<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
COMMISSION FILE NUMBER: 333-50433
AP HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 06-1269403
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
900 N. MICHIGAN AVENUE, (312) 274-2000
CHICAGO, ILLINOIS 60611-1542 (Registrant's Telephone Number,
(Address of Principal Executive Offices) Including Area Code)
Former name, address and fiscal year, if changed since last report:
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 X NO
<PAGE> 2
AP HOLDINGS, INC.
FORM 10-Q INDEX
<TABLE>
<S> <C> <C>
Part I. Financial Information
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets as of September 30, 1999
and December 31, 1998...............................................................................3
Condensed Consolidated Statements of Operations for the three and nine
months ended September 30, 1999 and September 30, 1998.............................................4
Condensed Consolidated Statements of Cash Flows for the nine
months ended September 30, 1999 and September 30, 1998..............................................5
Notes to Condensed Consolidated Financial Statements................................................6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..............11
Item 3. Quantitative and Qualitative Disclosures About Market Risk.........................................17
Part II. Other Information
Item 1. Legal Proceedings..................................................................................18
Item 2. Changes in Securities and Use of Proceeds..........................................................18
Item 3. Defaults upon Senior Securities....................................................................18
Item 4. Submission of Matters to a Vote of Security Holders................................................18
Item 5. Other Information..................................................................................18
Item 6. Exhibits and Reports on Form 8-K...................................................................18
Signatures.........................................................................................................19
Exhibits...........................................................................................................20
</TABLE>
2
<PAGE> 3
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AP HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999 DECEMBER 31, 1998
------------------ -----------------
ASSETS (UNAUDITED) (SEE NOTE)
<S> <C> <C>
Current assets:
Cash and cash equivalents ............................................... $ 6,887 $ 19,183
Notes and accounts receivable, net ...................................... 36,969 32,639
Prepaid expenses and supplies ........................................... 1,766 2,806
--------- ---------
Total current assets ....................................................... 45,622 54,628
Leaseholds and equipment, net .............................................. 34,309 27,618
Advances and deposits ...................................................... 2,635 3,318
Cost in excess of net assets acquired ...................................... 108,686 108,741
Intangible and other assets ................................................ 15,788 17,943
Due from affiliate ......................................................... 2,580 409
--------- ---------
Total assets ............................................................ $ 209,620 $ 212,657
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable ........................................................ $ 15,377 $ 18,184
Accrued and other current liabilities ................................... 26,171 43,624
Current portion of long-term borrowings ................................. 1,201 1,939
--------- ---------
Total current liabilities .................................................. 42,749 63,747
Long-term borrowings, excluding current portion ............................ 215,923 191,666
Other long-term liabilities ................................................ 11,123 11,675
Common stock of subsidiary subject to put/call rights;
5.01 shares issued and outstanding ...................................... 4,589 4,589
Stockholders' deficit:
Preferred stock, 12% quarterly, cumulative, par value $.01 per share, 10,000
shares authorized; 3,432.7 shares at September 30, 1999 and 3,151.7
shares at December 31, 1998 issued and outstanding ...................... 30,995 28,364
Common stock, par value $1.00 per share; 1,000 shares authorized;
26.3 shares issued and outstanding ...................................... 1 1
Additional paid-in capital ................................................. 2,088 2,088
Accumulated deficit ........................................................ (97,848) (89,473)
--------- ---------
Total stockholders' deficit ................................................ (64,764) (59,020)
--------- ---------
Total liabilities and stockholders' deficit ............................. $ 209,620 $ 212,657
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
Note: The balance sheet at December 31, 1998 has been derived from the audited
financial statement at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
3
<PAGE> 4
AP HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
----------------------------------------- ------------------------------------------
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998 SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Gross customer collections ............ $ 356,500 $ 284,000 $ 1,012,100 $ 723,200
=========== =========== =========== ===========
Parking services revenue:
Lease contracts ................... $ 46,841 $ 45,426 $ 147,366 $ 110,727
Management contracts .............. 13,435 10,532 36,609 24,079
----------- ----------- ----------- -----------
60,276 55,958 183,975 134,806
Cost of parking services:
Lease contracts ................... 40,523 40,294 129,415 98,446
Management contracts .............. 5,018 3,473 13,180 8,284
----------- ----------- ----------- -----------
45,541 43,767 142,595 106,730
----------- ----------- ----------- -----------
Gross profit .......................... 14,735 12,191 41,380 28,076
General and administrative expenses ... 8,580 7,302 23,096 16,663
Restructuring and other unusual costs.. 955 -- 1,365 14,100
Depreciation and amortization ......... 2,284 1,948 6,434 4,919
----------- ----------- ----------- -----------
Operating income (loss) ............... 2,916 2,941 10,485 (7,606)
Interest expense (income):
Interest expense .................. 5,342 4,927 15,807 10,922
Interest income ................... (354) (478) (461) (1,264)
----------- ----------- ----------- -----------
4,988 4,449 15,346 9,658
----------- ----------- ----------- -----------
Loss before minority interest, income
taxes and extraordinary item ...... (2,072) (1,508) (4,861) (17,264)
Minority interest ..................... 102 144 359 395
Income tax expense .................... 241 185 524 245
----------- ----------- ----------- -----------
Loss before extraordinary item ........ (2,415) (1,837) (5,744) (17,904)
Extraordinary item .................... -- -- -- 2,816
----------- ----------- ----------- -----------
Net loss .............................. (2,415) (1,837) (5,744) (20,720)
Preferred stock dividends ............. (904) (802) (2,631) (2,337)
----------- ----------- ----------- -----------
Net loss available for common
stockholders ...................... $ (3,319) $ (2,639) $ (8,375) $ (23,057)
=========== =========== =========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 5
AP HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------------------------------
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
------------------ ------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ........................................................... $ (5,744) $ (20,720)
Adjustments to reconcile net loss to net cash
used in operations:
Depreciation and amortization ................................... 6,434 4,919
Provision for impairment of assets .............................. -- 2,400
Interest accreted on long-term borrowing ........................ 3,777 2,346
Change in operating assets and liabilities, net of acquisitions . (25,296) (10,114)
--------- ---------
Net cash used in operating activities .............................. (20,829) (21,169)
INVESTING ACTIVITIES:
Businesses acquired, net of cash, and including direct
acquisition costs ............................................... (3,104) (87,648)
Purchase of leaseholds and equipment ............................... (6,996) (4,275)
Purchase of leaseholds and equipment by joint ventures ............. (303) (299)
Increase in other assets ........................................... -- (1,073)
--------- ---------
Net cash used in investing activities .............................. (10,403) (93,295)
FINANCING ACTIVITIES:
Proceeds from long-term borrowings ................................. 20,550 190,139
Payments on long-term borrowings ................................... (1,284) (41,801)
Payments on joint venture borrowings ............................... (330) (400)
Payments of debt issuance costs .................................... -- (6,180)
Redemption of redeemable preferred stock ........................... -- (8,000)
Redemption of common stock subject to put/call rights .............. -- (4,000)
--------- ---------
Net cash provided by financing activities .......................... 18,936 129,758
Increase (decrease) in cash and cash equivalents ................... (12,296) 15,294
Cash and cash equivalents at beginning of period ................... 19,183 3,322
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ......................... $ 6,887 $ 18,616
========= =========
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
Interest ........................................................ $ 13,557 $ 8,619
Taxes ........................................................... 487 219
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE> 6
AP HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(IN THOUSANDS, UNAUDITED)
1. INTERIM FINANCIAL DATA
AP Holdings ("Holdings") is a subsidiary of Holberg Industries, Inc.
("Holberg"), which owns 84% of the outstanding voting stock and 100% of the
preferred stock of APCOA/Standard Parking, Inc. ("APCOA/Standard" or "the
Company"), formerly known as APCOA, Inc. ("APCOA"). APCOA/Standard accounts for
all of Holdings' assets and Holdings conducts substantially all of its business
through APCOA/Standard.
The accompanying unaudited condensed consolidated financial statements
of Holdings, have been prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements.
In the opinion of management, all adjustments (consisting only of
adjustments of a normal and recurring nature) considered necessary for a fair
presentation of the financial position and results of operations have been
included. Operating results for the nine-month period ended September 30, 1999
are not necessarily indicative of the results that might be expected for the
fiscal year ending December 31, 1999. The financial statements presented in this
Report should be read in conjunction with the consolidated financial statements
and footnotes thereto included in Holdings' 1998 Form 10-K filed March 31, 1999.
Certain reclassifications have been made to the 1998 financial
information to conform to the 1999 presentation.
2. ACQUISITIONS
In January 1998, APCOA entered into a definitive Combination Agreement
to acquire all of the outstanding capital stock, partnership and other equity
interests of Standard Parking Corporation and certain of its affiliates
("Standard"). On March 30, 1998, APCOA acquired Standard for consideration
consisting of $65,000 in cash, 16% of the common stock of APCOA outstanding as
of January 15, 1998 and the assumption of certain liabilities, including a
$5,000 consulting and non-compete obligation for one of the former owners of
Standard, which represents the current value of the payments to be made, as
determined by consulting actuaries. In addition, on March 30, 1998, APCOA paid
to the Standard owners $2,822, generally representing Standard's earnings from
January 1 through the date of the acquisition and Standard's cash on hand at
such time. Financing of the acquisition included a contribution from AP
Holdings, Inc., the parent company of APCOA, of $40,683, in exchange for
redeemable preferred stock, and other transactions as described below and in
Note 3.
The acquisition has been accounted for under the purchase method;
accordingly, Standard's results are included in the consolidated financial
statements of APCOA/Standard from the date of acquisition. Following is the
final purchase price allocation based upon a final determination of the fair
value of assets acquired and liabilities assumed.
