Lamar Advertising Co (LAMR) 2002 Q3 法說會逐字稿

Good morning. My name is the Thea and I will be your conference facilitator today. At this time I would like to welcome everyone to the Lamar Advertising third quarter 2002 operating results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. If you would like to withdraw your question, you may press star 2 on your telephone keypad.

In the course of this discussion, Lamar may make forward-looking statements regarding the Company including statements about its future financial performance. Lamar has identified important factors that could cause actual results to differ materially from those discussed on this call in the Company's reports on Forms 10-K and 10-Q and the registration statements Lamar has filed with the SEC. Lamar refers you to those documents. Thank you.

I would now like to turn the call over to Mr. Kevin Reilly. Mr. Reilly you may begin the conference, sir.

Thea, thank you. Welcome to our [indiscernible] earnings call. Welcome all of our analysts and shareholders, friends that follow the Company.

I think the best place to start today since the numbers are fairly self-evident is to talk a little bit about '03 and then maybe discuss a little bit of Q4's guidance. Right off the bat, let me say that we'll do in excess of 20 percent free cash flow per share in '03 and we are going to get there by concentrating on four things. One is our bulletin utilization. Our utilization this year has been fairly flat. We put some programs in place where we think we are going to move bulletin utilization in '03. And remember, these are longer-term contracts. All changes in utilization [audio cutting out] big changes in net revenue. Second, cost control in '03, you can expect for your models, no more than 3 to 3 1/2 percent in cost control. Cap Ex in '03, you can look forward to a 17 per cent reduction in the Company's Cap Ex '03 over '02. And then lastly deleveraging we'll retire to up to $100 million in debt which would be a nice gain compared to some of the good progress that we have made in the last quarter.

Now let's talk a little bit about sales for '03 and the best way to talk about sales is in the context of recent trends. Our guidance for Q4, of course, is 6 on the top, 8 on the bottom, for Q3, we were 3 on the top, 1 on the bottom. So we've finally moved into territory where our same-store sales growth is outstripping the Company's expense growth. And we do expect this trend to continue. This is good news because, remember, over the last two years, our consolidated margins have gone from 48 percent to 44 percent. And now that we're back in positive territory, we expect to reverse this trend and over the next two years, we'll be back to the 48 percent margin now that same-store sales are improving. And based on our view, especially the first quarter of '03, we do expect the trend of same-store sales growth to continue.

Now, regarding Q4 guidance, had some concern from some of our shareholders and analysts that there's a trend where we are looking more towards 5 1/2 or 5.8 percent expense growth given the 5.7 percent expense growth in Q3, and our guidance for Q4. Remember, our guidance for Q4 on the expense side is very conservative. And moving into '03, again, you can put in your models 3 to 3.5 percent expense growth, and you can pretty much book it because the Company's -- has, uhm, fairly reliable fixed costs.

With that, I'd like to turn the call over to Keith, who will go through some of the numbers.

Good morning, everybody, just to recap the press release, you saw that net revenue came in at approximately $202 million. Consolidated EBITDA was $87.9, as we pointed out, there was a verdict handed down in late August, early September, that decreased that -- our EBITDA by $2.3 million down to $87.9 and we'll go into more detail about that later.

Free cash flow was $39.1 million, or 22 percent increase in free cash flow per share, 38 cents or 19 percent increase. On the same-store revenue and EBITDA growth, 3.5 and 1.0 for the third quarter. On the revenue side, the EBITDA as Kevin mentioned is [indiscernible] , so assuming that we hit that 60-cent number, that would put us for the year right at about 2.5 percent same-store growth. And that pretty much is the range that we gave the market at the beginning of the year in the low single digits. Similar to where we were in 1991 coming off of the downturn. Pro forma stats for the 12 months ended 9/30, pro forma net revenue was $768 million, EBITDA was $332.

Debt for the quarter pretty much remained unchanged but post Q3 the Company did pay down $74 million worth of 9.25 coupon high-yield debt and that brings our total debt down to about 5.3 times prevailing cash flow. And total debt [indiscernible] to below 4 1/2 points. And that was all done with free cash flow. We had -- at the time we paid those notes off, we had approximately 85 to $90 million in cash on hand. So we had to borrow nothing from our revolver to do that.

