Cash paid for state and federal income taxes
    
    $
    3,365
    
    
    $
    1,946
    
    
    $
    825Common stock issuance related to acquisitions
    
    $
    43,314
    
    
    $
    4,270
    
    
    $
    50,630
  36




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##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
  (a)
    
    Nature of Business
Lamar Advertising Company (the Company)
is engaged in the outdoor advertising
business operating over 151,000
billboard advertising displays in 44
states. The Companys 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 19 states
throughout the United States and Canada
and a transit advertising business in
75 markets. Logo signs are erected
pursuant to state-awarded service
contracts on public rights-of-way near
highway exits and deliver brand name
information on available gas, food,
lodging and camping services. Included
in the Companys logo sign business are
tourism signing contracts. 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
intercompany transactions and balances
have been eliminated in consolidation.(c)
    
    Property, Plant and Equipment
Property, plant and equipment are
stated at cost. Depreciation is
calculated using accelerated and
straight-line methods over the
estimated useful lives of the assets.(d)
    
    Goodwill and Intangible Assets
Under Statement of Financial Accounting
Standards No. 142, (SFAS No. 142)
goodwill is subject to an annual
impairment test. The Company
designated December 31 as the date of
its annual goodwill impairment test.
If an event occurs or circumstances
change that would more likely than not
reduce the fair value of a reporting
unit below its carrying value, an
interim impairment test would be
performed between annual tests. In
accordance with the standard, 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
dates on December 31, 2005 and December
31, 2004 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
5 to 15 years.(e)
    
    Impairment of Long-Lived AssetsIn accordance with SFAS No. 144, 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 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. 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.
 37




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##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 (f)
    
    Deferred Income
Deferred income consists principally of advertising revenue received
in advance and gains resulting from the sale of certain assets to
related parties. Deferred advertising revenue is recognized in income
as services are provided over the term of the contract. Deferred gains
are recognized in income in the consolidated financial statements at
the time the assets are sold to an unrelated party or otherwise
disposed of.(g)
    
    Revenue Recognition
The Company recognizes outdoor advertising revenue, net of agency
commissions, if any, 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 Companys 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:
 2005
    
    2004
    
    2003Net revenues
    
    $
    5,766
    
    
    
    5,490
    
    
    
    6,360Direct advertising expenses
    
    
    2,972
    
    
    
    3,124
    
    
    
    2,780General and administrative expenses
    
    
    2,521
    
    
    
    2,002
    
    
    
    3,197
 (h)
    
    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.(i)
    
    Earnings Per Share
Earnings per share are computed in accordance with SFAS No. 128, Earnings Per Share. The calculation of
basic earnings per share excludes any dilutive effect of stock options and convertible debt, while diluted
earnings per share includes the dilutive effect of stock options and convertible debt. The number of
potentially dilutive shares excluded from the calculation because of their anti-dilutive effect are
5,581,755 for the years ended December 31, 2005 and 2004 and 6,726,508 for the year ended December 31, 2003.(j)
    
    Stock Option Plan
The Company accounts for its stock option plan under the intrinsic value method in accordance with the
provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees,
and related interpretations. As such, compensation expense is recorded on the date of grant only if the
current market price of the underlying stock exceeds the exercise price. SFAS No. 123, Accounting for
Stock-Based Compensation and FASB Statement No. 148, Accounting for Stock-Based Compensation  Transition
and Disclosure, an amendment of FASB Statement No. 123, established accounting and disclosure requirements
using a fair-value-based method of accounting for stock-based employee compensation plans. As permitted by
existing accounting standards, the Company has elected to continue to apply the intrinsic-value-based
methods of accounting described above, and has adopted only the disclosure requirements of Statement 123, as
amended. The following table illustrates the effect on net income if the fair-value-based method had been
applied to all outstanding and unvested awards in each period.
 2005
    
    
    2004
    
    
    2003Net income (loss) applicable to common stock, as reported
    
    $
    41,414
    
    
    
    12,790
    
    
    
    (80,360
    )Deduct: Total stock-based employee compensation expense determined
under fair value based method for all awards, net of related tax
effects
    
    
    (5,013
    )
    
    
    (8,834
    )
    
    
    (3,472
    )Pro forma net income (loss) applicable to common stock
    
    $
    36,401
    
    
    
    3,956
    
    
    
    (83,832
    )
 2005
    
    2004
    
    2003Net income
(loss) per common share  as reported
(basic and diluted)
    
    $
    0.39
    
    
    
    0.12
    
    
    
    (0.78
    )Net income
(loss) per common share  pro forma
(basic and diluted)
    
    $
    0.34
    
    
    
    0.04
    
    
    
    (0.82
    )
 38




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##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 (k)
    
    Cash and Cash Equivalents
The Company considers all highly-liquid investments with original
maturities of three months or less to be cash equivalents.(l)
    
    Reclassification of Prior Year Amounts
Certain amounts in the prior years consolidated financial statements
have been reclassified to conform to the current year presentation.
These reclassifications had no effect on previously reported net
income (loss).(m)
    
    Asset Retirement Obligations
Statement of Financial Accounting Standards No. 143, Accounting for
Asset Retirement Obligations (Statement 143). Statement 143 requires
companies 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 assets 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 Companys asset retirement obligations relate primarily to
the dismantlement, removal, site reclamation and similar activities of
its properties.(n)
    
    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.
  Year Ended December 31, 2005
   TotalCurrent assets
    
    $
    10,374Property, plant and equipment
    
    
    59,846Goodwill
    
    
    29,944Site locations
    
    
    87,263Non-competition agreements
    
    
    1,439Customer lists and contracts
    
    
    15,372Other assets
    
    
    548Current liabilities
    
    
    (3,852
    )Long term liabilities
    
    
    (12,392
    )$
    188,542
 39




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##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
   2005
    
    2004Net revenues
    
    $
    1,029,151
    
    
    
    963,200Net income applicable to common stock
    
    
    40,384
    
    
    
    13,468Net income per common share (basic and diluted)
    
    $
    0.38
    
    
    
    0.13
 Year Ended December 31, 2004
   TotalCurrent assets
    
    $
    2,846Property, plant and equipment
    
    
    64,917Goodwill
    
    
    24,831Site locations
    
    
    87,281Non-competition agreements
    
    
    515Customer lists and contracts
    
    
    21,577Current liabilities
    
    
    (1,477
    )$
    200,490
 40




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##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 Year Ended December 31, 2003
   TotalCurrent assets
    
    $
    2,437Property, plant and equipment
    
    
    28,089Goodwill
    
    
    61,847Site locations
    
    
    83,849Non-competition agreements
    
    
    641Customer lists and contracts
    
    
    17,138Other assets
    
    
    6,666Current liabilities
    
    
    (956
    )Long-term liabilities
    
    
    (10,148
    )$
    189,563
   2005
    
    2004
    
    2003Issuance of Class A common stock in acquisitions
    
    $
    43,314
    
    
    
    4,270
    
    
    
    50,630
   Estimated Life(Years)
    
    2005
    
    
    2004Land
    
    
    
    $
    115,449
    
    
    
    90,951Building and improvements
    
    10  39
    
    
    72,718
    
    
    
    69,993Advertising structures
    
    15
    
    
    1,911,429
    
    
    
    1,834,302Automotive and other equipment
    
    3  7
    
    
    91,847
    
    
    
    82,133$
    2,191,443
    
    
    