<TABLE>
<S> <C>
Cash consideration............................................................. $ 65,000
5.01 shares of common stock issued, at calculated put/call value............... 4,589
Closing distribution to the Standard owners.................................... 2,822
Consulting and non-compete agreement with former owner......................... 5,000
Direct acquisition costs....................................................... 7,179
--------
Total purchase price........................................................... $ 84,590
========
Cash........................................................................... $ 1,711
Notes and accounts receivable.................................................. 1,815
Prepaid expenses............................................................... 545
Leaseholds and equipment....................................................... 7,971
Consulting and non-compete agreement........................................... 5,000
Cost in excess of net assets acquired.......................................... 74,519
Other assets................................................................... 415
Accounts payable and accrued expenses.......................................... (2,758)
Other costs and liabilities.................................................... (4,628)
--------
$ 84,590
========
</TABLE>
6
<PAGE> 7
AP HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
The put/call value for the 5.01 shares of common stock described above
is based primarily upon a multiple of EBITDA, as defined, of the Company. Under
certain circumstances the Company can be required to repurchase these shares,
however in no case will the Company be obligated to do so prior to March 2001.
Direct acquisition costs incurred in connection with the acquisition include
investment banking fees of $3,289 and legal and other professional fees of
$3,890.
Other costs and liabilities include pre-existing Standard vacation and
bonus liabilities of $1,089. Also included in other costs and liabilities are
software modifications of $870, re-branding costs of $510 and other costs of
$2,159 incurred in connection with the Company's business plan to integrate
Standard's operations.
The following unaudited pro forma results of operations for the
nine-month period ended September 30, 1998 assume the acquisition of Standard
occurred at the beginning of the period presented:
NINE MONTHS ENDED
SEPTEMBER 30, 1998
------------------
Net revenue.......................... $ 149,365
Loss before extraordinary item....... (17,993)
This pro forma information does not purport to be indicative of the
results that actually would have been obtained if the combination had taken
place at the beginning of the period presented and is not intended to be a
projection of future results.
On January 22, 1998, the Company acquired the assets of Huger Parking
Company, LLC, d/b/a Dixie Parking, for $1,000 in cash at closing and $3,250 in
notes payable. On May 1, 1998, the Company acquired the remaining 76% interest
in Executive Parking Industries LLC, through the acquisition of all of the
outstanding capital stock of S&S Parking, Inc., the sole asset of which was such
76% interest in EPI, for $7,020 in cash. In addition, on June 1, 1998,
APCOA/Standard acquired all of the outstanding capital stock of Century Parking,
Inc., and Sentry Parking Corporation, for $5,168 in cash at closing and $1,000
payable on the third anniversary of the closing date. On September 1, 1998,
APCOA/Standard acquired the operations of Virginia Parking Service, Inc. in a
stock purchase transaction for $3,114 in cash, including direct costs, and up to
$1,250 in notes payable over five years with interest at the prime rate. All of
these acquisitions have been accounted for under the purchase method,
accordingly operating results of the acquired companies have been included in
the Condensed Consolidated Financial Statements from the date of acquisition.
The historical operating results of the businesses prior to acquisition were not
material to the consolidated results of APCOA/Standard.
On April 1, 1999, the Company acquired the assets of Pacific Rim
Parking, Inc. ("Pacific Rim") in Los Angeles for $750 in cash and up to $750 in
non-interest bearing notes payable over five years. On May 1, 1999 the Company
acquired various contracts of System Parking Inc. in Atlanta for $250 in cash.
Effective as of July 1, 1999 the Company acquired all of the outstanding stock
of Universal Park Holdings Inc., operating under the names U-Park and Select
Valet Parking, in Vancouver B.C. for $1,130 plus a multiple of EBITDA on a
future earnout as defined in the agreement. These acquisitions have been
accounted for under the purchase method. The historical operating results of the
businesses prior to acquisition were not material relative to the consolidated
results of APCOA/Standard.
3. RESTRUCTURING AND OTHER UNUSUAL COSTS
In conjunction with the March 1998 acquisition of Standard (See Note
2), the Company adopted a business plan which included consolidating the
Company's headquarters in Chicago and company staff reductions. Through
September 30, 1999, restructuring and other unusual costs aggregating $19,415
have been recorded in connection with the implementation of this plan. Of the
$16,740 cash component of this total, $16,437 has been disbursed through
September 30, 1999, and it is expected that the remainder will be disbursed by
the end of 1999.
Included in "Restructuring and other unusual costs" in the accompanying
condensed consolidated statements of operations for the nine months ended
September 30, 1999 and 1998 are the following:
7
<PAGE> 8
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-----------------------------------------
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
------------------ ------------------
<S> <C> <C>
Employee severance costs .............................. $ -- $ 5,400
Employee relocation costs ............................. -- 5,000
Impairment of assets that will no longer be used
(non-cash expenses) ................................ -- 2,400
Increase in insurance reserves ........................ -- 1,000
Incremental integration costs and other ............... 1,365 300
------- -------
$ 1,365 $14,100
======= =======
</TABLE>
Employee severance costs consist of cash compensation and related
expenses to 54 people for whom employment was terminated. Employee relocation
costs relate to the relocation and consolidation of the headquarters of the
Company, the relocation of two major field offices, moving Cleveland
headquarters staff members to Chicago and other relocations within the field
organization. The increase in insurance reserves results from a buyout of the
insurance program of APCOA in connection with the combination of APCOA and
Standard insurance programs. The impairment and abandonment of assets that will
no longer be used consists of the write-off of capitalized organization costs
and leasehold improvements. Other incremental integration costs associated with
the restructuring plan that do not qualify as exit costs are expensed as
incurred and included in "Restructuring and other unusual costs" in the
Condensed Consolidated Statements of Operations. These integration costs relate
primarily to actions to facilitate the accounting system consolidation and
activities to realign and centralize administrative and other support functions.
4. BORROWING ARRANGEMENTS
APCOA/Standard's $140,000 9 1/4% Senior Subordinated Notes were issued
in September of 1998 and are due In March of 2008. The Notes are registered with
the Securities and Exchange Commission. The Notes were exchanged for
unregistered notes with substantially identical terms, which had been issued
earlier in 1998 to finance the acquisition of Standard and retire certain
existing indebtedness, and for general working capital purposes.
Holdings' 11 1/4% Senior Discount Notes were issued in September of
1998 and are due in march of 2008. The Discount Notes are registered with the
Securities and Exchange Commission. The issuance was exchanged for unregistered
notes with substantially identical terms, which had been issued earlier in 1998
to finance the March 1998 acquisitions of Standard (see Note 2).
In March of 1998, the Company entered into a $40,000 revolving Senior
Credit Facility (the "Facility") with a group of banks. Rates of interest on
borrowings against the Facility are indexed to certain key variable rates. At
September 30, 1999, borrowings under the Facility aggregated $20,550 and there
were letters of credit outstanding against this Facility of $1,250.
The Notes and Senior Credit Facility contain covenants that limit
APCOA/Standard from incurring additional indebtedness and issuing capital stock,
restrict dividend payments, limit transaction with affiliates and restrict
certain other transactions. Substantially all of APCOA/Standard's net assets are
restricted under these provisions and covenants See Note 5).
In connection with the early extinguishment of debt in March 1998, the
Company recorded an extraordinary loss of $2,816. The extraordinary loss
represents the unamortized balance of debt issuance costs related to APCOA's
previous credit agreement of $727 and a prepayment fee of $2,089 related to
APCOA's previous credit agreement.
5. SUBSIDIARY GUARANTORS
All of the Company's direct or indirect wholly owned domestic
subsidiaries, including Standard, other than inactive subsidiaries, fully,
unconditionally, jointly and severally guarantee the Senior Subordinated Notes.
