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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year ended September 30, 1998.
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from __________________________
to__________________________
Commission file number 001-13950
CENTRAL PARKING CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
Tennessee 62-1052916
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2401 21st Avenue South,
Suite 200, Nashville, Tennessee 37212
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (615) 297-4255
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Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Title of Each Class Name of each Exchange on which registered
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Common Stock $0.01 par Value New York Stock Exchange
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
The aggregate market value of the Common Stock held by non-affiliates of the
registrant, based on the closing price of the Common Stock on the New York
Stock Exchange on December 24, 1998 was $979,825,178. For purposes of this
response, the registrant has assumed that its directors, executive officers,
and beneficial owners of 5% or more of its Common Stock are the affiliates of
the registrant.
Indicate the number of shares outstanding of each of the registrant's classes
of common stock as of the latest practicable date.
Class Outstanding at December 24, 1998
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Common Stock, $0.01 par value 29,579,628
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Shareholders to be held on March 5, 1999 are incorporated by reference into Part
III of this Form 10-K. Portions of the Registrant's Annual Report to
Shareholders for the fiscal year ended September 30, 1998 are incorporated by
reference into Part II of this Form 10-K.
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PART I
ITEM 1. BUSINESS
GENERAL
Central Parking Corporation ("Central Parking" or the "Company") is a leading
provider of parking services operating, as of September 30, 1998, 2,440 parking
facilities containing approximately 1,023,000 spaces in 35 states, the District
of Columbia, Canada, Chile, Puerto Rico, the United Kingdom, the Republic of
Ireland, Spain, Germany, Mexico, and Malaysia. Central Parking has a business
development office in Amsterdam.
Central Parking provides parking management services at multi-level parking
facilities and surface lots. It also provides parking consulting, shuttle,
valet, parking meter enforcement, and billing and collection services. Central
Parking operates parking facilities under three general types of arrangements:
management contracts, leases, and fee ownership. As of September 30, 1998,
Central Parking operated 1,302 parking facilities under management contracts
and 1,071 parking facilities under leases, and owned, either independently or
through joint ventures, 67 parking facilities.
INDUSTRY
The International Parking Institute, a non-profit parking industry
organization, estimates that there are 35,000 parking facilities in the United
States operated by commercial and governmental entities. The commercial parking
services business is very fragmented, consisting of a few national companies
and approximately 1,000 small privately held local and regional operators.
Central Parking believes that it has the opportunity to consolidate portions of
this fragmented, localized industry by using its competitive advantage with
regard to scale, financial strength, technology, controls, and professionalism,
all of which are becoming increasingly important in the parking services
business. For the same reasons, Central Parking believes that it is well
positioned to be selected by municipal and other governmental entities to
operate their parking facilities and provide parking-related services as such
entities move toward outsourcing and privatization.
During the 1980's, the high level of construction activity in the United States
resulted in a significant increase in the number of parking facilities. Since
that time, as construction activity has slowed, growth of certain parking
service companies, including Central Parking, has been as a result of
take-aways from other parking companies. New construction and acquisition of
additional facilities are essential to growth for parking service companies
because of the limitations on growth in revenues of existing operations.
Although some growth in revenues from existing operations is possible through
redesign, increased operational efficiency, or increased facility use and
prices, such growth is ultimately limited by the size of a facility and market
conditions.
Management believes that most commercial real estate developers and property
owners view services such as parking as potential profit centers rather than
cost centers. These parties outsource parking operations to parking management
companies in an effort to maximize profits or leverage the original rental
value to a third-party lender. Parking management companies can increase
profits by using managerial skills and experience, operating systems, and
operating controls unique to the parking industry.
