SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended March 31, 1997
Commission file number 001-13950
CENTRAL PARKING CORPORATION
------------------------------------------
Exact Name of Registrant as Specified in Its Charter
TENNESSEE 62-1052916
- --------------------------------- -------------------
State or Other Jurisdiction I.R.S. Employer
of Incorporation or Organization Identification No.
2401 21ST AVENUE SOUTH
SUITE 200
NASHVILLE, TENNESSEE 37212
- --------------------------------------- --------------
Address of Principal Executive Offices Zip Code
Registrant's Telephone Number,
Including Area Code: (615) 297-4255
Former name, address and fiscal year,
if changed since last report: Not Applicable
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 ( )
Indicate the number of shares outstanding of each of the
registrant's classes of common stock as of the latest practicable
date.
Class Outstanding at May 13, 1997
- ----------------------------- ---------------------------
COMMON STOCK, $0.01 PAR VALUE 17,528,671
<PAGE> 1
INDEX
CENTRAL PARKING CORPORATION
PAGE
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets
--- March 31, 1997, September 30, 1996
and March 31, 1996 3
Condensed consolidated statements of earnings
--- three and six months ended
March 31, 1997 and 1996 4-5
Condensed consolidated statements of cash flows
--- six months ended March 31, 1997 and 1996 6
Notes to condensed consolidated financial statements 7-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-12
PART 2. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 14-15
SIGNATURES 16
<PAGE> 2
<TABLE>
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Amounts in thousands)
<CAPTION>
Unaudited September 30, Unaudited
March 31,1997 1996 March 31, 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,981 $ 28,605 $ 26,916
Management accounts receivable 9,636 8,982 7,741
Accounts and current portion of notes receivable 7,284 3,016 3,245
Prepaid expenses 7,230 4,549 3,859
Deferred income taxes 697 270 -
Assets held for resale 45,799 - -
--------------- --------------- ---------------
Total current assets 78,627 45,422 41,761
Investments, at amortized cost 4,609 4,483 4,367
Notes receivable, less current portion 8,304 8,248 4,265
Property, equipment, and leasehold improvements, net 89,934 38,188 36,209
Contract rights, net 5,403 5,815 6,279
Goodwill, net 27,612 - -
Investment in limited partnerships 1,240 1,234 1,235
Investment in general partnerships 47,862 1,705 1,413
Other assets 7,174 2,117 2,031
--------------- --------------- ---------------
$ 270,765 $ 107,212 $ 97,560
=============== =============== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 47,207 $ - $ -
Accounts payable 18,515 11,275 9,461
Accrued payroll and related costs 7,214 5,059 5,071
Accrued expenses 3,151 900 4,471
Management accounts payable 9,844 7,788 4,610
Income taxes payable 1,100 693 1,179
--------------- --------------- ---------------
Total current liabilities 87,031 25,715 24,792
Long-term debt 86,767 - -
Other liabilities 3,952 - -
Deferred compensation 2,977 3,095 2,491
Deferred income taxes 4,602 1,609 1,081
--------------- --------------- ---------------
Total liabilities 185,329 30,419 28,364
Shareholders' equity :
Common stock, $.01 par value; 50,000,000 shares authorized, 17,528,671,
17,477,088 and 17,417,481 issued and outstanding, respectively 175 175 174
Additional paid-in capital 32,619 31,747 31,513
Foreign currency translation adjustment 225 59 (32)
Retained earnings 53,021 45,449 37,541
Deferred compensation on restricted stock, net (604) (637) -
--------------- --------------- ---------------
Total shareholders' equity 85,436 76,793 69,196
--------------- --------------- ---------------
$ 270,765 $ 107,212 $ 97,560
=============== =============== ================
See accompanying notes to condensed consolidated financial statements
</TABLE>
<PAGE> 3
<TABLE>
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
Unaudited
(Dollar amounts in thousands, except per share data)
<CAPTION>
Three Months Ended March 31,
1997 1996
-------------- -------------
<S> <C> <C>
Revenues:
Parking $ 45,702 $ 27,600
Management contract 10,223 8,080
-------------- -------------
Total revenues 55,925 35,680
Costs and expenses:
Cost of parking 39,397 24,947
Cost of management contracts 3,191 2,702
General and administrative 6,228 4,436
-------------- -------------
Total costs and expenses 48,816 32,085
-------------- -------------
Operating earnings 7,109 3,595
Other income (expense):
Interest income 240 530
Interest expense (1,313) -
Net gains on sales of property and equipment 2 1,142
Equity in partnership and joint venture earnings 955 65
-------------- -------------
Other income (expense), net (116) 1,737
-------------- -------------
Earnings before income taxes 6,993 5,332
Income taxes 2,577 1,867
-------------- -------------
Net earnings $ 4,416 $ 3,465
============== =============
Weighted average common shares and
common share equivalents 17,604,050 17,522,563