Separate financial statements of the guarantor subsidiaries are not separately
presented because, in the opinion of management, such financial statements are
not material to investors. The non-guarantor subsidiaries include joint
ventures, wholly owned subsidiaries of the Company organized under the laws of
foreign jurisdictions and inactive subsidiaries, all of which are included in
the Condensed Consolidated Financial Statements. The following is summarized
combining financial information for the Company, the guarantor subsidiaries of
the Company and the non-guarantor subsidiaries of the Company:
8
<PAGE> 9
<TABLE>
<CAPTION>
APCOA/ GUARANTOR NON-GUARANTOR
STANDARD SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
-------- ------------ ------------ ------------ -----
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
- -------------------
SEPTEMBER 30, 1999
Cash and cash equivalents .......................... $ 3,026 $ 3,598 $ 263 $ -- $ 6,887
Notes and accounts receivable ...................... 24,101 8,997 3,871 -- 36,969
Current assets ..................................... 27,441 13,672 4,509 -- 45,622
Leaseholds and equipment, net ...................... 17,221 12,069 5,019 -- 34,309
Cost in excess of net assets acquired, net ......... 18,591 89,304 791 -- 108,686
Investment in subsidiaries ......................... 110,336 -- -- (110,336) --
Total assets ....................................... 191,314 121,246 11,640 (110,336) 213,864
Accounts payable ................................... 12,204 931 2,242 -- 15,377
Current liabilities ................................ 28,383 6,962 7,404 -- 42,749
Long-term borrowings, excluding current portion .... 163,159 661 4,152 -- 167,972
Redeemable preferred stock ......................... 47,951 -- -- -- 47,951
Common stock subject to put/call rights ............ 4,589 -- -- -- 4,589
Total stockholders' equity (deficit) ............... (61,308) 111,531 (407) (110,336) (60,520)
Total liabilities and stockholders' equity (deficit) 191,314 121,246 11,640 (110,336) 213,864
DECEMBER 31, 1998
Cash and cash equivalents .......................... $ 10,784 $ 7,177 $ 1,222 $ -- $ 19,183
Notes and accounts receivable ...................... 27,406 3,657 1,576 -- 32,639
Current assets ..................................... 38,886 11,968 3,774 -- 54,628
Leaseholds and equipment, net ...................... 12,129 10,086 5,403 -- 27,618
Cost in excess of net assets acquired, net ......... 18,966 88,961 814 -- 108,741
Investment in subsidiaries ......................... 107,293 -- -- (107,293) --
Total assets ....................................... 193,411 118,881 11,770 (107,293) 216,769
Accounts payable ................................... 11,235 6,390 559 -- 18,184
Current liabilities ................................ 40,757 16,022 6,968 -- 63,747
Long-term borrowings, excluding current portion .... 142,716 277 4,499 -- 147,492
Redeemable preferred stock ......................... 44,174 -- -- -- 44,174
Common stock subject to put/call rights ............ 4,589 -- -- -- 4,589
Total stockholders' equity (deficit) ............... (48,710) 101,544 (449) (107,293) (54,908)
Total liabilities and stockholders' equity (deficit) 193,411 118,881 11,770 (107,293) 216,769
INCOME STATEMENT DATA:
- ----------------------
THREE MONTHS ENDED SEPTEMBER 30, 1999
Parking Revenue .................................... $ 27,184 $ 24,682 $ 8,410 $ -- $ 60,276
Gross profit ....................................... 7,011 6,494 1,230 -- 14,735
Restructuring and other unusual costs .............. 955 -- -- -- 955
Depreciation and amortization ...................... 1,061 980 243 -- 2,284
Operating income ................................... 1,991 253 672 -- 2,916
Interest expense, net .............................. 3,671 (25) 132 -- 3,778
Equity in earnings of subsidiaries ................. 660 -- -- (660) --
Net income (loss) .................................. (1,205) 279 381 (660) (1,205)
THREE MONTHS ENDED SEPTEMBER 30, 1998
Parking Revenue .................................... $ 22,341 $ 25,456 $ 8,161 $ -- $ 55,958
Gross profit ....................................... 5,279 6,649 263 -- 12,191
Depreciation and amortization ...................... 857 841 250 -- 1,948
Operating income (loss) ............................ 181 3,334 (574) -- 2,941
Interest expense, net .............................. 3,139 (1) 153 -- 3,291
Equity in earnings of subsidiaries ................. (2,510) -- -- 2,510
Net income (loss) .................................. (679) 3,330 (820) (2,510) (679)
NINE MONTHS ENDED SEPTEMBER 30, 1999
Parking Revenue .................................... $ 78,826 $ 75,098 $ 30,051 $ -- $ 183,975
Gross profit ....................................... 19,349 18,222 3,809 -- 41,380
Restructuring and other unusual costs .............. 1,365 -- -- -- 1,365
Depreciation and amortization ...................... 3,274 2,398 762 -- 6,434
Operating income ................................... 6,621 1,664 2,200 -- 10,485
Interest expense, net .............................. 11,053 (26) 410 -- 11,437
Equity in earnings of subsidiaries ................. 2,997 -- -- (2,997) --
Net income (loss) .................................. (1,835) 1,690 1,307 (2,997) (1,835)
NINE MONTHS ENDED SEPTEMBER 30, 1998
Parking Revenue .................................... $ 61,156 $ 45,919 $ 27,731 $ -- $ 134,806
Gross profit ....................................... 13,970 12,089 2,017 -- 28,076
Depreciation and amortization ...................... 2,457 1,681 781 -- 4,919
Restructuring and other unusual costs .............. 14,100 -- -- -- 14,100
Operating income (loss) ............................ (13,787) 6,358 (177) -- (7,606)
Interest expense, net .............................. 6,843 (11) 480 -- 7,312
Equity in earnings of subsidiaries ................. (5,365) -- -- 5,365 --
Net income (loss) .................................. (18,375) 6,364 (998) (5,365) (18,374)
</TABLE>
9
<PAGE> 10
<TABLE>
<S> <C> <C> <C> <C> <C>
STATEMENT OF CASH FLOW DATA:
- ----------------------------
NINE MONTHS ENDED SEPTEMBER 30, 1999
Net cash used in operating activities $ (17,645) $ (2,528) $ (656) $ -- $ (20,829)
Investing activities:
Purchase of leaseholds and equipment ............ (5,945) (1,051) -- -- (6,996)
Purchase of leaseholds and equipment by joint
ventures ........................................ -- -- (303) -- (303)
Businesses acquired ............................. (3,104) -- -- -- (3,104)
Net cash used in investing activities ............. (9,049) (1,051) (303) -- (10,403)
Financing activities:
Proceeds from long-term borrowings .............. 20,550 -- -- -- 20,550
Payments on long-term borrowings ................ (1,614) -- -- -- (1,614)
Net cash provided by financing activities ......... 18,936 -- -- -- 18,936
NINE MONTHS ENDED SEPTEMBER 30, 1998
Net cash provided by (used in) operating activities $ (24,031) $ 2,140 $ 722 $ -- $ (21,169)
Investing activities:
Purchase of leaseholds and equipment ............ (2,902) (1,373) -- -- (4,275)
Purchase of leaseholds and equipment by joint
ventures ........................................ -- -- (299) -- (299)
Businesses acquired ............................. (92,097) 4,449 -- -- (87,648)
Other ........................................... (5,073) -- -- -- (5,073)
Net cash provided by (used in) investing activities (100,072) 3,076 (299) -- (97,295)
Financing activities:
Proceeds from long-term borrowings .............. 149,456 -- -- -- 149,456
Payments on long-term borrowings ................ (41,801) -- -- -- (41,801)
Payments on debt issuance costs ................. (6,180) -- -- -- (6,180)
Payments on joint venture debt .................. -- -- (400) -- (400)
Proceeds from issuance of preferred stock ....... 40,683 -- -- -- 40,683
Redemption of redeemable preferred stock ........ (8,000) -- -- -- (8,000)
Net cash provided by (used in) financing activities 134,158 -- (400) -- 133,758
</TABLE>
6. SUBSEQUENT EVENTS
As of November 12, 1999, the Company obtained an Amendment to its
Senior Credit Facility for purposes of funding future acquisitions. The
principal changes to the facility provide for additional borrowings of $15
million, thereby increasing the borrowings under the facility to $55 million,
with the potential to add $10 million of additional capacity at a later date,
and the revision of certain financial covenants and ratios.
10
<PAGE> 11
PART I FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
AP Holdings ("Holdings") is a subsidiary of Holberg Industries, Inc.
("Holberg"), which owns 84% of the outstanding voting stock and 100% of the
preferred stock of APCOA/Standard Parking, Inc. ("APCOA/Standard" or "the
Company"), formerly known as APCOA, Inc. ("APCOA"). APCOA/Standard accounts for
all of Holdings' assets and Holdings conducts substantially all of its business
through APCOA/Standard.
APCOA/Standard operates in a single reportable segment operating
parking facilities under two types of arrangements: management contracts and
leases. Under a management contract, APCOA/Standard typically receives a base
monthly fee for managing the property, and may also receive an incentive fee
based on the achievement of facility revenues above a base amount. In some
instances, APCOA/Standard also receives certain fees for ancillary services.
Typically, all of the underlying revenues, expenses and capital expenditures
under a management contract flow through to the property owner, not to
APCOA/Standard. Under lease arrangements, APCOA/Standard generally pays to the
property owner either a fixed annual rental, a percentage of gross customer
collections or a combination thereof. APCOA/Standard collects all revenues under
lease arrangements and is responsible for most operating expenses, but it is
typically not responsible for major maintenance or capital expenditures. As of
September 30, 1999, APCOA/Standard operated approximately 76% of its 1,833
parking facilities under management contracts and approximately 24% under
leases.
Parking services revenue--leases. Lease parking services revenues
consist of all gross customer collections received at a leased facility.
Parking services revenue--management contracts. Management contract
revenues consist of management fees, including both fixed and revenue-based, and
fees for ancillary services such as accounting, equipment leasing, consulting,
and other value-added services with respect to managed locations, but exclude
gross customer collections at such locations. Management contracts generally
provide APCOA/Standard a management fee regardless of the operating performance
of the underlying facility.
Cost of parking services--leases. Cost of parking services under lease
arrangements consist of (i) contractual rental fees paid to the facility owner
and (ii) all operating expenses incurred in connection with operating the leased
facility. Contractual fees paid to the facility owner are based on either a
fixed contractual amount or a percentage of gross revenue, or a combination
thereof. Generally, under a lease arrangement APCOA/Standard is not responsible
for major capital expenditures or property taxes.
Cost of parking services--management contracts. Cost of parking
services under management contracts is generally passed through to the facility
owner, therefore these costs are not included in the results of operations of
the Company. Several APCOA/Standard contracts, however, require APCOA/Standard
to pay for certain costs that are offset by larger management fees. These
contracts tend to be large airport properties with high cost structures.
General and administrative expenses. General and administrative
expenses include primarily salaries, wages, travel and office related expenses
for the headquarters and field office and supervisory employees.
11
<PAGE> 12
SUMMARY OF OPERATING FACILITIES
The following table reflects the Company's facilities at the end of the
periods indicated:
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998 September 30, 1998
------------------ ----------------- ------------------
<S> <C> <C> <C>
Managed facilities..................... 1,399 1,190 1,046
Leased facilities...................... 434 446 411
--------- -------- --------
Total facilities....................... 1,833 1,636 1,457
========= ======== ========
</TABLE>
The Company's strategy is to add locations in core cities where a
concentration of locations improves customer service levels and operating
margins. In general, contracts added as set forth in the table above followed
this strategy. The decline in the number of leased facilities through nine
months of 1999 are the result of the conversion of 6 locations from leases to
management contracts and the net loss of 6 other lease locations.
