<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report (Date of earliest event reported):
February 12, 1998
CENTRAL PARKING CORPORATION
(Exact name of registrant as specified in its charter)
Tennessee 001-13950 62-1052916
--------- --------- ----------
(State or other (Commission File (Employer
jurisdiction of Number) Identification
incorporation) Number)
2401 21st Avenue South, Suite 200, Nashville, Tennessee 37212
-------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code:
(615) 297 4255
Not applicable
---------------------------------------------------
(Former name or former address,
if changed since last report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Central Parking Corporation (the "Registrant") hereby amends its 8-K
filed February 17, 1998 to include the audited financial statements of Kinney
System Holding Corp. ("Kinney") for the year ended December 31, 1997 and
certain pro forma information.
2
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) and (b) The following financial statements and pro forma financial
information are attached:
Item 7(a). Financial Statements
Consolidated Financial Statements for the year ended December 31,
1997, with independent auditors' report thereon
Item 7(b). Pro Forma Financial Statements
Pro forma Condensed Consolidated Balance Sheet at December 31, 1997
Pro forma Condensed Consolidated Statement of Earnings for the three
months ended December 31, 1997 and the year ended
September 30, 1997
(c) Exhibits. The following are exhibits filed as a part of this Report:
2.1 Acquisition Agreement and Plan of Merger dated as of November 7, 1997
by and between Registrant, Kinney System Holding Corp. and a
subsidiary of Registrant. (Filed with initial 8-K)
23.1 Consent of KPMG Peat Marwick LLP
3
<PAGE> 4
KINNEY SYSTEM HOLDING CORP.
AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 1997
(With Independent Auditors' Report Thereon)
<PAGE> 5
INDEPENDENT AUDITORS' REPORT
To the Stockholders of
Kinney System Holding Corp. and Subsidiaries:
We have audited the accompanying consolidated balance sheet of Kinney
System Holding Corp. and subsidiaries as of December 31, 1997, and the
related consolidated statements of earnings and retained earnings and
cash flows for the year then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Kinney System Holding Corp. and subsidiaries at December 31, 1997, and
the results of their operations and their cash flows for the year then
ended, in conformity with generally accepted accounting principles.
May 7, 1998
1
<PAGE> 6
KINNEY SYSTEM HOLDING CORP.
AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 1997
(amounts in thousands except share data)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents $ 6,805
Management accounts receivable, net of allowance for doubtful accounts of $507 3,145
Accounts and current portion of notes receivable, net of allowance for doubtful accounts of $237 2,671
Prepaid expenses and other current assets 1,526
Deferred tax asset (note 12) 1,290
Due from stockholder (notes 10 and 14) 3,458
-------
Total current assets 18,895
-------
Long-term notes and other receivables, less current portion (note 3):
Due from New York City 10,455
Other 311
-------
Total long-term receivables 10,766
-------
Property, equipment and leaseholds - net (notes 2, 4, 7 and 8) 26,919
Deferred tax assets (note 12) 5,376
Investment in limited liability companies and partnerships (notes 5 and 14) 10,743
Security deposits and other assets 6,270
-------
$78,969
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt (note 7) $20,226
Current portion of capital lease obligations (note 8) 890
Accounts payable 3,459
Accrued liabilities (note 9) 13,363
Customer deposits 613
-------
Total current liabilities 38,551
-------
Long-term debt, excluding current portion (notes 6 and 7) 3,164
Capital lease obligations, excluding current portion (note 8) 8,432
Deferred rent 7,398
Other 328
-------
Total liabilities 57,873
-------
Stockholders' equity (note 6):
Common stock par value $0.01. Authorized 1,000 shares,
issued and outstanding 100 shares --
Additional paid-in capital 6,304
Retained earnings 14,792
-------
Total stockholders' equity 21,096
-------
Commitments and contingencies (notes 2, 5, 6, 8, 11, 13 and 14) $78,969
=======
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 7
KINNEY SYSTEM HOLDING CORP.
AND SUBSIDIARIES
Consolidated Statement of Earnings and Retained Earnings
Year ended December 31, 1997
(amounts in thousands)
<TABLE>
<S> <C>
Parking revenue $ 134,946
---------
Costs and expenses (note 8):
Cost of parking 114,337
General and administrative 13,921
---------
Total costs and expenses 128,258
---------
Operating earnings 6,688
---------
Other income (expenses):
Equity in earnings of partnerships and limited liability
companies (note 5) 836
Interest income 1,498
Interest expense (4,037)
---------
(1,703)
---------
Earnings before income taxes 4,985
Income tax expense (benefit) (note 12):
Current 3,457
Deferred (1,238)
---------
Net earnings 2,766
Retained earnings at January 1, 1997 12,026
---------
Retained earnings at December 31, 1997 $ 14,792
=========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 8
KINNEY SYSTEM HOLDING CORP.
AND SUBSIDIARIES
Consolidated Statement of Cash Flows
Year ended December 31, 1997
(amounts in thousands)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net earnings $ 2,766
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 4,649
Deferred income taxes (1,238)
Equity in earnings of limited liability companies and partnerships (836)
Loss on property closures and condemnations 779
Deferred rent 1,301
Changes in assets and liabilities:
Increase in management and other accounts receivable (1)
Increase in prepaid expenses and other current assets (11)
Increase in security deposits and other assets (806)
Increase in due from stockholder (3,458)
Increase in accounts payable 1,351
Increase in accrued liabilities 1,493
Decrease in other liabilities (711)
---------
Total adjustments 2,512
---------
Net cash provided by operating activities 5,278
---------
Cash flows from investing activities:
Acquisition of leases and management agreements (971)
Acquisition of property and equipment (1,170)
Repayment received on notes receivable 621
Investment in limited liability companies and partnerships (4,920)
Distributions from limited liability companies 567
---------
Net cash used in investing activities (5,873)
---------
Cash flows from financing activities:
Repayment of long-term debt (5,447)
Borrowings under long-term debt 8,058
Payment of financing costs (126)
Payments of capitalized lease obligations (549)
---------
Net cash provided by financing activities 1,936
---------
Net increase in cash and cash equivalents 1,341
Cash and cash equivalents as of January 1, 1997 5,464
---------
Cash and cash equivalents as of December 31, 1997 $ 6,805
=========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 3,476
=========
Income taxes $ 2,113
=========
NONCASH FINANCING ACTIVITIES:
The Company issued a note for $2,204 in connection with acquisition of
various leases and management agreements (see note 2)
Equipment was acquired pursuant to capital lease agreements in the amount
of $1,337 (see note 8)
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 9
KINNEY SYSTEM HOLDING CORP.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) ORGANIZATION
Kinney System Holding Corp. and subsidiaries ("the Company") are
engaged in the business of managing and operating parking facilities
in various states, primarily in the northeastern United States.
