Central Parking Corporation
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended September 30, 2006.
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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)
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Tennessee
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62-1052916 |
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer Identification No.) |
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2401 21st Avenue South, |
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Suite 200, Nashville, Tennessee
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37212 |
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(Address of Principal Executive Offices)
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(Zip Code) |
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Registrants Telephone Number, Including Area Code:
Securities Registered Pursuant to Section 12(b) of the Act:
Securities Registered Pursuant to Section 12(g) of the Act:
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(615) 297-4255
None |
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Title of Each Class
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Name of each Exchange on which registered |
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Common Stock, $0.01 par value
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New York Stock Exchange |
Indicate by check mark if the regristrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
YES o NO þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act. YES o NO þ
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 þ NO o
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. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in
Rule 12b-2 of the Exchange Act (Check one):
Large accelerated filer o Accelerated filer þ Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). YES o NO þ
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, 2006 (the last
business day of the most recently completed second fiscal quarter) was $107,400,592. 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.
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Class
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Outstanding at November 30, 2006 |
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Common Stock, $0.01 par value
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32,176,711 |
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrants definitive proxy statement for the Annual Meeting of Shareholders
to be held on February 20, 2007 are incorporated by reference into Part III, items 10, 11, 12, 13
and 14 of this Form 10-K.
TABLE OF CONTENTS
Page 2 of 70
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; 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:
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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 |
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increase cash flow by reducing operating costs, accounts receivable and indebtedness; |
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cover the fixed costs of its leased and owned facilities and
maintain adequate liquidity through its cash resources and credit facility; |
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integrate future acquisitions, in light of challenges in
retaining key employees, synchronizing business processes and efficiently
integrating facilities, marketing, and operations; |
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comply with the terms of its credit facility or obtain waivers of noncompliance; |
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reduce operating losses at unprofitable locations; |
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form and maintain strategic relationships with certain large real estate owners and operators; and |
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renew existing insurance coverage and to obtain performance and surety bonds on favorable terms; |
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successful implementation of the Companys strategic plan and other operating strategies; |
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interest rate fluctuations; |
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the loss, or renewal on less favorable terms, of existing management contracts and
leases and the failure to add new locations on favorable terms; |
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the timing of property-related gains and losses; |
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pre-opening, start-up and break-in costs of parking facilities; |
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player strikes or other events affecting major league sports;
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changes in economic and business conditions at the local, regional, national or international levels; |
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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; |
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the impact of litigation; |
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higher premium and claims costs relating to medical, liability, workers compensation and other insurance programs; |
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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; |
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changes in current parking rates and pricing of services to clients; |
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extraordinary events affecting parking facilities that the Company manages, including
labor strikes, emergency safety measures, military or terrorist attacks and natural
disasters; |
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the loss of key employees; and |
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the other factors discussed under the heading Item 1A. Risk Factors included elsewhere in this Form 10-K. |
Page 4 of 70
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, 2006, Central Parking operated 3,055 parking
facilities containing 1,403,055 spaces in 37 states, the District of Columbia, Canada, Puerto Rico,
Chile, Colombia, Peru, the United Kingdom, the Republic of Ireland, Spain, 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, 2006, Central Parking operated 1,620 parking facilities under management contracts
and 1,296 parking facilities under leases. In addition, the Company owned 139 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 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:
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Exit marginal and low growth markets (cities and countries). The Company has
divested operations in 10 cities in the United States and 4 foreign countries. Most of the
operations 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 divested are primarily in countries in which the
Company has a small market share and significant barriers to growth. The operations that
the Company has divested since August 2005 represent less than 4.0% of revenues. |
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Reduce the number of marginal and unprofitable operating agreements. In its
remaining markets, the Company is seeking to improve profit margins by reducing the number
of marginal and unprofitable operating agreements and focus on fewer but more profitable
locations. The Company plans to 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. |
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Target national accounts and other market segments with high growth potential.
The Company is placing more focus on national accounts and other specialized parking market
segments, including stadiums and arenas, airports, municipal and hospitality valet.
Additional resources have been dedicated to these specialized markets. A senior-level
manager has been named to focus on 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 |
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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. |
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Re-emphasize the importance of client relationships in retaining and growing the
management contract segment. The Company is re-emphasizing the importance of
developing and maintaining strong client relationships at the local, regional and national
levels with the primary goals of improving the Companys management contract retention
rates and increasing its share of the management contract business. |
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Expand the Operational Excellence initiative company-wide. Through its
Operational Excellence initiative, the Company seeks to improve revenues, margins and
profits at the location level. The Company is dedicating additional resources to its
Operational Excellence initiative to expand its operational audit and training programs and
is adding Operational Excellence managers in several key markets. |
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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 plans to 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. |
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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 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 2006, the
Company sold 39 properties for a total of $115.8 million and anticipates additional sales
during the next fiscal year. |
The strategic plan is designed to capitalize on Central Parkings brand, experience and
relationships to grow the profits of the Company.
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.
Page 6 of 70
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; 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, 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 18 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.
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 2006, 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.
Page 7 of 70
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 2006.
Acquisitions
The Companys acquisition strategy is 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.
No acquisitions were completed in 2004, 2005 or 2006.
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 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,
2006, had grown to 113 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 operations in Mexico in July
1994 by forming a joint venture with G. Accion, (formerly Fondo Opcion), an established Mexican
developer. In Fiscal 2006, the Company sold its interest in Mexico and Germany. As of September
30, 2006, Central Parking also operated 142 facilities in Canada, 6 in Spain, 28 in
Chile, 23 in Colombia, 10 in Poland, 13 in Peru, 2 in Switzerland, 10 in the Republic of Ireland,
and 13 in Greece. The Company also operates on-street parking services in the United Kingdom and
the Republic of Ireland. In October 2006, the Company
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sold its operations in Poland. Poland has
been included in discontinued operations. The financial impact of the sale of Poland is not
significant to the Company. The Company received $0.3 million from the sale of Poland. 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:
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September 30, |
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2006 |
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Managed |
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1,620 |
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1,671 |
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1,615 |
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Leased |
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1,296 |
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1,548 |
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1,626 |
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Owned |
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139 |
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180 |
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192 |
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Total |
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3,055 |
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3,399 |
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3,433 |
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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.
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
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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
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.
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
Page 10 of 70
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 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, 2006, the Company employed 18,940 individuals, including 14,657 full-time
and 4,283 part-time employees. Approximately 3,817 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. Management
believes that the Companys employee relations are good.
Page 11 of 70
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 18 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 100 F Street, 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.
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.
Economic slowdowns in the United States could adversely affect employment levels, consumer
spending and commercial office occupancy, which, in turn, could reduce the demand for parking. The
reduced demand for parking could negatively impact 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 43.2% of our total revenues from continuing operations
(excluding reimbursement of management contract expenses) in fiscal year 2006. Revenues from our
operations in New York City and surrounding areas accounted for approximately 26.6% of our total
revenues from continuing operations (excluding reimbursement of management expenses) in fiscal
2006. 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.
Compliance with and any failure to comply with current regulatory requirements will result in
additional expenses and may adversely affect us.
Keeping abreast of, and in compliance with, changing laws, regulations and standards relating
to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, Securities
and Exchange Commission regulations and NYSE Stock Market rules, has required an increased amount
of management attention. We remain committed to maintaining high standards of corporate governance
and public disclosure. As a result, we intend to invest all reasonably necessary resources to
Page 12 of 70
comply with evolving standards, and this investment has resulted in and we expect will continue to
result in increased general and administrative expenses and a diversion of management time and
attention from revenue-generating activities to compliance activities.
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 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 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, 2006, was 200 basis
points. The amount outstanding under our Credit Facility was $73.7 million with a weighted average
interest rate of
Page 13 of 70
3.7% as of September 30, 2006. 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 million and the Credit Facility, which
was all floating interest, was $73.7 million on September 30, 2006. We expect to pay both
quarterly principal 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 1,435 facilities as of September 30, 2006. 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 breakin 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 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. In recent years, the sureties for our performance bond
program increased the rates we pay on these bonds and required us to collateralize a greater
percentage of our performance bonds with letters of credit. 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
Page 14 of 70
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, the Republic of Ireland and other countries. For the year
ended September 30, 2006, revenues from foreign operations represented 6.1% of our total revenues,
excluding reimbursement of management contract expenses. Our United Kingdom operations accounted
for 24.9% 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
currently have limited exposure to foreign currency risk. We have entered into certain foreign
currency forward contracts to mitigate the foreign exchange risk related to
certain intercompany notes we have with our subsidiary in the United Kingdom. See note 1 to our
consolidated financial statements.
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.
If we cannot maintain positive relationships with labor unions representing our employees, a
work stoppage may adversely affect our business.
Approximately 3,907 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.
Item 2. Properties
The Companys facilities, as of September 30, 2006, are organized into seven segments which
are subdivided into 21 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, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage |
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
of Total |
Segment |
|
Cities |
|
Locations |
|
Managed |
|
Leased |
|
Owned |
|
Spaces |
|
Spaces |
Segment 1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada |
|
Calgary, Montreal, Ottawa, Toronto Pearson Airport,
Toronto, Vancouver |
|
|
142 |
|
|
|
71 |
|
|
|
69 |
|
|
|
2 |
|
|
|
62,462 |
|
|
|
4.45 |
% |
Cincinnati |
|
Columbus, Columbus Airport, Cleveland, Indianapolis
Lexington ,Detroit Airport, Detroit, Cincinnati, |
|
|
168 |
|
|
|
76 |
|
|
|
76 |
|
|
|
16 |
|
|
|
88,423 |
|
|
|
6.30 |
% |
Chicago |
|
Chicago, Milwaukee, General Mitchell Airport |
|
|
129 |
|
|
|
88 |
|
|
|
36 |
|
|
|
5 |
|
|
|
54,589 |
|
|
|
3.89 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment 1 |
|
|
439 |
|
|
|
235 |
|
|
|
181 |
|
|
|
23 |
|
|
|
205,474 |
|
|
|
14.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Washington DC |
|
Washington DC, Washington Dulles Airport, Baltimore,
Richmond, Richmond Airport |
|
|
203 |
|
|
|
106 |
|
|
|
92 |
|
|
|
5 |
|
|
|
95,053 |
|
|
|
6.78 |
% |
Upper New York |
|
Syracuse, Charleston, WV, Pittsburgh, Rochester |
|
|
58 |
|
|
|
30 |
|
|
|
23 |
|
|
|
5 |
|
|
|
21,652 |
|
|
|
1.54 |
% |
Philadelphia |
|
Philadelphia, Harrisburg Airport |
|
|
75 |
|
|
|
28 |
|
|
|
42 |
|
|
|
5 |
|
|
|
53,313 |
|
|
|
3.80 |
% |
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Page 15 of 70
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Percentage |
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|
Number of |
|
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|
|
|
|
|
|
|
|
Total |
|
of Total |
Segment |
|
Cities |
|
Locations |
|
Managed |
|
Leased |
|
Owned |
|
Spaces |
|
Spaces |
|
|
Total Segment 2 |
|
|
336 |
|
|
|
164 |
|
|
|
157 |
|
|
|
15 |
|
|
|
170,018 |
|
|
|
12.12 |
% |
|
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Segment 3 |
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|
|
Nashville |
|
Nashville, Knoxville |
|
|
153 |
|
|
|
59 |
|
|
|
80 |
|
|
|
14 |
|
|
|
60,151 |
|
|
|
4.29 |
% |
Los Angeles |
|
Los Angeles, Costa Mesa, San Diego, Burbank Airport
Pheonix |
|
|
153 |
|
|
|
79 |
|
|
|
70 |
|
|
|
4 |
|
|
|
55,656 |
|
|
|
3.97 |
% |
San Francisco |
|
San Francisco, Sacramento, Oakland |
|
|
85 |
|
|
|
51 |
|
|
|
34 |
|
|
|
0 |
|
|
|
23,594 |
|
|
|
1.68 |
% |
Seattle |
|
Seattle |
|
|
26 |
|
|
|
24 |
|
|
|
2 |
|
|
|
0 |
|
|
|
8,555 |
|
|
|
0.61 |
% |
Denver |
|
Denver, Albuquerque, Minneapolis, St. Louis Airport,
Memphis, St. Louis, Omaha, Kansas city |
|
|
298 |
|
|
|
122 |
|
|
|
153 |
|
|
|
23 |
|
|
|
92,077 |
|
|
|
6.56 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment 3 |
|
|
715 |
|
|
|
335 |
|
|
|
339 |
|
|
|
41 |
|
|
|
240,033 |
|
|
|
17.11 |
% |
|
|
|
|
|
|
|
|
|
|
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|
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Segment 4 |
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|
|
|
|
|
|
|
|
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|
|
Boston |
|
Boston, Manchester, Providence, Hartford |
|
|
137 |
|
|
|
70 |
|
|
|
61 |
|
|
|
6 |
|
|
|
98,306 |
|
|
|
7.01 |
% |
New York |
|
Stamford, New Jersey, Poughkeepsie, New York |
|
|
408 |
|
|
|
209 |
|
|
|
187 |
|
|
|
12 |
|
|
|
162,255 |
|
|
|
11.56 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment 4 |
|
|
545 |
|
|
|
279 |
|
|
|
248 |
|
|
|
18 |
|
|
|
260,561 |
|
|
|
18.57 |
% |
|
|
|
|
|
|
|
|
|
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Segment 5 |
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Florida |
|
Atlanta, Jacksonville, Tampa, Orlando |
|
|
133 |
|
|
|
77 |
|
|
|
48 |
|
|
|
8 |
|
|
|
65,379 |
|
|
|
4.66 |
% |
Charlotte |
|
Birmingham, Charlotte, Knoxville |
|
|
105 |
|
|
|
71 |
|
|
|
33 |
|
|
|
1 |
|
|
|
39,151 |
|
|
|
2.79 |
% |
New Orleans |
|
New Orleans, New Orleans Airport, Baton Rouge
Jackson, Mobile |
|
|
146 |
|
|
|
53 |
|
|
|
88 |
|
|
|
5 |
|
|
|
44,001 |
|
|
|
3.14 |
% |
Houston |
|
Oklahoma City, Tulsa, Houston, Houston Airport,
Dallas, Austin, San Antonio, FT Worth, Dallas-
FT Worth Airport |
|
|
253 |
|
|
|
103 |
|
|
|
123 |
|
|
|
27 |
|
|
|
116,053 |
|
|
|
8.27 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment 5 |
|
|
637 |
|
|
|
304 |
|
|
|
292 |
|
|
|
41 |
|
|
|
264,584 |
|
|
|
18.86 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
Segment 6 |
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
USA Parking |
|
|
|
|
92 |
|
|
|
76 |
|
|
|
15 |
|
|
|
1 |
|
|
|
51,483 |
|
|
|
3.67 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment 6 |
|
|
92 |
|
|
|
76 |
|
|
|
15 |
|
|
|
1 |
|
|
|
51,483 |
|
|
|
3.67 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
Segment 7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South America |
|
San Juan, Chile, Colombia, Peru |
|
|
91 |
|
|
|
59 |
|
|
|
32 |
|
|
|
0 |
|
|
|
33,112 |
|
|
|
2.36 |
% |
Europe |
|
London, Poland, Greece, Switzerland, Ireland
Spain |
|
|
154 |
|
|
|
134 |
|
|
|
20 |
|
|
|
0 |
|
|
|
148,464 |
|
|
|
10.58 |
% |
Miami |
|
Miami |
|
|
46 |
|
|
|
34 |
|
|
|
12 |
|
|
|
0 |
|
|
|
29,326 |
|
|
|
2.09 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment 7 |
|
|
291 |
|
|
|
227 |
|
|
|
64 |
|
|
|
0 |
|
|
|
210,902 |
|
|
|
15.03 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
3,055 |
|
|
|
1,620 |
|
|
|
1,296 |
|
|
|
139 |
|
|
|
1,403,055 |
|
|
|
100.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Companys facilities include both surface lots and structured parking facilities
(garages). Approximately 25% 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, 2006 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent |
|
|
Managed |
|
Leased |
|
Owned |
|
Total |
|
Spaces |
|
of Total |
Total U.S. and Puerto Rico |
|
|
1,376 |
|
|
|
1,182 |
|
|
|
137 |
|
|
|
2,695 |
|
|
|
1,170,588 |
|
|
|
83.43 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United Kingdom |
|
|
108 |
|
|
|
5 |
|
|
|
0 |
|
|
|
113 |
|
|
|
122,470 |
|
|
|
8.73 |
% |
Canada |
|
|
71 |
|
|
|
69 |
|
|
|
2 |
|
|
|
142 |
|
|
|
62,462 |
|
|
|
4.45 |
% |
Chile |
|
|
19 |
|
|
|
9 |
|
|
|
0 |
|
|
|
28 |
|
|
|
9,346 |
|
|
|
0.67 |
% |
Greece |
|
|
9 |
|
|
|
4 |
|
|
|
0 |
|
|
|
13 |
|
|
|
8,185 |
|
|
|
0.59 |
% |
Peru |
|
|
13 |
|
|
|
0 |
|
|
|
0 |
|
|
|
13 |
|
|
|
8,327 |
|
|
|
0.59 |
% |
Spain |
|
|
1 |
|
|
|
5 |
|
|
|
0 |
|
|
|
6 |
|
|
|
2,440 |
|
|
|
0.17 |
% |
Poland |
|
|
5 |
|
|
|
5 |
|
|
|
0 |
|
|
|
10 |
|
|
|
1,867 |
|
|
|
0.13 |
% |
Colombia |
|
|
7 |
|
|
|
16 |
|
|
|
0 |
|
|
|
23 |
|
|
|
3,868 |
|
|
|
0.28 |
% |
Ireland |
|
|
10 |
|
|
|
0 |
|
|
|
0 |
|
|
|
10 |
|
|
|
13,177 |
|
|
|
0.94 |
% |
Switzerland |
|
|
1 |
|
|
|
1 |
|
|
|
0 |
|
|
|
2 |
|
|
|
325 |
|
|
|
0.02 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total foreign |
|
|
244 |
|
|
|
114 |
|
|
|
2 |
|
|
|
360 |
|
|
|
232,467 |
|
|
|
16.57 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total facilities |
|
|
1,620 |
|
|
|
1,296 |
|
|
|
139 |
|
|
|
3,055 |
|
|
|
1,403,055 |
|
|
|
100.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 16 of 70
The table below sets forth certain information regarding the Companys managed, leased and owned
facilities in the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
2006 |
|
2005 |
|
2004 |
Managed Facilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year |
|
|
1,671 |
|
|
|
1,615 |
|
|
|
1,714 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired or merged during year |
|
|
|
|
|
|
|
|
|
|
|
|
Added during year |
|
|
279 |
|
|
|
354 |
|
|
|
225 |
|
Consolidated during year |
|
|
(15 |
) |
|
|
(52 |
) |
|
|
(18 |
) |
Deleted during year |
|
|
(315 |
) |
|
|
(246 |
) |
|
|
(306 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
End of year |
|
|
1,620 |
|
|
|
1,671 |
|
|
|
1,615 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renewal Rate (1) |
|
|
83.9 |
% |
|
|
87.6 |
% |
|
|
84.2 |
% |
Leased Facilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year |
|
|
1,548 |
|
|
|
1,626 |
|
|
|
1,798 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired or merged during year |
|
|
|
|
|
|
|
|
|
|
|
|
Added during year |
|
|
118 |
|
|
|
159 |
|
|
|
108 |
|
Consolidated during year |
|
|
(49 |
) |
|
|
(18 |
) |
|
|
(59 |
) |
Deleted during year |
|
|
(321 |
) |
|
|
(219 |
) |
|
|
(221 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
End of year |
|
|
1,296 |
|
|
|
1,548 |
|
|
|
1,626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned Facilities (2): |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year |
|
|
180 |
|
|
|
192 |
|
|
|
205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased during year |
|
|
1 |
|
|
|
2 |
|
|
|
2 |
|
Sold during year |
|
|
(42 |
) |
|
|
(14 |
) |
|
|
(15 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
End of year |
|
|
139 |
|
|
|
180 |
|
|
|
192 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total facilities (end of year) |
|
|
3,055 |
|
|
|
3,399 |
|
|
|
3,433 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase(reduction) in number of facilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Managed |
|
|
(3.1 |
)% |
|
|
3.5 |
% |
|
|
(5.8 |
)% |
Leased |
|
|
(16.3 |
)% |
|
|
(4.8 |
)% |
|
|
(9.6 |
)% |
Owned |
|
|
(22.8 |
)% |
|
|
(6.3 |
)% |
|
|
(6.3 |
)% |
Total facilities |
|
|
(10.1 |
)% |
|
|
(1.0 |
)% |
|
|
(7.6 |
)% |
|
|
|
(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.