RESULTS OF OPERATIONS
Gross customer collections consist of gross receipts collected at all
leased and managed properties, including unconsolidated affiliates. Gross
customer collections increased $72.5 million, or 25.5%, to $356.5 million in the
third quarter of 1999 compared to $284.0 million in the third quarter of 1998.
This increase is attributable to the addition of 376 locations during the
period. Gross customer collections increased $288.9 million or 39.9% to $1012.1
million in the first nine months of 1999 compared to $723.2 million in the first
nine months of 1998. This increase is attributable $120.9 million to the
combination with Standard and $168.0 million to the addition of other locations
during the period.
In analyzing gross margins of APCOA/Standard, it should be noted that
the cost of parking services incurred in connection with the provision of
management services is generally paid by the clients. Margins for lease
arrangements are significantly impacted by variables other than operating
performance, such as variability in parking rates in different cities and widely
varying space utilization by parking facility type.
The following should be read in conjunction with the Condensed
Consolidated Financial Statements and notes thereto in Item 1.
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1998
Parking services revenue--leases. Lease revenue increased $1.4 million,
or 3.1% to $46.8 million in the third quarter of 1999 as compared to $45.4
million in the third quarter of 1998. This resulted from the net addition of 23
leases through internal growth and acquisitions completed in 1998 and 1999. (See
Note 2 of the Notes to Condensed Consolidated Financial Statements.)
Parking services revenue--management contracts. Management contract
revenue increased $2.9 million, or 27.6%, to $13.4 million in the third quarter
of 1999 as compared to $10.5 million in the third quarter of 1998. This resulted
from the net addition of 353 management contracts through internal growth and
other 1998 and 1999 acquisitions.
Cost of parking services--leases. Cost of parking for leases increased
$0.2 million, or 0.6%, to $40.5 million for the third quarter of 1999 from $40.3
million in the third quarter of 1998. This increase resulted from the addition
of a net total of 23 new leases through internal growth and acquisitions. Gross
margin for leases improved to 13.5% for the third quarter of 1999 compared to
11.3% for the third quarter of 1998.
Cost of parking services--management contracts. Cost of parking for
management contracts increased $1.5 million, or 44.5%, to $5.0 million for the
third quarter of 1999 from $3.5 million in the third quarter of 1998. This
increase resulted from the addition of a net total of 353 new contracts through
internal growth and acquisitions. Gross margin for management contracts declined
to 62.6% in the third quarter of 1999 compared to 67.0% for the third quarter of
1998. Most management contracts have no cost of parking services related to them
as all costs are reimbursable to the Company. However, several contracts
(primarily large airport properties and several urban locations), require the
Company to pay for certain costs which are offset by larger management fees. The
increase in cost of parking management contracts was related to the addition of
several contracts of this type.
General and administrative expenses. General and administrative
expenses increased $1.3 million, or 17.5%, to $8.6 million for the third quarter
of 1999 as compared to $7.3 million, for the third quarter of 1998. This
increase resulted from costs associated with the acquired companies, inflation,
and investment in the Company's infrastructure in anticipation
12
<PAGE> 13
of future growth.
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1998
Parking services revenue-leases. Lease revenue increased $36.6 million,
or 33.1% to $147.4 million for the first nine months of 1999 as compared to
$110.7 million in the first nine months of 1998. This resulted from the net
addition of 23 leases through internal growth and acquisitions completed in 1998
and 1999.
Parking services revenue-management contracts. Management contract
revenue increased $12.5 million, or 52.0% to $36.6 million for the first nine
months of 1999 as compared to $24.1 million in the first nine months of 1998.
This resulted from the net addition of 353 management contracts through internal
growth and acquisitions completed in 1998 and 1999.
Cost of Parking services-leases. Cost of parking for leases increased
$31.0 million, or 31.5% to $129.4 million for the first nine months of 1999 as
compared to $98.4 million for the first nine months of 1998. Gross margin for
leases improved to 12.2% for the first nine months of 1999 compared to 11.1% for
the first nine months of 1998.
Cost of Parking services-management contracts. Cost of parking for
management contracts increased $4.9 million, or 59.1% to $13.2 million for the
first nine months of 1999 as compared to $8.3 million for the first nine months
of 1998. Gross margin for management contracts decreased to 64.0% in the first
nine months of 1999 compared to 65.6% for the first nine months of 1998. Most
management contracts have no cost of parking services related to them as all
costs are reimbursable to the Company. However, several contracts (primarily
large airport properties and several urban locations), require the Company to
pay for certain costs which are offset by larger management fees. The increase
in cost of parking management contracts was related to the addition of several
contracts of this type.
General and administrative expenses. General and administrative
expenses increased $6.4 million, or 38.6%, to $23.1 million for the first nine
months of 1999 as compared to $16.7 million for the first nine months of 1998.
This increase resulted from costs associated with the acquired companies,
inflation, and investment in the Company's infrastructure in anticipation of
future growth. Partially offsetting these increases were acquisition related
cost savings of $1.4 million realized in the first nine months of 1999.
Restructuring and other unusual costs. The Company recorded $1.4
million of restructuring and other unusual costs in the first nine months of
1999 as compared to $14.1 million for the first nine months of 1998. These
charges were incurred in connection with the combination with Standard and a
thorough analysis of the costs associated with implementing the business plan of
consolidating the Company's headquarters in Chicago and costs related to APCOA
staff reductions. The Company recorded $1.0 million of incremental integration
costs in the third quarter of 1999 relating primarily to actions to facilitate
the accounting system consolidation and other support functions in connection
with acquisitions.
13
<PAGE> 14
COMPARISON OF RESULTS OF OPERATIONS ON A COMBINED BASIS
The following supplementary information is provided to enhance the
analysis of results of operations. The results presented below represent the
combined historical results of APCOA and Standard for the period presented,
without pro forma adjustments for the impact of the acquisition of Standard.
These combined results do not purport to represent what the actual results would
have been if the acquisition had occurred at the beginning of 1998.
SEPTEMBER 30, SEPTEMBER 30,
1999 1998
------------- -------------
Gross customer collections ..................... $1,012,100 $ 800,100
========== ==========
Parking services revenue:
Lease contracts ........................... $ 147,366 $ 122,772
Management contracts ...................... 36,609 26,593
---------- ----------
183,975 149,365
Cost of parking services:
Lease contracts ........................... 129,415 109,635
Management contracts ...................... 13,180 8,284
---------- ----------
142,595 117,919
---------- ----------
Gross profit ................................... 41,380 31,446
General and administrative expenses ............ 23,096 18,681
---------- ----------
Operating income before depreciation,
amortization and restructuring charges .... $ 18,284 $ 12,765
========== ==========
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1998
Parking services revenue--leases. Lease revenue increased $24.6
million, or 20.0%, to $147.4 million for the first nine months of 1999 as
compared to $122.8 million in the first nine months of 1998. This resulted from
the net addition of 23 leases through internal growth and acquisitions completed
in 1998.
Parking services revenue--management contracts. Management contract
revenue increased $10.0 million, or 37.7%, to $36.6 million for the first nine
months of 1999 as compared to $26.6 million in the first nine months of 1998.
This resulted from the net addition of 353 management contracts through internal
growth and acquisitions completed in 1998 and 1999.
Cost of parking services--leases. Cost of parking for leases increased
$19.8 million, or 18.0% to $129.4 million for the first nine months of 1999 as
compared to $109.6 million for the first nine months of 1998. Gross margin for
leases improved to 12.2% for the first nine months of 1999 compared to 10.7% for
the first nine months of 1998.
Cost of parking services--management contracts. Cost of parking for
management contracts increased $4.9 million, or 59.1% to $13.2 million for the
first nine months of 1999 as compared to $8.3 million for the first nine months
of 1998. Gross margin for management contracts declined to 64.0% in the first
nine months of 1999 compared to 68.8% for the first nine months of 1998. Most
management contracts have no cost of parking services related to them as all
costs are reimbursable to the Company. However, several contracts (primarily
large airport properties and several urban locations), require the Company to
pay for certain costs which are offset by larger management fees. The increase
in cost of parking management contracts was related to the addition of several
contracts of this type.
General and administrative expenses. General and administrative
expenses increased $4.4 million, or 23.6%, to $23.1 million for the first nine
months of 1999 as compared to $18.7 million, for the first nine months of 1998.
This increase resulted from costs associated with the acquired companies,
inflation, and investment in the Company's infrastructure in anticipation of
future growth. Partially offsetting these increases were acquisition related
costs savings of $1.2 million realized in the first nine months of 1999.
14
<PAGE> 15
LIQUIDITY AND CAPITAL RESOURCES
As a result of day-to-day activity at the parking locations,
APCOA/Standard collects significant amounts of cash. Under lease contracts, this
revenue is deposited into local APCOA/Standard bank accounts, with a portion
remitted to the clients in the form of rental payments according to the terms of
the leases. Under management contracts, some clients require APCOA/Standard to
deposit the daily receipts into a local APCOA/Standard bank account. Others
require the deposit into a client account, and some have a segregated account
for the receipts and disbursements of the property.
Locations with revenues deposited into the APCOA/Standard banks enable
the Company to operate with a negative working capital. This negative working
capital arises from the liability that is created for the amount of revenue that
will be remitted to the clients in the form of rents or net profit distributions
subsequent to month end, after the books are closed and reconciled. Since the
Company operates with a revolving Senior Credit Facility, all funds held for
future remittance to the clients are used to reduce the line until the payments
are made to the clients.
Locations with revenues deposited into client accounts or segregated
accounts can, depending upon timing of rent or net profit distributions, result
in significant amounts of cash being temporarily inaccessible to the Company for
use for operating needs. Additionally, the ability to utilize cash deposited
into local APCOA/Standard accounts is dependent upon the movement of that cash
into the Company's corporate account. For these reasons, the Company from time
to time is required, despite significant cash balances, to utilize its Senior
Credit Facility to fund immediate working capital needs. In April 1999, the
Company began an initiative to streamline its cash management and receivables
collection processes by standardizing the procedures used by all acquired
companies.