On the Cap Ex side, for the quarter, it was right at $21 million. For the 9 months it's $57 million, so if we do the same in Q4 that we did in Q3, we'll end up pretty much right where we said we were, where we would end up, and that's about $79 million for the year in total Cap Ex. But I can list those later if anybody wants to know what the categories are.

Let me mention something, Kevin had alluded to the expense side. Just to maybe give you some color, on Q3, we had guided to 110 for Q3 versus actual 1.06 for Q2. And last quarter's earnings call we listed several things that was going to create that increase. One was health insurance costs, that we received a significant rate increase as of July 1. One was a logo lease franchise payment that we had to make to the state for a million dollars. There was some additional printing costs, production costs, to produce some of the ad displays. And all of that totalled up to $110 million. If you take away the $2.3 for the suit, that would bring us down from $1.14 to about $1.117. The majority of that -- the difference of $1.7 million is lease costs that were paid in the third quarter for percentage leases. We pay some leases on a percentage basis and that's every six months or 12 months, revenues were, of course, up over last year in the first half. And especially the second quarter. And so, therefore, we paid those fees in July and that was about a million dollars.

So if you would like more color on that, please give me a call off line. But that's basically it. The costs came in that we knew were going to come in that was over and above Q2. $2.3 million on the suit we had no idea about and the $1 million in extra lease costs which was a one-time payment we're not sure of it until we actually make that payment either at the end of the year or middle year because we don't know what our trailing sales are going to be and, of course, revenue is up so that that cost was up. Kevin, you want to....

No. I think we can go ahead and move on.

I just want to reiterate that Q3 expenses were up 5.7 percent. Our Q4 guidance does show an increase greater than our normal expense run rate. But I want to assure all of our shareholders and analysts that this is not a trend. We're very conservative on the Q4 guidance. And so you can't take Q3 actual and Q4 guidance and run that out for '03. You can book 3 to 3.5 percent in your models for '03.

The actual expenses for Q3 would have been about approximately $111 million. If you carry that forward to -- and that was including the million dollars in the one-time lease payment. So if you assume that that level of expenses carries forward to Q4, the $111, on a pro forma basis over Q4 '01, that's a 3.7 percent increase. So we are being conservative, it's the last quarter of the year. We don't want to be blindsided by something that we may not be aware of. So as usual, we just are careful.

Keith, thank you. With that, we'd like to open up the line for questions.

At this time, I would like to remind everyone that if you would like to ask a question, press star 1 on your telephone keypad now. We'll pause for just a moment to compile the Q & A roster. The first question comes from Paul Sweeney, CSFB.

Thanks very much, good morning, everybody. Wonder, Kevin, if you would talk about the bulletin business. I know that you have suggested that you hadn't really seen any improvement in your bulletin business, occupancy or otherwise this year. I think you probably had hoped you would. In '03 that's going to be one of the areas you are going to focus on. Could you talk about what you're going to be doing, specifically what programs you have in place to drive your bulletin business in '03? Are there particular categories or is there a way you sell it?

And then a second question, I guess, just on the Cap Ex, can you talk about you're bringing your Cap Ex down year-over-year you said by about 17 percent. Could you kind of break up, Keith, what's your maintenance Cap Ex and what's your revenue producing Cap Ex in '02 and '03? Are you cutting from one category or the other? Thank you.

On the bulletin side, a lot of our -- the progress that we expect to make in '03 is going to be based on incenting our 700-person sales force. Most of our business, as you know, is local. 85 percent of our business is local. And we've got a big focus in '03 to get our sales force on the street. We're offering them incentives. And we also will probably be offering some production incentives to our customers. We produce a lot of the ads for our customers. And without [indiscernible] we think that we can -- we have been able to lower the cost of the production over the last 4, 5 years. And we think that we can pass on some of these lower production costs to our customers -- in an effort to move more space.

So that's where most of the focus is going to be on the bulletin side of our business. I will say right now going into '03, we're pretty encouraged. Because although we haven't seen any movement in occupancy, our rates have been stable and based on what we have booked for the first quarter of next year, I'm expecting to show some improvement on the bulletin occupancy front.

Can you just talk about those forward bookings? Do you usually disclose those pretty clearly?