The consolidated financial statements of the Company include the
financial statements of the Company and its wholly owned subsidiaries.
All significant intercompany balances and transactions have been
eliminated in consolidation.
(B) REVENUES
Revenues include parking revenues from leased and owned locations.
Revenues also include management contract revenues which represent
revenues (both fixed fees and additional payments based upon parking
revenues) from facilities managed for other parties, and management
fees primarily for accounting and insurance services. Parking and
management contract revenues are recognized when earned.
(C) CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers
cash and cash equivalents to include cash on hand and in banks and
short-term, highly liquid investments with original maturities of
three months or less. At December 31, 1997, the Company had cash
equivalents of $4,640,623.
(D) PROPERTY, EQUIPMENT AND LEASEHOLDS
Property, equipment and leaseholds are stated at cost. Depreciation on
property and equipment is calculated on the straight-line method over
the estimated useful lives of the assets, generally three to forty
years. Leasehold interests are amortized over the lives of the related
leases. Property and equipment held under capital leases and leasehold
improvements are amortized on a straight-line basis over the shorter
of the lease term or the estimated useful life of the asset.
(E) INVESTMENTS IN LIMITED LIABILITY COMPANIES AND PARTNERSHIPS
Investments in limited liability companies and partnerships are
accounted for using the equity method of accounting. The Company has
entered into agreements to operate parking garages through either
general partnerships, limited liability companies or limited
partnerships. The financial results of the Company's investments are
included in the equity in earnings of partnerships and limited
liability companies in the accompanying consolidated statement of
earnings and retained earnings. The difference between the Company's
investment and the underlying net equity of such entities is amortized
over the estimated recovery period.
(Continued)
5
<PAGE> 10
KINNEY SYSTEM HOLDING CORP.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(F) LEASE TRANSACTIONS AND RELATED BALANCES
The Company accounts for operating lease obligations on a
straight-line basis. Contingent or percentage payments are
recognized when operations indicate such amounts will be payable.
Lease obligations paid in advance are included in prepaid
expenses. The difference between actual lease payments and
straight-line lease expense over the lease term is included in
deferred rent in the accompanying balance sheet.
(G) IMPAIRMENT OF LONG-LIVED ASSETS
The Company accounts for asset impairment under the provisions of
Statement of Financial Accounting Standards No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of. This statement requires that long-lived assets
and certain identifiable intangibles be reviewed for impairment
whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability
of assets to be held and used is measured by a comparison of the
carrying amount of an asset to future net cash flows expected to
be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceed the fair
value of the assets. Assets to be disposed of are reported at the
lower of the carrying amount or fair value less costs to sell.
(H) INCOME TAXES
The Company files a consolidated Federal income tax return. Income
taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date.
(I) USE OF ESTIMATES IN FINANCIAL STATEMENT PRESENTATION
Management of the Company has made certain estimates and
assumptions relating to the reporting of assets, liabilities,
revenues and expenses to prepare these consolidated financial
statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(2) ACQUISITION
During 1997, the Company acquired various leases and management
agreements from a parking garage company ("Seller") in the Washington,
D.C. area. The acquisition included 18 leased locations and the right to
manage 3 additional locations. The purchase price was $3,175,000, of
which $971,000 was paid in cash, and a note was issued for the remaining
balance of $2,204,000 (see note 7).
The purchase price of the locations is subject to increase by an
additional amount of up to $1,000,000 if certain performance criteria are
met during the next eight years. In the opinion of management, based on
the current performance of the locations, no additional accrual is
currently required, and accordingly, no additional liability has been
reflected in the accompanying consolidated financial statements.
(Continued)
6
<PAGE> 11
KINNEY SYSTEM HOLDING CORP.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(3) NOTES RECEIVABLE
In 1973, the Company built two parking garages on behalf of the City
of New York (the "City") which were substantially funded with proceeds
of two notes payable (see note 7). The Company also entered into a
long-term management agreement to operate the parking garages. Amounts
advanced for the construction of the garages were recorded as a note
receivable and are being repaid by the City in monthly installments of
$156,000 including interest at 11.5% through December 2007. The note
receivable at December 31, 1997 was $11,082,800, including the current
portion of $627,500. The notes payable are secured by a pledge of the
Company's interest in the agreement with the City.
Other notes and long-term receivables of $311,000 are primarily
related to lease transactions.
(4) PROPERTY, EQUIPMENT AND LEASEHOLDS
Property, equipment, leaseholds and accumulated depreciation and
amortization consist of the following:
<TABLE>
<S> <C>
Land $ 4,141,000
Parking garages and improvements 2,349,000
Machinery and equipment 5,616,000
Leasehold interests 39,205,000
Leasehold improvements 6,210,000
Property and equipment under capital leases (note 8) 9,408,000
-----------
66,929,000
Less accumulated depreciation and amortization 40,010,000
-----------
$26,919,000
===========
</TABLE>
During the year ended December 31, 1997, fully depreciated assets with a cost
of approximately $4,200,000 were written off.
(5) INVESTMENT IN LIMITED LIABILITY COMPANIES AND PARTNERSHIPS
(A) LIMITED LIABILITY COMPANIES
In April 1995, the Company purchased a 40% interest in a limited
liability company, 12 West 48th Street, LLC, that owns and
operates a garage and two adjacent commercial buildings in
Manhattan, for $4,400,000. The Company paid $400,000 in cash and
received financing of $4,000,000 from a bank (see note 6) for the
remainder. The following is summary information regarding 12 West
48th Street, LLC as of December 31, 1997:
<TABLE>
<S> <C>
Assets $12,100,000
===========
Liabilities 430,000
Members' capital 11,670,000
-----------
Total liabilities and members' capital $12,100,000
===========
Revenues 2,000,000
Operating expenses (177,000)
Depreciation (67,000)
-----------
Net income $ 1,756,000
===========
(Continued)
</TABLE>
7
<PAGE> 12
KINNEY SYSTEM HOLDING CORP.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
In August 1997, the Company and an unrelated company formed a limited
liability company, SK Travel, LLC ("SK Travel"), to own and operate an
airplane. Each company initially contributed $4,175,000 (see note 6) and
equally share in the ownership. In addition, several capital contributions
totaling $767,000 were also made by the Company. Through December 1997, the
airplane owned by SK Travel had not been rented to third parties, thus no
revenues have been reported. The following is unaudited summary information
regarding SK Travel as of December 31, 1997:
<TABLE>
<S> <C>
Assets $ 9,000,000
-----------
Members' capital $ 9,000,000
===========
Depreciation expense $ (470,000)
Operating expenses (30,000)
-----------
Net loss $ (500,000)
===========
</TABLE>
(B) LIMITED PARTNERSHIPS
The Company owns 40% and 43% limited partnership interests in Cromwell
Louisville Associates, LP ("Louisville") and Cromwell Silver Towers Group,
LP ("Silver Towers"), respectively. These entities operate parking garages.