    2,077,379
   2005
    
    
    2004EstimatedLife
    
    Gross Carrying
    
    
    Accumulated
    
    
    Gross Carrying
    
    
    Accumulated(Years)
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationAmortizable Intangible Assets:Customer lists and contracts
    
    7  10
    
    $
    425,739
    
    
    $
    344,125
    
    
    $
    410,368
    
    
    $
    298,108Noncompetition agreements
    
    3  15
    
    
    59,618
    
    
    
    53,437
    
    
    
    58,179
    
    
    
    51,284Site locations
    
    15
    
    
    1,195,581
    
    
    
    391,926
    
    
    
    1,108,318
    
    
    
    313,776Other
    
    5  15
    
    
    13,600
    
    
    
    8,107
    
    
    
    13,817
    
    
    
    7,1411,694,538
    
    
    
    797,595
    
    
    
    1,590,682
    
    
    
    670,309Unamortizable Intangible
Assets:Goodwill
    
    
    
    $
    1,548,685
    
    
    $
    253,635
    
    
    $
    1,518,741
    
    
    $
    253,635
 41




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##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
  Balance as of December 31, 2004
    
    $
    1,518,741Goodwill acquired during the year
    
    
    29,944Impairment losses
    
    
    Balance as of December 31, 2005
    
    $
    1,548,685
  Year ended December 31, 2006
    
    $
    123,400Year ended December 31, 2007
    
    $
    103,420Year ended December 31, 2008
    
    $
    96,652Year ended December 31, 2009
    
    $
    93,622Year ended December 31, 2010
    
    $
    90,135
   2006
    
    $
    136,3802007
    
    
    119,4642008
    
    
    100,7602009
    
    
    87,5882010
    
    
    74,024Thereafter
    
    
    493,017
    2005
    
    
    2004Payroll
    
    $
    11,888
    
    
    
    12,894Interest
    
    
    25,840
    
    
    
    18,601Insurance benefits
    
    
    9,337
    
    
    
    9,260Other
    
    
    14,931
    
    
    
    9,758$
    61,996
    
    
    
    50,513
   2005
    
    
    2004Bank Credit Agreement
    
    $
    495,000
    
    
    $
    975,0002 7/8% Convertible notes
    
    
    287,500
    
    
    
    287,5008% Unsecured subordinated notes
    
    
    1,333
    
    
    
    3,3337 1/4% Senior subordinated notes
    
    
    388,628
    
    
    
    389,0206 5/8%
Senior Subordinated notes
    
    
    400,000
    
    
    
    Other notes with various rates and terms
    
    
    3,865
    
    
    
    5,0811,576,326
    
    
    
    1,659,934Less current maturities
    
    
    (2,788
    )
    
    
    (72,510
    )Long-term debt, excluding current maturities
    
    $
    1,573,538
    
    
    $
    1,587,424
 42




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##### Table of Contents

a

LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
  2006
    
    $
    2,7882007
    
    
    6,0982008
    
    
    21,1542009
    
    
    31,0212010
    
    
    348,386Later years
    
    
    1,166,879
 1 4
     
 TermDecember 31, 2007  September 30, 2009
    
    $
    5,000December 31, 2009  September 30, 2011
    
    
    15,000December 31, 2011  September 30, 2012
    
    
    60,000
 43




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##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
   
    
    dispose of assets;
    
    incur or repay debt;
    
    create liens;
    
    make investments; and
    
    pay dividends.
  
    
    interest coverage;
    
    fixed charges ratios;
    
    senior debt ratios; and
    
    total debt ratios.
     Balance at December 31, 2003
    
    $
    123,217Additions to asset retirement obligations
    
    
    3,687Accretion expense
    
    
    10,204Liabilities settled
    
    
    (4,408
    )Balance at December 31, 2004
    
    $
    132,700Additions to asset retirement obligations
    
    
    1,612Accretion expense
    
    
    7,039Liabilities settled
    
    
    (5,813
    )Balance at December 31, 2005
    
    $
    135,538
 44




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##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
   Year ended December 31,2005
    
    
    2004
    
    
    2003Direct expenses
    
    $
    276,977
    
    
    
    279,735
    
    
    
    267,078General and administrative expenses
    
    
    6,870
    
    
    
    8,403
    
    
    
    11,214Corporate expenses
    
    
    6,242
    
    
    
    5,918
    
    
    
    6,655$
    290,089
    
    
    
    294,056
    
    
    
    284,947
   Current
    
    
    Deferred
    
    
    TotalYear ended December 31, 2005:U.S. federal
    
    $
    2,500
    
    
    
    22,504
    
    
    
    25,004State and local
    
    
    2,530
    
    
    
    1,221
    
    
    
    3,751Foreign
    
    
    3,017
    
    
    
    127
    
    
    
    3,144$
    8,047
    
    
    
    23,852
    
    
    
    31,899Year ended December 31, 2004:U.S. federal
    
    $
    
    
    
    
    5,621
    
    
    
    5,621State and local
    
    
    3,557
    
    
    
    1,339
    
    
    
    4,896Foreign
    
    
    
    
    
    
    788
    
    
    
    788$
    3,557
    
    
    
    7,748
    
    
    
    11,305Year ended December 31, 2003:U.S. federal
    
    $
    
    
    
    
    (19,543
    )
    
    
    (19,543
    )State and local
    
    
    (42
    )
    
    
    (4,653
    )
    
    
    (4,695
    )Foreign
    
    
    
    
    
    
    665
    
    
    
    665$
    (42
    )
    
    
    ( 23,531
    )
    
    
    (23,573
    )
  2005
    
    
    2004
    
    
    2003Computed expected tax expense (benefit)
    
    $
    25,787
    
    
    
    8,316
    
    
    
    (21,531
    )Increase (reduction) in income taxes resulting from:Book expenses not deductible for tax purposes
    
    
    4,012
    
    
    
    825
    
    
    
    1,150Amortization of non-deductible goodwill
    
    
    26
    
    
    
    2
    
    
    
    (14
    )State and local income taxes, net of federal
income tax benefit
    
    
    2,438
    
    
    
    3,231
    
    
    
    (3,099
    )Other differences, net
    
    
    (364
    )
    
    
    (1,069
    )
    
    
    (79
    )$
    31,899
    
    
    
    11,305
    
    
    
    (23,573
    )
 45




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##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
  2005
    
    
    2004Current deferred tax assets:Receivables, principally due to allowance for doubtful accounts
    
    $
    2,316
    
    
    
    1,950Accrued liabilities not deducted for tax purposes
    
    
    1,609
    
    
    
    2,396Other
    
    
    3,203
    
    
    
    2,553Net current deferred tax asset
    
    
    7,128
    
    
    
    6,899Non-current deferred tax liabilities:Plant and equipment, principally due to differences in depreciation
    
    $
    (10,893
    )
    
    
    (5,845
    )Intangibles, due to differences in amortizable lives
    
    
    (244,712
    )
    
    
    (238,116
    )(255,605
    )
    
    
    (243,961
    )Non-current deferred tax assets:Plant and equipment, due to basis differences on acquisitions and costs
capitalized for tax purposes
    
    
    34,080
    
    
    
    40,521Investment in affiliates and plant and equipment, due to gains recognized
for tax purposes and deferred for financial reporting purposes
    
    
    931
    
    
    
    941Accrued liabilities not deducted for tax purposes
    
    
    3,232
    
    
    
