Lamar Advertising Co (LAMR) 2005 Q3 法說會逐字稿

We now have Chief Operating Officer Sean Reilly, and Chief Financial Officer, Keith Istre in conference. Please be aware that each of your lines is on listen-only mode. At the conclusion of the Company's presentation, we will open the floor for questions. [OPERATOR INSTRUCTIONS]

In the course of this discussion, Lamar may make forward-looking statements regarding this 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, and the Company's report on Form 10-K and Form 10-Q, and the registration statements that Lamar has filed with the SEC. Lamar refers you to those documents. Lamar's third-quarter earnings release, which contains the information required by regulation G, was furnished to the SEC on a Form 8-K this morning, and is available on Lamar's website, www.lamar.com.

I would now like to turn conference over to Sean Reilly. Mr. Reilly, you may begin.

Thank you, Operator. As Kevin is overseas, it falls to me to welcome our shareholders to our third-quarter earnings conference call.

Let me open up first by commending many of the men and women of Lamar, who have been working 24/7 in hurricane-devastated areas, to rebuild our offices, rebuild our inventory, and get our customers back up on the boards. We have crews from all over the country who have engaged in this effort. They are working hard. We have employees who are away from their families, and living in trailers on our office sites. And I know that many of them listen in on these calls, or hear them later and I want them to know that we appreciate their efforts.

On the hurricanes, I am pleased to report that the construction is going extremely well, and customers are there. We should have all the inventory, with the exception of the Gulfport and Biloxi area in the air, and in billing by the beginning of the year. And that has taken, again, a monumental effort from many of the hard-working folks at Lamar to make that happen.

Also on the hurricane front, as you know, there was another hurricane that came through South Florida, Wilma. And I am very pleased to report that the new panel-free design, that we have been deploying on the Gulf Coast, is working like a charm. It has certainly mitigated our damages from Wilma. Wilma hit three offices, Fort Myers, the southern part of Lakeland, and the southern part of Daytona.

Where we went up with panel-free structures, there was virtually no damage. And from Wilma, we estimate that the damage will be less than $500,000. And, again, that's a tribute to this new design we deployed along the Gulf Coast. You can rest assured that as we rebuild from the Texas border to Mobile, Alabama, that we will be deploying that design. And I would like to commend the vendors to our industry that brought that to us.

I am going to go ahead and go over a few of the operating stats that you are familiar with; however, I want a note of caution. Some of the stats, particularly on occupancy still have hurricane noise in the data. So I wouldn't put too much in the specifics of the numbers. The general message is occupancies in both Posters and Bulletins, are running about the same as same time last year. On Posters, it is exactly the same, 71% occupancy. Q3 '05 versus Q3 '04.

On Bulletins we are showing down 1 point, 79% '05, versus 80% '04. I think if you adjusted for the hurricane, they would be roughly flat, the increases were primarily driven by rate, and in the rate numbers, since that sold inventory only, these numbers are clean. And on Posters we are up 6% on rate, Q3 '05 over Q3 '04. Bulletins up 8% on rate Q3 '05.

Our National sales have picked up slightly this year over last. Year-to-date '05 we are at 18% National, 82% Local, same time last year, we were 17% and 83% respectively. We mentioned at the beginning of the year that we thought we would be up double digits in National sales this year. We are year-to-date up 11%. And we think that by the time we finish, since that is actual booked business, you will see that number grow.

On the acquisition front, we have closed 53 transactions for a total purchase price of $160 million. And that again represents about 53 transactions.

With that as a backdrop, let me turn it over to Keith, and he will walk through the numbers.

Okay. Good morning, everybody. Just to start off repeating what you saw in the press release, we did approximately $265 million in total revenue for the quarter. $253 million of that was from our core group. The other $12 million came from Obie, which you know, we are not including in pro forma numbers for this year.

Our consolidated EBITDA margins for the quarter was 46.2, versus 46.6 last year's third quarter, and, of course, that was due in part to two things, the hurricane obviously loss of revenue, and increased expenses, and the fact that Obie is a lower-margin business than traditional outdoor, and it will cost the Company approximately 1% this year in margins because it is a lower contributor.

