Central Parking Corporation
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 September 30, 2005. |
|
|
|
o |
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the transition period from ___ to ___ |
Commission file number 001-13950
CENTRAL PARKING CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
|
|
|
Tennessee
|
|
62-1052916 |
|
|
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer Identification No.) |
|
|
|
2401 21st Avenue South,
Suite 200, Nashville, Tennessee
|
|
37212 |
|
|
|
(Address of Principal Executive Offices)
|
|
(Zip Code) |
|
Registrants Telephone Number, Including Area Code:
|
|
(615) 297-4255 |
|
Securities Registered Pursuant to Section 12(b) of the Act:
|
|
None |
Securities Registered Pursuant to Section 12(g) of the Act:
|
|
|
Title of Each Class
|
|
Name of each Exchange on which registered |
|
|
|
Common Stock, $0.01 par Value
|
|
New York Stock Exchange |
Indicate
by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes
£ No R
Indicate
by check mark whether
the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes £ No R
Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. YES R NO £
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K.
£
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Act). YES R NO £
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act). Yes
£ No
R
The aggregate market value of the Common Stock held by non-affiliates of the registrant, based on
the closing price of the Common Stock on the New York Stock Exchange on March 31, 2005 (the last
business day of the most recently completed second fiscal quarter) was $294,577,952. For purposes
of this response, the registrant has assumed that its directors, executive officers, and beneficial
owners of 5% or more of its Common Stock are the affiliates of the registrant.
Indicate the number of shares outstanding of each of the registrants classes of common stock as of
the latest practicable date.
|
|
|
Class
|
|
Outstanding at December 13, 2005 |
|
|
|
Common Stock, $0.01 par value
|
|
31,939,656 |
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrants definitive proxy statement for the Annual Meeting of Shareholders
to be held on February 21, 2006 are incorporated by reference into Part III, items 10, 11, 12, 13
and 14 of this Form 10-K.
IMPORTANT INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Certain information discussed in this Annual Report on Form 10-K, including but not limited
to, information under the captions Business; Properties; Legal Proceedings; Managements
Discussion and Analysis of Financial Condition and Results of Operations, and Quantitative and
Qualitative Disclosures About Market Risk, and the information incorporated herein by reference,
may constitute forward-looking statements for purposes of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements are subject to risks and uncertainties, including, without limitation,
the factors set forth under the caption Risk Factors. Forward-looking statements include, but are
not limited to, discussions regarding the Companys strategic
plan, operating strategy, growth strategy,
acquisition strategy, cost savings initiatives, industry, economic conditions, financial condition,
liquidity and capital resources, results of operations and impact of new accounting pronouncements.
Such statements include, but are not limited to, statements preceded by, followed by or that
otherwise include the words believes, expects, anticipates, intends, seeks, estimates,
projects, objective, strategy, outlook, assumptions, guidance, forecasts, goal,
intends, pursue, will likely result, will continue or similar expressions. For those
statements, the Company claims the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995.
The following important factors, in addition to those discussed elsewhere in this document,
and the documents which are incorporated herein by reference, could affect the future financial
results of the Company and could cause actual results to differ materially from those expressed in
forward-looking statements contained in news release and other public statements by the Company and
incorporated by reference in this document:
|
- |
|
the Companys ability to achieve the goals described in this report and other reports
filed with the Securities and Exchange Commission, including but not limited to, the
Companys ability to |
|
- |
|
increase cash flow by reducing operating costs, accounts receivable and indebtedness; |
|
|
- |
|
cover the fixed costs of its leased and owned facilities and
maintain adequate liquidity through its cash resources and credit facility; |
|
|
- |
|
integrate future acquisitions, in light of challenges in
retaining key employees, synchronizing business processes and efficiently
integrating facilities, marketing, and operations; |
|
|
- |
|
comply with the terms of its credit facility or obtain waivers of noncompliance; |
|
|
- |
|
reduce operating losses at unprofitable locations; |
|
|
- |
|
form and maintain strategic relationships with certain large real estate owners and operators; and |
|
|
- |
|
renew existing insurance coverage and to obtain performance and surety bonds on favorable terms; |
|
- |
|
successful implementation of the Companys strategic plan and other operating strategies; |
|
|
- |
|
interest rate fluctuations; |
|
|
- |
|
the loss, or renewal on less favorable terms, of existing management contracts and
leases and the failure to add new locations on favorable terms; |
|
|
- |
|
the timing of property-related gains and losses; |
|
|
- |
|
pre-opening, start-up and break-in costs of parking facilities; |
|
|
- |
|
player strikes or other events affecting major league sports; |
|
|
- |
|
changes in economic and business conditions at the local, regional, national or international levels; |
|
|
- |
|
changes in patterns of air travel or automobile usage, including but not limited to the
effects of weather and fuel prices on travel and transportation patterns; |
|
|
- |
|
the impact of litigation; |
|
|
- |
|
higher premium and claims costs relating to medical, liability, workers compensation and other insurance programs; |
1
|
- |
|
compliance with, or changes in, local, state, national and international laws and
regulations, including, without limitation, local regulations, restrictions and taxation on
real property, parking and automobile usage, security measures, environmental, anti-trust
and consumer protection laws; |
|
|
- |
|
changes in current parking rates and pricing of services to clients; |
|
|
- |
|
extraordinary events affecting parking facilities that the Company manages, including
labor strikes, emergency safety measures, military or terrorist attacks and natural
disasters; |
|
|
- |
|
the loss of key employees; and |
|
|
- |
|
the other factors discussed under the heading Item 1A.
Risk Factors included elsewhere in this Form 10-K. |
2
PART I
Item 1. Business
General
Central Parking Corporation (Central Parking or the Company) is a leading provider of
parking and related services. As of September 30, 2005, Central Parking operated 3,399 parking
facilities containing 1,564,356 spaces in 37 states, the District of Columbia, Canada, Puerto Rico,
Mexico, Chile, Colombia, Peru, Venezuela, the United Kingdom, the Republic of Ireland, Spain,
Germany, Poland, Greece and Switzerland.
Central Parking operates or manages multi-level parking facilities and surface lots. It also
provides ancillary services, including parking consulting, shuttle bus, valet, parking meter
collection and enforcement, and billing services. Central Parking operates parking facilities under
three general types of arrangements: management contracts, leases and fee ownership. As of
September 30, 2005, Central Parking operated 1,671 parking facilities under management contracts
and 1,548 parking facilities under leases. In addition, the Company owned 180 parking facilities
either independently or through joint ventures.
Parking Industry
The commercial parking services business is very fragmented, consisting of a few national
companies and numerous small, privately held local and regional operators. Central Parking
believes it has certain competitive advantages over many of these companies, including advantages
of scale, financial resources and technology.
During the 1980s, the high level of construction activity in the United States resulted in a
significant increase in the number of parking facilities. Since that time, construction activity
has slowed and the primary growth opportunity for parking companies has become take-aways or
competing with other parking operators for existing locations. Although some growth in revenues
from existing operations is possible through redesign, increased operational efficiency, or
increased facility use and prices, such growth is ultimately limited by the size of a facility and
market conditions.
Management believes that most commercial real estate developers and property owners view
services such as parking as potential profit centers rather than cost centers. Many of these
parties outsource parking operations to parking management companies in an effort to maximize
profits or leverage the original rental value to a third-party lender. Parking management companies
can increase profits by using managerial skills and experience, operating systems, and operating
controls unique to the parking industry.
Management continues to view privatization of certain governmental operations and facilities
as an opportunity for the parking industry. For example, privatization of on-street parking fee
collection and enforcement in the United Kingdom has provided significant opportunities for private
sector parking companies. In the United States, several cities have awarded on-street parking fee
collection and enforcement and parking meter service contracts to private sector parking companies
such as Central Parking.
Strategic Plan
In August 2005, the Company announced a new strategic plan designed to streamline operations
and focus on core competencies and key markets with the greatest potential for growing profits.
The plan includes the following components:
|
|
|
Exit marginal and low growth markets (cities and
countries). As a key component of our
strategy to reduce costs and become more focused on high-growth markets, the Company plans
to divest operations in up to 15 cities in the United States and up to eight foreign
countries. Most of the operations to be divested in the United States are in small to
medium-sized markets that management believes have limited growth potential. The Company
intends to maintain a strong presence and focus its growth efforts in the major
metropolitan areas throughout the United States. Internationally, the operations to be
divested are primarily in countries in which the Company has a small market share and
significant barriers to growth. The Company is seeking buyers for the operations to be
divested and the sale process is expected to take up to 12 months. The operations that the
Company plans to divest represent less than 4% of revenues. |
|
|
|
|
Reduce the number of marginal and unprofitable operating agreements. In its remaining
markets, the Company intends to improve profit margins by reducing the number of marginal
and unprofitable operating agreements and focus on fewer but more profitable locations. The
Company will continue its program of seeking to eliminate unprofitable leases through
renegotiation, operational improvements and selective buyouts. Low-margin management
agreements and leases will be targeted for renegotiation or termination. |
|
|
|
|
Target national accounts and other market segments with high growth potential. The Company
intends to place more focus on national accounts and other specialized parking market
segments, including stadiums and arenas, airports, on-street and hospitality valet.
Additional resources will be dedicated to these specialized markets. A senior-level manager
has been named to focus on |
3
|
|
|
the stadium and arena market segment and a vice president for national accounts also has been
named. In addition, the Companys USA Parking subsidiary, which is focused on the high-end
hospitality industry, is expanding its marketing activities outside of its traditional home
base of Florida. The Company will continue its efforts to expand its share of the airport
parking segment and will seek to grow its on-street business. |
|
|
|
|
Re-emphasize the importance of client relationships in retaining and growing the
management contract segment. The Company intends to re-emphasize the importance of
developing and maintaining strong client relationships at the local, regional and national
levels through new training initiatives and incentives with the primary goals of improving
the Companys management contract retention rates and increasing its share of the management
contract business. |
|
|
|
|
Expand the Operational Excellence initiative company-wide.
Through its Operational Excellence, the Company seeks to improve
revenues, margins and profits at the location level. The Company
intends to dedicate additional resources to its Operational
Excellence initiative to expand its operational audit and training
programs and add Operational Excellence managers in several key
markets.
|
|
|
|
|
Increase investment in technology to reduce costs and improve operational efficiencies.
The Company plans to deploy additional technology at the lot level, including automated pay
stations and other revenue collection technology. In addition, the Company will continue to
automate more field and corporate accounting processes. Management believes this investment
will streamline payment processing, improve timeliness of reporting and drive operational
efficiencies.
In addition, management believes that the Companys application
of technology to its operations represents a competitive advantage
over smaller operators with more limited resources.
|
|
|
|
|
Continue to pursue opportunistic sales of real estate. The Company plans to continue its
previously announced strategy of pursuing opportunistic sales of real estate in situations
where the Company can achieve a purchase price that represents a substantial multiple to
earnings.
The Company has acquired a significant portfolio of real estate
properties. In certain situations, some of these properties have
increased in value significantly such that the best use for the
property is something other than parking. In these situations, the
Company will consider selling the property for development. During
fiscal year 2005, the Company sold 10 properties for a total of $81.5
million and anticipates additional sales during next fiscal year.
|
The new strategic plan is designed to capitalize on Central Parkings brand, experience and
relationships to grow the profits of the Company. Implementation of
the plan is expected to take approximately twelve months.
Operating Strategy
In
addition to the strategic plan described above,
Central Parking seeks to increase the revenues and profitability of its parking facilities
through a variety of operating strategies, including the following:
Manage Costs
To provide competitively priced services, the Company must contain costs. Managers analyze
staffing and cost control issues, and each is tracked on a monthly basis to determine whether
financial results are within budgeted ranges. Because of the substantial performance-based
components of their compensation, managers at the city level and above are motivated to contain the
costs of their operations.
Emphasize Sales and Marketing Efforts
Central Parkings management is actively involved in developing and maintaining business
relationships and in exploring opportunities for growth. Central Parkings marketing efforts are
designed to expand its operations by developing lasting relationships with major real estate
developers and asset managers, business and government leaders, and other clients. Central Parking
encourages its managers to pursue new opportunities at the local level while simultaneously
targeting key clients and projects at a national level.
Management believes that Central Parkings relative size,
financial resources and systems give it a competitive advantage in winning new business and
make it an attractive partner for joint venture and other
opportunities. In addition,
Central Parking believes that its performance-based compensation system, which
is designed to reward managers for increasing profitability in their respective areas of
responsibility, is an important element of this strategy.
Leverage Established Market Presence
Central Parking has an established presence in multiple markets, representing platforms from
which it can build. Because of the relatively fixed nature of certain overhead at the city level
and the resources that can be shared in specific markets, management believes it has the
opportunity to increase the Companys profit margins as it grows its presence in established
markets.
4
Pursue Privatization Opportunities and Airports
The Company pursues privatization opportunities, including on-street parking fee collection
and enforcement, shuttle services and airport parking management. The Company currently has
contracts for parking meter collection and enforcement in 29 cities, including; Charlotte, North
Carolina; Toledo, Ohio; Daytona Beach, Florida; and Edinburgh, Scotland. The Company currently
provides airport parking management services to approximately 30 airports, including airports in
Miami, New Orleans, Houston, and Detroit and Washington Dulles.
Empower Local Managers; Provide Corporate Support
The Companys strategy is to establish a successful balance between centralized and
decentralized management. Because its business is dependent, to some extent, on relationships with
clients, Central Parking provides its managers with a significant degree of autonomy in order to
encourage prompt and effective responses to local market demands. In conjunction with this local
operational authority, the Company provides, through its corporate office, services that may not be
readily available to independent operators such as management support, human resources management,
marketing and business expertise, training, and financial and information systems. Services
performed primarily at the corporate level include billing, quality improvement oversight, accounts
payable, financial and accounting functions, human resources, legal services, policy and procedure
development, systems design, real estate management and corporate acquisitions and development.
The Companys operations are managed based on segments administered by executive vice
presidents and senior vice presidents. These segments are generally organized geographically, with
exceptions depending on the needs of specific regions. See Note 17 to the Consolidated Financial
Statements for financial information regarding the Companys business segments.
Utilize Performance-Based Compensation
Central Parkings performance-based compensation system rewards managers at the general (city)
manager level and above for the profitability of their respective areas of responsibility.
Maintain Well-Defined Professional Management Organization
In order to ensure professionalism and consistency in Central Parkings operations, provide a
career path opportunity for its managers, and achieve a balance between autonomy and
accountability, Central Parking has established a structured management organization.
For its managerial positions, Central Parking seeks to recruit college graduates or people
with previous parking services or hospitality industry experience, and requires that they undergo a
training program. New managers typically are assigned to a particular facility where they are
supervised as they manage one to five employees. The Companys management trainee program teaches a
wide variety of skills, including organizational skills and basic management techniques. As
managers develop and gain
experience, they have the opportunity to assume expanded responsibility, be promoted to higher
management levels and increase the performance-based component of their compensation. This
well-defined structure provides a career path that is designed to be an attractive opportunity for
prospective new hires. In addition, management believes the training and advancement program has
enabled Central Parking to instill a high level of professionalism in its employees.
5
Offer
Ancillary Services
Central Parking provides services that are complementary to parking facility management. These
services include consulting services (parking facility design, layout and utilization); on-street
parking fee collection and enforcement services; shuttle bus and van services; and, accounts
receivable billing systems and services. These ancillary services did not constitute a significant
portion of Central Parkings revenues in fiscal year 2005, but management believes that the
provision of ancillary services can be important in obtaining new business and preparing the
Company for future changes in the parking industry.
Focus on Retention of Patrons
For the Company to succeed, its parking patrons must have a positive experience at Company
facilities. Accordingly, the Company seeks to have well lit, clean facilities and cordial
employees. Each facility manager has primary responsibility for the environment at the facility,
and is evaluated on his or her ability to retain parking patrons. The Company also monitors
customer satisfaction through customer surveys.
Maintain Disciplined Facility Site Selection Analysis
In existing markets, the facility site selection process begins with identification of a
possible facility site and the analysis of projected revenues and costs at the site by general
managers and regional managers. The managers then typically conduct an examination of a locations
potential demand based on traffic patterns and counts, area demographics, and potential
competitors. Pro forma financial statements are then developed and a Company representative will
meet with the property owner to discuss the terms and structure of the agreement.
The Company seeks to distinguish itself from its competitors by combining a reputation for
professionalism and quality management with operating strategies designed to increase the revenues
of parking operations for its clients. The Companys clients include some of the nations largest
owners, developers and managers of mixed-use projects, office buildings and hotels as well as
municipalities and other governmental agencies and airport authorities. Parking facilities operated
by the Company include, among others, certain terminals operated by BAA Heathrow International
Airport (London), Houston Airport, Detroit Airport, Strategic Rail Authority Parking (London), the
Prudential Center (Boston), Turner Field (Atlanta), Coors Field (Denver), and various parking
facilities owned by the Hyatt and Westin hotel chains, Faison Associates, May Department Stores,
Trizec Office Properties, Jones Lang LaSalle, Millenium Partners, Shorenstein and Crescent Real
Estate. None of these clients accounted for more than 5% of the Companys total revenues for fiscal
year 2005.
Acquisitions
The Companys acquisition strategy is very selective and focuses primarily on acquisitions
that the Company believes will enable it to become a more efficient and cost-effective provider in
selected markets. The strategy also focuses on businesses that have the potential to enhance future
cash flows and can be acquired at reasonable valuations. Central Parking believes it has the
opportunity to recognize certain economies of scale by making acquisitions in markets where the
Company already has a presence. Management believes acquisitions also can be an effective means of
entering new markets, thereby quickly obtaining both operating presence and management personnel.
The Company acquired Sterling Parking LTD in May 2003. No
acquisitions were completed in 2004 or 2005.
See Note 2 to the Consolidated Financial Statements and Item 7, Managements Discussion and
Analysis of Financial Condition and Results of Operations.
Sales and Marketing
Central Parkings sales and marketing efforts are designed to expand its operations by
developing and maintaining relationships with major real estate developers and asset managers,
business and government leaders, and other clients. Central Parking encourages its managers to
pursue new opportunities at the local level while selectively targeting key clients and projects at
a national level.
Local
At the local level, Central Parkings sales and marketing efforts are decentralized and
directed towards identifying new expansion opportunities within a particular city or region.
Managers are trained to develop the business contacts necessary to generate new opportunities and
monitor their local markets for take-away and outsourcing opportunities. Central Parking provides
its managers with a significant degree of autonomy in order to encourage prompt and effective
responses to local market demands, which is complemented by management support and marketing
training through Central Parkings corporate offices. By developing business contacts locally,
Central Parkings managers often get the opportunity to bid on projects when asset managers and
property owners are dissatisfied with other operators and also learn in advance of possible new
projects.
National
At the national level, Central Parkings marketing efforts are undertaken primarily by
upper-level management, which targets developers, governmental entities, the hospitality industry,
mixed-use projects, and medical facilities. These efforts are directed at
6
operations that generally
have national name recognition, substantial demand for parking related services, and the potential
for nationwide growth. For example, Central Parkings current clients include, among other national
real estate companies and hotel chains, Millennium Partners, Faison Associates, Shorenstein, May
Department Stores, Crescent Real Estate, Trizec Office Properties, Jones Lang LaSalle, Westin
Hotels, Ritz Carlton Hotels and Hyatt Hotels. Management believes that providing high-quality,
efficient services to such companies can lead to additional opportunities as those clients expand
their operations. Management believes outsourcing by parking facility owners will continue to be a
source for additional facilities, and management believes the Companys global presence, experience
and reputation with large real estate asset managers give it a competitive advantage in this area.
International
Central Parkings international operations began in the early 1990s with the formation of an
international division. The Company generally has entered foreign markets either through consulting
projects or by forming joint ventures with established local entities. Consulting projects allow
Central Parking to establish a presence and evaluate the prospects for growth in a given market
without investing a significant amount of capital. Likewise, forming joint ventures with local
partners allows Central Parking to enter new foreign markets with reduced operating and investment
risks.
Operations in London began in 1991 with a single consulting agreement and, as of September 30,
2005, had grown to 105 locations in the United Kingdom including four airports, eight rail
operating companies and parking meter enforcement and ticketing services for thirteen local
governments that have privatized these services. Central Parking began expansion into Mexico in
July 1994 by forming a joint venture with G. Accion, (formerly Fondo Opcion), an established
Mexican developer, and as of September 30, 2005, operated 127 facilities in Mexico.
In September 2005, the Company entered into a letter of intent to sell its 50% interest in
its joint venture company in Mexico to its partner. The letter of intent is subject to the
negotiation and execution of a definitive agreement and there can be no assurance that the
transaction will be completed.
As of September
30, 2005, Central Parking also operated 134 facilities in Canada, 5 facilities in Spain, 10 in
Poland, 27 in Chile, 4 in Venezuela, 18 in Colombia, 12 in Peru, 2 in Switzerland, 7 in the
Republic of Ireland, and 8 in Greece. The Company also operates on-street parking services in the
United Kingdom, Germany and the Republic of Ireland. In 1996, Central Parking acquired a 50% equity
interest in a joint venture, which operated 19 facilities in Germany as of September 30, 2005. To
manage its international expansion efforts, the Company has allocated responsibilities for
international operations to the President of International Operations.
Operating Arrangements
Central Parking operates parking facilities under three general types of arrangements:
management contracts, leases, and fee ownership. The following table sets forth certain information
regarding the number of managed, leased, or owned facilities as of the specified dates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
Managed |
|
|
1,671 |
|
|
|
1,615 |
|
|
|
1,714 |
|
Leased |
|
|
1,548 |
|
|
|
1,626 |
|
|
|
1,798 |
|
Owned |
|
|
180 |
|
|
|
192 |
|
|
|
205 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
3,399 |
|
|
|
3,433 |
|
|
|
3,717 |
|
|
|
|
|
|
|
|
|
|
|
See
Item 2. Properties for certain information regarding the Companys managed, leased and
owned facilities. The general terms and benefits of these types of arrangements are discussed
below. Financial information regarding these types of arrangements is set forth in Item 7.
Managements Discussion and Analysis of Financial Condition and Results of Operations.
Management Contracts
Management contract revenues consist of management fees (both fixed and performance based) and
fees for ancillary services such as insurance, accounting, benefits administration, equipment
leasing, and consulting. The cost of management contracts includes insurance premiums and claims
and other indirect overhead. The Companys responsibilities under a management contract as a
facility manager generally include hiring, training, and staffing parking personnel, and providing
collections, accounting, record keeping and insurance. Most management contracts provide that the
Company is reimbursed for out-of-pocket expenses. Central Parking is not responsible under most of
its management contracts for structural, mechanical, or electrical maintenance or repairs, or for
providing security or guard services or for paying property taxes. In general, management contracts
are for terms of one to three years and are renewable for successive one-year terms, but are
typically cancelable by the property owner on 30 days notice. With respect to insurance, the
Companys clients have the option of obtaining liability insurance on their own or having Central
Parking provide insurance as part of the services provided under the management contract. Because
of the Companys size and claims experience, management believes it can purchase such insurance at
lower rates than the Companys clients can generally obtain on their own.
7
Leases
The Companys leases generally require the payment of a fixed amount of rent, regardless of
the amount of revenues or profitability generated by the parking facility. In addition, many
leases also require the payment of a percentage of gross revenues above specified threshold levels.
In general, leased facilities require a longer commitment, a larger capital investment for the
Company, and represent a greater risk than managed facilities due to the relatively fixed nature of
expenses. However, leased facilities often provide a greater opportunity for long-term growth in
revenues and profits. The cost of parking includes rent, payroll and related benefits,
depreciation, maintenance, insurance, and general operating expenses. Under its leases, the
Company is typically responsible for all facets of the parking operations, including pricing,
utilities, and routine maintenance. In short to medium term leases, the Company is generally not
responsible for structural, mechanical or electrical maintenance or repairs, or property taxes.
However, the Company does often have these responsibilities in longer-term leases. Lease
arrangements are typically for terms of three to twenty years, and generally provide for increases
in base rent that are either pre-determined and recognized on a straight-line basis or have
contingent payments based on changes in indices, such as the Consumer Price Index, and are
recognized when incurred.
Fee Ownership
Ownership of parking facilities, either independently or through joint ventures, typically
requires a larger capital investment and greater risk than managed or leased facilities, but
provides maximum control over the operation of the parking facility and the greatest profit
potential of the three types of operating arrangements. All owned facility revenues flow directly
to the Company, and the Company has the potential to realize benefits of appreciation in the value
of the underlying real estate if the property is sold. The ownership of a parking facility brings
the Company complete responsibility for all aspects of the property, including all structural,
mechanical or electrical maintenance or repairs and property taxes.
Joint Ventures
The Company historically has sought joint venture partners who are established local or
regional real estate developers. Joint ventures typically involve a 50% interest in a development
where the parking facility is a part of a larger multi-use project, allowing the Companys joint
venture partners to benefit from a capital infusion to the project. Joint ventures offer the
revenue growth potential
of owned lots with lower capital requirements. The Company has interests in joint ventures
that own or operate parking facilities located in the United States as well as several other
countries.
DBE Partnerships
Central Parking is a party to a number of disadvantaged business enterprise partnerships.
These are generally partnerships formed by Central Parking and a disadvantaged business person to
manage a facility. Central Parking generally owns 60% to 75% of the partnership interests in each
partnership and typically receives management fees before partnership distributions are made to the
partners.
Competition
The parking industry is fragmented and highly competitive with relatively low barriers to
entry. The Company competes with a variety of other companies to manage, lease and own parking
facilities, and faces competition for customers and employees to operate parking facilities.
Although there are relatively few large, national parking companies that compete with the Company,
numerous companies, including real estate developers, hotel and property management companies, and
national financial services companies either compete currently or have the potential to compete
with parking companies. Municipalities and other governmental entities also operate parking
facilities that compete with Central Parking. In addition, the Company faces competition from
numerous regional and local parking companies and from owner-operators of facilities who are
potential clients for the Companys management services. Construction of new parking facilities
near the Companys existing facilities increases the competition for customers and employees and
can adversely affect the Companys business.
Management believes that it competes for management clients based on a variety of factors,
including fees charged for services; ability to generate revenues and control expenses for clients;
accurate and timely reporting of operational results; quality of customer service; and ability to
anticipate and respond to industry changes. Factors that affect the Companys ability to compete
for leased and owned locations include the ability to make capital investments, pre-paid rent
payments and other financial commitments; long-term financial stability; and the ability to
generate revenues and control expenses. The Company competes for parking customers based primarily
on rates charged for parking; convenience (location) of the facility; and quality of customer
service. Factors affecting the Companys ability to compete for employees include wages, benefits
and working conditions.
Seasonality
The Companys business is subject to a modest amount of seasonality. Historically, the
Companys results have been higher during the quarters that end on December 31 and June 30. The
Company attributes the relative lower results of the quarters that end on March 31 and September 30
to, among other factors, winter weather and summer vacations. There can be no assurance that this
8
trend will continue in future years. For further discussion of this issue see Item 7.
Managements Discussion and Analysis of Financial Condition and Results of Operations.
Insurance
The Company purchases comprehensive liability insurance covering certain claims that occur at
parking facilities it owns, leases or manages. The primary amount of such coverage is $1 million
per occurrence and $2 million in the aggregate per facility. In addition, the Company purchases
umbrella/excess liability coverage. The Companys various liability insurance policies have
deductibles of up to $350,000 that must be met before the insurance companies are required to
reimburse the Company for costs and liabilities relating to covered claims. The Company purchases
a workers compensation policy with a per claim deductible of $250,000. The Company utilizes a
third party administrator to process and pay filed workers compensation claims. The Company also
provides health insurance for many of its employees and purchases a stop-loss policy with a
deductible of $150,000 per claim. As a result, the Company is, in effect, self-insured for all
claims up to the deductible levels.
Because of the size of the operations covered and its claims experience, the Company purchases
liability insurance policies at prices that management believes represent a discount to the prices
that would typically be charged to parking facility owners on a stand-alone basis. Pursuant to its
management contracts, the Company charges its management clients for insurance at rates it believes
are competitive. In each case, the Companys management clients have the option of purchasing their
own policies, provided the Company is named as an additional insured. A reduction in the number of
clients that purchase insurance through the Company could have a material adverse effect on the
operating earnings of the Company. In addition, a material increase in insurance costs due to an
increase in the number of claims, higher claims costs or higher premiums paid by the Company could
have a material adverse effect on the operating earnings of the Company. In this regard, the
Company has experienced a substantial increase in the premiums it pays for insurance in recent
years and the Company has experienced a significant increase in claims costs, including liability,
group health, and
workers compensation. These increased costs have adversely affected the Companys
profitability. The Company has been able to recover a portion of these increased costs through
cost sharing programs, however, there can be no assurance the Company will be able to fully recover
or reduce these increased costs.
Regulation
The Companys business is subject to numerous federal, state and local laws and regulations,
and in some cases, municipal and state authorities directly regulate parking facilities. The
facilities in New York City are, for example, subject to extensive governmental restrictions
concerning numbers of cars, pricing, structural integrity and certain prohibited practices. Many
cities impose a tax or surcharge on parking services, which generally range from 10% to 50% of
revenues collected. Several state and local laws have been passed in recent years that encourage
car-pooling and the use of mass transit or impose certain restrictions on automobile usage. These
types of laws have adversely affected the Companys revenues and could continue to do so in the
future. An example was the restrictions imposed by the City of New York in the wake of the
September 11 terrorist attacks, which included street closures, traffic flow restrictions and a
requirement for passenger cars entering certain bridges and tunnels to have more than one occupant
during the morning rush hour. Although these restrictions have been eased, the City of New York
has considered other actions, including higher tolls, increased taxes and vehicle occupancy
requirements in certain circumstances, which could adversely impact the Company. The Company is
also affected by zoning and use restrictions, increases in real estate taxes, and other laws and
regulations that are common to any business that owns real estate.
The Company is subject to numerous federal, state and local employment and labor laws and
regulations, including Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act
of 1991, the Age Discrimination in Employment Act of 1967, the Family Medical Leave Act, wage and
hour laws, and various state and local employment discrimination and human rights laws. Several
cities in which the Company has operations either have adopted or are considering the adoption of
so-called living wage ordinances which could adversely impact the Companys profitability by
requiring companies that contract with local governmental authorities and other employers to
increase wages to levels substantially above the federal minimum wage. In addition, the Company is
subject to provisions of the Occupational Safety and Health Act of 1970, as amended (OSHA) and
related regulations. Various other governmental regulations affect the Companys operation of
parking facilities, both directly and indirectly, including the Americans with Disabilities Act
(ADA). Under the ADA, public accommodations, including many parking facilities, are required to
meet certain federal requirements related to access and use by disabled persons. For example, the
ADA generally requires garages to include handicapped spaces, headroom for wheelchair vans, and
elevators that are operable by disabled persons.
Under various federal, state and local environmental laws, ordinances and regulations, a
current or previous owner or operator of real property may be liable for the costs of removal or
remediation of hazardous or toxic substances on, under or in such property. Such laws typically
impose liability without regard to whether the owner or operator knew of, or was responsible for,
the presence of such hazardous or toxic substances. In connection with the ownership or operation
of parking facilities, the Company may be liable for any such costs. Although Central Parking is
currently not aware of any material environmental claims pending or threatened against it, there
can be no assurance that a material environmental claim will not be asserted against the Company.
The cost
9
of defending against claims of liability, or remediating a contaminated property, could
have a material adverse effect on the Companys financial condition or results of operations.
The Company also is subject to various federal and state antitrust and consumer laws and
regulations including the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
HSR Act), which requires notification filings and waiting periods in connection with certain
mergers and acquisitions. In connection with the Companys merger with Allright Corporation
(Allright) in March 1999, the Antitrust Division of the United States Department of Justice filed
a complaint in U.S. District Court for the District of Columbia seeking to enjoin the merger on
antitrust grounds. In addition, the Company received notices from several states, including
Tennessee, Texas, Illinois and Maryland, that the attorneys general of those states were reviewing
the merger from an antitrust perspective. Several of these states also requested certain
information relating to the merger and the operations of Central Parking and Allright in the form
of civil investigative demands. Central Parking and Allright entered into a settlement agreement
with the Antitrust Division on March 16, 1999, under which the two companies agreed to divest a
total of 74 parking facilities in 18 cities, representing approximately 18,000 parking spaces. The
settlement agreement also prohibited Central Parking and Allright from, among other things,
operating any of the divested properties for a period of two years following the divestiture of
each facility. The two-year prohibition on operating the divested properties has expired. None of
the states that reviewed the transaction from an antitrust perspective became a party to the
settlement agreement with the Antitrust Division and several of the states continued their
investigation of the merger after the Allright merger was consummated. The completion of any
future mergers or acquisitions by the Company is subject to the filing requirements described above
and possible review by the Department of Justice or the Federal Trade Commission and various state
attorneys general. Certain of the Companys fee collection activities are subject to federal and
state consumer protection or debt collection laws and regulations.
Employees
As of September 30, 2005, the Company employed 23,957 individuals, including 18,000 full-time
and 5,957 part-time employees. Approximately 4,801 U. S. employees are represented by labor unions.
Various union locals represent parking attendants and cashiers at the New York City facilities.
Other cities in which some of the Companys employees are represented by labor unions include
Washington, D.C., Miami, Detroit, Philadelphia, San Francisco, Jersey City, Newark, Atlantic City,
Pittsburgh, Los Angeles, St. Louis, Columbus, Chicago and San Juan, Puerto Rico. The Company
frequently is engaged in collective bargaining negotiations with various union locals. The
Companys employees in Pittsburgh (approximately 20 employees) currently are on strike but the
Company has not experienced any significant labor strikes. Management believes that the Companys
employee relations are good.