    2,579Net operating loss carryforward
    
    
    69,955
    
    
    
    88,540Asset retirement obligation
    
    
    35,289
    
    
    
    34,654Tax credits
    
    
    3,319
    
    
    
    0Other, net
    
    
    1,103
    
    
    
    486Non-current deferred tax assets
    
    
    147,909
    
    
    
    167,721Net non-current deferred tax liability
    
    $
    (107,696
    )
    
    
    (76,240
    )
      46




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##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
         47




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##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
           Grant Year
    
    Dividend Yield
    
    Expected Volatility
    
    Risk Free Interest Rate
    
    Expected Lives2005
    
    
    0
    %
    
    
    43
    %
    
    
    4
    %
    
    
    72004
    
    
    0
    %
    
    
    46
    %
    
    
    4
    %
    
    
    62003
    
    
    0
    %
    
    
    46
    %
    
    
    4
    %
    
    
    6
 48




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##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
  2005
    
    
    2004
    
    
    2003Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding, beginning of year
    
    
    4,347,267
    
    
    $
    33.72
    
    
    
    3,822,710
    
    
    $
    30.27
    
    
    
    4,067,365
    
    
    $
    29.83Granted
    
    
    177,296
    
    
    
    41.87
    
    
    
    1,416,000
    
    
    
    37.77
    
    
    
    117,500
    
    
    
    31.55Exercised
    
    
    (552,781
    )
    
    
    28.83
    
    
    
    (865,443
    )
    
    
    25.03
    
    
    
    (298,105
    )
    
    
    23.03Canceled
    
    
    (16,000
    )
    
    
    34.00
    
    
    
    (26,000
    )
    
    
    37.42
    
    
    
    (64,050
    )
    
    
    38.06Outstanding, end of year
    
    
    3,955,782
    
    
    $
    34.76
    
    
    
    4,347,267
    
    
    $
    33.72
    
    
    
    3,822,710
    
    
    $
    30.27Price for exercised shares
    
    $
    28.83
    
    
    
    
    
    
    $
    25.03
    
    
    
    
    
    
    $
    23.03Shares available for grant, end
of year
    
    
    1,767,213
    
    
    
    
    
    
    
    1,927,759
    
    
    
    
    
    
    
    1,317,759Weighted average fair value of
options granted during the
year
    
    $
    23.70
    
    
    
    
    
    
    $
    18.48
    
    
    
    
    
    
    $
    15.00
  WeightedAverage
    
    Weighted
    
    
    
    
    
    WeightedRange of
    
    Number
    
    Remaining
    
    Average
    
    Number
    
    AverageExercise
    
    Outstanding at
    
    Contractual
    
    Exercise
    
    Exercisable at
    
    ExercisePrices
    
    December 31, 2005
    
    Life
    
    Price
    
    December 31, 2005
    
    Price10.67  30.34
    
    
    1,202,482
    
    
    
    4.37
    
    
    
    25.83
    
    
    
    1,148,482
    
    
    
    25.6530.50  37.19
    
    
    877,150
    
    
    
    4.24
    
    
    
    34.04
    
    
    
    678,650
    
    
    
    34.1037.35  37.35
    
    
    1,114,850
    
    
    
    8.10
    
    
    
    37.35
    
    
    
    378,050
    
    
    
    37.3537.56  60.63
    
    
    761,300
    
    
    
    5.97
    
    
    
    45.93
    
    
    
    442,634
    
    
    
    48.32
      49




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##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
             2005
    
    2004Carrying
    
    Estimated
    
    Carrying
    
    EstimatedAmount
    
    Fair Value
    
    Amount
    
    Fair ValueLong-term debt
    
    $
    1,573,538
    
    
    $
    1,606,726
    
    
    $
    1,587,424
    
    
    $
    1,647,032
 50




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##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
  
    
    The carrying amounts of cash and cash equivalents, prepaids,
receivables, trade accounts payable, accrued expenses and deferred
income approximate fair value because of the short term nature of
these items.
    
    The fair value of long-term debt is based upon market quotes obtained
from dealers where available and by discounting future cash flows at
rates currently available to the Company for similar instruments when
quoted market rates are not available.
   Year 2005 QuartersMarch 31
    
    June 30
    
    September 30
    
    December 31Net revenues
    
    $
    232,829
    
    
    $
    264,743
    
    
    $
    265,594
    
    
    $
    258,490Net revenues less direct advertising expenses
    
    
    148,353
    
    
    
    177,999
    
    
    
    175,669
    
    
    
    166,496Net income applicable to common stock
    
    
    4,944
    
    
    
    18,653
    
    
    
    11,990
    
    
    
    5,827Net income per common share basic
    
    
    0.05
    
    
    
    0.18
    
    
    
    0.11
    
    
    
    0.06Net income per common share  diluted
    
    
    0.05
    
    
    
    0.18
    
    
    
    0.11
    
    
    
    0.05
 Year 2004 QuartersMarch 31
    
    June 30
    
    September 30
    
    December 31Net revenues
    
    $
    200,976
    
    
    $
    226,915
    
    
    $
    231,622
    
    
    $
    223,997Net revenues less direct advertising expenses
    
    
    127,185
    
    
    
    152,553
    
    
    
    155,232
    
    
    
    146,383Net income (loss) applicable to common stock
    
    
    (3,724
    )
    
    
    7,590
    
    
    
    8,194
    
    
    
    730Net income (loss) per common share (basic
and diluted)
    
    
    (0.04
    )
    
    
    0.07
    
    
    
    0.08
    
    
    
    0.01
    51




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##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 , .
     52




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##### Table of Contents



LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
  53
    Table of Contents   SCHEDULE 2
 
 Balance at
    
    Charged to
    
    
    
    
    
    Balance atBeginning
    
    Costs and
    
    
    
    
    
    End ofof Period
    
    Expenses
    
    Deductions
    
    PeriodYear ended December 31, 2005Deducted in balance sheet from trade accounts receivable: Allowance for doubtful accounts
    
    $
    5,000
    
    
    
    7,674
    
    
    
    6,674
    
    
    
    6,000Deducted in balance sheet from intangible assets: Amortization of intangible assets
    
    $
    923,944
    
    
    
    136,383
    
    
    
    9,097
    
    
    
    1,051,230Year ended December 31, 2004Deducted in balance sheet from trade accounts receivable: Allowance for doubtful accounts
    
    $
    4,914
    
    
    
    7,772
    
    
    
    7,686
    
    
    
    5,000Deducted in balance sheet from intangible assets: Amortization of intangible assets
    
    $
    800,062
    
    
    
    123,882
    
    
    
    
    
    
    
    923,944Year ended December 31, 2003Deducted in balance sheet from trade accounts receivable: Allowance for doubtful accounts
    
    $
    4,914
    
    
    
    8,599
    
    
    
    8,599
    
    
    
    4,914Deducted in balance sheet from intangible assets: Amortization of intangible assets
    
    $
    674,356
    
    
    
    125,706
    
    
    
    
    
    
    
    800,062
 54




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##### Table of Contents



LAMAR MEDIA CORP.
AND SUBSIDIARIES
 Managements Report on Internal Control Over Financial Reporting
    
    
    56Report of Independent Registered Public Accounting Firm  Internal Control over Financial Reporting
    
    
    57Report of Independent Registered Public Accounting Firm  Consolidated Financial Statements
    
    
    58Consolidated Balance Sheets as of December 31, 2005 and 2004
    
    
    59Consolidated Statements of Operations for the years ended December 31, 2005, 2004 and 2003
    