Well, usually, on the forward bookings, we talk about for '03, we talk about that in January. I can tell you right now as of September 30, we're 82 percent booked. And we're assuming a 90 percent renewal rate. So that's why we have such a high level of confidence in our 6 percent sales guidance, same-store sales guidance for Q4. The other thing that encourages us is that our book-to-goal percentage -- now, even though our goals are less than they were in 2000, actually, the same. We -- in 2000 we were right at 81 percent. Even though we haven't experienced an increase in the Company's bulletin occupancy, we do feel like we're making some progress on that front.

Keith, the question regarding Cap Ex, would you break that out a little bit?

For the quarter? Yeah, just for the third --

Yeah, just for the third quarter and maybe for your '03. That's Cap Ex is going to be down 17 percent. Where's that coming from, that cut?

Okay. Let me go through the quarter. [indiscernible] [ audio cutting out ] billboards. And you know, just rule of thumb, approximately half of that would have been for maintenance. [indiscernible] Transit was a million. Real estate was $4 million. Logos was $2 million. Property, plant and equipment, or operating equipment, was also $2 million.

That was Q3?

That's Q3.

That's Q3. Going forward, it's going to come from every category except for logos. Logos is opportunistic. And every logo we build adds revenue to the Company. But we are going to be cutting across some PP&E, real estate and offices, cutting in that area quite heavily. On the outdoor side, we are not going to curtail our new build activity because that adds capacity. They're usually new units where we already have contracts associated with those units but we will be pushing out our retrofit program especially as it applies to our posters. This is a program where we all -- when we go in and buy a company, we remodel all the boards to establish the Lamar brand.

Okay.

So the short answer is a 17 percent reduction -- a 15 percent reduction would be a piece of cake on the Cap Ex side because we run our business day in and day out, our mandatory Cap Ex is about 5 percent of net revenue and that's about 40 million bucks.

Okay, great. Thank you.

The next question is from Drew Marcus of Deutsche Banc.

Good morning, guys. You talk about, over the past you talked a lot about how you have been investing in your product and that's pushed expenses up a little bit higher than expected this year and you always talked about how you would benefit from that. Can you talk about the tangible benefits you are seeing from investing your product? What those specific benefits are and, you know, as you referenced in your expense growth talk, which of those investments will you not need to make in 2003?

Well, we certainly showed the improvement on the poster front because we have seen an uptick in occupancy from 62 percent to 66 percent. And that's been encouraging. On the bulletin side, we haven't seen it as much, but we certainly spent the money. And we've got the -- they're clean and fresh. The lights are burning, now we've just got to incent the sales force to get out there and move it. There are no excuses for not moving the bulletin category. That's where we need to see some movements.

Not necessarily in price, but in utilization. Our utilization is pretty much flat '02 over '01 although over the last six months we had a one point improvement. We're currently at 75 percent occupancy. But it's -- certainly on the poster side, the money that we spent retrofitting our posters, putting the Lamar look on those boards, has paid off.

Do you feel that if revenues are a little bit softer than you expect in '03 you'll be able to batten down the hatches a little more than you did in '02?

Well, the difference -- absolutely. I mean, we're going on record at no more than 3 to 3.5 percent expense growth, and on the Cap Ex side if we had to, if things really got ugly, if we had to we could chop it down to 40 million bucks. That's what it takes to keep the doors open to do a good job for our customers.

Okay. Thank you.

Your next question comes from Richard Rosenstein of Goldman Sachs.

Thanks. A couple of questions. One, I think you just said that the bulletin occupancy is running about 75 percent now. Can you talk about just where it was averaging in 2000 and 2001 on a comparable basis? And then, Keith, you had mentioned the one-time payment of a million dollars in July, you know, the lease, the variable lease component. That's one time inasmuch as one time a year. If it's recurring every year, though, isn't it? Thanks.

In December and July, we generally incur that cost. It's either semiannual or annual. From July 1 to June 30 or January 1 to December 31, depending on how the landlord wants it. And it is -- it is recurring, but last year because of the revenue downdraft, in December it was much less than it would be probably this December because revenues were down year over year. And, you know, we did have some additional acquisitions that we made last year and this year that also helped to buck that up in the past 12 months from June 30 through July 1 of last year. So, you know, it just depends on the sales volume as to what the cost of that variable lease payment is.