The stockholders of the Company also have interests in these partnerships.
The Company has guaranteed certain liabilities of Louisville and Silver
Towers amounting to $250,000 and $400,000, respectively. The following is
unaudited summary information regarding the partnerships as of December 31,
1997:
<TABLE>
<CAPTION>
(UNAUDITED)
SILVER
LOUISVILLE TOWERS
----------- -----------
<S> <C> <C>
Assets $ 3,500,000 1,300,000
=========== ===========
Liabilities 4,280,000 1,350,000
Partners' deficit (780,000) (50,000)
----------- -----------
Total liabilities and partners' deficit $ 3,500,000 1,300,000
=========== ===========
Revenues 475,000 850,000
Operating expenses (205,000) (460,000)
Interest expense (210,000) (120,000)
Depreciation (140,000) (50,000)
----------- -----------
Net income (loss) $ (80,000) 220,000
=========== ===========
</TABLE>
(Continued)
8
<PAGE> 13
KINNEY SYSTEM HOLDING CORP.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(C) PARTNERSHIP
The Company owns a 50% partnership interest in Spectrum Parking Associates
("Spectrum") that leases parking facilities located in Philadelphia, PA.
The Company has guaranteed certain liabilities of Spectrum amounting to
approximately $368,000. The following is summary information regarding the
partnership as of December 31, 1997:
<TABLE>
<S> <C>
Assets $ 2,200,000
===========
Liabilities 1,800,000
Partners' capital 400,000
-----------
Total liabilities and partners' capital $ 2,200,000
===========
Revenues 6,900,000
Operating expenses (6,475,000)
Interest expense (100,000)
Depreciation (50,000)
-----------
Net income $ 275,000
===========
</TABLE>
(6) LOAN AGREEMENT
In June 1997, the Company entered into a loan agreement with Fleet Bank,
N.A. ("Fleet") which provides for a revolving line of credit of up to $15
million, letters of credit of up to $5 million, and a term loan of $4.25
million to be used for the Company's investment in SK Travel (see notes
5(a) and 7). Portions of the revolving line of credit can be converted to
term loans. At December 31, 1997, the Company had borrowed approximately
$3,808,000, payable in June 2000, under the revolving line of credit. This
amount was used to repay an outstanding loan used to finance the Company's
investment in 12 West 48th Street, LLC. The line of credit pays interest
monthly at the lower of LIBOR plus 2% or prime (8.5% at December 31, 1997).
The loan agreement is secured by the outstanding shares of common stock of
the Company and its subsidiaries.
The loan agreement with Fleet contains certain financial covenants which
require maintenance of specified levels of tangible net worth, debt service
coverage, debt to cash flow and liabilities to tangible net worth, as
defined, in addition to other nonfinancial covenants. In connection with
the sale of the Company, the outstanding balance was repaid in February
1998 (see note 14), and accordingly has been reclassified to current
portion of long-term debt.
At December 31, 1997, the Company was contingently liable under letters of
credit pursuant to certain loan and credit agreements totaling
approximately $5,400,000.
(Continued)
9
<PAGE> 14
KINNEY SYSTEM HOLDING CORP.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(7) LONG-TERM DEBT
<TABLE>
<S> <C>
Long-term debt at December 31, 1997 consists of the following:
Note payable, due June 2000, with interest at the lower of LIBOR plus 2% or
prime (8.5% at December 31, 1997) payable monthly (see note 6). This
note was repaid in full in February 1998 (note 14). $ 3,808,000
Term loan payable in monthly installments of $70,833, plus interest
of 4% above the commercial rate (8.5% at December 31, 1997)
through August 2002 (see note 6). This loan was repaid in full
in February 1998 (note 14). 3,967,000
Note payable, due in monthly installments of $43,685, including
interest at 4% above the commercial rate (9.6% at December 31,
1997) with final payment of $4,500,000 due December, 2003,
secured by various parking garages. This note was repaid in full in
February 1998 (note 14). 4,949,000
Notespayable, due in monthly installments of $124,587, including
interest at 9.2%, through January 2004, secured by the Company's
agreement with the City (see note 3). These notes were repaid in full
in February 1998 (note 14). 6,944,000
Note payable, due in quarterly principal installments of $91,826,
through February 2000, and $55,096 from March 2000 through March
2005, plus interest of 7.5% (see note 2). 1,928,000
Note payable for an agreement not to compete, due in monthly
installments of $14,393, including interest at 8.5%, through
November 2008. The note is cancelable if the related lease
agreement terminates and all rent is paid through termination of
occupancy. 1,350,000
Other notes payable 444,000
-----------
23,390,000
Less current portion 20,226,000
-----------
$ 3,164,000
===========
</TABLE>
Other notes payable consist of various notes including a note payable to
the former owners of a parking company acquired in 1986 (one of whom is a
stockholder of the Company) and note payable for a lease acquisition. The
$87,000 note payable to the former owners of the parking company acquired
bears interest at 1% per annum above prime (9.25% at December 31, 1997) and
is payable monthly through June 1998. The $302,000 note payable for a lease
acquisition bears interest at 6.2% and is payable quarterly through October
2011.
In conjunction with the sale of the Company, $19,668,000 of debt was repaid
in February 1998 (note 14). This debt has been reclassified to current
portion of long-term debt.
Aggregate annual maturities of long-term debt at December 31, 1997 are as
follows:
<TABLE>
<S> <C>
1998 $20,226,000
1999 504,000
2000 363,000
2001 336,000
2002 352,000
Thereafter 1,609,000
-----------
$23,390,000
===========
</TABLE>
(Continued)
10
<PAGE> 15
KINNEY SYSTEM HOLDING CORP.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(8) LEASES
The Company is obligated under capital leases for buildings and equipment
that expire at various dates through 2003.
At December 31, 1997, the amount of buildings and equipment and related
accumulated amortization recorded under capital leases was $9,400,000 and
$5,200,000, respectively.