Free cash flow was up 12%, $7.7 million. On a pro forma basis, you saw in the press release, we did 5.9, and those are not adjusted for hurricane losses. That is the pro forma actual. We had got it to approximately 5 to 6, so if you did do the math for the loss of revenue, we would have exceeded our guidance on the top end.

The direct in G&A expenses at the operating level 3.5, those have been running very consistent throughout the year. 3.7 in the first quarter, 3.4 in the second. Corporate overhead, 17.2, that's ratcheting down as we mentioned to you. We had a lot of business initiatives at the end of last year, beginning of this year where we hired personnel here at Corporate to handle. And that should lap itself. We expect the fourth-quarter Corporate to be about 10% on a comparative basis. The year-to-date same-store revenue for the three quarters would be 6.6%. That is not in the release, but that's the rate.

On the debt side, we as you know, we did refinance some credit lines, and we put in a new bank credit agreement with our bank group as of September 30. It has a $400 million revolving credit facility, and a $400 million term loan. As of today we have $285 million in availability under that $400 million term loan, to for operating purposes, stock repurchase, CapEx, et cetera. On the CapEx side to date, as of 9/30, we have spent $75 million. We had guided to 85 for the year. You saw that we will be spending and extra 15 between now and December 31, so we expect CapEx to come in, in the $100 million range for the full year of 2005.

With that, I think I will turn it back over to the operator, to open it up for questions.

[OPERATOR INSTRUCTIONS] Our first question comes from Chris Ensley with Bear, Stearns.

Good morning, thanks for taking the call. Curious about some of your different regions. I think in the first half of the year the Western region was your fastest grower. I wonder if any of that has changed, and if other regions have picked up materially, or slowed materially?

I think the story is still basically the same. The West is still growing very rapidly. We are experiencing great demand and great growth in Southern California, and Las Vegas in particular. You know, the Midwest, upper Midwest, and, of course, now the Gulf Coast with the hurricanes, while they are still growing and posting mid single-digit growth, it is not as robust there. So I would say that the story is pretty much the same.

Are you seeing any differences between your larger markets and your smaller?

You know, as I try to dig through that and mine that data, I don't think so. You know, there are anecdotal big market success stories like Vegas, and there's anecdotal small market successes. So I don't necessarily think that's the case. I think you are more accurate with your previous description, the sort of differences in regional economies I think is driving it more.

Great, thank you.

Another question, operator?

Yes, sir, one moment. One moment, sir. The next question comes from Barton Crockett with JP Morgan.

Okay, great. Thank you very much. A couple of questions. First, can you tell us what the reason is for the deceleration of same-store sales growth that you guys are guiding for in the fourth quarter, 5% versus 5.9% in the third quarter. The hurricane impact seems relatively close, 1.62 million. And in the third quarter I thought there was a bit of a slowdown in July, and August and September were stronger, and I am just wondering if one of the months here in the fourth quarter looks like it is slowing down? Some color there.

Secondly, on the share repurchase, I know you guys have talked in the past about seeing the best use of your capital being in acquisitions, you know, and investment in digital, and share repurchase would be a little further down the pike. Now you are stepping up to do it now. Should we infer from that that there is less on tap for the future in acquisitions, or anything in terms of the availability of digital, and just explain what the rationale is in doing this now, as opposed to why you didn't do it before? Thank you.

Sure, let me hit the share repurchase first. There are a lot of reasons why companies do share repurchases. There are different philosophies employed. Ours is very much a long-term effort. We are looking 3, 5, 10 years down the line, and as we think about uses for the Company's free cash flow, we haven't changed our view.

We still order it as building new Billboards greenfield, doing accretive acquisitions, deploying digital, but now we have added a fourth, because our free cash flows are so robust, that when you take a long-term view, and we do, we look very long. There will be, we believe, opportunities to deploy capital on a stock repurchase. So I wouldn't infer that we don't think we can deploy capital accretively. We still believe that.