Give you a sense on the bulletin occupancy, our year-to-date numbers for '01 for the last six months, year to date, that would be April through September, for '01 was 74 percent. In '00, we were in the low 80s. 82, 83 percent for '00. So, I mean, you know, one-point improvement is -- it's better than nothing. We had hoped -- we had hoped when we started out this year that we were going to show a little bit better momentum in our bulletin utilization because it is -- it does represent 70 percent of the Company's net revenue. But... in spite of that we're pretty pleased that we're going into Q4 with a 6 percent same-store growth, our occupancy holding steady on the bulletin side, up 1, and our bookings looking pretty good as we go forward.

And if I could just follow up and then one other question, are there any minimum guarantees on the variable lease component? And then second, I think you had some political demand on your -- on the poster side of things. How does pricing look on the poster side, particularly in markets where there was heavier-than-average political advertising? Thanks.

Rich, let me take posters first. Our actual -- our rates are only up $4, our average rate per panel has moved from $416 to $420. So -- and we did get in October, the month of October rates actually -- we got a good rate, we went from $411 to $419. So that's one of the things that I wanted to caution the market about, that October and November's numbers, especially in the poster category, look pretty good. We hope to sustain that momentum because we haven't had a real dramatic spike in our -- even though it's improved, we haven't had a dramatic spike in our poster occupancy. That improvement in poster occupancy has been really from April forward. So it's -- our improvement there kicked in before politics.

However, the stakes were huge in both the House and the Senate. A lot of money was pumped into the system and there probably were some customers that are regular network affiliate customers that were crowded out and they spent money elsewhere -- radio and outdoor. Some of those customers aren't going to stick because they will go back to wherever they came from. But we don't see the way -- I'm just looking at our rate and occupancy trends for our poster category, January -- year to date '02, the trends are very positive.

And then on your question, Rich, about the minimum guarantees and so forth, some do, some don't. Probably the majority do. They get a set payment each month. And then they get the greater of -- however the contract reads, x percent or, you know, whatever the formula is. So it's kind of spread across the map.

Percentage plant payments only apply to about 10 percent of our lease portfolio. Most of our portfolio is locked in at fixed rates long term.

Rich, you may be thinking is this thing analogous to what's going on in the transit business? And the answer to that would be no. On the traditional outdoor side, these minimum guarantees are very small. It's not like the -- what's happening to companies like OB and Viacom on the transit side.

That's what I thought. Just wanted to be sure. Thanks very much.

Your next question comes from Bill Meyers of Lehman Brothers.

Thanks, a couple of quick questions. First on the acquisition front, looks like the [indiscernible] activity declined in each of the last three quarters, I think from about $76 million, 33 to $22 million. At the same time your $58 million cash balance is up meaningfully from where it was in the second quarter and the end of last year. Going forward should we be expecting more acquisitions, and are you still seeing things in the 10 times ballpark area? And then I'll follow up with two other questions.

Sure, uhm, a couple of things regarding the pace. You know, it's interesting, we are trying to recalibrate sellers' expectations on price, and we have been told no a little more than in the past in terms of trying to get deals done from the way we're pricing them. Keep in mind that most people that are in this business are pretty successful business people. They don't have to sell if we don't hit their pricing expectations. So that has a little something to do with the slowdown in the pace. I think next year, you can expect pretty much about the same level as this year, and if you look at the uses to which we can put our capital, you know, I think our shareholders would agree that paying down $70 million worth of 9.25 paper was probably a better use of our free cash than buying some incremental more billboard inventory. So, you know, that's where we are. We are trying to recalibrate sellers' expectations on pricing. And we're also using the free cash flow to pay down the higher coupon debt.

Then just two quick followups, changing gears in terms of FAS 142. Do you expect to take an impairment charge in the fourth quarter? And then just from a tax standpoint, when do you expect to become real cash taxpayers?

Question number one on the 142 is no. We don't. We review that from time to time. And as of right now, that is not something we expect to have to book. The cash taxpayer, Bill, would be right now it looks like '06. Maybe '05 immaterially but '06 would probably be the first year that we would become a real taxpayer, I mean on a Federal basis. We pay a couple of million dollars a year in State taxes where some of our older subsidiaries generate some taxable income. But it's very slight.