Service Marks and Trademarks
The Company has registered the names CPC, Central Parking System and Central Parking
Corporation, and its logo with the United States Patent and Trademark Office and has the right to
use them throughout the United States except in certain areas, including the Chicago and Atlantic
City areas where two other companies have the exclusive right to use the name Central Parking.
The Company also owns registered trademarks for Square Industries, Kinney System, Allied Parking
and Allright Parking and operates various parking locations under those names. The Company uses the
name Chicago Parking System in Chicago and CPS Parking in Seattle and Milwaukee. The Company
has registered the name Control Plus and its symbol in London and has registered that name and
symbol in association with its on-street parking activities in Richmond, Virginia. The Company has registered, or intends to register, its name and logo
in various international locations where it does business.
Foreign and Domestic Operations
For information about the Companys foreign and domestic operations refer to Note 17 to the
Consolidated Financial Statements.
Available Information
The Company files reports with the Securities and Exchange Commission (SEC), including
annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K.
Copies of the Companys reports filed with the SEC may be obtained by the public at the SECs
Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. The public may obtain
information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The Company files such reports with the SEC electronically, and the SEC maintains an Internet site
at www.sec.gov that contains the Companys reports, proxy and information statements, and other
information filed electronically. The Companys website address
is www.parking.com. The Company
also makes available, free of charge through the Companys website, its annual reports on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and other materials filed with
the SEC as soon as reasonably practicable after such material is electronically filed with or
furnished to the SEC. The information provided on the Companys website is not part of this
report, and is therefore not incorporated by reference unless such information is otherwise
specifically referenced elsewhere in this report.
10
Item 1A. Risk Factors
You should carefully consider the following specific risk factors as well as the other
information contained or incorporated by reference in this report, as these are
important factors, among others, that could cause our actual results to differ from our expected or
historical results. It is not possible to predict or identify all such factors. Consequently, you
should not consider any such list to be a complete statement of all of our potential risks or
uncertainties.
Our financial performance is sensitive to changes in economic conditions that may
impact employment and consumer spending and commercial office occupancy.
The most recent general economic slowdown in the United States adversely affected employment
levels, consumer spending and commercial office occupancy, which, in turn, reduced the demand for
parking. The reduced demand for parking negatively impacted our revenues and net income.
Future economic conditions affecting disposable consumer income, employment levels, business
conditions, fuel and energy costs, interest rates, and tax rates, are also likely to adversely
affect our business.
Our concentration of operations in the Northeastern and Mid-Atlantic regions of the
United States, particularly in New York City, increases the risk of negative financial fluctuations
due to events or factors that affect these areas.
Our operations in the Northeastern and Mid-Atlantic regions of the United States,
which includes the cities of New York, Newark, Boston, Philadelphia, Pittsburgh, Baltimore and
Washington, D.C. generated approximately 43.5% of our total revenues (excluding
reimbursement of management contract expenses) in fiscal year 2005. Revenues from our
operations in New York City and surrounding areas accounted for approximately 26.2% of our total revenues (excluding reimbursement of management expenses) in fiscal 2005. The
concentration of operations in these areas increases the risk that local or regional events or
factors that affect these cities or regions such as severe winter weather, labor strikes, changes
in local or state laws and regulations, economic conditions or acts of terrorism, can have a
disproportionate impact on our operating results and financial condition.
We have found material weaknesses in our internal controls that require remediation and concluded, pursuant to Section 404 of the
Sarbanes-Oxley Act of 2002, that our internal controls over financial reporting at September 30, 2005 were not effective.
As we disclose in Part II, Item 9A, Controls and
Procedures of this Form 10-K, our CEO and CFO have concluded that our
disclosure controls and procedures were not effective as of September 30, 2005. While we are taking immediate steps to correct our
internal control weaknesses, the material weaknesses that have been discovered will not be considered remediated until the new and
improved internal controls operate for a period of time, are tested and it is concluded that such new and improved internal controls
are operating effectively. Pending the successful completion of such testing, we will perform mitigating procedures relating to our
internal control weaknesses.
Any failure to implement and maintain the improvements in the controls over our financial reporting, or difficulties encountered
in the implementation of these improvements in our controls, could cause us to fail to meet our reporting obligations. Any failure
to improve our internal controls to address the identified material weakness could also cause investors to lose confidence in our
reported financial information, which could have a negative impact on the trading price of our stock.
Changes in the insurance marketplace, including significantly higher premiums, higher
deductibles and coverage restrictions and increased claims costs, have negatively impacted our net income in recent years and could have a material adverse effect on our results of
operations and financial condition in the future.
We purchase insurance covering
certain types of claims that occur at parking
facilities we own, lease or manage. In addition, we purchase workers compensation,
group health, directors and officers liability and certain other insurance coverages. Due to
changes in the insurance marketplace,
we have experienced in recent years a substantial increase in the premiums we pay for most
types of insurance coverage and an increase in the deductibles relating to such coverage. We also have experienced an increase in certain claims costs, including workers compensation,
liability and group health. In addition, coverages of certain types of risk, such as terrorism
coverage, have been significantly restricted or are no longer
available at a reasonable cost. The changes in the
insurance marketplace, including increased premium and claims costs, higher deductibles and
coverage restrictions, have negatively impacted our earnings in recent years and could have a
material adverse effect on our results of operations and financial condition in the
future.
Acts of terrorism, such as the September 11, 2001 attacks, can have a significant adverse
affect on our results of operations and financial condition.
We estimate that the terrorist attacks on September 11, 2001 reduced our
revenues in the fourth quarter of fiscal year 2001 by approximately $5 million and approximately
$10 million in the first half of fiscal year 2002. Not only did the attack cause physical damage
to some of the parking facilities operated by us, but the reduction in the number of
commuters parking in the areas affected, reduction in tourists and local consumers traveling to the
area as well as the broader reduction in airplane travel and lower attendance at sporting events,
concerts and other venues, also impacted our operations adversely. The closing of streets in the
vicinity of the World Trade Center and other areas of New York City and the imposition of certain
restrictions on traffic and other security measures in New York City and at the nations airports
also had a negative impact on our operations. Our operations are concentrated
heavily in the downtown areas of major U.S. cities and some are located near landmarks or other
sites that have been mentioned as potential targets of terrorists. In
addition, we
manage the parking operations at approximately 30 airports. Additional terrorist attacks or the
imposition of additional security measures, particularly in New York, Washington, D.C. or other
major cities in which we have a significant presence, or at airports, could have a material
adverse effect on our results of operations and financial condition.
The offer or sale of a substantial amount of our common stock by significant
shareholders could have an adverse impact on the market price of our
common stock.
In February 2001, we filed a registration statement on Form S-3 covering 7,381,618
shares of our common stock held by certain shareholders. These shares
were registered pursuant to registration rights previously
11
granted to these shareholders. Although
we believe a significant portion of these shares has been sold, these shareholders may
sell any remaining shares that were registered on any stock exchange, market or trading facility on
which the shares are traded, or in private transactions. Other substantial shareholders, including the Chairman of Central Parking, Monroe Carell, Jr., the Carell Childrens
Trust, and other family members and related entities (the Carell Family), are permitted to sell
significant amounts of our common stock under Rule 144 and other exemptions from
registration under the federal securities laws. In addition, the Carell Family has certain rights
to register substantially all of the shares held by the family and related entities. The offer or
sale of substantial amounts of our common stock by these or other significant
shareholders, particularly if such offers or sales occur simultaneously or relatively close in
time, could have a significant negative impact on our stocks market price.
We are dependent on the continued availability of capital to support our business.
We have significant working capital requirements, including but not limited to, repair
and maintenance obligations for many of our parking facilities. We are dependant on the
cash generated from our operations and Credit Facility to meet
our working capital requirements. The Credit Facility contains covenants including those that
require us to maintain certain financial ratios, restrict further indebtedness and certain
acquisition activity and limit the amount of dividends paid. The primary ratios are a leverage
ratio, senior leverage ratio and a fixed charge coverage ratio. Quarterly compliance is calculated
using a four quarter rolling methodology and measured against certain targets. Our inability to meet debt covenants and debt service payments under the Credit Facility would have a
material adverse effect on us.
We are subject to interest rate risk.
We are subject to market risk from exposure to changes in interest rates based upon our
financing, investing and cash management activities. The Credit Facility bears interest at LIBOR
plus a tier-based margin dependent upon certain financial ratios. There are separate tiers for the
revolving loan and term loan. The weighted average margin as of September 30, 2005, was 185 basis
points. The amount outstanding under our Credit Facility was $81.5 million with a
weighted average interest rate of 4.4% as of September 30, 2005. We have reduced a portion
of our interest rate risk by executing two interest rate swap transactions whereby we have
fixed $87.5 million of floating rate debt. The term loan is required to be repaid in quarterly
payments of $0.2 million through March 2008 and quarterly payments of $9.1 million from June 2008
through March 2010. An increase (decrease) in LIBOR of 1% would result in no increase (decrease)
of annual interest expense since the swaps, which converted the rates to fixed, totaled $87.5 and
the Credit Facility, which was all floating interest, was $81.5 million on September 30, 2005. We expect to pay both quarterly principle amortization and monthly interest payments out of
operating cash flow.
Our large number of leased and owned facilities increases the risk that we
may become unprofitable and that we may not be able to cover the fixed costs of our leased and
owned facilities.
We leased or owned 1,728 facilities as of September 30, 2005. Although there is more
potential for income from leased and owned facilities than from management contracts, they also
carry more risk if there is a downturn in the economy, property performance or commercial real
estate occupancy rates because a significant part of the costs to operate such facilities typically
is fixed. For example, in the case of leases, there are typically minimum lease payments that must
be made regardless of the revenues or profitability of the facility. In particular, it is
difficult to forecast revenues of newly constructed parking facilities because these facilities do
not have an operating history. Start-up costs, the length of the break in period during which
parking demand is built and economic conditions at the time the facility is opened, are very
difficult to predict at the time the lease is executed (and the base rent is agreed upon), which is
often two or more years prior to the opening of the facility.
In the case of owned facilities, there are the normal risks of ownership and costs of capital.
In addition, operating expenses for both leased and owned facilities are borne by us
and are not passed through to the owner, as is the case with management contracts. In the case of
owned facilities and generally in the case of longer-term leased facilities, we also are
responsible for property taxes and all maintenance and repair costs, including structural,
mechanical and systems repairs. Performance of our parking facilities depends, in
part, on our ability to negotiate favorable contract terms and control operating
expenses, economic conditions prevailing generally and in areas where parking facilities are
located, the nature and extent of competitive parking facilities in the area, weather conditions
and the real estate market.
An increase in government regulation or taxation could have a negative effect on our
profitability.
Our business is subject to numerous federal, state and local laws and regulations,
and in some cases, municipal and state authorities directly regulate parking facilities. In
addition, many cities impose a substantial tax or surcharge on parking services, which generally
range from 10% to 50%.
Substantial increases in the tax or surcharge on parking such as
occurred in recent years in Pittsburgh and Miami can have a significant negative effect on profitability in a given
city. The profitability of our business is also affected by increases in property taxes
because the Company is responsible for paying property taxes on its owned properties and on many of its leased facilities.
Several state and local laws have been passed in recent years that are designed to encourage
car-pooling or the use of mass transit or impose certain restrictions on automobile usage. An
example is the restrictions imposed by the City of New York in the wake of the September 11
terrorist attacks, which included street closures and a requirement for passenger cars entering
certain bridges and tunnels to have more than one occupant during the morning rush hour. We also are subject to federal, state and local employment
12
and labor laws and regulations, and
several cities in which we have operations either have adopted or are considering the
adoption of so-called living wage ordinances. The adoption of such laws and regulations, the
imposition of additional parking taxes or surcharges and increases in property and other taxes
could adversely impact our profitability.
The sureties for our performance bond program may increase rates and require additional
collateral to issue or renew performance bonds in support of certain contracts.
Under substantially all of our contracts with municipalities and government entities and
airports, we are required to provide a performance bond to support our obligations under the
contract. We are also required to provide performance bonds under certain
leases and other contracts with non-governmental entities. Due to our financial results in
recent years and the financial state of the surety bond industry, the sureties for our performance
bond program have increased our rates and have required us to collateralize a greater percentage of
our performance bonds with letters of credit. As a result, our working capital needs have
increased and our borrowing capacity has decreased since letters of credit used by us to
collateralize surety bonds reduces the availability of funds under our Credit Facility. Although
we believe our performance bond program is adequate for its present needs, if we are
unable to provide sufficient collateral in the future, our sureties may not issue or renew
performance bonds to support our obligations under certain contracts.
As is customary in the industry, a surety provider can refuse to provide a bond principal with
new or renewal surety bonds. If any existing or future surety provider refuses to provide us with
surety bonds, there can be no assurance that we would be able to find alternate providers on
acceptable terms, or at all. Our inability to provide surety bonds could result in the loss of
existing contracts or future business, which could have a material adverse effect on our business
and financial condition.
Our net income could be adversely affected if accruals for future insurance losses are not
adequate.
We provide liability, medical and workers compensation insurance coverage. We are obligated
to pay for each loss incurred up to the amount of a deductible specified in our insurance policies.
Our financial statements reflect our anticipated costs based upon loss experience and guidance and
evaluation we have received from third party insurance professionals, such as actuaries. There can
be no assurance, however, that the ultimate amount of such costs will not exceed the amounts
presently accrued, in which case we would need to increase accruals and pay additional expenses.
The operation of our business is dependent on key personnel.
Our success is, and will continue to be, substantially dependent upon the continued services
of our management team. The loss of the services of one or more of the members of our senior
management team could have a material adverse effect on our financial condition and the results of
operations. Although we have entered into employment agreements with, and historically have been
successful in retaining the services of our senior management, there can be no assurance that we
will be able to retain these senior management people in the future. In addition, our future
growth depends on our ability to attract and retain skilled operating managers and employees.
We have foreign operations that may be adversely affected by foreign currency exchange rate
fluctuations.
We operate in the United Kingdom, Germany, the Republic of Ireland and other
countries. For the year ended September 30, 2005, revenues from foreign operations represented
4.1% of our total revenue, excluding reimbursement of management contract expenses.
Our United Kingdom operations accounted for 9.0% of total revenues from foreign
operations, excluding reimbursement of management contract expense and excluding earnings from
joint ventures. We receive revenues and incur expenses in various foreign
currencies in connection with our foreign operations and, as a result, we are subject
to currency exchange rate fluctuations. We intend to continue to invest in certain
foreign leased or owned parking facilities, either independently or through joint ventures, where
appropriate, and may become increasingly exposed to foreign currency fluctuations. We
believe we have currently limited exposure to foreign currency risk and do not have a foreign
currency hedging program.
In connection with ownership or operation of parking facilities, we may be liable
for environmental problems.
Under various federal, state, and local environmental laws, ordinances, and regulations, a
current or previous owner or operator of real property may be liable for the cost of removal or
remediation of hazardous or toxic substances on, under, or in such property. Such laws typically
impose liability without regard to whether the owner or operator knew of, or was responsible for,
the presence of such hazardous or toxic substances. There can be no assurance that a material
environmental claim will not be asserted against us or against our owned or operated
parking facilities. The cost of defending against claims of liability, or of remediating a
contaminated property, could have a negative effect on our business and financial
results.
13
If we cannot maintain positive relationships with labor unions representing our employees, a
work stoppage may adversely affect our business.
Approximately 4,801 employees are represented by labor unions. There can be
no assurance that we will be able to renew existing labor union contracts on
acceptable terms. Employees could exercise their rights
under these labor union contracts, which could include a strike or walk-out. In such cases,
there are no assurances that we would be able to staff sufficient employees for its
short-term needs. Any such labor strike or our inability to negotiate a
satisfactory contract upon expiration of the current agreements could have a negative effect on
our business and financial results.
The failure to successfully integrate future acquisitions could have a negative impact on
our business and the market price of its common stock.
We
completed the acquisition of Sterling LTD in fiscal year 2003 and may seek
additional acquisition opportunities on a selective basis in the future. We can give
no assurance that any acquired facility or company will be successfully integrated into our
operations. Also, because of the purchase price paid by us or because of the
performance of acquired operations after such acquisitions, there can be no assurance that the
results of the acquired operations will not be dilutive to our per share earnings.
Any acquisition contemplated or completed by us may result in adverse short-term
effects on our reported operating results, divert managements attention, introduce
difficulties in retaining, hiring and training key personnel, and introduce risks associated with
unanticipated problems or legal liabilities, some or all of which could have a negative effect on
our business and financial results.
Item 2. Properties
The Companys facilities, as of September 30, 2005, are organized into 8 segments which are
subdivided into 23 regions as detailed below. Each region is supervised by a regional manager who
reports directly to one of the executive vice presidents or senior vice presidents. Regional
managers oversee four to six general managers who each supervise the Companys operations in a
particular city. The following table summarizes certain information regarding the Companys
operating locations as of September 30, 2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage |
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
of Total |
|
Segment |
|
Cities |
|
Locations |
|
|
Managed |
|
|
Leased |
|
|
Owned |
|
|
Spaces |
|
|
Spaces |
|
Segment 1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Los Angeles |
|
Los Angeles, Orange County, San
Diego, Burbank Airport |
|
|
117 |
|
|
|
50 |
|
|
|
63 |
|
|
|
4 |
|
|
|
37,568 |
|
|
|
2.40 |
% |
San Francisco |
|
San Francisco, Oakland, Sacramento |
|
|
88 |
|
|
|
51 |
|
|
|
37 |
|
|
|
0 |
|
|
|
23,981 |
|
|
|
1.53 |
% |
Seattle |
|
Salt Lake City, Seattle, Vancouver |
|
|
76 |
|
|
|
30 |
|
|
|
46 |
|
|
|
0 |
|
|
|
14,461 |
|
|
|
0.92 |
% |
Denver |
|
Denver, Phoenix, Albuquerque, El Paso |
|
|
175 |
|
|
|
71 |
|
|
|
93 |
|
|
|
11 |
|
|
|
52,343 |
|
|
|
3.35 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment 1 |
|
|
456 |
|
|
|
202 |
|
|
|
239 |
|
|
|
15 |
|
|
|
128,353 |
|
|
|
8.20 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Boston |
|
Boston, Hartford, Manchester, Providence |
|
|
137 |
|
|
|
68 |
|
|
|
63 |
|
|
|
6 |
|
|
|
96,465 |
|
|
|
6.17 |
% |
New York |
|
New Jersey, New York City, Beacon, Stamford |
|
|
425 |
|
|
|
210 |
|
|
|
204 |
|
|
|
11 |
|
|
|
167,239 |
|
|
|
10.69 |
% |
Philadelphia |
|
Philadelphia, Harrisburg Airport |
|
|
76 |
|
|
|
31 |
|
|
|
40 |
|
|
|
5 |
|
|
|
50,104 |
|
|
|
3.20 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment 2 |
|
|
638 |
|
|
|
309 |
|
|
|
307 |
|
|
|
22 |
|
|
|
313,808 |
|
|
|
20.06 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
USA Parking |
|
|
|
|
102 |
|
|
|
84 |
|
|
|
16 |
|
|
|
2 |
|
|
|
54,283 |
|
|
|
3.47 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment 3 |
|
|
102 |
|
|
|
84 |
|
|
|
16 |
|
|
|
2 |
|
|
|
54,283 |
|
|
|
3.47 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment 4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mexico |
|
Mexico |
|
|
127 |
|
|
|
77 |
|
|
|
50 |
|
|
|
0 |
|
|
|
74,081 |
|
|
|
4.74 |
% |
South America |
|
Chile, Venezuela, Colombia, Peru, San Juan |
|
|
87 |
|
|
|
53 |
|
|
|
34 |
|
|
|
0 |
|
|
|
30,940 |
|
|
|
1.98 |
% |
Europe |
|
United
Kingdom, Ireland, Spain, Poland,
Greece, Switzerland, Germany |
|
|
156 |
|
|
|
125 |
|
|
|
31 |
|
|
|
0 |
|
|
|
171,655 |
|
|
|
10.97 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment 4 |
|
|
370 |
|
|
|
255 |
|
|
|
115 |
|
|
|
0 |
|
|
|
276,676 |
|
|
|
17.69 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment 5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nashville |
|
Nashville |
|
|
96 |
|
|
|
34 |
|
|
|
51 |
|
|
|
11 |
|
|
|
50,980 |
|
|
|
3.26 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment 5 |
|
|
96 |
|
|
|
34 |
|
|
|
51 |
|
|
|
11 |
|
|
|
50,980 |
|
|
|
3.26 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage |
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
of Total |
|
Segment |
|
Cities |
|
Locations |
|
|
Managed |
|
|
Leased |
|
|
Owned |
|
|
Spaces |
|
|
Spaces |
|
Segment 6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cincinnati |
|
Indianapolis, Louisville, Lexington, Boone Co. Airport, Cincinnati, Columbus, Cleveland, Columbus Airport |
|
|
155 |
|
|
|
55 |
|
|
|
83 |
|
|
|
17 |
|
|
|
59,914 |
|
|
|
3.83 |
% |
Canada |
|
Detroit, Detroit Airport, Toronto, Ottawa, Montreal, Calgary, Toronto Pearson Airport |
|
|
117 |
|
|
|
85 |
|
|
|
30 |
|
|
|
2 |
|
|
|
103,683 |
|
|
|
6.63 |
% |
Chicago |
|
Chicago, Chicago Parking LLC, Minneapolis, Milwaukee, Gen. Mitchell Airport |
|
|
145 |
|
|
|
53 |
|
|
|
81 |
|
|
|
11 |
|
|
|
60,399 |
|
|
|
3.86 |
% |
St. Louis |
|
St. Louis, Kansas City, St. Louis Airport, Omaha, Memphis, Little Rock |
|
|
175 |
|
|
|
65 |
|
|
|
98 |
|
|
|
12 |
|
|
|
51,208 |
|
|
|
3.27 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment 6 |
|
|
592 |
|
|
|
258 |
|
|
|
292 |
|
|
|
42 |
|
|
|
275,204 |
|
|
|
17.59 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment 7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Washington, DC |
|
Washington, DC, Washington Dulles Airport, Baltimore, Richmond, Roanoke, Lynchburg (VA), Roanoke Airport, Richmond Airport |
|
|
242 |
|
|
|
112 |
|
|
|
115 |
|
|
|
15 |
|
|
|
100,343 |
|
|
|
6.41 |
% |
Upper New York |
|
Rochester, Buffalo, Binghamton, Syracuse, Pittsburgh, Wilkes-Barre, Charleston, WV |
|
|
120 |
|
|
|
50 |
|
|
|
54 |
|
|
|
16 |
|
|
|
37,477 |
|
|
|
2.40 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment 7 |
|
|
362 |
|
|
|
162 |
|
|
|
169 |
|
|
|
31 |
|
|
|
137,820 |
|
|
|
8.81 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment 8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida |
|
Jacksonville, Tampa, Orlando |
|
|
83 |
|
|
|
51 |
|
|
|
31 |
|
|
|
1 |
|
|
|
41,444 |
|
|
|
2.65 |
% |
Atlanta |
|
Atlanta, Miami |
|
|
116 |
|
|
|
65 |
|
|
|
42 |
|
|
|
9 |
|
|
|
56,172 |
|
|
|
3.59 |
% |
New Orleans |
|
Mobile, New Orleans, Baton Rouge, New Orleans Airport, Jackson |
|
|
129 |
|
|
|
46 |
|
|
|
78 |
|
|
|
5 |
|
|
|
40,424 |
|
|
|
2.58 |
% |
Houston |
|
Houston, Houston Airport, Oklahoma City, Tulsa, Dallas, Austin, Dallas-FT Worth Airport, San Antonio, Ft. Worth |
|
|
292 |
|
|
|
123 |
|
|
|
134 |
|
|
|
35 |
|
|
|
136,660 |
|
|
|
8.74 |
% |
Charlotte |
|
Birmingham, Charlotte, Columbia, Charleston, SC, Knoxville, Chattanooga |
|
|
163 |
|
|
|
82 |
|
|
|
74 |
|
|
|
7 |
|
|
|
52,532 |
|
|
|
3.36 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment 8 |
|
|
783 |
|
|
|
367 |
|
|
|
359 |
|
|
|
57 |
|
|
|
327,232 |
|
|
|
20.92 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
3,399 |
|
|
|
1,671 |
|
|
|
1,548 |
|
|
|
180 |
|
|
|
1,564,356 |
|
|
|
100.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Companys facilities include both surface lots and structured parking facilities
(garages). Approximately 18% of the Companys owned parking properties are in structured parking
facilities, with the remainder in surface lots. Each year the Company expends significant funds to
repair and maintain parking facilities. Management believes the Companys owned facilities
generally are in good condition and are adequate for its present needs.
A summary of the facilities operated domestically and internationally by Central Parking as of
September 30, 2005 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent |
|
|
|
Managed |
|
|
Leased |
|
|
Owned |
|
|
Total |
|
|
Spaces |
|
|
of Total |
|
Total U.S. and Puerto Rico |
|
|
1,372 |
|
|
|
1,371 |
|
|
|
178 |
|
|
|
2,921 |
|
|
|
1,265,943 |
|
|
|
80.93 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United Kingdom |
|
|
98 |
|
|
|
7 |
|
|
|
0 |
|
|
|
105 |
|
|
|
124,702 |
|
|
|
7.97 |
% |
Mexico (1) |
|
|
77 |
|
|
|
50 |
|
|
|
0 |
|
|
|
127 |
|
|
|
74,081 |
|
|
|
4.73 |
% |
Canada |
|
|
62 |
|
|
|
70 |
|
|
|
2 |
|
|
|
134 |
|
|
|
32,796 |
|
|
|
2.10 |
% |
Venezuela (1) |
|
|
3 |
|
|
|
1 |
|
|
|
0 |
|
|
|
4 |
|
|
|
3,783 |
|
|
|
0.24 |
% |
Germany (1) |
|
|
6 |
|
|
|
13 |
|
|
|
0 |
|
|
|
19 |
|
|
|
25,300 |
|
|
|
1.62 |
% |
Chile |
|
|
15 |
|
|
|
12 |
|
|
|
0 |
|
|
|
27 |
|
|
|
7,806 |
|
|
|
0.50 |
% |
Greece (1) |
|
|
7 |
|
|
|
1 |
|
|
|
0 |
|
|
|
8 |
|
|
|
7,445 |
|
|
|
0.48 |
% |
Peru (1) |
|
|
11 |
|
|
|
1 |
|
|
|
0 |
|
|
|
12 |
|
|
|
5,555 |
|
|
|
0.35 |
% |
Spain |
|
|
1 |
|
|
|
4 |
|
|
|
0 |
|
|
|
5 |
|
|
|
1,573 |
|
|
|
0.10 |
% |
Poland (1) |
|
|
5 |
|
|
|
5 |
|
|
|
0 |
|
|
|
10 |
|
|
|
1,867 |
|
|
|
0.12 |
% |
Colombia(1) |
|
|
6 |
|
|
|
12 |
|
|
|
0 |
|
|
|
18 |
|
|
|
2,737 |
|
|
|
0.17 |
% |
Ireland |
|
|
7 |
|
|
|
0 |
|
|
|
0 |
|
|
|
7 |
|
|
|
10,443 |
|
|
|
0.67 |
% |
Switzerland |
|
|
1 |
|
|
|
1 |
|
|
|
0 |
|
|
|
2 |
|
|
|
325 |
|
|
|
0.02 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total foreign |
|
|
299 |
|
|
|
177 |
|
|
|
2 |
|
|
|
478 |
|
|
|
298,413 |
|
|
|
19.07 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total facilities |
|
|
1,671 |
|
|
|
1,548 |
|
|
|
180 |
|
|
|
3,399 |
|
|
|
1,564,356 |
|
|
|
100.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Operated through unconsolidated 50% owned joint ventures |
15
The table below sets forth certain information regarding the Companys managed, leased and owned
facilities in the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
Managed Facilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year |
|
|
1,615 |
|
|
|
1,714 |
|
|
|
1,762 |
|
|
|
|
|
|
|
|
|
|
|
Acquired or merged during year |
|
|
|
|
|
|
|
|
|
|
9 |
|
Added during year |
|
|
354 |
|
|
|
225 |
|
|
|
236 |
|
Consolidated during year |
|
|
(52 |
) |
|
|
(18 |
) |
|
|
(44 |
) |
Deleted during year |
|
|
(246 |
) |
|
|
(306 |
) |
|
|
(249 |
) |
|
|
|
|
|
|
|
|
|
|
End of year |
|
|
1,671 |
|
|
|
1,615 |
|
|
|
1,714 |
|
|
|
|
|
|
|
|
|
|
|
Renewal Rate (1) |
|
|
87.6 |
% |
|
|
84.2 |
% |
|
|
87.5 |
% |
Leased Facilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year |
|
|
1,626 |
|
|
|
1,798 |
|
|
|
1,886 |
|
|
|
|
|
|
|
|
|
|
|
Acquired or merged during year |
|
|
|
|
|
|
|
|
|
|
9 |
|
Added during year |
|
|
159 |
|
|
|
108 |
|
|
|
164 |
|
Consolidated during year |
|
|
(18 |
) |
|
|
(59 |
) |
|
|
(33 |
) |
Deleted during year |
|
|
(219 |
) |
|
|
(221 |
) |
|
|
(228 |
) |
|
|
|
|
|
|
|
|
|
|
End of year |
|
|
1,548 |
|
|
|
1,626 |
|
|
|
1,798 |
|
|
|
|
|
|
|
|
|
|
|
Owned Facilities (2): |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year |
|
|
192 |
|
|
|
205 |
|
|
|
214 |
|
|
|
|
|
|
|
|
|
|
|
Purchased during year |
|
|
2 |
|
|
|
2 |
|
|
|
9 |
|
Sold during year |
|
|
(14 |
) |
|
|
(15 |
) |
|
|
(18 |
) |
|
|
|
|
|
|
|
|
|
|
End of year |
|
|
180 |
|
|
|
192 |
|
|
|
205 |
|
|
|
|
|
|
|
|
|
|
|
Total facilities (end of year) |
|
|
3,399 |
|
|
|
3,433 |
|
|
|
3,717 |
|
|
|
|
|
|
|
|
|
|
|
Net increase(reduction) in number of facilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Managed |
|
|
3.5 |
% |
|
|
(5.8 |
)% |
|
|
(2.7 |
)% |
Leased |
|
|
(4.8 |
)% |
|
|
(9.6 |
)% |
|
|
(4.7 |
)% |
Owned |
|
|
(6.3 |
)% |
|
|
(6.3 |
)% |
|
|
(4.2 |
)% |
Total facilities |
|
|
(1.0 |
)% |
|
|
(7.6 |
)% |
|
|
(3.8 |
)% |
|
|
|
(1) |
|
The renewal rate calculation is 100% minus deleted locations divided by the sum of the
beginning of the year, acquired and added during the year for management locations. |
|
(2) |
|
Includes the Companys corporate headquarters in Nashville, Tennessee. |
Item 3. Legal Proceedings
The ownership of property and provision of services to the public entails an inherent risk of
liability. Although the Company is engaged in routine litigation incidental to its business, there
is no legal proceeding to which the Company is a party which, in the opinion of management, is
likely to have a material adverse effect upon the Companys financial condition, results of
operations, or liquidity. The Company carries liability insurance
against certain types of claims such as bodily injury that management believes meets industry
standards; however, there can be no assurance that any legal proceedings (including any related
judgments, settlements or costs) will not have a material adverse effect on the Companys financial
condition, liquidity or results of operations.
In June and July 2003, four stockholders filed separate lawsuits against the Company, two
former CEOs, and a former CFO and its current Chairman in the U. S. District Court for the Middle
District of Tennessee. The plaintiff in each case sought to represent a plaintiff class of
purchasers of Central Parkings Common Stock. The plaintiff in each case claimed that the
defendants made material misrepresentations and/or omissions in connection with the Companys
financial statements for the quarter and fiscal year ended September 30, 2002 and about the
Companys internal controls in violation of the Securities Exchange Act of 1934, which allegedly
caused the plaintiffs to buy Company stock at inflated prices. By order dated December 10, 2003,
the Court consolidated the cases under the name, In re: Central Parking Corporation Securities
Litigation, civil action No. 03-CV-0546, appointed two individuals as co-lead plaintiffs and
approved their selection of counsel. The plaintiffs filed an amended complaint on February 13,
2004, in which plaintiffs added the Companys Independent Registered Public Accountant as a
defendant and in which the plaintiffs added a number of allegations. The amended complaint also
sought to extend the putative class period during which investors purchased the Companys Common
Stock by approximately nine months (February 5, 2002 to February 13, 2003). On April 23, 2004, the
defendants filed motions to dismiss the lawsuit. On August 11, 2004, the court dismissed all
claims against the Companys
16
Independent Registered Public Accountant, but denied the motion to
dismiss with respect to the Company and the individual defendants. On January 27, 2005, the
Company announced that an agreement in principle had been reached to settle the lawsuit. Under the
agreement in principle, the Companys primary liability insurance carrier agreed to fully fund a
$4.9 million payment to be used to provide all benefits to shareholder class members and their
counsel, and to cover related notice and administrative costs. A definitive settlement agreement
was executed and, on April 8, 2005, the court entered an order granting preliminary approval of the
negotiated settlement. Notice of the proposed settlement was mailed to all class members. The
final hearing on the proposed settlement was held on June 10, 2005 and the settlement was approved
on that date. The deadline for filing an appeal of the settlement was July 11, 2005.
The settlement has been consummated, and this action is concluded.