Net earnings per common share $ 0.25 $ 0.20
============== =============
Dividends per common share $ 0.02 $ 0.02
============== =============
See accompanying notes to condensed consolidated financial statements
</TABLE>
<PAGE> 4
<TABLE>
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
Unaudited
(Dollar amounts in thousands, except per share data)
<CAPTION>
Six Months Ended March 31,
1997 1996
-------------- -------------
<S> <C> <C>
Revenues:
Parking $ 77,787 $ 52,763
Management contract 19,561 16,168
-------------- -------------
Total revenues 97,348 68,931
Costs and expenses:
Cost of parking 68,482 47,460
Cost of management contracts 5,692 5,226
General and administrative 10,936 8,515
-------------- -------------
Total costs and expenses 85,110 61,201
-------------- -------------
Operating earnings 12,238 7,730
Other income (expense):
Interest income 865 1,119
Interest expense (1,320) -
Net gains on sales of property and equipment 5 1,183
Equity in partnership and joint venture earnings 1,205 229
-------------- -------------
Other income (expense), net 755 2,531
-------------- -------------
Earnings before income taxes 12,993 10,261
Income taxes 4,678 3,568
-------------- -------------
Net earnings $ 8,315 $ 6,693
============== =============
Weighted average common shares and
common share equivalents 17,609,288 17,374,032
Net earnings per common share $ 0.47 $ 0.39
============== =============
Dividends per common share $ 0.04 $ 0.04
============== =============
See accompanying notes to condensed consolidated financial statements
</TABLE>
<PAGE> 5
<TABLE>
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Unaudited
(Amounts in thousands)
<CAPTION>
Six Months Ended March 31,
1997 1996
------------- ------------
<S> <C> <C>
Net earnings $ 8,315 $ 6,693
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation 1,822 1,178
Amortization of contract rights 412 420
Amortization of deferred compensation cost 33 34
Amortization of goodwill 227 -
Equity in partnership and joint venture (earnings) (1,205) (229)
Net gains on sales of property and equipment (5) (1,183)
Deferred income taxes 40 327
Changes in operating assets and liabilities, net of effects of acquisition of companies:
(Increase) decrease in management accounts receivable (723) (970)
(Increase) decrease in notes and accounts receivable - other (3,016) 2,604
(Increase) decrease in prepaid expenses (857) (59)
(Increase) decrease in other assets (1,618) 231
Increase (decrease) in accounts payable, accrued expenses and deferred compensation (438) 2,238
Increase (decrease) in management accounts payable (605) (1,022)
Increase (decrease) in income taxes payable 288 (386)
------------- ------------
Net cash provided by operating activities 2,670 9,876
------------- ------------
Cash flows from investing activities:
Proceeds from sales of property and equipment 9,339 1,418
Investments in notes receivable (368) -
Purchase of assets held for resale (45,799) -
Purchase of property, equipment, and leasehold improvements (4,188) (13,343)
Purchase of contract rights - (332)
Investment in or return on general and limited partnerships (45,193) (35)
Acquisition of company, net of cash acquired (48,091) -
Purchase of investments (126) (121)
------------- ------------
Net cash used by investing activities (134,426) (12,413)
------------- ------------
Cash flows from financing activities:
Dividends paid (699) (697)
Net borrowings under revolving credit agreement 129,770 -
Principal repayments on notes payable (18,977) -
Proceeds from issuance of common stock, net 872 20,015
------------- ------------
Net cash provided by financing activities 110,966 19,318
------------- ------------
Foreign currency translation 166 (83)
------------- ------------
Net increase (decrease) in cash and cash equivalents (20,624) 16,698
Cash and cash equivalents at beginning of period 28,605 10,218
------------- ------------
Cash and cash equivalents at end of period $ 7,981 $ 26,916
============= ============
Non-cash transactions:
Exchange of properties, net $ - $ 2,644
============= ============
Conversion of deferred compensation payable to restricted stock $ - $ 1,874
============= ============
Effects of acquisition:
Fair value of assets acquired $ 71,278
Purchase price in excess of the net assets acquired 27,839
Liabilities assumed (44,361)
-------------
Cash paid 54,756
Less cash acquired (6,665)
-------------
Net cash paid for acquistion $ 48,091 $ -
============= ============
See accompanying notes to condensed consolidated financial statements
</TABLE>
<PAGE> 6
CENTRAL PARKING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 1997
BASIS OF PRESENTATION
- ---------------------
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. All
significant inter-company transactions have been eliminated in
consolidation. Operating results for the three and six months
ended March 31, 1997 are not necessarily indicative of the results
that may be expected for the fiscal year ending September 30, 1997.