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, but could have a material effect on the results of
operations in a given quarter.
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, 2006.
Page 17 of 70
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 2006 |
|
|
|
|
|
|
|
|
First Quarter |
|
$ |
15.54 |
|
|
$ |
12.85 |
|
Second Quarter |
|
|
16.84 |
|
|
|
12.96 |
|
Third Quarter |
|
|
16.11 |
|
|
|
13.30 |
|
Fourth Quarter |
|
|
17.97 |
|
|
|
15.00 |
|
Twelve months |
|
|
17.97 |
|
|
|
12.85 |
|
|
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 |
|
(b) There were, as of September 30, 2006, approximately 4,500 shareholders 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, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities remaining |
|
|
|
Number of securities to be |
|
|
Weighted-average exercise |
|
|
available for future issuance under |
|
|
|
issued upon exercise of |
|
|
price of outstanding |
|
|
equity compensation plans |
|
|
|
outstanding options, |
|
|
options, warrants and |
|
|
(excluding securities reflected in |
|
|
|
warrants and rights |
|
|
rights |
|
|
column (a)) |
|
Plan Category |
|
(a) |
|
|
(b) |
|
|
(c) |
|
Equity compensation plans
approved by securities holders |
|
|
3,684,895 |
|
|
$ |
17.83 |
|
|
|
1,440,969 |
|
|
Equity compensation plans not
approved by securities holders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
3,684,895 |
|
|
$ |
17.83 |
|
|
|
1,440,969 |
|
|
|
|
|
|
|
|
|
|
|
Page 18 of 70
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
2006 vs. 2005 |
|
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
Increase (Decrease) |
|
Amounts in thousands, except share and
employee data |
|
|
(5) |
|
|
(5) |
|
|
(5) |
|
|
(5) |
|
|
|
|
|
|
|
|
|
STATEMENT OF OPERATIONS DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parking |
|
$ |
522,547 |
|
|
$ |
537,712 |
|
|
$ |
560,925 |
|
|
$ |
564,294 |
|
|
$ |
554,143 |
|
|
$ |
(15,165 |
) |
|
|
(2.8 |
)% |
Management contract and other |
|
|
119,006 |
|
|
|
115,053 |
|
|
|
122,023 |
|
|
|
114,816 |
|
|
|
113,262 |
|
|
|
3,953 |
|
|
|
3.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
641,553 |
|
|
|
652,765 |
|
|
|
682,948 |
|
|
|
679,110 |
|
|
|
667,405 |
|
|
|
(11,212 |
) |
|
|
(1.7 |
) |
Reimbursement of management contract expenses |
|
|
467,882 |
|
|
|
452,287 |
|
|
|
516,515 |
|
|
|
482,938 |
|
|
|
449,513 |
|
|
|
15,595 |
|
|
|
3.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
1,109,435 |
|
|
|
1,105,052 |
|
|
|
1,199,463 |
|
|
|
1,162,048 |
|
|
|
1,116,918 |
|
|
|
4,383 |
|
|
|
0.4 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total before reimbursed management contract expenses |
|
|
605,514 |
|
|
|
634,995 |
|
|
|
639,528 |
|
|
|
675,447 |
|
|
|
608,497 |
|
|
|
(29,481 |
) |
|
|
(4.6 |
) |
Reimbursed management contract expenses |
|
|
467,882 |
|
|
|
452,287 |
|
|
|
516,515 |
|
|
|
482,938 |
|
|
|
449,513 |
|
|
|
15,595 |
|
|
|
3.4 |
|
Property-related gains (losses), net |
|
|
31,900 |
|
|
|
53,596 |
|
|
|
7,161 |
|
|
|
(7,150 |
) |
|
|
(4,329 |
) |
|
|
(21,696 |
) |
|
|
(40.5 |
) |
Impairment of goodwill |
|
|
|
|
|
|
(454 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(454 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (losses) |
|
|
67,939 |
|
|
|
70,912 |
|
|
|
50,581 |
|
|
|
(3,487 |
) |
|
|
54,579 |
|
|
|
(2,973 |
) |
|
|
(4.2 |
) |
Percentage of operating earnings (losses) to total revenues,
excluding reimbursement of management contract expenses |
|
|
10.6 |
% |
|
|
10.9 |
% |
|
|
7.4 |
% |
|
|
0.5 |
% |
|
|
8.2 |
% |
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(14,470 |
) |
|
|
(13,152 |
) |
|
|
(15,396 |
) |
|
|
(16,988 |
) |
|
|
(10,011 |
) |
|
|
1,318 |
|
|
|
10.0 |
|
Gain on repurchase of subordinated convertible debentures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,245 |
|
|
|
|
|
|
|
|
|
Gain on sale of non-operating assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on derivative instruments |
|
|
(1,172 |
) |
|
|
3,006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,178 |
) |
|
|
(139.0 |
) |
Equity in partnership and joint venture earnings (losses) |
|
|
1,234 |
|
|
|
(474 |
) |
|
|
(2,984 |
) |
|
|
2,212 |
|
|
|
2,702 |
|
|
|
1,708 |
|
|
|
(360.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations before
income taxes, minority interest and
cumulative effect of accounting changes |
|
|
53,531 |
|
|
|
60,292 |
|
|
|
32,201 |
|
|
|
(14,984 |
) |
|
|
56,515 |
|
|
|
(6,761 |
) |
|
|
(11.2 |
) |
Minority interest |
|
|
(1,014 |
) |
|
|
(1,327 |
) |
|
|
(2,999 |
) |
|
|
(4,044 |
) |
|
|
(4,764 |
) |
|
|
313 |
|
|
|
(23.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations before income
taxes and cumulative effect of accounting changes |
|
|
52,517 |
|
|
|
58,965 |
|
|
|
29,202 |
|
|
|
(19,028 |
) |
|
|
51,751 |
|
|
|
(6,448 |
) |
|
|
(10.9 |
) |
Income tax (expense) benefit |
|
|
(19,068 |
) |
|
|
(26,906 |
) |
|
|
(12,736 |
) |
|
|
7,231 |
|
|
|
(18,381 |
) |
|
|
7,838 |
|
|
|
(29.1 |
|
Income tax percentage of earnings (loss) from continuing
Operations before income taxes and cumulative effect of
accounting changes |
|
|
36.3 |
% |
|
|
45.6 |
% |
|
|
43.6 |
% |
|
|
38.0 |
% |
|
|
35.5 |
% |
|
|
N/A |
|
|
|
N/A |
|
Cumulative effect of accounting changes, net of tax (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,341 |
) |
|
|
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations |
|
|
33,449 |
|
|
|
32,059 |
|
|
|
16,466 |
|
|
|
(11,797 |
) |
|
|
24,029 |
|
|
|
1,390 |
|
|
|
4.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations, net of tax |
|
|
(5,585 |
) |
|
|
(17,789 |
) |
|
|
527 |
|
|
|
7,270 |
|
|
|
9,739 |
|
|
|
12,204 |
|
|
|
(68.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
27,864 |
|
|
$ |
14,270 |
|
|
$ |
16,993 |
|
|
$ |
(4,527 |
) |
|
$ |
33,768 |
|
|
$ |
13,594 |
|
|
|
95.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of net earnings (loss) to total revenues,
excluding reimbursement of management contract expenses |
|
|
4.3 |
% |
|
|
2.2 |
% |
|
|
2.5 |
% |
|
|
(0.7 |
)% |
|
|
5.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
2006 vs. 2005 |
|
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
Increase (Decrease) |
|
|
|
|
|
|
|
(5) |
|
|
(5) |
|
|
(5) |
|
|
(5) |
|
|
|
|
|
|
|
|
|
PER SHARE DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations before
cumulative effect of accounting changes basic |
|
$ |
1.03 |
|
|
$ |
0.88 |
|
|
$ |
0.45 |
|
|
$ |
(0.33 |
) |
|
$ |
0.93 |
|
|
$ |
0.15 |
|
|
|
17.0 |
% |
Cumulative effect of accounting changes, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.26 |
) |
|
|
|
|
|
|
|
|
Discontinued operations, net of tax |
|
|
(0.17 |
) |
|
|
(0.49 |
) |
|
|
0.02 |
|
|
|
0.20 |
|
|
|
0.27 |
|
|
|
0.32 |
|
|
|
65.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) basic |
|
$ |
0.86 |
|
|
$ |
0.39 |
|
|
$ |
0.47 |
|
|
$ |
(0.13 |
) |
|
$ |
0.94 |
|
|
$ |
0.47 |
|
|
|
120.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations before
cumulative effect of accounting changes diluted |
|
$ |
1.03 |
|
|
$ |
0.87 |
|
|
$ |
0.45 |
|
|
$ |
(0.33 |
) |
|
$ |
0.92 |
|
|
$ |
0.16 |
|
|
|
18.4 |
% |
Cumulative effect of accounting changes, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.26 |
) |
|
|
|
|
|
|
|
|
Discontinued operations, net of tax |
|
|
(0.17 |
) |
|
|
(0.48 |
) |
|
|
0.02 |
|
|
|
0.20 |
|
|
|
0.27 |
|
|
|
0.31 |
|
|
|
64.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) diluted |
|
$ |
0.86 |
|
|
$ |
0.39 |
|
|
$ |
0.47 |
|
|
$ |
(0.13 |
) |
|
$ |
0.93 |
|
|
$ |
0.47 |
|
|
|
120.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common shares outstanding |
|
|
32,258 |
|
|
|
36,626 |
|
|
|
36,346 |
|
|
|
36,034 |
|
|
|
35,849 |
|
|
|
(4,368 |
) |
|
|
(11.9 |
)% |
Diluted weighted average common shares outstanding |
|
|
32,499 |
|
|
|
36,762 |
|
|
|
36,555 |
|
|
|
36,034 |
|
|
|
36,211 |
|
|
|
(4,263 |
) |
|
|
(11.6 |
)% |
Dividends per common share |
|
$ |
0.06 |
|
|
$ |
0.06 |
|
|
$ |
0.06 |
|
|
$ |
0.06 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
Net book value per common share outstanding
at September 30 |
|
$ |
12.63 |
|
|
$ |
12.30 |
|
|
$ |
11.89 |
|
|
$ |
11.56 |
|
|
$ |
11.57 |
|
|
|
|
|
|
|
|
|
Page 19 of 70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, |
|
|
2006 vs. 2005 |
|
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
Increase (Decrease) |
|
BALANCE SHEET DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
44,689 |
|
|
$ |
26,055 |
|
|
$ |
27,628 |
|
|
$ |
31,572 |
|
|
$ |
33,498 |
|
|
$ |
18,634 |
|
|
|
71.5 |
% |
Working capital |
|
|
(25,453 |
) |
|
|
870 |
|
|
|
(54,759 |
) |
|
|
11,882 |
|
|
|
(92,805 |
) |
|
|
(26,323 |
) |
|
|
(3025.6 |
) |
Goodwill |
|
|
232,056 |
|
|
|
232,443 |
|
|
|
232,562 |
|
|
|
230,312 |
|
|
|
242,141 |
|
|
|
(387 |
) |
|
|
(0.2 |
) |
Total assets |
|
|
788,370 |
|
|
|
867,814 |
|
|
|
929,628 |
|
|
|
1,001,177 |
|
|
|
998,884 |
|
|
|
(79,444 |
) |
|
|
(9.2 |
) |
Long-term debt and capital lease obligations,
less current portion |
|
|
87,625 |
|
|
|
98,212 |
|
|
|
159,188 |
|
|
|
266,961 |
|
|
|
207,098 |
|
|
|
(10,587 |
) |
|
|
(10.8 |
) |
Subordinated convertible debentures |
|
|
78,085 |
|
|
|
78,085 |
|
|
|
78,085 |
|
|
|
78,085 |
|
|
|
78,085 |
|
|
|
|
|
|
|
|
|
Shareholders equity |
|
|
406,228 |
|
|
|
452,061 |
|
|
|
435,033 |
|
|
|
416,526 |
|
|
|
415,804 |
|
|
|
(45,833 |
) |
|
|
(10.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
2006 vs. 2005 |
|
|
2006 |
|
2005 |
|
2004 |
|
2003 |
|
2002 |
|
Increase (Decrease) |
OTHER DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
$ |
30,278 |
|
|
$ |
29,497 |
|
|
$ |
32,635 |
|
|
$ |
35,173 |
|
|
$ |
34,500 |
|
|
$ |
781 |
|
|
|
2.6 |
% |
Employees (2) |
|
|
18,940 |
|
|
|
23,957 |
|
|
|
22,537 |
|
|
|
21,187 |
|
|
|
18,100 |
|
|
|
(5,017 |
) |
|
|
(20.9 |
) |
Number of shareholders (2) |
|
|
4,500 |
|
|
|
5,650 |
|
|
|
6,862 |
|
|
|
8,400 |
|
|
|
7,100 |
|
|
|
(1,150 |
) |
|
|
(20.4 |
) |
Market capitalization (in millions) (3) |
|
$ |
531,000 |
|
|
$ |
550,000 |
|
|
$ |
484,000 |
|
|
$ |
443,000 |
|
|
$ |
724,000 |
|
|
$ |
(19,000 |
) |
|
|
(3.5 |
) |
Return on average equity (4) |
|
|
6.5 |
% |
|
|
3.2 |
% |
|
|
4.0 |
% |
|
|
(1.1 |
)% |
|
|
8.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
(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. |
|
(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 2006 as well as the locations designated as
held-for-sale during fiscal year 2006 but not yet sold, as discontinued operations net of
related income taxes. |
|
NM |
|
Not meaningful |
|
N/A |
|
Not applicable |
Page 20 of 70
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 2006 of 293 locations (119 additional leased and owned locations
offset by 363 lost or sold locations and 49 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
decline in the number of managed facilities in 2006 of 51 locations (279 additional managed
locations offset by 330 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, 2006, the following involve a higher
degree of judgment and complexity:
Impairment of Long-Lived Assets and Goodwill
As of September 30, 2006, the Companys long-lived assets were comprised primarily of $295.9
million of property, equipment and leasehold improvements and $72.0 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, 2006, the Company had $232.1
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 includes 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 loss of
approximately $3.6 million ($3.2 million in continuing operations and $0.4 million in discontinued
operations) during the fiscal year ended September 30, 2006. 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
changes in interest rates, which could 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, 2005, the
Company recorded $6.6 million of impairment charges related to long-lived assets in continuing
operations and $7.0 million of impairment charges related to long-lived assets in discontinued
operations. The Company also recorded $0.5 million in impairment charges related to Goodwill in
continuing operations for fiscal year 2005.
Contract and Lease Rights
Page 21 of 70
As of September 30, 2006, the Company had $72.0 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, 2006, the Company had $64.0 million of trade receivables, including
management accounts receivable and accounts receivable other. Additionally, the Company had a
recorded allowance for doubtful accounts of $3.0 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 and Mid-Atlantic United States, could have an impact on the collection of existing
receivable balances or future allowance considerations.
Lease Termination Costs
The Company recognizes lease termination costs related to disposal activities in accordance
with SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. 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.
Self-Insurance Liabilities
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 recognition of liabilities 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 a liability. 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. Total discounted self-insurance liabilities at
September 30, 2006 and September 30, 2005 were $22.6 million and $24.6 million, respectively,
reflecting a 4.5% discount rate. The related undiscounted amounts at such dates were $25.0 million
and $27.7 million, respectively.
Classification as Continuing or Discontinuing Operations
In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, the results of operations (including the gain or loss on sale and any recognized asset
impairment) of long-lived assets which qualify as a component of an entity that either have been
disposed of or are classified as held for sale shall be reported in discontinued operations if (i)
the operations and cash flows of the component have been, or will be, eliminated from operations of
the Company as a result of the disposal transaction and (ii) the Company will not have any
significant continuing involvement in the operations of the component after the disposal
transaction. The net property-related gains noted above have been classified in continuing
operations as the individual disposal transactions did not meet the SFAS No. 144 and EITF 03-13
criteria for classification as discontinued operations primarily due to the expected retention of
certain cash flows from assets disposed. If managements assumptions regarding the timing and
amount of such retained cash flows change in the future, the net property
gain (loss) recognized in continuing operations, along with the results of operations related
to such assets, may need to be reclassified to discontinued operations.