The Company also leases land, buildings and equipment, primarily for
parking facilities, under noncancelable operating leases that expire at
various dates through 2101. Some leases contain renewal options. Certain
leases require payment of contingent rent based upon achieving certain
levels of gross receipts from the related facility's operations as well as
adjustments to rent for the Company's share of certain costs and expenses
of the landlord.
Rent expense, net of sublease rental income for the year ended December 31,
1997, is as follows:
<TABLE>
<S> <C>
Minimum rentals $44,000,000
Contingent rentals 18,000,000
-----------
62,000,000
Less sublease rental income 2,000,000
-----------
Rent expense $60,000,000
===========
</TABLE>
Future minimum lease payments under noncancelable operating leases (with
initial or remaining lease terms in excess of one year) and future minimum
capital lease payments as of December 31, 1997 are:
<TABLE>
<CAPTION>
CAPITAL OPERATING
YEAR ENDING DECEMBER 31 LEASES LEASES
---------------------- ------ ------
<S> <C> <C>
1998 $ 2,310,000 39,000,000
1999 2,490,000 29,000,000
2000 2,520,000 27,000,000
2001 2,560,000 26,000,000
2002 2,480,000 25,000,000
Thereafter 2,310,000 178,000,000
----------- -----------
Total minimum lease payments 14,670,000 324,000,000
===========
Less amounts representing interest (at rates
ranging from 8.4% to 17%) 5,348,000
-----------
Present value of net minimum capital lease payments 9,322,000
Less current portion of capital lease obligations 890,000
-----------
Obligations under capital leases, excluding current portion $ 8,432,000
===========
</TABLE>
The Company expects to receive an aggregate of approximately $12,000,000
under sublease agreements through 2013.
(Continued)
11
<PAGE> 16
KINNEY SYSTEM HOLDING CORP.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(9) ACCRUED LIABILITIES
At December 31, 1997, accrued liabilities included the following:
<TABLE>
<S> <C>
Rent $ 2,921,000
Income and other taxes 4,343,000
Compensation 915,000
Extraordinary repairs and maintenance (note 13d) 1,400,000
Insurance 1,190,000
Other 2,594,000
-----------
$13,363,000
===========
</TABLE>
(10) RELATED PARTY TRANSACTIONS
At December 31, 1997, $100,000 is due to related entities in which a
stockholder of the Company has an interest. This amount, which is included
in other accrued liabilities and other long-term liabilities in the
accompanying consolidated balance sheet, bears interest at 1% above the
prime rate (9.5% at December 31, 1997).
The $3,458,000 due from stockholders relates to professional fees incurred
in anticipation of the sale of the Company (see note 14) and bears interest
at 6% per annum and is payable on demand.
During the year ended December 31, 1997, $800,000 was paid to a stockholder
under a consulting agreement.
(11) RETIREMENT PLANS
(A) Certain union employees are covered under multiemployer defined
benefit plans administered by unions. The amount charged to pension
expense and contributions made to these plans was approximately
$1,100,000 for the year ended December 31, 1997.
The Multiemployer Pension Plan Amendments Act of 1980 imposes certain
liabilities upon employers associated with multiemployer plans who
withdraw from such a plan, or upon termination of said plan. The
Company has not received information from the plan's administrators to
determine its share of unfunded vested benefits, if any, nor has it
undertaken to terminate, withdraw or partially withdraw from the plan.
(B) The Company has a 401(k) plan which allows eligible employees (as
defined in the plan) to defer a portion of their salary. Contributions
from participants are limited to 15% of their annual salary. The
Company may make matching contributions to the plan. The actual
percentage will be determined by the Company. For the year ended
December 31, 1997, the Company made no matching contributions.
(Continued)
12
<PAGE> 17
KINNEY SYSTEM HOLDING CORP.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(12) INCOME TAXES
Income tax expense (benefit) consists of the following for the year ended
December 31, 1997:
<TABLE>
<S> <C>
Current:
Federal $ 2,337,000
State 1,120,000
-----------
3,457,000
Deferred:
Federal (837,000)
State (401,000)
-----------
(1,238,000)
-----------
$ 2,219,000
===========
</TABLE>
A reconciliation between actual income taxes and amounts computed by
applying the Federal statutory tax rate to earnings before income taxes is
summarized as follows:
<TABLE>
<CAPTION>
AS A PERCENTAGE
OF EARNINGS
BEFORE TAXES
<S> <C>
Federal statutory tax rate on earnings before income taxes $1,695,000
----------
Increase in tax rates resulting from:
State and local income taxes, net of Federal income tax benefit 475,000
Other, net 49,000
----------
Income tax expense $2,219,000
==========
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities at December 31, 1997 are as
follows:
<TABLE>
<S> <C>
Deferred tax assets:
Deferred rent $ 3,200,000
Capital leases 2,200,000
Accrued insurance 460,000
Other accrued liabilities 615,000
Allowance for bad debts 322,000
-----------
6,797,000
Deferred tax liabilities - other, primarily limited liability and partnership interests (131,000)
-----------
Net deferred tax assets $ 6,666,000
===========
</TABLE>
Management believes that, more likely than not, the results of operations
will generate sufficient taxable income to realize deferred tax assets.
(Continued)
13
<PAGE> 18
KINNEY SYSTEM HOLDING CORP.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(13) COMMITMENTS AND CONTINGENCIES
(A) LEGAL MATTERS
The Company has been named as a defendant in various lawsuits. In the
opinion of management, after consulting with counsel, the Company does
not believe that any liability resulting from their ultimate outcome
will have a materially adverse effect on the financial position,
results of operations, or liquidity of the Company.
During the regular course of business, there have been asserted and
unasserted claims against the Company, a portion of which are not
covered by insurance. In the opinion of management, after consulting
with counsel, adequate provision has been made to cover settlement of
any claims to the extent not covered by insurance and the ultimate
outcome of such claims will not have a materially adverse effect on
the financial position, results of operations, or liquidity of the
Company.
(B) COMMERCIAL RENT AND OCCUPANCY TAXES
Several of the Company's subsidiaries are currently being audited by
the City of New York for New York City commercial rent and occupancy
taxes. Management believes that adequate provision has been made for
any potential assessments.
(C) STATE TAXES
Certain of the Company's state income tax returns are currently under
audit by various state agencies. Management believes that the results
of these audits will not have a materially adverse effect on the
financial position, results of operations, or liquidity of the
Company.