Privatization of government operations and facilities could provide new
opportunities for the parking industry. The International Parking Institute has
estimated that more than 50% of the revenues generated by the United States
parking industry is generated by facilities operated by municipalities and
other governmental entities. Cities and municipal authorities may consider
retaining private firms to operate facilities and parking-related services in
an effort to reduce operating budgets and increase efficiency. Privatization in
the United Kingdom already has provided significant expansion opportunities for
private parking companies. In the United States, several cities have awarded or
are considering awarding on-street parking enforcement and parking meter
service contracts to for-profit parking companies such as Central Parking. For
example, Central Parking has been awarded contracts for collection of parking
meter revenues in Miami Beach, Florida, and parking meter enforcement in
Charlotte, North Carolina and Richmond, Virginia.
GROWTH STRATEGY
Central Parking plans to continue to add facilities to its operations by
focusing its marketing efforts on adding facilities at the local level,
targeting real estate managers and developers with a national presence,
pursuing strategic acquisitions of other parking service operators, and
expanding its international operations. Set forth below are the key elements of
Central Parking's growth strategy.
Increase Market Presence. Central Parking continually seeks to
establish and increase its operations in new and existing markets through
take-aways of competitors' contracts, obtaining new management and lease
contracts,
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entering into joint venture arrangements, and purchases of parking
facilities. Through emphasizing marketing at the local level and
establishing relationships with large-scale national asset managers and
developers, Central Parking expects to continue to expand its base of
operations. Management believes that Central Parking's relative size,
financial strength and systems, and automation capabilities give it a
competitive advantage in winning new business and make it an attractive
partner for joint venture and other opportunities. In addition, Central
Parking believes that its unique performance-based compensation system,
which is designed to reward managers for increasing the profitability of
their respective area of responsibility, has been a key contributor to
Central Parking's growth.
Pursue Strategic Acquisitions. Central Parking intends to continue to
pursue acquisition opportunities. Central Parking believes that many of its
smaller competitors have limited access to capital or do not have the
systems or economies of scale to compete effectively. Central Parking's
acquisition strategy is to focus on opportunities that enable Central
Parking to (i) become a stronger, more efficient provider in selected
markets, (ii) generate significant economies of scale and cost savings, and
(iii) increase cash flow. Cost savings typically result from the
elimination of duplicative management functions as well as from
efficiencies resulting from implementing Central Parking's systems and
professional management techniques and development. Central Parking has a
senior vice president dedicated exclusively to acquisitions and
development. During calendar year 1997, Central Parking acquired Square
Industries, Inc. ("Square") (January 1997) in New York, Car Park
Corporation ("Car Park") (May 1997) in San Francisco, and Diplomat Parking
Corporation ("Diplomat") (October 1997) in Washington, D.C. During calendar
year 1998, Central Parking acquired Kinney System Holding Corp ("Kinney")
(February 1998), which operated 403 parking facilities primarily in New
York, Boston, Philadelphia, and Washington, D.C.; Turner Parking System,
Inc ("Turner") (April 1998), which operated 34 parking facilities in Texas,
Florida, California, Georgia and Washington, D.C.; and Sterling Parking,
Inc ("Sterling") (July 1998), which operates parking facilities in Georgia,
Florida, Virginia, California and Kentucky. In addition, Central Parking
purchased the remaining 50% interest in Central Parking System of
Louisiana, Inc ("CPS-Louisiana") (March 1998), which operates parking
facilities in Louisiana.
Expand International Operations. Management believes that there are
significant international growth opportunities, particularly for
well-capitalized companies that are interested in making significant
investments in equipment and construction, either independently or with
foreign partners. Central Parking typically enters foreign markets either
through consulting projects or by forming joint ventures with established
local entities, both of which allow Central Parking to enter foreign
markets with reduced operating and investment risk. Since 1991, Central
Parking has established operations in the United Kingdom, Germany, Mexico,
Malaysia, Canada, Spain, and the Republic of Ireland. Central Parking
believes there are significant expansion opportunities in these countries
as well as other countries.