The Company had cash and cash equivalents of $6.9 million at September
30, 1999 compared to $19.2 million at December 31, 1998.
The Company's Senior Credit Facility ("the Facility") provides for
borrowings of up to $55 million at variable rates based, at the Company's
option, either on LIBOR, the overnight federal funds rate, or the bank's base
rate. From time to time the Company utilizes the Facility to provide
readily-accessible cash for working capital purposes. The Facility includes
covenants that limit APCOA/Standard from incurring additional indebtedness,
issuing preferred stock or paying dividends, and contains certain other
restrictions. At September 30, 1999, borrowings against the Facility aggregated
$20.6 million, and letters of credit outstanding against the Facility aggregated
$1.3 million.
The Company believes that cash flow from operating activities, existing
cash and cash equivalents, and borrowings under the Facility will be adequate to
meet the Company's short-term liquidity requirements prior to maturity of its
long-term indebtedness, although no assurance can be provided in this regard.
If the Company identifies investment opportunities requiring cash in
excess of the Company's operating cash flows and existing cash, the Company may
borrow under the Facility or may seek additional sources of capital including
the sale or issuance of common stock. The Company has in the past and expects in
the future to pursue a strategy of growth through acquisition. On January 22,
1998, the Company acquired the assets of Dixie for $1.0 million in cash and
notes aggregating $3.2 million. On May 1, 1998, the Company acquired the
remaining 76% interest in Executive Parking Industries, LLC, through acquisition
of its parent company for $7.0 million in cash. On June 1, 1998, the Company
completed the acquisition of Century Parking and Sentry Parking for
consideration consisting of $5.2 million in cash at closing and $1.0 million
payable on the third anniversary of the closing date. In addition, on September
1, 1998, the Company acquired the capital stock of Virginia Parking Services
Inc. for $2.7 million in cash including direct costs, and up to $1.3 million in
notes. On April 1, 1999, the Company acquired the assets of Pacific Rim Parking,
Inc. ("Pacific Rim") in Los Angeles for $0.8 million in cash and up to $0.8
million in non-interest bearing notes payable over five years. On May 1, 1999
the company acquired various contracts of System Parking Inc. located in Atlanta
for $250 in cash. Effective July 1, 1999 the company acquired all of the
outstanding stock of Universal Park Holdings Inc. ("Universal Park") operating
under the names U-Park and Select Valet Parking in Vancouver B.C. for $1.2
million plus a multiple of EBITDA on a future earnout as defined in the
agreement. These acquisitions have been accounted for under the purchase method.
The historical operating results of the businesses prior to acquisition were not
material relative to the consolidated results of APCOA/Standard.
The Company is currently in negotiations with respect to several
possible additional acquisitions, as of the date hereof, the historical
operating results of which would not be material relative to the consolidated
operating results of APCOA/Standard. There can be no assurance as to the
Company's ability to effect these or other future acquisitions, nor as to the
affect any such acquisitions will have on the Company's operations, financial
condition and profitability.
15
<PAGE> 16
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1998
Net cash used in operating activities totaled $20.8 million for the
first nine months of 1999 compared to $21.2 million for the first nine months of
1998. Cash used during 1999 included $5.5 million for the purchase of an
insurance tail policy to cover claims for all years prior to 1999 under APCOA's
previous insurance program, $4.0 million for cash restructuring charges,
increases in accounts receivable relating to acquired contracts and existing
locations of $4.3 million and decreases in accounts payable of $2.8 million.
Cash used in investing activities totaled $10.4 million for the first
nine months of 1999 compared to $93.3 million for the first nine months of 1998.
Cash used in the first nine months of 1999 included the acquisitions of the
assets of Pacific Rim in Los Angeles for $750, various contracts of System
Parking in Atlanta for $250, the outstanding stock of Universal Park Holdings,
Inc. in Vancouver, B.C. for $1,220 and the buy-out of a lease in Los Angeles for
$426. In addition, cash used in investing in the first nine months of 1999
included the furnishing and improvement of the Company's combined office space
in Chicago, investment in management information system enhancements and capital
investments to secure and/or extend leased facilities. Cash used in investing
activities in the first nine months of 1998 included the acquisitions of
Standard and Huger Parking Company, LLC d/b/a Dixie Parking ("Dixie"). In
addition, the Company acquired the remaining 76% interest in Executive Parking
Industries LLC, and the acquisition of the outstanding capital stock of Century
Parking Inc. and Sentry Parking Corporation.
Cash generated from financing activities totaled $18.9 million in the
first nine months of 1999 compared to $129.8 million in the first nine months of
1998. The 1999 activity included $20.6 million in borrowings from the revolving
Senior Credit Facility, partially offset by repayments on long-term borrowings
of $1.6 million. The 1998 activity included $184.0 million of proceeds from the
issuance of debt, $42.2 million in debt repayments, $8.0 million for the
redemption of preferred stock, and $4.0 million from the redemption of common
stock subject to put/call rights.
YEAR 2000
The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of the
Company's computer programs or hardware that have date-sensitive software or
embedded chips may recognize a date using "00" as a year other than the year
2000. This could result in a system failure or miscalculations causing
disruptions of operations including, among other things, a temporary inability
to process transactions or engage in normal business activities.
In conjunction with the integration of the Company's operations
described above, the Company's business plan includes the integration of
existing information and operating systems of the acquired companies with those
of APCOA. By the end of January 1999, substantially all of the accounting for
the Company's five regions was converted to the APCOA management information
systems. At the same time, the Company has fully integrated field management and
has finalized a combined aesthetics program, which will create a common look and
theme for all of the Company's parking facilities. This program is being
implemented over a period of time based upon client input and approval.
The core business applications and technical infrastructure that will
continue in use when the integration is completed have been tested and are
believed to be Year 2000 compliant. The Company has not, however, evaluated the
degree of compliance of the various systems that will be discontinued. The
Company has substantially completed its planned integration and therefore
believes the impact of discontinued systems would not be material.
The Company has no material systems that interface directly with those
of third parties. The Company does, however, rely on certain third party vendors
for routine transaction processing such as the clearing of checks and payment of
certain payroll. The Company is monitoring the degree of compliance of these
vendors, and those who were unable to provide assurance of compliance have been
replaced. The Company anticipates no difficulty in locating appropriate
replacement vendors should it become necessary, and the impact to the Company is
not expected to be material.
The Company expects to incur no significant costs as a direct result of
the Year 2000 issue.
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended which are
intended to be covered by the safe harbors created thereby. Those statements
include, but may not be limited to, the discussions of the Company's
expectations concerning its future profitability, the discussion of the
Company's strategic relationships, discussions about Year 2000 compliance plans,
and the
16
<PAGE> 17
Company's operating and growth assumptions regarding certain matters, including
anticipated cost savings, in preparation of the unaudited financial information.
Investors are cautioned that forward-looking statements involve risks and
uncertainties. Although the Company believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate and, therefore, there can be no assurance that
the forward-looking statements included will prove to be accurate. In light of
the significant uncertainties inherent in the forward-looking statements
included herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and plans
of the Company will be achieved.
CAUTIONARY STATEMENTS
Holdings and the Company continue to be subject to certain factors that
could cause Holdings and the Company's results to differ materially from
expected and historical results (see the "Risk Factors" set forth in the
Company's Registration Statement on Form S-4 (No. 333-50433) filed on April 17,
1998, as amended on June 9, 1998, July 15, 1998, August 11, 1998 and August 14,
1998 (the "Registration Statement)).
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Holdings' and the Company's primary market risk exposure consists of
risk related to changes in interest rates. Historically, Holdings and the
Company have not used derivative financial instruments for speculative or
trading purposes.
The Company has a $55 million revolving variable rate Senior Credit
Facility (see Note 4 of the Notes to the Condensed Consolidated Financial
Statements). Interest expense on such borrowing is sensitive to changes in the
market rate of interest. If the Company were to borrow the entire $55 million
available under the Facility, a 1% increase in the average market rate would
result in an increase in the Company's annual interest expense of $0.6 million.
This amount is determined by considering the impact of the hypothetical
interest rates on the Company's borrowing cost, but does not consider the
effects of the reduced level of overall economic activity that could exist in
such an environment. Due to the uncertainty of the specific changes and their
possible effects, the foregoing sensitivity analysis assumes no changes in the
Company's financial structure.
17
<PAGE> 18
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to various claims and legal proceedings which
consist principally of lease and contract disputes and includes litigation with
The County of Wayne relating to the management of parking lots at the Detroit
Metropolitan Airport. These claims and legal proceedings are considered
ordinary, routine, and incidental to the Company's business, and in the opinion
of management, the ultimate liability with respect these proceedings and claims
will not materially affect the financial position, operations, or liquidity of
the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION
------ -----------
3.1 Amended and Restated Certificate of Incorporation of the
Company (incorporated by reference to Exhibit 3.1 to the
Company's Registration Statement on Form S-4 (No. 333-50433)
filed on April 17, 1998, as amended on June 9, 1998, July
15, 1998, August 11, 1998 and August 14, 1998 (the
"Registration Statement")).
3.2 Amended and Restated By-Laws of the Company (incorporated by
reference to Exhibit 3.2 to the Registration Statement).
4.1 Indenture, dated as of March 30, 1998, amended as of July 6,
1998, September 21, 1998 and January 12, 1999 by and among
the Company, the Subsidiary Guarantors and State Street Bank
and Trust Company (incorporated by reference to Exhibit 4.1
to the Registration Statement).