For further information, refer to the consolidated financial
statements and footnotes thereto for the year ended September 30,
1996 (included in the Company's Annual Report on Form 10-K).
INITIAL PUBLIC OFFERING
- -----------------------
On October 10, 1995, the Company completed an initial public
offering of common stock in which 1,864,500 shares (adjusted for
the 3 for 2 split in March 1996) were sold by the Company for net
proceeds of $20.0 million. In addition, 2,755,500 shares of common
stock (adjusted for the 3 for 2 split in March 1996) were sold by
certain shareholders of the Company.
THREE FOR TWO STOCK SPLIT
- -------------------------
On February 21, 1996, the Board of Directors approved a
three-for-two stock split payable to shareholders of record as of
March 4, 1996. The stock split was distributed on March 19, 1996
resulting in the net issuance of 5,805,816 new shares. Actual
shares outstanding after the split were 17,417,481.
All shares and per share amounts in this report have been
adjusted to reflect the stock split, unless otherwise noted.
INCOME PER SHARE
- -----------------
Income per share has been computed by dividing net earnings
for each period by the weighted average number of shares and share
equivalents outstanding during the applicable period.
Fully diluted per share data is not presented since the
effect would dilute earnings per share by less than three percent
(3%).
<PAGE> 7
ACQUISITIONS
- ------------
(A) CIVIC PARKING, L.L.C.
On December 31, 1996, the Company purchased for cash Civic Parking,
L.L.C. ("Civic Parking"), a limited liability company, which owns four
parking garages in St. Louis: Kiener East, Kiener West, Stadium East
and Stadium West. The four garages, which had previously been operated
by the Company under management agreements, have a total of 7,464 parking
spaces. The purchase price was approximately $91.0 million which was financed
through working capital and a draw of $67.2 million on the Company's revolving
credit facility (see Long Term Debt). The transaction was accounted for under
the purchase method. The estimated fair value of the garages at the date of
the acquisition was equal to the purchase price and, accordingly, management
has allocated the purchase price to the land and buildings acquired.
On April 16, 1997, the Company sold 50% of the membership units of Civic
Parking to an affiliate of Equity Capital Holdings, L.L.C. for $46.0
million in cash. In the allocation of the purchase price, the Company
assigned $45.8 million to the membership units that were sold;
consisting of an estimated sale price of $46.0 million and estimated net
cash inflows for the holding period of $638 thousand offset by interest
on incremental debt during the holding period of $801 thousand. The
membership units retained by the Company have been accounted for in the
accompanying financial statements under the equity method and are included in
the Company's consolidated financial statements from December 31, 1996.
The Company will continue to operate these garages pursuant to a lease
and operating agreement with Civic Parking, L.L.C.
(B) SQUARE INDUSTRIES, INC.
On January 18, 1997, the Company completed a cash tender to acquire all
of the outstanding shares of Square Industries, Inc. ("Square") for
$54.8 million, including transaction fees and other related expenses.
In addition, the Company assumed $23.2 million of existing Square debt.
The purchase price was financed through a draw on the Company's
revolving credit facility (see Long Term Debt). As of March 31, 1997,
the Company has refinanced $18.9 million of the debt assumed from Square
through a draw on the revolving credit facility.