On
December 23, 2005, the Company entered into a settlement agreement
with Rotala PLC, the Flights Group companies, Stuart Lawrenson, Paul
Churchman and Michael Tackley resolving the Companys claims
arising from certain actions taken by former employees of the Company
in the United Kingdom. The key terms of the settlement include:
(1) 46,666,667 shares of Rotala stock indirectly owned by
Lawrenson will be sold through a private placement anticipated to
close in the first quarter of 2006, with the proceeds of such sale to
be paid to the Company; (2) Rotala will issue promissory notes
to the Company with a value of L800,000 payable in annual
installments between December 31, 2006, and December 31,
2010; (3) in addition to amounts already received from Rotala
for goods and services benefiting the Flights Group, Rotala will pay
an additional L270,000 to the Company upon completion of a previously
announced fundraising, (4) Rotala will grant to the Company a
warrant to purchase 15,000,000 ordinary shares of Rotala stock at an
exercise price of 1.5 pence per share, exercisable for a five year
period; A(5) Stuart Lawrenson is obligated to pay to the Company
L70,000 within fourteen days and to pay an additional L60,000 within
a year, and (6) Paul Churchman and Michael Tackley are each
obligated pay L10,000 to the Company within ninety days. Once the
conditions of this settlement have been met, all claims between the
parties will be released.
Item 4. Submission of Matters to a Vote of Security-Holders
No matter was submitted to a vote of the Companys security-holders during the fourth quarter
of the fiscal year ended September 30, 2005.
17
PART II
Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
(a) The Registrants common stock is listed on the NYSE under the symbol CPC. The following
table sets forth, for the periods indicated, the high and low sales prices for the Companys common
stock as reported by the NYSE.
|
|
|
|
|
|
|
|
|
|
|
High |
|
|
Low |
|
FISCAL YEAR 2005 |
|
|
|
|
|
|
|
|
First Quarter |
|
$ |
15.72 |
|
|
$ |
12.55 |
|
Second Quarter |
|
|
18.37 |
|
|
|
13.72 |
|
Third Quarter |
|
|
17.76 |
|
|
|
13.21 |
|
Fourth Quarter |
|
|
16.33 |
|
|
|
13.79 |
|
Twelve months |
|
|
18.37 |
|
|
|
12.55 |
|
|
|
|
|
|
|
|
|
|
FISCAL YEAR 2004 |
|
|
|
|
|
|
|
|
First Quarter |
|
$ |
15.32 |
|
|
$ |
11.27 |
|
Second Quarter |
|
|
21.70 |
|
|
|
14.88 |
|
Third Quarter |
|
|
21.26 |
|
|
|
17.18 |
|
Fourth Quarter |
|
|
19.85 |
|
|
|
13.20 |
|
Twelve months |
|
|
21.70 |
|
|
|
11.27 |
|
(b) There were, as of September 30, 2005, approximately 5,650 holders of the Companys common
stock, based on the number of record holders of the Companys common stock and an estimate of the
number of individual participants represented by security position listings.
(c) Since April 1997, Central Parking has distributed a quarterly cash dividend of $0.015 per
share of Central Parking common stock. The Companys Board currently intends to declare a cash
dividend each quarter depending on Central Parkings profitability and future capital requirements.
Central Parking reserves the right, however, to retain all or a substantial portion of its earnings
to finance the operation and expansion of Central Parkings business. As a result, the future
payment of dividends will depend upon, among other things, the Companys profitability, capital
requirements, financial condition, growth, business opportunities, and other factors that the
Central Parking Board may deem relevant, including restrictions in any then-existing credit
agreement. The Companys existing credit facility contains certain covenants including those that
require the Company to maintain certain financial ratios, restrict further indebtedness, and limit
the amount of dividends payable; however, the Company does not believe these restrictions limit its
ability to pay currently anticipated cash dividends. In addition, Central Parking Finance Trust
(the Trust), a Delaware statutory business trust, of which all of the common securities are owned
by the Company, has issued preferred securities (the Trust Issued Preferred Securities) and has
invested the proceeds thereof in an equivalent amount of 5.25% Convertible Subordinated Debentures
(Convertible Debentures) of the Company. Pursuant to the Convertible Debentures, the Company is
prohibited from paying dividends on its common stock if the quarterly distributions on the Trust
Issued Preferred Securities are not made. See Note 10 to the Consolidated Financial Statements.
(d) The following table is for the presentation of securities authorized for issuance under equity
compensation plans as of September 30, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities |
|
|
|
|
|
|
Number of securities remaining |
|
|
|
to be issued upon |
|
|
Weighted-average |
|
|
available for future issuance under |
|
|
|
exercise of |
|
|
exercise price of |
|
|
equity compensation plans |
|
|
|
outstanding options, |
|
|
outstanding options, |
|
|
(excluding securities reflected in |
|
|
|
warrants and rights |
|
|
warrants and rights |
|
|
column (a)) |
|
Plan Category |
|
(a) |
|
|
(b) |
|
|
(c) |
|
Equity compensation plans
approved by securities holders |
|
|
4,453,206 |
|
|
$ |
17.86 |
|
|
|
2,151,807 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans not
approved by securities holders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
4,453,206 |
|
|
$ |
17.86 |
|
|
|
2,151,807 |
|
|
|
|
|
|
|
|
|
|
|
18
Item 6. Selected Financial Data
Selected financial data of the Company is set forth below for each of the periods indicated.
Certain of the statement of operations, per share, and balance sheet data were derived from the
audited consolidated financial statements of the Company. All of the information set forth below
should be read in conjunction with Item 8. Financial Statements and Supplementary Data
and with Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations.
Amounts in thousands, except share and employee data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
2005 vs. 2004 |
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
2001 |
|
|
Increase (Decrease) |
|
|
|
|
|
|
|
(5) |
|
|
(5) |
|
|
(5) |
|
|
(5) |
|
|
|
|
|
|
|
|
|
STATEMENT OF OPERATIONS DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parking |
|
$ |
550,782 |
|
|
$ |
572,878 |
|
|
$ |
575,969 |
|
|
$ |
565,497 |
|
|
$ |
571,019 |
|
|
$ |
(22,096 |
) |
|
|
(3.9 |
)% |
Management contract and other |
|
|
118,611 |
|
|
|
124,672 |
|
|
|
117,428 |
|
|
|
115,484 |
|
|
|
97,663 |
|
|
|
(6,061 |
) |
|
|
(4.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
669,393 |
|
|
|
697,550 |
|
|
|
693,397 |
|
|
|
680,981 |
|
|
|
668,682 |
|
|
|
(28,157 |
) |
|
|
(4.0 |
) |
Reimbursement of management contract expenses |
|
|
464,423 |
|
|
|
418,565 |
|
|
|
418,058 |
|
|
|
390,306 |
|
|
|
373,413 |
|
|
|
45,858 |
|
|
|
11.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
1,133,816 |
|
|
|
1,116,115 |
|
|
|
1,111,455 |
|
|
|
1,071,287 |
|
|
|
1,042,095 |
|
|
|
17,701 |
|
|
|
1.6 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total before reimbursed management contract expenses |
|
|
648,722 |
|
|
|
651,450 |
|
|
|
687,167 |
|
|
|
619,480 |
|
|
|
605,943 |
|
|
|
(2,728 |
) |
|
|
(0.4 |
) |
Reimbursed management contract expenses |
|
|
464,423 |
|
|
|
418,565 |
|
|
|
418,058 |
|
|
|
390,306 |
|
|
|
373,413 |
|
|
|
45,858 |
|
|
|
11.0 |
|
Property-related gains (losses), net |
|
|
53,570 |
|
|
|
7,654 |
|
|
|
(7,560 |
) |
|
|
(4,329 |
) |
|
|
(7,024 |
) |
|
|
45,916 |
|
|
|
599.9 |
|
Impairment of goodwill |
|
|
(454 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(454 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (losses) |
|
|
73,787 |
|
|
|
53,754 |
|
|
|
(1,330 |
) |
|
|
57,172 |
|
|
|
55,715 |
|
|
|
20,033 |
|
|
|
37.3 |
|
Percentage of operating earnings (losses) to total revenues,
excluding reimbursement of management contract expenses |
|
|
11.0 |
% |
|
|
7.7 |
% |
|
|
(0.2 |
)% |
|
|
8.4 |
% |
|
|
8.3 |
% |
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(13,203 |
) |
|
|
(15,593 |
) |
|
|
(17,164 |
) |
|
|
(10,147 |
) |
|
|
(16,989 |
) |
|
|
2,390 |
|
|
|
15.3 |
|
Gain on repurchase of subordinated convertible debentures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of non-operating assets |
|
|
|
|
|
|
|
|
|
|
3,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on derivative instruments |
|
|
3,006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,006 |
|
|
|
|
|
Equity in partnership and joint venture (losses) earnings |
|
|
(474 |
) |
|
|
(2,984 |
) |
|
|
2,212 |
|
|
|
2,702 |
|
|
|
3,151 |
|
|
|
2,510 |
|
|
|
84.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations before
income taxes, minority interest and
cumulative effect of accounting changes |
|
|
63,116 |
|
|
|
35,177 |
|
|
|
(13,003 |
) |
|
|
58,972 |
|
|
|
41,877 |
|
|
|
27,939 |
|
|
|
79.4 |
|
Minority interest |
|
|
(1,331 |
) |
|
|
(2,999 |
) |
|
|
(4,052 |
) |
|
|
(4,765 |
) |
|
|
(3,502 |
) |
|
|
1,668 |
|
|
|
55.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations before income
taxes and cumulative effect of accounting changes |
|
|
61,785 |
|
|
|
32,178 |
|
|
|
(17,055 |
) |
|
|
54,207 |
|
|
|
38,375 |
|
|
|
29,607 |
|
|
|
92.0 |
|
Income tax (expense) benefit |
|
|
(27,969 |
) |
|
|
(13,776 |
) |
|
|
6,903 |
|
|
|
(17,689 |
) |
|
|
(16,217 |
) |
|
|
(14,193 |
) |
|
|
(103.0 |
) |
Income tax percentage of earnings (loss) from continuing
operations before income taxes and cumulative effect of
accounting changes |
|
|
45.3 |
% |
|
|
42.8 |
% |
|
|
40.5 |
% |
|
|
32.6 |
% |
|
|
42.3 |
% |
|
|
N/A |
|
|
|
N/A |
|
Cumulative effect of accounting changes, net of tax (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,341 |
) |
|
|
(259 |
) |
|
|
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations |
|
|
33,816 |
|
|
|
18,402 |
|
|
|
(10,152 |
) |
|
|
27,177 |
|
|
|
21,899 |
|
|
|
15,414 |
|
|
|
83.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations, net of tax |
|
|
(19,546 |
) |
|
|
(1,409 |
) |
|
|
5,625 |
|
|
|
6,591 |
|
|
|
3,954 |
|
|
|
(18,137 |
) |
|
|
(1,287.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
14,270 |
|
|
$ |
16,993 |
|
|
$ |
(4,527 |
) |
|
$ |
33,768 |
|
|
$ |
25,853 |
|
|
$ |
(2,723 |
) |
|
|
(16.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of net earnings (loss) to total revenues,
excluding reimbursement of management contract expenses |
|
|
2.1 |
% |
|
|
2.4 |
% |
|
|
(0.7 |
)% |
|
|
5.0 |
% |
|
|
3.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
2005 vs. 2004 |
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
2001 |
|
|
Increase (Decrease) |
|
|
|
|
|
|
|
(5) |
|
|
(5) |
|
|
(5) |
|
|
(5) |
|
|
|
|
|
|
|
|
|
PER SHARE DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations before
cumulative effect of accounting changes basic |
|
$ |
0.92 |
|
|
$ |
0.51 |
|
|
$ |
(0.32 |
) |
|
$ |
1.02 |
|
|
$ |
0.62 |
|
|
$ |
0.41 |
|
|
|
80.4 |
% |
Cumulative effect of accounting changes, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.26 |
) |
|
|
(0.01 |
) |
|
|
|
|
|
|
|
|
Discontinued operations, net of tax |
|
|
(0.53 |
) |
|
|
(0.04 |
) |
|
|
0.19 |
|
|
|
0.18 |
|
|
|
0.11 |
|
|
|
(0.49 |
) |
|
|
(1,225.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) basic |
|
$ |
0.39 |
|
|
$ |
0.47 |
|
|
$ |
(0.13 |
) |
|
$ |
0.94 |
|
|
$ |
0.72 |
|
|
$ |
(0.08 |
) |
|
|
(17.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations before
cumulative effect of accounting changes diluted |
|
$ |
0.92 |
|
|
$ |
0.51 |
|
|
$ |
(0.32 |
) |
|
$ |
1.01 |
|
|
$ |
0.62 |
|
|
$ |
0.41 |
|
|
|
80.4 |
% |
Cumulative effect of accounting changes, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.26 |
) |
|
|
(0.01 |
) |
|
|
|
|
|
|
|
|
Discontinued operations, net of tax |
|
|
(0.53 |
) |
|
|
(0.04 |
) |
|
|
0.19 |
|
|
|
0.18 |
|
|
|
0.11 |
|
|
|
(0.49 |
) |
|
|
(1,225.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) diluted |
|
$ |
0.39 |
|
|
$ |
0.47 |
|
|
$ |
(0.13 |
) |
|
$ |
0.93 |
|
|
$ |
0.72 |
|
|
$ |
(0.08 |
) |
|
|
(17.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common shares outstanding |
|
|
36,626 |
|
|
|
36,346 |
|
|
|
36,034 |
|
|
|
35,849 |
|
|
|
35,803 |
|
|
|
280 |
|
|
|
0.8 |
% |
Diluted weighted average common shares outstanding |
|
|
36,762 |
|
|
|
36,555 |
|
|
|
36,034 |
|
|
|
36,211 |
|
|
|
36,015 |
|
|
|
207 |
|
|
|
0.6 |
% |
Dividends per common share |
|
$ |
0.06 |
|
|
$ |
0.06 |
|
|
$ |
0.06 |
|
|
$ |
0.06 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
Net book value per common share outstanding
at September 30 |
|
$ |
12.30 |
|
|
$ |
11.89 |
|
|
$ |
11.56 |
|
|
$ |
11.57 |
|
|
$ |
10.63 |
|
|
|
|
|
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, |
|
|
2005 vs 2004 |
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
2001 |
|
|
Increase (Decrease) |
|
BALANCE SHEET DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
26,055 |
|
|
$ |
27,628 |
|
|
$ |
31,572 |
|
|
$ |
33,498 |
|
|
$ |
41,849 |
|
|
$ |
(1,573 |
) |
|
|
(5.7 |
)% |
Working capital |
|
|
5,476 |
|
|
|
(54,759 |
) |
|
|
11,882 |
|
|
|
(92,805 |
) |
|
|
(79,251 |
) |
|
|
60,235 |
|
|
|
110.0 |
|
Goodwill |
|
|
232,443 |
|
|
|
232,562 |
|
|
|
230,312 |
|
|
|
242,141 |
|
|
|
250,630 |
|
|
|
(119 |
) |
|
|
(0.1 |
) |
Total assets |
|
|
867,814 |
|
|
|
929,628 |
|
|
|
1,001,177 |
|
|
|
998,884 |
|
|
|
986,881 |
|
|
|
(61,814 |
) |
|
|
(6.6 |
) |
Long-term debt and capital lease obligations,
less current portion |
|
|
98,212 |
|
|
|
159,188 |
|
|
|
266,961 |
|
|
|
207,098 |
|
|
|
208,885 |
|
|
|
(60,976 |
) |
|
|
(38.3 |
) |
Subordinated convertible debentures |
|
|
78,085 |
|
|
|
78,085 |
|
|
|
78,085 |
|
|
|
78,085 |
|
|
|
110,000 |
|
|
|
|
|
|
|
|
|
Shareholders equity |
|
|
452,061 |
|
|
|
435,033 |
|
|
|
416,526 |
|
|
|
415,804 |
|
|
|
381,446 |
|
|
|
17,028 |
|
|
|
3.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
2005 vs. 2004 |
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
2001 |
|
|
Increase (Decrease) |
|
OTHER DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
$ |
29,497 |
|
|
$ |
32,635 |
|
|
$ |
35,173 |
|
|
$ |
34,500 |
|
|
$ |
44,263 |
|
|
$ |
(3,138 |
) |
|
|
(9.6 |
)% |
Employees (2) |
|
|
23,957 |
|
|
|
22,537 |
|
|
|
21,187 |
|
|
|
18,100 |
|
|
|
18,800 |
|
|
|
1,420 |
|
|
|
6.3 |
|
Number of shareholders (2) |
|
|
5,650 |
|
|
|
6,862 |
|
|
|
8,400 |
|
|
|
7,100 |
|
|
|
6,500 |
|
|
|
(1,212 |
) |
|
|
(17.7 |
) |
Market capitalization (in millions) (3) |
|
$ |
550,000 |
|
|
$ |
484,000 |
|
|
$ |
443,000 |
|
|
$ |
724,000 |
|
|
$ |
501,000 |
|
|
$ |
66,000 |
|
|
|
13.6 |
|
Return on average equity (4) |
|
|
3.2 |
% |
|
|
4.0 |
% |
|
|
(1.1 |
)% |
|
|
8.5 |
% |
|
|
6.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Reflects the Companys adoption in 2002 of Statement of Financial Accounting Standards
(SFAS) No. 142 for the transitional impairment of goodwill of $9.3 million, net of tax of $28
thousand. Reflects the Companys adoption in 2001 of Staff Accounting Bulletin (SAB) 101
related to revenue recognition of $259 thousand, net of tax of $171 thousand. |
|
(2) |
|
Reflects information as of September 30 of the respective fiscal year.
|
|
(3) |
|
Based on number of shares outstanding and closing market price as of September 30. |
|
(4) |
|
Reflects return on equity calculated using fiscal year net earnings (loss) divided by average
shareholders equity for the fiscal year. |
|
(5) |
|
The Companys prior period results were reclassified to reflect the operations of the
locations discontinued in fiscal year 2005 as well as the locations designated as
held-for-sale during fiscal year 2005 but not yet sold, as discontinued operations net of
related income taxes. |
|
NM |
|
Not meaningful |
|
N/A |
|
Not Applicable |
20
Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
Overview
The Company operates parking facilities under three types of arrangements: leases, fee
ownership, and management contracts. Revenues from leased and owned properties are categorized in
the Companys financial statements as parking revenues. Cost of parking relates to both leased and
owned facilities and includes rent, payroll and related benefits, depreciation, maintenance,
insurance and general operating expenses. The Company experienced a net decline in the number of
leased and owned locations in 2005 of 90 locations (161 additional leased and owned locations
offset by 233 lost or sold locations and 18 locations that were converted to management agreements
or consolidated with existing locations). Management contract revenues consist of management fees
(both fixed and performance based) and fees for ancillary services such as insurance, accounting,
benefits administration, equipment leasing, and consulting. The cost of management contracts
includes insurance premiums and claims and other indirect overhead. The Company experienced a net
increase in the number of managed facilities in 2005 of 56 locations (354 additional managed
locations offset by 298 lost locations during the year). In addition to management fees, many of
the management agreements provide for the reimbursement of expenses incurred by the Company to
manage the locations. The reimbursement of expenses is presented as a component of revenue and
costs in accordance with EITF No. 01-14.
Critical Accounting Policies
Managements Discussion and Analysis of Financial Condition and Results of Operations
discusses the Companys consolidated financial statements, which have been prepared in accordance
with U.S. generally accepted accounting principles. Accounting estimates are an integral part of
the preparation of the financial statements and the financial reporting process and are based upon
current judgments. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during
the reported period. Certain accounting policies and estimates are particularly sensitive because
of their complexity and the possibility that future events affecting them may differ materially
from the Companys current judgments and estimates.
The following listing of critical accounting policies is not intended to be a comprehensive
list of all of the Companys accounting policies. In many cases, the accounting treatment of a
particular transaction is specifically dictated by U. S. generally accepted accounting principles,
with no need for managements judgment regarding accounting policy. The Company believes that of
its significant accounting policies, as discussed in Note 1 to the consolidated financial
statements included herein for the year ended September 30, 2005, the following involve a higher
degree of judgment and complexity:
Impairment of Long-Lived Assets and Goodwill
As of September 30, 2005, the Companys long-lived assets were comprised primarily of $327.4
million of property, equipment and leasehold improvements and $80.1 million of contract and lease
rights. In accounting for the Companys long-lived assets, other than goodwill and other
intangible assets, the Company applies the provisions of SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. As of September 30, 2005, the Company had $232.4
million of goodwill. The Company accounts for goodwill and other intangible assets under the
provisions of SFAS No. 142, Goodwill and Other Intangible Assets.
The determination and measurement of an impairment loss under these accounting standards
require the significant use of judgment and estimates. The determination of fair value of these
assets utilizes cash flow projections that assume certain future revenue and cost levels, assumed
discount rates based upon current market conditions and other valuation factors, all of which
involve the use of significant judgment and estimation. The Company recorded impairment losses of
approximately $6.7 million in property related losses and an additional $7.2 million in
discontinued operations during the year ended September 30, 2005 as a result of certain locations
that were either under performing, terminated, disposed, or prematurely closed. Future events may
indicate differences from managements judgments and estimates which could, in turn, result in
increased impairment charges in the future. Future events that may result in increased impairment
charges include increases in interest rates, which would impact discount rates, unfavorable
economic conditions or other factors which could decrease revenues and profitability of existing
locations, and changes in the cost structure of existing facilities. For the fiscal year ended
September 30, 2004, the Company recorded $2.2 million of impairment charges related to long-lived
assets in continuing operations and $2.3 million of impairment charges related to long-lived assets
in discontinued operations.
21
Contract and Lease Rights
As of September 30, 2005, the Company had $80.1 million of contract and lease rights. The
Company capitalizes payments made to third parties, which provide the Company the right to manage
or lease facilities. Lease rights and management contract rights which are purchased individually
are amortized on a straight-line basis over the terms of the related agreements, which range from 5
to 30 years. Management contract rights acquired through acquisition of an entity are amortized as
a group over the estimated term of the contracts, including anticipated renewals and terminations
based on the Companys historical experience (typically 15 years). If the renewal rate of contracts
within an acquired group is less than initially estimated, accelerated amortization or impairment
may be necessary.
Allowance for Doubtful Accounts
As
of September 30, 2005, the Company had $77.7 million of trade receivables, including
management accounts receivable and accounts receivable other. Additionally, the Company had a
recorded allowance for doubtful accounts of $10.3 million. The Company reports management accounts
receivable, net of an allowance for doubtful accounts, to represent its estimate of the amount that
ultimately will be realized in cash. The Company reviews the adequacy of its allowance for
doubtful accounts on an ongoing basis, using historical collection trends, analyses of receivable
portfolios by region and by source, aging of receivables, as well as review of specific accounts,
and makes adjustments in the allowance as necessary. Changes in economic conditions, specifically
in the Northeast United States, could have an impact on the collection of existing receivable
balances or future allowance considerations. As of September 30, 2004, the Company had $61.6
million of trade receivables, including management accounts receivable and accounts receivable
other.
Lease Termination Costs
The Company has recognized lease termination costs related to disposal activities initiated
after December 31, 2002 in accordance with SFAS No. 146, Accounting for Costs Associated with Exit
or Disposal Activities, in its financial statements. Lease termination costs related to disposal
activities initiated prior to December 31, 2002, were recognized in accordance with Emerging Issues
Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). Lease
termination costs are based upon certain estimates of liabilities related to costs to exit an
activity. Liability estimates may change as a result of future events, such as the settlement of a
lease termination for an amount less than the amount contractually required.
Insurance
The Company purchases comprehensive liability insurance covering certain claims that occur at
parking facilities it owns, leases or manages. The primary amount of such coverage is $1 million
per occurrence and $2 million in the aggregate per facility. In addition, the Company purchases
umbrella/excess liability coverage. The Companys various liability insurance policies have
deductibles of up to $350,000 that must be met before the insurance companies are required to
reimburse the Company for costs incurred relating to covered claims. In addition, the Companys
workers compensation program has a deductible of $250,000. The Company also provides health
insurance for many of its employees and purchases a stop-loss policy with a deductible of $150,000
per claim. As a result, the Company is, in effect, self-insured for all claims up to the
deductible levels. The Company applies the provisions of SFAS No. 5, Accounting for Contingencies,
in determining the timing and amount of expense recognition associated with claims against the
Company. The expense recognition is based upon managements determination of an unfavorable
outcome of a claim being deemed as probable and reasonably estimable, as defined in SFAS No. 5.
This determination requires the use of judgment in both the estimation of probability and the
amount to be recognized as an expense. The Company engages an actuary to assist in determining the
estimated liabilities for customer injury, employee medical costs and workers compensation claims.
Management utilizes historical experience with similar claims along with input from legal counsel
in determining the likelihood and extent of an unfavorable outcome for certain general litigation.
Future events may indicate differences from these judgments and estimates and result in increased
expense recognition in the future.
Income Taxes
The Company uses the asset and liability method of SFAS No. 109, Accounting for Income Taxes,
to account for income taxes. Under this method, deferred income 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 enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to be recovered or
settled. The Company has certain net operating loss carry forwards which expire between 2006 and
2024. The valuation allowance was established for certain net operating loss carry forwards
where their recoverability is deemed to be uncertain. The carrying value of the Companys net
deferred tax assets assumes that the Company will be able to generate sufficient future taxable
income in certain tax jurisdictions, based on estimates and assumptions. If these estimates and
related assumptions change in the future, the
22
Company
will be required to adjust its deferred tax valuation allowances. The
valuation allowance was increased during 2005 to reflect net
operating loss carry forwards in foreign operations and in certain
states where management has determined that it is more likely than
not that the deferred tax asset will not be realized.
Restatement
During the fourth quarter of 2005, management of the Company became aware that certain
employees in its United Kingdom operation had engaged in unauthorized related party
transactions utilizing Company assets and had made improper and inaccurate accounting entries that
resulted in the over accrual of revenues and understatement of expenses during the first
three quarters of fiscal 2005. On September 29, 2005, the Audit Committee of the Board of Directors and
senior management decided to restate the Companys financial statements for the quarterly periods
ended December 31, 2004, March 31, 2005 and June 30,
2005 to reflect the correction of these
accounting errors. In addition, during the fourth quarter, the
Company has reassessed its accounting for interest rate swap
agreements related to its credit facility and has restated its
quarterly financial statements for the first three quarters of fiscal
2005. See Managements Discussion and Analysis of Financial Condition and Results of
Operations Quarterly Results. The Company has not amended and does not intend to amend its
previously filed Reports on Form 10-Q for each of the first three quarters in the year ended
September 30, 2005. For this reason, the consolidated financial statements and related financial
information for the affected periods contained in such reports should not be relied
upon.
Results of Operations
Year Ended September 30, 2005 Compared to Year Ended September 30, 2004
Parking revenues in fiscal year 2005 decreased to $550.8 million from $572.9 million in fiscal
year 2004, a decrease of $22.1 million, or 3.9%. The decrease resulted from the conversion of
certain contracts from lease agreements to management agreements
which totaled $14.6 million and closed locations of $33.0 million,
partially offset by $16.1 million in revenues from new locations. The Company experienced an
increase in same store sales of $9.5 million for fiscal year 2005 compared to fiscal year 2004.
Management contract and other revenues (excluding reimbursement of management contract
expenses) decreased in fiscal year 2005 to $118.6 million from $124.7 million in fiscal year 2004,
a decrease of $6.1 million, or 4.9%. The majority of the decrease is due to a decrease of $5.8
million for lots closed during the year, a decrease in same store sales of $5.2 million, offset by
new locations and other of $4.9 million.
Cost
of parking in fiscal year 2005 decreased to $504.6 million or
91.6% of parking revenues
from $521.7 million or 91.1% of parking revenues in fiscal year
2004, a decrease of $17.1 million,
or 3.3%. The decrease is primarily due to a decrease in payroll expense of $4.0 million, lower
rent expense of $9.8 million, $2.4 million decrease in property taxes, $2.3 million decrease in
depreciation expense and $1.6 million in other expenses; offset
by an increase of $1.5 million liability
insurance claims expense and $1.5 million increase in snow removal.
Cost
of management contracts in fiscal year 2005 increased to $60.5 million from $57.9 million
in fiscal year 2004. The cost of management contracts, as a percentage of management contract and
other revenues, excluding reimbursement of management contract
expenses, was 51.0% in fiscal year
2005 compared to 46.4% in fiscal year 2004. The increase in cost was primarily caused by an
increase of $2.8 million in bad debt expense, an increase in commercial and employment claims of
$1.0 million and an increase of $1.2 million of liability insurance expense; offset by a $1.2
million decrease in group insurance, a decrease of $0.6 million in consulting expenses and a decrease of
$0.6 million in other expenses.
General
and administrative expenses increased to $83.6 million in 2005 from $71.9 million in
2004, an increase of $11.7 million, or 16.3%. This increase is due to an increase of $1.4 million
in severance expense, $3.4 million in compensation expense, and
$6.9 million in professional fees
and other expenses related primarily to Sarbanes-Oxley compliance
efforts. General and
administrative expenses increased as a percentage of total revenue (excluding reimbursement of
management contract expenses) to 12.5% in 2005 from 10.3% in 2004.
Net property-related gains for fiscal year 2005 were $53.6 million compared to $7.7 million in
fiscal year 2004. The $53.6 million gain was comprised of a gain on the sale of property of $60.2
million, comprised primarily of $38.4 million on the sale of a lease in New York, $9.6 million on
the sale of a property in New York, $5.7 million gain on a property in Denver, $1.9 million on a
property in Seattle, $1.2 million on a property in Chicago and $3.4 million related to other
miscellaneous sales. The Company incurred $6.7 million of impairments of leasehold improvements,
contract rights and other intangible assets primarily related to two locations in segment two, one
location in segment four, two locations in segment six, one location in segment seven and one
location in segment eight. Based on current operating results, the Companys recent forecast for
the next fiscal year, required capital improvements, and certain lease term uncertainties,
management determined that the projected cash flows for these locations would not be enough to
recover the remaining value of the assets. The $7.7 million gain in 2004 was comprised of a $6.3
million gain on the sale of property in New York and $3.6 million of gains on other properties
sold, which the Company plans to continue to operate. The gains on the sale of property were offset
by $2.2 million of impairments of contract rights, deferred expenses and leasehold
23
improvements
related to locations which management plans to continue to operate.
The loss on
the impairment charges recognized in fiscal year 2005 and 2004 were based on estimated fair values
using projected cash flows of the applicable parking facility discounted at the Companys average
cost of funds. Management determined that the projected cash flows for these locations would not
be enough to recover the remaining value of the assets.
The Company adopted the provisions of SFAS No. 144 on October 1, 2002. In addition to
providing enhanced guidance on identifying and measuring impairments of long-lived assets, SFAS No.
144 requires that the operating results from certain disposals of a parking facility be reflected
as discontinued operations. SFAS No. 144 also requires that gains, losses and impairments
resulting from the designation of a parking facility as held-for-sale be reflected as discontinued
operations. For fiscal year 2005, the Company either disposed of or designated as held-for-sale or
disposal certain locations, resulting in a loss from discontinued operations of $19.5 million.
Included in discontinued operations in 2005 is $1.2 million of losses from the sale of property and
$7.2 million of impairment charges related to certain properties held for sale and loss from
discontinued operations of $11.1 million. The Companys 2004 and 2003 results were reclassified to
reflect the operations of these locations as discontinued operations, net of related income taxes.
During 2005, the Company determined that $454,000 of the goodwill recorded in segment seven
was impaired based on evaluation performed by a third party.
Interest income in fiscal year 2005 decreased to $4.7 million from $4.9 million in fiscal year
2004. Interest expense decreased in fiscal year 2005 to $17.9 million from $20.5 million in fiscal
year 2004 due primarily to a decrease in the average balance outstanding in 2005. The weighted
average balance outstanding for the Companys debt obligations and subordinated convertible
debentures was $261.9 million during the fiscal year ended September 30, 2005, at a weighted
average interest rate of 6.3% compared to a weighted average balance outstanding of $306.3 million
at a weighted average rate of 5.9% during the fiscal year ended September 30, 2004. Deferred
finance costs were included in the calculation of the weighted average interest rate.
The
Company recognized a $3.0 million gain on derivative instruments
equal to the fair market value of both interest rate swaps at
September 30, 2005 of which $1.6 million represents the
correction of 2004 and 2003 gains previously recognized in
accumulated other comprehensive income.
Equity in partnership and joint venture (losses) earnings was a loss of $0.5 million in fiscal
year 2005 compared to a loss of $3.0 million in fiscal year 2004. The decrease is primarily
related to operating results for the Companys 50% owned, non-consolidated affiliate in Mexico.
During the second quarter of fiscal 2004, the Companys Mexican affiliate reported to the Company
that the affiliate would be taking certain impairments and losses as part of the year-end audit
performed by independent auditors. As the entity is a 50% owned, non-consolidated investment,
results are recorded on the equity method. The 2004 losses reported to us were mostly non-cash,
and totaled $2.6 million. $1.5 million of the losses was related to the second quarter of fiscal
year 2004 and $1.1 million related to prior periods. The $1.5 million quarter 2004 impact was the
result of non-cash impairments, primarily related to notes receivable and other assets. The $1.1
million prior-period impact was due to corrections in the recording of equipment leases, and
interest-expense accruals. Due to the immateriality of the effect on any one prior period and the
second quarter of 2004, the corrections were made in the second quarter of Fiscal year 2004. During
the fourth quarter of 2005, the Company reached a tentative agreement to sell its fifty percent
interest in its joint venture in Mexico, for a cash payment at closing of $325,000 and a secured
promissory note of approximately $3.7 million in repayment of the joint ventures indebtedness to
the Company. Based on the tentative agreement, the Company recognized a $1.7 million impairment
charge on its investment in the joint venture during the fourth quarter of 2005. This transaction
is subject to the negotiation and execution of a definitive agreement, and there can be no
assurance that the transaction will be completed or that it will be completed on the terms
described above.