(D) ACCRUED REPAIRS AND MAINTENANCE
The Company has accrued certain amounts related to extraordinary
repairs and maintenance for a parking facility which is operated under
a capital lease. The Company has estimated its liability to be
$1,400,000; however, negotiations with the landlord have not been
finalized. Because the repairs and maintenance are expected to be
completed in 1998, the related liabilities are included in accrued
liabilities in the accompanying consolidated balance sheet.
(E) UNION CONTRACTS
Approximately 46% of the Company's labor force is employed under union
contracts. Accordingly, it is possible that such contracts could
impact the Company's growth and results from operations in the future.
(14) SUBSEQUENT EVENTS
In February 1998, the stockholders of the Company sold the common stock of
the Company to an unrelated party. Certain assets including amounts due
from stockholder and investments in SK Travel, Louisville and Silver Towers
were excluded from the sale. In connection with the sale, the Company
entered into agreements with various employees wherein the employees were
entitled to a combination of retention, severance, and success payments if
certain conditions are met.
The total estimated cost of these payments, in the event all conditions are
met, is approximately $6,866,000. Through December 31, 1997, all retention
payments, totaling approximately $784,000 had been paid and reflected in
the accompanying consolidated financial statements. The success payments
are discretionary and became payable upon the sale of the Company.
Severance payments become payable if and when the employee is terminated.
In connection with the closing of the sale, certain loans totaling
$19,668,000 were repaid (see notes 6 and 7).
14
<PAGE> 19
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial information of
Central Parking Corporation (the "Company") is based on (a) the historical
consolidated financial results of the Company, (b) the historical financial
statements of Civic Parking, LLC ("Civic"), (c) the historical consolidated
financial statements of Square Industries, Inc.,("Square"), (d) the historical
financial statements of Car Park Corporation ("Car Park"), (e) the historical
consolidated financial statements of Diplomat Parking corporation ("Diplomat"),
and (f) the historical consolidated financial statements of Kinney System
Holding Corp. ("Kinney").
The historical consolidated balance sheet of the Company as of December 31,
1997 presents the consolidated financial position of the Company on such date.
The historical consolidated balance sheet of Kinney represents the consolidated
financial position of Kinney as of December 31, 1997. Kinney's fiscal year
ends December 31. The unaudited pro forma consolidated balance sheet as of
December 31, 1997 assumes that the Kinney acquisition had occurred on December
31, 1997.
The historical statement of earnings information for the year ended
September 30, 1997 reflects (a) the historical results of operations of the
Company for its fiscal year then ended, (b) the historical results of operations
of Civic for the three month period ended December 31, 1996, (c) the historical
results of operations of Square for the three month period ended December 31,
1996 and the period January 1 through January 17, 1997, (d) the historical
results of operations of Car Park for the period October 1, 1996 through May 29,
1997, (e) the historical results of Diplomat for the twelve month period ending
September 30, 1997, and (f) the historical results of Kinney for the twelve
month period ending December 31, 1997. The historical statement of earnings for
the quarter ended December 31, 1997 reflects the historical results of
operations of the Company for the first quarter of its fiscal 1998 and the
historical results of Kinney for the quarter ended December 31, 1997. The
unaudited pro forma statements of earnings was prepared assuming that the
acquisitions were consummated on October 1, 1996.
The unaudited pro forma consolidated financial information has been
prepared based on the historical financial statements of the Company and the
acquired entities, reclassified as necessary to conform with the presentation
used in the consolidated financial statements of the Company, and gives effect
to (a) the acquisitions under the purchase method of accounting, based on
preliminary allocations of the respective purchase prices with respect to the
Diplomat and Kinney acquisitions, (b) the financing of the acquisitions, (c)
certain estimated operational and financial combination benefits which are a
direct result of the Square and Kinney acquisitions, and (d) the assumptions and
adjustments which are deemed appropriate by management of the Company and which
are described in the accompanying notes to the pro forma consolidated financial
information.
This pro forma consolidated financial information may not be indicative of
the results that would have occurred if the acquisitions had been in effect on
the dates indicated or which may be obtained in the future. Such pro forma
consolidated financial information should be read in conjunction with the
historical financial statements and notes thereto.
<PAGE> 20
CENTRAL PARKING CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(ALL DOLLAR AMOUNTS ARE EXPRESSED IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Effects of
Kinney
Historical Acquisition and Pro Forma
---------- Related Consolidated
Company Kinney Financing Totals
--------- --------- --------------- ------------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 13,288 $ 6,805 $ -- $ 20,093
Management accounts receivable 11,164 3,145 -- 14,309
Accounts and current portion of notes receivable - other 4,790 2,671 -- 7,461
Prepaid expenses 11,314 1,526 -- 12,840
Deferred income taxes 981 1,290 -- 2,271
Due from stockholder -- 3,458 (3,458)(A) --
--------- --------- --------- ---------
Total current assets 41,537 18,895 (3,458) 56,974
Investments, at amortized cost 4,825 -- -- 4,825
Notes receivable, less current portion: 16,402 -- -- 16,402
Due from New York City -- 10,455 2,100 (B) 12,555
Other -- 311 -- 311
Property, equipment, and leasehold improvements, net 80,177 26,919 7,676 (B) 114,772
Contract rights, net 4,807 -- -- 4,807
Goodwill, net 51,584 -- 189,822 (B) 241,406
Investment in partnerships and joint ventures 50,189 10,743 (5,721)(A) 61,633
6,422 (B)
Deferred income taxes -- 5,376 -- 5,376
Other assets 7,223 6,270 1,818 (D) 15,311
--------- --------- --------- ---------
$ 256,744 $ 78,969 $ 198,659 $ 534,372
========= ========= ========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt $ 1,292 $ 20,226 $ (19,668)(D) $ 1,850
Current portion of capital lease obligations -- 890 -- 890
Accounts payable 26,586 3,459 -- 30,045
Accrued expenses 12,042 13,363 (32)(D) 30,373
5,000 (B)
Management accounts payable 9,928 -- -- 9,928
Income taxes payable 3,690 -- -- 3,690
Other current liabilities -- 613 -- 613
--------- --------- --------- ---------
Total current liabilities 53,538 38,551 (14,700) 77,389
Long-term debt, less current portion 86,899 3,164 193,514 (D) 283,577
Capital lease obligations, less current portion -- 8,432 -- 8,432
Other liabilities 5,293 328 -- 5,621
Deferred income taxes 5,693 -- 3,941 (C) 9,634
Deferred compensation 3,118 -- -- 3,118
Deferred rent -- 7,398 -- 7,398
--------- --------- --------- ---------
Total liabilities 154,541 57,873 182,755 395,169
Shareholders' equity:
Common Stock 263 -- 9 (B) 272
Additional paid-in capital 33,050 6,304 30,687 (B) 70,041
Foreign currency translation adjustment 271 -- -- 271
Retained earnings 69,172 14,792 (14,792)(B) 69,172
Deferred compensation on restricted stock, net (553) -- -- (553)
--------- --------- --------- ---------
Total shareholders' equity 102,203 21,096 15,904 139,203
--------- --------- --------- ---------
$ 256,744 $ 78,969 $ 198,659 $ 534,372
========= ========= ========= =========
</TABLE>
See accompanying notes to pro forma consolidated financial information.