    
    60Consolidated Statements of Stockholders Equity for the years ended December 31, 2005, 2004 and 2003
    
    
    61Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003
    
    
    62Notes to Consolidated Financial Statements
    
    
    6366Schedule 2  Valuation and Qualifying Accounts for the years ended December 31, 2005, 2004 and 2003
    
    
    67
 55




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##### Table of Contents



Managements Report on Internal Control Over Financial Reporting
    56




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 .
    . .
  /s/
KPMG LLP
 
 57




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    .
 /s/
KPMG LLP
 
 58




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##### Table of Contents



LAMAR MEDIA CORP.
AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2005 and 2004
 2005
    
    
    2004ASSETSCurrent assets:Cash and cash equivalents
    
    $
    19,419
    
    
    $
    44,201Receivables, net of allowance for doubtful accounts of $6,000 and $5,000 in
2005 and 2004
    
    
    114,733
    
    
    
    87,962Prepaid expenses
    
    
    35,763
    
    
    
    35,287Deferred
income tax assets (note 6)
    
    
    7,128
    
    
    
    6,899Other current assets
    
    
    10,189
    
    
    
    8,121Total current assets
    
    
    187,232
    
    
    
    182,470Property, plant and equipment
    
    
    2,191,443
    
    
    
    2,077,379Less accumulated depreciation and amortization
    
    
    (902,138
    )
    
    
    (807,735
    )Net property, plant and equipment
    
    
    1,289,305
    
    
    
    1,269,644Goodwill (note 3)
    
    
    1,285,807
    
    
    
    1,256,835Intangible assets (note 3)
    
    
    896,328
    
    
    
    919,791Deferred financing costs net of accumulated amortization of $7,923 and $14,302 as of 2005
and 2004 respectively
    
    
    17,977
    
    
    
    13,361Other assets
    
    
    36,251
    
    
    
    30,361Total assets
    
    $
    3,712,900
    
    
    $
    3,672,462LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Trade accounts payable
    
    $
    13,730
    
    
    $
    10,412Current maturities of long-term debt (note 5)
    
    
    2,788
    
    
    
    72,510Accrued expenses (note 4)
    
    
    52,659
    
    
    
    41,253Deferred income
    
    
    14,945
    
    
    
    14,669Total current liabilities
    
    
    84,122
    
    
    
    138,844Long-term debt (note 5)
    
    
    1,573,538
    
    
    
    1,299,924Deferred income tax liabilities (note 6)
    
    
    138,642
    
    
    
    103,598Asset retirement obligation
    
    
    135,538
    
    
    
    132,700Other liabilities
    
    
    11,344
    
    
    
    8,657Total liabilities
    
    
    1,943,184
    
    
    
    1,683,723Stockholders equity:Common stock, $.01 par value, authorized 3,000 shares; 100 shares issued and
outstanding
at 2005 and 2004
    
    
    
    
    
    
    Additional paid-in-capital
    
    
    2,390,458
    
    
    
    2,343,929Accumulated deficit
    
    
    (620,742
    )
    
    
    (355,190
    )Stockholders equity
    
    
    1,769,716
    
    
    
    1,988,739Total liabilities and stockholders equity
    
    $
    3,712,900
    
    
    $
    3,672,462
  59




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##### Table of Contents



LAMAR MEDIA CORP.
AND SUBSIDIARIES
Consolidated Statements of Operations
Years Ended December 31, 2005, 2004 and 2003
 2005
    
    
    2004
    
    
    2003Net revenues
    
    $
    1,021,656
    
    
    $
    883,510
    
    
    $
    810,139Operating expenses (income):Direct advertising expenses (exclusive of depreciation and amortization)
    
    
    353,139
    
    
    
    302,157
    
    
    
    292,017General and administrative expenses (exclusive of depreciation and amortization)
    
    
    176,099
    
    
    
    158,161
    
    
    
    145,971Corporate expenses (exclusive of depreciation and amortization)
    
    
    36,163
    
    
    
    29,795
    
    
    
    25,229Depreciation and amortization
    
    
    290,089
    
    
    
    294,056
    
    
    
    284,947Gain on disposition of assets
    
    
    (1,119
    )
    
    
    (1,067
    )
    
    
    (1,946
    )854,371
    
    
    
    783,102
    
    
    
    746,218Operating income
    
    
    167,285
    
    
    
    100,408
    
    
    
    63,921Other expense (income):Loss on extinguishment of debt
    
    
    3,982
    
    
    
    
    
    
    
    21,077Interest income
    
    
    (1,511
    )
    
    
    (495
    )
    
    
    (502
    )Interest expense
    
    
    81,856
    
    
    
    64,920
    
    
    
    77,85284,327
    
    
    
    64,425
    
    
    
    98,427Income (loss) before income tax expense (benefit) and cumulative
effect of a change in accounting principle
    
    
    82,958
    
    
    
    35,983
    
    
    
    (34,506
    )Income tax expense (benefit) (note 6)
    
    
    35,488
    
    
    
    11,764
    
    
    
    (12,338
    )Income (loss) before cumulative effect of a change in accounting
principle
    
    
    47,470
    
    
    
    24,219
    
    
    
    (22,168
    )Cumulative effect of a change in accounting principle,
net of tax benefit of $25,727
    
    
    
    
    
    
    
    
    
    
    40,240Net income (loss)
    
    $
    47,470
    
    
    $
    24,219
    
    
    $
    (62,408
    )
 60
    Table of Contents  LAMAR MEDIA CORP.
AND SUBSIDIARIES
Consolidated Statements of Stockholders Equity
Years Ended December 31, 2005, 2004 and 2003
 ADDITIONALCOMMON
    
    
    PAID-IN
    
    
    ACCUMULATEDSTOCK
    
    
    CAPITAL
    
    
    DEFICIT
    
    
    TOTALBalance, December 31, 2002
    
    $
    
    
    
    
    2,281,901
    
    
    
    (301,189
    )
    
    
    1,980,712Dividend to parent
    
    
    
    
    
    
    
    
    
    
    (15,812
    )
    
    
    (15,812
    )Contribution from parent
    
    
    
    
    
    
    52,050
    
    
    
    
    
    
    
    52,050Net loss
    
    
    
    
    
    
    
    
    
    
    (62,408
    )
    
    
    (62,408
    )Balance, December 31, 2003
    
    $
    
    
    
    
    2,333,951
    
    
    
    (379,409
    )
    
    
    1,954,542Contribution from parent
    
    
    
    
    
    
    9,978
    
    
    
    
    
    
    
    9,978Net income
    
    
    
    
    
    
    
    
    
    
    24,219
    
    
    
    24,219Balance, December 31, 2004
    
    $
    
    
    
    
    2,343,929
    
    
    
    (355,190
    )
    
    
    1,988,739Contribution from parent
    
    
    
    
    
    
    46,529
    
    
    
    
    
    
    
    46,529Net income
    
    
    
    
    
    
    
    
    
    
    47,470
    
    
    
    47,470Dividend to parent
    
    
    
    
    
    
    
    
    

    
    (313,022
    )
    
    
    (313,022
    )Balance, December 31, 2005
    
    $
    
    
    
    
    2,390,458
    
    
    
    (620,742
    )
    
    
    1,769,716
  61
    Table of Contents  LAMAR MEDIA CORP.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended December 31, 2005, 2004 and 2003
 2005
    