The Companys effective income tax rate on earnings from continuing operations before income
taxes was 45.3% in fiscal year 2005 compared to 42.8% in fiscal year 2004. The increase in the
effective tax rate is primarily attributable to a decrease in jobs
credit and the effect of an increase in the deferred income tax
valuation allowance related to certain state and foreign operating losses. The Companys effective tax rate is expected to be approximately 40.0% before
discontinued operations for fiscal year 2006. See footnote 13. Income taxes for further
discussion.
Year Ended September 30, 2004 Compared to Year Ended September 30, 2003
Parking revenues in fiscal year 2004 decreased to $572.9 million from $576.0 million in fiscal
year 2003, a decrease of $3.1 million, or 0.5%. The decrease resulted from the conversion of
certain contracts from lease agreements to management agreements which totaled $15.3 million,
partially offset by $11.6 million in revenues from new locations. The Company experienced an
increase in same store sales of $4.0 million for fiscal year 2004 compared to fiscal year 2003 for
the entire Company.
Management contract and other revenues (excluding reimbursement of management contract
expenses) increased in fiscal year 2004 to $124.7 million from $117.4 million in fiscal year 2003,
an increase of $7.2 million, or 6.2%. The majority of the increase is due to the conversion of
certain contracts from lease arrangements to management agreements and $3.8 million of new business
and increased ancillary income.
24
Cost of parking in fiscal year 2004 decreased to $521.7 million or 91.1% of parking revenues
from $538.2 million or 93.4% of parking revenues in fiscal year 2003, a decrease of $16.5 million,
or 3.1%. The decrease is primarily due to a decrease in payroll
expense of $6.9 million, lower
rent expense of $4.8 million, $1.6 million decrease in
depreciation expense, $1.6 million decrease
in supplies, $0.7 million decrease in snow removal,
$0.3 million decrease in repairs and maintenance and, $0.6 million
decrease in other expenses.
Cost of management contracts in fiscal year 2004 decreased to $57.9 million from $65.6 million
in fiscal year 2003. The cost of management contracts, as a percentage of management contract and
other revenues, excluding reimbursement of management contract expenses, was 46.4% in fiscal year
2004 compared to 55.8% in fiscal year 2003. The decrease in cost was primarily caused by a
decrease of $3.9 million in bad debt expense,
a decrease of $2.5 million of liability insurance expense, and
$1.3 million decrease
in other miscellaneous costs.
General and administrative expenses decreased to $71.9 million in 2004 from $83.4 million in
2003, a decrease of $11.5 million, or 13.8%. This decrease is due to a reduction of $5.3 million
in severance expense, $4.8 million in compensation expense, and $1.4 million in professional fees
and other expenses. General and administrative expenses decreased as a percentage of total revenue
(excluding reimbursement of management contract expenses) to 10.3% in 2004 from 12.0% in 2003.
Net property-related gains for fiscal year 2004 were $7.7 million compared to losses of $7.6
million in fiscal year 2003. The $7.7 million gain was comprised of a $6.3 million gain on the
sale of property in New York and $3.6 million of gains on other properties sold, which the Company
plans to continue to operate. The gains on the sale of property were offset by $2.2 million of
impairments of contract rights, deferred expenses and leasehold improvements related to locations
which management plans to continue to operate. The $7.6 million loss in 2003 was comprised of
impairments of $3.6 million of contract rights and deferred expenses and $4.0 million of leasehold
improvements related to locations which management plans to continue to operate. Impairment
charges recognized in fiscal year 2004 and 2003 were based on estimated fair values using projected
cash flows of the applicable parking facility discounted at the Companys average cost of funds.
Management determined that the projected cash flows for these locations would not be enough to
recover the remaining value of the assets.
For fiscal year 2004, the Company either disposed of or designated as held-for-sale or
disposal certain locations, resulting in loss from discontinued operations of $1.4 million.
Included in discontinued operations in 2004 is $1.8 million of losses from the sale of property and
$2.3 million of impairment charges related to certain properties held for sale, offset by earnings
from discontinued operations of $2.6 million. The Companys 2003 results were reclassified to
reflect the operations of these locations as discontinued operations, net of related income taxes.
Interest income in fiscal year 2004 increased to $4.9 million from $4.7 million in fiscal year
2003. Interest expense decreased in fiscal year 2004 to
$20.5 million from $21.9 million in fiscal
year 2003 due primarily to a decrease in the average balance outstanding in 2004. The weighted
average balance outstanding for the Companys debt obligations and subordinated convertible
debentures was $306.3 million during the fiscal year ended September 30, 2004, at a weighted
average interest rate of 5.9% compared to a weighted average balance outstanding of $361.0 million
at a weighted average rate of 5.8% during the fiscal year ended September 30, 2003. Deferred
finance costs were included in the calculation of the weighted average interest rate.
Equity in partnership and joint venture (losses) earnings was a loss of $3.0 million in fiscal
year 2004 compared to earnings of $2.2 million in fiscal year 2003. The decrease is primarily
related to operating results for the Companys 50% owned, non-consolidated affiliate in Mexico. As
previously discussed, during the second quarter of fiscal 2004, the Companys Mexican affiliate
reported to the Company that the affiliate would be taking certain impairments and losses as part
of the year-end audit performed by independent auditors. As the entity is a 50% owned,
non-consolidated investment, results are recorded on the equity method. The losses reported to us
were mostly non-cash, and totaled $2.6 million.
The Companys effective income tax rate on earnings from continuing operations before income
taxes was 42.8% in fiscal year 2004 compared to 40.5% in fiscal year 2003. The increase in the
effective tax rate is primarily attributable to a decrease in jobs credit.
Quarterly Results
The
quarterly 2005, as reported and 2004 statement of operations data set forth below was derived from unaudited
financial statements of the Company and includes all adjustments
(including reclassifications between continuing and discontinuing
operations) which the Company considers
necessary for a fair presentation thereof.
During
the fourth quarter 2005, management of the Company became aware that
certain employees in its United Kingdom operation had engaged in
unauthorized related party transactions which resulted in the
unauthorized transfer and utilization of Company assets and
improper and inaccurate accounting entries that resulted in
the over accrual of revenues and understatement of expenses during
the first three quarters of fiscal 2005. On September 29, 2005, the
Audit Committee of the Board of Directors and senior management
decided to restate the Companys financial statements for the
quarterly periods ended December 31, 2004, March 31, 2005,
and June 30, 2005 to reflect the correction of these accounting
errors. In addition, during the fourth quarter, the Company has
reassessed its accounting for interest rate swap agreements related
to its credit facility and has restated its quarterly financial
statements related to these interest rate swap agreements.
Corrections
were made to reduce revenues excluding reimbursement of management
contract expenses by $1.0 million (an increase of $0.1 million and
$0.5 million in the first and second quarters, respectively, reduced
by $1.6 million in the third quarter) for the inappropriate over
accrual of revenues. Corrections were made to reduce earnings from
continuing operations, net of tax by $4.5 million (an increase of
$0.1 million in the first quarter, reduced by $0.3 million in the
second quarter and, reduced by $4.3 million in the third quarter) for
the inappropriate over accrual of revenues and the
inappropriate capitalization and under recording of expenses.
Additionally, corrections were made to increase earnings from continuing
operations, net of tax by $0.5 million (an increase of $0.3 million
and $0.7 million in the first and second quarters, respectively,
reduced by $0.5 million in the third quarter) to record the change in
fair value of the swap agreements. Corrections were made to reduce
earnings from discontinued operations, net of tax by $5.5 million (a
decrease of $1.0 million in the first quarter, an increase of $0.9
million in the second quarter, and a decrease of $5.4
million in the third quarter) for the inappropriate over accrual of
revenues and inappropriate capitalization and under recording of
expenses. As a result of these corrections net earnings and retained
earnings were reduced by $9.5 million (a decrease of $0.6 million in
the first quarter, an increase of $1.3 million in the second quarter,
and a decrease of $10.2 million in the third quarter). The
restatements had no impact on previously reported cash balances or
total cash flows from operating, investing or financing activities
for each of the applicable 2005 quarters.
25
Amounts in thousands, except per share data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 Quarters |
|
December 31 |
|
|
March 31 |
|
(Unaudited) |
|
As Reported |
|
|
Restated |
|
|
As Reported |
|
|
Restated |
|
Total revenues, excluding reimbursement
of management contract expenses |
|
$ |
171,511 |
|
|
$ |
171,579 |
|
|
$ |
164,567 |
|
|
$ |
165,061 |
|
Property related gains, net |
|
|
1,881 |
|
|
|
1,881 |
|
|
|
14,755 |
|
|
|
14,755 |
|
Operating earnings |
|
|
13,169 |
|
|
|
13,234 |
|
|
|
16,376 |
|
|
|
15,999 |
|
Earnings from continuing operations, net of tax |
|
|
5,727 |
|
|
|
6,106 |
|
|
|
6,628 |
|
|
|
7,018 |
|
Discontinued operations, net of tax |
|
|
(2,247 |
) |
|
|
(3,235 |
) |
|
|
(364 |
) |
|
|
532 |
|
Net earnings |
|
|
3,480 |
|
|
|
2,871 |
|
|
|
6,264 |
|
|
|
7,550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations, net of tax
per share - basic |
|
$ |
0.16 |
|
|
$ |
0.17 |
|
|
$ |
0.18 |
|
|
$ |
0.19 |
|
Discontinued operations, net of tax |
|
|
(0.06 |
) |
|
|
(0.09 |
) |
|
|
(0.01 |
) |
|
|
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings basic |
|
$ |
0.10 |
|
|
$ |
0.08 |
|
|
$ |
0.17 |
|
|
$ |
0.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations, net of tax per share dilutive |
|
$ |
0.16 |
|
|
$ |
0.17 |
|
|
$ |
0.18 |
|
|
$ |
0.19 |
|
Discontinued operations, net of tax |
|
|
(0.06 |
) |
|
|
(0.09 |
) |
|
|
(0.01 |
) |
|
|
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
- dilutive |
|
$ |
0.10 |
|
|
$ |
0.08 |
|
|
$ |
0.17 |
|
|
$ |
0.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30 |
|
|
September 30 |
|
|
|
As Reported |
|
|
Restated |
|
|
|
|
|
Total revenues, excluding reimbursement
of management contract expenses |
|
$ |
168,658 |
|
|
$ |
167,063 |
|
|
$ |
165,690 |
|
Property related gains, net |
|
|
(1,171 |
) |
|
|
(1,171 |
) |
|
|
38,105 |
|
Operating earnings |
|
|
12,475 |
|
|
|
6,104 |
|
|
|
38,450 |
|
Earnings from continuing operations, net of tax |
|
|
7,973 |
|
|
|
3,192 |
|
|
|
17,500 |
|
Discontinued operations, net of tax |
|
|
(3,093 |
) |
|
|
(8,528 |
) |
|
|
(8,315 |
) |
Net earnings (loss) |
|
|
4,880 |
|
|
|
(5,336 |
) |
|
|
9,185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing
operations, net of tax per share basic |
|
$ |
0.22 |
|
|
$ |
0.09 |
|
|
$ |
0.47 |
|
Discontinued operations, net of tax |
|
|
(0.08 |
) |
|
|
(0.23 |
) |
|
|
(0.23 |
) |
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) basic |
|
$ |
0.14 |
|
|
$ |
(0.14 |
) |
|
$ |
0.24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing
operations, net of tax per share dilutive |
|
$ |
0.22 |
|
|
$ |
0.09 |
|
|
$ |
0.47 |
|
Discontinued operations, net of tax |
|
|
(0.08 |
) |
|
|
(0.23 |
) |
|
|
(0.23 |
) |
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) dilutive |
|
$ |
0.14 |
|
|
$ |
(0.14 |
) |
|
$ |
0.24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 Quarters |
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
December 31 |
|
|
March 31 |
|
|
June 30 |
|
|
September 30 |
|
Total revenues, excluding reimbursement
of management contract expenses |
|
$ |
179,063 |
|
|
$ |
172,578 |
|
|
$ |
176,629 |
|
|
$ |
169,280 |
|
Property related gains, net |
|
|
1,243 |
|
|
|
3,293 |
|
|
|
1,433 |
|
|
|
1,685 |
|
Operating earnings |
|
|
17,970 |
|
|
|
12,755 |
|
|
|
16,082 |
|
|
|
6,947 |
|
Earnings from continuing operations, net of tax |
|
|
8,529 |
|
|
|
2,770 |
|
|
|
6,028 |
|
|
|
1,075 |
|
Discontinued operations, net of tax |
|
|
(134 |
) |
|
|
765 |
|
|
|
(60 |
) |
|
|
(1,980 |
) |
Net earnings |
|
|
8,395 |
|
|
|
3,535 |
|
|
|
5,968 |
|
|
|
(905 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing
operations, net of tax per share basic |
|
$ |
0.24 |
|
|
$ |
0.08 |
|
|
$ |
0.16 |
|
|
$ |
0.03 |
|
Discontinued operations, net of tax |
|
|
(0.01 |
) |
|
|
0.02 |
|
|
|
(0.00 |
) |
|
|
(0.05 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings basic |
|
$ |
0.23 |
|
|
$ |
0.10 |
|
|
$ |
0.16 |
|
|
$ |
(0.02 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing
operations, net of tax per share dilutive |
|
$ |
0.24 |
|
|
$ |
0.08 |
|
|
$ |
0.16 |
|
|
$ |
0.03 |
|
Discontinued operations, net of tax |
|
|
(0.01 |
) |
|
|
0.02 |
|
|
|
(0.00 |
) |
|
|
(0.05 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
- dilutive |
|
$ |
0.23 |
|
|
$ |
0.10 |
|
|
$ |
0.16 |
|
|
$ |
(0.02 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
26
Fourth
quarter 2005 results from continuing operations, net of tax were higher due primarily to a
$23.0 million gain, net of tax, on the sale of a lease right in New York. General and administrative expenses were
significantly higher due to $2.2 of professional fees as a result of the Companys investigation of
and resolution of certain inappropriate accounting entries and misappropriation of assets in the
United Kingdom, and for costs to comply with the requirements of the Section 404 of the Sarbanes
Oxley Act of 2002. Fourth quarter earnings from continuing
operations, net of tax for 2005 were also reduced by $1.7 million for the impairment of the Companys investment in the Mexican joint venture and
$0.5 million for the impairment of goodwill. The fourth quarter
earnings from continuing operations, net of tax were increased by
$0.5 million to record a correction of 2004 and 2003 gains
previously recognized in accumulated other comprehensive income for
the change in the recognition of swap
agreements and reduced by $0.5 million related to the correction
of prior period rent expense for certain locations. The Company also increased its workers compensation
and general liability reserves by $1.2 million due to higher
claims cost.
Liquidity and Capital Resources
Net
cash provided by operating activities for fiscal year 2005 was $3.2 million, a decrease of
$38.4 million from net cash provided by operating activities of $41.6 million during fiscal year
2004. The primary factor which contributed to this change was the decrease in revenue in 2005.
Net
cash provided by investing activities was $101.7 million for
fiscal year 2005 compared to
$52.4 million of net cash provided by investing activities in fiscal year 2004. This change was
primarily due to an increase in proceeds from the disposition of property and equipment during 2005
and the collection of notes receivable related to the Edison partnership.
Net
cash used by financing activities for fiscal year 2005 was $106.6 million compared to cash
used of $97.7 million in fiscal year 2004. Net cash used by financing activities in fiscal
year 2005 primarily consisted of debt repayment of $121.4 million.
On February 28, 2003, the Company entered into a credit facility (the Credit Facility)
initially providing for an aggregate availability of up to $350 million consisting of a five-year
$175 million revolving loan, including a sub-limit of $60 million for standby letters of credit,
and a $175 million seven-year term loan. The facility is secured by the stock of certain
subsidiaries of the Company, certain real estate assets, and domestic personal property assets of
the Company and certain subsidiaries. Proceeds from the Credit Facility were used to refinance a
previous credit facility.
The Company amended the Credit Facility in June 2004. The amendment reduced the margin
applied to the term loan by 75 basis points, and increased the standby letters of credit sub-limit
by $30.0 million to $90.0 million. The Company uses its revolving loan to collateralize
outstanding letters of credit. All other terms and conditions remained the same.
On January 25, 2005, the Company completed an amendment to the Credit Facility. The amended
facility reduced the aggregate availability to $300 million consisting of a $225 million revolving
loan and a $75 million term loan. The maturity dates remained the same, February 28, 2008, for the
revolver and June 30, 2010, for the term loan. Additionally, the interest rate margins were
reduced for both the revolver and term loans. The quarterly amortization schedule was also
amended. The new schedule requires the term loan payments in the amount of $187,500 for the
quarters ended March 2005 through March 2008 and $9.1 million for the quarters ended June 2008
through March 2010. The revolving loan is required to be repaid in February 2008. The aggregate
availability under the Credit Facility was $172.8 million at September 30, 2005, which is a net of
$45.1 million of stand-by letters of credit.
The Credit Facility bears interest at LIBOR plus a tier-based margin dependent upon certain
financial ratios. There are separate tiers for the revolving loan and term loan. The weighted
average margin as of September 30, 2005 was 185 basis points. The amount outstanding under the
Companys Credit Facility was $81.5 million with a weighted average interest rate of 4.4% as of
September 30, 2005. The aggregate availability under the Credit
Facility was $172.8 million at
September 30, 2005, which is net of $45.1 million of stand-by letters of credit. The Company had
deferred financing costs related to the Credit Facility of $5.9 million as of September 30, 2005
and $6.7 million as of September 30, 2004. The Company amortizes these costs over the term of the
credit facility.
The Company is required under the Credit Facility to enter into and maintain interest rate
protection agreements designed to limit the Companys exposure to increases in interest rates. On
May 30, 2003, the Company entered into two interest rate swap transactions for a total of $87.5
million. Both transactions swapped the Companys floating LIBOR interest rates for fixed interest
of 2.45% until June 30, 2007. Because not all of the terms are
consistent with the credit facility, the derivatives do not qualify
as a cash flow hedge.
The weighted average interest rate on the Companys Credit Facility at September 30, 2005 was
4.4%. The 4.4% rate includes all outstanding LIBOR contracts and swap agreements at September 30,
2005. An increase (decrease) in LIBOR of 1% would result in no increase (decrease) of annual
interest expense since the swaps, which converted the rates to fixed,
totaled $87.5 million and the Credit
Facility, which was all floating interest, was $81.5 million on
September 30, 2005.
27
The Credit Facility contains covenants including those that require the Company to maintain
certain financial ratios, restrict further indebtedness and certain acquisition activity and limit
the amount of dividends paid. The primary ratios are a leverage ratio, senior leverage ratio and a
fixed charge coverage ratio. Quarterly compliance is calculated using a four quarter rolling
methodology and measured against certain targets. As of September 30, 2005, the Company is in
compliance with all of the Credit Facility covenants.
Depending on the timing and magnitude of the Companys future investments (either in the form
of leased or purchased properties, joint ventures, or acquisitions), the working capital necessary
to satisfy current obligations is anticipated to be generated from operations and the Credit
Facility over the next twelve months. In the ordinary course of business, Central Parking is
required to maintain and, in some cases, make capital improvements to the parking facilities it
operates. If Central Parking identifies investment opportunities or has needs requiring cash in
excess of Central Parkings cash flows and the existing Credit Facility, Central Parking may seek
additional sources of capital, including seeking to amend the Credit Facility to obtain additional
debt capacity; however, there can be no assurance such additional capacity or sources of capital
could be obtained. The current market value of Central Parking common stock also could have an
impact on Central Parkings ability to complete significant acquisitions or raise additional
capital.
Future Cash Commitments
In August of 2005 the Company made an offer to its shareholders to purchase up to 4,400,000
shares of common stock at a price no greater than $16.75 nor lower than $14.50 per share. The
transaction was structured as a modified Dutch Auction tender offer. The company funded the
transaction with $75.3 million borrowed under the Credit Facility.
The offer was amended to reduce the range from a price no higher than $16.00 and no lower than
$14.00 per share. The transaction was concluded on October 14, 2005 at which time the Company
accepted and purchased 4,859,674 shares at a price of $15.50 per share, totaling $75.3 million in
cash payments. The company exercised its right to purchase an additional number of shares without
extending or modifying the offer.
The Company routinely makes capital expenditures to maintain or enhance parking facilities
under its control. The Company expects such capital expenditures for fiscal year 2006 to be
approximately $19 to $22 million.
Historically, the Company has paid dividends on its common stock and expects to pay dividends
in the future. Common stock dividends of $2.1 million were paid during fiscal year 2005.
The following tables summarize the Companys total contractual obligations and commercial
commitments as of September 30, 2005 (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments due by period |
|
|
|
|
|
|
|
|
|
|
Less than |
|
|
1-3 |
|
|
3-5 |
|
|
After 5 |
|
|
|
Total |
|
|
1 Year |
|
|
Years |
|
|
Years |
|
|
Years |
|
Long-term debt and capital lease
obligations |
|
$ |
99,976 |
|
|
$ |
1,764 |
|
|
$ |
43,220 |
|
|
$ |
54,854 |
|
|
$ |
138 |
|
Subordinated debentures |
|
|
78,085 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,085 |
|
Operating leases |
|
|
1,041,825 |
|
|
|
182,833 |
|
|
|
271,050 |
|
|
|
165,814 |
|
|
|
422,128 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contractual cash obligations |
|
$ |
1,219,886 |
|
|
$ |
184,597 |
|
|
$ |
314,270 |
|
|
$ |
220,668 |
|
|
$ |
500,351 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of commitment expiration per period |
|
|
|
|
|
|
Less than |
|
1-3 |
|
3-5 |
|
After 5 |
|
|
Total |
|
1 Year |
|
Years |
|
Years |
|
Years |
Unused lines of credit |
|
$ |
172,850 |
|
|
$ |
|
|
|
$ |
172,850 |
|
|
$ |
|
|
|
$ |
|
|
Unused lines of credit as of September 30, 2005 are reduced by $45.1 million of standby
letters of credit.
International Foreign Currency Exposure
The Company operates wholly-owned subsidiaries in the United Kingdom, Canada and Spain. Total
revenues from wholly-owned foreign operations amounted to 4.1%, 6.9% and 6.6% of total revenues
(excluding reimbursement of management contract expenses) for the years ended September 30, 2005,
2004 and 2003, respectively. Additionally, as of September 30, 2005, the Company operated through joint ventures in Mexico,
Germany, Poland, Greece, Venezuela, Colombia and Peru. The Company
intends to continue to invest in foreign
leased or owned facilities, and may become increasingly exposed to foreign currency fluctuations. The
Company, in limited circumstances, has
28
|
|
denominated contracts in U.S. dollars to limit currency
exposure. Presently, the Company has limited exposure to foreign currency risk and has no hedging
programs related to such risk. The Company anticipates implementing a hedging program if such risk
materially increases. For the year ended September 30, 2005, revenues from operations in the United
Kingdom and Canada represented 9.0% and 50.8%, respectively, of total revenues generated by foreign
operations, excluding reimbursement of management contract expenses. |
Impact of Inflation and Changing Prices
The primary sources of revenues to the Company are parking revenues from owned and leased
locations and management contract revenue on managed parking facilities. The Company believes that
inflation has had a limited impact on its overall operations for the fiscal years ended September
30, 2005, 2004 and 2003 and does not expect inflation to have a material effect on its overall
operations in fiscal year 2006.
Off Balance Sheet Arrangements
The Company has various ownership interests in certain unconsolidated
partnerships and joint ventures. See Notes 1 and 8 to the Consolidated Financial Statements for
information regarding the Companys investments in unconsolidated partnerships and joint ventures.
Recent Accounting Pronouncements
In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123R,
Share-Based Payment. SFAS No. 123R requires the company to measure the cost of employee services
received in exchange for an award of equity instruments based on the grant-date fair value of the
award. Beginning October 1, 2005, the Company adopted SFAS 123R,
using the modified prospective method, which requires the fair value of
stock options to be expensed during the vesting period. The Company estimates the expense for
fiscal year 2006 to be approximately $475 thousand.
Item 7a. Quantitative and Qualitative Disclosures About Market Risk
Interest Rates
The Companys primary exposure to market risk consists of changes in interest rates on
variable rate borrowings. As of September 30, 2005, the Company had $81.5 million of variable rate
debt outstanding under the Credit Facility, priced at LIBOR plus a weighted average 185 basis
points.
The Company is required under the Credit Facility to enter into and maintain interest rate
protection agreements designed to limit the Companys exposure to increases in interest rates. On
May 30, 2003, the Company entered into two interest rate swap transactions for a total of $87.5
million. Both transactions swapped the Companys floating LIBOR interest rates for fixed interest
of 2.45% until June 30, 2007. Because not all of the terms are
consistent with the credit facility, the derivatives do not qualify
as a cash flow hedge.
The weighted average interest rate on the Companys Credit Facility at September 30, 2005 was
4.4%. The 4.4% rate includes all outstanding LIBOR contracts and swap agreements at September 30,
2005. An increase (decrease) in LIBOR of 1% would result in no increase (decrease) of annual
interest expense since the swaps, which converted the rates to fixed, totaled $87.5 and the Credit
Facility, which was all floating interest, was $81.5 million on
September 30, 2005.
Foreign Currency Exposure
The Companys exposure to foreign exchange risk is minimal. As of September 30, 2005, the
Company has approximately GBP 0.7 million (USD $1.2 million) of cash and cash equivalents
denominated in British pounds, EUR 2.1 million (USD $2.5 million) denominated in euros, CAD 0.7
million (USD $0.6 million) denominated in Canadian dollars, and USD $1.0 million denominated in
various other foreign currencies. The Company also has EUR 0.7 million (USD $0.8 million) of notes
payable denominated in euros and GBP 4.8 million (USD $8.6 million) of notes payable denominated in
pounds at September 30, 2005. These notes bear interest at a floating rate of 4.12% as of September
30, 2005, and require monthly principal and interest payments through 2012. The Company does not
hold any hedging instruments related to foreign currency transactions. The Company monitors
foreign currency positions and may enter into certain hedging instruments in the future should it
determine that exposure to foreign exchange risk has increased. Based on the Companys overall
currency rate exposure as of September 30, 2005, management does not believe a near-term change in
currency rates, based on historical currency movements, would materially affect the Companys
financial statements.
29
Item 8. Financial Statements and Supplementary Data
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
PAGE |
|
|
|
|
31 |
|
|
|
|
32 |
|
|
|
|
33 |
|
|
|
|
34 |
|
|
|
|
35 |
|
|
|
|
37 |
|
|
|
|
65 |
|
|
|
|
65 |
|
30
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Central Parking Corporation:
We have audited the accompanying consolidated balance sheets of Central Parking Corporation
and subsidiaries as of September 30, 2005 and 2004, and the related consolidated statements of
operations, shareholders equity and comprehensive income (loss), and cash flows for each of the
years in the three-year period ended September 30, 2005. In connection with our audits of the
consolidated financial statements, we also have audited the financial statement Schedule II
Valuation Qualifying Accounts and financial statement schedule IV Mortgage Loans on Real Estate
as of September 30, 2005 and for each of the years in the three year period ended September 30,
2005. These consolidated financial statements and financial statement schedules are the
responsibility of the Companys management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Central Parking Corporation and subsidiaries as of
September 30, 2005 and 2004, and the results of their operations and their cash flows for each of
the years in the three-year period ended September 30, 2005, in conformity with U.S. generally
accepted accounting principles. Also in our opinion, the related financial statement schedules,
when considered in relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the effectiveness of Central Parking Corporation and subsidiaries
internal control over financial reporting as of September 30, 2005, based on criteria established
in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO), and our report dated December 29, 2005 expressed an unqualified opinion
on managements assessment of, and an adverse opinion on the effective operation of, internal
control over financial reporting as of September 30, 2005.