Square operates 116 parking facilities containing over 61,000 spaces
located primarily in the Northeast; New York City 48, Philadelphia 30,
Newark 17, Pittsburgh 11, and other cities 10. The Square acquisition
was accounted for under the purchase method and, accordingly, the
results of operations of Square have been included in the Company's
consolidated financial statements from January 18, 1997 and the purchase
price has been allocated to Square's assets and liabilities based on
their estimated fair values at the date of acquisition. A significant
component of management's plan for the combined company is the
consolidation of operations and administration functions which include a
reduction in staffing levels. Adjustments to goodwill included accruals
of approximately $794,000 related to severance of former Square
employees. The excess of the purchase price over the fair value of the
net assets acquired of $27.8 million is being amortized on a
straight-line basis over 25 years. Purchase price adjustments for
Square have not been finalized as of March 31, 1997. Final purchase
price adjustments are not expected to be material.
<PAGE> 8
PRO FORMA INFORMATION
- ---------------------
The following unaudited pro forma condensed results of operations give effect
to the acquisitions of Square Industries, Inc. and Civic Parking, L.L.C. as if
such transactions had occurred at the beginning of each period presented (in
thousands except for earnings per share):
Six Months Ended March 31,
1997 1996
-------- ---------
Total revenues $119,646 $102,491
Earnings before income taxes 14,387 11,785
Net earnings 8,989 7,324
Earnings per common share 0.51 0.42
Weighted average common shares and
common share equivalents 17,609 17,374
The foregoing unaudited proforma condensed statements of operations give
effect to, among other proforma adjustments, the following:
(i) Interest expense on debt incurred to finance the acquisitions.
(ii) Amortization over 25 years of the excess of cost over net assets
acquired related to the Square acquisition.
(iii) Depreciation and amortization adjustments related to the fair
value of assets acquired.
(iv) Recognition of the effect of estimated cost savings relating to general
and administrative expenses, including excess personnel, to be eliminated
prospectively in connection with the Square acquisition.
(v) Elimination of the effect of Square's historical costs directly related
to Square's sale to the Company, scheduled amortization of deferred
expenses and financing costs, and the write off of deferred financing
costs directly related to the acquisition.
(vi) Adjustments to income tax expense related to the above
LONG TERM DEBT
- --------------
The Company financed the two acquisitions noted above from current working
capital and borrowings against a $150 million revolving credit facility
(the "Acquisition Facility") with a commercial bank.
The Acquisition Facility, which is unsecured, expires January 31, 2000,
provided that the Lenders may extend the term until January 31, 2001, upon
the request of the Company. Revolving loans under the Acquisition Facility
bear interest at one of two rates, at the Company's option, either (i) the
bank's base rate or (ii) the LIBOR plus a margin ranging from .25% to 1.25%
depending on the occurrence of certain dates or events, achievement of certain
financial ratios and the Company's senior unsecured debt rating from Standard
and Poor's or Moody's. In accordance with the loan agreement, the Company
permanently reduced the Acquisition Facility to $120 million as of April 16,
1997. The Company must also permanently reduce the Acquisition Facility to
<PAGE> 9
$85 million by the earlier of September 30, 1997 or such time as the Company
raises equity of at least $35 million. This required reduction may be extended
by the Company for two additional three month periods at the sole discretion of
the Lenders. The Company anticipates that the borrowings under the Acquisition
Facility will be repaid out of cash flow, a refinancing, or the proceeds of a
debt or equity offering. The Acquisition Facility contains certain covenants
which require the Company and its subsidiaries to maintain certain financial
ratios and restrict further indebtedness. The amount outstanding at
March 31, 1997 was $129,770,000, of which $85 million is reflected as long
term debt on the accompanying condensed consolidated balance sheets. Such
debt had a 7.2% weighted average interest rate.
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31,1997
COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
- ----------------------------------------------
Parking revenues for the second quarter of fiscal 1997
increased to $45.7 million from $27.6 million in the second quarter
of fiscal 1996, an increase of $18.1 million or 65.6%. Of the
$18.1 million increase, $13.4 million resulted from the addition of
76 leased and owned Square locations, and $4.7 million is
attributable to an additional net increase of 78 leased and owned
locations over the same quarter last year. Revenues from foreign
operations increased to $4.2 million from $2.9 million. The
increase in foreign revenues was a result of the addition of three
leased locations.