Income Taxes
The Company uses the asset and liability method of SFAS No. 109, Accounting for Income Taxes,
to account for income
Page 22 of 70
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
2025. 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 Company will be required to adjust its deferred tax valuation
allowances. The valuation allowance was increased during 2006 and 2005 to reflect net operating loss
carryforwards 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.
Results of Operations
Unless otherwise indicated, the following discussion relates to continuing operations.
Year Ended September 30, 2006 Compared to Year Ended September 30, 2005
Parking revenues in fiscal year 2006 decreased to $522.5 million from $537.7 million in fiscal
year 2005, a decrease of $15.2 million, or 2.8%. The decrease of $15.2 million is due to decreases
of $57.3 million due to closed locations; partially offset by an increase of $11.9 million related
to contracts converted from leased to management deals, an increase of $8.5 million in new
locations and an increase in same store sales of $21.7 million.
Management contract and other revenues (excluding reimbursement of management contract
expenses) increased in fiscal year 2006 to $119.0 million from $115.1 million in fiscal year 2005,
an increase of $3.9 million, or 3.4%. The increase was primarily due to higher management fees.
Cost of parking in fiscal year 2006 decreased to $478.4 million or 91.5% of parking revenues
from $491.8 million or 91.5% of parking revenues in fiscal year 2005, a decrease of $13.4 million,
or 2.7%. The decrease was due primarily to a reduction in the number of operating locations,
including elimination of several unprofitable locations, and was composed of decreases of $10.2
million in rent expense, $1.9 million in repairs and maintenance, $1.4 million in insurance claims
expense, $1.3 million in snow removal; partially offset by a $0.9 million increase in professional
services and $0.5 million increase in other expenses.
Cost of management contracts in fiscal year 2006 decreased to $47.5 million from $60.3 million
in fiscal year 2005, a decrease of $12.8 million or 21.2%. The cost of management contracts, as a
percentage of management contract and other revenues, excluding reimbursement of management
contract expenses, was 39.9% in fiscal year 2006 compared to 52.4% in fiscal year 2005. The
decrease was primarily caused by decreases of $2.5 million in group insurance claims expense, $5.9
million in other insurance related costs and a reduction of $4.4 million in bad debt expense.
General and administrative expenses decreased to $79.6 million in 2006 from $83.0 million in
2005, a decrease of $3.3 million, or 4.0%. This decrease is due to decreases of $1.1 million in
deferred compensation, $0.7 million in payroll related expenses, $0.6 million in travel and
entertainment, $0.9 million in professional services, and $1.9 million in other expenses; partially
offset by an increase of $1.9 million in supplies. General and administrative expenses as a
percentage of total revenues (excluding reimbursement of management contract expenses) decreased to
12.4% for fiscal 2006 compared to 12.7% for fiscal 2005.
Net property-related gains for fiscal year 2006 were $31.9 million compared to $53.6 million
in fiscal year 2005. Net property-related gains for the fiscal year ended September 30, 2006 of
$31.9 million was comprised of gains on sale of property of $35.1 million ($12.0 million in
Houston, $ 9.1 million in Baltimore, $6.2 million in
Chicago, $2.4 million from the sale of our
interest in our Germany partnership, $1.8 million in Atlanta, $1.4 million in Denver, $1.4 million
in West Palm Beach, $1.3 million in Nashville, $0.9 million in Dallas, and $0.7 million in
miscellaneous property sales; partially offset by a loss of
$0.9 million in Pittsburgh and $1.2 million in London); offset by
$3.2 million of impairments of leasehold improvements, contract rights and other intangible
assets primarily in Segment Two, Segment Four, Segment Five, and Other. The $53.6 million gain in 2005 was
comprised of a gain on the sale of property of $60.2 million, comprised primarily of ($38.2 million
on the sale of a lease in New York, $9.1 million on the sale of property in New York, $5.5 million
in Missouri, $2.7 million in Denver, $1.9 million in Seattle, $1.9 million in Chicago, and $0.9
million related to other miscellaneous sales); offset by $6.6 million of impairments of leasehold
improvements, contract rights and other intangible assets primarily
in Segment One, Segment Two, Segment Three, Segment Four, Segment
Seven and Segment Other. The impairment charges recognized in fiscal year 2006 and 2005 were
based on estimated fair values using projected cash flows of the applicable parking facility
discounted at the Companys average cost of funds.
Page 23 of 70
In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, the results of operations (including the gain or loss on sale and any recognized asset
impairment) of long-lived assets which qualify as a component of an entity that either have been
disposed of or are classified as held for sale shall be reported in discontinued operations if (i)
the operations and cash flows of the component have been, or will be, eliminated from operations of
the Company as a result of the disposal transaction and (ii) the entity will not have any
significant continuing involvement in the operations of the component after the disposal
transaction. To the extent that the net property-related gains have been classified in continuing
operations, management concluded that the individual disposal transactions did not meet the SFAS
No. 144 and EITF 03-13 criteria for classification as discontinued operations primarily due to the
expected retention of certain cash flows from assets disposed. If managements assumptions
regarding the timing and amount of such retained cash flows change in the future, the net property
gain (loss) recognized in continuing operations, along with the results of operations related to
such assets, may need to be reclassified to discontinued operations.
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.
Interest income in fiscal year 2006 decreased to $1.2 million from $4.7 million in fiscal year
2005. Interest expense decreased in fiscal year 2006 to $11.5 million from $13.7 million in fiscal
year 2005 due primarily to a decrease in the average balance outstanding in 2006. The weighted
average balance outstanding for the Companys debt obligations and subordinated convertible
debentures was $222.8 million during the fiscal year ended September 30, 2006, at a weighted
average interest rate of 6.3% compared to a weighted average balance outstanding of $261.9 million
at a weighted average rate of 6.3% during the fiscal year ended September 30, 2005. Deferred
finance costs were included in the calculation of the weighted average interest rate.
The Company recognized a $1.2 million loss on derivative instruments equal to the fair market
value of both interest rate swaps at September 30, 2006. For September 30, 2005, the Company
recognized a $3.0 million gain on derivative instruments equal to the fair market value of both
interest rate swaps, 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 earnings (losses) was $1.2 million in fiscal year 2006
compared to a loss of $0.5 million in fiscal year 2005. The increase is primarily related to
improved operating results due to the sale of the Companys 50% owned, non-consolidated affiliate
in Mexico. During the fourth quarter of 2005, the Company signed a letter of intent 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 letter of intent, the Company recognized a $1.7 million
impairment charge on its investment in the joint venture during the fourth quarter of 2005. The
Company finalized the sale of its interest in Mexico in fiscal 2006.
The Companys effective income tax rate on earnings from continuing operations before income
taxes was 36.3% in fiscal year 2006 compared to 45.6% in fiscal year 2005. The decrease in the
effective tax rate is primarily attributable to the effect of a decrease in the deferred income tax
valuation allowance related to certain state operating losses. The Companys effective tax rate is
expected to be approximately 38.0% before discontinued operations for fiscal year 2007. See note
13 to the consolidated financial statements for further discussion.
Included in operating earnings from discontinued operations for fiscal 2006 is income of $2.3
million from the settlement agreement with Rotala. Net property-related gains (losses) related to
discontinued operations the year ended September 30, 2006, includes a charge of $12.3 million
related to the disposal of the United Kingdom transport division, which consists of $10.2 million
in contract and lease buyouts associated with buses, routes and the depot, and $2.1 million for
severance related costs. All obligations related to the charge were paid in fiscal 2006, except
for $2.4 million relating to contract and lease buyouts which will be paid in fiscal 2007. Also
included in net property-related gains (losses) related to discontinued operations for the fiscal
2006 are gains of $11.3 million from the sale of properties which had been classified as Assets
Held for Sale. The
$11.3 million gain primarily relates to the sale of properties of $2.6 million in Atlanta, $2.1
million in Nashville, $1.9 million in Miami, $1.8 million in Chicago, $0.6 million in Roanoke, $0.5
million in Pittsburgh, $0.5 million in Charleston, $0.4 million in Little Rock, $0.3 million in San
Antonio, $0.2 million in Minneapolis, $0.1 million in Houston, and $0.3 million in miscellaneous
properties. The Companys 2005 and 2004 consolidated statements of income and cash flows have been
reclassified to reflect the operations and cash flows related to discontinued operations through
September 30, 2006. Due to the nature of the Companys business and the nature of the
transactions, the Company is not able to estimate the disclosures required by Emerging Issues Task
Force (EITF) No. 03-13.
Page 24 of 70
Year Ended September 30, 2005 Compared to Year Ended September 30, 2004
Parking revenues in fiscal year 2005 decreased to $537.2 million from $560.9 million in fiscal
year 2004, a decrease of $23.2 million, or 4.1%. The decrease resulted from the conversion of
certain contracts from lease agreements to management agreements which totaled $12.6 million and
closed locations of $29.2 million, partially offset by $9.7 million in revenues from new locations.
The Company experienced an increase in same store sales of $8.9 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 $115.1 million from $122.0 million in fiscal year 2004,
a decrease of $7.0 million, or 5.7%. The majority of the decrease is due to a decrease of $7.1
million for lots closed during the year, a decrease in same store sales of $3.4 million, offset by
new locations and other of $3.5 million.
Cost of parking in fiscal year 2005 decreased to $491.8 million or 91.5% of parking revenues
from $510.2 million or 91.0% of parking revenues in fiscal year 2004, a decrease of $18.4 million,
or 3.6%. The decrease is primarily due to a decrease of $6.7 million in payroll expense, a
decrease of $9.1 million in rent expense, a decrease of $2.0 million in depreciation expense and
$0.6 million in other expenses.
Cost of management contracts in fiscal year 2005 increased to $60.3 million from $57.8 million
in fiscal year 2004 an increase of $2.5 million or 4.3%. The cost of management contracts, as a
percentage of management contract and other revenues, excluding reimbursement of management
contract expenses, was 52.4% in fiscal year 2005 compared to 47.3% in fiscal year 2004. The
increase in cost was primarily caused by an increase of $2.9 million in bad debt expense, and an
increase of $2.1 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 $0.7 million in
other expenses.
General and administrative expenses increased to $83.0 million in 2005 from $71.5 million in
2004, an increase of $11.4 million, or 16.0%. This increase is due to an increase of $3.7 million
in severance expense and other payroll related expenses, and $6.0 million in professional fees
related primarily to Sarbanes-Oxley compliance efforts, $0.7 million in travel expenses and $1.0
million in other expenses. General and administrative expenses increased as a percentage of total
revenue (excluding reimbursement of management contract expenses) to 12.7% in 2005 from 10.5% in
2004.
Net property-related gains for fiscal year 2005 were $53.6 million compared to $7.2 million in
fiscal year 2004. The $53.6 million gain in 2005 was comprised of a gain on the sale of property
of $60.2 million, comprised primarily of ($38.2 million on the sale of a lease in New York, $9.1
million on the sale of property in New York, $5.5 million gain in Missouri, $2.7 million in Denver,
$1.9 million in Seattle, $1.9 million Chicago, and $0.9 million related to other miscellaneous
sales); offset by $6.6 million of impairments of leasehold improvements, contract rights and other
intangible assets primarily in Segment One, Segment Two, Segment
Three, Segment Four, Segment Seven, and Segment Other. The $7.2
million gain in 2004 was comprised of a gain on sale of property of
$9.6 million comprised of ($5.7 million
gain on sale of property in Providence, $1.8 million in New York, $1.1 million in London, $0.9
million in Dallas and $0.1 million in miscellaneous property sales); offset by $2.4 million of
impairments of leasehold improvements, contract rights and other
intangible assets primarily in Segment One, Segment Four, and Segment
Other. 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.
In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, the results of operations (including the gain or loss on sale and any recognized
asset impairment) of long-lived assets which qualify as a component of an entity that either have
been disposed of or are classified as held for sale shall be reported in discontinued operations if
(i) the operations and cash flows of the component have been, or will be, eliminated from
operations of the Company as a result of the disposal transaction and (ii) the entity will not have
any significant continuing involvement in the operations of the component after the disposal
transaction. The net property-related gains noted above have been classified in
continuing operations as the individual disposal transactions did not meet the SFAS No. 144
and EITF 03-13 criteria for classification as discontinued operations primarily due to the expected
retention of certain cash flows from assets disposed. If managements assumptions regarding the
timing and amount of such retained cash flows change in the future, the net property gain (loss)
recognized in continuing operations, along with the results of operations related to such assets,
may need to be reclassified to discontinued operations.
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 $20.3 million in fiscal
year 2004 due primarily to a decrease in the average
Page 25 of 70
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 earnings (losses) 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 second 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 45.6% in fiscal year 2005 compared to 43.6% in fiscal year 2004. The decrease in the
effective tax rate is primarily attributable to an increase in jobs credit. See note 13 to the
consolidated financial statements for further discussion.
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 $17.9 million.
Included in discontinued operations in 2005 is $1.4 million of losses from the sale of property and
$7.9 million of impairment charges related to certain properties held for sale and loss from
discontinued operations of $7.4 million.
Quarterly Results
The quarterly 2006 and 2005, as reported 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 (amounts in thousands, except per share data).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 Quarters |
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
December 31 |
|
|
March 31 |
|
|
June 30 |
|
|
September 30 |
|
Total revenues, excluding reimbursement
of management contract expenses |
|
$ |
160,384 |
|
|
$ |
158,152 |
|
|
$ |
162,449 |
|
|
$ |
160,568 |
|
Property related gains, net |
|
|
22,914 |
|
|
|
(1,159 |
) |
|
|
4,542 |
|
|
|
5,603 |
|
Operating earnings |
|
|
30,577 |
|
|
|
4,076 |
|
|
|
15,780 |
|
|
|
17,506 |
|
Earnings from continuing operations,
net of tax |
|
|
16,360 |
|
|
|
95 |
|
|
|
8,257 |
|
|
|
8,737 |
|
Discontinued operations, net of tax |
|
|
1,595 |
|
|
|
1,892 |
|
|
|
(9,361 |
) |
|
|
289 |
|
Net earnings |
|
|
17,955 |
|
|
|
1,987 |
|
|
|
(1,104 |
) |
|
|
9,026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing
operations, net of tax per share basic |
|
$ |
0.50 |
|
|
$ |
0.00 |
|
|
$ |
0.26 |
|
|
$ |
0.27 |
|
Discontinued operations, net of tax |
|
|
0.05 |
|
|
|
0.06 |
|
|
|
(0.29 |
) |
|
|
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings basic |
|
$ |
0.55 |
|
|
$ |
0.06 |
|
|
$ |
(0.03 |
) |
|
$ |
0.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing
operations, net of tax per share dilutive |
|
$ |
0.50 |
|
|
$ |
0.00 |
|
|
$ |
0.26 |
|
|
$ |
0.27 |
|
Discontinued operations, net of tax |
|
|
0.05 |
|
|
|
0.06 |
|
|
|
(0.29 |
) |
|
|
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings dilutive |
|
$ |
0.55 |
|
|
$ |
0.06 |
|
|
$ |
(0.03 |
) |
|
$ |
0.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 26 of 70
The fluctuations in operating earnings by quarter for fiscal year 2006 are primarily
related to the normal seasonality and the property related gains (losses), net. During the fourth
quarter of fiscal year 2006, the property related gains were primarily related to $7.6 million gain
on the sale of properties, partially offset by impairments of $2.0 million.
Fourth quarter 2006 results from continuing operations, net of tax were lower than the fourth
quarter of 2005 due primarily to a $20.8 million gain, net of tax, on the sale of a lease right in
New York during the fourth quarter of 2005. During the fourth quarter of 2006, the Company
increased its parking margin by 1.1% over the fourth quarter of 2005. The Company also increased
the Management contract margin by 18.5% over the previous year, due to the increase in management
fees due to the divestiture of unprofitable locations and lower bad debt expense than the fourth
quarter of 2005. General and administrative expenses were lower due
to a reduction of $2.2 million of
professional fees as a result of fewer consultants and professionals and $0.5 million for travel
and entertainment needed for SOX and the investigation in the United Kingdom.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 Quarters |
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
December 31 |
|
|
March 31 |
|
|
June 30 |
|
|
September 30 |
|
Total revenues, excluding reimbursement
of management contract expenses |
|
$ |
167,488 |
|
|
$ |
161,019 |
|
|
$ |
162,801 |
|
|
$ |
161,457 |
|
Property related gains, net |
|
|
1,881 |
|
|
|
14,755 |
|
|
|
(1,149 |
) |
|
|
37,655 |
|
Operating earnings |
|
|
12,605 |
|
|
|
15,199 |
|
|
|
4,260 |
|
|
|
38,849 |
|
Earnings from continuing operations, net of
tax |
|
|
6,097 |
|
|
|
7,437 |
|
|
|
393 |
|
|
|
18,132 |
|
Discontinued operations, net of tax |
|
|
(3,226 |
) |
|
|
113 |
|
|
|
(5,729 |
) |
|
|
(8,947 |
) |
Net earnings |
|
|
2,871 |
|
|
|
7,550 |
|
|
|
(5,336 |
) |
|
|
9,185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing
operations, net of tax per share basic |
|
$ |
0.17 |
|
|
$ |
0.20 |
|
|
$ |
0.01 |
|
|
$ |
0.50 |
|
Discontinued operations, net of tax |
|
|
(0.09 |
) |
|
|
0.01 |
|
|
|
(0.15 |
) |
|
|
(0.26 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings basic |
|
$ |
0.08 |
|
|
$ |
0.21 |
|
|
$ |
(0.14 |
) |
|
$ |
0.24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing
operations, net of tax per share dilutive |
|
$ |
0.17 |
|
|
$ |
0.20 |
|
|
$ |
0.01 |
|
|
$ |
0.49 |
|
Discontinued operations, net of tax |
|
|
(0.09 |
) |
|
|
0.01 |
|
|
|
(0.15 |
) |
|
|
(0.25 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings dilutive |
|
$ |
0.08 |
|
|
$ |
0.21 |
|
|
$ |
(0.14 |
) |
|
$ |
0.24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidity and Capital Resources
At
September 30, 2006, the Company had a working capital deficit of
$25.5 million. The
Company does not believe that this is a liquidity issue due to the Company having $171.3 million in
unused lines of credit.