As a matter of fact, it is fully our intention to, over the next six to eight months, double our digital deployment. So we are still committed, and we still believe that our own business represents the best investment of our free cash flow.

On the question of deceleration, keep in mind we did not hurricane adjust our numbers. So, you know, it would have been approximately 6ish, had the hurricanes not happened. And I don't think I would, you know, view that as deceleration. Keith will get into that in a little more detail.

Well, talking about third quarter, you mentioned July. We last fall, told you that July had a slowdown, and our same store was 5.4 for July. And that's why we got it to approximately 5 to 6. We ended up right at 6 for the quarter. So obviously August and September came in where we thought they would. And that 5.9 or 6, whatever for the quarter, as Sean mentioned, is not hurricane adjusted. If you want to do the math, we have laid out the quarterly loss of revenues for the third and fourth quarter. So, anyway, just a little color.

Our next question comes from [Gambier Accesi], Banc of America Securities.

Good morning. Can you give us an update on your easement purchase program?

To date we have spent $13 million. And we expect that to translate into about $1.3 million annual expense savings. That's as of today.

Right. I have two more questions. In terms of trends, are you seeing strength in any categories, or weakness in any specific categories? Secondly I know you don't give EBITDA guidance, but can we expect the same expense run rate as Q2, any unusual expense items we need to watch out for in 4Q?

No. No, I think the expense run rate should be approximately the same as in Q3. The only thing is you will see a deceleration of the growth in Corporate as I explained.

On category strength or weakness, anything on that?

For the categories, for those of you that have followed us for a long time, you know these things don't move very much.

Right.

There has been a slight uptick in real estate and development companies, so they have moved, and this is monthly data, so this is just September year-over-year. They moved from 6% of our book, to 7% of our book. There seems to be a little bit of an uptick in that activity, with a correspondingly similar 1-point dip in Hotel-motels. And, you know, again, as I try to cut through it and see if it really means anything, at the end of the day, I don't see much movement in terms of categories in the book. You know, there's 1 point here or there, but nothing that a trend would make.

All right, great. Thank you.

Our next question comes from Marci Ryvicker with Wachovia.

Good morning.

Good morning.

I want to concentrate on your digital Billboard efforts. First, Sean, do you have any progress on the regulatory front? I also wanted to know when you target, I guess, your digital Billboard expansion, are you targeting new markets? Or are you targeting markets where you already have digital billboards. And then lastly, what are the margins now on the digital products? Have the costs continued to come down?

Yes. We have enough confidence in the digital model, that we are deploying wherever the regulatory environment will allow. So that is both doubling up in existing markets, and also getting up and going in new markets. You know, the regulatory environment we believe is going to be receptive. We've had some victories as I mentioned, I feel fairly confident that we can double the number of units we have out there over the next six months.

And as I have mentioned on recent calls before, we have a lot of confidence in the business model. We have seen it work both the poster size and bulletin size. We have seen it work in small markets and large markets. And we have seen it work in markets where we are the predominant operator, and in markets where we have competition, so, you know, we feel good about it.

The cost of the units is coming down. So our ROIs are better because of that. And in terms of the margins, you know, because we still attempt to deploy on company-owned real estate, the margin contribution is very healthy, 65%, 75%. I hope that answers your question, and we feeling good about digital.

I have one more follow-up. Do you have a digital network or some type of system that Clear Channel has in Cleveland? Have you been working with Clear Channel on something like that?

We have a network operating center here in Baton Rouge that controls all of our boards, regardless of market, and allows our customers to change their copy. We are talking to Clear Channel about some sort of industry backbone. Those conversations are very early. Hopefully they will lead to some industry standardization, and some industry cost sharing.

You know we are very happy that our outdoor brethren are going to start a new life as a public company on their own this week, we wish them well, and our view is that that independence can only accelerate the industry getting together, particularly on digital deployment.

Great. Thank you very much.