4.2 Form of New Note (included as Exhibit A to Exhibit 4.1).
4.3 Form of New Note Guarantee (included as Exhibit D to Exhibit
4.1).
4.4 Supplemental Indenture, dated as of January 12, 1999 by and
among APCOA LaSalle Parking Company, LLC, the Company, and
State Street Bank and Trust Company (incorporated by
reference to Exhibit 4.4 to the Company's Annual Report on
Form 10K filed for December 31, 1998).
4.5 Supplemental Indenture, dated as of September 21, 1998,
among Virginia Parking Service, Inc., the Company, and State
Street Bank and Trust Company (incorporated by reference to
Exhibit 4.5 to the Company's Annual Report on Form 10K filed
for December 31, 1998).
4.6 Supplemental Indenture, dated as of July 6, 1998, among S&S
Parking, Century Parking, Inc. and Sentry Parking
Corporation, the Company, and State Street Bank and Trust
Company (incorporated by reference to Exhibit 4.6 to the
Company's Annual Report on Form 10K filed for December 31,
1998).
4.7 First Amendment to the Senior Credit Facility dated November
12, 1999 by and among the Company, the Lenders and Bank One
NA, as agent for the Lenders.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
No current report on Form 8-K was filed by Holdings and the
Company during the quarter ended September, 1999.
18
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized:
AP Holdings, Inc.
(Registrant)
November 15, 1999
By: /s/ Walter Stuelpe
---------------------------------------
Walter Stuelpe,
Chief Executive Officer, President and
Director (Principal Executive Officer)
November 15, 1999
By: /s/ Michael J. Celebrezze
---------------------------------------
Michael J. Celebrezze,
(Treasurer Principal Financial and
Accounting Officer)
19
<PAGE> 20
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
3.1 Amended and Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the Company's
Registration Statement on Form S-4 (No. 333-50433) filed on April
17, 1998, as amended on June 9, 1998, July 15, 1998, August 11,
1998 and August 14, 1998 (the "Registration Statement")).
3.2 Amended and Restated By-Laws of the Company (incorporated by
reference to Exhibit 3.2 to the Registration Statement).
4.1 Indenture, dated as of March 30, 1998, amended as of July 6,
1998, September 21, 1998 and January 12, 1999 by and among the
Company, the Subsidiary Guarantors and State Street Bank and
Trust Company (incorporated by reference to Exhibit 4.1 to the
Registration Statement).
4.2 Form of New Note (included as Exhibit A to Exhibit 4.1).
4.3 Form of New Note Guarantee (included as Exhibit D to Exhibit
4.1).
4.4 Supplemental Indenture, dated as of January 12, 1999 by and among
APCOA LaSalle Parking Company, LLC, the Company, and State Street
Bank and Trust Company (incorporated by reference to Exhibit 4.4
to the Company's Annual Report on Form 10K filed for December 31,
1998).
4.5 Supplemental Indenture, dated as of September 21, 1998, among
Virginia Parking Service, Inc., the Company, and State Street
Bank and Trust Company (incorporated by reference to Exhibit 4.5
to the Company's Annual Report on Form 10K filed for December 31,
1998).
4.6 Supplemental Indenture, dated as of July 6, 1998, among S&S
Parking, Century Parking, Inc. and Sentry Parking Corporation,
the Company, and State Street Bank and Trust Company
(incorporated by reference to Exhibit 4.6 to the Company's Annual
Report on Form 10K filed for December 31, 1998).
4.7 First Amendment to the Senior Credit Facility dated November 12,
1999 by and among the Company, the Lenders and Bank One NA, as
agent for the Lenders.
27.1 Financial Data Schedule.
20
<PAGE> 1
EXHIBIT 4.7
Execution Copy
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of November 12, 1999
(this "Amendment"), is among APCOA/STANDARD PARKING, INC., a Delaware
corporation (the "Company"), the Lenders set forth on the signature pages hereof
(collectively, the "Lenders") and BANK ONE, NA, formerly known as THE FIRST
NATIONAL BANK OF CHICAGO, as agent for the Lenders (in such capacity, the
"Agent").
RECITALS
A. The Company, the Guarantors, the Agent and the Lenders are
parties to a Credit Agreement dated as of March 30, 1998 (as clarified by letter
agreement dated March 30, 1999, the "Credit Agreement").
B. The Company desires to amend the Credit Agreement, and the
Agent and the Lenders are willing to do so in accordance with the terms hereof.
TERMS
In consideration of the premises and of the mutual agreements
herein contained, the parties agree as follows:
ARTICLE I. AMENDMENTS. Upon fulfillment of the conditions set
forth in Article III hereof, the Credit Agreement shall be amended as follows:
1.1 The definition of "Applicable Margin" in Section 1.1 shall
be amended by deleting the table set forth therein and inserting the table and
paragraph set forth below in place thereof:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
APPLICABLE MARGIN FOR ALL ADVANCES AND FEES
-------------------------------------------
- -------------------------------------------------------------------------------------------------------
Adjusted Total Debt to Adjusted Corporate LIBOR Loan and Letter Commitment Fees
Adjusted EBITDA Ratio Base Rate Loan of Credit Fees
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
=>6.0:1.0 175 bps 300 bps 62.5 bps
- -------------------------------------------------------------------------------------------------------
=>5.5:1.0 but <6.0:1.0 150 bps 275 bps 62.5 bps
- -------------------------------------------------------------------------------------------------------
=>5.0:1.0 but <5.5:1.0 125 bps 250 bps 62.5 bps
- -------------------------------------------------------------------------------------------------------
=>4.5:1.0 but <5.0:1.0 100 bps 225 bps 50 bps
- -------------------------------------------------------------------------------------------------------
<4.5:1.0 75 bps 200 bps 50 bps
- -------------------------------------------------------------------------------------------------------
</TABLE>
Notwithstanding anything in this Agreement to the contrary, as of the First
Amendment Effective Date the Applicable Margin shall be based on an Adjusted
Total Debt to Adjusted EBITDA Ratio of greater than or equal to 6.0:1.0 pursuant
to the above table until adjusted for the first time after the First Amendment
Effective Date.
1.2 The definition of "Commitments" in Section 1.1 shall be
amended by adding the
<PAGE> 2
following language after the reference therein to "Assignment and Acceptance":
"or in the applicable Lender Addition and Acknowledgement Agreement".
1.3 The definition of "Fixed Charge Coverage Ratio" in Section
1.1 shall be amended by adding the following language at the end thereof:
"provided further that in the calculation of Fixed Charges, Net Capital
Expenditures of the Company solely for information technology and office build
out, if expended, shall be excluded up to $4,800,000 for fiscal year 1999 and up
to $2,000,000 for fiscal year 2000".
1.4 The following definitions are hereby added to Section 1.1 in
appropriate alphabetical order:
"Company Subsidiary" shall mean the primary operating
Subsidiary of Company identified by the Company to the Agent and the Lenders
prior to the First Amendment Effective Date.
"First Amendment" shall mean the First Amendment to this
Agreement dated as of November 12, 1999.
"First Amendment Effective Date" shall mean the date of the
First Amendment.
"Company" shall mean the company identified by the Company
to the Agent and the Lenders prior to the First Amendment Effective Date code
named Project Company.
"Company Acquisition" shall mean the acquisition by Parent
and the Company of Company pursuant to a merger of Company with a Subsidiary of
Parent (pursuant to which, among other things, Company and Company Subsidiary
will become Wholly Owned Subsidiaries of the Company), all in accordance with
the Company Acquisition Documents.
"Company Acquisition Documents" shall mean the agreement and
plan of merger by and among the Company, Parent, an acquisition subsidiary of
Parent, Company, Company Subsidiary and the other parties thereto and all
agreements, instruments and documents executed or delivered pursuant thereto,
each as approved by the Agent in accordance with Section 2.5 of the First
Amendment.
1.5 A new Section 2.11 shall be added at the end of Article II
to read as follows:
2.11 Optional Increase in Commitments.
(a) Subject to the conditions set forth below, the Company may,
upon at least thirty (30) days prior written notice to the Agent or
such shorter time as may be agreed to by the Agent, increase the
aggregate amount of the Commitments, either by designating a lender not
theretofore a Lender to become a Lender (such designation to be
effective only with the prior written consent of the Agent, which
consent shall not be unreasonably withheld) or by agreeing with an
existing Lender that such Lender's Commitment shall be increased (thus
increasing the aggregate Commitments, provided that no existing Lender
shall be obligated in any way to increase its commitment); provided
that:
(i) the Agent has consented to such increase;
(ii) no Unmatured Default or Event of Default shall have occurred
and be
-2-
<PAGE> 3
continuing hereunder as of the effective date of such increase;
(iii) the representations and warranties made by the Company and
contained in Article IV shall be true and correct in all material
respects on and as of the effective date with the same effect as if
made on and as of such date (other than those representations and
warranties that by their terms speak as of a particular date, which
representations and warranties shall be true and correct in all
material respects as of such particular date);
(iv) the amount of such increase in the aggregate Commitments
shall not cause the aggregate Commitments to exceed $65,000,000;
(v) the Company and the Lender or lender not theretofore a
Lender, shall execute and deliver to the Agent, for its acceptance and
recording in the register pursuant to Section 8.6(e), a Lender Addition
and Acknowledgement Agreement, in form and substance satisfactory to
the Agent and acknowledged by the Agent and each Guarantor and
substantially in the form of Exhibit J attached hereto;
(vi) the Company shall pay any amount required to be paid
pursuant to Section 3.9 hereof resulting from the reallocation of Loans
pursuant to the increase in the aggregate Commitments; and
(vii) the Agent may request any other documents or information in
its reasonable discretion.