/s/ KPMG LLP
Nashville, Tennessee
December 29, 2005
CENTRAL PARKING CORPORATION and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Amounts in thousands, except share and per share data
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
2005 |
|
|
2004 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
26,055 |
|
|
$ |
27,628 |
|
Management accounts receivable, net of allowance for doubtful accounts of
$10,268 and $3,206 at September 30, 2005 and 2004, respectively |
|
|
51,931 |
|
|
|
43,776 |
|
Accounts
receivable - other |
|
|
15,537 |
|
|
|
14,594 |
|
Current portion of notes receivable (including amounts due
from related parties of $937 in 2005 and $1,617 in 2004) |
|
|
5,818 |
|
|
|
6,010 |
|
Prepaid expenses |
|
|
8,630 |
|
|
|
13,045 |
|
Assets held for sale |
|
|
49,048 |
|
|
|
23,724 |
|
Available for sale securities |
|
|
4,606 |
|
|
|
4,364 |
|
Refundable income taxes |
|
|
|
|
|
|
1,461 |
|
Deferred income taxes |
|
|
19,949 |
|
|
|
11,177 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
181,574 |
|
|
|
145,779 |
|
Notes receivable, less current portion |
|
|
10,480 |
|
|
|
41,940 |
|
Property, equipment, and leasehold improvements, net |
|
|
327,391 |
|
|
|
380,256 |
|
Contract and lease rights, net |
|
|
80,064 |
|
|
|
89,015 |
|
Goodwill, net |
|
|
232,443 |
|
|
|
232,562 |
|
Investment in and advances to partnerships and joint ventures |
|
|
4,443 |
|
|
|
7,824 |
|
Other assets |
|
|
31,419 |
|
|
|
32,252 |
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
867,814 |
|
|
$ |
929,628 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Current portion of long-term debt and capital lease obligations |
|
$ |
1,764 |
|
|
$ |
46,867 |
|
Accounts payable |
|
|
83,604 |
|
|
|
82,224 |
|
Accrued expenses |
|
|
52,809 |
|
|
|
46,807 |
|
Management accounts payable |
|
|
25,532 |
|
|
|
24,640 |
|
Income taxes payable |
|
|
12,389 |
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
176,098 |
|
|
|
200,538 |
|
Long-term debt and capital lease obligations, less current portion |
|
|
98,212 |
|
|
|
159,188 |
|
Subordinated convertible debentures |
|
|
78,085 |
|
|
|
78,085 |
|
Deferred rent |
|
|
22,113 |
|
|
|
24,450 |
|
Deferred income taxes |
|
|
19,565 |
|
|
|
17,293 |
|
Other liabilities |
|
|
21,152 |
|
|
|
14,977 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
415,225 |
|
|
|
494,531 |
|
|
|
|
|
|
|
|
|
|
Minority interest |
|
|
528 |
|
|
|
64 |
|
|
|
|
|
|
|
|
|
|
Shareholders equity: |
|
|
|
|
|
|
|
|
Common stock, $0.01 par value; 50,000,000 shares authorized,
36,759,155 and 36,582,808 shares issued and outstanding at
September 30, 2005 and 2004, respectively |
|
|
368 |
|
|
|
366 |
|
Additional paid-in capital |
|
|
251,784 |
|
|
|
249,452 |
|
Accumulated other comprehensive income, net |
|
|
3,432 |
|
|
|
879 |
|
Retained earnings |
|
|
197,182 |
|
|
|
185,041 |
|
Other |
|
|
(705 |
) |
|
|
(705 |
) |
|
|
|
|
|
|
|
Total shareholders equity |
|
|
452,061 |
|
|
|
435,033 |
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders Equity |
|
$ |
867,814 |
|
|
$ |
929,628 |
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
32
CENTRAL PARKING CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Amounts in thousands, except per share data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Parking |
|
$ |
550,782 |
|
|
$ |
572,878 |
|
|
$ |
575,969 |
|
Management contract and other |
|
|
118,611 |
|
|
|
124,672 |
|
|
|
117,428 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
669,393 |
|
|
|
697,550 |
|
|
|
693,397 |
|
Reimbursement of management contract expenses |
|
|
464,423 |
|
|
|
418,565 |
|
|
|
418,058 |
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
1,133,816 |
|
|
|
1,116,115 |
|
|
|
1,111,455 |
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of parking |
|
|
504,648 |
|
|
|
521,682 |
|
|
|
538,158 |
|
Cost of management contracts |
|
|
60,493 |
|
|
|
57,904 |
|
|
|
65,600 |
|
General and administrative |
|
|
83,581 |
|
|
|
71,864 |
|
|
|
83,409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
648,722 |
|
|
|
651,450 |
|
|
|
687,167 |
|
Reimbursed management contract expenses |
|
|
464,423 |
|
|
|
418,565 |
|
|
|
418,058 |
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses |
|
|
1,113,145 |
|
|
|
1,070,015 |
|
|
|
1,105,225 |
|
|
|
|
|
|
|
|
|
|
|
Property-related gains (losses), net |
|
|
53,570 |
|
|
|
7,654 |
|
|
|
(7,560 |
) |
Impairment of goodwill |
|
|
(454 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (losses) |
|
|
73,787 |
|
|
|
53,754 |
|
|
|
(1,330 |
) |
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
4,741 |
|
|
|
4,883 |
|
|
|
4,733 |
|
Interest expense |
|
|
(17,944 |
) |
|
|
(20,476 |
) |
|
|
(21,897 |
) |
Gain on sale of non-operating assets |
|
|
|
|
|
|
|
|
|
|
3,279 |
|
Gain on derivative instruments |
|
|
3,006 |
|
|
|
|
|
|
|
|
|
Equity in partnership and joint venture (losses) earnings |
|
|
(474 |
) |
|
|
(2,984 |
) |
|
|
2,212 |
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations before minority interest,
and income taxes |
|
|
63,116 |
|
|
|
35,177 |
|
|
|
(13,003 |
) |
Minority interest |
|
|
(1,331 |
) |
|
|
(2,999 |
) |
|
|
(4,052 |
) |
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations before income taxes |
|
|
61,785 |
|
|
|
32,178 |
|
|
|
(17,055 |
) |
Income tax (expense) benefit: |
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
(32,057 |
) |
|
|
(11,186 |
) |
|
|
(5,051 |
) |
Deferred |
|
|
4,088 |
|
|
|
(2,590 |
) |
|
|
11,954 |
|
|
|
|
|
|
|
|
|
|
|
Total income tax (expense) benefit |
|
|
(27,969 |
) |
|
|
(13,776 |
) |
|
|
6,903 |
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations |
|
|
33,816 |
|
|
|
18,402 |
|
|
|
(10,152 |
) |
|
|
|
|
|
|
|
|
|
|
Discontinued operations, net of tax |
|
|
(19,546 |
) |
|
|
(1,409 |
) |
|
|
5,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
14,270 |
|
|
$ |
16,993 |
|
|
$ |
(4,527 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations |
|
$ |
0.92 |
|
|
$ |
0.51 |
|
|
$ |
(0.28 |
) |
Discontinued operations, net of tax |
|
|
(0.53 |
) |
|
|
(0.04 |
) |
|
|
0.15 |
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
0.39 |
|
|
$ |
0.47 |
|
|
$ |
(0.13 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations |
|
$ |
0.92 |
|
|
$ |
0.51 |
|
|
$ |
(0.28 |
) |
Discontinued operations, net of tax |
|
|
(0.53 |
) |
|
|
(0.04 |
) |
|
|
0.15 |
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
0.39 |
|
|
$ |
0.47 |
|
|
$ |
(0.13 |
) |
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
33
CENTRAL PARKING CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
and COMPREHENSIVE INCOME (LOSS)
Amounts in thousands, except per share data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Other |
|
|
|
|
|
|
Other |
|
|
|
|
|
|
Number of |
|
|
Common |
|
|
Paid-in |
|
|
Comprehensive |
|
|
Retained |
|
|
Shareholders |
|
|
|
|
|
|
Shares |
|
|
Stock |
|
|
Capital |
|
|
Income (Loss), net |
|
|
Earnings |
|
|
Equity |
|
|
Total |
|
Balance at September 30, 2002 |
|
|
35,952 |
|
|
$ |
360 |
|
|
$ |
242,112 |
|
|
$ |
(2,377 |
) |
|
$ |
176,924 |
|
|
$ |
(1,215 |
) |
|
$ |
415,804 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance under restricted stock
plan and employment agreements |
|
|
13 |
|
|
|
1 |
|
|
|
215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
216 |
|
Issuance under Employee Stock
Purchase Plan |
|
|
164 |
|
|
|
1 |
|
|
|
3,550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,551 |
|
Common stock dividends, $0.06 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,165 |
) |
|
|
|
|
|
|
(2,165 |
) |
Exercise of stock options and warrants and
related tax benefits |
|
|
41 |
|
|
|
|
|
|
|
682 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
682 |
|
Amortization of deferred compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
510 |
|
|
|
510 |
|
Comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,527 |
) |
|
|
|
|
|
|
(4,527 |
) |
Foreign currency translation adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
629 |
|
|
|
|
|
|
|
|
|
|
|
629 |
|
Unrealized gain on available-for-sale
securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
168 |
|
|
|
|
|
|
|
|
|
|
|
168 |
|
Unrealized gain on fair value of derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,658 |
|
|
|
|
|
|
|
|
|
|
|
1,658 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,072 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2003 |
|
|
36,170 |
|
|
|
362 |
|
|
|
246,559 |
|
|
|
78 |
|
|
|
170,232 |
|
|
|
(705 |
) |
|
$ |
416,526 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance under restricted stock
plan and employment agreements |
|
|
16 |
|
|
|
|
|
|
|
323 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
323 |
|
Issuance under Employee Stock
Purchase Plan |
|
|
71 |
|
|
|
1 |
|
|
|
591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
592 |
|
Common stock dividends, $0.06 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,184 |
) |
|
|
|
|
|
|
(2,184 |
) |
Exercise of stock options and
related tax benefits |
|
|
130 |
|
|
|
1 |
|
|
|
1,612 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,613 |
|
Issuance of deferred stock units |
|
|
196 |
|
|
|
2 |
|
|
|
367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
369 |
|
Comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,993 |
|
|
|
|
|
|
|
16,993 |
|
Foreign currency translation adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(276 |
) |
|
|
|
|
|
|
|
|
|
|
(276 |
) |
Unrealized loss on available-for-sale
securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5 |
) |
|
|
|
|
|
|
|
|
|
|
(5 |
) |
Unrealized gain on fair value of derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,082 |
|
|
|
|
|
|
|
|
|
|
|
1,082 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2004 |
|
|
36,583 |
|
|
|
366 |
|
|
|
249,452 |
|
|
|
879 |
|
|
|
185,041 |
|
|
|
(705 |
) |
|
$ |
435,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance under restricted stock
plan and employment agreements |
|
|
14 |
|
|
|
|
|
|
|
197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
197 |
|
Issuance under Employee Stock
Purchase Plan |
|
|
39 |
|
|
|
|
|
|
|
569 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
569 |
|
Common stock dividends, $0.06 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,129 |
) |
|
|
|
|
|
|
(2,129 |
) |
Exercise of stock options and
related tax benefits |
|
|
123 |
|
|
|
2 |
|
|
|
1,566 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,568 |
|
Comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,270 |
|
|
|
|
|
|
|
14,270 |
|
Foreign currency translation adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,259 |
|
|
|
|
|
|
|
|
|
|
|
3,259 |
|
Unrealized gain on available-for-sale
securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54 |
|
|
|
|
|
|
|
|
|
|
|
54 |
|
Unrealized loss on fair value of derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(760 |
) |
|
|
|
|
|
|
|
|
|
|
(760 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,823 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2005 |
|
|
36,759 |
|
|
$ |
368 |
|
|
$ |
251,784 |
|
|
$ |
3,432 |
|
|
$ |
197,182 |
|
|
$ |
(705 |
) |
|
$ |
452,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
34
CENTRAL PARKING CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts in thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
14,270 |
|
|
$ |
16,993 |
|
|
$ |
(4,527 |
) |
Loss (earnings) from discontinued operations |
|
|
19,546 |
|
|
|
1,409 |
|
|
|
(5,625 |
) |
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations |
|
|
33,816 |
|
|
|
18,402 |
|
|
|
(10,152 |
) |
Adjustments to reconcile earnings (loss) from continuing operations to net cash
provided by operating activities continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
29,497 |
|
|
|
32,635 |
|
|
|
35,173 |
|
Equity in partnership and joint venture losses (earnings) |
|
|
474 |
|
|
|
2,984 |
|
|
|
(2,212 |
) |
Distributions from partnerships and joint ventures |
|
|
2,092 |
|
|
|
1,412 |
|
|
|
1,375 |
|
Loss on impairment of goodwill |
|
|
454 |
|
|
|
|
|
|
|
|
|
Gain on sale of non-operating assets |
|
|
|
|
|
|
|
|
|
|
(3,279 |
) |
Property related (gains) losses, net |
|
|
(53,570 |
) |
|
|
(7,654 |
) |
|
|
7,560 |
|
Gain on derivative instruments |
|
|
(3,006 |
) |
|
|
|
|
|
|
|
|
Loss on derivatives related to refinancing |
|
|
|
|
|
|
|
|
|
|
918 |
|
Decrease in fair value of derivatives |
|
|
|
|
|
|
|
|
|
|
12 |
|
Deferred income taxes |
|
|
(4,088 |
) |
|
|
2,590 |
|
|
|
(11,954 |
) |
Minority interest |
|
|
1,331 |
|
|
|
2,999 |
|
|
|
4,052 |
|
Changes in operating assets and liabilities, excluding effects of acquisitions: |
|
|
|
|
|
|
|
|
|
|
|
|
Management accounts receivable |
|
|
(8,368 |
) |
|
|
(6,605 |
) |
|
|
5,490 |
|
Accounts
receivable - other |
|
|
(955 |
) |
|
|
6,106 |
|
|
|
274 |
|
Prepaid expenses |
|
|
4,402 |
|
|
|
(1,621 |
) |
|
|
(1,373 |
) |
Other assets |
|
|
(9,313 |
) |
|
|
(7,211 |
) |
|
|
(2,904 |
) |
Accounts payable, accrued expenses and other liabilities |
|
|
13,634 |
|
|
|
(6,096 |
) |
|
|
1,186 |
|
Management accounts payable |
|
|
884 |
|
|
|
(749 |
) |
|
|
(279 |
) |
Deferred rent |
|
|
(2,337 |
) |
|
|
(3,119 |
) |
|
|
(1,535 |
) |
Refundable income taxes |
|
|
1,461 |
|
|
|
4,022 |
|
|
|
(5,483 |
) |
Income taxes payable |
|
|
12,527 |
|
|
|
273 |
|
|
|
2,149 |
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities continuing operations |
|
|
18,935 |
|
|
|
38,368 |
|
|
|
19,018 |
|
Net cash (used) provided by operating activities discontinued
operations |
|
|
(15,701 |
) |
|
|
3,271 |
|
|
|
1,495 |
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
3,234 |
|
|
|
41,639 |
|
|
|
20,513 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from disposition of property and equipment |
|
|
81,541 |
|
|
|
69,408 |
|
|
|
26,147 |
|
Purchase of equipment and leasehold improvements |
|
|
(12,279 |
) |
|
|
(13,274 |
) |
|
|
(53,924 |
) |
Purchase of property |
|
|
|
|
|
|
(1,725 |
) |
|
|
|
|
Purchase of lease rights |
|
|
|
|
|
|
(4,530 |
) |
|
|
(7,186 |
) |
Acquisitions, net of cash acquired |
|
|
|
|
|
|
|
|
|
|
(1,997 |
) |
Incentive payment for USA Parking |
|
|
|
|
|
|
2,250 |
|
|
|
|
|
Proceeds
from notes receivable |
|
|
32,484 |
|
|
|
227 |
|
|
|
5,823 |
|
|
|
|
|
|
|
|
|
|
|
Net cash provided (used) by investing activities |
|
|
101,746 |
|
|
|
52,356 |
|
|
|
(31,137 |
) |
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid |
|
|
(2,129 |
) |
|
|
(2,184 |
) |
|
|
(2,165 |
) |
Net (repayments) borrowings under revolving credit agreement |
|
|
7,062 |
|
|
|
(59,000 |
) |
|
|
(87,500 |
) |
Proceeds from issuance of notes payable, net of issuance costs |
|
|
8,417 |
|
|
|
2,933 |
|
|
|
176,332 |
|
Principal repayments on long-term debt and capital lease obligations |
|
|
(121,367 |
) |
|
|
(39,065 |
) |
|
|
(78,664 |
) |
Payment to minority interest partners |
|
|
(937 |
) |
|
|
(3,244 |
) |
|
|
(4,116 |
) |
Proceeds from issuance of common stock and exercise of stock options |
|
|
2,334 |
|
|
|
2,897 |
|
|
|
4,182 |
|
|
|
|
|
|
|
|
|
|
|
Net cash (used) provided by financing activities |
|
|
(106,620 |
) |
|
|
(97,663 |
) |
|
|
8,069 |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation |
|
|
67 |
|
|
|
(276 |
) |
|
|
629 |
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
|
(1,573 |
) |
|
|
(3,944 |
) |
|
|
(1,926 |
) |
Cash and cash equivalents at beginning of year |
|
|
27,628 |
|
|
|
31,572 |
|
|
|
33,498 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
$ |
26,055 |
|
|
$ |
27,628 |
|
|
$ |
31,572 |
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows continued:
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
Non-cash transactions: |
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized gain on fair value of derivatives and available-
for-sale securities |
|
$ |
|
|
|
$ |
1,077 |
|
|
$ |
1,826 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash payments for: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest |
|
$ |
16,983 |
|
|
$ |
19,160 |
|
|
$ |
14,020 |
|
Income taxes |
|
$ |
16,355 |
|
|
$ |
6,725 |
|
|
$ |
12,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effects of acquisitions: |
|
|
|
|
|
|
|
|
|
|
|
|
Estimated fair value of assets acquired |
|
$ |
|
|
|
$ |
|
|
|
$ |
632 |
|
Purchase price in excess of the net assets acquired (contract rights) |
|
|
|
|
|
|
|
|
|
|
2,333 |
|
Estimated fair values of liabilities assumed |
|
|
|
|
|
|
|
|
|
|
(968 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash paid for acquisitions |
|
$ |
|
|
|
$ |
|
|
|
$ |
1,997 |
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Summary of Significant Accounting Policies
A summary of the significant accounting policies applied in the preparation of the
accompanying consolidated financial statements is as follows:
(a) Organization and Basis of Presentation
Central Parking Corporation (CPC) is a United States company incorporated in the State of
Tennessee. The consolidated financial statements include the accounts of Central Parking
Corporation and its subsidiaries (the Company or Central Parking) including Central Parking
System, Inc. (CPS) and its subsidiaries; Kinney System Holdings, Inc. and its subsidiaries
(Kinney); Central Parking System of the United Kingdom, Ltd. and its subsidiary (CPS-UK);
Central Parking System Realty, Inc. and its subsidiaries (Realty); and Allright Holdings, Inc.
and its subsidiaries (Allright), including through June 30, 2004, Edison Parking Management, L.P.
(Edison), a 50% owned partnership whereby Allright was the general partner and had effective
control of the partnership based on the terms of the partnership agreement. The results of
operations of the remaining 50% of Edison were eliminated as a minority interest. All significant
intercompany transactions have been eliminated in consolidation.
The Company owns, operates and manages parking facilities and provides parking consulting
services throughout the world, primarily in the United States, Canada, and the United Kingdom. The
Company manages and operates owned or leased parking facilities, manages and operates parking
facilities owned or leased by third parties, and provides financial and other advisory services to
clients.
(b) Revenues
Parking revenues include the parking revenues from leased and owned locations. Management
contract revenues represent revenues (both fixed and performance-based fees) from facilities
managed for other parties and miscellaneous fees for accounting, insurance and other ancillary
services such as consulting and transportation management services. Parking revenues from transient
parking are recognized as cash is received. Parking revenues from monthly parking customers, fixed
fee management contract revenues and miscellaneous management fees are recognized on a monthly
basis based on the terms of the underlying contracts. Management contract revenues related to
performance-based arrangements are accrued when the performance measures have been met.
Management accounts payable reflected on the accompanying consolidated balance sheets is
reflected net of cash. Such cash balances belong to the owners of the various managed facilities,
but they are held by the Company and are used to pay expenses of the managed facilities and
ultimately to settle the balance due to the owners of the managed facilities.
In accordance with Emerging Issues Task Force (EITF) Issue No. 01-14, Income Statement
Characterization of Reimbursements Received for Out-of-Pocket Expenses Incurred, the Company
recognizes as both revenues and expenses, in equal amounts, costs directly reimbursed from its
management clients.
(c) Cash and Cash Equivalents
The Company considers cash and cash equivalents to include cash on hand, in banks, and
short-term, highly liquid investments with original maturities of three months or less.
(d) Management Accounts Receivable
Management accounts receivable are recorded at the amount invoiced to third parties for
management contract revenues. The Company reports management accounts receivable net of an
allowance for doubtful accounts to represent its estimate of the amount that ultimately will be
realized in cash. The Company reviews the adequacy of its allowance for doubtful accounts on an
ongoing basis, using historical collection trends, analyses of receivable portfolios by region and
by source, aging of receivables, as well as review of specific accounts, and makes adjustments in
the allowance as necessary. Changes in economic conditions, specifically in the Northeast United
States, could have an impact on the collection of existing receivable balances or future allowance
considerations.
(e) Available for sale securities
Investment securities primarily consist of debt obligations of states and political
subdivisions. As of September 30, 2005, the balance of the investment securities was $4.6 million.
These securities were previously classified as held-to-maturity. Such securities were stated at
amortized cost adjusted for amortization of premiums and accretion of discounts. As of September
30, 2004, the balance of the investment was $4.4 million. During fiscal year 2003, the Company
sold a portion of these securities, and accordingly reclassified the remaining securities as
available for sale. Available-for-sale securities are recorded at fair value.
Unrealized holding
37
gains and losses, net of related tax effects, on these securities are excluded
from earnings and are reported as a separate component of accumulated other comprehensive income
until realized. Realized gains and losses from the sale of available-for-sale securities are
determined on a specific-identification basis.
(f) Property, Equipment, and Leasehold Improvements
Property, equipment and leasehold improvements, including computer hardware and software, are
recorded at cost. Depreciation is provided principally on a straight-line basis over the estimated
useful life of the asset, which is generally one to fifteen years for furniture, fixtures, and
equipment, three years for computer software, five years for computer hardware, and thirty to forty
years for buildings and garages. Leasehold improvements are amortized over the original lease term,
excluding optional renewal periods, or the estimated useful life of the asset, whichever is
shorter. Major additions and improvements to property and equipment that extend their economic
life are capitalized. Repair and maintenance costs are charged to operating expense as incurred.
(g) Investment in and Advances to Partnerships and Joint Ventures
The Company has a number of joint ventures to operate and develop parking garages through
either corporate joint ventures, general partnerships, limited liability companies, or limited
partnerships. The financial results of the Companys joint ventures are generally accounted for
under the equity method and are included in equity in partnership and joint venture earnings in the
accompanying consolidated statements of operations with the exception of the Companys investment
in Edison Parking Management, L.P. (Edison), which was consolidated, through June 30, 2004, into
the Companys financial statements due to the Companys control of Edison, with the remaining 50%
recorded as minority interest. Effective July 1, 2004, the Companys general partnership interest
in Edison was redeemed by Edison in exchange for cash of $570,251, a note receivable and certain
parking management agreements. As a result of the redemption, the Company no longer consolidates
Edison and reversed minority interest of $30.6 million.
Amounts due from unconsolidated partnerships and joint ventures under notes receivable are
classified in the consolidated balance sheets as investments in and advances to partnerships and
joint ventures until amounts due become payable in the next twelve months. When these amounts
become due within the next twelve months, such amounts are presented as current portion of notes
receivable from related parties in the consolidated balance sheets.
(h) Contract and Lease Rights
Contract and lease rights consist of capitalized payments made to third parties which provide
the Company the opportunity to manage or lease facilities. Contract and lease rights are allocated
among respective locations and are amortized principally on a straight-line basis over the terms of
the related agreements, which range from five to thirty years or an estimated term considering
anticipated terminations and renewals. Management contract rights acquired through acquisition of
an entity are amortized as a group over the estimated term of the contracts, including anticipated
renewals and terminations based on the Companys historical experience (typically 15 years).
(i) Goodwill
Goodwill, which represents the excess of purchase price over the fair value of net assets
acquired and liabilities assumed in a business combination, is not amortized, but is tested for
impairment at least annually and whenever events or circumstances occur indicating that goodwill
may be impaired. The Companys annual impairment testing date is September 30.
(j) Other Assets
Other assets is comprised of a combination of the cash surrender value of life insurance
policies, investment securities, security deposits, key money, deferred debt issuance costs on the
subordinated convertible debentures, deferred debt issuance costs and non-compete agreements. Key
money represents lease prepayments tendered to lessors at the inception of long-term lease
relationships and is amortized over the original term of the lease, excluding optional renewal
periods. Non-compete agreements are amortized over the contractual term of the agreement or the
economic useful life, whichever is shorter. Deferred debt issuance costs are amortized over the
contractual term of the related debt or subordinated convertible debentures.
(k) Lease Transactions and Related Balances
The Company accounts for operating lease obligations and sublease income on a straight-line
basis. Contingent or percentage payments are recognized when operations indicate such amounts will
be paid. Lease obligations paid in advance are included in prepaid rent. The difference between
actual lease payments and straight-line lease expenses over the original lease term, excluding
optional renewal periods, is included in deferred rent. Rent expense for all operating leases and
rental income from subleases are reflected in cost of parking or general and administrative
expenses.
In connection with certain acquisitions, the Company revalued certain leases to estimated fair
value at the time of the respective acquisition. Favorable operating leases of entities acquired
represent the present value of the excess
38
of the current market
rental over the contractual lease payments. Unfavorable operating leases of entities acquired
represent the present value of the excess of the contractual lease payments over the current market
rental. Such adjustments are amortized on a straight-line basis over the remaining original term of
the underlying lease, or 30 years, whichever is shorter. Favorable and unfavorable lease rights are
reflected on the accompanying consolidated balance sheets in contract and lease rights and other
liabilities, respectively.
(l) Property-Related Gains (Losses), Net
Net property-related gains and losses on the accompanying consolidated statements of
operations include (i) realized gains and losses on the sale of operating property and equipment,
(ii) impairment of long-lived assets, and (iii) costs incurred to terminate existing parking
facility leases prior to their contractual termination date.
(m) Impairment of Long-Lived Assets
Long-lived assets, such as property, equipment and leasehold improvements 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. 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 consolidated balance sheet and reported at
the lower of carrying amount or fair value less costs to sell, and would no longer be 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 consolidated balance sheet.
Goodwill
is tested annually for impairment, and is tested for impairment more frequently if events and circumstances indicate that the assets might be
impaired. An impairment loss is recognized to the extent that the carrying amount of goodwill and
indefinite life intangible assets exceeds their implied fair value. This determination is made at
the reporting unit level and consists of two steps. First, the Company determines the fair value
of a reporting unit and compares it to its carrying amount. Second, if the carrying amount of a
reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the
carrying amount of the reporting units goodwill over the implied fair value of that goodwill. The
implied fair value of goodwill is determined by allocating the fair value of the reporting unit in
a manner similar to a purchase price allocation, in accordance with SFAS No. 141, Business
Combinations. The residual fair value after this allocation is the implied fair value of the
reporting unit goodwill.
(n) Income Taxes
The Company files a consolidated federal income tax return. The Company uses the asset and
liability method to account for income taxes. Under this 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 and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted 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. The Company does not provide for federal income taxes on the accumulated earnings
considered permanently reinvested in foreign subsidiaries.
(o) Pre-opening Expense
The direct and incremental costs of hiring and training personnel associated with the opening
of new parking facilities and the associated internal development costs are expensed as incurred.
(p) Per Share Data
Basic net earnings (loss) per share excludes dilution and is computed by dividing income
available to common shareholders by the weighted-average number of common shares outstanding for
the period. Diluted net earnings (loss) per share reflects the potential dilution that could occur
if securities or other contracts to issue common stock were exercised or converted into common
stock or resulted in the issuance of common stock that then shared in the earnings of the Company.
(q) Foreign Currency Translation
The financial position and results of operations of the Companys foreign subsidiaries and
equity method joint ventures are measured using local currency as the functional currency.
Translation adjustments arising from the differences in exchange rates from period to period are
generally included in the currency translation adjustment as a component of accumulated other
comprehensive income (loss), net of income taxes in shareholders equity.
(r) Fair Value of Financial Instruments
The Company discloses the fair values of financial instruments for which it is practicable to
estimate the value. Fair value disclosures exclude certain financial instruments such as trade
receivables and payables when carrying values approximate the fair
39
value. The fair values of the
financial instruments are estimates based upon current market conditions and quoted market prices
for the same or similar instruments as of September 30. At September 30, 2005 and 2004, book value
approximates fair value for substantially all of the Companys assets, liabilities and derivatives
that are subject to the fair value disclosure requirements.
(s) Stock Option Plan
In December 2002, the Financial Accounting Standards Board (FASB) issued SFAS
No. 148, Accounting for Stock-Based Compensation Transition and Disclosure, an amendment of FASB
Statement No. 123. SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based Compensation, to
provide alternative methods of transition for a voluntary change to the fair value method of
accounting for stock-based employee compensation. In addition, this statement amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial
statements. Certain of the disclosure modifications are included below.
The Company applies the intrinsic-value-based method of accounting prescribed by Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations including Financial Accounting Standards Board (FASB) Interpretation No. 44,
Accounting for Certain Transactions involving Stock Compensation, an interpretation of APB Opinion
No. 25, to account for its fixed-plan stock options. Under this method, compensation expense is
recorded on the date of grant only if the current market price of the underlying stock exceeded the
exercise price. SFAS No. 123 established accounting and disclosure requirements using a
fair-value-based method of accounting for stock-based employee compensation plans. As allowed by
SFAS No. 123 and SFAS No. 148, the Company has elected to continue to apply the
intrinsic-value-based method of accounting described above, and has adopted only the disclosure
requirements of these statements.
The following table illustrates the effect on net earnings (loss) if the fair-value-based
method had been applied to record stock-based compensation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended September 30, |
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
Net earnings (loss), as reported |
|
$ |
14,270 |
|
|
$ |
16,993 |
|
|
$ |
(4,527 |
) |
Add stock-based employee compensation expense
included in reported net earnings (loss), net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
Deduct total stock-based employee compensation expense
determined under fair-value-based method for all awards,
net of tax |
|
|
(9,006 |
) |
|
|
(2,765 |
) |
|
|
(5,799 |
) |
|
|
|
|
|
|
|
|
|
|
Pro forma net earnings (loss) |
|
$ |
5,264 |
|
|
$ |
14,228 |
|
|
$ |
(10,326 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic-as reported |
|
$ |
0.39 |
|
|
$ |
0.47 |
|
|
$ |
(0.13 |
) |
|
|
|
|
|
|
|
|
|
|
Basic-pro forma |
|
$ |
0.14 |
|
|
$ |
0.39 |
|
|
$ |
(0.29 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted-as reported |
|
$ |
0.39 |
|
|
$ |
0.47 |
|
|
$ |
(0.13 |
) |
|
|
|
|
|
|
|
|
|
|
Diluted-pro forma |
|
$ |
0.14 |
|
|
$ |
0.39 |
|
|
$ |
(0.29 |
) |
|
|
|
|
|
|
|
|
|
|
Deductions for stock-based employee compensation expense in the table above were calculated
using the Black-Scholes option pricing model. The Company utilizes both the single option and
multiple option valuation approaches. Allocations of compensation expenses were made using
historical option terms for option grants made to the Companys employees and historical Central
Parking Corporation stock price volatility. The Company applies a 40% tax rate to arrive at the
after tax deduction.
The
estimated weighted average fair value of the options granted was $5.65 for 2005 option
grants, $3.16 for 2004 option grants and $6.60 for 2003 option grants, using the Black-Scholes
option pricing model with the following assumptions: weighted average dividend yield based on
historic dividend rates at the date of grant, weighted average volatility of 33% for fiscal year
2005, 42% for fiscal year 2004 and 50% for fiscal year 2003, weighted average risk free interest
based on the treasury bill rate of 10-year instruments at the date of grant, and a weighted average
expected term of 7.0 years for 2005, 2.0 years for 2004 and 4.9 years for 2003.
In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123 (revised
2004), Share-Based Payment. SFAS 123(R) is a revision of SFAS No. 123, Accounting for Stock-Based
Compensation and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. SFAS
123(R) requires all share-based payments to employees, including
40
grants of employee stock options,
to be recognized in the financial statements based on their fair values. SFAS 123(R) is effective
at the beginning of the first annual period beginning after June 15, 2005. In accordance with SFAS
123(R), the Company adopted SFAS No. 123(R) on October 1, 2005. The adoption of SFAS No.
123(R) using the modified prospective method will result in a
recognition of approximately $475,000 in fiscal 2006. The Company
accelerated the vesting of approximately 1.2 million out-of-the-money
stock options at a weighted average exercise price of $18.85 per
share during fiscal year 2005 to reduce compensation expense in
future periods. During Fiscal 2005, the Company did not recognize any
compensation cost due to the decision to accelerate the vesting of
the options. By accelerating the vesting of the out-of-the-money
stock options, the Company reduced future compensation cost by
$7.7 million over the next ten years.
(t) Business Concentrations
Approximately 43%, 43% and 42% of the Companys total revenues for fiscal year 2005, 2004 and
2003, respectively, excluding reimbursement of management contract expenses, were attributable to
parking and management contract operations geographically located in the northeastern area of the
United States. See also Note 17.
(u) Risk Management
The Company utilizes a combination of indemnity and self-insurance coverages, up to certain
maximum losses for liability, health and workers compensation claims. The accompanying
consolidated balance sheets reflect the estimated losses related to such risks. The primary amount
of liability coverage is $1 million per occurrence and $2 million in the aggregate per facility.
The Companys various liability insurance policies have deductibles of up to $350,000 per
occurrence, which must be met before the insurance companies are required to reimburse the Company
for costs related to covered claims. In addition, the Companys workers compensation program has
a deductible of $250,000. The Company also provides health insurance for many of its employees and
purchases a stop-loss policy with a deductible of $150,000 per claim. As a result, the Company is,
in effect, self-insured for all claims up to the deductible levels. The Company applies the
provisions of SFAS No. 5, Accounting for Contingencies, in determining the timing and amount of
expense recognition associated with claims against the Company. The expense recognition is based
upon managements determination of an unfavorable outcome of a claim being deemed as probable and
reasonably estimable, as defined in SFAS No. 5. This determination requires the use of judgment in
both the estimation of probability and the amount to be recognized as an expense. The Company
engages an actuary to assist in determining the estimated liabilities for customer injury, employee
medical costs and workers compensation claims. Management utilizes historical experience with
similar claims along with input from legal counsel in determining the likelihood and extent of an
unfavorable outcome for certain general litigation. Future events may indicate differences from
these judgments and estimates and result in increased expense recognition in the future.
(v) Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. generally
accepted accounting principles requires management to make a number of estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reported period. Actual results could differ from those
estimates.
(w) Derivative financial instruments
The Company uses variable rate debt to finance its operations. These debt obligations expose
the Company to variability in interest payments due to changes in interest rates. If interest
rates increase, interest expense increases. Conversely, if interest rates decrease, interest
expense also decreases. Management believes it is prudent to limit the variability of its interest
payments.
To meet this objective, the Company may enter into various types of derivative instruments to
manage fluctuations in cash flows resulting from interest rate risk. The Company has utilized interest rate swaps and caps. Under the interest rate swaps, the Company receives variable
interest rate payments and makes fixed interest rate payments, thereby creating fixed-rate debt.
The purchased interest rate cap agreements also protect the Company from increases in interest
rates that would result in increased cash interest payments made under its Credit Facility. Under
the interest rate cap agreements, the Company has the right to receive cash if interest rates
increase above a specified level.
The Company does not enter into derivative instruments for any purpose other than cash flow
hedging purposes. That is, the Company does not speculate using derivative instruments. The
Company assesses interest rate cash flow risk by continually identifying and monitoring changes in
interest rate exposures that may adversely impact expected future cash flows and by evaluating
hedging opportunities. The Company maintains risk management control systems to monitor interest
rate cash flow risk attributable to both the Companys outstanding or forecasted debt obligations
as well as the Companys offsetting hedge positions. The risk management control systems involve
the use of analytical techniques, including cash flow sensitivity analysis, to estimate the
expected impact of changes in interest rates on the Companys future cash flows.
The Company recognizes all derivatives as either assets or liabilities, measured at fair
value, in the consolidated balance sheet.
At September 30, 2005, the Companys derivative financial instruments consisted of two
interest rate swaps with a combined notional amount of $87.5 million. The Company did not have any
interest rate cap agreements at September 30, 2005 or 2004. The
41
derivative financial instruments
are reported at their fair values and are included as other assets or other liabilities, on the
face of the consolidated balance sheets. The following table lists the fair value of each type of
derivative financial instrument (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
September 30, 2005 |
|
|
September 30, 2004 |
|
Derivative instrument assets: |
|
|
|
|
|
|
|
|
Interest rate swaps |
|
$ |
3,006 |
|
|
$ |
1,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Because
the underlying terms of the interest rate swaps are not identical to
the terms of the associated debt instruments, the hedging
relationship is not effective. As such, any changes in the fair value
of these derivative instruments are included in the consolidated
statement of operations.
The Company had a $25.0 million swap that matured on October 29, 2003. This swap hedged the
1999 credit facility that was paid in full in February of 2003. Under the terms of that agreement,
the Company continued to pay the fixed interest through maturity. Because this swap was no longer
associated with any existing debt, it was considered ineffective at September 30, 2003. Therefore
any change in fair value subsequent to February 2003, has been reflected in the consolidated
statement of operations. The Company also had three interest rate cap agreements that matured on
March 19, 2004, which also hedged the 1999 credit facility. Because the cap agreements were no
longer associated with any existing debt, they were also considered ineffective. Therefore any
change in the fair value of the cap agreements subsequent to February 2003, has been reflected in
the consolidated statement of operations.
(x) Discontinued Operations
The Company adopted the provisions of SFAS No. 144 on October 1, 2002. In addition to
providing enhanced guidance on identifying and measuring impairments of long-lived assets, SFAS No.
144 requires that the operating results from certain disposals of parking facilities be classified
as discontinued operations. SFAS No. 144 also requires that gains, losses and impairments
resulting from the designation of a parking facility as held-for-sale be classified as discontinued
operations. For the year ended September 30, 2005, the Company had certain locations designated as
discontinued operations which were either held-for-sale or disposed during the current year. For
the year ended September 30, 2005, the locations had revenues of $25.3 million, a pretax loss of
$23.7 million, and $4.2 million of income tax benefit, resulting in a loss from discontinued
operations of $19.5 million, included in the loss was $8.3 million in property related losses. The
facts and circumstances leading to discontinued operations classification and the expected
disposals include expected property sales, condemnations or early lease and management agreement
terminations. The segment in which the majority of the long lived asset (disposal group) is
reported under is segment-other. Included in the year ended September 30, 2005 is the year-to-date
results of operations for all locations discontinued during fiscal year of 2005 as well as the
locations designated as held-for-sale during fiscal year 2004 but not yet sold. The Companys
prior period results were reclassified to reflect the operations of the locations discontinued in
fiscal year 2005 as well as the locations designated as held-for-sale during fiscal year 2005 but
not yet sold, as discontinued operations net of related income taxes.