Great. Thank you.

Your next question comes from Tim Wallace, Bank of America Securities.

Good morning. Could you give us the pricing trends on your long-term contracts going back sort of three or four months to get a handle on whether there's been any incremental changes there? Second, in terms of your three to 3 1/2 percent expense growth next year, could you just remind us what the pro forma that would be off of? And then finally, your same-station performance was significantly better than Clear Channel's and a little bit better than Viacom's. Could you comment on where that strength for you has been coming from, whether it's, you know, larger markets, mid-sized markets, or whether it's, you know, national or local strength? Thanks.

Let me start with the last question first. It's been all over the map, but you got to remember, one of the reasons why we post better performances than the other two companies is we have less competitive friction because most of our revenue is in the middle markets throughout the US where we have 85 to 59 percent share. Also, if you look at our business mix, 85 percent local versus 14 percent national has been a real down draft in national business and that's had a tough impact on the bigger companies. We're 85 percent local, of course. Also, if you look at our product mix, they have -- we have a little bit heavier percentage of our revenue comes from bulletins versus posters. We're 70/30. 70 percent bulletins, 30 percent posters. The strength -- it's really been all over the map.

We have had a couple of smaller markets where they have been able to add inventory and they came off of a good year actually last year and they added inventory and they were able to continue making progress. They weren't in major television markets. And they had lots of little customers. We also had some larger markets that had such a lousy year last year that relative to their performance last year, they have posted some pretty good increases. So, it's kind of a combination of both.

Middle markets where they never missed a beat are doing okay and then some of our larger markets that had very, very easy comps. Looking at it regionally, the Northeast and the Midwest have been recovering nicely. You know, they're still -- there's still some softness in the Southeast.

The travel and tourism business is -- has been hit particularly hard in Florida. So, you know, that's been an area where we're working hard, you know, particularly on the bulletin side. When you look at hotel-motel business, you know, they were hit pretty hard after 9/11. You know, we're -- in talking to our good customers in that category, they're feeling better about '03 particularly in the hotel-motel side so we're expecting some things to turn there.

And then the pricing trends over the last three or four months on your long-term contracts?

On the bulletins, it's been flat. We had a little bit uptick in September. But for the most part, flat.

And then --

We don't expect pricing to really change in '03. Our goal in '03 is to keep pricing flat and move utilization.

And in terms of the pro forma costs to grow at 3 to 3.5 percent?

You are looking at, on a pro forma '02 expenses of about $430 million, somewhere in that range, 420, 430.

Okay, very good. Thank you.

Your next question comes from Brian Pitz of Morgan Stanley.

Good morning, guys. How are you?

Fine.

Looks like you had $15 million of additional purchase price for the quarter. What type of margins are you seeing on these properties you are bringing in? And then I have a follow-up.

You mean on the acquisitions?

Yes.

You know, it's, uhm, it sounds like a broken record when we say 10 times forward, because our goal really hasn't changed to bring them in at 10 times forward but what has changed is the conservatism and the scrutiny we give to the pro formas that are being prepared by our managers in the field. Because in the down draft, it was becoming clear to us that they weren't able to perform at the level that they had promised. And the pro formas were coming in at 11 or 12. Or the performance was coming in at 11 or 12 times forward, sometimes even 13. So I'm very confident that given the caution and the scrutiny that we're given, the preparation of these pro formas now, that we're bringing them in at 10 times forward.

Okay. You beat down a fair amount of debt this quarter. Can you talk about your target debt levels going forward.

What was the first part about the question? I heard about the targeted debt levels.

You guys paid down more debt than usual. Just want to know what your target levels are at longer term.

Well, I mean, we... we have some other high coupon debt that's still left out there, high yield, couple hundred million at 8 and 5/8 -- if anything were to go, it would be that, then the 9 and 5/8 yield, that's right ahead of it.

I think barring any very attractive acquisitions out there we're planning on paying down about $100 million in additional debt in '03.

Okay.

Your next question is from Mark Nobby of Merrill Lynch.

Question, Kevin. Just bring along what Rich was talking about before, as was Tim, regarding category strength. Are you seeing anything like particular categories during the rebound, for example, you know, we're hearing on the entertainment side they are going to now, have to do a good job of trying to increase their marketing on the -- for the movies? And I have another question as a follow-up.