Our next question comes from James Dix with Deutsche Bank.

Good morning, gentlemen. A couple of questions. First, just if you could give any colors to where you think you are getting your incremental spending from? What other media, you know, what budgets might be getting cut in order to give you more money in some of your markets? I guess also longer term, what is your least expense growth expectation? I think it has been pretty stable down through the years, but I just want to get a sense of that, to see whether the easement purchase program might have any impact on that. And I know you raised your guidance for CapEx this year. Any sense of if it will return to a more normalized rate next year, after you have done your repairs post hurricanes?

Sure. Yes, obviously if we are able to finish the reconstruction by January 1, which we think, with the exception of Gulfport and Biloxi, we will do. Then you will certainly see on the traditional billboard side, the CapEx return to its normal level. Again, for those of house have followed us a long time, traditionally what you have to spend on maintenance CapEx is about 5% of your billing. So over time, that's where you should see maintenance CapEx fall.

Now that doesn't include digital deployment. If we are able to accelerate digital, which I believe next year we will be able to do, we will break that out as a separate category of CapEx. Again you should applaud that dollar spent, and we think that it is a wise investment.

Second part question was.

Lease expense.

Yes. On the lease expense. Those who have followed us for long time, we have a huge lease portfolio, some 75,000 strong, in terms of numbers of contracts with landlords, and that hugely diversified lease portfolio is what keeps our lease expense in-line.

My sense is that we have weathered three or four years of a super hot real estate market which, if you were worried about extraordinary growth in our lease portfolios, you would have seen it, and you know, we weathered that quite nicely, and, you know, if there is going be a slight cooling in the real estate environment, that can only help us in that regard.

And then I guess just finally on the, you know, where you think some budgets might be getting shifted from to you?

You know, it's anecdotal. I will go ahead and throw a few out.

Okay.

We have heard that the Verizon account has grown with us, at the expense of radio. We believe that our Local auto dealership category is growing, at the expense of Local network affiliate, television. And you know anecdotally we are seeing that.

I can't give it to you in any aggregate numbers, other than to say that Verizon has clearly moved up in our book. Q3 '05, Verizon is now a solid top-ten player, and we expect that they are going to remain there, because they are happy with their outdoor.

Okay, great. Thanks very much.

Our next question comes from Gordon Hodge with Thomas Weisel Partners.

Good morning. A couple of questions. Sean I think in the past you have given given us the actual pricing, or the average pricing on the bulletins and posters? I don't know if you have that but that would be great.

I do.

Also on digital, I don't know if you mentioned how many you have deployed, or if you have deployed any new ones since the last call, and what the plans are for, specifically for this fourth quarter? Thanks.

Yes, we've got 26 up in the air now. We've got 10 on order. And we expect as I've mentioned, that some time by the end of the first quarter, middle of the second quarter, we should have doubled that number.

I am sorry, 20 you said.

26 in the air right now.

26, got it.

And we have 10 on order where all of the permitting and structural issues have been worked through.

Okay.

And they should be up, you know, again up in the next 30, 45 days and then by middle of the second quarter, we should have another, you know, 15, 16, 17 up in the air. That's sort of the pace of which we are deploying.

On the rate question, Q3 '4 Posters $426 per panel. Q3 '05 posters, $452 per panel, that's a 6% increase.

Okay.

And on bulletins, Q3 '04, $1051 average rate per panel. Q3 '05, $1132 average rate per panel, that's an increase of 8%. Again given a little bit of the hurricane noise and our occupancy data, you can see that we are driving most of our top-line growth through rates.

Terrific, thank you.

Our next question comes from Laraine Mancini with Merrill Lynch.

Great. Couple of questions. I'm noticing on Billboards at least in the New York area, that there seem to be a lot of new local businesses up there. Can you talk about if you are seeing new local guys come on the platform?

And in National level, I know you mentioned Verizon moving from radio, but do you have other categories of business that seem new for you?