    
    2004
    
    
    2003Cash flows from operating activities:Net income (loss)
    
    $
    47,470
    
    
    $
    24,219
    
    
    $
    (62,408
    )Adjustments to reconcile net income (loss) to net cash provided by
operating activities:Depreciation and amortization
    
    
    287,212
    
    
    
    294,056
    
    
    
    284,947Amortization included in interest expense
    
    
    2,719
    
    
    
    2,437
    
    
    
    2,797Gain on disposition of assets
    
    
    (1,119
    )
    
    
    (1,067
    )
    
    
    (1,946
    )Loss on extinguishment of debt
    
    
    3,982
    
    
    
    
    
    
    
    21,077Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    
    
    
    
    40,240Deferred income tax expenses (benefit)
    
    
    27,440
    
    
    
    8,207
    
    
    
    (12,296
    )Provision for doubtful accounts
    
    
    6,674
    
    
    
    7,772
    
    
    
    8,599Changes in operating assets and liabilities:(Increase) decrease in:Receivables
    
    
    (24,915
    )
    
    
    (4,824
    )
    
    
    (6,217
    )Prepaid expenses
    
    
    (448
    )
    
    
    (2,509
    )
    
    
    (2,923
    )Other assets
    
    
    919
    
    
    
    14,400
    
    
    
    (7,461
    )Increase (decrease) in:Trade accounts payable
    
    
    3,318
    
    
    
    1,600
    
    
    
    (1,238
    )Accrued expenses
    
    
    3,107
    
    
    
    1,682
    
    
    
    11,431Other liabilities
    
    
    8,202
    
    
    
    (234
    )
    
    
    254Cash flows provided by operating activities
    
    
    364,561
    
    
    
    345,739
    
    
    
    274,856Cash flows from investing activities:Capital expenditures
    
    
    (120,114
    )
    
    
    (81,165
    )
    
    
    (78,275
    )Acquisitions
    
    
    (145,228
    )
    
    
    (189,540
    )
    
    
    (135,319
    )Increase in notes receivable
    
    
    (7,175
    )
    
    
    
    
    
    
    Proceeds from sale of property and equipment
    
    
    5,550
    
    
    
    7,824
    
    
    
    5,829Cash flows used in investing activities
    
    
    (266,967
    )
    
    
    (262,881
    )
    
    
    (207,765
    )Cash flows from financing activities:Increase in notes payable
    
    
    287,500
    
    
    
    
    
    
    
    128,038Deposits for debt extinguishment
    
    
    
    
    
    
    
    
    
    
    266,657Principal payments on long-term debt
    
    
    (485,539
    )
    
    
    (44,928
    )
    
    
    (483,888
    )Debt issuance costs
    
    
    (5,315
    )
    
    
    (1,526
    )
    
    
    (9,899
    )Net proceeds from note offerings and new notes payable
    
    
    394,000
    
    
    
    
    
    
    
    24,188Dividends to parent
    
    
    (313,022
    )
    
    
    
    
    
    
    Cash flows used in financing activities
    
    
    (122,376
    )
    
    
    (46,454
    )
    
    
    (74,904
    )Net increase (decrease) in cash and cash equivalents
    
    
    (24,782
    )
    
    
    36,404
    
    
    
    (7,813
    )Cash and cash equivalents at beginning of period
    
    
    44,201
    
    
    
    7,797
    
    
    
    15,610Cash and cash equivalents at end of period
    
    $
    19,419
    
    
    $
    44,201
    
    
    $
    7,797Supplemental disclosures of cash flow information:Cash paid for interest
    
    $
    71,898
    
    
    $
    65,747
    
    
    $
    64,245Cash paid for state and federal income taxes
    
    $
    3,365
    
    
    $
    1,946
    
    
    $
    825
  62
    Table of Contents  LAMAR MEDIA CORP.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
          2005
    
    2004
    
    2003Parent company stock contributed for acquisitions
    
    $
    43,314
    
    
    
    4,270
    
    
    
    50,630
   Estimated
    
    
    2005
    
    
    2004Life
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    Gross Carrying
    
    
    Accumulated(Years)
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationAmortizable Intangible Assets:Customer lists and contracts
    
    
    7  10
    
    
    
    425,739
    
    
    
    344,125
    
    
    
    410,368
    
    
    
    298,108Non-competition agreements
    
    
    3  15
    
    
    
    59,618
    
    
    
    53,437
    
    
    
    58,179
    
    
    
    51,284Site locations
    
    
    15
    
    
    
    1,195,581
    
    
    
    391,926
    
    
    
    1,108,318
    
    
    
    313,776Other
    
    
    5  15
    
    
    
    13,002
    
    
    
    8,124
    
    
    
    13,235
    
    
    
    7,1411,693,940
    
    
    
    797,612
    
    
    
    1,590,100
    
    
    
    670,309Unamortizable Intangible Assets:Goodwill
    
    
    
    
    
    $
    1,538,573
    
    
    $
    252,766
    
    
    $
    1,509,601
    
    
    $
    252,766
 63
    Table of Contents  LAMAR MEDIA CORP.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
  Balance as of December 31, 2004
    
    $
    1,509,601Goodwill acquired during the year
    
    
    28,972Impairment losses
    
    
    Balance as of December 31, 2005
    
    $
    1,538,573
   2005
    
    
    2004Payroll
    
    $
    11,889
    
    
    
    12,894Interest
    
    
    25,840
    
    
    
    18,601Other
    
    
    14,930
    
    
    
    9,758$
    52,659
    
    
    
    41,253
   2005
    
    
    20047 1/4% Senior subordinated notes
    
    $
    388,628
    
    
    
    389,020Mirror note to parent
    
    
    287,500
    
    
    
    Bank Credit Agreement
    
    
    495,000
    
    
    
    975,0008% Unsecured subordinated notes
    
    
    1,333
    
    
    
    3,3336 5/8% Senior subordinated notes
    
    
    400,000
    
    
    
    Other notes with various rates and terms
    
    
    3,865
    
    
    
    5,0811,576,326
    
    
    
    1,372,434Less current maturities
    
    
    (2,788
    )
    
    
    (72,510
    )Long-term debt excluding current maturities
    
    $
    1,573,538
    
    
    
    1,299,924
  2006
    
    $
    2,7882007
    
    
    6,0982008
    
    
    21,1542009
    
    
    31,0212010
    
    
    348,386Later years
    
    
    1,166,879
 64
    Table of Contents  LAMAR MEDIA CORP.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
   Current
    
    
    Deferred
    
    
    TotalYear ended December 31, 2005:U.S. federal
    
    $
    2,500
    
    
    
    26,111
    
    
    
    28,611State and local
    
    
    2,530
    
    
    
    1,203
    
    
    
    3,733Foreign
    
    
    3,017
    
    
    
    127
    
    
    
    3,144$
    8,047
    
    
    
    27,441
    
    
    
    35,488Year ended December 31, 2004:U.S. federal
    
    $
    
    
    
    
    11,314
    
    
    
    11,314State and local
    
    
    3,557
    
    
    
    (3,895
    )
    
    
    (338
    )Foreign
    
    
    
    
    
    
    788
    
    
    
    788$
    3,557
    
    
    
    8,207
    
    
    
    11,764Year ended December 31, 2003:U.S. federal
    
    $
    
    
    
    
    (10,492
    )
    
    
    (10,492
    )State and local
    
    
    (42
    )
    