Let me let Sean speak to that. If you look at our top 10 categories, there has been a -- an uptick in retail. From 9 percent of our book last year, year to date to 10 percent of our book this year, year to date. There's also been a 1 percent uptick in hospital and healthcare. From 5 percent of our book to 6 percent of our book. And 1 percent uptick in gaming from 5 percent of our book to 6 percent of our book. Given the markets that we're in, the category of entertainment, we track as amusement, and it's holding steady at 5 percent of our book, year to day. And it was 5 percent of our book last year to date.

I said it a little bit earlier on categories that we are going to be working on for '03 and the one that we're really going to focus on because we think it can make an incremental difference in our occupancy is the hotel-motel. They have actually ticked down 1 percent year to date. They traditionally run 9 percent of our book. Both in '00 and '01, and this year year to date it's ticked down to 8 percent of our book. So we have some initiatives targeted specifically at that category. Those are great customers. You know, we understand that they have had a tough year this year. But what they are telling us, particularly the roadside hotel-motel trade, is that they are looking forward to a better year next year. And we have a new product we're rolling out for them. It's a changeable message board where they can change price based on their utilization and occupancy on a daily basis. We've been in discussions with several of our big customers and they're very excited about that product. And we think that's going to lead them to extending their buys with us.

How about restaurants, by the way? Have restaurants -- I mean, obviously, the fundamentals there have been deteriorating and the McDonalds of the world are seeing weakness. But what's their desire to advertise?

They are -- holding steady. Year to date, 12 percent of our book. Last year to date, it was 12 percent. 2000 it was 12 percent. To bring it to just Q3, our top advertiser in Q3 was McDonald's. Our second was Cracker Barrel. And year to date, they occupy the same slot. So, you know, we're seeing no erosion there. As a matter of fact, we're working on a huge buy for '03 with McDonald's Corporate. Normally our McDonald's business comes from the local franchisees and it's heavily directional. But we're working now on a real nice buy for Q2 of next year with McDonald's Corporate. And menu changes generally work out pretty good for us. Outdoor seems to be a good vehicle when they -- change their menus.

Other question, uhm, relates to, you said earlier, I just didn't get the notes, as far as what -- you anticipate the pay -- to pay down debt in 2003?

Our goal, barring any attractive acquisitions, would be in the $100 million range.

$100 million. Okay. You did say that.

Yeah. So if we do, give or take, 25 million a quarter in acquisitions, which is the pace that I'm anticipating, then paying down $100 million in debt ought to fall right in line with that.

Great. Thank you very much.

Your next question comes from Bishop Sheen Wachovia Securities.

This is Charles [indiscernible]. I'm sitting in for Bishop Sheen. Most of my questions have been answered but I have one quick follow-up. Is there any plan to pay down additional debt for [indiscernible] and what levels is your cash right now?

Could you repeat -- what level did you ask if we were going to get ready to pay down?

I mean, is there any -- you pay down $73 million things end of last quarter I was wondering if there is any additional plan to pay down some more debt for the rest of this quarter?

Other than the regular bank amortization, which at the end of the years the --, the last quarter is about $16 million, and we should do that with cash on hand as well, right now we have about 16 to $20 million on hand.

Okay. Thank you.

Your next question comes from Andy Anhow of Deutsche Banc.

Hello. I just wanted to follow up on a more general industry question. Is there anything in particular besides your contract structure that would account for the sort of slower growth in outdoor versus what we have seen locally with radio and television this year?

No. I think it's -- radio had easier comps, that's the short answer. When we went in the ditch, we didn't go nearly as far as the radio industry. And if you look back over the last 15 years, there's not a dime's worth of difference between outdoor and radio's growth. There's just a little bit more volatility with radio versus outdoor.

But, you know, our contracts obviously are longer. We have 30-day poster contracts, 4, 6, 12-month bulletin contracts but you remember, we've got a ton of unsold inventory that's just sitting out there. So it's not length of the contracts that could -- that would retard our ability to rebound. Because we do have all this unsold space.

We just tend to look at it the other way around. When you look at the two companies in terms of -- two media platforms in terms of growth, they're about the same except one has a higher beta, and that's where the contract links comes into play. 70 percent of our business, four, six and 12-month contracts and the renewals are pretty much even throughout the year. So that lends a lot of stability to the Company's revenue streams. And the company's Cash flow streams.