(b) Upon the execution, delivery, acceptance and recording of a
Lender Addition and Acknowledgement Agreement, from and after the
effective date specified in such Lender Addition and Acknowledgement
Agreement, which effective date shall be not less than five (5) nor
more than ten (10) Business Days after the delivery thereof to the
Agent, such existing Lender shall have a Commitment as therein set
forth or such other Lender shall become a Lender with a Commitment as
therein set forth and all the rights and obligations of a Lender with
such a Commitment hereunder.
(c) Upon its receipt of a Lender Addition and Acknowledgement
Agreement together with any Note or Notes, if requested, subject to the
written consent of the Agent, the Agent shall, if such Lender Addition
and Acknowledgement Agreement has been completed and is substantially
in the form of Exhibit J:
(i) accept such Lender Addition and Acknowledgement Agreement;
(ii) record the information contained therein in the Register;
and
(iii) give prompt notice thereof to the Lenders and the Company
and deliver to the Lenders a schedule reflecting the new Commitments.
Within five (5) Business Days after receipt of notice, the Company
shall execute and deliver to the Agent, in exchange for the surrendered
Note or Notes of any existing Lender or with respect to any Lender not
theretofore a Lender, a new Note or Notes to the order of the
applicable Lenders in amounts equal to the Commitments of such Lenders
pursuant to the Lender Addition and Acknowledgement Agreement. Such new
Note or Notes shall be in an aggregate principal
-3-
<PAGE> 4
amount equal to the aggregate principal amount of such Commitments,
shall be dated the effective date of such Lender Addition and
Acknowledgement Agreement and shall otherwise be in substantially the
form of the existing Notes. Each surrendered Note and/or Notes shall be
canceled and returned to Company.
1.6 Section 4.20 is restated as follows:
4.20 Subordinated Debt Documents. (a) All representations
and warranties of the Company contained in any Subordinated Debt
Document are true and correct in all material respects. The Company
will be issuing the Subordinated Notes in the principal amount of
$140,000,000 on the Effective Date, and all Subordinated Note Documents
are described on Schedule 1.1-B hereto.
(b) All Lender Indebtedness (including without limitation the
$15,000,000 increase in the Lender Indebtedness pursuant to the First
Amendment and the potential $10,000,000 increase in the Lender
Indebtedness pursuant to Section 2.11) is "Senior Debt" and "Designated
Senior Debt" as defined in the Subordinated Debt Documents and entitled
to the benefits of all subordination provisions contained in the
Subordinated Debt Documents and, other than such Lender Indebtedness,
there is no other "Designated Senior Debt" thereunder. The $15,000,000
increase in the Lender Indebtedness pursuant to the First Amendment is,
and the potential $10,000,000 increase in the Lender Indebtedness under
Section 2.11 will be, incurred pursuant to, and in full compliance
with, clause (xv) of the items listed as "Permitted Debt" following the
first paragraph of Section 4.9 of the Subordinated Note Indenture and
classified as Indebtedness incurred under that clause for purposes of
the Subordinated Note Indenture. Neither the Company nor any of its
Subsidiaries has incurred any other Indebtedness under such clause
(xv). All Lender Indebtedness (including without limitation the
$15,000,000 increase in the Lender Indebtedness pursuant to the First
Amendment and the potential $10,000,000 increase in the Lender
Indebtedness pursuant to Section 2.11) is incurred pursuant to clauses
(i) and (xv) of the items listed as "Permitted Debt" following the
first paragraph of Section 4.9 of the Subordinated Note Indenture and
in full compliance with the terms and provisions of the Subordinated
Debt Documents, and do not need to meet the requirements of the first
paragraph of Section 4.9 of the Subordinated Note Indenture.
(c) There is no event of default or event or condition which
could become an event of default with notice or lapse of time or both,
under the Subordinated Debt Documents and each of the Subordinated Debt
Documents is in full force and effect. Other than pursuant to the
Subordinated Notes, there is no obligation pursuant to any Subordinated
Debt Document or other document or agreement evidencing or relating to
any Subordinated Debt outstanding or to be outstanding on the Effective
Date which obligates the Company to pay any principal or interest or
redeem any of its Capital Stock or incur any other monetary obligation.
1.7 Sections 5.2(a) and (b) shall be amended and restated as
follows:
(a) Adjusted Total Debt to Adjusted EBITDA Ratio. Permit or
suffer the Adjusted Total Debt to Adjusted EBITDA Ratio to be greater
than (i) 6.95 to 1.0 at any time from and including the Effective Date
to and including September 29, 1999, (ii) 6.75 to 1.0 at any time from
and including September 30, 1999 to and
-4-
<PAGE> 5
including June 29, 2000, (iii) 6.50 to 1.0 at any time from and
including June 30, 2000 to and including March 30, 2001, (iv) 6.35 to
1.00 at any time from and including March 31, 2001 to and including
June 29, 2001, (v) 6.20 to 1.00 at any time from and including June 30,
2001 to and including September 29, 2001, (vi) 6.00 to 1.00 at any time
from and including September 30, 2001 to and including December 30,
2001, (vii) 5.80 to 1.00 at any time from and including December 31,
2001 to and including March 30, 2002 or (viii) 5.50 to 1.0 at any time
thereafter.
(b) Interest Coverage Ratio. Permit or suffer the Interest
Coverage Ratio to be less than (i) 1.5 to 1.0 as of the end of any
fiscal quarter of the Company ending on or before September 30, 2000,
(ii) 1.55 to 1.0 as of the end of the fiscal quarter of the Company
ending on December 31, 2000, (iii) 1.6 to 1.0 as of the end of the
fiscal quarters of the Company ending on March 31, 2001 and June 30,
2001, (iv) 1.65 to 1.0 as of the end of any fiscal quarter of the
Company ending on or after September 30, 2001 but on or before March
31, 2002, or (v) 1.75 to 1.0 as of the end of any fiscal quarter of the
Company ending thereafter.
1.8 Article V is amended by adding the following to the end
thereof: "Section 5.4 Company Acquisition. Subject to the written approval of
the Agent of the Company Acquisition Documents in accordance with Section 2.5 of
the First Amendment and the compliance with the other requirements of Section
2.5 of the First Amendment, notwithstanding anything in this Agreement to the
contrary, the Company may complete the Company Acquisition and the other
transactions expressly contemplated by such Company Acquisition Documents, all
in accordance with such Company Acquisition Documents and the representations
and covenants contained with respect thereto in the First Amendment, and the
Company Acquisition shall be a Permitted Acquisition for all purposes of this
Agreement, provided that the Company Acquisition shall be consummated on or
before December 15, 1999."
1.9 Section 5.2(q) shall be amended and restated as follows:
(q) Net Capital Expenditures. Make, or permit any Subsidiary
to make, Net Capital Expenditures that exceed in any fiscal year in the
aggregate for the Company and its Subsidiaries 25% of the Adjusted
EBITDA for such fiscal year (provided that the Company and its
Subsidiaries in the aggregate shall be permitted to make Net Capital
Expenditures of up to $7,000,000 for the Calculation Period ending
December 31, 1998), plus in each case, (i) the amount by which the
allowed Net Capital Expenditures for the most recently ended fiscal
year (exclusive of the proviso to this paragraph) exceeded the actual
Net Capital Expenditures for such fiscal year and (ii) an amount, not
to exceed $2,000,000, of the allowed Net Capital Expenditures for the
following fiscal year (subject to the permitted Net Capital
Expenditures for such following year being reduced by the amount used
and allowed under this clause (ii)), provided, that, in addition to the
amount of Net Capital Expenditures otherwise permitted pursuant to this
Section 5.2(q), additional Net Capital Expenditures solely for
information technology and office build out shall be permitted in the
amount of up to $4,800,000 for fiscal year 1999 and up to $2,000,000
for fiscal year 2000.
1.10 Section 8.1(a) shall be amended by (i) adding the following
language at the beginning of Section 8.1(a): "Except as otherwise expressly
provided in Section 2.11," and (ii) adding the following language at the
beginning of clause (ii): "except pursuant to Section 2.11,".
1.11 The Commitment amount for each Lender under the Credit
Agreement is amended to be the amounts set forth next to the signature of each
Lender on this Amendment.
-5-
<PAGE> 6
1.12 A new Exhibit entitled "Lender Addition and Acknowledgement
Agreement" shall be added to the Credit Agreement as Exhibit J in the form of
Exhibit J attached hereto.
ARTICLE II. REPRESENTATIONS AND AGREEMENTS. The Company
represents and warrants to, and agrees with, the Agent and the Lenders that:
2.1 The execution, delivery and performance of this Amendment,
and the New Notes when executed and delivered hereunder, are within its powers,
have been duly authorized and are not in contravention of any statute, law or
regulation known to it or of any terms of its Articles of Incorporation or
By-laws, or of any material agreement or undertaking to which it is a party or
by which it is bound.
2.2 This Amendment is, and the New Notes when executed and
delivered hereunder will be, the legal, valid and binding obligations of the
Company and each Guarantor enforceable against each in accordance with the
respective terms thereof.
2.3 After giving effect to the amendments contained herein, the
representations and warranties contained in Article IV of the Credit Agreement
are true in all material respects on and as of the date hereof with the same
force and effect as if made on and as of the date hereof.
2.4 After giving effect to the amendments contained herein, no
Event of Default or Unmatured Default exists or has occurred and is continuing
on the date hereof.
2.5 (a) On or before the date five Business Days prior to the
proposed consummation of the Company Acquisition, the Company will deliver to
the Agent and the Lenders complete copies of all Company Acquisition Documents.
Within five Business Days following such delivery, the Agent shall notify the
Company in writing of its approval or disapproval of such Company Acquisition
Documents. Upon such approval, the Commitment amount for each Lender shall be
increased as set forth next to the signature of such Lender on this Amendment,
provided that, notwithstanding anything herein or in any Loan Document to the
contrary, the Company shall not be permitted to obtain any Advance under such
increase until simultaneously with the consummation of the Company Acquisition
in accordance with the terms of this Amendment.