<PAGE> 21
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
PROFORMA CONSOLIDATED STATEMENTS OF EARNINGS
Year ended September 30, 1997
(All dollar amounts are expressed in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
(1) (2)
Combined Combined
Company Historical Pro Forma Pro Forma Diplomat
Historical Acquisitions Adjustments Consolidated Historical
---------- ------------ ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Revenues:
Parking 180,885 26,281 (2,448) 204,718 17,699
Management contracts 42,091 17 -- 42,108 1,217
------- ------ ------ ------- ------
Total revenues 222,976 26,298 (2,448) 246,826 18,916
Costs and expenses:
Cost of parking 159,904 21,379 (1,336) 179,947 15,864
Cost of management contracts 11,793 -- -- 11,793 131
Amortization of goodwill and noncompete agreements 920 -- 439 1,359 --
Acquisition costs -- 2,864 (2,864) -- --
General and administrative 22,506 2,896 (1,434) 23,968 7,095
------- ------ ------ ------- ------
Total costs and expenses 195,123 27,139 (5,195) 217,067 23,090
------- ------ ------ ------- ------
Operating earnings (loss) 27,853 (841) 2,747 29,759 (4,174)
Other income (expenses):
Interest income 1,842 2 (283) 1,561 18
Interest expense (4,582) (805) (881) (6,268) --
Net gains (losses) on sales of property and equipment 3,137 -- -- 3,137 --
Equity in partnership and joint venture earnings 4,163 -- 513 4,676 --
Write-off of assets -- (964) 612 (352) (205)
------- ------ ------ ------- ------
Earnings (loss) before income taxes 32,413 (2,608) 2,708 32,513 (4,361)
Income tax expense 12,207 68 134 12,409 233
------- ------ ------ ------- ------
Net earnings (loss) 20,206 (2,676) 2,574 20,104 (4,594)
======= ====== ====== ======= ======
Basic earnings per common share $ 0.78
=======
Diluted earnings per common share $ 0.77
=======
Weighted average shares-basic 25,991
=======
Weighted average shares-diluted 26,330
=======
<CAPTION>
Pro Forma Pro Forma Kinney Pro Forma Pro Forma
Adjustments Consolidated Historical Adjustments Consolidated
----------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Parking -- 222,417 129,214 -- 351,631
Management contracts -- 43,325 5,732 -- 49,057
------ ------- ------- ------- -------
Total revenues -- 265,742 134,946 -- 400,688
Costs and expenses:
Cost of parking -- 195,811 107,438 167 (N) 303,416
Cost of management contracts -- 11,924 4,015 -- 15,939
Amortization of goodwill and noncompete agreements 810 (K) 2,169 -- 6,327 (O) 8,496
Acquisition costs -- -- -- -- --
General and administrative (4,969)(L) 26,094 16,026 (5,588)(E) 36,660
320 (P)
(192)(Q)
------ ------- ------- ------- -------
Total costs and expenses (4,159) 235,998 127,479 1,034 364,511
------ ------- ------- ------- -------
Operating earnings (loss) 4,159 29,744 7,467 (1,034) 36,177
Other income (expenses):
Interest income -- 1,579 1,498 (210)(R) 2,867
Interest expense (888)(M) (7,156) (4,037) (9,597)(S) (20,790)
Net gains (losses) on sales of property and equipment -- 3,137 (779) -- 2,358
Equity in partnership and joint venture earnings -- 4,676 836 (56)(T) 5,456
Write-off of assets -- (557) -- -- (557)
------ ------- ------- ------- -------
Earnings (loss) before income taxes 3,271 31,423 4,985 (10,897) 25,511
Income tax expense (343)(G) 12,299 2,219 (1,976)(U) 12,542
------ ------- ------- ------- -------
Net earnings (loss) 3,614 19,124 2,766 (8,921) 12,969
====== ======= ======= ======= =======
Basic earnings per common share $ 0.48
=======
Diluted earnings per common share $ 0.48
=======
Weighted average shares-basic 26,874
=======
Weighted average shares-diluted 27,212
=======
</TABLE>
See accompanying notes to pro forma consolidated financial information
<PAGE> 22
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS
Three months ended December 31, 1997
(All dollar amounts are expressed in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Company Kinney Pro Forma Pro Forma
Historical Historical Adjustments Consolidated
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues:
Parking 59,005 33,548 -- 92,553
Management contracts 12,184 1,418 -- 13,602
------- ------ ------ --------
Total revenues 71,189 34,966 -- 106,155
Costs and expenses:
Cost of parking 51,895 27,521 42 (A) 79,458
Cost of management contracts 3,252 1,011 -- 4,263
Amortization of goodwill and noncompete agreements 562 -- 1,582 (B) 2,144
General and administrative 6,676 3,641 (2,334)(C) 7,645
80 (D)
(418)(E)
------- ------ ------ --------
Total costs and expenses 62,385 32,173 (1,048) 93,510
------- ------ ------ --------
Operating earnings (loss) 8,804 2,793 1,048 12,645
Other income (expenses):
Interest income 497 367 (53)(F) 811
Interest expense (1,411) (1,439) (2,043)(G) (4,893)
Net gains(losses) on sales of property and equipment 2 -- -- 2
Equity in partnership and joint venture earnings 1,207 55 133 (H) 1,395
------- ------ ------ --------
Earnings (loss) before income taxes 9,099 1,776 (915) 9,960
Income tax expense 3,457 837 288 (I) 4,582
------- ------ ------ --------
Net earnings (loss) 5,642 939 (1,203) 5,378
======= ====== ====== ========
Basic earnings per common share $ 0.22 $ 0.20
======= ========
Diluted earnings per common share $ 0.21 $ 0.20
======= ========
Weighted average shares
-basic 26,042 26,925
======= ========
-diluted 26,482 27,364
======= ========
</TABLE>
See accompanying notes to pro forma consolidated financial information
<PAGE> 23
CENTRAL PARKING CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The accompanying unaudited pro forma financial information presents the pro
forma consolidated financial condition of Central Parking Corporation as of
December 31, 1997 and the pro forma consolidated results of operations for the
three months ended December 31, 1997 and the fiscal year ended September 30,
1997.