OPERATING STRATEGY
Central Parking's primary objective is to increase the revenues and
profitability of its parking facilities through a variety of operating
strategies, including the following:
Maintain Strict Cost Management and Cash Control. In order to provide
competitively priced services, the Company must contain costs. Managers
are trained to analyze staffing and cost control issues, and each facility
is carefully tracked on a monthly basis to determine whether financial
results are within budgeted ranges. Because of the substantial
performance-based components of their compensation, managers are
continuously motivated to contain the costs of their operations. Strict
cash control also is critical to Central Parking and its clients. Central
Parking's cash control procedures are based on a ticketing system
supervised by high level managers and include on-site spot checks,
multiple daily cash deposits, local audit functions, managerial oversight
and review, and internal audit procedures. It is Central Parking policy
that all tickets and gate counts are reconciled daily against cash
collected. Management believes its cash control procedures are effective
in minimizing the loss of revenues at parking facilities.
Emphasize Sales and Marketing Efforts. Central Parking's management is
actively involved in developing and maintaining business relationships and
in exploring opportunities for growth. A cornerstone of Central Parking's
culture is its incentive compensation system, which rewards managers who
are able to develop new business. Central Parking's marketing efforts are
designed to expand its operations by developing lasting relationships with
major real estate developers and asset managers, business and government
leaders, and other clients. Central Parking encourages its managers to
pursue new opportunities at the local level while simultaneously
selectively targeting key clients and projects at a national level.
Leverage Established Market Presence and Corporate Infrastructure.
Central Parking has an established presence in multiple markets,
representing platforms from which it can build. Because of the relatively
fixed nature of corporate overhead and the resources that can be shared in
specific markets, Central Parking has the opportunity to expand its profit
margins as it grows its presence in established markets. Central Parking
has consistently reduced general and administrative expenses, excluding
goodwill amortization, as a percentage of total revenues. General and
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administrative expenses, excluding goodwill amortization, as a percentage
of total revenues were 12.3%, 10.2%, and 8.8% in fiscal 1996, 1997, and
1998, respectively.
Empower Local Managers; Provide Corporate Support. Central Parking has
achieved what management believes is a successful balance between
centralized and decentralized management. Because its business is
dependent, to some extent, on personal relationships, Central Parking
provides its managers with a significant degree of autonomy in order to
encourage prompt and effective responses to local market demands. In
conjunction with this local operational authority, the Company provides,
through its corporate office, services that typically are not readily
available to independent operators such as management support, marketing
and business expertise, training, and financial and information systems.
Central Parking retains centralized control over those functions necessary
to monitor service quality and cash control integrity and to maximize
operational efficiency. Services performed at the corporate level include
billing, quality improvement oversight, financial and accounting
functions, legal services, policy and procedure development, systems
design, and corporate acquisitions and development.
Utilize Performance-Based Compensation. Central Parking's
performance-based compensation system rewards managers at the general
manager level and above for the profitability of their respective areas of
responsibility. Each person participating in the incentive program
generally receives a substantial portion of his or her compensation from
this performance-based compensation system. Incentive compensation
payments typically range from 20% to 80% of total compensation.
Maintain Well-Defined Professional Management Organization. In order
to ensure professionalism and consistency in Central Parking's operations,
to provide a career path opportunity for its managers, and to achieve a
balance between autonomy and accountability, Central Parking has
established a highly structured management organization. Organized into
six levels, Central Parking has a total of 400 managers and hires
approximately 50 per year.
Central Parking recruits primarily college graduates or people with
previous parking services or hospitality industry experience, and requires
that they complete a formal training program. Management believes that
Central Parking's training program is a significant factor in Central
Parking's success. New managers are assigned to a particular facility
where they are supervised as they manage one to five employees. The
management trainee program lasts approximately one year and teaches a wide
variety of skills, including organizational skills, basic management
techniques, and basic accounting. Upon successful completion of this stage
of the program, management trainees are promoted to facility manager in
charge of a particular parking facility. As facility managers, they report
up through the hierarchical structure of managers. As managers develop and
gain experience, they have the opportunity to assume expanded
responsibility, to be promoted to higher management levels and to increase
the performance-based component of their compensation. This well-defined
structure provides a career path that is designed to be an attractive
opportunity for prospective new hires. In addition, management believes
the well-planned training and advancement program has enabled Central
Parking to instill a high level of professionalism in its employees. A
final important benefit of Central Parking's organizational structure is
that it has allowed Central Parking to balance localized autonomy with
accountability and centralized support and control.