Net
cash used by operating activities for fiscal year 2006 was $2.1
million, a decrease of $5.3
million from net cash provided by operating activities of $3.2 million during fiscal year 2005. The
primary factor which contributed to this change was the decrease in
revenue in 2006 and changes in working capital components.
Net cash provided by investing activities was $105.8 million for fiscal year 2006 compared to
$101.7 million of net cash provided by investing activities in fiscal year 2005. This change was
primarily due to an increase in proceeds from notes receivable during
2006.
Net cash used by financing activities for fiscal year 2006 was $85.7 million compared to cash
used of $106.6 million in fiscal year 2005. Net cash used by financing activities in fiscal year
2006 primarily consisted of purchase of common stock of $75.3 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
Page 27 of 70
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 $171.3 million at September 30, 2006, which is a net of
$53.7 million of stand-by letters of credit.
The Company completed an amendment to the Credit Facility as of March 31, 2006. The main
purpose of the amendment was to modify the financial covenant target requirements. The
modifications affected the leverage ratio, senior leverage ratio and fixed charge coverage ratio.
The new leverage targets step down over the next several quarters and will remain at 3.50 for the
leverage ratio and 2.50 for the senior leverage ratio until loan maturity.
The Credit Facility bears interest at LIBOR plus a tier-based margin dependent upon certain
financial ratios. There are separate pricing tiers for the revolving loan and term loan. The
weighted average margin as of September 30, 2006 was 200 basis points. The amount outstanding under
the Companys Credit Facility was $73.7 million consisting of a $73.7 million term loan, with an
overall weighted average interest rate of 3.7% as of September 30, 2006. The term loan is required
to be repaid in quarterly payments of $187,500 through March 2008 and quarterly payments of $9.1
million from June 2008 through March 2010. The revolving loan is required to be repaid February
2008. The aggregate availability under the Credit Facility was $171.3 million at September 30,
2006, which is net of $53.7 million of stand-by letters of credit. During the first quarter of
2006, the Company repurchased a total of 4,859,674 shares for $75.3 million using the availability
under 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, 2006 was
3.7%. The 3.7% rate includes all outstanding LIBOR contracts and swap agreements at September 30,
2006. 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 $73.7 million at September 30, 2006.
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.
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 is measured against specified targets. The Company was in compliance
with the Credit Facilitys covenants at September 30, 2006.
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
Page 28 of 70
Company expects such capital expenditures for fiscal year 2007 to be
approximately $10 to $13 million.
Historically, the Company has paid dividends on its common stock and expects to pay dividends
in the future. Common stock dividends of $1.9 million were paid during fiscal year 2006.
The following tables summarize the Companys total contractual obligations and commercial
commitments as of September 30, 2006 (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 |
|
$ |
90,487 |
|
|
$ |
2,862 |
|
|
$ |
60,003 |
|
|
$ |
27,496 |
|
|
$ |
126 |
|
Subordinated debentures |
|
|
78,085 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,085 |
|
Operating leases |
|
|
958,503 |
|
|
|
199,360 |
|
|
|
266,451 |
|
|
|
163,539 |
|
|
|
329,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contractual cash obligations |
|
$ |
1,127,075 |
|
|
$ |
202,222 |
|
|
$ |
326,454 |
|
|
$ |
191,035 |
|
|
$ |
407,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of commitment expiration per period |
|
|
|
|
|
|
|
Less than |
|
|
1-3 |
|
|
3-5 |
|
|
After 5 |
|
|
|
Total |
|
|
1 Year |
|
|
Years |
|
|
Years |
|
|
Years |
|
Unused lines of credit |
|
$ |
171,305 |
|
|
$ |
|
|
|
$ |
171,305 |
|
|
$ |
|
|
|
$ |
|
|
Unused lines of credit as of September 30, 2006 are reduced by $53.7 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 4.3%, 2.8% and 5.8% of total revenues
(excluding reimbursement of management contract expenses) for the years ended September 30, 2006,
2005 and 2004, respectively. For the year ended September 30, 2006, revenues from operations in the
United Kingdom and Canada represented 24.9% and 38.9%, respectively, of total revenues generated by
foreign operations, excluding reimbursement of management contract expenses. Additionally, as of
September 30, 2006, the Company operated through joint ventures in Poland, Greece, 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 has entered into certain foreign currency forward contracts to mitigate the
foreign exchange risk related to various intercompany notes receivable from the Companys
wholly-owned subsidiary in the United Kingdom. These forward contracts are expected to offset the
transactional gains and losses on the intercompany notes denominated in British pounds. The gains
and losses related to such contracts and the transactional gains and losses related to the
intercompany notes recognized during fiscal 2006 were not significant. The notional amount of the
open contracts at September 30, 2006 totaled approximately $20.2 million. The fair value of the foreign currency forward contracts at September 30, 2006
was a $390 thousand liability. See note 1 to our consolidated financial statements.
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, 2006, 2005 and 2004 and does not expect inflation to have a material effect on its overall
operations in fiscal year 2007.
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 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
Page 29 of 70
of the award. SFAS 123R was effective for the
Company beginning October 1, 2005. See Note 14 to the Consolidated Financial Statements for
additional information.
In March 2005, the FASB issued FASB Interpretation No. 47, Accounting for Conditional Asset
Retirement Obligations, an interpretation of FASB Statement No. 143 (FIN No. 47). FIN No. 47
clarifies that the term, conditional asset retirement obligation as used in SFAS No. 143,
Accounting for Asset Retirement Obligations, refers to a legal obligation to perform an asset
retirement activity in which the timing and/or method of settlement are conditional upon a future
event that may or may not be within the control of the entity. Even though uncertainty about the
timing and/or method of settlement exists and may be conditional upon a future event, the
obligation to perform the asset retirement activity is unconditional. Accordingly, an entity is
required to recognize a liability for the fair value of a conditional asset retirement obligation
if the fair value of the liability can be reasonably estimated. Uncertainty about the timing
and/or method of settlement of a conditional asset retirement obligation should be factored into
the measurement of the liability when sufficient information exists. The fair value of a liability
for the conditional asset retirement obligation should be recognized when incurred generally upon
acquisition, construction, or development or through the normal operation of the asset. SFAS No.
143 acknowledges that in some cases, sufficient information may not be available to reasonably
estimate the fair value of an asset retirement obligation. FIN No. 47 also clarifies when an
entity would have sufficient information to reasonably estimate the fair value of an asset
retirement obligation. FIN No. 47 is effective no later than the end of fiscal years ending after
December 15, 2005. The adoption of this pronouncement did not have a material effect on the
Companys consolidated financial statements for fiscal year 2006.
In June 2005, the Emerging Issues Task Force (EITF) reached consensus in EITF 04-5,
Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited
Partnership or Similar Entity When the Limited Partners Have Certain Rights, to provide guidance on
how general partners in a limited partnership should determine whether they control a limited
partnership and therefore should consolidate it. The EITF agreed that the presumption of general
partner control would be overcome only when the limited partners have either of two types of
rights. The first type, referred to as kick-out rights, is the right to dissolve or liquidate the
partnership or otherwise remove the general partner without cause. The second type, referred to as
participating rights, is the right to effectively participate in significant decisions made in the
ordinary course of the partnerships business. The kick-out rights and the participating rights
must be substantive in order to overcome the presumption of general partner control. The consensus
is effective for general partners of all new limited partnerships formed and for existing limited
partnerships for which the partnership agreements are modified subsequent to the date of FASB
ratification (June 29, 2005). For existing limited partnerships that have not been modified, the
guidance in EITF 04-5 is effective no later than the beginning of the first reporting period in
fiscal years beginning after December 15, 2005. The Company determined that the impact of the
adoption of this pronouncement did not have a material effect on its consolidated financial
statements for fiscal year 2006.
In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes, an interpretation of FASB Statement No. 109 (FIN No. 48). FIN No. 48 clarifies the
accounting for uncertainty in income taxes recognized in an enterprises financial statements in
accordance with FASB Statement No. 109, Accounting for Income Taxes. This Interpretation
prescribes a recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax
position taken or expected to be taken in a tax return. This Interpretation also provides guidance
on derecognition, classification, interest and penalties, accounting in interim periods,
disclosure, and transition. This Interpretation is effective for fiscal years beginning after
December 15, 2006. The Company has not determined the impact, if any, that the adoption of this
pronouncement will have to its consolidated financial statements.
In June 2006, the EITF reached a consensus on Issue No. 06-03, How Taxes Collected from
Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement
(That Is, Gross versus Net Presentation) (EITF 06-03). EITF 06-03 concludes that (a) the scope of
this Issue includes any tax assessed by a governmental authority that is directly imposed on a
revenue-producing transaction between a seller and a customer and (b) that the presentation of
taxes within the scope on either a gross or a net basis is an accounting policy decision that
should be disclosed under Opinion 22. Furthermore, for taxes reported on a gross basis, a company
should disclose the amounts of those taxes in interim and annual financial statements for each
period for which an income statement is presented. The consensus is effective, through
retrospective application, for periods beginning after December 15, 2006. The Company has not
determined the impact, if any, that the adoption of this pronouncement will have to its
consolidated financial statements.
In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair
Value Measurements. This Standard defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles and expands disclosures about fair value
measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007 and interim periods within those fiscal years. The Company has not
determined the impact, if any, that the adoption of this pronouncement will have to its
consolidated financial statements.
Page 30 of 70
In September 2006, the SEC issued Staff Accounting Bulletin No. 108 (SAB 108), Considering the
Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements. SAB 108 provides guidance regarding the consideration given to prior year
misstatements when determining materiality in current financial statements, and is effective for
fiscal years ending after November 15, 2006. The Company has not determined the impact SAB 108
will have on its consolidated financial statements.
In November 2006, the Emerging Issues Task Force reached a consensus on Issue No. 06-04,
Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split of
Endorsement Split-Dollar Life Insurance Arrangements, (EITF 06-04). EITF 06-04 reached a
consensus that for a split-dollar life insurance arrangement that provides a benefit to an employee
that extends to postretirement periods, an employer should recognize a liability for future
benefits in accordance with FAS No. 106 or Opinion 12 (depending upon whether a substantive plan is
deemed to exist) based on the substantive agreement with the employee. This consensus is effective
for fiscal years beginning after December 15, 2006. The Company has not determined the impact, if
any, that the adoption of this pronouncement will have to its consolidated financial statements.
In November 2006, the Emerging Issues Task Force reached a consensus on Issue No.06-05,
Accounting for Purchases of Life Insurance-Determining the Amount That Could Be Realized in
Accordance with FASB Technical Bulletin No. 85-04, (EITF 06-05). EITF 06-05 reached a
consensus that a policyholder should consider any additional amounts included in the contractual
terms of the policy in determining the amount that could be realized under the insurance contract.
The Task Force agreed that contractual limitations should be considered when determining the
realizable amounts. Those amounts that are recoverable by the policyholder at the discretion of
the insurance company should be excluded from the amount that could be realized. The Task Force
also agreed that fixed amounts that are recoverable by the policyholder in future periods in excess
of one year from the surrender of the policy should be recognized at their present value. The Task
Force also reached a consensus that a policyholder should determine the amount that could be
realizable under the life insurance contract assuming the surrender of an individual-life by
individual policy (or certificate by certificate in a group policy). The Task Force also noted
that any amount that is ultimately realized by the policyholder upon the assumed surrender of the
final policy (or final certificate in a group policy) shall be included in the amount that could be
realized under the insurance contract. This consensus is effective for fiscal years beginning
after December 15, 2006. The Company has not determined the impact, if any, that the adoption of
this pronouncement will have to its consolidated financial statements.
In September 2006, FASB issued FASB Staff Position (FSP) No. AUG AIR -01, Accounting for
Planned Major Maintenance Activities, (FSP No. AUG AIR-01). FSP AUG AIR-01 prohibits the use of
the accrue-in-advance method of accounting for planned major maintenance activities in annual and
interim financial reporting periods. An entity shall apply the same method of accounting for
planned major maintenance activities in annual and interim financial reporting periods. The
guidance in this FSP shall be applied to the first fiscal year beginning after December 15, 2006.
The Company has not determined the impact, if any, that the adoption of this FSP will have to its
consolidated financial statements.
In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158,
Employers Accounting for Defined Benefit Pension and Other Postretirement Plans an amendment of
FASB Statements No. 87, 88, 106, and 132R. This Standard requires an employer to recognize the
overfunded or underfunded status of a defined benefit postretirement plan (other than a
multiemployer plan) as an asset or liability in its statement of financial position and to
recognize changes in that funded status in the year in which the changes occur through
comprehensive income of a business entity. This statement requires an employer that is a business
entity and sponsors one or more single-employer defined benefit plans to (i) recognize the funded
status of a benefit plan; (ii) recognize as a component of other comprehensive income, net of tax,
the gains or losses and prior service costs or credits that arise during the period but are not
recognized as components of net periodic benefit cost pursuant to FASB Statement No. 87,
Employerss Accounting for Pensions, or No. 106, Employers Accounting for Postretiremnet Benefits
Other Than Pension; (iii) measure defined benefit plan assets and obligations as of the date of
the employers fiscal year-end statement of financial position; and (iv) disclose in the notes to
the financial statements additional information about certain effects on net periodic benefit cost
for the next fiscal year that arise from delayed recognition of the gains or losses, prior service
costs or credits, and transition asset or obligation. SFAS 158 is effective for financial
statements issued for fiscal years ending after December 15,
2006; except for the measurement date provisions, which shall be
effective for fiscal years ending after December 15, 2008. The Company has not determined the impact, if any, that the adoption of this
pronouncement will have to its consolidated financial statements.
Page 31 of 70
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, 2006, the Company had $73.7 million of variable rate
debt outstanding under the Credit Facility priced at LIBOR plus a weighted average margin of 200
basis points. The Credit Facility is payable in quarterly installments of $187,500 through March
2008 and quarterly payments of $9.1 million from June 2008 through March 2010. The Company
anticipates paying the scheduled quarterly payments from operating cash flows.
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 combined notional
amount of $87.5 million. Both transactions swapped the Companys floating LIBOR interest rates for
fixed interest of 2.45% until June 30, 2007.
The weighted average interest rate on the Companys Credit Facility at September 30, 2006 was
3.7%. The 3.7% rate includes all outstanding LIBOR contracts and swap agreements at September 30,
2006. An increase (decrease) in LIBOR of 1% would not result in a significant 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 $73.7 million at September
30, 2006.
In March 2000, a limited liability company, of which the Company is the sole shareholder,
purchased a parking structure for $19.6 million and financed $13.3 million of the purchase price
with a five-year note bearing interest at one-month floating LIBOR plus 162.5 basis points. 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
at a floating basis based on LIBOR plus 162.5 basis points. The Company entered into an interest
rate cap agreement on the underlying $12.7 million loan in October 2005. This agreement limits the
Companys exposure to the floating interest rate by paying the Company for interest paid in excess
of 5.50%.
Foreign Currency Exposure
As of September 30, 2006, the Company has approximately GBP 3.7 million (USD $7.0 million) of
cash and cash equivalents denominated in British pounds, EUR 2.7 million (USD $3.4 million)
denominated in euros, CAD 1.1 million (USD $1.0 million) denominated in Canadian dollars, and USD
$1.6 million denominated in various other foreign currencies.
The Company also has EUR 0.8 million (USD $1.0 million) of notes payable denominated in euros
and GBP 10.8 million (USD $20.2 million) of intercompany notes receivable and notes payable
denominated in British pounds at September 30, 2006. These intercompany notes bear interest at a
floating rate of 5.3% as of September 30, 2006, and require monthly principal and interest payments
through 2012. The Company has entered into certain foreign currency forward contracts to mitigate
the foreign exchange risk related to various intercompany notes receivable from the Companys
wholly-owned subsidiary in the United Kingdom. These forward contracts are expected to offset the
transactional gains and losses on the intercompany notes denominated in British pounds. The gains
and losses related to such contracts and the transactional gains and losses related to the
intercompany notes recognized during fiscal 2006 were not significant. The notional amount of the
open contracts at September 30, 2006 totaled approximately $20.2
million. See note 1 to our consolidated
financial statements. The fair value of the foreign currency forward contracts at September 30,
2006 was a $390 thousand liability.
Based on the Companys overall currency rate exposure as of September, 2006, management does
not believe a near-term change in currency rates, based on historical currency movements, would
materially affect the Companys consolidated financial statements.
Page 32 of 70
Item 8. Financial Statements and Supplementary Data
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
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|
|
|
|
PAGE |
|
|
|
34 |
|
|
|
|
35 |
|
|
|
|
36 |
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|
|
|
37 |
|
|
|
|
38 |
|
|
|
|
40 |
|
|
|
|
64 |
|
|
|
|
64 |
|
Page 33 of 70
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, 2006 and 2005, and the related consolidated statements of
operations, shareholders equity and comprehensive income, and cash flows for each of the years in
the three-year period ended September 30, 2006. In connection with our audits of the consolidated
financial statements, we also have audited financial statement Schedule II Valuation Qualifying
Accounts for each of the years in the three year period ended September 30, 2006, and financial
statement schedule IV Mortgage Loans on Real Estate as of September 30, 2006. 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, 2006 and 2005, and the results of their operations and their cash flows for each of
the years in the three-year period ended September 30, 2006, 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.
As discussed in note 14 to the consolidated financial statements, in fiscal 2006 the Company
changed its method of accounting for share-based payments.
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, 2006, based on criteria established
in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO), and our report dated December 14, 2006 expressed an unqualified opinion
on managements assessment of, the effective operation of, internal control over financial
reporting as of September 30, 2006.