On December 31, 1996, the Company acquired for cash 100% of the ownership
units in Civic Parking, LLC, a Missouri limited liability company ("Civic"). In
April, 1997, the Company sold 50% of its investment in Civic. On January 18,
1997, the Company completed the acquisition of Square Industries, Inc., a New
York corporation ("Square"), through a cash tender offer for all the outstanding
shares of common stock of Square. On May 29, 1997, the Company acquired the
assets and related leases of Car Park Corporation ("Car Park"). On October 1,
1997, the Company purchased the common stock of Diplomat Parking Corporation
("Diplomat"). The Company's historical consolidated balance sheet at December
31, 1997 reflects the acquired net assets and effects of financing of Civic,
Square, Car Park, and Diplomat. On February 12, 1998, the Company completed its
acquisition of Kinney System Holding Corp. ("Kinney"). The Company's
accompanying pro forma consolidated balance sheet includes the acquired net
assets and effects of the related financing, as if Kinney had been acquired on
December 31, 1997. The accompanying pro forma consolidated statements of
earnings reflect the pro forma results of operations of the Company, as
adjusted, as if each of the acquisitions had occurred on October 1, 1996.
PRO FORMA CONSOLIDATED BALANCE SHEET
The acquisition of Kinney has been accounted for as a purchase. The aggregate
purchase price and the allocation of such purchase price to the acquired net
assets, based upon preliminary purchase price allocations, are as follows (in
$000s):
<TABLE>
<S> <C>
Purchase price for common stock of Kinney........... $ 206,400
Purchase price for acquisitions by Kinney of
partnership interest ............................ 2,596
Transaction costs .................................. 2,000
---------
Total acquisition cost ............................. $ 210,996
Assets not acquired ................................ 9,179
Elimination of stockholders' equity acquired ....... (21,096)
Property, plant and equipment write-up
to estimated fair values ........................ (3,971)
Investment in limited liability corporation
write-up to estimated fair value ............... (3,826)
Recognize favorable lease rights ................... (3,705)
Note receivable write-up to fair value ............. (2,100)
Fair value of partnership interest acquired by
Kinney between September 30, 1997 and
acquisition date ................................ (2,596)
Recognize estimated severance costs ................ 3,000
Recognize net deferred tax liabilities related to
write-up of assets to fair value, net of
deductible acquisition costs .................... 3,941
---------
Excess of cost over net assets
acquired (goodwill) .................. $ 189,822
=========
</TABLE>
The goodwill will be amortized on a straight-line basis over 30 years. The
estimated life of 30 years was selected by management after consideration of
various factors, including the nature of the assets acquired, the terms of the
acquired management contracts and garage leases, the expected renewal rate of
such contracts and the historical renewal rate (93%) of the Company's contracts,
the relatively stable operating history of the acquired owned parking
facilities, the competitive environment and the relative stable nature of the
industry in which the acquired business operates.
<PAGE> 24
The adjustments reflected in the pro forma consolidated balance sheet are as
follows:
(A) To eliminate assets not acquired in connection with the
purchase. The assets not acquired include the due from
stockholder of $3,458,000 and certain limited partnership
interests of $5,721,000.
(B) To record the purchase of Kinney based on the preliminary
allocation of the purchase price based upon estimates of fair
value of the assets and liabilities acquired as set forth
above, including (i) the write-up of property, plant and
equipment of $3,971,000, (ii) the write-up of certain limited
partnership interests to recognize the fair value of the
underlying property, plant and equipment of $3,826,000, (iii)
the recognition of favorable lease rights of $3,705,000, (iv)
the write-up of notes receivable of $2,100,000, (v) the
recognition of partnership interests acquired of $2,596,000
during the period after the historical balance sheet and
before the acquisition date, (vi) the recording of transaction
costs of $2,000,000, (vii) the recording of severance costs of
$3,000,000, (viii) the elimination of Kinney's equity, (ix)
the issuance of $37,000,000 of the Company's common stock as
part of the purchase price consideration, and (x) the
recording of the resultant $189,822,000 in goodwill.
(C) To record deferred tax liabilities resulting from the write-up
of assets for financial reporting purposes, net of deductible
acquisition costs.
(D) To record the net increase in debt incurred to finance the
acquisition and the related impact to deferred financing
costs. Accrued interest of $32,000 was also written off in
connection with the retirement of the Kinney debt.
PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS
Year ended September 30, 1997
(1) The historical financial results of the Combined Acquisitions
presented in the unaudited pro forma consolidated statement of earnings for the
year ended September 30, 1997 are as follows (in $000s):
<TABLE>
<CAPTION>
Square Civic CarPark Combined
Historical Historical Historical Acquisitions
10/1/96-1/17/97 10/1-12/31/96 10/1-5/29/97 Historical
--------------- ------------- ------------ ----------
<S> <C> <C> <C> <C>
Revenues:
Parking ................................ 22,298 2,448 1,535 26,281
Management contracts ................... -- -- 17 17
------- ------- ------- -------
Total revenues .................... 22,298 2,448 1,552 26,298
Costs and expenses:
Cost of parking ........................ 18,763 1,313 1,303 21,379
Cost of management contracts ........... -- -- -- --
Amortization of goodwill and
noncompete agreements ............ -- -- -- --
Acquisition costs ...................... 2,864 -- -- 2,864
General and administrative ............. 2,654 173 69 2,896
------- ------- ------- -------
Total costs and expenses .......... 24,281 1,486 1,372 27,139
------- ------- ------- -------
Operating earnings (loss) ......... (1,983) 962 180 (841)
Other income (expenses):
Interest income ........................ -- 2 -- 2
Interest expense ....................... 203 (1,008) -- (805)
Write-off of assets .................... (964) -- -- (964)
------- ------- ------- -------
Earnings (loss) before income taxes (2,744) (44) 180 (2,608)
Income tax expense ......................... 68 -- -- 68
------- ------- ------- -------
Net earnings (loss) .............. (2,812) (44) 180 (2,676)
======= ======= ======= =======
</TABLE>
<PAGE> 25
(2) The Combined Pro Forma Adjustments for the year ended September 30,
1997 are as follows (in $000s):
<TABLE>
<CAPTION>
Square Civic Car Park Combined
Pro Forma Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Adjustments Adjustments
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
(2,393)(H)
Parking ........................................ -- (55)(I) -- (2,448)
Management contracts ........................... -- -- -- --
------ ------ ------ ------
Total revenues ............................ -- (2,448) -- (2,448)
Costs and expenses:
(1,195)(H)
Cost of parking ............................... (23)(A) (85)(A) -- (1,336)
(33)(I)
Amortization of goodwill and
noncompete agreements ..................... 302 (B) -- 137 (B) 439
Acquisition costs .............................. (2,864)(C) -- -- (2,864)
General and administrative ..................... (97)(D) -- (1,434)
(173)(H)
(1,164)(E)
------ ------ ------ ------
Total costs and expenses .................. (3,846) (1,486) 137 (5,195)
------ ------ ------ ------
Operating earnings (loss) ...................... 3,846 (962) (137) 2,747
Other income (expenses):
Interest income ................................ -- (283)(J) -- (283)
Interest expense ............................... (1,357)(F) 586 (F) (110)(F) (881)
Equity in partnership and joint venture earnings -- 513 (H) -- 513
Write-off of assets ............................ 612(D) -- -- 612
------ ------ ------ ------
Earnings (loss) before income taxes ....... 3,101 (146) (247) 2,708
Income tax expense ................................. 180(G) (72)(G) 26 (G) 134
====== ====== ====== ======
Net earnings (loss) ....................... 2,921 (74) (273) 2,574
====== ====== ====== ======
</TABLE>
The adjustments reflected in the pro forma consolidated statements of earnings
are as follows in:
Year ended September 30, 1997:
(A) To reflect the net change in depreciation resulting from the
fair value adjustments and changes in estimated asset lives.