Automate Facilities. Management believes that the Company's
application of sophisticated technology to its operations represents a
competitive advantage over smaller operators with more limited resources.
Central Parking has implemented computerized card tracking and accounting
systems in certain of its facilities and is experimenting with a variety
of automated settlement systems. Central Parking expects that these
technology initiatives will enhance revenue by increasing the efficiency
and accuracy of payment collections, reduce labor costs, and minimize lost
revenue at parking facilities.
Strategically Expand Service Offerings. Central Parking provides
services that are complementary to parking facility management, with a
particular emphasis on consulting services. Other ancillary services
include parking meter enforcement services, on-street parking services,
car pooling coordination, shuttle van services, and transportation
management. These ancillary services do not constitute a significant
portion of Central Parking's revenues, but management believes that the
provision of ancillary services can be important in obtaining new business
and preparing the Company for future changes in the parking industry.
Focus on Retention of Patrons. In order for the Company to succeed,
its parking patrons must have a positive experience at Company facilities.
Accordingly, the Company stresses the importance of having well lighted,
clean facilities and cordial employees. Each facility manager has primary
responsibility for the environment at the facility, and is evaluated on
his or her ability to retain parking patrons. The Company also monitors
customer satisfaction through customer surveys and "mystery parker"
programs.
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Maintain Disciplined Facility Site Selection Analysis. In existing
markets, the facility site selection process begins with identification of
a possible facility site and the analysis of projected revenues and costs
at the site by general managers and regional managers. The managers then
conduct an examination of a location's potential demand based on traffic
patterns and counts, area demographics, and potential competitors. Pro
forma financial statements are then developed and a Company representative
will meet with the property owner to discuss the terms and structure of
the agreement.
The Company seeks to distinguish itself from its competitors by
combining a reputation for professional integrity and quality management
with operating strategies designed to increase the revenues of parking
operations for its clients. The Company's clients include some of the
nation's largest owners and developers of mixed-use projects, major office
building complexes, sports stadiums, hotels, and toll roads. Parking
facilities operated by the Company include, among others, certain
terminals operated by BAA Heathrow International Airport (London), the
Prudential Center (Boston), Cinergy Field (Cincinnati), Coors Field
(Denver), and various parking facilities owned by the Hyatt and Westin
hotel chains, the Rouse Company, Faison Associates, May Department Stores,
Equity Office Properties, and Crescent Real Estate. None of these clients
account for more than 5% of the Company's total revenues.
ACQUISITIONS
The Company's acquisition strategy focuses primarily on acquisitions that will
enable Central Parking to become a more efficient and cost-effective provider
in selected markets. Central Parking believes it can recognize economies of
scale by making acquisitions in markets where the Company already has a
presence, which allows Central Parking to reduce the overhead cost of the
acquired company by consolidating its management with that of Central Parking.
In addition, Central Parking seeks acquisitions in attractive new markets.
Management believes acquisitions are an effective means of entering new
markets, thereby quickly obtaining both operating presence and management
personnel. Central Parking also believes it generally can improve acquired
operations by applying its operating strategies and professional management
techniques. The Company's acquisitions over the last two years, all of which
were accounted for under the purchase method of accounting, are as follows:
Civic Parking LLC. On December 31, 1996, Central Parking purchased for
cash, Civic, 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 Central Parking 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 $67.2 million
of borrowings under the Company's then existing credit facility. Of the
$91.0 million, $46.0 million was held for resale to a joint venture partner
and $45.0 million was recorded as an investment in joint ventures. On April
16, 1997, Central Parking consummated the sale of 50% of Civic to its joint
venture partner, an affiliate of Equity Capital Holdings, LLC, for $46.0
million in cash. Central Parking continues to operate these garages
pursuant to a lease and operating agreement with Civic.