    
    (2,469
    )
    
    
    (2,511
    )Foreign
    
    
    
    
    
    
    665
    
    
    
    665$
    (42
    )
    
    
    (12,296
    )
    
    
    (12,338
    )
  2005
    
    
    2004
    
    
    2003Computed expected tax expense (benefit)
    
    $
    29,035
    
    
    
    12,234
    
    
    
    (11,732
    )Increase (reduction) in income taxes resulting from:Book expenses not deductible for tax purposes
    
    
    4,012
    
    
    
    825
    
    
    
    1,149Amortization of non-deductible goodwill
    
    
    24
    
    
    
    (3
    )
    
    
    (19
    )State and local income taxes, net of federal income tax benefit
    
    
    2,427
    
    
    
    (223
    )
    
    
    (1,657
    )Other differences, net
    
    
    (10
    )
    
    
    (1,069
    )
    
    
    (79
    )$
    35,488
    
    
    
    11,764
    
    
    
    (12,338
    )
  2005
    
    
    2004Current deferred tax assets:Receivables, principally due to allowance for doubtful accounts
    
    $
    2,316
    
    
    $
    1,950Accrued liabilities not deducted for tax purposes
    
    
    1,609
    
    
    
    2.396Other
    
    
    3,203
    
    
    
    2,553Net current deferred tax asset
    
    
    7,128
    
    
    
    6,899Non-current deferred tax liabilities:Plant and equipment, principally due to differences in depreciation
    
    
    (10,893
    )
    
    
    (5,845
    )Intangibles, due to differences in amortizable lives
    
    
    (244,127
    )
    
    
    (237,617
    )(255,020
    )
    
    
    (243,462
    )Non-current deferred tax assets:Plant and
equipment, due to basis differences on acquisitions and costs capitalized for tax purposes
    
    
    34,080
    
    
    
    40,521Investment in affiliates and plant and equipment, due to gains
recognized for tax purposes and deferred for financial reporting
purposes
    
    
    931
    
    
    
    941Accrued liabilities not deducted for tax purposes
    
    
    3,232
    
    
    
    2,579Net operating loss carryforward
    
    
    38,424
    
    
    
    61,143Asset retirement obligation
    
    
    35,289
    
    
    
    34,654Other, net
    
    
    4,422
    
    
    
    26116,378
    
    
    
    139,864Net non-current deferred tax liability
    
    $
    (138,642
    )
    
    $
    (103,598
    )
 65
    Table of Contents  LAMAR MEDIA CORP.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
        Year 2005 QuartersMarch 31
    
    June 30
    
    September 30
    
    December 31Net revenues
    
    $
    232,829
    
    
    $
    264,743
    
    
    $
    265,594
    
    
    $
    258,490Net revenues less direct advertising expenses
    
    
    148,353
    
    
    
    177,999
    
    
    
    175,669
    
    
    
    166,496Net income applicable to common stock
    
    
    6,843
    
    
    
    20,734
    
    
    
    13,916
    
    
    
    5,977
 Year 2004 QuartersMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 31Net revenues
    
    $
    200,976
    
    
    $
    226,915
    
    
    $
    231,622
    
    
    $
    223,997Net revenues less direct advertising expenses
    
    
    127,185
    
    
    
    152,553
    
    
    
    155,232
    
    
    
    146,383Net (loss) income applicable to common stock
    
    
    (2,051
    )
    
    
    9,463
    
    
    
    10,188
    
    
    
    6,619
 66
    Table of Contents  SCHEDULE 2
 
 Balance at
    
    
    Charged to
    
    
    
    
    
    
    BalanceBeginning of
    
    
    Costs and
    
    
    
    
    
    
    at endPeriod
    
    
    Expenses
    
    
    Deductions
    
    
    of PeriodYear Ended December 31, 2005Deducted in balance sheet from trade accounts receivable: Allowance for doubtful accounts
    
    $
    5,000
    
    
    
    7,674
    
    
    
    6,674
    
    
    
    6,000Deducted in balance sheet from intangible assets: Amortization of intangible assets
    
    $
    923,075
    
    
    
    133,519
    
    
    
    6,216
    
    
    
    1,050,378Year Ended December 31, 2004Deducted in balance sheet from trade accounts receivable: Allowance for doubtful accounts
    
    $
    4,914
    
    
    
    7,772
    
    
    
    7,686
    
    
    
    5,000Deducted in balance sheet from intangible assets: Amortization of intangible assets
    
    $
    799,176
    
    
    
    123,899
    
    
    
    
    
    
    
    923,075Year Ended December 31, 2003Deducted in balance sheet from trade accounts receivable: Allowance for doubtful accounts
    
    $
    4,914
    
    
    
    8,599
    
    
    
    8,599
    
    
    
    4,914Deducted in balance sheet from intangible assets: Amortization of intangible assets
    
    $
    672,889
    
    
    
    126,287
    
    
    
    
    
    
    
    799,176
 67
    Table of Contents  ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 Lamar Advertising Company
 Lamar Media Corp.
 
 ITEM 9A. CONTROLS AND PROCEDURES
 Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
  Managements Report on Internal Control Over Financial Reporting
 Lamar Advertising Company
   Lamar Media Corp.
   Changes in Internal Control Over Financial Reporting
  
 ITEM 9B. OTHER INFORMATION
 Lamar Advertising Company
 Lamar Media Corp.
 68
    Table of Contents  PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
   
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
   
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
        69
    Table of Contents  SIGNATURES
  LAMAR ADVERTISING COMPANY
 March 14, 2006
    
    By:
    
    /s/ Kevin P. Reilly, Jr.Kevin P. Reilly, Jr.
President and Chief Executive Officer
  Signature
    
    Title
    
    Date/s/ Kevin P. Reilly, Jr.
    
    President, Chief Executive Officer and Director
    
    3/14/06Kevin P. Reilly, Jr.
    
    (Principal Executive Officer)/s/ Keith A. Istre
    
    Chief Financial Officer
    
    3/14/06Keith A. Istre
    
    (Principal Financial and Accounting Officer)/s/ Wendell S. Reilly
    
    Director
    
    3/14/06Wendell S. Reilly/s/ Stephen P. Mumblow
    
    Director
    
    3/14/06Stephen P. Mumblow/s/ John Maxwell Hamilton
    
    Director
    
    3/14/06John Maxwell Hamilton/s/ Thomas Reifenheiser
    
    Director
    
    3/14/06Thomas Reifenheiser/s/ Anna Reilly
    
    Director
    
    3/14/06Anna Reilly/s/ Robert M. Jelenic
    
    Director
    
    3/14/06Robert M. Jelenic
 70
    Table of Contents  SIGNATURES
  LAMAR MEDIA CORP.
 March
14, 2006
    
    By:
    
    /s/ Kevin P. Reilly, Jr.Kevin P. Reilly, Jr.President and Chief Executive Officer
  Signature
    
    Title
        Date/s/ Kevin P. Reilly, Jr.
    
    Chief Executive Officer and Director
    
    3/14/06Kevin P. Reilly, Jr.
    
    (Principal Executive Officer)/s/ Sean E. Reilly
    
    Chief Operating Officer, Vice President
    
    3/14/06Sean E. Reilly
    
    and Director/s/ Keith A. Istre
    
    Chief Financial and Accounting Officer and Director
    
    3/14/06Keith A. Istre
    
    (Principal Financial and Accounting Officer)/s/ T. Everett Stewart, Jr.
    