Great. Thank you very much.

Your final question comes from David Murphy of S.G. Cowen.

Hi, guys. Just a few quick questions here. First off, you commented on pricing in the poster business being up in October and November. I'm just curious if that's carrying through to December and what rates are looking like in December versus October and November?

Uhm --

And secondly, I was curious if you guys have been selling any bulletins on a shorter-term basis. We had heard that other outdoor operators were finding that advertisers were looking for shorter commitments and I just had one final question after that. Thanks.

Let me talk about advertisers' attitudes and then I'll go back to the poster trends for the rest of the year. They don't -- they're not going short. A lot of our advertisers actually want to go long because they see an opportunity to lock in attractive rates. And so we're not seeing that. However, especially on the bulletin side and the poster side, with the exception of the last two months, they are still waiting to the last minute. So, you know, although we are giving aggressive guidance for our same-store sales for the fourth quarter, a lot of that, that's driving that is easy comps and not an environment where the customers are just beating our door down. They are still waiting to the last minute. And, you know, a good indication that there's not been a real change this year in ad spend is our bulletin business because we have bulletins all over the country. And lots of little customers buy these things one at a time.

And with the exception of the hotel-motel business, you know, that -- our utilization has been fairly flat. Now, the poster trends for the rest of the year, again, the trends look good but again, we're up against very easy comps. So the poster is pretty much going to carry the day for the company as it relates to the same-store sales increase guidance that we are giving for the fourth quarter.

How about on an absolute basis? [indiscernible] CPM are for the posters in December versus October November?

The numbers I have of front of me -- I don't have forward numbers. I have trailing occupancy and rate numbers. And I don't have it broken down for you in CPM numbers. But I think you can -- we can expect for the fourth quarter, not a dramatic increase in CPMs but a decent uptick in utilization. And, of course, that's driven in part probably by politics, but also in part because we're in the holiday season. And the retailers go ahead and book their business in November. So that the copy comes down around December 25.

And just one final question. You had mentioned that in 2003 you were assuming 90 percent renewal rates on the bulletins. Just curious. I know that a -- they have been gone down a little bit over the past year and a half. I was curious where renewal rates are right now.

No. That was, uhm, our -- that -- it's actually 90.9 percent. That 90.9 percent renewal rate related to the 82 percent business book-to-goal number. In other words, as of September 30, we're 82 percent booked for the entire year, for the rest of this year. And that's assuming a 91 percent renewal rate. That make sense to you? That's where those numbers came from.

Great. I mean, is it generally in that range now?

Well, in 2000, we were at 89.4 percent. Our renewal rate. [indiscernible].

If you assume that you get to --

Excuse me. Yeah. Assuming a 90 percent renewal rate, actually we're 90... [indiscernible]. We're 91 percent book-to-goal year to date at the end of September 30. Excuse me. Without the 90 percent renewal rate, we would be 82 percent. But with the 90 percent assumption, we're 91 percent of the way there. We were -- that's where we were in 2000. In fact, we at 90 percent in 2000.

Okay.

So, you know, that gives us some encouragement. So we want our friends and shareholders to keep in mind that our goal, this is book-to-goal. And our goals were a lot more aggressive 2000 than they were in '02.

Okay. Great. Thanks a lot.

You now have a question from Greg Cool of Morgan Stanley.

Hi, good morning, guys. Good quarter. I just had two quick questions. One, forgive me if this has been asked already. What were your total acquisitions for the quarter? And what does that bring your year-to-date acquisitions up to?

Total for the quarter was relatively modest. It was $21.6 million. To date, this quarter, we have done 4. So our year to date is about $134 million. That's 64 transactions, $134 million.

Understood. And question for Keith. Keith, what is your current availability and what is drawn under your revolver as of 9/30?

Yeah, well, 9/30, or to date, nothing is drawn and availability is about 320, $330 million.

Great. Thanks, guys.

There are no further questions at this time. Would you like to have closing remarks, Mr. Reilly?

Uhm, yeah. I just want to thank our friends and shareholders for listening into our third quarter conference call. And we look forward to our call in the fourth. Thank you.

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