Management contract revenue for the second quarter of fiscal
1997 increased to $10.2 million from $8.1 million in the second
quarter of fiscal 1996, an increase of $2.1 million or 26.5%. The
increase of $2.1 million consists of $1.2 million resulting from
the addition of 40 Square contracts and $874 thousand attributable
to an additional net increase of 44 management contracts over the
same period last year.
Cost of parking for the second quarter of fiscal 1997
increased to $39.4 million from $24.9 million in the second fiscal
quarter of 1996, an increase of $14.5 million or 57.9%. Of the
$14.5 million increase, $10.4 million resulted from the addition of
76 leased and owned Square locations, and $4.1 million is
attributable to an additional net increase of 78 leased and owned
locations over the same quarter last year. Rent and payroll
expenses represented $10.3 million of the $14.5 million increase
which was attributable to the increase in owned and leased
facilities from 544 to 698. The decrease in cost of parking as a
percentage of parking revenue to 86.2% in the second quarter of
fiscal 1997 from 90.4% for the same period in 1996 resulted
primarily from lower rent expense as a percentage of parking
revenues attributable to the Square facilities.
Cost of management contracts for the second quarter of fiscal
1997 increased to $3.2 million from $2.7 million for the second
quarter of fiscal 1996, an increase of $489 thousand or 18.1%.
This increase is primarily attributable to higher liability
insurance claims associated with the increase from 751 to 835
management locations.
General and administrative expenses increased to $6.2 million
for the second quarter of 1997 from $4.4 million for the second
quarter of fiscal 1996, an increase of $1.8 million or 40.4%. Of
the $1.8 million increase, $1.0 million is primarily attributable
to increased general and administrative expenses resulting from the
addition of Square, $227 thousand is amortization of goodwill
arising from the acquisition of Square and, $530 thousand is
attributable to increased incentive compensation resulting from
<PAGE> 11
increased profits and increases in corporate overhead resulting
from expanded headquarter's functions. General and administrative
expenses were, as a percentage of revenues, 11.1% for the second
quarter of 1997 compared to 12.4% for the second quarter of 1996, a
decrease of 1.3%. The decrease resulted from spreading fixed
expenses over a larger revenue base which was primarily
attributable to the addition of Square facilities.
Interest income decreased to $240 thousand for the second
quarter of fiscal 1997 from $530 thousand for the second quarter of
fiscal 1996, a decrease of $290 thousand or 54.5%. Interest
expense for the second quarter of fiscal 1997 was $1.3 million
compared to $0 for the second quarter of fiscal 1996. The increase
in interest expense resulted from borrowings against the Company's
revolving credit facility. The reduction in interest income
resulted from reduced investment balances. The reduced investment
balances and borrowings against the revolving credit facility were
attributable to funding the acquisitions of Square and Civic
Parking.
There were no material gains from sales of property and
equipment for the second quarter of fiscal 1997 compared to a gain
of $1.1 million in the second quarter of fiscal 1996. The gain in
1996 was primarily from the condemnation of a property in January,
1994 that was in dispute and settled during the first quarter of
fiscal 1996.
Equity in partnership and joint venture earnings increased to
$955 thousand for the second quarter of fiscal 1997 compared to $65
thousand for the same period in 1996. The increase is primarily
attributable to earnings from Civic Parking of $638 thousand and an
increase in earnings from $19 thousand to $139 thousand
attributable to the joint venture in Mexico.
Income taxes increased to $2.6 million in the second quarter
of fiscal 1997 compared to $1.9 million for the same period in
1996, an increase of $711 thousand or 38.1%. The tax rate for the
1997 quarter was 36.9% compared to 35.0% for the 1996 quarter. The
increase in tax rate is primarily attributable to a decrease in
income from tax exempt investments and permanent differences
arising from the amortization of intangible assets in the 1997
quarter compared to the 1996 quarter.