(b) The Company and Parent will not consummate the Company
Acquisition unless the Agent approves such Company Acquisition Documents and the
consummation of the Company Acquisition occurs on or before December 15, 1999
and in accordance with the terms of this First Amendment. The Company will
consummate the Company Acquisition in accordance with such Company Acquisition
Documents in all material respects and in accordance with all laws and
regulations and will acquire, free and clear of all Liens (other than Permitted
Liens), good and marketable title to all Capital Stock (including without
limitation all Capital Stock of Company and Company Subsidiary) and other assets
being acquired pursuant to the Company Acquisition. The total consideration
(including without limitation any payments in cash or cash equivalents, any
payment in Capital Stock or other consideration, any deferred payments, any
loans made to former or current shareholders, employees or directors of Company
or any of its Subsidiaries and any assumption of any debt or other obligations)
paid or payable in connection with the Company Acquisition shall not exceed an
amount acceptable to the Agent, and prior to the closing of the Company
Acquisition the Company will represent to the Lenders and the Agent the amount
of such total consideration.
(c) The Company shall deliver evidence to the Agent that the
Company is completing the Company Acquisition simultaneously with the first
Advance being made in connection with the increase in the Commitments related to
the Company Acquisition described on the signature pages
-6-
<PAGE> 7
hereto, all in accordance with this Section 2.5 (including without limitation an
opinion of counsel and a certificate of the chief financial officer of the
Company (attaching pro forma computations acceptable to the Agent to demonstrate
compliance with all financial covenants hereunder) stating that the Company
Acquisition complies with the term and provisions of this Amendment and the
Credit Agreement and all laws and regulations). Simultaneously with the first
Advance hereunder in connection with the Company Acquisition in accordance with
terms hereof, the Company shall execute and deliver to the Agent Notes in favor
of each Lender in the amount of the Lender's new Commitment amount related to
the Company Acquisition set forth on the signature pages of this Amendment (the
"New Notes"), deliver to the Agent such additional legal opinions and
resolutions as may be required by the Agent and pay all fees required to be paid
in connection therewith as agreed upon between the Company, the Agent and the
Arranger.
ARTICLE III. CONDITIONS OF EFFECTIVENESS. This Amendment shall
not become effective until each of the following conditions is satisfied:
3.1 The Company, the Guarantors and the Lenders shall have
signed this Amendment.
3.2 The Company and the Guarantors shall have delivered such
resolutions, officer's certificates and legal opinions as the Agent may
reasonably request.
3.3 The Company shall have paid the fees required to be paid, as
agreed upon between the Company, the Agent and the Arranger.
3.4 The Company shall have delivered to the Agent such other
documents and satisfied such other conditions, if any, as reasonably requested
by the Agent.
ARTICLE IV. MISCELLANEOUS.
4.1 References in the Credit Agreement or in any other Loan
Document to the Credit Agreement shall be deemed to be references to the Credit
Agreement as amended hereby and as further amended from time to time.
4.2 The Company agrees to pay and to save the Agent harmless for
the payment of all reasonable documented costs and expenses arising in
connection with this Amendment, including the reasonable documented fees of
counsel to the Agent in connection with preparing this Amendment and the related
documents.
4.3 The Company and each Guarantor acknowledge and agree that,
to the best of their knowledge, the Agent and the Lenders have fully performed
all of their obligations under all documents executed in connection with the
Credit Agreement. The Company and each Guarantor represent and warrant that they
are not aware of any claims or causes of action against the Agent or any Lender.
4.4 The Lenders and the Agent waive the Events of Default (the
"Existing Defaults") caused by the breach of Section 5.2(j) due to the advances
in the aggregate amount of $2,600,000 to Holberg Industries, Inc. made prior to
September 30, 1999 when the conditions for such advances under Section 5.2(j)
were not satisfied and the breaches of Section 5.2(a), (c) and (q) which
occurred prior to the date hereof to the extent described by the Company to the
Lenders prior to the date hereof, provided that it is acknowledged and agreed
that this is a one time waiver only for the Existing Defaults, and shall not
waive any other breach at any other time of Section 5.2(a), (c) or (q) or any
other term or covenant of the Credit Agreement.
-7-
<PAGE> 8
4.5 Except as expressly amended hereby, the Company and each
Guarantor agree that the Credit Agreement, the Notes, the Security Documents and
all other documents and agreements executed by the Company in connection with
the Credit Agreement in favor of the Agent or any Lender are ratified and
confirmed, as amended hereby, and shall remain in full force and effect in
accordance with their terms and that they are not aware of any set off,
counterclaim, defense or other claim or dispute with respect to any of the
foregoing. Terms used but not defined herein shall have the respective meanings
ascribed thereto in the Credit Agreement. This Amendment may be signed upon any
number of counterparts with the same effect as if the signatures thereto and
hereto were upon the same instrument, and telecopied signatures shall be
effective as originals.
-8-
<PAGE> 9
IN WITNESS WHEREOF, the parties signing this Amendment have
caused this Amendment to be executed and delivered as of the day and year first
above written.
APCOA/STANDARD PARKING, INC.
By:________________________________
Its:_______________________________
Commitment if the Agent does not BANK ONE, NA, as a Lender and as
give the approval contemplated Agent, formerly known as The First
by Section 2.5 of the First Amendment: National Bank of Chicago
$27,500,000
Commitment if the Agent does By:________________________________
give the approval contemplated
by Section 2.5 of the First Amendment: Its:_______________________________
$35,000,000
Commitment if the Agent does not LASALLE NATIONAL BANK
give the approval contemplated
by Section 2.5 of the First Amendment:
$12,500,000
Commitment if the Agent does By:________________________________
give the approval contemplated
by Section 2.5 the First Amendment: Its:_______________________________
$20,000,000
-9-
<PAGE> 10
CONSENT AND AGREEMENT
As of the date and year first above written, each of the
undersigned hereby:
(a) fully consents to the terms and provisions of the above Amendment
and the consummation of the transactions contemplated hereby and agrees to all
terms and provisions of the above Amendment applicable to it;
(b) agrees that each Guaranty and all other agreements executed by
any of the undersigned in connection with the Credit Agreement or otherwise in
favor of the Agent or the Lenders (collectively, the "Security Documents") are
hereby ratified and confirmed and shall remain in full force and effect, and
each of the undersigned acknowledges that it has no setoff, counterclaim or
defense with respect to any Security Document; and
(c) acknowledges that its consent and agreement hereto is a condition
to the Banks' obligation under this Amendment and it is in its interest and to
its financial benefit to execute this consent and agreement.
A-1 AUTO PARK, INC.
By:___________________________________
Name: Michael J. Celebrezze
Title: Vice President
AP HOLDINGS, INC.
By:___________________________________
Name: Michael J. Celebrezze
Title: Treasurer
APCOA CAPITAL CORPORATION
By:___________________________________
Name: Michael J. Celebrezze
Title: Vice President
APCOA-HAWAII, INC.
By:___________________________________
Name: Michael J. Celebrezze
Title: Vice President
-10-
<PAGE> 11
EVENTS PARKING CO., INC.
By:___________________________________
Name: Michael J. Celebrezze
Title: Treasurer
HAWAII PARKING MAINTENANCE, INC.
By:___________________________________
Name: Michael J. Celebrezze
Title: Vice President
METROPOLITAN PARKING SYSTEM, INC.
By:___________________________________
Name: Michael J. Celebrezze
Title: Treasurer
SENTINEL PARKING CO. OF OHIO, INC.
By:___________________________________
Name: Michael J. Celebrezze
Title: Vice President
TOWER PARKING, INC.
By:___________________________________
Name: Michael J. Celebrezze
Title: Vice President
STANDARD AUTO PARK, INC.
By:___________________________________
Name: Michael J. Celebrezze
Title: Vice President
STANDARD PARKING CORPORATION
By:___________________________________
Name: Michael J. Celebrezze
Title: Vice President
-11-
<PAGE> 12
APCOA LASALLE PARKING, LLC
By: APCOA/Standard Parking Inc.
as Manager
By:_____________________________
Name: Michael J. Celebrezze
Title: Senior Vice President
S & S PARKING, INC.
By:___________________________________
Name: Michael J. Celebrezze
Title: Vice President
STANDARD PARKING CORPORATION, IL
By:___________________________________
Name: Michael J. Celebrezze
Title: Vice President
CENTURY PARKING, INC.
By:___________________________________
Name: Michael J. Celebrezze
Title: Vice President
SENTRY PARKING CORPORATION
By:___________________________________
Name: Michael J. Celebrezze
Title: Vice President
VIRGINIA PARKING SERVICES, INC.
By:___________________________________
Name: Michael J. Celebrezze
Title: Vice President
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000835928
<NAME> A.P. HOLDINGS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 6,887
<SECURITIES> 0
<RECEIVABLES> 38,697
<ALLOWANCES> (1,728)
<INVENTORY> 0
<CURRENT-ASSETS> 45,622
<PP&E> 83,504
<DEPRECIATION> 49,195
<TOTAL-ASSETS> 209,620
<CURRENT-LIABILITIES> 42,749
<BONDS> 215,923
30,995
0
<COMMON> 1
<OTHER-SE> (95,760)
<TOTAL-LIABILITY-AND-EQUITY> 209,620
<SALES> 183,975
<TOTAL-REVENUES> 183,975
<CGS> 142,595
<TOTAL-COSTS> 142,595
<OTHER-EXPENSES> 30,895
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,807
<INCOME-PRETAX> (5,220)
<INCOME-TAX> 524
<INCOME-CONTINUING> (5,744)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,744)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