    Director
    
    3/14/06T. Everett Stewart, Jr.
 71
    Table of Contents  INDEX TO EXHIBITS
 EXHIBITNUMBER
    
    DESCRIPTION3.1
    
    Restated Certificate of Incorporation of the Company. Filed herewith.3.2
    
    Amended and Restated Certificate of Incorporation of Lamar Media. Filed as Exhibit 3.1 to
Lamar Medias Registration Statement on Form S-1/A (File No. 333-05479) filed on July 31,
1996, and incorporated herein by reference.3.3
    
    Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Lamar
Media. Previously filed as Exhibit 3.2 to Lamar Medias Annual Report on Form 10-K for fiscal
year ended December 31, 1997 (File No. 1-12407) filed on March 30, 1998, and incorporated
herein by reference.3.4
    
    Amendment to Amended and Restated Certificate of Incorporation of Lamar Media, as set forth
in the Agreement and Plan of Merger dated as of July 20, 1999 among Lamar Media Corp., Lamar
New Holding Co., and Lamar Holdings Merge Co. Previously filed as Exhibit 2.1 to the
Companys Current Report on Form 8-K filed on July 22, 1999 (File No. 0-30242) and
incorporated herein by reference.3.5
    
    Amended and Restated Bylaws of the Company. Previously filed as Exhibit 3.3
to the Companys Quarterly Report on Form 10-Q for the period ended June 30,
1999 (File No. 0-20833) filed on August 16, 1999, and incorporated herein by
reference.3.6
    
    Amended and Restated Bylaws of Lamar Media. Previously filed as Exhibit 3.1
to Lamar Medias Quarterly Report on Form 10-Q for the period ended September
30, 1999 (File No. 1-12407) filed on November 12, 1999, and incorporated
herein by reference.4.1
    
    Specimen certificate for the shares of Class A common stock of the Company.
Previously filed as Exhibit 4.1 to the Companys Registration Statement on
Form S-1 (File No. 333-05479), and incorporated herein by reference.4.2
    
    Senior Secured Note dated as of May 19, 1993. Previously filed as Exhibit
4.1 to the Companys Registration Statement on Form S-1 (File No. 33-59624),
and incorporated herein by reference.4.3
    
    Indenture dated as of September 24, 1986 relating to the Companys 8%
Unsecured Subordinated Debentures. Previously filed as Exhibit 10.3 to the
Companys Registration Statement on Form S-1 (File No. 33-59624), and
incorporated herein by reference.4.4
    
    Indenture dated May 15, 1993 relating to the Companys 11% Senior Secured
Notes due May 15, 2003. Previously filed as Exhibit 4.3 to the Companys
Registration Statement on Form S-1 (File No. 33-59624), and incorporated
herein by reference.4.5
    
    First Supplemental Indenture dated as of July 30, 1996 relating to the
Companys 11% Senior Secured Notes due May 15, 2003. Previously filed as
Exhibit 4.5 to the Companys Registration Statement on Form S-1(File No.
333-05479), and incorporated herein by reference.4.6
    
    Form of Second Supplemental Indenture in the form of an Amended and Restated
Indenture dated as of November 8, 1996 relating to the Companys 11% Senior
Secured Notes due May 15, 2003. Previously filed as Exhibit 4.1 to the
Companys Current Report on Form 8-K (File No. 1-12407) filed on November 15,
1996, and incorporated herein by reference.4.7
    
    Notice of Trustee dated November 8, 1996 with respect to the release of the
security interest in the Trustee on behalf of the holders of the Companys
11% Senior Secured Notes due May 15, 2003. Previously filed as Exhibit 4.2
to the Companys Current Report on Form 8-K filed on November 15, 1996 (File
No. 1-12407), and incorporated herein by reference.4.8
    
    Form of Subordinated Note. Previously filed as Exhibit 4.8 to the
Registration Statement on Form S-1 (File No. 333-05479), and incorporated
herein by reference.4.9
    
    Indenture dated as of December 23, 2002 between Lamar Media, certain
subsidiaries of Lamar Media, as guarantors and Wachovia Bank of Delaware,
National, as trustee. Previously filed as Exhibit 4.1 to Lamar Medias
Current Report on Form 8-K (File No. 0-20833) filed on December 27, 2002, and
incorporated herein by reference.4.10
    
    Supplemental Indenture to the Indenture dated as of December 23, 2002 among
Lamar Media, certain of its subsidiaries and Wachovia Bank of Delaware,
National Association, as Trustee, dated as of June 9, 2003. Previously filed
as Exhibit 4.31 to Lamar Medias Registration Statement on Form S-4 (File No.
333-107427) filed on July 29, 2003, and incorporated herein by reference.
 72
    Table of Contents  EXHIBITNUMBER
    
    DESCRIPTION4.11
    
    Supplemental Indenture to the Indenture dated December 23, 2002 among Lamar
Media, certain of its subsidiaries and Wachovia Bank of Delaware, National
Association, as Trustee, dated October 7, 2003. Previously filed as Exhibit
4.1 to Lamar Medias Quarterly Report on Form 10-Q for the period ended
September 30, 2003 (File No. 1-12407) filed on November 5, 2003, and
incorporated herein by reference.4.12
    
    Form of 7 1/4% Notes Due 2013. Filed as Exhibit 4.2 to Lamar Medias Current
Report on Form 8-K (File No. 0-20833) filed on December 27, 2002, and
incorporated herein by reference.4.13
    
    Form of Exchange Note. Filed as Exhibit 4.29 to Lamar Medias Registration
Statement on Form S-4 (File No. 333-102634), and incorporated herein by
reference.4.14
    
    Indenture dated as of June 16, 2003 between Lamar Media and Wachovia Bank of
Delaware, National Association, as Trustee. Previously filed as Exhibit 4.4
to Lamar Medias Quarterly Report on Form 10-Q for the period ended June 30,
2003 (File No. 1-12407) filed on August 13, 2003, and incorporated herein by
reference.4.15
    
    First Supplemental Indenture dated as of June 16, 2003 between Lamar Media
and Wachovia Bank of Delaware, National Association, as Trustee. Previously
filed as Exhibit 4.5 to Lamar Medias Quarterly Report on Form 10-Q for the
period ended June 30, 2003 (File No. 1-12407) filed on August 13, 2003, and
incorporated herein by reference.4.16
    
    Supplemental Indenture to the Indenture dated as of December 23, 2002 among
Lamar Media, Lamar Canadian Outdoor Company and Wachovia Bank of Delaware,
National Association, as Trustee, dated as of April 5, 2004. Previously
filed as Exhibit 4.1 to the Companys Quarterly Report on Form 10-Q for the
period ended June 30, 2004 (File No. 0-30242) filed on August 6, 2004, and
incorporated herein by reference.4.17
    
    Supplemental Indenture to Indenture dated as of December 23, 2002 among Lamar
Media, certain of its subsidiaries and Wachovia Bank of Delaware, National
Association, as Trustee, dated as of January 19, 2005. Previously filed as
Exhibit 4.1 to the Companys Quarterly Report on Form 10-Q for the period
ended March 31, 2005 (File No. 0-30242) filed on May 6, 2005, and
incorporated herein by reference.4.18
    
    Indenture dated as of August 16, 2005 between Lamar Media, the guarantors
named therein, and The Bank of New York Trust Company, N.A., as Trustee.
Previously filed as Exhibit 4.1 to the Companys Current Report on Form 8-K
(File No. 0-30242) filed on August 18, 2005 and incorporated herein by
reference.4.19
    