SIX MONTHS ENDED MARCH 31,1997
COMPARED TO SIX MONTHS ENDED MARCH 31, 1996
- --------------------------------------------
Parking revenues for the first six months of fiscal 1997 increased to
$77.8 million from $52.8 million in the first six months of fiscal 1996,
an increase of $25.0 million or 47.4%. Of the $25.0 million increase,
$13.4 million resulted from the addition of 76 leased and owned Square
locations, and $11.6 million is attributable to an additional net
increase of 78 leased and owned locations over the same period last
year. Revenues from foreign operations increased to $8.2 million from
$5.8 million. The increase in foreign revenues was a result of the
addition of three leased locations.
<PAGE> 12
Management contract revenue for the first six months of fiscal 1997
increased to $19.6 million from $16.2 million in the first six months of
fiscal 1996, an increase of $3.4 million or 21.0%. The increase of $3.4
million consists of $1.2 million resulting from the addition of 40
Square contracts and $2.2 million attributable to an additional net
increase of 44 management contracts over the same period last year.
Cost of parking for the first six months of fiscal 1997 increased to
$68.5 million from $47.5 million in the first six months of 1996, an
increase of $21.0 million or 44.3%. Of the $21.0 million increase, $10.4
million resulted from the addition of 76 leased and owned Square
locations, and $10.6 million is attributable to an additional net
increase of 78 leased and owned locations over the same period last
year. Rent and payroll expenses represented $16.1 million of the $21.0
million increase which was attributable to the increase in owned and
leased facilities from 544 to 698. The decrease in cost of parking as a
percentage of parking revenue to 88.0% for the first six months of
fiscal 1997 from 89.9% for the same period in 1996 resulted primarily
from lower rent expense as a percentage of parking revenues attributable
to the Square facilities.
Cost of management contracts for the first six months of fiscal 1997
increased to $5.7 million from $5.2 million for the first six months of
fiscal 1996, an increase of $466 thousand or 8.9%. This increase is
primarily attributable to higher liability insurance claims associated
with the increase from 751 to 835 management locations.
General and administrative expenses increased to $10.9 million for the
first six months of 1997 from $8.5 million for the first six months of
fiscal 1996, an increase of $2.4 million or 28.4%. Of the $2.4 million
increase, $1.0 million is primarily attributable to increased general
and administrative expenses resulting from the addition of Square, $227
thousand is amortization of goodwill arising from the acquisition of
Square, and $1.1 million is attributable to increased incentive
compensation resulting from increased profits and increases in corporate
overhead resulting from expanded headquarter's functions. General and
administrative expenses were, as a percentage of revenues, 11.2% for the
six months of 1997 compared to 12.4% for the six months of 1996, a
decrease of 1.2%. The decrease resulted from spreading fixed expenses
over a larger revenue base which was primarily attributable to the
addition of Square facilities.
Interest income decreased to $865 thousand for the first six months of
fiscal 1997 from $1.1 million for the first six months of fiscal 1996, a
decrease of $254 thousand or 22.7%. Interest expense for the first six
months of fiscal 1997 was $1.3 million compared to $0 for the same
period in fiscal 1996. The increase in interest expense resulted from
borrowings against the Company's revolving credit facility. The
reduction in interest income resulted from reduced investment balances.
The reduced investment balances and borrowings against the revolving
credit facility were attributable to funding the acquisitions of Square
and Civic Parking.
There were no material gains from sales of property and equipment for
the first six months of fiscal 1997 compared to a gain of $1.2 million
for the same period in fiscal 1996. The gain in 1996 was primarily from
the condemnation of a property in January, 1994 that was in dispute and
settled during the first quarter of fiscal 1996.
<PAGE> 13
Equity in partnership and joint venture earnings increased to $1.2
million for the first six months of fiscal 1997 compared to $229
thousand for the same period in 1996, an increase of $976 thousand. The
increase is primarily attributable to earnings from Civic Parking of
$638 thousand and an increase in earnings from $26 thousand to $228
thousand attributable to the joint venture in Mexico.
Income taxes increased to $4.7 million in the first six months of fiscal
1997 compared to $3.6 million for the same period in 1996, an increase
of $1.1 or 31.1%. The tax rate for the first six months of fiscal 1997
was 36.0% compared to 34.8% for the same period in 1996. The increase in
tax rate is primarily attributable to a decrease in income from tax
exempt investments and permanent differences arising from the
amortization of intangible assets in the first six months of fiscal 1997
compared to the same period in 1996.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the first six months of fiscal 1997, the Company used working
capital and its Acquisition Facility to finance the acquisitions of
Civic Parking and Square. The Civic Parking acquisition consisted
primarily of the $45.8 million of assets held for resale and $45.2
million increase in the investment in general partnerships. Square
accounted for the $48.1 million acquisition of company, net of cash
acquired. The Company purchased properties totaling $4.2 million during
the first six months of fiscal 1997 and $13.3 million for the same
period of fiscal 1996.