And then second, you mentioned that the ROIs are obviously going up in digital, as the price comes down, can you contrast the types of ROIs you are seeing from easements versus M&A, and digital?

Yes, I think what you will see is, in terms of ROI, digital is the best. The question is how many can we get out there. So clearly a dollar spent in the digital deployment, is a dollar well spent. You know, on the categories as I mentioned earlier, there is no big movers in our book. You know we had, you know, some individual success stories, and customers come and go.

Local is strong, but would have to say, that given that National is up 11% in our book, National is stronger, and, you know, I think if you are looking at secular trends that favor outdoor, to the extent that our National outpaces the aggregate growth in ad spend, that ought to be something that causes you to be very confident in the future of Outdoor.

Because I think that is going to be the case, and when you look at our aggregate book, you know, you will see that Lamar's same-store will likewise outgrow aggregate ad spends. So we feel real good about where we stack up, in terms of our future compared to the future of other local media outlets.

Can you put a range on what the digital ROI is right now?

Yes, we typically don't approve a deployment, and we look at many of them, and we turn down very few from our management team, because the ROIs are so good. We are looking at ROIs that are at a minimum mid-20s, and most of the time mid-30s.

Would it be fair to say that M&A and easement ROIs are about the same level, and maybe in the 10 to 15%?

Yes, unlevered.

Yes.

That is a good number.

Thank you.

Our next question comes from Kit Spring with Stifel Nicolaus.

Can you talk about what you think the reason is, for the difference in your growth rate and Clear Channel's domestic billboard growth rate? I think theirs is a bit higher, your's is very good. Why do you think Clear Channel's was so much higher, if I am right on that?

And secondly which percentage of your billboards may be suitable for digital over the long term, 5, 10, 20, 30, what do you think the percentage might be? Thanks.

On the percentage digital, you know we learned a lot in our deployment so far, and I kind of categorized it as, you know, to date, we have been able to deploy and be successful in a variety of settings, and have multiple deployments in a given market. Over time, we are probably going to learn some more about the issues of cannibalization of our existing inventory. You know, we certainly haven't hit that yet, and won't for 4 or 5 years, but as you think out, there will that be inevitable effect, and so we are going to need to think through that.

But in general, I would say that where I am sitting right now, every unit is a candidate. And we will just have to see how it evolves. You know on the comparisons with Clear Channel, there are slight differences in the nature of our markets. We tend to have high market shares in smaller markets. We tend to be competitive in the larger markets, but with only one product, the Bulletin. And we only have a smaller component, that is Transit and Street Furniture.

And when you put that all together, you know, what you are going to find over time, and I am talking a ten-year look through the ad cycles, you are not going to see that much difference between growth rates. Coming out of and going into ad recessions, you will see a difference in larger competitive markets and Transit businesses, because they have different performance characteristics through the cycle. But I think if you take a long view, you won't see dramatically different growth rates.

Great, thank you.

Our next question comes from Mark Bacurin with Robert W. Baird.

Good morning. Keith, I was hoping you could provide a little color on some of the costs in the quarter. I think last year when you guys had hurricane damage, you were capitalizing most of the labor expense specifically to the Billboards. But you also indicated that you had lots of overtime charges, just as crews were overworked, et cetera. I was wondering if there's any number you can give us for the current quarter as well as into Q4, that is hurricane-related but not specifically capitalized-related to the rebuilding of the Billboards?

We will probably have a better handle on that when we have the next call. The first hurricane hit at the end of August and the last one hit at the end of September. All I can tell you, I don't have a firm number what it is and what it will be, but the bulk of that labor is going into the cost of the new structures, that we are throwing up to replace the ones that were destroyed. So nothing has changed over the last year's third quarter, when we got hit with the four storms in Florida.

Okay. And then if I read the press release correctly, it sounded like inside the depreciation expense number in the quarter which was, you know, 74.7, there were $3.5 million of inventory write-off charges related to the signs that were damaged?

Right.

So it would have been closer to 71 excluding that number?