(y) Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
(2) Business
Combinations and Lease Right Transactions
Sterling Parking LTD
Effective May 1, 2003, the Company purchased 100% of the common stock of Sterling Parking
Limited in Calgary, Alberta for $1,996,567. The purchase included 18 management and 9 leased
locations. The fair value of assets and liabilities acquired as of the acquisition date was as
follows (in thousands):
|
|
|
|
|
Tangible assets |
|
$ |
632 |
|
Contract rights |
|
|
2,333 |
|
Liabilities assumed |
|
|
(968 |
) |
|
|
|
|
Net assets acquired |
|
$ |
1,997 |
|
|
|
|
|
42
The tangible assets primarily consisted of accounts receivable, equipment and leasehold
improvements, and prepaid lease payments.
Pro forma results for fiscal year 2003 are not presented as the impact of the acquisition to
reported results are inconsequential.
Lease rights
In 1992 the Company entered into an agreement to lease and operate certain locations in New
York City. The 1992 agreement, terminated in August 2004, initially covered approximately 80
locations; however, all but seven of these locations had been renegotiated with extended terms or
terminated as of September 30, 2003. The Company was entitled to receive a termination fee, as
defined in the agreement, as the landlord disposes of certain properties or renegotiates the lease
agreements. The termination fee was based on the earnings of the location over the remaining
duration of the agreement. The termination amounts have been recorded as deferred rent and were
fully amortized through August 2004 to offset the rent payments due under the 1992 agreement. The
Company reached an agreement to continue to operate six of the seven locations when the existing
agreement expired in August 2004. These locations were converted from leased to managed. The
seventh location has been sold and the Company is operating the location for the new owner under a
lease.
In October 2002, the Company executed an agreement with Connex South Eastern Limited, a
private rail company headquartered in the United Kingdom, to lease 82 parking facilities throughout
the United Kingdom. Connex was responsible for operating certain rail lines for the Strategic Rail
Authority, a United Kingdom government agency. Under the terms of the lease agreement, the Company
paid an upfront payment of $6.4 million for the right to lease these facilities and agreed to
invest approximately $5 million in property improvements at these locations. The $6.4 million of
upfront payments and $5 million in property improvements were to be amortized over the nine-year
term of the lease. During the third quarter of 2003, the Company was informed that Connex would
be removed as the private operator by the Strategic Rail Authority. Under the lease agreement
Connex was required to reimburse the Company for the unamortized upfront payments. In November
2003, the Company entered into a management agreement with the Strategic Rail Authority to operate
the same 82 parking facilities covered by the Connex lease, for a five year term. In accordance
with the management agreement, the Strategic Rail Authority agreed to acquire the Companys
property improvements under the former Connex agreement. In November 2003, Connex made a
settlement payment to the Company to reimburse the Company for the upfront and property improvement
payments of $11.4 million and for $19.2 million for other capital expenditures. The Company
realized a gain of $0.4 million related to the settlement of the agreement.
(3) Notes Receivable
In connection with the acquisition of Kinney in February 1998, the Company acquired a note
receivable from the City of New York (the City) related to two parking garages which were built
on behalf of the City. The Company also has a long-term management agreement to operate the parking
garages. Amounts advanced for the construction of the garages were recorded as a note receivable
and are being repaid by the City in monthly installments of $156 thousand, including interest at a
fixed rate of 8.0%, through December 2007. At September 30, 2005, the total of the note receivable
was $4.2 million.
In June 1997, Allright loaned the limited partner of Edison $16.5 million in connection with
Allrights acquisition of its general partnership interest in Edison. In conjunction with the
merger of Allright and Central Parking, the partnership agreement was restructured and an
additional $9.9 million was advanced to the limited partner. The
amended note receivable totaled
$26.4 million and bore interest at a fixed rate of 10%. The note receivable was paid in full in
September 2005.
In connection with the Allright merger, the Company acquired a mortgage note of $2.5 million,
bearing interest at a fixed rate of 7.7%, from a partnership which is secured by a parking garage
and rental assignments. The loan is a balloon note which matures in August 2010.
In connection with the acquisition of Allied Parking in October 1998, the Company obtained
notes receivable totaling $4.9 million, secured by an assignment of rents from the properties being
leased. The notes are payable monthly and bear interest at a fixed rate of 7.0%.
The remainder of the notes receivable consist of notes ranging from $1 thousand to $3.0
million at the end of fiscal year 2005, and notes ranging from $1 thousand to $2.6 million at the
end of fiscal year 2004. The notes bear interest at fixed rates ranging from 0% to 9.6% at the end
of fiscal year 2005 and are due between 2006 and 2017.
43
(4) Property, Equipment and Leasehold Improvements
A summary of property, equipment and leasehold improvements and related accumulated
depreciation and amortization is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
2005 |
|
|
2004 |
|
Leasehold improvements |
|
$ |
42,611 |
|
|
$ |
46,837 |
|
Buildings and garages |
|
|
83,593 |
|
|
|
83,643 |
|
Operating equipment |
|
|
75,072 |
|
|
|
73,064 |
|
Furniture and fixtures |
|
|
9,480 |
|
|
|
9,157 |
|
Equipment operated under capital leases |
|
|
1,164 |
|
|
|
3,817 |
|
|
|
|
|
|
|
|
|
|
|
211,920 |
|
|
|
216,518 |
|
Less accumulated depreciation and amortization |
|
|
100,339 |
|
|
|
99,745 |
|
|
|
|
|
|
|
|
|
|
|
111,581 |
|
|
|
116,773 |
|
Land |
|
|
215,810 |
|
|
|
263,483 |
|
|
|
|
|
|
|
|
Property, equipment and leasehold improvements, net |
|
$ |
327,391 |
|
|
$ |
380,256 |
|
|
|
|
|
|
|
|
Depreciation expense of property, equipment and leasehold improvements was $18.6 million,
$20.4 million and $22.5 million, respectively, for the fiscal years ended September 30, 2005, 2004
and 2003. Depreciation expense included in cost of parking was $13.7 million, $14.6 million and
$16.2 million, depreciation expense included in cost of management contracts was $0.2 Million, $0.5
million and $1.1 million, and depreciation expense included in general and administrative expenses
was $4.7 million, $5.3 million and $5.2 million for the fiscal years ended September 30, 2005, 2004
and 2003, respectively.
(5) Goodwill and Amortizable Intangible Assets
As of September 30, 2005, the Company had the following amortizable intangible assets (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross |
|
|
|
|
|
|
|
|
|
Carrying |
|
|
Accumulated |
|
|
|
|
|
|
Amount |
|
|
Amortization |
|
|
Net |
|
Contract and lease rights |
|
$ |
140,503 |
|
|
$ |
60,439 |
|
|
$ |
80,064 |
|
Noncompete agreements |
|
|
2,575 |
|
|
|
2,386 |
|
|
|
189 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
143,078 |
|
|
|
62,825 |
|
|
|
80,253 |
|
|
|
|
|
|
|
|
|
|
|
The following table shows the changes in contract and lease rights for fiscal years 2005
and 2004 (in thousands):
|
|
|
|
|
As of September 30, 2003 |
|
$ |
102,315 |
|
Additions |
|
|
1,502 |
|
Amortization |
|
|
(8,557 |
) |
Deletions |
|
|
(5,747 |
) |
Impairments |
|
|
(498 |
) |
|
|
|
|
As of September 30, 2004 |
|
|
89,015 |
|
Additions |
|
|
740 |
|
Amortization |
|
|
(7,779 |
) |
Deletions |
|
|
(1,912 |
) |
Impairments |
|
|
|
|
|
|
|
|
As of September 30, 2005 |
|
$ |
80,064 |
|
|
|
|
|
The future amortization of contract and lease rights are as follows (in thousands):
|
|
|
|
|
|
|
Year Ending |
|
|
|
September 30, |
|
2006 |
|
$ |
7,769 |
|
2007 |
|
|
7,765 |
|
2008 |
|
|
7,766 |
|
2009 |
|
|
7,766 |
|
2010 |
|
|
7,739 |
|
Thereafter |
|
|
41,259 |
|
|
|
|
|
|
|
$ |
80,064 |
|
|
|
|
|
44
Amortization expense related to the contract and lease rights was $7.7 million, $8.5 million
and $9.5 million, respectively, for the years ended September 30, 2005, 2004 and 2003.
Amortization expense related to noncompete agreements was $3,000, $33,000 and $0.2 million,
respectively, for the years ended September 30, 2005, 2004 and 2003, respectively.
In accordance with SFAS No. 142, the Company assigned its goodwill to its various reporting
units. The following table reflects the changes in the carrying amounts of goodwill by reported
segment for the years ended September 30, 2005 and 2004 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One |
|
|
Two |
|
|
Three |
|
|
Four |
|
|
Five |
|
|
Six |
|
|
Seven |
|
|
Eight |
|
|
Total |
|
Balance as of September 30, 2003 |
|
$ |
3,522 |
|
|
$ |
185,180 |
|
|
$ |
100 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
3,201 |
|
|
$ |
28,695 |
|
|
$ |
9,614 |
|
|
$ |
230,312 |
|
Acquired during the period |
|
|
|
|
|
|
|
|
|
|
2,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2004 |
|
|
3,522 |
|
|
|
185,180 |
|
|
|
2,350 |
|
|
|
|
|
|
|
|
|
|
|
3,201 |
|
|
|
28,695 |
|
|
|
9,614 |
|
|
|
232,562 |
|
Acquired during the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
184 |
|
Foreign currency translation |
|
|
151 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
151 |
|
Impairment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(454 |
) |
|
|
|
|
|
|
(454 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2005 |
|
$ |
3,673 |
|
|
$ |
185,180 |
|
|
$ |
2,350 |
|
|
$ |
184 |
|
|
$ |
|
|
|
$ |
3,201 |
|
|
$ |
28,241 |
|
|
$ |
9,614 |
|
|
$ |
232,443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During 2005, the Company determined that $454,000 of the goodwill recorded in segment
seven was impaired based on an evaluation performed by a third party.
During 2004, the Company paid an additional payment to the seller of an acquired business due
to an incentive provision of the acquisition agreement.
(6) Gain on Sale of Non-Operating Assets
During fiscal year 2003, the Company consummated the sale of an airplane owned by the Company
for $3.9 million, resulting in the recognition of a gain of $3.3 million, net of selling costs.
(7) Property-Related Gains (Losses), Net
The Company routinely disposes of owned properties due to various factors, including economic
considerations, unsolicited offers from third parties and condemnation proceedings initiated by
local government authorities. Leased properties are also periodically evaluated and determinations
may be made to sell or exit a lease obligation.
In accordance with SFAS No. 144, gains and losses on the sale or condemnation of property,
equipment, leasehold improvements, contract rights and lease rights are included as a component of
discontinued operations as are gains and losses on the termination, prior to the end of the
contractual term, of lease or management obligations. Impairments associated with parking
facilities that meet the assets held-for-sale criteria as defined in SFAS No. 144 are also included
as a component of discontinued operations.
Included in property-related gains and losses are the gains or losses from the disposal of
equipment or other assets that are not included in discontinued operations. Also included are
losses due to the impairment of assets at locations which management plans to continue to operate.
All assets disposed of during the years ended September 30, 2005, 2004 and 2003 were in use at
the time of disposal. A summary of property-related pretax gains and losses for the years ended
September 30, 2005, 2004 and 2003 is as follows (in thousands):
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended September 30, |
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
Net gains on sale of property |
|
$ |
60,228 |
|
|
$ |
9,860 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment charges for property, equipment and leasehold improvements |
|
|
(2,434 |
) |
|
|
(1,612 |
) |
|
|
(3,959 |
) |
Impairment charges for intangible assets |
|
|
(4,224 |
) |
|
|
(594 |
) |
|
|
(3,601 |
) |
|
|
|
|
|
|
|
|
|
|
Total property related gains (losses), net |
|
$ |
53,570 |
|
|
$ |
7,654 |
|
|
$ |
(7,560 |
) |
|
|
|
|
|
|
|
|
|
|
The
$53.6 million gain was comprised of a gain on the sale of property of $60.2 million,
comprised primarily of $38.4 million on the sale of a lease in New York, $9.6 million on the sale
of a property in New York, $5.7 million gain on a property in Denver, $1.9 million on a property in
Seattle, $1.2 million on a property in Chicago and $3.4 million related to other miscellaneous
sales. The Company incurred $6.7 million of impairments of leasehold improvements, contract rights
and other intangible assets primarily related to two locations in segment two, one location in
segment four, two locations in segment six, one location in segment seven and one location in
segment eight. Based on the current operating results and the Companys recent forecast for the
next fiscal year, management determined that the projected cash flows for these locations would not
be enough to recover the remaining value of the assets. Impairment charges recognized in fiscal
2005 were based on estimated fair values using projected cash flows of the applicable parking
facility discounted at the Companys average cost of funds.
The $7.7 million gain in 2004 was comprised of a $6.3 million gain on sale of property in New
York and $3.6 million of gain on other properties sold, which the Company plans to continue to
operate under management agreements. The gains on the sale of property were offset by $2.2 million
of impairments of contract rights and leasehold improvements related to locations which management
plans to continue to operate. The Company recognized $0.6 million in impairment charges for
intangible assets primarily in New York City, Little Rock, Arkansas and Kansas City. The Company
also recognized $1.6 million in impairment charges for property, equipment and leasehold
improvements primarily in New York City. Based on the current operating results and the Companys
recent forecast for the next fiscal year, management determined that the projected cash flows for
these locations would not be enough to recover the remaining value of the assets. Impairment
charges recognized in fiscal 2004 were based on estimated fair values using projected cash flows of
the applicable parking facility discounted at the Companys average cost of funds.
The $7.6 million loss in 2003 was comprised of impairments of contract rights, deferred
expenses and leasehold improvements related to locations which management plans to continue to
operate. The Company recognized $4.0 million in impairment charges for property, equipment and
leasehold improvements primarily in New York City. Also, the Company recognized $3.6 million in
impairment charges for intangible assets primarily in New York City. Based on the continued
sluggish economy, current operating results, and the Companys recent forecast for the next fiscal
year, management determined that the projected cash flows for these locations would not be enough
to recover the remaining value of the assets. Impairment charges recognized in fiscal year 2003
were based on estimated fair values using projected cash flows of the applicable parking facility
discounted at the Companys average cost of funds.
(8) Investment in and Advances to Partnerships and Joint Ventures
The following tables reflect the financial position and results of operations for the
partnerships and joint ventures as of September 30, 2005 and 2004, and for each of the years in the
three-year period ended September 30, 2005 (in thousands). Aggregate fair value of investments is
not disclosed as quoted market prices are not available.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment |
|
|
Advances |
|
|
|
(Accumulated Losses) |
|
|
to Partnerships |
|
|
|
in Partnerships and |
|
|
and Joint |
|
|
|
Joint Ventures |
|
|
Ventures |
|
|
|
2005 |
|
|
2004 |
|
|
2005 |
|
|
2004 |
|
Commerce Street Joint Venture |
|
$ |
(149 |
) |
|
$ |
(347 |
) |
|
$ |
149 |
|
|
$ |
347 |
|
Larimer Square Parking Associates |
|
|
1,126 |
|
|
|
1,129 |
|
|
|
788 |
|
|
|
866 |
|
Lodo Parking Garage, LLC |
|
|
1,055 |
|
|
|
1,079 |
|
|
|
|
|
|
|
|
|
CPS Mexico, Inc. |
|
|
325 |
|
|
|
2,761 |
|
|
|
|
|
|
|
2,495 |
|
Other |
|
|
2,086 |
|
|
|
3,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
4,443 |
|
|
$ |
7,824 |
|
|
$ |
937 |
|
|
$ |
3,708 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Partnership and |
|
|
Joint Venture |
|
|
|
Joint Venture Earnings (Losses) |
|
|
Debt |
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
|
2005 |
|
|
2004 |
|
Commerce Street Joint Venture |
|
$ |
739 |
|
|
$ |
606 |
|
|
$ |
484 |
|
|
$ |
4,793 |
|
|
$ |
5,350 |
|
Larimer Square Parking Associates |
|
|
389 |
|
|
|
312 |
|
|
|
287 |
|
|
|
831 |
|
|
|
1,745 |
|
Lodo Parking Garage, LLC |
|
|
158 |
|
|
|
94 |
|
|
|
88 |
|
|
|
|
|
|
|
|
|
CPS Mexico, Inc. |
|
|
(1,499 |
) |
|
|
(4,036 |
) |
|
|
1,424 |
|
|
|
17,470 |
|
|
|
17,850 |
|
Other |
|
|
(261 |
) |
|
|
40 |
|
|
|
(71 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(474 |
) |
|
$ |
(2,984 |
) |
|
$ |
2,212 |
|
|
$ |
23,094 |
|
|
$ |
24,945 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Commerce Street Joint Venture
The Company has a 50% interest in a joint venture that owns a parking complex in
Nashville, Tennessee. The complex consists of the original parking garage and retail space
(the Original Facility) and an addition to the parking garage (the Addition) constructed
several years after the completion of the Original Facility.
The joint venture financed the Original Facility with industrial development bonds in
the original principal amount of $8.6 million (the 1984 Bonds) issued by The Industrial
Development Board of the Metropolitan Government of Nashville and Davidson County (the Metro
IDB or Issuer) in 1984. The Metro IDB holds title to the Original Facility, which it
leases to the joint venture under a lease expiring in 2014. The lease of the Original
Facility obligates the venture to make lease payments corresponding to principal and interest
payable on Series A Bonds and provides the venture with an option to purchase the Original
Facility at any time by paying the amount due under the Series A Bonds and making a nominal
purchase payment to the Metro IDB. In 1994, the Issuer, at the request of the Company,
issued additional bonds (the Series 1994 Bonds) in the amount of $6.7 million and applied
the proceeds to refunding of the 1984 Bonds.
In June 2002, the Issuer, at the request of the Company issued $4.8 million of Series
2002A variable rate revenue refunding bonds and $0.3 million of Series 2002B
Federally-taxable revenue refunding bonds (collectively the Bonds). The series 2002A Bonds
mature on January 1, 2014. The Bonds require monthly interest payments. The proceeds of the
Bonds were used to repay the 1994 Bonds. As of September 30, 2005, the Series 2002A Bonds
had a variable rate of 2.95%. The 2002A Bonds are subject to a mandatory sinking fund
redemption beginning January 1, 2004 and on each January 1 thereafter. The 2002B Bonds were
repaid in full in January 2003.
(b) Larimer Square Parking Associates
The Company owns a 50% interest in a joint venture that owns a parking complex in
Denver, Colorado. The complex, which was completed in February 1996, was constructed and
financed by the joint venture partners. The Company invested $991 thousand in the joint
venture and loaned the joint venture $1.1 million in the form of a construction note, bearing
interest at a fixed rate of 9.5%, which was converted to a term note in August 1996,
following completion of the project. An additional $1.1 million was loaned by the Company
which will be repaid through sales tax and property tax revenues by the Denver Urban Renewal
Authority at a fixed interest rate of 10%. The Company manages the parking facility for the
venture.
(c) Lodo Parking Garage, LLC
In March 1995, the Company acquired a 50% interest in a joint venture which owns a
parking complex in Denver, Colorado. The Company invested $1.4 million in the joint venture
and manages the parking facility for the joint venture. The remaining 50% is owned by the
Companys Chairman of the Board of Directors. See Note 15.
(d) CPS Mexico, Inc.
The Company holds a 50% interest in a Mexican joint venture which manages and leases
various parking structures in Mexico. The Company also has loaned $2.4 million and $2.5 million
at September 30, 2005 and 2004, respectively, to
the affiliate. These loans bear interest at fixed rates ranging from 10% to 12% and are
included in current portion of notes receivable on the Companys consolidated balance sheet at
September 30, 2005 and 2004. During the fourth quarter of 2005, the Company reached tentative
agreement to sell its fifty percent interest in its joint venture in Mexico, which is expected
to result in a non-cash loss on the sale of approximately $1.7 million. The Company is
expected to receive a cash payment at closing of $325,000 and a secured promissory note of
approximately $3.7 million in repayment of the joint ventures indebtedness to the Company.
The Company recognized an impairment charge on its recorded investment in the Mexican joint
venture of $1.7 million during the fourth quarter of 2005 based on the expected proceeds of the
sale. This transaction is subject to the negotiation and execution of a definitive agreement,
and there can be no assurance that the transaction will be completed or that it will be
completed on the terms described above.
47
The Company entered into a partnership agreement effective June 1, 2000, to operate certain
locations in Puerto Rico. The Company was the general partner. The partners entered into an
option agreement on that date whereby the other partner had the option to sell its partnership
interest to the Company during the period from May 1, 2003 to November 30, 2003. The Company and
the partner mutually agreed to allow the partner to sell its interest to the Company on March 31,
2003. The purchase was consummated on March 31, 2003, for approximately $14.3 million, which had
previously been recorded as a liability by the Company.
(9) Long-Term Debt and Capital Lease Obligations
Long-term debt and capital lease obligations consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
As of September 30, |
|
|
|
2005 |
|
|
2004 |
|
Credit Facility |
|
|
|
|
|
|
|
|
Term note payable |
|
$ |
74,437 |
|
|
$ |
157,675 |
|
Revolving credit facility |
|
|
7,062 |
|
|
|
|
|
Other notes payable |
|
|
15,539 |
|
|
|
47,740 |
|
Capital lease obligations |
|
|
2,938 |
|
|
|
640 |
|
|
|
|
|
|
|
|
Total |
|
|
99,976 |
|
|
|
206,055 |
|
Less: current maturities of long-term obligations |
|
|
(1,764 |
) |
|
|
(46,867 |
) |
|
|
|
|
|
|
|
Total long-term obligations |
|
$ |
98,212 |
|
|
$ |
159,188 |
|
|
|
|
|
|
|
|
On February 28, 2003, the Company entered into a credit facility (the Credit Facility)
initially providing for an aggregate availability of up to $350 million consisting of a five-year
$175 million revolving loan, including a sub-limit of $60 million for standby letters of credit,
and a $175 million seven-year term loan. The facility is secured by the stock of certain
subsidiaries of the Company, certain real estate assets, and domestic personal property assets of
the Company and certain subsidiaries. Proceeds from the Credit Facility were used to refinance a
previous credit facility.
The Company amended the Credit Facility in June 2004. The amendment reduced the margin
applied to the term loan by 75 basis points, and increased the standby letters of credit sub-limit
by $30.0 million to $90.0 million. The Company uses its revolving loan to collateralize
outstanding letters of credit. All other terms and conditions remained the same.
On January 25, 2005, the Company completed an amendment to the Credit Facility. The amended
facility reduced the aggregate availability to $300 million consisting of a $225 million revolving
loan and a $75 million term loan. The maturity dates remained the same, February 28, 2008, for the
revolver and June 30, 2010, for the term loan. Additionally, the interest rate margins were
reduced for both the revolver and term loans. The quarterly amortization schedule was also
amended. The new schedule requires payments to the term loan in the amount of $187,500 for the
quarters ended March 2005 through March 2008 and $9.1 million for the quarters ended June 2008
through March 2010.
The Credit Facility bears interest at LIBOR plus a tier-based margin dependent upon certain
financial ratios. There are separate tiers for the revolving loan and term loan. The weighted
average margin as of September 30, 2005 was 185 basis points. The amount outstanding under the
Companys Credit Facility was $81.5 million with a weighted average interest rate of 4.4% as of
September 30, 2005. The aggregate availability under the Credit Facility was $172.8 million at
September 30, 2005, which is net of $45.1 million of stand-by letters of credit. The Company had
deferred financing costs related to the Credit Facility of $5.9 million as of September 30, 2005
and $6.7 million as of September 30, 2004. The Company amortizes these costs over the term of the
credit facility.
The Credit Facility contains covenants including those that require the Company to maintain
certain financial ratios, restrict further indebtedness and certain acquisition activity and limit
the amount of dividends paid. The primary ratios are a leverage ratio, senior leverage ratio and a
fixed charge coverage ratio. Quarterly compliance is calculated using a four quarter rolling
methodology and measured against certain targets. The Company was in compliance with the amended
covenants at September 30, 2005.
On March 15, 2000, a limited liability company (LLC) of which the Company is the sole
shareholder purchased the Black Angus Garage, a multi-level structure with 300 parking stalls,
located in New York City, for $19.6 million. $13.3 million of the purchase was financed through a
five-year note bearing interest at one month floating LIBOR plus 162.5 basis points. The note is
48
collateralized by the parking facility. In April 2005, the limited liability company amended the
note. The amendment extended the term to a maturity date of February 28, 2008. The amended $12.7
million loan will continue to bear interest on a floating basis based on LIBOR plus 162.5 basis
points. On November 16, 2005, the Company entered into a cap agreement to comply with the interest rate protection
requirement of the loan. This interest rate cap will prevent the floating rate LIBOR rate from
exceeding 5.5% during the remaining term of the note.
The Company also has several notes payable outstanding totaling $2.8 million at September 30,
2005. These notes are secured by real estate and equipment and bear interest at fixed rates
ranging from 6.5% to 10.0%.
Future maturities under long-term debt arrangements, including capital lease obligations, are
as follows (in thousands):
|
|
|
|
|
|
|
Year Ending |
|
|
|
September 30, |
|
2006 |
|
$ |
1,764 |
|
2007 |
|
|
4,524 |
|
2008 |
|
|
38,696 |
|
2009 |
|
|
36,575 |
|
2010 |
|
|
18,279 |
|
Thereafter |
|
|
138 |
|
|
|
|
|
|
|
$ |
99,976 |
|
|
|
|
|
(10) Subordinated Convertible Debentures
On March 18, 1998, the Company created Central Parking Finance Trust (Trust) which completed
a private placement of 4,400,000 shares at $25.00 per share of 5.25% convertible trust issued
preferred securities (Preferred Securities) pursuant to an exemption from registration under the
Securities Act of 1933, as amended. The Preferred Securities represent preferred undivided
beneficial interests in the assets of Central Parking Finance Trust, a statutory business trust
formed under the laws of the State of Delaware. The Company owns all of the common securities of
the Trust. The Trust exists for the sole purpose of issuing the Preferred Securities and investing
the proceeds thereof in an equivalent amount of 5.25% Convertible Subordinated Debentures
(Convertible Debentures) of the Company due 2028. The net proceeds to the Company from the
Preferred Securities private placement were $106.5 million. Each Preferred Security is entitled to
receive cumulative cash distributions at an annual rate of 5.25% (or $1.312 per share) and will be
convertible at the option of the holder thereof into shares of Company common stock at a conversion
rate of 0.4545 shares of Company common stock for each Preferred Security (equivalent to $55.00 per
share of Company common stock), subject to adjustment in certain circumstances. The Preferred
Securities prohibit the payment of dividends on Central Parking common stock if the quarterly
distributions on the Preferred Securities are not made for any reason. The Preferred Securities do
not have a stated maturity date but are subject to mandatory redemption upon the repayment of the
Convertible Debentures at their stated maturity (April 1, 2028) or upon acceleration or earlier
repayment of the Convertible Debentures.
In December 2003, the FASB issued FASB Interpretation No. 46 (revised December 2003) (FIN
46R), Consolidation of Variable Interest Entities, which addresses how a business enterprise
should evaluate whether it has a controlling financial interest in an entity through means other
than voting rights and accordingly should consolidate the entity. FIN 46R replaced FASB
Interpretation No. 46, Consolidation of Variable Interest Entities, which was issued in January
2003.
FIN 46Rs transition guidance required the application of either FIN 46 or FIN 46R to all
Special Purpose Entities (SPEs) in which the Company holds a variable interest no later than the
end of the first reporting period ending after December 15, 2003. Under the provisions of both FIN
46 and FIN 46R, the Trust is considered an SPE in which the Company holds a variable interest
because the Trusts activities are generally so restricted and predetermined that the holders of
the Preferred Securities lack the direct or indirect ability to make decisions about the Trusts
activities through voting rights or similar rights. During the quarter ended December 31, 2003,
the Company adopted the provisions of FIN 46R to account for its variable interest in the Trust.
Since a majority of the Preferred Securities issued by the Trust are owned by a few investors,
the Company is not deemed to be the primary beneficiary under FIN 46R. Additionally, the Trusts
common stock equity held by the Company would not be considered at risk and therefore, the common
stock equity would not absorb any expected losses of the Trust. Accordingly, under the provisions
of FIN 46R, the Company does not have a significant variable interest in the Trust. Therefore, the
Company deconsolidated the Trust upon adoption of FIN 46R by removing, on the consolidated balance
sheets, the amount previously recorded as Company-obligated mandatorily redeemable securities of a
subsidiary trust and recorded, as a component of long-term liabilities, subordinated convertible
debentures. Additionally, the amounts previously reported as dividends on Company-obligated
mandatorily
49
redeemable securities of a subsidiary trust, were included as interest expense on the
consolidated statements of operations. As permitted by FIN 46R, the Company elected to restate the
prior period amounts to conform to the current year presentation.
(11) Shareholders Equity
The following tables set forth the computation of basic and diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
|
September 30, 2005 |
|
|
September 30, 2004 |
|
|
September 30, 2003 |
|
|
|
Income |
|
|
Common |
|
|
Per |
|
|
Income |
|
|
Common |
|
|
Per |
|
|
Income |
|
|
Common |
|
|
Per |
|
|
|
Available |
|
|
Shares |
|
|
Share |
|
|
Available |
|
|
Shares |
|
|
Share |
|
|
Available |
|
|
Shares |
|
|
Share |
|
|
|
($000s) |
|
|
(000s) |
|
|
Amount |
|
|
($000s) |
|
|
(000s) |
|
|
Amount |
|
|
($000s) |
|
|
(000s) |
|
|
Amount |
|
Basic earnings (loss) from continuing
operations per share |
|
$ |
33,816 |
|
|
|
36,626 |
|
|
$ |
0.92 |
|
|
$ |
18,402 |
|
|
|
36,346 |
|
|
$ |
0.51 |
|
|
$ |
(10,152 |
) |
|
|
36,034 |
|
|
$ |
(0.28 |
) |
Effects of dilutive stock and options: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock option plan and warrants |
|
|
|
|
|
|
136 |
|
|
|
|
|
|
|
|
|
|
|
209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) from continuing
operations per share |
|
$ |
33,816 |
|
|
|
36,762 |
|
|
$ |
0.92 |
|
|
$ |
18,402 |
|
|
|
36,555 |
|
|
$ |
0.51 |
|
|
$ |
(10,152 |
) |
|
|
36,034 |
|
|
$ |
(0.28 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares used for the computation of basic earnings (loss) per
share excludes certain common shares issued pursuant to the Companys restricted stock plan and
deferred compensation agreement, because under the related agreements the holders of restricted
stock will forfeit such shares if certain employment or service requirements are not met. The
effect of the conversion of the subordinated convertible debentures has not been included in the
diluted earnings per share calculation since such securities were anti-dilutive for all periods. At
September 30, 2005 and 2004, such securities were convertible into 1,419,588 shares of common
stock. Options to acquire 2,453,353, 2,851,723 and 4,151,057 shares of common stock were excluded
from the 2005, 2004 and 2003 diluted earnings per share calculations because they were
anti-dilutive.
(12) Operating Lease Commitments
The Company and its subsidiaries conduct a significant portion of their operations on leased
premises under operating leases expiring at various dates through 2101. Lease agreements provide
for minimum payments or contingent payments based upon a percentage of revenue or, in some cases, a
combination of both types of arrangements. Certain locations additionally require the Company and
its subsidiaries to pay real estate taxes and other occupancy expenses.