During the first six months of fiscal 1997 the Company sold a property
acquired in the Square acquisition for $9.3 million in cash. There were
no significant property sales in the same period of fiscal 1996.
Depending on the timing and magnitude of the Company's future
investments (either in the form of lease or purchase of parking
properties, joint ventures, or acquisitions), the working capital
necessary to satisfy current obligations is anticipated to be generated
from operations and the revolving credit facility. On March 24, 1997,
the Company filed a registration statement with the Securities Exchange
Commission registering an additional 3.3 million shares of Common
Stock. The Company has not determined if it will proceed with the
offering of such Common Stock. If the Company identifies investment
opportunities requiring cash in excess of the Company's cash flows and
the existing credit facility, the Company may seek additional sources of
capital, including the sale or issuance of Common Stock.
<PAGE> 14
ACQUISITION FACILITY
- --------------------
The Acquisition Facility is a $150 million revolving credit facility,
which is unsecured, and expires January 31, 2000, provided that the
Lenders may extend the term until January 31, 2001, upon the request of
the Company. Revolving loans under the Acquisition Facility bear
interest at one of two rates, at the Company's option, either (i) the
bank's base rate or (ii) the LIBOR plus a margin ranging from .25% to
1.25% depending on the occurrence of certain dates or events,
achievement of certain financial ratios and the Company's senior
unsecured debt rating from Standard and Poor's or Moody's. In
accordance with the loan agreement, the Company permanently reduced the
Acquisition Facility to $120 million as of April 16, 1997. The Company
must also permanently reduce the Acquisition Facility to $85 million by
the earlier of September 30, 1997 or such time as the Company raises
equity of at least $35 million. This required reduction may be extended
by the Company for two additional three month periods at the sole
discretion of the lenders. The Company anticipates that the borrowings
under the Acquisition Facility will be repaid out of cash flow, a
refinancing, or the proceeds of a debt or equity offering. The
Acquisition Facility contains certain covenants which require the
Company and its subsidiaries to maintain certain financial ratios and
restrict further indebtedness. As of May 12, 1997 the Company had $46.3
million available for borrowing under the Acquisition Facility and $73.7
million outstanding.
<PAGE> 15
PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The following proposals were approved at the Company's
Annual Meeting of Shareholders which was held on February 28, 1997.
(a) The re-election of all seven directors for terms ending at the 1998
Annual Meeting of Shareholders. Each director received the
following number of total votes:
ABSTAINED /
FOR AGAINST WITHHELD
------------------------------------------------
Monroe J. Carell, Jr. 16,845,002 0 4,503
James H. Bond 16,845,002 0 4,503
Cecil Conlee 16,845,002 0 4,503
John W. Eakin 16,845,002 0 4,503
William C. O'Neill 16,845,002 0 4,503
Edward G. Nelson 16,845,002 0 4,503
P. E. Sadler 16,845,002 0 4,503
(b) An amendment to the Company's Amended and Restated Charter to increase
the number of authorized shares available for issuance from 30,000,000
to 50,000,000. This proposal received the following number of total votes:
ABSTAINED /
FOR AGAINST WITHHELD
-------------------------------------------------
16,766,419 69,944 13,142
(c) A proposal to adopt the Deferred Stock Unit Plan for key employees with
250,000 shares of common stock reserved for issuance. The proposal
received the following number of total votes:
ABSTAINED /
FOR AGAINST WITHHELD
--------------------------------------------------
16,737,055 88,991 23,459
<PAGE> 16
ITEM 7 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits filed as a part of this report are listed in
the exhibit index immediately following the signature page.