That's correct. If you look at last year's, go back to last year's third quarter, it was about 5.5 million of the exact same type of charges for the storms that were destroyed in Florida. So if you want to get apples-to-apples, take 3.5 out this year, and 5.5 out of last year's third quarter.

Okay. That's great. And then on the interest expense number for the quarter. Was there anything odd in that number? Was the sequential uptick just a function of rising rates, and could you give us what the mix is of floating versus fixed at this point?

No it is just a continued uptick on the rates, and we did put in $400 million worth of high yield in July at 6.625, and that was a higher rate than we were paying for the floating debt under our bank agreement that we paid off with the proceeds from that $400 million high-yield deal.

And the fixed portion of our debt is 60%, and floating is 40. After the high yield deal that we put in place in July.

Okay. Great, one quick final one. As we look at your new share buyback authorization, I understand, you know, you may not have a set schedule, but is there a percentage of free cash flow we can think about, in terms of what you may spend on a going forward basis, and maybe not quarter-to-quarter but maybe even annually?

I think we put in the release we hope to accomplish it over an 18-month period.

18 months.

And the way we have structured this is to again take a very long-term view, and to be opportunistic with that in mind. So, you know, again, there's been a lot of different philosophies when you think about share repurchases, and ours is very much to look long.

But it is fair to say that you intend to execute this initial authorization over the 18 months?

That's correct.

Okay. Thank you.

Our next question comes from Evan Marwell with Criterion.

Good morning. Thank you for taking my call. Coming back to the digital stuff for a second, can you give us an update of what you are seeing, in terms of how the boards are ramping up, and who are the primary customers who have shown interest in them, and how they are using them, is my first question.

And my second question on the same thing is, are you seeing any impact on your acquisition pipeline from digital boards, in terms of either folks saying, Gee, I want a higher price now, because I can see the value from putting a digital board on my poles that I have already. Or them saying, Gee, I don't have the capital to do this, so maybe I am more willing to sell at this point?

I'll hit the last one first on, has it affected our acquisition map. No. I mean we are certainly not going to go overpay for a location, because of the prospects of digital, because we can develop locations on our own. So, we are very disciplined in that regard, and while certainly the industry is excited about the prospect of digital, you certainly wouldn't want to see us go out there, and buy on the come. That has never been our track record and I don't intend on starting to do that now.

In terms of who is buying. It is almost 100% local. And if you can envision what we look like today, which is onesies and twosies scattered around 15, 20 markets. Our sales force goes out, hits the local agencies, and typically they are 100% booked for the year, before the board goes up. With virtually 100% local customers. And the customers are using it much like they would use newspaper, because they can change the copy instantaneously and costlessly. They can now do call-to-action advertising, and advertise things like changing prices for event-driven advertising.

Now that being said, if you think five years down the line after hopefully Clear Channel and Viacom com has joined us in this effort, and there is an industry nation-wide network, then I think you will see more participation from National advertisers, that will be able to execute a buy nation-wide, by calling the big three companies, and getting a digital product. So that's hopefully where we are going, and again, I have confidence that we will get there.

And one follow-up on that. What is the smallest revenue per month board that you have converted to digital? In other words, what was the lowest amount of revenue you were getting from a board, prior to converting it to digital, that you felt was still a good candidate for digital conversion?

Right around 8,000 per month in billing, and that would probably be best described as a smaller market poster deployment, where we take the most desirable poster in a given town, and it may have been billing, you know, as integrated into a 30-sheet showing. It may have been billing $400, $500, $600 a month, and now it is billing 7,000, $8,000 a month.

It was 400 or 500, and now it is 7,000 or 8,000.

Yes.

Okay. And then just one final follow-up on that. Is that threshold being driven largely by the cost of the boards? And so in other words, as you see the cost of the boards continue to fall, would you expect that threshold to continue to fall?

Yes. I mean, again, remember very ROI sensitive, as we do this. So to the extent that the cost of the digital display falls, we can deploy, economically we can deploy faster.

Great, I appreciate your time.