Future minimum rental commitments under operating leases and subleases are as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ending |
|
Fixed |
|
|
Sub-rental |
|
|
Net |
|
September 30, |
|
Rent |
|
|
Income |
|
|
Rent |
|
2006 |
|
$ |
182,833 |
|
|
$ |
1,951 |
|
|
$ |
180,882 |
|
2007 |
|
|
154,306 |
|
|
|
1,894 |
|
|
|
152,412 |
|
2008 |
|
|
116,744 |
|
|
|
1,371 |
|
|
|
115,373 |
|
2009 |
|
|
90,992 |
|
|
|
1,196 |
|
|
|
89,796 |
|
2010 |
|
|
74,821 |
|
|
|
1,221 |
|
|
|
73,600 |
|
Thereafter |
|
|
422,129 |
|
|
|
20,148 |
|
|
|
401,981 |
|
|
|
|
|
|
|
|
|
|
|
Total future operating lease commitments |
|
$ |
1,041,825 |
|
|
$ |
27,781 |
|
|
$ |
1,014,044 |
|
|
|
|
|
|
|
|
|
|
|
Rental expense for all operating leases, along with offsetting rental income from subleases were as
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
Rentals: |
|
|
|
|
|
|
|
|
|
|
|
|
Minimum |
|
$ |
244,776 |
|
|
$ |
254,378 |
|
|
$ |
262,189 |
|
Contingent |
|
|
60,359 |
|
|
|
66,104 |
|
|
|
65,085 |
|
|
|
|
|
|
|
|
|
|
|
Total rent expense |
|
|
305,135 |
|
|
|
320,482 |
|
|
|
327,274 |
|
Less sub-lease income |
|
|
(16,305 |
) |
|
|
(16,570 |
) |
|
|
(15,961 |
) |
|
|
|
|
|
|
|
|
|
|
Total rent expense, net |
|
$ |
288,830 |
|
|
$ |
303,912 |
|
|
$ |
311,313 |
|
|
|
|
|
|
|
|
|
|
|
50
(13) Income Taxes
Income tax expense (benefit) from continuing operations consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
Current: |
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
$ |
30,328 |
|
|
$ |
7,082 |
|
|
$ |
6,093 |
|
Jobs credit, net of federal tax benefit |
|
|
(961 |
) |
|
|
(305 |
) |
|
|
(727 |
) |
|
|
|
|
|
|
|
|
|
|
Net federal current tax expense |
|
|
29,367 |
|
|
|
6,777 |
|
|
|
5,366 |
|
State |
|
|
2,772 |
|
|
|
1,681 |
|
|
|
1,395 |
|
Non-U.S |
|
|
(82 |
) |
|
|
2,728 |
|
|
|
(1,710 |
) |
|
|
|
|
|
|
|
|
|
|
Total current tax expense |
|
|
32,057 |
|
|
|
11,186 |
|
|
|
5,051 |
|
|
|
|
|
|
|
|
|
|
|
Deferred: |
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
|
(5,414 |
) |
|
|
2,202 |
|
|
|
(11,696 |
) |
State |
|
|
804 |
|
|
|
388 |
|
|
|
(2,057 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-U.S. |
|
|
522 |
|
|
|
|
|
|
|
1,799 |
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax (benefit) expense |
|
|
(4,088 |
) |
|
|
2,590 |
|
|
|
(11,954 |
) |
|
|
|
|
|
|
|
|
|
|
Total income tax expense (benefit)
from continuing operations |
|
$ |
27,969 |
|
|
$ |
13,776 |
|
|
$ |
(6,903 |
) |
|
|
|
|
|
|
|
|
|
|
Total income taxes are allocated as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
Income tax expense (benefit) from continuing operations |
|
$ |
27,969 |
|
|
$ |
13,776 |
|
|
$ |
(6,903 |
) |
Income tax (benefit) expense from discontinued operations |
|
|
(4,236 |
) |
|
|
(1,056 |
) |
|
|
3,824 |
|
Shareholders equity for unrealized gain on fair value of
derivatives for financial reporting purposes |
|
|
(507 |
) |
|
|
721 |
|
|
|
1,106 |
|
Shareholders
equity for compensation expense for tax purposes different from amounts recognized for financial reporting purposes |
|
|
|
|
|
|
(205 |
) |
|
|
105 |
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income tax expense (benefit) |
|
$ |
23,226 |
|
|
$ |
13,236 |
|
|
$ |
(1,868 |
) |
|
|
|
|
|
|
|
|
|
|
Provision has not been made for U.S. or additional foreign taxes on approximately $17.9
million, $33.6 million and $27.7 million at September 30, 2005, 2004 and 2003, respectively, of
undistributed earnings of foreign subsidiaries, as those earnings are intended to be permanently
reinvested.
The American Jobs Creation Act of 2004, which was enacted on October 22, 2004, provides for a
dividend received deduction of 85% of cash dividends received from controlled foreign corporations
and invested in the United States. This provision would apply to the Companys years ended
September 30, 2005 and 2006. The Company is in the early stages of evaluating the effect of these
provisions on its repatriation plans.
A reconciliation between actual income taxes and amounts computed by applying the federal
statutory rate to earnings (loss) from continuing operations before income taxes is summarized as
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
U.S. Federal statutory rate on (loss) earnings from
continuing operations before income taxes |
|
$ |
21,621 |
|
|
|
35.0 |
% |
|
$ |
11,263 |
|
|
|
35.0 |
% |
|
$ |
(5,969 |
) |
|
|
35.0 |
% |
State and
city income taxes, including changes in valuation allowance net of federal tax effect |
|
|
2,324 |
|
|
|
3.8 |
|
|
|
1,345 |
|
|
|
4.2 |
|
|
|
(430 |
) |
|
|
2.5 |
|
Jobs credits |
|
|
(961 |
) |
|
|
(1.5 |
) |
|
|
(305 |
) |
|
|
(0.9 |
) |
|
|
(727 |
) |
|
|
4.3 |
|
Foreign
versus US rate difference, including changes in valuation allowance |
|
|
3,559 |
|
|
|
5.9 |
|
|
|
(181 |
) |
|
|
(0.6 |
) |
|
|
508 |
|
|
|
(3.0 |
) |
Equity in unconsolidated subsidiaries |
|
|
1,097 |
|
|
|
1.7 |
|
|
|
1,428 |
|
|
|
4.4 |
|
|
|
(480 |
) |
|
|
2.8 |
|
Other |
|
|
329 |
|
|
|
0.4 |
|
|
|
226 |
|
|
|
0.7 |
|
|
|
195 |
|
|
|
(1.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) from continuing operations |
|
$ |
27,969 |
|
|
|
45.3 |
% |
|
$ |
13,776 |
|
|
|
42.8 |
% |
|
$ |
(6,903 |
) |
|
|
40.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51
Sources of deferred tax assets and deferred tax liabilities are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
2005 |
|
|
2004 |
|
Deferred tax assets: |
|
|
|
|
|
|
|
|
Intangible assets |
|
$ |
5,662 |
|
|
$ |
8,649 |
|
Accrued expenses |
|
|
13,323 |
|
|
|
8,949 |
|
Allowance for doubtful accounts |
|
|
143 |
|
|
|
988 |
|
Partnership interest |
|
|
262 |
|
|
|
|
|
Deferred income |
|
|
9,339 |
|
|
|
11,354 |
|
Deferred compensation expense |
|
|
6,269 |
|
|
|
2,000 |
|
Net operating losses |
|
|
14,201 |
|
|
|
10,514 |
|
Tax credits |
|
|
528 |
|
|
|
1,594 |
|
Other |
|
|
213 |
|
|
|
|
|
|
|
|
|
|
|
|
Total gross deferred tax assets |
|
|
49,940 |
|
|
|
44,048 |
|
|
|
|
|
|
|
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
Property, equipment and leasehold improvements |
|
|
(35,548 |
) |
|
|
(43,700 |
) |
Timing differences in recognition of partnership earnings |
|
|
|
|
|
|
(409 |
) |
Unrecognized gain on fair value of derivative instruments |
|
|
(1,202 |
) |
|
|
(507 |
) |
Deferred liability on discontinued foreign operations |
|
|
(712 |
) |
|
|
|
|
Other |
|
|
|
|
|
|
(51 |
) |
|
|
|
|
|
|
|
Total gross deferred tax liabilities |
|
|
(37,462 |
) |
|
|
(44,667 |
) |
Valuation allowance on deferred tax assets |
|
|
(12,094 |
) |
|
|
(5,497 |
) |
|
|
|
|
|
|
|
Net deferred tax assets (liabilities) |
|
$ |
384 |
|
|
$ |
(6,116 |
) |
|
|
|
|
|
|
|
As of September 30, 2005, the Company has foreign, state and city net operating loss carry
forwards of approximately $223.8 million which expire between 2006 and 2024. Based on prior taxable income, management
believes that it is more likely than not that the Company will generate sufficient taxable income
to realize deferred tax assets after giving consideration to the valuation allowance. The valuation
allowance has been provided for net operating loss carry forwards for which recoverability is
deemed to be uncertain. The valuation allowance increase of $6.6
million during the year ended September 30, 2005 was to reflect net
operating loss carry forwards in foreign operations and in certain
states where management has determined that is is more likely than
not that the deferred tax asset will not be realized.
(14) Employee Benefit Programs
(a) Stock Plans
In August 1995, the Board of Directors and shareholders approved a stock plan for key
personnel, which included a stock option plan and a restricted stock plan. Under the plans,
incentive stock options, as well as nonqualified options and other stock-based awards, may be
granted to officers, employees and directors. A total of 7,317,500 common shares have been reserved
for issuance under these two plans combined. Options representing 4,302,706 shares are outstanding
under the stock option plan at September 30, 2005. Options are granted with an exercise price equal
to the fair market value at the date of grant, generally vest over a one- to four-year period and
generally expire ten years after the date of grant.
In August 1995, both the Board of Directors and shareholders approved a stock plan for
directors. A total of 475,000 shares have been reserved for issuance under the plan. Options to
purchase 150,500 shares are outstanding under this plan at September 30, 2005.
52
The following table summarizes the transactions pursuant to the Companys stock option plans
for the last three fiscal years:
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
Weighted Average |
|
|
|
of Shares |
|
|
Exercise Price |
|
Outstanding at September 30, 2002 |
|
|
4,870,184 |
|
|
$ |
19.48 |
|
Granted |
|
|
1,585,500 |
|
|
$ |
15.25 |
|
Exercised |
|
|
(41,239 |
) |
|
$ |
15.29 |
|
Canceled |
|
|
(1,405,799 |
) |
|
$ |
18.83 |
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2003 |
|
|
5,008,646 |
|
|
$ |
18.33 |
|
Granted |
|
|
654,750 |
|
|
$ |
14.14 |
|
Exercised |
|
|
(129,905 |
) |
|
$ |
14.01 |
|
Canceled |
|
|
(825,584 |
) |
|
$ |
19.32 |
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2004 |
|
|
4,707,907 |
|
|
$ |
17.70 |
|
Granted |
|
|
305,000 |
|
|
$ |
16.43 |
|
Exercised |
|
|
(123,334 |
) |
|
$ |
11.33 |
|
Canceled |
|
|
(436,367 |
) |
|
$ |
15.92 |
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2005 |
|
|
4,453,206 |
|
|
$ |
17.86 |
|
|
|
|
|
|
|
|
|
At September 30, 2005, 2004 and 2003, options to purchase 4,136,206, 2,144,778 and 1,476,019
shares of common stock, respectively, were exercisable at weighted average exercise prices of
$18.23, $19.68 and $21.64, respectively.
At September 30, 2005, information for outstanding options and options currently exercisable
is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Price Range Per Share |
|
|
$8.00-$13.99 |
|
$14.11-$16.95 |
|
$17.13-$18.80 |
|
$18.99-$20.14 |
|
$21.25-$51.06 |
Options outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of options |
|
|
1,053,536 |
|
|
|
933,372 |
|
|
|
1,032,138 |
|
|
|
1,099,100 |
|
|
|
335,185 |
|
Weighted-average exercise price |
|
$ |
12.94 |
|
|
$ |
14.66 |
|
|
$ |
18.68 |
|
|
$ |
19.95 |
|
|
$ |
32.85 |
|
Weighted-average contractual lives |
|
7.28 years |
|
7.60 years |
|
6.60 years |
|
5.68 years |
|
2.61 years |
Options exercisable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of options |
|
|
736,411 |
|
|
|
933,372 |
|
|
|
1,032,138 |
|
|
|
1,099,100 |
|
|
|
335,185 |
|
Weighted-average exercise price |
|
$ |
12.94 |
|
|
$ |
14.66 |
|
|
$ |
18.68 |
|
|
$ |
19.95 |
|
|
$ |
32.85 |
|
At September 30, 2004, information for outstanding options and options currently exercisable is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Price Range Per Share |
|
|
|
$8.00-$12.73 |
|
|
$13.28-$14.81 |
|
|
$16.36-$18.80 |
|
|
$18.99-$20.14 |
|
|
$20.49-$51.06 |
|
Options outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of options |
|
|
1,010,411 |
|
|
|
1,067,035 |
|
|
|
1,078,176 |
|
|
|
1,197,725 |
|
|
|
354,560 |
|
Weighted-average exercise price |
|
$ |
12.44 |
|
|
$ |
14.19 |
|
|
$ |
18.71 |
|
|
$ |
19.94 |
|
|
$ |
32.61 |
|
Weighted-average contractual lives |
|
8.34 years |
|
8.62 years |
|
7.34 years |
|
6.67 years |
|
3.68 years |
Options exercisable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of options |
|
|
403,286 |
|
|
|
291,785 |
|
|
|
137,672 |
|
|
|
959,475 |
|
|
|
352,560 |
|
Weighted-average exercise price |
|
$ |
12.00 |
|
|
|
14.44 |
|
|
$ |
18.50 |
|
|
$ |
19.91 |
|
|
$ |
32.66 |
|
The Company also has an Employee Stock Purchase Plan which began on April 1, 1996, under which
850,000 shares of common stock have been reserved for issuance. The plan allows participants to
contribute up to 10% of their normal pay (as defined in the Plan) to a custodial account for
purchase of the Companys common stock. Participants may enroll or make changes to their enrollment
annually, and they may withdraw from the plan at any time by giving the Company written notice.
Employees purchase stock annually following the end of the plan year at a price per share equal to
the lesser of 85% of the closing market price of the Companys common stock on the first or the
last trading day of the plan year. At September 30, 2005, employees had purchased 595,032 shares
under this plan. Beginning April 1, 2005, the Company has suspend contributions into the plan.
(b) Profit-Sharing and 401(k) Plan
The Company has a Profit-Sharing and 401(k) Savings Plan that allows eligible participants to
make pretax contributions, receive Company 401(k) match contributions and participate in
discretionary Company profit-sharing
53
contributions. Employees 20 years or older may participate in the Plan after one year of
continuous service, if the employee was employed prior to reaching age 65. Participants
contributions, Company 401(k) match contributions and earnings thereon immediately vest. Company
profit-sharing contributions are 100% vested after five years of continuous service. Company
expense associated with this plan was $2.4 million, $2.1 million and $2.4 million in years 2005,
2004 and 2003, respectively.
(c) Incentive Compensation Agreements
The Company has incentive compensation agreements with certain key employees. Participating
employees receive an annual bonus based on profitability of the operations and other factors for
which they are responsible. Incentive compensation expense is accrued during the year based upon
managements estimate of amounts earned under the related agreements. Incentive compensation under
all such agreements was approximately $5.4 million, $5.3 million and $4.8 million in years 2005,
2004 and 2003, respectively.
(d) Deferred Compensation Agreements
The Company has an employment agreement with its President of International Operations in
which the officer is entitled to receive upon retirement 267,750 shares of common stock which were
issued in 1995 under the Companys restricted stock plan. The Company recorded $705 thousand of
deferred compensation expense in its shareholders equity in fiscal year 1995, which was being
amortized ratably over the remaining expected term of the officers employment. During fiscal year
2001 the agreement was amended to allow the officer to receive all of the shares if he were to
leave the Company prior to his normal retirement date. Correspondingly, the Company transferred
267,750 shares of restricted common stock into a Rabbi Trust (the Trust) owned by the Company.
The officer has no authority over the administration of the Trust. Transfer of these shares
resulted in an increase in liabilities and a decrease in equity of $705 thousand.
The Company has a deferred compensation agreement that entitles the Chairman to receive annual
payments of $500 thousand following his termination, for any reason until his death, in
exchange for a covenant not to compete. In the event his wife survives him, she is entitled to
annual payments of $500 thousand until her death. The Company recognizes annual compensation
expense pursuant to this agreement equivalent to the change in the actuarially determined future
obligation under the agreement. Compensation (benefit) expense associated with this agreement was
approximately $861 thousand, $199 thousand and $(24) thousand in fiscal years 2005, 2004 and 2003,
respectively. At September 30, 2005, the Company had recorded a liability of $4.5 million
associated with this agreement.
Agreements with certain former key executives of Allright provide for aggregate annual
payments ranging from $20 thousand to $144 thousand per year for periods ranging from 10 years to
life, beginning when the executive retires or upon death or disability. Under certain conditions,
the amount of deferred benefits can be reduced. Life insurance contracts with a face value of
approximately $8.9 million have been purchased to fund, as necessary, the benefits under these
agreements. The cash surrender value of the life insurance contracts is approximately $1.7 million
and $2.0 million at September 30, 2005 and 2004, respectively, and is included in other non-current
assets. The plan is a nonqualified plan and is not subject to ERISA funding requirements. Deferred
compensation costs for 2005, 2004 and 2003 were $721 thousand, $774 thousand and $466 thousand,
respectively. At September 30, 2005, the Company had recorded a liability of $5.9 million
associated with this plan.
(e) Deferred
Stock Unit Plan
On December 19, 1996, the Board of Directors approved the adoption of the Companys Deferred
Stock Unit Plan. Under the plan, certain key employees have the opportunity to defer the receipt of
certain portions of their cash compensation, instead receiving shares of common stock following
certain periods of deferral. The plan is administered by a committee, appointed by the Board of
Directors of the Company consisting of at least two non-employee outside directors of the
Company. The Company reserved 375,000 shares of common stock for issuance under the 1996 Deferred
Stock Unit Plan. Participants may defer up to 50% of their salary. As
of September 30, 2005, $2.6
million of compensation remained deferred under this plan. Beginning on October 1, 2005, the Company has suspended deferrals into the plan.
(f) Restricted Stock Units
As of September 30, 2005, the Restricted Stock Plan had issued 330,463 shares.
Expense related to vesting of restricted stock is recognized by the Company over the vesting
period. Under the restricted stock plan, the Company granted 14,000 shares and 16,000 shares with
weighted average fair values on grant date of $14.08 per share and $20.20 per share during fiscal
year 2005 and 2004, respectively.
The Company issued restricted stock valued at $197 thousand, $323 thousand and $216 thousand of restricted stock units, during fiscal year 2005,
2004 and 2003 respectively. These restricted stock grants are exercisable upon change of
control of the Company.
(15) Related Parties
In
fiscal 2005, the Company leases two properties from an entity 50% owned by Monroe Carell, Jr., the
Companys chairman, for a combined base rent of $290 thousand plus
percentage rent over specified thresholds. Total rent expense,
including percentage rent, was $315 thousand, $296 thousand and $290
thousand in 2005, 2004 and 2003, respectively. Management believes that such transactions have been on terms no less favorable
to the Company than those that could have been obtained from unaffiliated persons. A company owned
by Mr. Carell, owns a 50% interest in a limited liability company that owns the Lodo Garage in
Denver, Colorado. The entity owned by Mr. Carell purchased the interest in the garage from a third
party. The Company owns the remaining 50%.
54
In connection with the acquisition of Kinney, the Company entered into an agreement with Lewis
Katz, a director of the Company whereby the director has agreed to seek new business opportunities
in the form of leases and management contracts and renewals of existing leases and contracts as
requested by the Company. During the fiscal years ended September 30, 2005, 2004 and 2003, the
Company recognized expense of $649 thousand, $339 thousand and $592 thousand, respectively, in
connection with this agreement.
Lewis Katz, a director of the Company, has an ownership interest in Foley Parking Affiliate,
LLC (Foley Parking). Foley Parking and the Company each own 50% of a company that leases a
parking garage in New York City. The lease has a term of 20 years and the base rent is $1.3
million per year. This location incurred losses of approximately $80,000 and $636,000, in fiscal
years 2005 and 2004, respectively.
(16) Contingencies
In June and July 2003, four stockholders filed separate lawsuits against the Company, two
former CEOs, and a former CFO and its current Chairman in the U. S. District Court for the Middle District of
Tennessee. The plaintiff in each case sought to represent a plaintiff class of purchasers of
Central Parkings Common Stock. The plaintiff in each case claimed that the defendants made
material misrepresentations and/or omissions in connection with the Companys financial statements
for the quarter and fiscal year ended September 30, 2002 and about the Companys internal controls
in violation of the Securities Exchange Act of 1934, which allegedly caused the plaintiffs to buy
Company stock at inflated prices. By order dated December 10, 2003, the Court consolidated the
cases under the name, In re: Central Parking Corporation Securities Litigation, civil action No.
03-CV-0546, appointed two individuals as co-lead plaintiffs and approved their selection of
counsel. The plaintiffs filed an amended complaint on February 13, 2004, in which plaintiffs added
the Companys Independent Registered Public Accountant as a defendant and in which the plaintiffs
added a number of allegations. The amended complaint also sought to extend the putative class
period during which investors purchased the Companys Common Stock by approximately nine months
(February 5, 2002 to February 13, 2003). On April 23, 2004, the defendants filed motions to
dismiss the lawsuit. On August 11, 2004, the court dismissed all claims against the Companys
Independent Registered Public Accountant, but denied the motion to dismiss with respect to the
Company and the individual defendants. On January 27, 2005, the Company announced that an
agreement in principle had been reached to settle the lawsuit. Under the agreement in principle,
the Companys primary liability insurance carrier agreed to fully fund a $4.9 million payment that
would be used to provide all benefits to shareholder class members and their counsel, and to cover
related notice and administrative costs. A definitive settlement agreement was executed and, on
April 8, 2005, the court entered an order granting preliminary approval of the negotiated
settlement. Notice of the proposed settlement was mailed to all class members. The deadline for
the class members to object to the settlement or require an exclusion from the class was May 31,
2005. The final hearing on the proposed settlement was held on June 10, 2005 and the settlement
was approved on that date. The deadline for filing an appeal of the settlement was July 11, 2005.
The settlement has been consummated, and this action is concluded.
In addition to the matters described above the Company is subject to various legal proceedings
and claims, which arise in the ordinary course of its business. In the opinion of management, the
ultimate liability with respect to those proceedings and claims will not have a material adverse
effect on the financial position, operations, or liquidity of the Company.
(17) Business Segments
The Companys business activities consist of domestic and foreign operations. Foreign
operations are conducted in the United Kingdom, Canada, Spain, the
Republic of Ireland, Puerto Rico, Chile,
Colombia, Peru, Venezuela, Greece, Poland, and Switzerland. The Company also conducts business
through joint ventures in Mexico and Germany. Revenues attributable to foreign operations were less
than 10% of consolidated revenues for each of fiscal years 2005, 2004 and 2003. In 2005, the
United Kingdom and Canada account for 9.0% and 50.8% of total foreign revenues, respectively.
A summary of information about the Companys foreign and domestic operations is as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
Total revenues, excluding reimbursement of
management contract expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Domestic |
|
$ |
641,695 |
|
|
$ |
649,463 |
|
|
$ |
647,534 |
|
Foreign |
|
|
27,298 |
|
|
|
48,087 |
|
|
|
45,863 |
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
668,993 |
|
|
$ |
697,550 |
|
|
$ |
693,397 |
|
|
|
|
|
|
|
|
|
|
|
Operating earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
Domestic |
|
$ |
95,293 |
|
|
$ |
45,712 |
|
|
$ |
(4,715 |
) |
Foreign |
|
|
(21,506 |
) |
|
|
8,042 |
|
|
|
3,385 |
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
73,787 |
|
|
$ |
53,754 |
|
|
$ |
(1,330 |
) |
|
|
|
|
|
|
|
|
|
|
55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
Earnings (loss) from continuing operations before
minority interest, and income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
Domestic |
|
$ |
86,150 |
|
|
$ |
30,927 |
|
|
$ |
(17,717 |
) |
Foreign |
|
|
(23,034 |
) |
|
|
4,250 |
|
|
|
4,714 |
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
63,116 |
|
|
$ |
35,177 |
|
|
$ |
(13,003 |
) |
|
|
|
|
|
|
|
|
|
|
Identifiable assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Domestic |
|
$ |
821,631 |
|
|
$ |
879,003 |
|
|
|
|
|
Foreign |
|
|
46,183 |
|
|
|
50,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
867,814 |
|
|
$ |
929,628 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company is managed based on segments administered by senior vice presidents. These
segments are generally organized geographically, with exceptions depending on the needs of specific
regions. The following is a summary of revenues (excluding reimbursement of management contract
expenses) and operating earnings (loss) by segment for the years ended September 30, 2005, 2004 and
2003 (in thousands) and identifiable assets as of September 30, 2005 and 2004. During fiscal year
2004, the Company realigned certain locations among segments. All prior years segment data has
been reclassified to conform to the new segment alignment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
Revenues (a): |
|
|
|
|
|
|
|
|
|
|
|
|
Segment One |
|
$ |
77,685 |
|
|
$ |
75,303 |
|
|
$ |
73,218 |
|
Segment Two |
|
|
284,792 |
|
|
|
296,878 |
|
|
|
289,686 |
|
Segment Three |
|
|
18,468 |
|
|
|
17,909 |
|
|
|
15,262 |
|
Segment Four |
|
|
29,591 |
|
|
|
35,039 |
|
|
|
35,146 |
|
Segment Five |
|
|
9,870 |
|
|
|
10,052 |
|
|
|
9,469 |
|
Segment Six |
|
|
89,574 |
|
|
|
96,222 |
|
|
|
94,813 |
|
Segment Seven |
|
|
63,045 |
|
|
|
65,856 |
|
|
|
75,834 |
|
Segment Eight |
|
|
85,756 |
|
|
|
87,883 |
|
|
|
91,667 |
|
Other |
|
|
10,212 |
|
|
|
12,408 |
|
|
|
8,302 |
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
668,993 |
|
|
$ |
697,550 |
|
|
$ |
693,397 |
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
Segment One |
|
$ |
576 |
|
|
$ |
396 |
|
|
$ |
(4,269 |
) |
Segment Two |
|
|
54,542 |
|
|
|
11,401 |
|
|
|
5,803 |
|
Segment Three |
|
|
3,767 |
|
|
|
3,446 |
|
|
|
448 |
|
Segment Four |
|
|
(8,751 |
) |
|
|
5,001 |
|
|
|
856 |
|
Segment Five |
|
|
1,982 |
|
|
|
1,921 |
|
|
|
1,349 |
|
Segment Six |
|
|
4,847 |
|
|
|
7,381 |
|
|
|
7,799 |
|
Segment Seven |
|
|
814 |
|
|
|
(704 |
) |
|
|
(188 |
) |
Segment Eight |
|
|
12,210 |
|
|
|
11,218 |
|
|
|
7,121 |
|
Other |
|
|
3,800 |
|
|
|
13,694 |
|
|
|
(20,249 |
) |
|
|
|
|
|
|
|
|
|
|
Total
operating earnings (loss) |
|
$ |
73,787 |
|
|
$ |
53,754 |
|
|
$ |
(1,330 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
2005 |
|
|
2004 |
|
Identifiable assets: |
|
|
|
|
|
|
|
|
Segment One |
|
$ |
10,404 |
|
|
$ |
11,449 |
|
Segment Two |
|
|
321,310 |
|
|
|
328,565 |
|
Segment Three |
|
|
13,707 |
|
|
|
12,257 |
|
Segment Four |
|
|
43,406 |
|
|
|
47,927 |
|
Segment Five |
|
|
1,322 |
|
|
|
134 |
|
Segment Six |
|
|
23,423 |
|
|
|
22,542 |
|
Segment Seven |
|
|
36,571 |
|
|
|
35,468 |
|
Segment Eight |
|
|
35,709 |
|
|
|
32,306 |
|
Other |
|
|
381,962 |
|
|
|
438,980 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
867,814 |
|
|
$ |
929,628 |
|
|
|
|
|
|
|
|
56
(a) Excludes reimbursement of management contract expenses.
Segment One encompasses the western region of the United States and Vancouver, BC.
Segment Two encompasses the Northeastern United States, including New York City, New Jersey, Boston
and Philadelphia.
Segment Three encompasses the USA Parking acquisition.
Segment Four encompasses Europe, Puerto Rico, Central and South America.
Segment Five encompasses Nashville, TN.
Segment Six encompasses the Nebraska, Missouri, and the Midwestern region of the United States. It
also includes Canada, excluding Vancouver.
Segment Seven encompasses the mid-Atlantic region of the United States and includes Virginia,
Washington DC and Baltimore. It also includes Pennsylvania and Western New York.
Segment Eight encompasses Florida, Alabama, parts of Tennessee and portions of the southeastern
region of the United States to include the Gulf Coast region and Texas.
Other encompasses the home office, eliminations, certain owned real estate, and certain
partnerships.
(18) Subsequent Event
In August of 2005 the Company made an offer to its shareholders to purchase up to 4,400,000
shares of common stock at a price no greater than $16.75 or lower than $14.50 per share. The
transaction was structured as a modified Dutch Auction tender offer.
The offer was amended to reduce the range from a price no higher than $16.00 and no lower than
$14.00 per share. The transaction was concluded on October 14, 2005 at which time the Company
accepted and purchased 4,859,674 shares at a price of $15.50 per share, totaling $75.3 million in
cash payments. The company exercised its right to purchase an additional number of shares without
extending or modifying the offer. The company used $75.3 million to repurchase
the shares. The company funded the transaction with the Credit
Facility.
On
December 23, 2005, the Company entered into a settlement agreement
with Rotala PLC, the Flights Group companies, Stuart Lawrenson, Paul
Churchman and Michael Tackley resolving the Companys claims
arising from certain actions taken by former employees of the Company
in the United Kingdom. The key terms of the settlement include:
(1) 46,666,667 shares of Rotala stock indirectly owned by
Lawrenson will be sold through a private placement anticipated to
close in the first quarter of 2006, with the proceeds of such sale to
be paid to the Company; (2) Rotala will issue promissory notes
to the Company with a value of L800,000 payable in annual
installments between December 31, 2006, and December 31,
2010; (3) in addition to amounts already received from Rotala
for goods and services benefiting the Flights Group, Rotala will pay
an additional L270,000 to the Company upon completion of a previously
announced fundraising, (4) Rotala will grant to the Company a
warrant to purchase 15,000,000 ordinary shares of Rotala stock at an
exercise price of 1.5 pence per share, exercisable for a five year
period; A(5) Stuart Lawrenson is obligated to pay to the Company
L70,000 within fourteen days and to pay an additional L60,000 within
a year, and (6) Paul Churchman and Michael Tackley are each
obligated pay L10,000 to the Company within ninety days. Once the
conditions of this settlement have been met, all claims between the
parties will be released.
57
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
Item 9A. Controls and Procedures
Overview
As previously disclosed in a Current Report on Form 8-K which we filed on September 30, 2005
and as described in Item 7 to this Form 10-K management of the Company became aware that certain
employees in its United Kingdom subsidiary had engaged in unauthorized related party transactions
utilizing Company assets and had made improper and inaccurate accounting entries that resulted in
the over accrual of revenues and understatement of expenses during fiscal 2005. In addition, as
further discussed in Item 7, during the fourth quarter, the Company reassessed its accounting for
interest rate swap agreements related to its credit facility and
determined that its prior accounting was incorrect. Accordingly, as described
herein, the Company determined to restate its financial statements for the quarterly periods ended
December 31, 2004, March 31, 2005 and June 30, 2005 to reflect these accounting errors. We also
have determined internal control deficiencies existed related to deficiencies in company-level and
other controls as discussed below.
Management has determined that the internal control deficiencies discussed below are material
weaknesses, as defined by the Public Company Accounting Oversight Boards Auditing Standard No. 2.
The Public Company Accounting Oversight Board has defined a material weakness as a significant
deficiency, or combination of significant deficiencies, that results in more than a remote
likelihood that a material misstatement of the annual or interim financial statements will not be
prevented or detected. Management has reviewed the internal control deficiencies with our Audit
Committee, has discussed it with our independent registered public accounting firm, KPMG LLP, and
has advised our Audit Committee that these deficiencies are material weaknesses in our internal
control over financial reporting.
(a) Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
The effectiveness of our or any system of disclosure controls and procedures
is subject to certain limitations, including the exercise of judgment in designing, implementing
and evaluating the controls and procedures, the assumptions used in identifying the likelihood of
future events, and the inability to eliminate the risk of collusion or management override
completely. As a result, there can be no assurance that our disclosure controls and procedures will
detect all errors or fraud. By their nature, our, or any, system of disclosure controls and
procedures can provide only reasonable assurance regarding managements control objectives.
Under the supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, we evaluated the design and operation of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934, or the Exchange Act) in each of the quarterly periods ended December 31,
2004, March 31, 2005, June 30, 2005 and September 30, 2005. At the time of the filing of our Form
10-Qs for the quarterly periods ended December 31, 2004, March 31, 2005 and June 30, 2005, on the
basis of those evaluations, our management, including our Chief Executive Officer and Chief
Financial Officer, concluded that our disclosure controls and procedures were effective, to give
reasonable assurance that the information required to be disclosed by us in reports that we file
under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the SEC and to ensure that information required to be disclosed
in the reports filed or submitted under the Exchange Act is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer, in a manner that
allows timely decisions regarding required disclosure.
In light of the material weaknesses in internal control over financial reporting discussed
below, our Chief Executive Officer and Chief Financial Officer now have concluded that our
disclosure controls and procedures were not effective as of December 31, 2004, March 31, 2005, and
June 30, 2005. In addition, our Chief Executive Officer and Chief Financial Officer have concluded
that disclosure controls and procedures were not effective as of September 30, 2005.
In response to these material weaknesses, the Audit Committee conducted an investigation of
certain matters related to the United Kingdom subsidiary and management performed additional
analyses and other post-closing procedures to ensure our consolidated financial statements were
prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management,
including our Chief Executive Officer and Chief Financial Officer, believes the restated 2005
quarterly financial results and the consolidated financial statements
as of September included in
this report fairly present, in all material respects, our results of operations for the periods
presented.
(b) Managements Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the
supervision and with the participation of our management, including our
58
principal executive officer and principal financial officer, we conducted an assessment of the effectiveness of our internal
control over financial reporting based on the framework in Internal ControlIntegrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
As a result of this assessment, management identified material weaknesses in internal control
over financial reporting as follows:
1. Inadequate company-level controls. We did not maintain effective company-level controls as
defined in the Internal ControlIntegrated Framework published by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). These deficiencies related to three of the five
components of internal control as defined by COSO (control environment, monitoring, and information
and communication). Specifically,
|
|
|
Our control environment did not sufficiently promote
integrity and ethical values over financial reporting
throughout our management structure, and this material
weakness was a contributing factor in the development of
other material weaknesses described below; |
|
|
|
|
We had inadequate monitoring controls, including inadequate staffing
and procedures to ensure periodic evaluations of internal controls to
ensure that appropriate personnel regularly obtain evidence that
controls are functioning effectively and that identified control
deficiencies are remediated timely; and |
|
|
|
|
There was inadequate communication from management to employees
regarding the importance of controls and employees duties and control
responsibilities. |
These deficiencies resulted in more than a remote likelihood that a material misstatement of
our interim or annual financial statements would not be prevented or detected.