(b) Reports on Form 8-K
In relation to the acquisition of Civic Parking, L.L.C., the
Company filed a Current Report on Form 8-K on January 14, 1997 with
subsequent amendments on Form 8-K/A filed on January 16, 1997, March
17, 1997, March 21, 1997, and April 8, 1997. This report included
Item 2 and Item 7. Financial statements presented under Item 7
included pre-acquisition financial statements for Civic Parking,
L.L.C., Statements of Revenues and Expenses of Civic Center
Corporation, and proforma financial information for Central
Parking Corporation.
In relation to the acquisition of Square Industries, Inc., the
Company filed a Current Report on Form 8-K on January 31, 1997 with
subsequent amendments on Form 8-K/A filed on March 18, 1997,
March 21, 1997, and April 9, 1997. This report included Item 2
and Item 7. Financial statements presented under Item 7 included
pre-acquisition financial statements for Square Industries, Inc. and
proforma financial information for Central Parking Corporation.
After the quarter ended, the Company filed a Current Report on
Form 8-K on April 30, 1997 in relation to the disposition of 50%
of Civic Parking, L.L.C. This report included Item 2 and Item 7.
Financial information presented under Item 7 included proforma
financial information for Central Parking Corporation
<PAGE> 17
EXHIBIT INDEX
EXHIBIT
NUMBER DOCUMENT
2.1 Agreement for Sale and Purchase of Membership
Interests, dated as of November 22, 1996, by and
among Central Parking System Realty, Inc., Central
Parking System Realty of Missouri, Inc. , Gateway
Group, Inc., and SLC Holdings, L.L.C.
(Incorporated by reference herein to Exhibit 2.2
to the Company's Current Report on Form 8-K as
filed on January 14, 1997)
2.2 Agreement and Plan of Merger dated as of December 6, 1996, by
and among Central Parking Corporation, Central Parking System
-- Empire State, Inc., and Square Industries, Inc.
(incorporated by reference to Exhibit (c)(1) to the Company's
Tender Offer Statement on Schedule 14D-1 filed by Central
Parking Corporation on December 13, 1996)
2.3 Agreement for Purchase and Sale of Membership
Interests, dated as of April 16, 1997, by and
among EOP-St. Louis Parking Garages, L.L.C. and
Central Parking System Realty of Missouri, Inc.
(Incorporated by reference herein to Exhibit 2.3
to the Company's Current Report on Form 8-K as
filed on April 30, 1997)
3 Amended and Restated Charter of Central Parking
Corporation restated to incorporate the Amendment
adopted February 28, 1997 (incorporated by
reference to Exhibit 3.2 to the Company's
Registration Statement No. 333-23869 on Form S-3
as filed on March 23, 1997)
10.1 Central Parking Corporation Deferred Stock Unit
Plan (incorporated by reference to Exhibit A to
the Company's Definitive Proxy Statement on
Schedule DEF 14A as filed on January 14, 1997)
10.2 Monroe J. Carell, Jr. Employment Agreement
(incorporated by reference to Exhibit 10.8 to the
Company's Registration Statement No. 33-95640 on
Form S-1)
10.3 Amendment to Monroe J. Carell, Jr. Employment
Agreement
27 Financial Data Schedule
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CENTRAL PARKING CORPORATION
Date: May 14, 1997 By: /s/ Stephen A. Tisdell
Stephen A. Tisdell
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant in the capacities and on the
dates indicated.
Signature Title Date
/s/ Stephen A. Tisdell Chief Financial Officer May 14, 1997
Stephen A. Tisdell (Principal Financial and
Accounting Officer)
<PAGE> 19
EXHIBIT 10.3
SUPPLEMENT TO MINUTES OF CENTRAL PARKING CORPORATION
BOARD OF DIRECTORS MEETING
September 20, 1996
At its September 20, 1996 meeting, the Board of Directors of the company
approved the recommendation of the Compensation Committee (which
committee is comprised of Cecil Conlee, Chairman, John Eakin, and
William C. O'Neil, Jr.) that the compensation of company chairman,
Monroe Carell, Jr., be revised as follows for the Fiscal Year ending
September 30, 1997:
Base salary - $66,000
Bonus payable in cash - $500,000 (maximum)
Stock Options - $200,000 (options equal to $200,000 worth of stock at
the closing price as of October 1, 1996.)
This is a supplement to the Board minutes dated September 20, 1996 and
is to be entered in the book of minutes of the company.
/s/ Henry J. Abbott
Henry J. Abbott
Secretary
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