/s/ KPMG LLP
Nashville, Tennessee
December 14, 2006
Page 34 of 70
CENTRAL PARKING CORPORATION and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
Amounts in thousands, except share and per share data |
|
2006 |
|
|
2005 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
44,689 |
|
|
$ |
26,055 |
|
Management accounts receivable, net of allowance for doubtful accounts of
$1,618 and $7,090 at September 30, 2006 and 2005, respectively |
|
|
47,747 |
|
|
|
51,931 |
|
Accounts receivable other, net of allowance for doubtful accounts of $1,234
and $2,685 at September 30, 2006 and 2005, respectively |
|
|
13,406 |
|
|
|
15,537 |
|
Current portion of notes receivable (including amounts due
from related parties of $165 in 2006 and $937 in 2005) and net of allowance for
doubtful accounts of $59 and $493 at September 30, 2006 and 2005, respectively |
|
|
3,913 |
|
|
|
5,818 |
|
Prepaid expenses |
|
|
12,306 |
|
|
|
8,630 |
|
Assets available for sale |
|
|
6,682 |
|
|
|
49,048 |
|
Refundable income taxes |
|
|
3,817 |
|
|
|
|
|
Deferred income taxes |
|
|
10,003 |
|
|
|
19,949 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
142,563 |
|
|
|
176,968 |
|
Available for sale securities |
|
|
4,909 |
|
|
|
4,606 |
|
Notes receivable, less current portion |
|
|
10,569 |
|
|
|
10,480 |
|
Property, equipment, and leasehold improvements, net |
|
|
295,923 |
|
|
|
327,391 |
|
Contract and lease rights, net |
|
|
71,995 |
|
|
|
80,064 |
|
Goodwill, net |
|
|
232,056 |
|
|
|
232,443 |
|
Investment in and advances to partnerships and joint ventures |
|
|
3,851 |
|
|
|
4,443 |
|
Other assets |
|
|
26,504 |
|
|
|
31,419 |
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
788,370 |
|
|
$ |
867,814 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Current portion of long-term debt and capital lease obligations |
|
$ |
2,862 |
|
|
$ |
1,764 |
|
Accounts payable |
|
|
88,672 |
|
|
|
83,604 |
|
Accrued payroll and related costs |
|
|
16,095 |
|
|
|
17,263 |
|
Accrued expenses |
|
|
33,937 |
|
|
|
35,546 |
|
Management accounts payable |
|
|
26,450 |
|
|
|
25,532 |
|
Income taxes payable |
|
|
|
|
|
|
12,389 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
168,016 |
|
|
|
176,098 |
|
Long-term debt and capital lease obligations, less current portion |
|
|
87,625 |
|
|
|
98,212 |
|
Subordinated convertible debentures |
|
|
78,085 |
|
|
|
78,085 |
|
Deferred rent |
|
|
21,547 |
|
|
|
22,113 |
|
Deferred income taxes |
|
|
6,184 |
|
|
|
19,565 |
|
Other liabilities |
|
|
20,388 |
|
|
|
21,152 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
381,845 |
|
|
|
415,225 |
|
|
|
|
|
|
|
|
|
|
Minority interest |
|
|
297 |
|
|
|
528 |
|
|
|
|
|
|
|
|
|
|
Shareholders equity: |
|
|
|
|
|
|
|
|
Common stock, $0.01 par value; 50,000,000 shares authorized,
32,154,128 and 36,759,155 shares issued and outstanding at
September 30, 2006 and 2005, respectively |
|
|
322 |
|
|
|
368 |
|
Additional paid-in capital |
|
|
180,091 |
|
|
|
251,784 |
|
Accumulated other comprehensive income, net |
|
|
3,398 |
|
|
|
3,432 |
|
Retained earnings |
|
|
223,122 |
|
|
|
197,182 |
|
Other |
|
|
(705 |
) |
|
|
(705 |
) |
|
|
|
|
|
|
|
Total shareholders equity |
|
|
406,228 |
|
|
|
452,061 |
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders Equity |
|
$ |
788,370 |
|
|
$ |
867,814 |
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
Page 35 of 70
CENTRAL PARKING CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
Amounts in thousands, except per share data |
|
2006 |
|
|
2005 |
|
|
2004 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Parking |
|
$ |
522,547 |
|
|
$ |
537,712 |
|
|
$ |
560,925 |
|
Management contract and other |
|
|
119,006 |
|
|
|
115,053 |
|
|
|
122,023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
641,553 |
|
|
|
652,765 |
|
|
|
682,948 |
|
Reimbursement of management contract expenses |
|
|
467,882 |
|
|
|
452,287 |
|
|
|
516,515 |
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
1,109,435 |
|
|
|
1,105,052 |
|
|
|
1,199,463 |
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of parking |
|
|
478,376 |
|
|
|
491,781 |
|
|
|
510,213 |
|
Cost of management contracts |
|
|
47,509 |
|
|
|
60,262 |
|
|
|
57,775 |
|
General and administrative |
|
|
79,629 |
|
|
|
82,952 |
|
|
|
71,540 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
605,514 |
|
|
|
634,995 |
|
|
|
639,528 |
|
Reimbursed management contract expenses |
|
|
467,882 |
|
|
|
452,287 |
|
|
|
516,515 |
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses |
|
|
1,073,396 |
|
|
|
1,087,282 |
|
|
|
1,156,043 |
|
|
|
|
|
|
|
|
|
|
|
Property-related gains, net |
|
|
31,900 |
|
|
|
53,596 |
|
|
|
7,161 |
|
Impairment of goodwill |
|
|
|
|
|
|
(454 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings |
|
|
67,939 |
|
|
|
70,912 |
|
|
|
50,581 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
1,238 |
|
|
|
4,739 |
|
|
|
4,880 |
|
Interest expense |
|
|
(15,708 |
) |
|
|
(17,891 |
) |
|
|
(20,276 |
) |
Gain (loss) on derivative instruments |
|
|
(1,172 |
) |
|
|
3,006 |
|
|
|
|
|
Equity in partnership and joint venture earnings (losses) |
|
|
1,234 |
|
|
|
(474 |
) |
|
|
(2,984 |
) |
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations before minority interest,
and income taxes |
|
|
53,531 |
|
|
|
60,292 |
|
|
|
32,201 |
|
Minority interest |
|
|
(1,014 |
) |
|
|
(1,327 |
) |
|
|
(2,999 |
) |
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations before income taxes |
|
|
52,517 |
|
|
|
58,965 |
|
|
|
29,202 |
|
Income tax expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
(22,504 |
) |
|
|
(30,994 |
) |
|
|
(10,145 |
) |
Deferred |
|
|
3,436 |
|
|
|
4,088 |
|
|
|
(2,591 |
) |
|
|
|
|
|
|
|
|
|
|
Total income tax expense |
|
|
(19,068 |
) |
|
|
(26,906 |
) |
|
|
(12,736 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations |
|
|
33,449 |
|
|
|
32,059 |
|
|
|
16,466 |
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations, net of tax |
|
|
(5,585 |
) |
|
|
(17,789 |
) |
|
|
527 |
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
27,864 |
|
|
$ |
14,270 |
|
|
$ |
16,993 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations |
|
$ |
1.03 |
|
|
$ |
0.88 |
|
|
$ |
0.45 |
|
Discontinued operations, net of tax |
|
|
(0.17 |
) |
|
|
(0.49 |
) |
|
|
0.02 |
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
0.86 |
|
|
$ |
0.39 |
|
|
$ |
0.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations |
|
$ |
1.03 |
|
|
$ |
0.87 |
|
|
$ |
0.45 |
|
Discontinued operations, net of tax |
|
|
(0.17 |
) |
|
|
(0.48 |
) |
|
|
0.02 |
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
0.86 |
|
|
$ |
0.39 |
|
|
$ |
0.47 |
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
Page 36 of 70
CENTRAL PARKING CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
and COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Other |
|
|
|
|
|
|
Other |
|
|
|
|
|
|
Number of |
|
|
Common |
|
|
Paid-in |
|
|
Comprehensive |
|
|
Retained |
|
|
Shareholders |
|
|
|
|
Amounts in thousands, except per share data |
|
Shares |
|
|
Stock |
|
|
Capital |
|
|
Income (Loss), net |
|
|
Earnings |
|
|
Equity |
|
|
Total |
|
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: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance under restricted stock
plan and employment agreements |
|
|
14 |
|
|
|
1 |
|
|
|
1,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,999 |
|
Common stock dividends, $0.06 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,924 |
) |
|
|
|
|
|
|
(1,924 |
) |
Exercise of stock options and
related tax benefits |
|
|
234 |
|
|
|
1 |
|
|
|
656 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
657 |
|
Stock-based compensation expense |
|
|
|
|
|
|
1 |
|
|
|
582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
583 |
|
Tax benefit related to stock option expense |
|
|
|
|
|
|
|
|
|
|
254 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
254 |
|
Issuance of deferred stock units |
|
|
6 |
|
|
|
|
|
|
|
93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93 |
|
Repurchase of common stock |
|
|
(4,859 |
) |
|
|
(49 |
) |
|
|
(75,276 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(75,325 |
) |
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,864 |
|
|
|
|
|
|
|
27,864 |
|
Foreign currency translation adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(140 |
) |
|
|
|
|
|
|
|
|
|
|
(140 |
) |
Unrealized gain on available-for-sale
securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
106 |
|
|
|
|
|
|
|
|
|
|
|
106 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,829 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2006 |
|
|
32,154 |
|
|
$ |
322 |
|
|
$ |
180,091 |
|
|
$ |
3,398 |
|
|
$ |
223,122 |
|
|
$ |
(705 |
) |
|
$ |
406,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
Page 37 of 70
CENTRAL PARKING CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
|
|
|
|
|
(Revised See |
|
|
(Revised See |
|
Amounts in thousands |
|
|
|
|
Note 2) |
|
|
Note 2) |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
27,864 |
|
|
$ |
14,270 |
|
|
$ |
16,993 |
|
(Earnings) loss from discontinued operations |
|
|
5,585 |
|
|
|
17,789 |
|
|
|
(527 |
) |
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations |
|
|
33,449 |
|
|
|
32,059 |
|
|
|
16,466 |
|
Adjustments to reconcile earnings from continuing operations to net cash provided
(used) by operating activities continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
30,278 |
|
|
|
29,497 |
|
|
|
32,635 |
|
Equity in partnership and joint venture losses (earnings) |
|
|
(1,234 |
) |
|
|
474 |
|
|
|
2,984 |
|
Distributions from partnerships and joint ventures |
|
|
1,404 |
|
|
|
2,092 |
|
|
|
1,412 |
|
Impairment of goodwill |
|
|
|
|
|
|
454 |
|
|
|
|
|
Property related gains, net |
|
|
(31,900 |
) |
|
|
(53,596 |
) |
|
|
(7,161 |
) |
Loss (gain) on derivative instruments |
|
|
1,172 |
|
|
|
(3,006 |
) |
|
|
|
|
Stock-based compensation |
|
|
582 |
|
|
|
|
|
|
|
|
|
Excess tax benefit related to stock option exercises |
|
|
(254 |
) |
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
(3,434 |
) |
|
|
(4,088 |
) |
|
|
2,591 |
|
Minority interest |
|
|
1,014 |
|
|
|
1,327 |
|
|
|
2,999 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Management accounts receivable |
|
|
5,052 |
|
|
|
(8,368 |
) |
|
|
(6,605 |
) |
Accounts receivable other |
|
|
2,336 |
|
|
|
(955 |
) |
|
|
6,105 |
|
Prepaid expenses |
|
|
(3,510 |
) |
|
|
4,402 |
|
|
|
(1,621 |
) |
Other assets |
|
|
(4,295 |
) |
|
|
(9,313 |
) |
|
|
(7,211 |
) |
Accounts payable, accrued expenses and other liabilities |
|
|
(551 |
) |
|
|
13,634 |
|
|
|
(6,096 |
) |
Management accounts payable |
|
|
613 |
|
|
|
884 |
|
|
|
(749 |
) |
Deferred rent |
|
|
(566 |
) |
|
|
(2,337 |
) |
|
|
(3,119 |
) |
Refundable income taxes |
|
|
(3,815 |
) |
|
|
1,461 |
|
|
|
4,022 |
|
Income taxes payable |
|
|
(12,313 |
) |
|
|
12,527 |
|
|
|
273 |
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities continuing operations |
|
|
14,028 |
|
|
|
17,148 |
|
|
|
36,925 |
|
Net cash (used) provided by operating activities discontinued
operations |
|
|
(16,091 |
) |
|
|
(13,914 |
) |
|
|
4,714 |
|
|
|
|
|
|
|
|
|
|
|
Net cash (used) provided by operating activities |
|
|
(2,063 |
) |
|
|
3,234 |
|
|
|
41,639 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from disposition of property and equipment |
|
|
75,181 |
|
|
|
80,799 |
|
|
|
62,390 |
|
Purchase of equipment and leasehold improvements |
|
|
(12,018 |
) |
|
|
(12,279 |
) |
|
|
(13,274 |
) |
Purchase of property |
|
|
|
|
|
|
|
|
|
|
(1,725 |
) |
Purchase of lease rights |
|
|
|
|
|
|
|
|
|
|
(4,530 |
) |
Incentive payment for USA Parking |
|
|
|
|
|
|
|
|
|
|
2,250 |
|
Proceeds from notes receivable |
|
|
1,195 |
|
|
|
32,484 |
|
|
|
227 |
|
Distributions from partnerships and joint ventures |
|
|
885 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by investing activities continuing operations |
|
|
65,243 |
|
|
|
101,004 |
|
|
|
45,338 |
|
Net cash provided by investing activities discontinued operations |
|
|
40,570 |
|
|
|
742 |
|
|
|
7,018 |
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by investing activities |
|
|
105,813 |
|
|
|
101,746 |
|
|
|
52,356 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid |
|
|
(1,924 |
) |
|
|
(2,129 |
) |
|
|
(2,184 |
) |
Net (repayments) borrowings under revolving credit agreement |
|
|
(4,334 |
) |
|
|
7,062 |
|
|
|
(59,000 |
) |
Proceeds from issuance of notes payable, net of issuance costs |
|
|
910 |
|
|
|
8,417 |
|
|
|
2,933 |
|
Principal repayments on long-term debt and capital lease obligations |
|
|
(7,381 |
) |
|
|
(121,367 |
) |
|
|
(39,065 |
) |
Payment to minority interest partners |
|
|
(909 |
) |
|
|
(937 |
) |
|
|
(3,244 |
) |
Repurchase of common stock |
|
|
(75,325 |
) |
|
|
|
|
|
|
|
|
Excess tax benefit related to stock option exercises |
|
|
254 |
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock and exercise of stock options |
|
|
3,004 |
|
|
|
2,334 |
|
|
|
2,897 |
|
|
|
|
|
|
|
|
|
|
|
Net cash used by financing activities continuing operations |
|
|
(85,705 |
) |
|
|
(106,620 |
) |
|
|
(97,663 |
) |
Net cash used by financing activities discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used by financing activities |
|
|
(85,705 |
) |
|
|
(106,620 |
) |
|
|
(97,663 |
) |
|
|
|
|
|
|
|
|
|
|
Foreign currency translation |
|
|
589 |
|
|
|
67 |
|
|
|
(276 |
) |
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
18,634 |
|
|
|
(1,573 |
) |
|
|
(3,944 |
) |
Cash and cash equivalents at beginning of year |
|
|
26,055 |
|
|
|
27,628 |
|
|
|
31,572 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
$ |
44,689 |
|
|
$ |
26,055 |
|
|
$ |
27,628 |
|
|
|
|
|
|
|
|
|
|
|
(continued)
Page 38 of 70
Consolidated Statements of Cash Flows, continued:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
Non-cash transactions: |
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized gain on fair value of derivatives and available-
for-sale securities, net of tax |
|
$ |
106 |
|
|
$ |
(706 |
) |
|
$ |
1,077 |
|
Note receivable for consideration for sale of CPS Mexico, Inc. |
|
$ |
3,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash payments for: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest |
|
$ |
13,226 |
|
|
$ |
16,983 |
|
|
$ |
19,160 |
|
Income taxes |
|
$ |
43,404 |
|
|
$ |
16,355 |
|
|
$ |
6,725 |
|
See accompanying notes to consolidated financial statements.
Page 39 of 70
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 recognized when the performance measures have been met.
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. Book
overdraft balances resulting from zero balance type accounts at September 30, 2006 and 2005 totaled
$14.3 million and $15.8 million, respectively, and are reflected in accounts payable on the
accompanying consolidated balance sheets. The Company accounts for the change in book overdraft
positions as operating cash flows in the accompanying consolidated statements of cash flows.
(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 and
Mid-Atlantic 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, 2006, the balance of investment securities was $4.9 million, and
are recorded at fair value. Unrealized holding gains and losses, net of related tax effects, 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. A decline in the market value of any
available-for-sale or held-to-maturity security below cost that is deemed to be
other-than-temporary results in a reduction in carrying amount to fair value and a charge to
earnings. To determine whether an impairment is other-than-
Page 40 of 70
temporary, the Company considers whether it has the ability and intent to hold the investment until
a market price recovery and considers whether evidence indicating the cost of the investment is
recoverable outweighs evidence to the contrary.
(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. 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 August 31.
(j) Other Assets
Other assets is comprised of a combination of the cash surrender value of life insurance
policies, security deposits, key money, 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, generally using the interest method.
(k) Lease Transactions and Related Balances
The Company accounts for operating lease obligations and sublease income on a straight-line
basis. Contingent or percentage rent obligations of the Company are recognized when operations
indicate such amounts will be paid. Contingent sublease income is recognized when the performance
measures have been met. Lease obligations paid in advance are included in prepaid rent. The
difference between actual lease payments and straight-line lease expense 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 of the then 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 then current market rental. Such adjustments
are amortized on a straight-line basis
Page 41 of 70
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.
In the event the Company ceases to control the right to use a property the Company leases
under an operating lease, it determines whether it has a loss to record related to its operating
lease obligations pursuant to SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities. If the cease-use date criteria of such standard have not been met, no loss is
recognized by the Company unless it has entered into a sublease on such property and the Company
has determined it has a loss on such sublease pursuant to the criteria set forth in FTB 79-15,
Accounting for a Loss on a Sublease Not Involving the Disposal of a Segment.
(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 are separately presented in the consolidated balance sheet and reported at the
lower of carrying amount or fair value less costs to sell, and are no longer depreciated. The
assets and liabilities of a disposed group classified as held for sale are 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 exceeds its 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 indefinitely 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) Earnings (Loss) 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. Accumulated other
comprehensive income at September 30, 2006, includes
Page 42 of 70
$3.1 million related to foreign currency translation adjustments which have not been tax
affected due to managements intention that the accumulated earnings of such entities are
indefinitely reinvested.
(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 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, 2006 and 2005, book value
approximates fair value for substantially all of the Companys assets, liabilities, debt and
derivatives that are subject to the fair value disclosure requirements.
(s) Stock Option Plan
On October 1, 2005, the Company adopted SFAS No. 123R, Share-Based Payment, that addresses the
accounting for share-based payment transactions in which a company receives employee services in
exchange for equity instruments. SFAS No. 123R eliminates the ability to account for share-based
compensation transactions, as the Company formerly did, using the intrinsic value method as
prescribed by Accounting Principles Board, (APB), Opinion No. 25, Accounting for Stock Issued to
Employees, and generally requires that such transactions be accounted for using a fair-value-based
method and recognized as expense in the accompanying consolidated statements of operations.