    Release of Guaranty under the Indenture dated as of December 3, 2002 between
Lamar Media, certain of its subsidiaries named therein, and Wachovia Bank of
Delaware, National Association, as Trustee, by the Trustee, dated as of
December 30, 2005. Filed herewith.4.20
    
    Release of Guaranty under the Indenture dated as of August 16, 2005 between
Lamar Media, the guarantors named therein, and The Bank of New York Trust
Company, N.A., as Trustee, by the Trustee, dated as of December 30, 2005.
Filed herewith.10.1*
    
    2000 Employee Stock Purchase Plan. Previously filed as Exhibit 10.3 to the
Companys Quarterly Report on Form 10-Q for the period ended June 30, 2000
(File No. 0-30242) filed on August 11, 2000, and incorporated herein by
reference.10.2
    
    Credit Agreement dated as of March 7, 2003 between Lamar Media and the
Subsidiary Guarantors party thereto, the Lenders party thereto, and JPMorgan
Chase Bank, as Administrative Agent. Previously filed as Exhibit 10.38 to
Lamar Medias Registration Statement on Form S-4/A (File No. 333-102634)
filed on March 18, 2003, and incorporated herein by reference.
 73
    Table of Contents  EXHIBITNUMBER
    
    DESCRIPTION10.3
    
    Joinder Agreement dated as of October 7, 2003 to Credit Agreement dated as of
March 7, 2003 between Lamar Media and the Subsidiary Guarantors party
thereto, the Lenders party thereto, and JPMorgan Chase Bank, as
Administrative Agent by Premere Outdoor, Inc. Previously filed as Exhibit
10.1 to Lamar Medias Quarterly Report on Form 10-Q for the period ended
September 30, 2003 (File No. 1-12407) filed on November 5, 2003, and
incorporated herein by reference.10.4
    
    Amendment No. 1 dated as of January 28, 2004 to the Credit Agreement dated as
of March 7, 2003 between Lamar Media, the Subsidiary Guarantors a party
thereto and JPMorgan Chase Bank, as administrative agent for the lenders.
Previously filed as Exhibit 4.1 to the Companys Quarterly Report on Form
10-Q for the period ended March 31, 2004 (File No. 0-30242) filed on May 10,
2004, and incorporated by reference.10.5
    
    Tranche C Term Loan Agreement dated as of February 6, 2004 between Lamar
Media, the Subsidiary Guarantors a party thereto, the Tranche C Loan Lenders
a party thereto and JPMorgan Chase Bank, as administrative agent. Previously
filed as Exhibit 4.2 to the Companys Quarterly Report on Form 10-Q for the
period ended March 31, 2004 (File No. 0-30242) filed on May 10, 2004, and
incorporated by reference.10.6
    
    Joinder Agreement dated as of April 19, 2004 to Credit Agreement dated as of
March 7, 2003 between Lamar Media and Lamar Canadian Outdoor Company, the
Lenders party thereto and JPMorgan Chase Bank, as Administrative Agent.
Previously filed as Exhibit 10.1 to the Companys Quarterly Report on Form
10-Q for the period ended June 30, 2004 (File No. 0-30242) filed on August 6,
2004, and incorporated herein by reference.10.7*
    
    1996 Equity Incentive Plan, as amended. Previously filed as Exhibit 10.2 to
the Companys Quarterly Report on Form 10-Q for the period ended June 30,
2004 (File No. 0-30242) filed on August 6, 2004, and incorporated herein by
reference.10.8
    
    Tranche D Term Loan Agreement dated August 12, 2004 among Lamar Media, the
Subsidiary Guarantors thereunder, the Lenders party thereto and JP Morgan
Chase Bank, as Administrative Agent. Previously filed as Exhibit 10.1 to the
Companys Quarterly Report on Form 10-Q for the period ended September 30,
2004 (File No. 0-30242) filed on November 15, 2004, and incorporated herein
by reference.10.9*
    
    Form of Stock Option Agreement under the 1996 Equity Incentive Plan, as
amended. Previously filed as Exhibit 10.14 to the Companys Annual Report on
Form 10-K for the year ended December 31, 2004 (File No. 0-30242) filed on
March 10, 2005, and incorporated herein by reference.10.10
    
    Joinder Agreement to Credit Agreement dated as of March 7, 2003 among Lamar
Media, the Subsidiary Guarantors party thereto, the Lenders party thereto and
JPMorgan Chase Bank, as Administrative Agent, by certain of Lamar Medias
subsidiaries, dated as of January 19, 2005. Previously filed as Exhibit 10.1
to the Companys Quarterly Report on Form 10-Q for the period ended March 31,
2005 (File No. 0-30242) filed on May 6, 2005, and incorporated herein by
reference.10.11*
    
    Lamar Advertising Company Non-Management Director Compensation Plan.
Previously filed as Exhibit 10.3 to the Companys Quarterly Report on Form
10-Q for the period ended March 31, 2005 (File No. 0-30242) filed on May 6,
2005, and incorporated herein by reference.10.12
    
    Credit Agreement dated as of September 30, 2005 between Lamar Media and
JPMorgan Chase Bank, N.A., as Administrative Agent. Filed herewith.10.13*
    
    Lamar Deferred Compensation Plan, as adopted on December 8, 2005. Previously
filed as Exhibit 10.1 to the Companys Current Report on Form 8-K (File No.
0-30242) filed on December 14, 2005 and incorporated herein by reference.10.14*
    
    Form of Trust Agreement for the Lamar Deferred Compensation Plan. Previously
filed as Exhibit 10.2 to the Companys Current Report on Form 8-K (File No.
0-30242) filed on December 14, 2005 and incorporated herein by reference.
 74
    Table of Contents  EXHIBITNUMBER
    
    DESCRIPTION10.15
    
    Series A Incremental Loan Agreement dated as of February 8, 2006 between
Lamar Media, the Subsidiary Guarantors named therein, the Series A
Incremental Lenders named therein and JPMorgan Chase Bank, N.A., as
Administrative Agent for the Company. Filed herewith.10.16*
    
    Form of Restricted Stock Agreement. Filed herewith.11.1
    
    Statement regarding computation of per share earnings. Filed herewith.12.1
    
    Statement regarding computation of
earnings to fixed charges for the Company. Filed herewith.12.2
    
    Statement regarding computation of
earnings to fixed charges for Lamar Media. Filed herewith.14.1
    
    Lamar Advertising Company Code of Business Conduct and Ethics. Previously
filed as Exhibit 14.1 to the Companys Annual Report on Form 10-K for the
period ended December 31, 2003 (File No. 0-30242) filed on March 10, 2004,
and incorporated herein by reference.21.1
    
    Subsidiaries of the Company. Filed herewith.23.1
    
    Consent of KPMG LLP. Filed herewith.31.1
    
    Certification of the Chief Executive Officer of the Company and Lamar Media
pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted
pursuant to Section 302 of the Sarbanes- Oxley Act of 2002. Filed herewith.31.2
    
    Certification of the Chief Financial Officer of the Company and Lamar Media
pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted
pursuant to Section 302 of the Sarbanes- Oxley Act of 2002. Filed herewith.32.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.
 
 *
    
    Denotes management contract or compensatory plan or arrangement in which the executive
officers or directors of the Company participate. 75