(B) To record amortization of goodwill and noncompete agreements
using 25 and 5 year lives, respectively.
(C) To eliminate the effect of acquisition costs reflected in
Square's historical results of operations which were directly related to
Square's sale to the Company.
(D) To eliminate the effect of Square's (i) scheduled amortization
of deferred expenses and financing costs, and (ii) write-off of
$612,000 of deferred financing costs directly related to the acquisition.
(E) To record the effect of estimated cost savings relating to
general and administrative expenses, including excess personnel, to be
eliminated in connection with the Square and Kinney acquisitions.
(F) To reflect interest on acquisition-related borrowings. Interest
is calculated at an average rate of 6.75%.
(G) To record estimated federal and state income taxes at a combined
rate of 37.7%.
(H) To reflect the elimination of 100% ownership of Civic as a
result of the sale of a 50% interest to Equity Office Holdings-St. Louis
Parking, LLC and to record a 50% joint venture interest as equity in
partnership and joint venture earnings.
(I) To eliminate the revenues and expenses related to a bus lot not
acquired, but included in the historical financial statements of Civic for
the period October 1 through December 31, 1996.
<PAGE> 26
(J) To reflect a decrease in income earned on cash investments used
for purposes of the acquisition of Civic.
(K) To record amortization of goodwill and noncompete agreements
using 25 and 5 year lives, respectively.
(L) To eliminate the effect of expense related to compensatory stock
options granted to a Diplomat stockholder directly related to the
acquisition of Diplomat by the Company.
(M) To reflect interest on Diplomat acquisition-related borrowings.
Interest is calculated at an average rate of 7%.
(N) To reflect the net change in depreciation resulting from the
fair value adjustments.
(O) To reflect amortization of goodwill using a 30 year life.
(P) To reflect expense associated with the five-year consulting
contracts with the former shareholders of Kinney.
(Q) To reflect amortization of the deferred financing fees over the
five year term of the related acquisition debt. Amortization of deferred
financing fees related to debt that was repaid at closing is removed.
(R) To reflect amortization of the adjustment to fair value on note
receivable due from New York City over remaining ten year term of the
note.
(S) To reflect interest expense on acquisition-related borrowings.
Interest is calculated at a rate of 6.875%. Interest expense on debt
repaid at closing is removed.
(T) To eliminate the effect of losses from equity in partnership
earnings for partnerships that were not transferred in the acquisition of
Kinney and to record amortization over a 30 year period relating to the
$3,826,000 purchase accounting write-up on the investment in
unconsolidated subsidiary acquired.
(U) To record estimated federal and state income taxes at Kinney's
statutory rate of 43.25%.
Quarter ended December 31, 1997
(A) To reflect the net change in depreciation resulting from the
fair value adjustments.
(B) To record amortization of goodwill using a 30 year life.
(C) To record the effect of estimated cost savings relating to
general and administrative expenses, including excess personnel, to be
eliminated in connection with the Kinney acquisition.
(D) To reflect expense associated with the five-year consulting
contracts with the former shareholders of Kinney.
(E) To reflect amortization of the deferred financing fees over the
five year term of the related acquisition debt. Amortization of deferred
financing fees related to debt that was repaid at closing is removed.
(F) To reflect amortization of the adjustment to fair value on note
receivable due from New York City over remaining 10 year term of the
note.
(G) To reflect interest on acquisition-related borrowings. Interest
is calculated at an average rate of 6.875%.
(H) To eliminate the effect of losses from equity in partnership
earnings for partnerships that were not transferred in the acquisition of
Kinney and to record goodwill amortization over a 30 year period relating
to the $3,826,000 purchase accounting write-up on the investment in
unconsolidated subsidiary acquired.
(I) To record estimated federal and state income taxes at a combined
statutory rate of 43.25%.
<PAGE> 27
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.
CENTRAL PARKING CORPORATION
By: /s/ Stephen A. Tisdell
----------------------------------
Stephen A. Tisdell
Chief Financial Officer
Date: May 15, 1998
<PAGE> 28
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No.
- ----------
<S> <C>
2.1 Acquisition Agreement and Plan of Merger dated as of
November 7, 1997 by and between Registrant, Kinney System Holding
Corp. and a subsidiary of Registrant.* (Filed with initial 8-K)
23.1 Consent of KPMG Peat Marwick LLP
</TABLE>
*A copy of the exhibit index to the Acquisition Agreement and Plan of Merger
has been included. The exhibits have been omitted but Registrant shall furnish
supplementally a copy of any omitted exhibit to the Commission upon request.
<PAGE> 1
EXHIBIT 23.1
The Board of Directors
Central Parking Corporation and Subsidiaries:
We consent to the inclusion of our report dated May 7, 1998 with respect to the
consolidated balance sheet of Kinney System Holding Corp. and subsidiaries as
of December 31, 1997, and the related consolidated statements of earnings and
retained earnings and cash flows for the year then ended, which report appears
in the Form 8-K/A of Central Parking Corporation and Subsidiaries.
New York, New York
May 12, 1998