The Company adopted SFAS No. 123R using the modified prospective method which requires the
application of the accounting standard as of October 1, 2005. The accompanying consolidated
financial statements for fiscal 2006 reflect the impact of adopting SFAS No. 123R. See Note 14 for
further details.
Stock-based compensation expense recognized during the period is based on the value of the
portion of stock-based payment awards that is ultimately expected to vest. Stock-based
compensation expense recognized in the accompanying consolidated statement of operations for the
fiscal year ended September 30, 2006, included compensation expense for stock-based payment awards
granted prior to, but not yet vested, as of October 1, 2005 and for the stock-based awards granted
after such date, based on the grant date fair value estimated in accordance with SFAS No. 123R. As
stock-based compensation expense recognized in the accompanying statement of income for fiscal 2006
is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.
SFAS No. 123R requires forfeitures to be estimated at the time of grant and revised, if necessary,
in subsequent periods if actual forfeitures differ from those estimates. In the pro forma
information for periods prior to fiscal 2006, which is also detailed in Note 14, we accounted for
forfeitures as they occurred.
(t) Business Concentrations
Approximately 43%, 44% and 43% of the Companys total revenues from continuing operations
(excluding reimbursement of management expenses) for fiscal year 2006, 2005 and 2004, 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. Revenues from our operations in New York City and surrounding areas accounted for
approximately 26.6% of our total revenues from continuing operations (excluding reimbursement of
management expenses) in fiscal 2006. See also Note 18.
(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
liability recognition associated with claims against the Company. The recognition of liabilities
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 a liability.
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. Total discounted self-insurance liabilities at September 30, 2006 and September 30, 2005
were $22.6 million and $24.6 million, respectively, reflecting a 4.5% discount rate. The related
undiscounted amounts at such dates were $25.0 million and $27.7 million, respectively.
Page 43 of 70
(v) Derivative financial instrument
The Company periodically enters into various types of derivative instruments to manage
fluctuations in cash flows resulting from interest rate risk. These instruments include interest
rate swaps and caps. Under interest rate swaps, the Company receives variable interest rate
payments and makes fixed interest rate payments, thereby creating fixed-rate debt. 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 interest rate cap
agreements, the Company has the right to receive cash if interest rates increase above a specified
level.
At September 30, 2006, the Company had two interest rate swaps with a combined notional amount
of $87.5 million. These derivative financial instruments are reported at their fair value and are
included as other assets on the consolidated balance sheets. The fair values of these swaps at
September 30, 2006 and 2005 were $1.9 million and $3.0 million, respectively. The interest rate
swaps do not qualify as cash flow hedges for accounting purposes. As such, any changes in the fair
value of these derivative instruments are included in the consolidated statements of operations.
The Company entered into an interest rate cap agreement on an underlying $12.7 million loan in
October 2005. This agreement limits the Companys exposure to the floating interest rate by paying
the Company for interest paid in excess of 5.50%. The fair value of this contract at September 30,
2006 was not significant.
The Company has entered into certain foreign currency forward contracts to mitigate the
foreign exchange risk related to various intercompany notes receivable from the Companys
wholly-owned subsidiary in the United Kingdom. These forward contracts are expected to offset the
transactional gains and losses on the intercompany notes denominated in British pounds. The gains
and losses related to such contracts and the transactional gains and losses related to the
intercompany notes recognized during fiscal 2006 were not significant. The notional amount of the
open contracts at September 30, 2006 totaled approximately $20.2 million. The fair value of the
foreign currency forward contracts at September 30, 2006 was a liability of $390 thousand.
(w) 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.
(2) Cash Flow Statement Revisions
The Company has separately disclosed in the accompanying consolidated statements of cash flows
the operating, investing and financing portions of the cash flows attributable to its discontinued
operations, which prior periods were reported on a combined basis in a single amount. As a result,
the accompanying consolidated cash flow statements for fiscal 2005 and 2004 have been labeled as
revised.
(3) Common Stock Repurchase
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
4,400,000 shares at a price of $15.50 per share. The Company exercised its right to purchase an
additional 459,674 shares without extending or modifying the offer. The Company repurchased a
total of 4,859,674 shares for $75.3 million using the availability under the Credit Facility.
(4) 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, 2006, the balance of the note
receivable was $2.5 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
Page 44 of 70
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 balance at
September 30, 2006 was $ 3.6 million.
In
connection with the sale of the Companys 50% interest in its joint venture in Mexico in January
2006, the Company obtained notes receivable totaling $3.7 million. The note is payable monthly and
bears interest at a fixed rate of 8%. The balance at September 30, 2006 was $ 3.1 million.
The remainder of the notes receivable consist of notes ranging from $3 thousand to $2.5
million at the end of fiscal year 2006, and notes ranging from $1 thousand to $3.0 million at the
end of fiscal year 2005. The notes bear interest at fixed rates ranging from 0% to 12.0% at the end
of fiscal year 2006 and are due between 2007 and 2017.
(5) 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, |
|
|
|
2006 |
|
|
2005 |
|
Leasehold improvements |
|
$ |
42,597 |
|
|
$ |
42,611 |
|
Buildings and garages |
|
|
82,418 |
|
|
|
83,593 |
|
Operating equipment |
|
|
73,735 |
|
|
|
75,072 |
|
Furniture and fixtures |
|
|
6,102 |
|
|
|
9,480 |
|
Equipment operated under capital leases |
|
|
5,450 |
|
|
|
1,164 |
|
|
|
|
|
|
|
|
|
|
|
210,302 |
|
|
|
211,920 |
|
Less accumulated depreciation and amortization |
|
|
108,549 |
|
|
|
100,339 |
|
|
|
|
|
|
|
|
|
|
|
101,753 |
|
|
|
111,581 |
|
Land |
|
|
194,170 |
|
|
|
215,810 |
|
|
|
|
|
|
|
|
Property, equipment and leasehold improvements, net |
|
$ |
295,923 |
|
|
$ |
327,391 |
|
|
|
|
|
|
|
|
Depreciation expense of property, equipment and leasehold improvements was $18.7 million,
$18.6 million and $20.4 million, respectively, for the fiscal years ended September 30, 2006, 2005
and 2004 for continuing operations. Depreciation expense included in discontinued operations for
such periods was $0.3 million, $0.4 million and $0.7 million, respectively. Depreciation expense
included in cost of parking was $13.9 million, $13.7 million and $14.6 million, depreciation
expense included in cost of management contracts was $0.2 million, $0.2 million and $0.5 million,
and depreciation expense included in general and administrative expenses was $4.6 million, $4.7
million and $5.3 million for the fiscal years ended September 30, 2006, 2005 and 2004,
respectively.
(6) Goodwill and Amortizable Intangible Assets
As of September 30, 2006, the Company had the following amortizable intangible assets (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross |
|
|
|
|
|
|
Carrying |
|
Accumulated |
|
|
|
|
Amount |
|
Amortization |
|
Net |
Contract and lease rights |
|
$ |
129,018 |
|
|
$ |
57,023 |
|
|
$ |
71,995 |
|
Page 45 of 70
The following table shows the changes in contract and lease rights for fiscal years 2006
and 2005 (in thousands):
|
|
|
|
|
As of September 30, 2004 |
|
$ |
89,015 |
|
Additions |
|
|
740 |
|
Amortization |
|
|
(7,779 |
) |
Deletions |
|
|
(1,912 |
) |
Impairments |
|
|
|
|
|
|
|
|
As of September 30, 2005 |
|
|
80,064 |
|
Additions |
|
|
|
|
Amortization |
|
|
(7,871 |
) |
Deletions |
|
|
110 |
|
Impairments |
|
|
(308 |
) |
|
|
|
|
As of September 30, 2006 |
|
$ |
71,995 |
|
|
|
|
|
The expected future amortization of contract and lease rights are as follows (in
thousands):
|
|
|
|
|
|
|
Year Ending |
|
|
|
September 30, |
|
2007 |
|
$ |
7,613 |
|
2008 |
|
|
7,272 |
|
2009 |
|
|
4,968 |
|
2010 |
|
|
4,535 |
|
2011 |
|
|
4,501 |
|
Thereafter |
|
|
43,106 |
|
|
|
|
|
|
|
$ |
71,995 |
|
|
|
|
|
Amortization expense related to the contract and lease rights was $7.9 million, $7.7 million
and $8.5 million, respectively, for the years ended September 30, 2006, 2005 and 2004, in
continuing operations. Amortization expense in discontinued operations related to the contract
and lease rights was not significant.
The Company has 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, 2006 and 2005 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One |
|
|
Two |
|
|
Three |
|
|
Four |
|
|
Five |
|
|
Six |
|
|
Seven |
|
|
Total |
|
Balance as of September 30, 2004 |
|
$ |
3,172 |
|
|
$ |
32,462 |
|
|
$ |
3,604 |
|
|
$ |
181,340 |
|
|
$ |
8,884 |
|
|
$ |
2,350 |
|
|
$ |
750 |
|
|
$ |
232,562 |
|
Acquired during the period |
|
|
30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104 |
|
|
|
|
|
|
|
50 |
|
|
|
184 |
|
Foreign currency translation |
|
|
|
|
|
|
|
|
|
|
69 |
|
|
|
73 |
|
|
|
9 |
|
|
|
|
|
|
|
|
|
|
|
151 |
|
Impairment |
|
|
|
|
|
|
(454 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(454 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2005 |
|
$ |
3,202 |
|
|
$ |
32,008 |
|
|
$ |
3,673 |
|
|
$ |
181,413 |
|
|
$ |
8,997 |
|
|
$ |
2,350 |
|
|
$ |
800 |
|
|
$ |
232,443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(387 |
) |
|
|
(387 |
) |
Impairment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2006 |
|
$ |
3,202 |
|
|
$ |
32,008 |
|
|
$ |
3,673 |
|
|
$ |
181,413 |
|
|
$ |
8,997 |
|
|
$ |
2,350 |
|
|
$ |
413 |
|
|
$ |
232,056 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During 2005, the Company determined that $454,000 of the goodwill recorded in segment two was impaired.
(7) Assets Held for Sale, Property-Related Gains, Net and Discontinued Operations
|
|
In accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets,
long-lived assets are classified as held for sale are presented separately in the asset section of
the balance sheet. Assets classified as held for sale are comprised almost exclusively of real
property and are included in the Segment-Other in the identifiable asset segment table included in
Note 18. |
Page 46 of 70
(b) |
|
Property-Related Gains (Losses), Net |
|
|
The Company periodically disposes of or recognizes impairment related to owned properties,
leasehold improvements, contract rights, lease rights and other long-term deferred expenses due to
various factors, including economic considerations, unsolicited offers from third parties, loss of
contracts and condemnation proceedings initiated by local government authorities. Leased and
managed properties are also periodically evaluated and determinations may be made to sell or exit a
lease obligation. A summary of property-related gains and losses is a follows (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended September 30, |
|
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
Net gains on sale of property |
|
$ |
35,063 |
|
|
$ |
60,229 |
|
|
$ |
9,586 |
|
Impairment charges for property, equipment and leasehold improvements |
|
|
(2,643 |
) |
|
|
(1,766 |
) |
|
|
(1,614 |
) |
Impairment charges for intangible assets |
|
|
(520 |
) |
|
|
(4,867 |
) |
|
|
(811 |
) |
|
|
|
|
|
|
|
|
|
|
Total property related gains, net |
|
$ |
31,900 |
|
|
$ |
53,596 |
|
|
$ |
7,161 |
|
|
|
|
|
|
|
|
|
|
|
Net property-related gains for the fiscal year ended September 30, 2006 of $31.9 million was
comprised of gains on sale of property of $35.1 comprised of $12.0 million in Houston, $ 9.1
Million in Baltimore, $6.2 million in Chicago, $2.4 million from the sale of our equity-method
investment in our Germany subsidiary, $1.8 million in Atlanta, $1.4 million in Denver, $1.4 million
in West Palm Beach, $1.3 Million in Nashville, $0.9 million in Dallas, and $0.7 million in
miscellaneous property sales; offset by a loss of $0.9 million
in Pittsburgh and $1.2 million in London; offset by $3.2
million of impairments of leasehold improvements, contract rights and other intangible assets
primarily in Segment-Two, Segment-Four, Segment-Five and Segment-Other. In assessing impairment,
management considered current operating results, the Companys recent forecast for the next fiscal
year and required capital improvements, management determined that the projected cash flows for
these locations would not be enough to recover the book value of the assets.
The $53.6 million gain in 2005 was comprised of a gain on the sale of property of $60.2
million, comprised primarily of $38.2 million on the sale of a lease in New York, $9.1 million on
the sale of property in New York, $5.5 million gain in Missouri, $2.7 million in Denver, $1.9
million in Seattle, $1.9 million Chicago, and $0.9 million related to other miscellaneous sales;
offset by $6.6 million of impairments of leasehold improvements, contract rights and other
intangible assets primarily in Segment-One, Segment-Two, Segment-Three, Segment-Four,
Segment-Seven, and Segment-Other. 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 $7.2 million gain in 2004 was comprised of a gain on sale of property of $9.6 comprised of
$5.7 million gain on sale of property in Providence, $1.8 million in New York, $1.1 million in
London, $0.9 million in Dallas and $0.1 million in miscellaneous property sales; offset by $2.4
million of impairments of leasehold improvements, contract rights and other intangible assets
primarily in Segment-One, Segment-Four, and Segment-Other. 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.
In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, the results of operations (including the gain or loss on sale and any recognized asset
impairment) of long-lived assets which qualify as a component of an entity that either have been
disposed of or are classified as held for sale are reported in discontinued operations if (i) the
operations and cash flows of the component have been, or will be, eliminated from operations of the
Company as a result of the disposal transaction and (ii) the Company will not have any significant
continuing involvement in the operations of the component after the disposal transaction. The net
property-related gains noted above have been classified in continuing operations as the individual
disposal transactions did not meet the SFAS No. 144 and EITF 03-13, Applying the Conditions in
Paragraph 42 of SFAS No. 144 in Determining Whether to Report Discontinued Operations, criteria for
classification as discontinued operations, primarily due to the expected retention of certain cash
flows from assets disposed. These expected continuing cash flows result from arrangements whereby
the Company continues to operate the parking facilities under an operating lease or a management
contract, or expects to do so in the future under the Companys right of first refusal agreements
with the purchaser of the properties. It is not practicable to quantify the specific amount of
such continuing cash flows or the period of time over which they will be generated. If managements
assumptions regarding the timing and amount of such retained cash flows change in the future, the
net property gain (loss) recognized in continuing operations, along with the results of operations
related to such assets, may need to be reclassified to discontinued operations.
Page 47 of 70
(c) Discontinued Operations
The Company has either disposed of, or designated as held-for-sale, certain locations which
meet the aforementioned criteria for classification as discontinued operations. The components of
discontinued operations reflected on the accompanying consolidated statements of income are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
September 30, |
|
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
Discontinued Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues |
|
$ |
39,676 |
|
|
$ |
65,323 |
|
|
$ |
75,673 |
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (loss) before property-
related gains (losses), net |
|
|
51 |
|
|
|
(11,464 |
) |
|
|
4,057 |
|
Property-related losses, net |
|
|
(402 |
) |
|
|
(9,384 |
) |
|
|
(3,626 |
) |
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, before
taxes |
|
|
(320 |
) |
|
|
(20,961 |
) |
|
|
511 |
|
Income tax benefit (expense) |
|
|
(5,265 |
) |
|
|
3,172 |
|
|
|
16 |
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations, net of tax |
|
$ |
(5,585 |
) |
|
$ |
(17,789 |
) |
|
$ |
527 |
|
|
|
|
|
|
|
|
|
|
|
Included in operating earnings from discontinued operations for fiscal 2006 is income of $2.3
million from the settlement agreement with Rotala. Net property-related gains (losses) related to
discontinued operations the year ended September 30, 2006, includes a charge of $12.3 million
related to the disposal of the United Kingdom transport division, which consists of $10.2 million
in contract and lease buyouts associated with buses, routes and the depot, and $2.1 million for
severance related costs. All obligations related to the charge were paid in fiscal 2006, except
for $2.4 million relating to contract and lease buyouts which will be paid in fiscal 2007. Also
included in net property-related gains (losses) related to discontinued operations for fiscal 2006
are gains of $11.3 million from the sale of properties which had been classified as Assets Held for
Sale. The $11.3 million gain primarily relates to the sale of properties of $2.6 million in
Atlanta, $2.1 million in Nashville, $1.9 million in Miami, $1.8 million in Chicago, $0.6 million in
Roanoke, $0.5 million in Pittsburgh, $0.5 million in Charleston, $0.4 million in Little Rock, $0.3
million in San Antonio, $0.2 million in Minneapolis, $0.1 million in Houston, and $0.3 million in
miscellaneous properties. The Companys consolidated statements of operations and cash flows for
fiscal 2005 and 2004 have been reclassified to reflect the operations and cash flows related to
these discontinued operations.
(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, 2006 and 2005, and for each of the years in the
three-year period ended September 30, 2006 (in thousands). Aggregate fair value of investments is
not disclosed as quoted market prices are not available.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment |
|
|
Advances to |
|
|
|
in Partnerships and |
|
|
Partnerships |
|
|
|
Joint Ventures |
|
|
and Joint Ventures |
|
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
Commerce Street Joint Venture |
|
$ |
193 |
|
|
$ |
(149 |
) |
|
$ |
165 |
|
|
$ |
149 |
|
Larimer Square Parking Associates |
|
|
1,972 |
|
|
|
1,126 |
|
|
|
|
|
|
|
788 |
|
Lodo Parking Garage, LLC |
|
|
1,023 |
|
|
|
1,055 |
|
|
|
|
|
|
|
|
|
CPS Mexico, Inc. |
|
|
|
|
|
|
325 |
|
|
|
|
|
|
|
|
|
Other |
|
|
663 |
|
|
|
2,086 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,851 |
|
|
$ |
4,443 |
|
|
$ |
165 |
|
|
$ |
937 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Partnership and |
|
|
Joint Venture |
|
|
|
Joint Venture Earnings (Losses) |
|
|
Debt |
|
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
|
2006 |
|
|
2005 |
|
Commerce Street Joint Venture |
|
$ |
762 |
|
|
$ |
739 |
|
|
$ |
606 |
|
|
$ |
4,212 |
|
|
$ |
4,793 |
|
Larimer Square Parking Associates |
|
|
389 |
|
|
|
389 |
|
|
|
312 |
|
|
|
|
|
|
|
831 |
|
Lodo Parking Garage, LLC |
|
|
182 |
|
|
|
158 |
|
|
|
94 |
|
|
|
|
|
|
|
|
|
CPS Mexico, Inc. |
|
|
|
|
|
|
(1,499 |
) |
|
|
(4,036 |
) |
|
|
|
|
|
|
17,470 |
|
Other |
|
|
(99 |
) |
|
|
(261 |
) |
|
|
40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,234 |
|
|
$ |
(474 |
) |
|
$ |
(2,984 |
) |
|
$ |
4,212 |
|
|
$ |
23,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 48 of 70
(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%. At September 30, 2006, all loans from the joint
venture have been repaid. 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 16.