Yes.

Thank you.

The next question comes from Stuart Kagel with Janco Partners.

Good morning. Sean, I wanted to get a sense for on the acquisition front, looking out over the next several years, what you think the scope of potential acquisitions for you would be? And then second question would be on the digital boards, just a big macro question. At how many state Departments of Transportation have approved the boards that you can subsequently go down to the municipal level, and try to get approval?

I am going to have to get back with you offline. I don't have that number on the numbers of states. I don't have that number with me.

Anecdotally I can tell that you, that we typically when we sit down with State highway departments, and help them understand that we are not putting up moving pictures, that we are putting up static pictures, they get it, and they tend to side with us. You know, we have had some wins at the state level. I will get back to you on the absolute number of states.

And, you know, and the acquisition pipeline, you know, we've been, you know, kind of steady state at $150 million to $200 million a year for the last few years, and I am not seeing anything that would, you know, cause me to deviate from that guidance. You know, I think you will see roughly that pace in '06, and, you know, hopefully roughly that pace in '07.

Is there a time, you know, four years out, where you would say it is probably done?

You know people have been speculating that that would have been today. But, you know, we still are able to find good acquisition candidates. When you get past the Big 3, there are still literally thousands of independent operators out there. And the value of those assets, you know, is certainly north of a billion dollars. So, you know, there is still some running room.

Great, thank you. And Keith, just one last question. On the quarterly interest expense. If you compare your free cash flow numbers to your interest expense and income statement, it looks like there is about $1.4 million of noncash interest expense.

That's right.

Is that a good run rate?

Yes.

Okay. Thank you.

Our final question comes from Bishop Cheen with Wachovia.

Hey, Keith and Sean. Thank you for taking the question. I just want to make sure I have got the new capitalization right. You said you had 285 available on the term, the term was the new $400 million term?

Right, that's correct.

That is $115 million there. How much is drawn on the revolver?

105.

Only 105 to run?

Yes. And there is another $10 million in letters of credit that we have outstanding backing up insurance programs.

Okay. I am missing some pieces. Give me the whole senior bank facility, if you would?

$400 million term A.

Right.

7-year life. And $400 million revolver.

Okay. Maybe I will just do this offline with you, because I am having problems getting back to your 1607 of total cap.

Okay.

And then the other question is, did you also in the new facility you have a $500 million undrawn incremental term?

Yes, that's correct.

Okay. And then the pricing is LIBOR 125 on the revolver, LIBOR 175 on the term?

No. No, it's come down, our top rate is 1 over. On the new facility, and then it decreases based on our leverage ratio.

Okay the top rate is, you said, 100.

Yes.

Okay. Last question in the inquisition. What about insurance settlement from the hurricane damage.

We self-insure. We always have. I had a conference call with our insurance broker, Marshall [McClennan], about two weeks ago, just so that we could get a gut check. By the way Clear Channel doesn't insure their inventory either. I am not sure about Viacom, but Marshall handles their account as well, and he informed me.

It will cost us based on a last track record over the past five years, approximately 14 million a year in premiums, if we can get somebody like Lloyds of London to insure us. For business interruption to go along with that, again based on our loss of revenue over the past 5 years. It would be approximately 4 million to 5 million a year in premiums. It's just too costly.

Okay. Will you see any profit of tax impact this year of, and I guess into '06, is there any positive tax impact?

Because of the storm.

Yes, from the hurricane damage.

Well, I mean, we wrote off the rest of the remaining net of value of the destroyed storms, and we will do that again in the fourth quarter, whatever we didn't get in the third quarter. So and it will be one write-off. You won't be averaging it out of the year. You will just take the write-off in this calendar year. That's right.

Okay, great, thank you, gentlemen.

Well, let me wrap up the call. I was just informed that we have digital authorization in actually 35 states. So we are looking at working on the remainder. Somebody handed me that piece of data.

Thank you all for listening, and we look forward to a great fourth quarter, and visiting again when we report on that. Operator, that's it.

Thank you.