Square Industries, Inc. On January 18, 1997, Central Parking completed
a cash tender to acquire all of the outstanding shares of Square for $54.8
million, including transaction fees and other related expenses. In
addition, Central Parking assumed $23.2 million of existing Square debt.
The purchase price was financed through borrowings under Central Parking's
then existing credit facility. At the time of the acquisition, Square
operated 116 parking facilities containing over 61,000 parking spaces,
located primarily in the Northeastern United States.
Car Park Corporation. On May 29, 1997, Central Parking acquired the
assets and related leases of Car Park for $3.5 million; consisting of 18
parking facilities with approximately 2,600 parking spaces located in the
San Francisco metropolitan region. The purchase price was financed through
$1.7 million of borrowings under the Company's then-existing credit
facility, and $1.8 million payable to the seller, which has been repaid in
full.
Diplomat Parking Corporation. On October 1, 1997, Central Parking
acquired the stock and certain assets of Diplomat for approximately $22.2
million in cash and notes payable, including transaction fees and other
related costs. The acquisition was financed through borrowings under the
Company's then existing credit facility. At the time of the acquisition,
Diplomat operated 164 parking facilities containing over 37,000 parking
spaces, located primarily in Washington, D.C. and Baltimore, Maryland.
Kinney System Holding Corp. On February 12, 1998, Central Parking
acquired Kinney, a privately held company headquartered in New York City.
Kinney has been in the parking business for over 60 years. In addition to
enhancing the Company's presence in New York City, Kinney increased
Central Parking's presence in a number of other major metropolitan areas
such as Boston, Philadelphia and Washington, D.C. and broadened its
geographic coverage in the following nine states: Connecticut, Florida,
Kentucky, Maryland, Massachusetts, New Hampshire, New York,
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Pennsylvania, and Virginia. Kinney provides both self-parking and valet
parking services, and provides parking related services such as facility
design and development and consulting services.
Kinney operated 403 parking facilities containing approximately
168,800 spaces, including approximately 76,700 in the New York City
metropolitan area, 42,800 in Boston, 31,100 in Philadelphia and 10,300 in
Washington, D.C. At the time of the acquisition, Kinney's facility mix was
comprised of 225 leased sites, 170 managed sites and 8 owned sites. The
parking facilities operated by Kinney include Yankee Stadium, the
Waldorf-Astoria, Port Authority Bus Terminal, World Financial Center, and
the General Motors Building in New York City, The Ritz-Carlton-Boston,
Government Center in Boston, Spectrum-Philadelphia, and the Four Seasons
Hotel of Washington, D.C.
Consideration for the Kinney acquisition was approximately $208.8
million, including $171.8 million in cash, including transaction fees and
other related costs, and $37.0 million (882,422 shares) in Central Parking
common stock. In connection with this transaction, Central Parking assumed
$10.3 million in capital leases, refinanced $24.2 million in existing
Kinney debt and assumed $4.6 million of Kinney debt. Central Parking
financed the Kinney acquisition through borrowings under the Company's
credit facility, and ultimately from the issuance of Central Parking common
stock and Central Parking obligations pursuant to the Trust Issued
Preferred Securities.
Central Parking System of Louisiana, Inc. Central Parking has
historically owned 50% of CPS-Louisiana and on March 30, 1998, purchased
the remaining 50% from Property Service Corporation for $2.5 million in
Central Parking common stock (52,631 shares). CPS-Louisiana manages and
operates leased parking facilities, manages and operates parking
facilities owned or leased by other parties, and provides financial and
other advisory services.
Turner Parking System, Inc. On April 1, 1998, Central Parking
purchased substantially all of the assets of Turner, a privately-held
parking company headquartered in Dallas, Texas, for $3.8 million,
including $3.0 million in cash and $800,000 (16,842 shares) in Central
Parking common stock. Central Parking financed the cash portion of the
Turner purchase with borrowings under the Company's credit facility.