(d) CPS Mexico, Inc.
The Company held a 50% interest in a Mexican joint venture which managed and leased
various parking structures in Mexico. During the fourth quarter of 2005, the Company
reached a tentative agreement to sell its fifty percent interest in its joint venture in
Mexico, which resulted in a non-cash loss on the sale of approximately $1.7 million. The
Company received 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. Central Parking finalized the transaction in fiscal 2006.
(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, |
|
|
|
2006 |
|
|
2005 |
|
Credit Facility |
|
|
|
|
|
|
|
|
Term note payable |
|
$ |
73,687 |
|
|
$ |
74,437 |
|
Revolving credit facility |
|
|
|
|
|
|
7,062 |
|
Other notes payable |
|
|
14,934 |
|
|
|
15,539 |
|
Capital lease obligations |
|
|
1,866 |
|
|
|
2,938 |
|
|
|
|
|
|
|
|
Total |
|
|
90,487 |
|
|
|
99,976 |
|
Less: current maturities of long-term obligations |
|
|
(2,862 |
) |
|
|
(1,764 |
) |
|
|
|
|
|
|
|
Total long-term obligations |
|
$ |
87,625 |
|
|
$ |
98,212 |
|
|
|
|
|
|
|
|
Page 49 of 70
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 Company completed an amendment to the Credit Facility as of March 31, 2006. The main
purpose of the amendment was to modify the financial covenant target requirements. The
modifications affected the leverage ratio, senior leverage ratio and fixed charge coverage ratio.
The new leverage targets step down over the next several quarters and will remain at 3.50 for the
leverage ratio and 2.50 for the senior leverage ratio until loan maturity.
The Credit Facility bears interest at LIBOR plus a tier-based margin dependent upon certain
financial ratios. There are separate pricing tiers for the revolving loan and term loan. The
weighted average margin as of September 30, 2006 was 200 basis points. The amount outstanding under
the Companys Credit Facility was $73.7 million, all of which related to the term loan, with an
overall weighted average interest rate of 3.7% as of September 30, 2006. The term loan is required
to be repaid in quarterly payments of $187,500 through March 2008 and quarterly payments of $9.1
million from June 2008 through March 2010. The revolving loan is required to be repaid February
2008. The aggregate availability under the Credit Facility was $171.3 million at September 30,
2006, which is net of $53.7 million of stand-by letters of credit. During the first quarter of
2006, the Company repurchased a total of 4,859,674 shares for $75.3 million using the availability
under 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 notional
value of $87.5 million. Both transactions swapped the Companys floating LIBOR interest rates for
fixed interest of 2.45% until June 30, 2007. The derivatives do not qualify as cash flow hedges.
The weighted average interest rate on the Companys Credit Facility at September 30, 2006 was
3.7%. The 3.7% rate includes all outstanding LIBOR contracts and swap agreements at September 30,
2006.
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
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 $2.3 million at September 30,
2006. These notes are secured by real estate and equipment and bear interest at fixed rates
ranging from 4.5% to 13.9%.
Page 50 of 70
Future maturities under long-term debt arrangements, including capital lease obligations, are
as follows (in thousands):
|
|
|
|
|
|
|
Year Ending |
|
|
|
September 30, |
|
2007 |
|
$ |
2,862 |
|
2008 |
|
|
24,150 |
|
2009 |
|
|
35,853 |
|
2010 |
|
|
27,357 |
|
2011 |
|
|
67 |
|
Thereafter |
|
|
198 |
|
|
|
|
|
|
|
$ |
90,487 |
|
|
|
|
|
(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 redeemable securities of a subsidiary trust, were included as interest expense on the
consolidated statements of operations.
Page 51 of 70
(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, 2006 |
|
|
September 30, 2005 |
|
|
September 30, 2004 |
|
|
|
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 from continuing
Operations per share |
|
$ |
33,449 |
|
|
|
32,258 |
|
|
$ |
1.03 |
|
|
$ |
32,059 |
|
|
|
36,626 |
|
|
$ |
0.88 |
|
|
$ |
16,466 |
|
|
|
36,346 |
|
|
$ |
0.45 |
|
Effects of dilutive stock options: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock option plan |
|
|
|
|
|
|
241 |
|
|
|
|
|
|
|
|
|
|
|
136 |
|
|
|
|
|
|
|
|
|
|
|
209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) from continuing
Operations per share |
|
$ |
33,449 |
|
|
|
32,499 |
|
|
$ |
1.03 |
|
|
$ |
32,059 |
|
|
|
36,762 |
|
|
$ |
0.87 |
|
|
$ |
16,466 |
|
|
|
36,555 |
|
|
$ |
0.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2006, 2005 and 2004, such securities were convertible into 1,419,588 shares of
common stock. Options to acquire 2,304,586, 2,453,586, and 2,851,723 shares of common stock were
excluded from the 2006, 2005 and 2004 diluted earnings per share calculations because they were
anti-dilutive.
(12) Operating Leases
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 |
|
2007 |
|
$ |
199,360 |
|
|
$ |
1,653 |
|
|
$ |
197,708 |
|
2008 |
|
|
151,111 |
|
|
|
1,367 |
|
|
|
149,745 |
|
2009 |
|
|
115,339 |
|
|
|
1,190 |
|
|
|
114,149 |
|
2010 |
|
|
92,719 |
|
|
|
1,216 |
|
|
|
91,503 |
|
2011 |
|
|
70,821 |
|
|
|
1,227 |
|
|
|
69,594 |
|
Thereafter |
|
|
329,153 |
|
|
|
18,678 |
|
|
|
310,473 |
|
|
|
|
|
|
|
|
|
|
|
Total future operating lease commitments |
|
$ |
958,503 |
|
|
$ |
25,331 |
|
|
$ |
933,172 |
|
|
|
|
|
|
|
|
|
|
|
Rental expense for all operating leases, along with offsetting rental income from subleases were as
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
Rentals: |
|
|
|
|
|
|
|
|
|
|
|
|
Minimum |
|
$ |
256,661 |
|
|
$ |
244,776 |
|
|
$ |
254,378 |
|
Contingent |
|
|
56,873 |
|
|
|
60,359 |
|
|
|
66,104 |
|
|
|
|
|
|
|
|
|
|
|
Total rent expense |
|
|
313,534 |
|
|
|
305,135 |
|
|
|
320,482 |
|
Less sub-lease income |
|
|
(16,970 |
) |
|
|
(16,305 |
) |
|
|
(16,570 |
) |
|
|
|
|
|
|
|
|
|
|
Total rent expense, net |
|
$ |
296,564 |
|
|
$ |
288,830 |
|
|
$ |
303,912 |
|
|
|
|
|
|
|
|
|
|
|
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
Page 52 of 70
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 in fiscal 2004 related to the settlement of the agreement.
(13) Income Taxes
Income tax expense (benefit) from continuing operations consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
Current: |
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
$ |
19,713 |
|
|
$ |
27,558 |
|
|
$ |
5,491 |
|
Jobs credit, net of federal tax benefit |
|
|
(952 |
) |
|
|
(961 |
) |
|
|
(305 |
) |
|
|
|
|
|
|
|
|
|
|
Net federal current tax expense |
|
|
18,761 |
|
|
|
26,597 |
|
|
|
5,186 |
|
State |
|
|
2,871 |
|
|
|
2,669 |
|
|
|
1,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-U.S |
|
|
872 |
|
|
|
1,728 |
|
|
|
3,545 |
|
|
|
|
|
|
|
|
|
|
|
Total current tax expense |
|
|
22,504 |
|
|
|
30,994 |
|
|
|
10,145 |
|
|
|
|
|
|
|
|
|
|
|
Deferred: |
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
|
(2,640 |
) |
|
|
(5,414 |
) |
|
|
2,203 |
|
State |
|
|
172 |
|
|
|
804 |
|
|
|
388 |
|
Non-U.S. |
|
|
(968 |
) |
|
|
522 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax (benefit) expense |
|
|
(3,436 |
) |
|
|
(4,088 |
) |
|
|
2,591 |
|
|
|
|
|
|
|
|
|
|
|
Total income tax expense from continuing operations |
|
$ |
19,068 |
|
|
$ |
26,906 |
|
|
$ |
12,736 |
|
|
|
|
|
|
|
|
|
|
|
Total income taxes are allocated as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
Income tax expense from continuing operations |
|
$ |
19,068 |
|
|
$ |
26,906 |
|
|
$ |
12,736 |
|
Income tax (benefit) expense from discontinued operations |
|
|
5,265 |
|
|
|
(3,172 |
) |
|
|
(16 |
) |
Shareholders equity for unrealized gain on fair value of
derivatives for financial reporting purposes |
|
|
|
|
|
|
|
|
|
|
721 |
|
Shareholders equity for compensation expense for tax
purposes different
from amounts recognized for financial reporting purposes |
|
|
(254 |
) |
|
|
(508 |
) |
|
|
(205 |
) |
|
|
|
|
|
|
|
|
|
|
Total comprehensive income tax expense (benefit) |
|
$ |
24,079 |
|
|
$ |
23,226 |
|
|
$ |
13,236 |
|
|
|
|
|
|
|
|
|
|
|
Provision has not been made for U.S. or additional foreign taxes on approximately $19.3
million, $17.9 million and $33.6 million at September 30, 2006, 2005 and 2004, respectively, of
undistributed earnings of foreign subsidiaries, as those earnings are intended to be permanently
reinvested.
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):
Page 53 of 70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
U.S. Federal statutory rate on (loss) earnings from
continuing operations before income taxes |
|
$ |
18,380 |
|
|
|
35.0 |
% |
|
$ |
20,638 |
|
|
|
35.0 |
% |
|
$ |
10,221 |
|
|
|
35.0 |
% |
State and city income taxes, including changes in
valuation allowance, net of federal tax effect |
|
|
1,978 |
|
|
|
3.8 |
|
|
|
2,257 |
|
|
|
3.8 |
|
|
|
1,172 |
|
|
|
4.0 |
|
Jobs credits |
|
|
(952 |
) |
|
|
(1.8 |
) |
|
|
(961 |
) |
|
|
(1.6 |
) |
|
|
(305 |
) |
|
|
(1.0 |
) |
Foreign versus US rate difference, including changes in
valuation allowance |
|
|
(84 |
) |
|
|
(0.2 |
) |
|
|
3,549 |
|
|
|
6.0 |
|
|
|
(163 |
) |
|
|
(0.6 |
) |
Equity in unconsolidated subsidiaries |
|
|
|
|
|
|
|
|
|
|
1,097 |
|
|
|
1.9 |
|
|
|
1,428 |
|
|
|
4.9 |
|
Other |
|
|
(254 |
) |
|
|
(0.5 |
) |
|
|
326 |
|
|
|
0.5 |
|
|
|
383 |
|
|
|
1.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense from continuing operations |
|
$ |
19,068 |
|
|
|
36.3 |
% |
|
$ |
26,906 |
|
|
|
45.6 |
% |
|
$ |
12,736 |
|
|
|
43.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sources of deferred tax assets and deferred tax liabilities are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
2006 |
|
|
2005 |
|
Deferred tax assets: |
|
|
|
|
|
|
|
|
Intangible assets |
|
$ |
6,729 |
|
|
$ |
5,662 |
|
Accrued expenses |
|
|
9,859 |
|
|
|
13,323 |
|
Allowance for doubtful accounts |
|
|
771 |
|
|
|
143 |
|
Partnership interest |
|
|
1,018 |
|
|
|
262 |
|
Deferred income |
|
|
10,245 |
|
|
|
9,339 |
|
Deferred compensation expense |
|
|
5,829 |
|
|
|
6,269 |
|
Net operating losses |
|
|
18,821 |
|
|
|
14,201 |
|
Tax credits |
|
|
387 |
|
|
|
528 |
|
Other |
|
|
256 |
|
|
|
213 |
|
|
|
|
|
|
|
|
Total gross deferred tax assets |
|
|
53,915 |
|
|
|
49,940 |
|
|
|
|
|
|
|
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
Property, equipment and leasehold improvements |
|
|
(32,679 |
) |
|
|
(35,548 |
) |
Unrecognized gain on fair value of derivative instruments |
|
|
(733 |
) |
|
|
(1,202 |
) |
Deferred liability on discontinued foreign operations |
|
|
(6 |
) |
|
|
(712 |
) |
|
|
|
|
|
|
|
Total gross deferred tax liabilities |
|
|
(33,418 |
) |
|
|
(37,462 |
) |
Valuation allowance on deferred tax assets |
|
|
(16,678 |
) |
|
|
(12,094 |
) |
|
|
|
|
|
|
|
Net deferred tax assets (liabilities) |
|
$ |
3,819 |
|
|
$ |
384 |
|
|
|
|
|
|
|
|
As of September 30, 2006, the Company has foreign, state and city net operating loss carry
forwards of approximately $216.7 million which expire between 2007 and 2025. Based on prior taxable
income, and expected future 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 $4.6 million during the year ended September 30, 2006 was to reflect net
operating loss carryforwards 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.
(14) Stock-Based Compensation
(a) Stock Option 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 had been reserved
for issuance under these two plans combined. Options representing 3,307,395 shares are outstanding
under the stock option plan at September 30, 2006. Under this plan, options generally vest over a
one- to four-year period and generally expire ten years after the date of grant. This plan expired
in August 2005 and no new shares will be granted under the plan.
In February 2006, shareholders approved a new 2006 plan and reserved 1,500,000 shares to be
issued. The Company has issued 300,000 options and 14,000 restricted shares under the new plan as
of September 30, 2006. Options are expected to be 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, similar to the
1995 plans.
Page 54 of 70
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. This plan
expired in August 2005 and no new options will be granted under this plan. Options to purchase
77,500 shares are outstanding under this plan at September 30, 2006.
Effective October 1, 2005, the Company adopted the fair value recognition provisions of SFAS
No.123R using the modified prospective method. Under this method, compensation costs in the
periods are based on the estimated fair value of the respective options and the proportion vesting
in the period. Stock-based employee compensation expense for the year ended September 30, 2006 was
calculated using the Black-Scholes option-pricing model. The Company utilizes both the single
option and multiple option valuation approaches. Allocation of compensation expense was made using
historical option terms for option grants made to the Companys employees and historical Central
Parking Corporation stock price volatility.
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 |
|
Net earnings, as reported |
|
$ |
14,270 |
|
|
$ |
16,993 |
|
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 |
) |
|
|
|
|
|
|
|
Pro forma net earnings |
|
$ |
5,264 |
|
|
$ |
14,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share: |
|
|
|
|
|
|
|
|
Basic-as reported |
|
$ |
0.39 |
|
|
$ |
0.47 |
|
|
|
|
|
|
|
|
Basic-pro forma |
|
$ |
0.14 |
|
|
$ |
0.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted-as reported |
|
$ |
0.39 |
|
|
$ |
0.47 |
|
|
|
|
|
|
|
|
Diluted-pro forma |
|
$ |
0.14 |
|
|
$ |
0.39 |
|
|
|
|
|
|
|
|
Stock-based employee compensation expense in the table above was calculated using the
Black-Scholes option pricing model. The Company utilizes both the single option and multiple
option valuation approaches. Allocation of compensation expense 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 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 2005 to reduce compensation
expense in future years. 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.
There was one option grant during the year ended September 30, 2006 for 300,000 options. Such
options vest ratably over four years. The estimated weighted average fair value of options granted
during 2006 was $4.35 using the Black-Scholes option pricing model with the following assumptions:
weighted average dividend yield based on historic dividend rates at the date of the grant, weighted
average volatility of 29% for fiscal year 2006, weighted average risk free interest based on the
treasury bill rate of 10-year instruments at the date of grant (5.0%), and a weighted average
expected term of 4.5 years for 2006.
The adoption of SFAS No.123(R) using the modified prospective method resulted in the Company
recognizing compensation expense of $582 thousand for fiscal 2006. The Company recognized an
income tax benefit of $254 thousand during the fiscal year ended September 30, 2006 related to the
exercise of non-qualified stock options. As of September 30, 2006, there were approximately $1.1
million of total unrecognized compensation expense related to unvested options granted under the
option plans. The Company used a 7.5% forfeiture to arrive at this expense. This cost is expected
to be fully recognized by the end of fiscal Year 2010. During the year ended September 30, 2006,
the aggregate intrinsic value of options exercised under our stock plan was $887 thousand
determined as of the date of option exercise.
A summary for the Companys stock option activity as of September 30, 2006, and changes during
fiscal 2006 is presented in the following table:
Page 55 of 70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
Aggregate |
|
|
|
Number |
|
|
Weighted Average |
|
Average Remaining |
|
Intrinsic Value |
|
|
|
of Shares |
|
|
Exercise Price |
|
Contractual Term |
|
as of 9/30/06 |
|
Outstanding at September 30, 2005 |
|
|
4,153,206 |
|
|
$ |
17.96 |
|
|
|
|
|
|
|
|
|
Granted |
|
|
300,000 |
|
|
$ |
14.41 |
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(234,469 |
) |
|
$ |
13.03 |
|
|
|
|
|
|
|
|
|
Forfeited |
|
|
(12,750 |
) |
|
$ |
12.73 |
|
|
|
|
|
|
|
|
|
Expired |
|
|
(521,092 |
) |
|
$ |
19.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2006 |
|
|
3,684,895 |
|
|
$ |
17.83 |
|
|
|
5.68 |
|
|
$ |
4,883,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested or expected to vest at
September 30, 2006 |
|
|
3,629,372 |
|
|
$ |
17.89 |
|
|
|
5.58 |
|
|
$ |
4,752,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at September 30, 2006 |
|
|
3,261,770 |
|
|
$ |
18.34 |
|
|
|
5.54 |
|
|
$ |
3,792,691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The estimated weighted average fair value of the options granted was $5.65 for 2005 option
grants and $3.16 for 2004 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 and 42% for fiscal year 2004;
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 and 2.0 years for 2004.