2. Inadequate Expertise in U.S. Generally Accepted Accounting Principles. Our finance and
accounting personnel were inadequately trained and lacked appropriate expertise in U.S. generally
accepted accounting principles to prepare financial information for inclusion in the Companys
consolidated financial statements. This deficiency resulted in the improper capitalization of
certain property and equipment, the improper recognition of revenue on certain management
agreements, improper deferral of gains and losses on interest rate swap agreements, the failure to recognize
impairment on property and equipment and other long-term assets, which required adjustments to the
interim and annual financial statements.
3. Inadequate segregation of duties. We had inadequate procedures and controls to ensure
proper segregation of duties within our purchasing, disbursements and accounting processes. As a
result, misappropriations of assets occurred and were not detected in a timely manner. This
deficiency resulted in the misappropriation of assets due to the unauthorized transfer of certain
management contracts to a former officer of the United Kingdom subsidiary and the Companys
continued payment and recognition of management costs after the contracts were transferred, which
required adjustments to the interim and annual financial statements to write-off certain current
assets, property and equipment and goodwill.
4. Inadequate financial statement preparation and review procedures. We had inadequate policies,
procedures and personnel to ensure that accurate, reliable interim and annual financial statements
were prepared and reviewed on a timely basis. Specifically, we had insufficient levels of
supporting documentation and review and supervision of the Companys accounting and finance
departments. These deficiencies resulted in errors in the recognition of revenue, improper
capitalization of certain property and equipment, improperly recorded
assets, the failure to record certain accrued liabilities in the
United Kingdom subsidiary which required adjustments to the interim and annual financial
statements.
5. Inadequate reviews of account reconciliations, analyses and journal entries. We had inadequate
review procedures over account reconciliations, account and transaction analyses, and journal
entries. Specifically, deficiencies were noted in the following areas: a) management review of
supporting documentation, calculations and assumptions used to prepare the financial statements,
including spreadsheets and account analyses; and b) management review of journal entries recorded
during the financial statement preparation process. These deficiencies resulted in inappropriate
recognition of revenue, inappropriate classification of assets,
improperly recorded assets, the failure to recorded certain accrued liabilities, which required adjustments to the interim and annual financial statements.
6. Inadequate controls over authorization of purchase and disbursement transactions. We had
inadequate controls over purchases and the disbursement of funds as well as the recording of
accruals for purchases and expenses. Specifically,
|
|
|
Inadequate and ineffective policies over the authorization of purchases; |
59
|
|
|
Ineffective invoice approval policies; |
|
|
|
|
Ineffective supervisory oversight and/or review of the addition or
removal of management contracts; and |
|
|
|
|
Inadequate period-end cut-off procedures in the procurement cycle. |
These deficiencies increase the likelihood that unauthorized purchases and disbursements could
occur and not be detected in a timely manner. These deficiencies resulted in the misappropriation
of assets because of the unauthorized transfer of certain management contracts to a former officer
of the United Kingdom subsidiary, the Companys continued payment and recognition of management
costs after the contracts were transferred, and the failure to record
certain accrued liabilities, which required adjustments to
the interim and annual financial statements.
7. Inadequate controls over revenue recognition. Our review procedures over accounting for revenue
recognition were not functioning effectively. Specifically, the review procedures over the
application of our revenue recognition policies for management
agreements were inadequate. These deficiencies resulted in the improper recognition of revenue on certain management
contracts, which required adjustments to the interim and annual financial statements.
As
a result of these material weaknesses as of September 30, 2005 in the Companys internal
control over financial reporting, management has concluded that, as of September 30, 2005, the
Companys internal control over financial reporting was not effective based on the criteria set
forth by the COSO of the Treadway Commission in Internal ControlIntegrated Framework.
Our assessment of the effectiveness of the Companys internal control over financial reporting
as of September 30, 2005 has been audited by KPMG LLP, an independent registered public accounting
firm, as stated in their auditors report which is included in Item 8 of this Form 10-K.
(c) Changes in Internal Control Over Financial Reporting
During the fourth quarter of 2005, the Company removed the persons directly responsible for
the unauthorized related party transactions and improper and inaccurate accounting entries in the
United Kingdom subsidiary. There were no other changes in our internal control over financial
reporting that occurred in the fourth quarter of 2005 that materially affected, or were reasonably likely to materially affect,
our internal control over financial reporting.
Subsequent to September 30, 2005, we implemented the remedial measures outlined below to
address the identified material weaknesses in connection with the preparation of our September 30,
2005 consolidated financial statements. We have dedicated additional resources to the review of
our control processes and procedures surrounding the internal control environment. Furthermore, we
have been conducting a thorough review and evaluation of our internal controls as part of our
compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002.
In order to remediate the weaknesses in our internal control over financial reporting,
management has implemented the following measures as of the date of filing of this Form 10-K:
|
|
|
Hired senior management including financial reporting personnel. |
|
|
|
|
Changed the lines of reporting so that the accounting, internal audit, information
technology and human resources functions in the United Kingdom subsidiary report directly
to the corresponding department heads in the United States. |
|
|
|
|
Established new approval authorization control limits. |
|
|
|
|
Established new reconciliation procedures. |
|
|
|
|
Replaced accounting software used in the United Kingdom subsidiary with programs used
in the United States and U.S. management employees have direct access to this system. |
Management is considering additional remedial actions to be implemented in fiscal 2006.
60
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Central Parking Corporation:
We have audited managements assessment, included in the accompanying Managements Report on
Internal Control Over Financial Reporting (Item 9A(b)) that Central Parking Corporation did not
maintain effective internal control over financial reporting as of September 30, 2005, because of
the effect of material weaknesses identified in managements assessment, based on criteria
established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Central Parking Corporations management is
responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting. Our responsibility is
to express an opinion on managements assessment and an opinion on the effectiveness of the
Companys internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating managements assessment, testing and evaluating the
design and operating effectiveness of internal control, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis
for our opinion.
A companys internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with U.S. generally accepted accounting
principles. A companys internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of
the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
A material weakness is a control deficiency, or combination of control deficiencies, that
results in more than a remote likelihood that a material misstatement of the annual or interim
financial statements will not be prevented or detected. Management has identified and included in
its assessment the following material weaknesses as of September 30, 2005:
1. Inadequate company-level controls. Management did not maintain effective company-level
controls as defined in the Internal ControlIntegrated Framework published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). These deficiencies related to three of
the five components of internal control as defined by COSO (control environment, monitoring, and
information and communication). Specifically,
|
|
|
The Companys control environment did not sufficiently promote
integrity and ethical values over financial reporting throughout the
Companys management structure, and this material weakness was a
contributing factor in the development of other material weaknesses
described below; |
|
|
|
|
Management had inadequate monitoring controls, including inadequate
staffing and procedures to ensure periodic evaluations of internal
controls to ensure that appropriate personnel regularly obtain
evidence that controls are functioning effectively and that identified
control deficiencies are remediated timely; and |
|
|
|
|
There was inadequate communication from management to
employees regarding the general importance of controls and
employees duties and control responsibilities. |
These deficiencies resulted in more than a remote likelihood that a material misstatement of
the Companys annual or interim financial statements would not be prevented or detected.
2. Inadequate Expertise in U.S. Generally Accepted Accounting Principles. The Companys finance
and accounting personnel were inadequately trained and lacked appropriate expertise in U.S.
generally accepted accounting principles to prepare financial information for inclusion in the
Companys consolidated financial statements. This deficiency resulted in the improper
capitalization of certain
61
property and equipment, the improper recognition of revenue on certain
management agreements, improper deferral of gains and losses and interest rate swap agreements, the failure to
recognize impairment on property and equipment and other long-term assets which required
adjustments to the interim and annual financial statements.
3. Inadequate segregation of duties. The Company had inadequate procedures and controls to
ensure proper segregation of duties within the Companys purchasing, disbursements and accounting
processes. As a result, misappropriations of assets occurred and were not detected in a timely
manner. This deficiency resulted in the misappropriation of assets due to the unauthorized
transfer of certain management contracts to a former officer of the United Kingdom subsidiary and
the Companys continued payment and recognition of management costs after the contracts were
transferred, which required adjustments to the interim and annual financial statements to write-off
certain current assets, property and equipment and goodwill.
4. Inadequate financial statement preparation and review procedures. The Company had inadequate
policies, procedures and personnel to ensure that accurate, reliable interim and annual financial
statements were prepared and reviewed on a timely basis. Specifically, the Company had insufficient
levels of supporting documentation and review and supervision of the Companys accounting and
finance departments. These deficiencies resulted in errors in the recognition of revenue, improper
capitalization of certain property and equipment, improperly recorded
assets, and the failure to record certain accrued liabilities in the
United Kingdom subsidiary which required adjustments to interim and annual financial statements.
5. Inadequate reviews of account reconciliations, analyses and journal entries. The Company had
inadequate review procedures over account reconciliations, account and transaction analyses, and
journal entries. Specifically, deficiencies were noted in the following areas: a) management review
of supporting documentation, calculations and assumptions used to prepare the financial statements,
including spreadsheets and account analyses; and b) management review of journal entries recorded
during the financial statement preparation process. These deficiencies resulted in inappropriate
recognition of revenue, inappropriate classification of assets,
improperly recorded assets, and the failure to record certain accrued liabilities, which required adjustments to the interim and annual financial statements.
6. Inadequate controls over authorization of purchase and disbursement transactions. The Company
had inadequate controls over purchases and the disbursement of funds as well as the recording of
accruals for purchases and expenses. Specifically,
|
|
|
Inadequate and ineffective policies over the authorization of purchases; |
|
|
|
|
Ineffective invoice approval policies; |
|
|
|
|
Ineffective supervisory oversight and/or review of the addition or
removal of management contracts; and |
|
|
|
|
Inadequate period-end cut-off procedures in the procurement cycle. |
These deficiencies increase the likelihood that unauthorized purchases and disbursements could
occur and not be detected in a timely manner. These deficiencies resulted in the misappropriation
of assets because of the unauthorized transfer of certain management contracts to a former officer
of the United Kingdom subsidiary, the Companys continued payment and recognition of management
costs after the contracts were transferred, and the failure to record
certain accrued liabilities, which required adjustments to
the interim and annual financial statements.
7. Inadequate controls over revenue recognition. The Companys review procedures over accounting
for revenue recognition were not functioning effectively. Specifically, the review procedures over
the application of revenue recognition policies for management agreements were inadequate. These deficiencies resulted in the improper recognition of revenue on
certain management contracts, which required adjustments to the interim and annual financial
statements.
In our opinion, managements assessment that Central Parking Corporation did not maintain
effective internal control over financial reporting as of September 30, 2005, is fairly stated, in
all material respects, based on criteria established in Internal ControlIntegrated Framework
issued by COSO. Also, in our opinion, because of the effect of the material weaknesses described
above on the achievement of the objectives of the control criteria, Central Parking Corporation did
not maintain effective internal control over financial reporting as of September 30, 2005, based on
criteria established in Internal ControlIntegrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of Central Parking Corporation and
subsidiaries as of September 30, 2005 and 2004, and the related consolidated statements of
operations, shareholders equity and comprehensive income (loss), and cash flows for each of the
years in
62
the three-year period ended September 30, 2005. The aforementioned material weaknesses
were considered in determining the nature, timing and extent of audit tests applied in our audit of the 2005 consolidated
financial statements, and this report does not affect our report
dated December 29, 2005, which
expressed an unqualified opinion on those consolidated financial statements.
/s/ KPMG LLP
Nashville, Tennessee
December 29, 2005
63
PART III
Item 10. Directors and Executive Officers of the Registrant
Information concerning this Item is incorporated by reference to the Companys definitive
proxy materials for the Companys 2006 Annual Meeting of Shareholders.
Item 11. Executive Compensation
Information concerning this Item is incorporated by reference to the Companys definitive
proxy materials for the Companys 2006 Annual Meeting of Shareholders.
Item 12. Security Ownership of Certain Beneficial Owners, Management and Related Stockholder
Matters
Information concerning this Item is incorporated by reference to the Companys definitive
proxy materials for the Companys 2006 Annual Meeting of Shareholders.
Item 13. Certain Relationships and Related Transactions
Information concerning this Item is incorporated by reference to the Companys definitive
proxy materials for the Companys 2006 Annual Meeting of Shareholders.
Item 14.
Principal Accounting Fees and Services
Information concerning this Item is incorporated by reference to the Companys definitive
proxy materials for the Companys 2006 Annual Meeting of Shareholders.
Item 15.
Exhibits and Financial Statement Schedules
|
(a) |
|
(1) and (2) Financial Statements and Financial Statement Schedules
Financial statements and schedules of the Company and its subsidiaries required to be
included in Part II, Item 8, are listed in the Index to Consolidated Financial Statements. |
|
|
(b) |
|
(3) Exhibits |
|
|
|
|
The exhibits are listed in the Index to Exhibits which appears immediately following the signature page. |
64
CENTRAL PARKING CORPORATION and SUBSIDIARIES
Schedule II Valuation and Qualifying Accounts
Amounts in thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions |
|
|
|
Balance at |
|
|
Charged to |
|
|
Charged to |
|
|
|
|
|
|
Balance at |
|
|
|
Beginning of |
|
|
Costs and |
|
|
Other |
|
|
(Deductions) |
|
|
End of |
|
Description |
|
Period |
|
|
Expenses |
|
|
Accounts |
|
|
Recoveries |
|
|
Period |
|
Allowance for Doubtful Accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended September 30, 2003 |
|
$ |
561 |
|
|
|
4,938 |
|
|
|
|
|
|
|
(1,779 |
) |
|
$ |
3,720 |
|
Year ended September 30, 2004 |
|
|
3,720 |
|
|
|
959 |
|
|
|
|
|
|
|
(1,473 |
) |
|
|
3,206 |
|
Year ended September 30, 2005 |
|
|
3,206 |
|
|
|
8,854 |
|
|
|
|
|
|
|
(1,792 |
) |
|
|
10,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Tax Valuation Account |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended September 30, 2003 |
|
$ |
15,279 |
|
|
|
2,167 |
|
|
|
(11,949 |
) |
|
|
|
|
|
$ |
5,497 |
|
Year ended September 30, 2004 |
|
|
5,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,497 |
|
Year ended September 30, 2005 |
|
|
5,497 |
|
|
|
6,597 |
|
|
|
|
|
|
|
|
|
|
|
12,094 |
|
See accompanying report of Independent Registered Public Accounting Firm.
CENTRAL PARKING CORPORATION and SUBSIDIARIES
Schedule IV Mortgage Loans on Real Estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal Amount |
|
|
|
|
Final |
|
Periodic |
|
|
|
Face |
|
Carrying |
|
of Loans Subject |
|
|
Interest |
|
Maturity |
|
Payment |
|
Prior |
|
Amount of |
|
Amount of |
|
to Delinquent |
Description |
|
Rate |
|
Date |
|
Terms |
|
Liens |
|
Mortgage |
|
Mortgage |
|
Principal or Interest |
Mortgage note
secured by parking
garages
|
|
1-month LIBOR +
1.625%
|
|
2/28/08
|
|
Monthly interest
only with balance
of $12,681,698 due
at maturity
|
|
None
|
|
$ |
12,681,698 |
|
|
$12,681,698 at
September 30, 2005
|
|
None |
See accompanying report of Independent Registered Public Accounting Firm.
65
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this amendment to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
|
|
|
|
|
|
|
|
CENTRAL PARKING CORPORATION |
|
|
|
|
|
|
|
|
|
Date:
December 29, 2005
|
|
By:
|
|
/s/ Jeff Heavrin |
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeff Heavrin |
|
|
|
|
|
|
Senior Vice President and Chief Financial Officer |
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant in the capacities and on the
dates indicated.
|
|
|
|
|
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/ Monroe J. Carell, Jr.
|
|
Chairman, Director
|
|
December 29, 2005 |
Monroe J. Carell, Jr. |
|
|
|
|
|
|
|
|
|
/s/ E MANUEL EADS
Emanuel Eads
|
|
President and Chief Executive Officer
|
|
December 29, 2005 |
|
|
|
|
|
/s/ Jeff Heavrin
Jeff Heavrin
|
|
Senior Vice President and
Chief Financial Officer (Principal
Financial Officer)
|
|
December 29, 2005 |
|
|
|
|
|
/s/ Cecil Conlee
Cecil Conlee
|
|
Director
|
|
December 29, 2005 |
|
|
|
|
|
/s/ Lewis Katz
Lewis Katz
|
|
Director
|
|
December 29, 2005 |
|
|
|
|
|
/s/ Edward G. Nelson
Edward G. Nelson
|
|
Director
|
|
December 29, 2005 |
|
|
|
|
|
/s/ Owen Shell, Jr.
Owen Shell, Jr.
|
|
Director
|
|
December 29, 2005 |
|
|
|
|
|
/s/ WILLIAM SMITH
William Smith
|
|
Director
|
|
December 29, 2005 |
|
|
|
|
|
|
|
Director
|
|
December 29, 2005 |
|
|
|
|
|
/s/ KATHRYN BROWN
Kathryn Brown
|
|
Director
|
|
December 29, 2005 |
66
Exhibit Index
|
|
|
Exhibit |
|
|
Number |
|
Document |
|
2
|
|
Plan of Recapitalization, effective October 9, 1997 (Incorporated by reference to Exhibit 2 to the
Companys Registration Statement No. 33-95640 on Form S-1). |
|
|
|
2.1
|
|
Agreement and Plan of Merger dated September 21, 1998, by and among the Registrant, Central
Merger Sub, Inc., Allright Holdings, Inc., Apollo Real Estate Investment Fund II, L.P. and AEW Partners, L.P.
(Incorporated by reference to Exhibit 2.1 to the Companys Registration Statement No. 333-66081 on Form S-4 filed on October
21, 1998). |
|
|
|
2.2
|
|
Amendment dated as of January 5, 1999, to the Agreement and Plan of Merger dated September 21,
1998 by and among the Registrant, Central Merger Sub, Inc., Allright Holdings, Inc., Apollo
Real Estate Investment Fund II, L.P. and AEW Partners, L.P. (Incorporated by reference to
Exhibit 2.1 to the Companys Registration Statement No. 333-66081 on Form S-4 filed on
October 21, 1998, as amended). |
|
|
|
3.1
|
|
(a) Amended and Restated Charter of the Registrant (Incorporated by reference to Exhibit 4.1 to the Companys Registration Statement No.
333-23869 on Form S-3). |
|
|
|
|
|
(b) Articles of Amendment to the Charter of Central Parking Corporation increasing the authorized number of shares of common
stock, par value $0.01 per share, to one hundred million (Incorporated by reference to Exhibit 2 to the Companys 10-Q for
the quarter ended March 31, 1999). |
|
|
|
3.2
|
|
Amended and Restated Bylaws of the Registrant (Incorporated by reference to Exhibit 4.1 to the
Companys Registration Statement No. 333-23869 on Form S-3). |
|
|
|
4.1
|
|
Form of Common Stock Certificate (Incorporated by reference to Exhibit 4.1 to the Companys
Registration Statement No. 33-95640 on Form S-1). |
|
|
|
4.2
|
|
Registration Rights Agreement dated as of September 21, 1998 by and between the Registrant, Apollo
Real Estate Investment Fund II, L.P., AEW Partners, L.P. and Monroe J. Carell, Jr., The Monroe
Carell Jr. Foundation, Monroe Carell Jr. 1995 Grantor Retained Annuity Trust, Monroe Carell Jr.
1994 Grantor Retained Annuity Trust, The Carell Childrens Trust, The 1996 Carell
Grandchildrens Trust, The Carell Family Grandchildren 1990 Trust, The Kathryn Carell Brown
Foundation, The Edith Carell Johnson Foundation, The Julie Carell Stadler Foundation, 1997 Carell Elizabeth
Brown Trust, 1997 Ann Scott Johnson Trust, 1997 Julia Claire Stadler Trust, 1997 William Carell Johnson
Trust, 1997 David Nicholas Brown Trust and 1997 George Monroe Stadler Trust (Incorporated by reference to
Exhibit 4.4 to the Companys Registration Statement No. 333-66081 filed on October 21, 1998). |
|
|
|
4.3
|
|
Amendment dated January 5, 1999 to the Registration Rights Agreement dated as of September 21, 1998, by and between the
Registrant, Apollo Real Estate Investment fund II, L.P., AEW Partners, L.P. and Monroe J. Carell, Jr., The Monroe
Carell Jr. Foundation, Monroe Carell Jr. 1995 Grantor Retained Annuity Trust, Monroe Carell Jr. 1994 Grantor Retained
Annuity Trust, The Carell Childrens Trust, The 1996 Carell Grandchildrens Trust, The Carell Family Grandchildren 1990
Trust, The Kathryn Carell Brown Foundation, The Edith Carell Johnson Foundation, The Julie Carell Stadler Foundation,
1997 Carell Elizabeth Brown Trust, 1997 Ann Scott Johnson Trust, 1997 Julia Claire Stadler Trust, 1997 William Carell
Johnson Trust, 1997 David Nicholas Brown Trust and 1997 George Monroe Stadler Trust (Incorporated by reference to Exhibit
4.4.1 to the Companys Registration Statement No. 333-66081 filed on October 21, 1998, as amended). |
|
|
|
4.4
|
|
Indenture dated March 18, 1998 between the registrant and Chase Bank of Texas, National Association, as Trustee regarding up to
$113,402,050 of 5-1/4 % Convertible Subordinated |
67
|
|
|
Exhibit |
|
|
Number |
|
Document |
|
|
|
Debentures due 2028 (Incorporated by reference to Exhibit 4.5 to the
Registrants Registration Statement No. 333-52497 on Form S-3). |
|
|
|
4.5
|
|
Amended and Restated Declaration of Trust of Central Parking Finance Trust dated as of March 18,
1998 (Incorporated by reference to Exhibit 4.5 to the Registrants Registration Statement No.
333-52497 on Form S-3). |
|
|
|
4.6
|
|
Preferred Securities Guarantee Agreement dated as of March 18, 1998 by and between the Registrant and
Chase Bank of Texas, national Association as Trustee (Incorporated by reference to Exhibit 4.7 to the Registrants
Registration Statement No. 333-52497 on Form S-3). |
|
|
|
4.7
|
|
Common Securities Guarantee Agreement dated March 18, 1998 by the Registrant (Incorporated by reference to
Exhibit 4.9 to 333-52497 on Form S-3). |
|
|
|
10.1
|
|
Executive Compensation Plans and Arrangements |
|
|
|
(a) 1995 Incentive and Nonqualified Stock Option Plan for Key Personnel (Incorporated by reference to Exhibit 10.1 to the
Companys Registration Statement No. 33-95640 on Form S-1). |
|
|
|
|
|
(b) Amendment to the 1995 Incentive and Nonqualified Stock Option Plan for Key Personnel increasing the number of shares licensed
for issuance under the plan to 3,817,500 (Incorporated by reference to Exhibit 10.1 (b) of the Companys Annual Report on
Form 10-K for the year ended September 30, 2000). |
|
|
|
|
|
(c) Form of Option Agreement under Key Personnel Plan (Incorporated by reference to Exhibit 10.2 to the Companys Registration
Statement No. 33-95640 on Form S-1). |
|
|
|
|
|
(d) 1995 Restricted Stock Plan (Incorporated by reference to Exhibit 10.5.1 to the Companys Registration Statement No. 33-95640
on Form S-1). |
|
|
|
|
|
(e) Form of Restricted Stock Agreement (Incorporated by reference to Exhibit 10.5.2 to the Companys Registration Statement
No.33-95640 on Form S-1). |
|
|
|
|
|
(f) Monroe J. Carell, Jr. Employment Agreement (Incorporated by reference to Exhibit 10.1(f) to the Companys Annual Report on
Form 10-K/A filed on December 17, 2004) |
|
|
|
|
|
(g) Monroe J. Carell, Jr. Revised Deferred Compensation Agreement, as amended (Incorporated by reference to Exhibit 10.1(g) to
the Companys Annual Report on Form 10-K/A filed on December 17, 2004) |
|
|
|
|
|
(h) Performance Unit Agreement between Central Parking Corporation and James H. Bond (Incorporated by reference to Exhibit
10.11.1 to the Companys Registration Statement No. 33-95640 on Form S-1.) |
|
|
|
|
|
(i) Modification of Performance Unit Agreement of James H. Bond (Incorporated by reference to Exhibit 10.1 (j) to the Companys Annual
Report on Form 10-K filed on December 27, 1997). |
|
|
|
|
|
(j) Second modification of Performance Unit Agreement of James H. Bond (Incorporated by reference to Exhibit 10.1 (k) to the Companys
Report on Form 10-Q for the period ended March 31, 2001). |
|
|
|
|
|
(k) Deferred Stock Unit Plan (Incorporated by reference to Exhibit 10.1(n) to the Companys Annual Report on Form 10-K filed on
December 21, 2001). |
|
|
|
|
|
(l) James H. Bond Employment Agreement dated as of May 31, 2001 (Incorporated by reference to Exhibit 10.1 (p) to the companys
Report on Form 10-Q for the period ended June 30, 2001). |
68
|
|
|
Exhibit |
|
|
Number |
|
Document |
|
|
|
(m) Emanuel J. Eads Employment Agreement dated as of October 1, 2000 (Incorporated by reference to Exhibit 10.1 (q) to the companys
Report on Form 10-Q for the period ended June 30, 2001). |
|
|
|
|
|
(n) Gregory A. Susick Employment Agreement dated as of October 1, 2000 (Incorporated by reference to Exhibit 10.1 (r) to the companys
Report on Form 10-Q for the period ended June 30, 2001). |
|
|
|
|
|
(o) Jeff L. Wolfe Employment Agreement dated as of October 1, 2000 (Incorporated by reference to
Exhibit 10.1 (s) to the companys Report on Form 10-Q for the period ended June 30, 2001). |
|
|
|
|
|
(p) Amendment No. 1 effective June
1, 2005 to the 2003 Employment Agreement between the Company and Jeff
Heavrin. (filed herewith) |
|
|
|
|
|
(q) Form of Senior Executive Employment Agreement (Incorporated by reference to Exhibit 10.1(t) to
the Companys Annual Report on Form 10-K filed on December 24, 2003) |
|
|
|
10.2
|
|
(a) 1995 Nonqualified Stock Option Plan for Directors (Incorporated by reference to Exhibit 10.3 to the Companys Registration
Statement No. 33-95640 on Form S-1). |
|
|
|
|
|
(b) Amendment to the 1995 Nonqualified Stock Option Plan for Directors increasing the number of shares reserved for issuance
under the plan to 475,000 (Incorporated by reference to Exhibit 10.2 to the Companys Annual Report on Form 10-K filed on
December 21, 2001). |
|
|
|
10.3
|
|
Form of Option Agreement under Directors plan (Incorporated by reference to Exhibit 10.4 to the
Companys Registration Statement No. 33-95640 on Form S-1). |
|
|
|
10.4
|
|
Form of Indemnification Agreement for Directors (Incorporated by reference to Exhibit 10.12 to the
Companys Registration Statement No. 33-95640 on Form S-1). |
|
|
|
10.5
|
|
Indemnification Agreement for Monroe J. Carell, Jr. (Incorporated by reference to Exhibit 10.13 to the
Companys Registration Statement No. 33-95640 on Form S-1). |
|
|
|
10.6
|
|
Form of Management Contract (Incorporated by reference to Exhibit 10.6 to the Companys Annual Report on Form
10-K filed on December 21, 2001). |
|
|
|
10.7
|
|
Form of Lease (Incorporated by reference to Exhibit 10.7 to the Companys Annual Report on Form 10-K filed on
December 21, 2001). |
|
|
|
10.8
|
|
1998 Employee Stock Purchase Plan (Incorporated by reference to Exhibit 10.16 to the Companys
Registration Statement No. 33-95640 on Form S-1). |
|
|
|
10.9
|
|
Exchange Agreement between the Company and Monroe J. Carell, Jr. (Incorporated by reference to Exhibit 10.18 to
the Companys Registration Statement No. 33-95640 on Form S-1). |
|
|
|
10.10
|
|
Consulting Agreement dated as of February 12, 1998, by and between Central Parking Corporation and
Lewis Katz (Incorporated by reference to Exhibit 10.20 of the Companys Report on Form 10-K for the period ended
September 30, 1999). |
|
|
|
10.11
|
|
Limited Partnership Agreement dated as of August 11, 1999, by and between CPS of the Northeast, Inc.
and Arizin Ventures, L.L.C. (Incorporated by reference to Exhibit 10.21 of the Companys Report on Form 10-K for the
period ended September 30, 1999). |
|
|
|
10.12
|
|
Shareholders Agreement and Agreement Not to Compete by and among Central Parking Corporation, Monroe J. Carell,
Jr., Lewis Katz and Saul Schwartz dated as of February 12, 1998 (Incorporated by reference to Exhibit 10.23 of the
Companys Report on Form 10-K for the period ended September 30, 1999). |
|
|
|
10.13
|
|
Lease Agreement dated as of October 6, 1995, by and between The Carell Family LLC and Central Parking
System of Tennessee, Inc. (Alloway Parking Lot) (Incorporated by reference to Exhibit 10.24 of the
Companys Report on Form 10-K for the period ended September 30, 1999). |
69
|
|
|
Exhibit |
|
|
Number |
|
Document |
|
10.14
|
|
First Amendment to Lease Agreement dated as of July 29, 1997, by and between The Carell Family LLC
and Central Parking System of Tennessee, Inc. (Alloway Parking Lot) (Incorporated by reference to
Exhibit 10.25 of the Companys Report on Form 10-K for the period ended September 30,
1999). |
|
|
|
10.15
|
|
Lease Agreement dated as of October 6, 1995 by and between The Carell Family LLC and Central
Parking System of Tennessee, Inc. (Second and Church Parking Lot) (Incorporated by reference to Exhibit 10.26 of the
Companys Report on Form 10-K for the period ended September 30, 1999). |
|
|
|
10.16
|
|
First Amendment to Lease Agreement dated as of October 6, 1995, by and between The Carell
Family LLC and Central Parking System of Tennessee, Inc. (Second and Church Parking Lot) (Incorporated by reference to
Exhibit 10.27 of the Companys Report on Form 10-K for the period ended September 30, 1999). |
|
|
|
10.17
|
|
Revolving Credit Note dated November 1, 2002, by Suntrust Bank and Central Parking Corporation.
(Incorporated by reference to Exhibit 10.1 on Form 10-Q filed on February 18, 2003). |
|
|
|
10.18
|
|
Promissory Note dated January 8, 2003 by Bank of America, N.A. and Central Parking Corporation.
(Incorporated by reference to Exhibit 10.2 on Form 10-Q filed on February 18, 2003). |
|
|
|
10.19
|
|
Credit Agreement dated February 28, 2003, among Central Parking Corporation, et. al and Bank of
America, N.A., et al. (Incorporated by reference to Exhibit 99.2 on Form 8-K filed on March 4, 2003) |
|
|
|
10.20
|
|
Waiver Agreement dated May 14, 2003, by Bank of America, N.A. and Central Parking Corporation.
(Incorporated by reference to Exhibit 10.3 on Form 10-Q filed on May 15, 2003). |
|
|
|
10.21
|
|
Employment Agreement dated March 3, 2003, by William J. Vareschi, Jr. and Central Parking Corporation. (Incorporated
by reference to Exhibit 10.4 on Form 10-Q filed on May 15, 2003). |
|
|
|
10.22
|
|
First Amendment to Credit Agreement dated August 12, 2003, by Bank of America, N.A. and Central Parking Corporation.
(Incorporated by reference to Exhibit 10.3 on Form 10-Q filed on August 14, 2003). |
|
|
|
10.23
|
|
Second Amendment to the Credit Facility dated June 4, 2004 by Bank of America, N.A. and Central Parking Corporation
(Incorporated by reference to Exhibit 10.1 on Form 10-Q filed on August 13, 2004) |
|
|
|
10.24
|
|
Third Amendment to the Credit Facility dated January 25, 2005 by Bank of America, N.A. and Central Parking Corporation (Incorporated by
reference to Exhibit 10.1 on Form 10-Q filed on February 9, 2005). |
|
|
|
10.25
|
|
Fourth Amendment to Credit Agreement dated August 11, 2005, among Central Parking Corporation, et. al and Bank of America, N.A., et. al.
(Incorporated by reference to Exhibit 10.1 on Form 8-K filed on August 12, 2005). |
|
|
|
10.26
|
|
International Swap Dealers Association, Inc. Master Agreement dated as of June 9, 2003, by JP Morgan Chase Bank and Central
Parking Corporation. (Incorporated by reference to Exhibit 10.4 on Form 10-Q filed on August 14, 2003). |
|
|
|
10.27
|
|
International Swap Dealers Association, Inc. Master Agreement dated as of May 23, 2003, by SunTrust Bank and Central Parking
Corporation. (Incorporated by reference to Exhibit 10.5 on Form 10-Q filed on August 14, 2003). |
|
|
|
10.28
|
|
Waiver Agreement
dated October 12, 2005 by and between the Company and Central
Parking System, Inc., Allright Corporation, Kinney System Inc.,
CPS Finance, Inc. and Central Parking System of Tennessee,
Inc., and certain subsidiaries of the Company and a group of
lenders having Bank of America, N.A. as their administrative agent
(the Lenders). (filed herewith) |
|
|
|
21
|
|
Subsidiaries of the Registrant (filed herewith). |
|
|
|
23
|
|
Consent of KPMG LLP (filed herewith). |
70
|
|
|
Exhibit |
|
|
Number |
|
Document |
|
31.1
|
|
Certification of Emanuel Eads pursuant to Rule 13a-14(a). |
|
|
|
31.2
|
|
Certification of Jeff Heavrin pursuant to Rule 13a-14(a). |
|
|
|
32.1
|
|
Certification of Emanuel Eads pursuant to Section 1350. |
|
|
|
32.2
|
|
Certification of Jeff Heavrin pursuant to Section 1350. |
71