The estimated weighted average fair value of options granted during 2006 was $4.35 using the
Black-Scholes option pricing model with the following assumptions: weighted average dividend yield
based on historic dividend rates at the date of the grant, weighted average volatility of 29% for
fiscal year 2006, weighted average risk free interest based on the treasury bill rate of 10-year
instruments at the date of grant (5.0%), and a weighted average expected term of 4.5 years for
2006.
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, 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 |
|
|
5,000 |
|
|
$ |
15.00 |
|
Exercised |
|
|
(123,334 |
) |
|
$ |
11.33 |
|
Canceled |
|
|
(436,367 |
) |
|
$ |
15.92 |
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2005 |
|
|
4,153,206 |
|
|
$ |
17.96 |
|
Granted |
|
|
300,000 |
|
|
$ |
14.41 |
|
Exercised |
|
|
(234,469 |
) |
|
$ |
13.03 |
|
Canceled |
|
|
(533,842 |
) |
|
$ |
19.27 |
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2006 |
|
|
3,684,895 |
|
|
$ |
17.83 |
|
|
|
|
|
|
|
|
|
At September 30, 2006, 2005 and 2004, options to purchase 3,261,770, 3,836, and 2,144,778 shares of
common stock, respectively, were exercisable at weighted average exercise prices of $18.34, $18.37
and $19.68, respectively.
(b)Restricted Stock
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 of one
year. 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. This plan expired in August
2005.
The Company measures compensation cost related to restricted shares using the quoted market
price on the grant date. During fiscal year ended 2006, the Company recognized compensation
expense of $193 thousand related to restricted shares and expects to recognize $91 thousand during
fiscal Year 2007.
Page 56 of 70
A summary for the Companys restricted stock activity as of September 30, 2006, and changes
during fiscal 2006 is presented in the following table:
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
Weighted Average |
|
|
of Shares |
|
|
Grant Date Fair Value |
Outstanding at September 30, 2005 |
|
|
28,660 |
|
|
$ |
16.76 |
|
Granted |
|
|
14,000 |
|
|
$ |
15.56 |
|
Vested |
|
|
(14,001 |
) |
|
$ |
17.24 |
|
Forfeited |
|
|
|
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2006 |
|
|
28,659 |
|
|
$ |
15.94 |
|
|
|
|
|
|
|
|
|
(c) Stock Purchase Plan
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, 2006, employees had purchased 595,032 shares
under this plan. Beginning April 1, 2005, the Company suspended contributions into the plan.
(d) 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, 2006, $2.7
million of compensation remained deferred under this plan. Beginning on October 1, 2005, the
Company has suspended deferrals into the plan.
(15) Employee Benefit Plans
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 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 $2.2 million, $2.4 million and
$2.1 million in years 2006, 2005 and 2004, respectively.
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 $6.3 million, $5.4 million and $5.3 million in years 2006,
2005 and 2004, respectively.
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. 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.
Page 57 of 70
Compensation (benefit) expense associated with this agreement was
approximately $41 thousand, $861 thousand and $199 thousand in fiscal years 2006, 2005 and 2004,
respectively. At September 30, 2006, 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 $8.3 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 $1.7 million at September 30, 2006 and 2005, 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 2006, 2005 and 2004 were $370 thousand, $721 thousand and $774 thousand,
respectively. At September 30, 2006, the Company had recorded a liability of $5.5 million
associated with these agreements.
(16) Related Parties
In fiscal 2005, the Company leased two properties from an entity 50% owned by Monroe Carell,
Jr., the Companys chairman, for a combined base rent of $725 thousand plus percentage rent over
specified thresholds. Total rent expense, including percentage rent, was $875 thousand, $321
thousand and $296 thousand in 2006, 2005 and 2004, 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%.
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, 2006, 2005 and 2004, the
Company recognized expense of $591 thousand, $649 thousand and $339 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 earnings of approximately $460 thousand in fiscal 2006
and losses of approximately $ 80 thousand and $636 thousand, in fiscal years 2005 and 2004,
respectively.
(17) Contingencies
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 or
liquidity of the Company, but could have a material effect on the results of operations in a given
reporting period. Where the Company believes that a loss is both probable and estimable, such
amounts have been recorded in the consolidated financial statements. For other pending or
threatened lawsuits, due to the early stage of the litigation management has not yet concluded
whether it is at least reasonably possible that the Company will incur a loss upon resolution.
The Company has employment and severance agreements with certain employees which require
payments by the Company upon the occurrence of certain events.
(18) 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, Greece, Poland, and Switzerland. Revenues attributable to foreign
operations were less than 10% of consolidated revenues for each of fiscal years 2006, 2005 and
2004. In 2006, the United Kingdom and Canada account for 24.9% and 38.9% of total foreign
revenues, respectively.
Page 58 of 70
A summary of information about the Companys foreign and domestic continuing operations is as
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
Total revenues, excluding reimbursement of
management contract expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Domestic |
|
$ |
602,668 |
|
|
$ |
626,054 |
|
|
$ |
634,807 |
|
Foreign |
|
|
38,885 |
|
|
|
26,711 |
|
|
|
48,141 |
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
641,553 |
|
|
$ |
652,765 |
|
|
$ |
682,948 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
Domestic |
|
$ |
80,355 |
|
|
$ |
90,955 |
|
|
$ |
42,937 |
|
Foreign |
|
|
(12,416 |
) |
|
|
(20,043 |
) |
|
|
7,644 |
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
67,939 |
|
|
$ |
70,912 |
|
|
$ |
50,581 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations before
minority interest, and income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
Domestic |
|
$ |
67,111 |
|
|
$ |
81,864 |
|
|
$ |
28,350 |
|
Foreign |
|
|
(13,580 |
) |
|
|
(21,572 |
) |
|
|
3,851 |
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
53,531 |
|
|
$ |
60,292 |
|
|
$ |
32,201 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Identifiable assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Domestic |
|
$ |
744,074 |
|
|
$ |
821,663 |
|
|
|
|
|
Foreign |
|
|
44,296 |
|
|
|
46,151 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
788,370 |
|
|
$ |
867,814 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2006, 2005 and
2004 (in thousands) and identifiable assets as of September 30, 2006 and 2005. During fiscal year
2006, 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, |
|
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
Revenues (a): |
|
|
|
|
|
|
|
|
|
|
|
|
Segment One |
|
$ |
62,439 |
|
|
$ |
65,716 |
|
|
$ |
70,703 |
|
Segment Two |
|
|
97,493 |
|
|
|
98,585 |
|
|
|
104,462 |
|
Segment Three |
|
|
107,855 |
|
|
|
107,818 |
|
|
|
107,095 |
|
Segment Four |
|
|
235,186 |
|
|
|
241,857 |
|
|
|
243,489 |
|
Segment Five |
|
|
71,388 |
|
|
|
74,092 |
|
|
|
76,633 |
|
Segment Six |
|
|
17,633 |
|
|
|
17,707 |
|
|
|
17,382 |
|
Segment Seven |
|
|
40,549 |
|
|
|
37,816 |
|
|
|
43,552 |
|
Other |
|
|
9,010 |
|
|
|
9,174 |
|
|
|
19,632 |
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
641,553 |
|
|
$ |
652,765 |
|
|
$ |
682,948 |
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
Segment One |
|
$ |
5,032 |
|
|
$ |
2,800 |
|
|
$ |
5,045 |
|
Segment Two |
|
|
6,496 |
|
|
|
3,010 |
|
|
|
2,671 |
|
Segment Three |
|
|
13,536 |
|
|
|
4,697 |
|
|
|
4,455 |
|
Segment Four |
|
|
13,637 |
|
|
|
51,464 |
|
|
|
3,276 |
|
Segment Five |
|
|
11,508 |
|
|
|
10,254 |
|
|
|
10,411 |
|
Segment Six |
|
|
3,811 |
|
|
|
3,517 |
|
|
|
3,246 |
|
Segment Seven |
|
|
37 |
|
|
|
(7,534 |
) |
|
|
5,439 |
|
Other |
|
|
13,882 |
|
|
|
2,704 |
|
|
|
16,038 |
|
|
|
|
|
|
|
|
|
|
|
Total operating earnings (loss) |
|
$ |
67,939 |
|
|
$ |
70,912 |
|
|
$ |
50,581 |
|
|
|
|
|
|
|
|
|
|
|
Page 59 of 70
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
2006 |
|
|
2005 |
|
Identifiable assets: |
|
|
|
|
|
|
|
|
Segment One |
|
$ |
20,878 |
|
|
$ |
18,666 |
|
Segment Two |
|
|
42,533 |
|
|
|
45,626 |
|
Segment Three |
|
|
74,218 |
|
|
|
56,120 |
|
Segment Four |
|
|
305,061 |
|
|
|
312,329 |
|
Segment Five |
|
|
27,566 |
|
|
|
29,961 |
|
Segment Six |
|
|
12,221 |
|
|
|
13,707 |
|
Segment Seven |
|
|
43,129 |
|
|
|
49,095 |
|
Other |
|
|
262,764 |
|
|
|
342,310 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
788,370 |
|
|
$ |
867,814 |
|
|
|
|
|
|
|
|
(a) Excludes reimbursement of management contract expenses.
Segment One encompasses the Midwestern region of the United States. It also includes Canada.
Segment Two encompasses the southeastern region of the United States to include Washington DC and Baltimore.
It also includes the Mid Atlantic region including Pennsylvania and Western New York.
Segment Three encompasses Nashville, TN, Noxville, TN, Memphis, TN, Nebraska, Colorado, Missouri, and the western region of the
United States.
Segment Four encompasses the northeastern region of the United States to include New York City, New Jersey, and Boston.
Segment Five encompasses Florida, Alabama, parts of Tennessee and the southeastern region of the United States to include
the Gulf Coast region and Texas.
Segment Six encompasses the USA Parking acquisition.
Segment Seven encompasses Miami, FL, Europe, Puerto Rico, Central and South America.
Other encompasses the home office, eliminations, owned real estate and certain partnerships.
(19) Subsequent Event
In October 2006, the Company sold its operations in Poland, which has been included in
discontinued operations. The financial impact of the sale of Poland is not significant to the
Company. The Company received $0.3 million from the sale of Poland.
On November 28, 2006, the Company announced that it has retained The Blackstone Group L.P. as
its financial advisor to assist the Company in exploring strategic alternatives to enhance
stockholder value.
Page 60 of 70
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
(a) Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the
effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) as of the end of the period covered by this annual report. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures effectively and timely provide them with material information
relating to us and our consolidated subsidiaries required to be disclosed in the reports we file or
submit under the Exchange Act.
(b) Managements Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control
over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange
Act of 1934. The Companys internal control over financial reporting is 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. The Companys internal control over financial reporting included those policies and
procedures that:
|
(i) |
|
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the Company; |
|
|
(ii) |
|
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 |
|
|
(iii) |
|
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.
Management assessed the effectiveness of the Companys internal control over financial reporting as
of September 30, 2006. In making this assessment, management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control-Integrated Framework.
Based on managements assessment and those criteria, management believes that, as of September 30,
2006, the Companys internal control over financial reporting was effective.
The Companys independent registered public accounting firm, KPMG LLP, has issued an attestation
report on managements assessment of the Companys internal control over financial reporting. That
report begins below.
(c) Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during our fiscal quarter
ended September 30, 2006 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
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 and
subsidiaries (the Company) maintained effective internal control over financial reporting as of
September 30, 2006, based on criteria established in Internal Control-Integrated Framework, issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Companys
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.
Page 61 of 70
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 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.
In our opinion, managements assessment that the Company maintained effective internal control over
financial reporting as of September 30, 2006, is fairly stated, in all material respects, based on
criteria established in Internal ControlIntegrated Framework, issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of
September 30, 2006, based on criteria established in Internal ControlIntegrated Framework,
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheets of the Company as of September 30, 2006 and
2005, and the related consolidated statements of operations, shareholders equity and comprehensive
income, and cash flows for each of the years in the three-year period ended September 30, 2006, and
our report dated December 14, 2006 expressed an unqualified opinion on those consolidated financial
statements. Our report refers to a change in accounting for share-based payments in fiscal 2006.
/s/ KPMG LLP
Nashville, Tennessee
December 14, 2006
Page 62 of 70
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.
The exhibits are listed in the Index to Exhibits which appears immediately following the
signature page.
Page 63 of 70
CENTRAL PARKING CORPORATION and SUBSIDIARIES
Schedule II Valuation and Qualifying Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in thousands |
|
|
|
|
|
Additions |
|
|
|
|
|
|
|
|
Balance at |
|
Charged (Credited) to |
|
Charged to |
|
|
|
|
|
Balance at |
|
|
Beginning of |
|
Costs and |
|
Other |
|
(Deductions) |
|
End of |
Description |
|
Period |
|
Expenses |
|
Accounts |
|
Recoveries |
|
Period |
Allowance for Doubtful
Accounts and Notes Receivable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Year ended September 30, 2006 |
|
|
10,268 |
|
|
|
(1,951 |
) |
|
|
|
|
|
|
(5,406 |
) |
|
|
2,911 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Tax Valuation Account |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended September 30, 2004 |
|
$ |
5,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
5,497 |
|
Year ended September 30, 2005 |
|
|
5,497 |
|
|
|
6,597 |
|
|
|
|
|
|
|
|
|
|
|
12,094 |
|
Year ended September 30, 2006 |
|
|
12,094 |
|
|
|
4,584 |
|
|
|
|
|
|
|
|
|
|
|
16,678 |
|
See accompanying report of Independent Registered Public Accounting Firm.
CENTRAL PARKING CORPORATION and SUBSIDIARIES
Schedule IV Mortgage Loans on Real Estate
September 30, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2006
|
|
None |
See accompanying report of Independent Registered Public Accounting Firm.
Page 64 of 70
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 14, 2006 |
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.
Monroe J. Carell, Jr. |
|
Chairman, Director
|
|
December 14, 2006 |
/s/ Emanuel Eads
Emanuel Eads |
|
President and Chief Executive Officer, Director
|
|
December 14, 2006 |
/s/ Jeff Heavrin
Jeff Heavrin |
|
Senior Vice President and
Chief Financial Officer (Principal Financial Officer)
|
|
December 14, 2006 |
/s/ Claude Blankenship
Claude Blankenship |
|
Director
|
|
December 14, 2006 |
/s/ Lewis Katz
Lewis Katz |
|
Director
|
|
December 14, 2006 |
/s/ Edward G. Nelson
Edward G. Nelson |
|
Director
|
|
December 14, 2006 |
/s/ Owen Shell, Jr
Owen Shell, Jr. |
|
Director
|
|
December 14, 2006 |
/s/ William Smith
William Smith |
|
Director
|
|
December 14, 2006 |
/s/ Ray Baker
Ray Baker |
|
Director
|
|
December 14, 2006 |
/s/ Kathryn Brown
Kathryn Brown |
|
Director
|
|
December 14, 2006 |
Page 65 of 70
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 Debentures due 2028 (Incorporated by reference to Exhibit 4.5 to the
Registrants Registration Statement No. 333-52497 on Form S-3). |
Page 66 of 70
|
|
|
Exhibit |
|
|
Number |
|
Document |
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). |
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4.7
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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). |
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10.1
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Executive Compensation Plans and Arrangements |
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(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). |
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(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). |
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(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). |
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(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). |
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(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). |
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(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) |
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(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) |
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(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.) |
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(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). |
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(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). |
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(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). |
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(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). |
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(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). |
Page 67 of 70
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Number |
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Document |
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(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). |
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(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). |
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(p) Amendment No. 1 effective June 1, 2005, to the 2003 Employment Agreement
between the Company and Jeff Heavrin. (Incorporated by reference to Exhibit
10.1 (p) to the Companys Report on
form 10-K for year ended Septebmer 2005) |
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(q) Emanuel Eads Employment Agreement dated as of August 2, 2005 (Incorporated
by reference to Exhibit 10.2 to the Companys Report on Form 10-Q for period
ended December 31, 2005) |
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(r) 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) |
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10.2
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(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). |
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(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). |
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10.3
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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). |
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10.4
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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). |
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10.5
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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). |
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10.6
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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). |
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10.7
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Form of Lease (Incorporated by reference to Exhibit 10.7 to the Companys Annual
Report on Form 10-K filed on December 21, 2001). |
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10.8
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1998 Employee Stock Purchase Plan (Incorporated by reference to Exhibit 10.16 to the
Companys Registration Statement No. 33-95640 on Form S-1). |
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10.9
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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). |
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10.10
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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). |
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10.11
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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). |
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10.12
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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). |
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10.13
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Lease Agreement dated as of October 6, 1995, by and between The Carell Family LLC and
Central Parking |
Page 68 of 70
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Exhibit |
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Number |
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Document |
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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). |
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10.14
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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). |
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10.15
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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). |
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10.16
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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). |
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10.17
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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). |
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10.18
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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). |
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10.19
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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) |
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10.20
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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). |
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10.21
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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). |
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10.22
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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). |
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10.23
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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) |
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10.24
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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). |
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10.25
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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). |
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10.26
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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). |
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10.27
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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). |
Page 69 of 70
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Exhibit |
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Number |
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Document |
10.28
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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").
(Incorporated by reference to Exhibit 10.28 of the Company's Report
on Form 10-K for the period ended September 30, 2005) |
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10.29
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Fifth Amendment to Credit Agreement dated as of April 7, 2006, by Bank of America, N.
A. and Central Parking Corporation (Incorporated by reference to Exhibit 10.1 on Form
10-Q filed on May 10,2006) |
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21
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Subsidiaries of the Registrant (filed herewith). |
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23
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Consent of KPMG LLP (filed herewith). |
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31.1
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Certification of Emanuel Eads pursuant to Rule 13a-14(a). |
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31.2
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Certification of Jeff Heavrin pursuant to Rule 13a-14(a). |
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32.1
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Certification of Emanuel Eads pursuant to Section 1350. |
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32.2
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Certification of Jeff Heavrin pursuant to Section 1350. |
Page 70 of 70