Sterling Parking, Inc. On July 1, 1998, Central Parking purchased
substantially all of the assets of Sterling Parking, Inc. ("Sterling"), a
privately-held parking company headquartered in Atlanta, Georgia for $4.3
million, including $2.1 million in cash, including transaction fees and
other related costs, and $2.2 million (54,358 shares) in Central Parking
common stock. Central Parking financed the cash portion of the Sterling
purchase with borrowings under the Company's credit facility. At the time
of the acquisition, Sterling operated 31 parking facilities in Georgia,
Florida, Virginia, California, and Kentucky.
PENDING MERGER
On September 21, 1998, the Company entered into a definitive agreement pursuant
to which the Company has agreed to merge with Allright Holdings, Inc.
("Allright"). Allright (d/b/a Allright Parking) is headquartered in Houston and
is one of the largest parking services companies in the United States with
revenues of $217.4 million for the fiscal year ended June 30, 1998. The
transaction, which is expected to be accounted for as a pooling-of-interests, is
based on a base purchase price of $564.4 million. The base purchase price of
Allright will be adjusted for certain items such as assumed long-term
indebtedness, certain expenses, asset acquisitions or dispositions, and material
variations of amounts estimated or represented by Allright Management prior to
the closing date. The equity purchase price of Allright is calculated in
equivalent shares of Central Parking common stock, based on a fixed share price
of $46.00 per share. Under terms of the agreement, Central Parking expects to
issue shares of common stock (approximately 7.6 million shares) to the
shareholders of Allright.
The merger remains subject to certain closing conditions, including the
expiration of the waiting period under the Hart-Scott-Rodino Act. The
transaction is subject to approval by the shareholders of both Central Parking
and Allright at separate meetings to be scheduled.
SALES AND MARKETING
Central Parking's sales and marketing efforts are designed to expand its
operations by developing and maintaining relationships with major real estate
developers and asset managers, business and government leaders, and other
clients. Central Parking encourages its managers to pursue new opportunities at
the local level while simultaneously selectively targeting key clients and
projects at a national level.
Local. At the local level, Central Parking's sales and marketing efforts are
decentralized and directed towards identifying new expansion opportunities
within a particular city or region. Managers are trained to develop the
business contacts necessary to generate new opportunities and to monitor their
local markets for take-away and outsourcing opportunities. Central Parking
provides its managers with a significant degree of autonomy in order to
encourage prompt and effective responses to local market demands, which is
complemented by management support and marketing training through Central
Parking's corporate offices. In addition, a manager's compensation is
dependent, in part, upon his or her success in developing new business. By
developing business contacts locally, Central Parking's managers often get the
opportunity to bid on projects when asset managers and property owners are
dissatisfied with current operations and also learn in advance of possible new
projects.
National. At the national level, Central Parking's marketing efforts are
undertaken primarily by upper-level management, which targets developers,
governmental entities, the hospitality industry, mixed-use projects, and
medical facilities. These efforts are directed at operations that generally
have national name recognition, substantial demand for parking related
services, and the potential for nationwide growth. For example, Central
Parking's current clients include, among other national real estate companies
and hotel chains, the Rouse Company, Faison Associates, Equity Office
Properties, May Department Stores, Crescent Real Estate, Westin Hotels, and
Hyatt Hotels. Management believes that providing high-quality, efficient
services to such companies will lead to additional opportunities as those
clients continue to expand their operations. Management believes outsourcing by
parking facility owners will continue to be a source for additional facilities,
and management believes the Company's experience and reputation with large real
estate asset managers give it a competitive advantage in this area.
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INTERNATIONAL EXPANSION
Central Parking's international operations began in the early 1990's with the
formation of an international division, which is now one of the fastest growing
areas of Central Parking. The Company typically enters foreign markets either
through consulting projects or by forming joint ventures with established local
entities. Consulting projects allow Central Parking to establish a presence and
evaluate the prospects for growth of a given market without investing a
significant amount of capital. Likewise, forming joint ventures with local
partners allows Central Parking to enter new foreign markets with reduced
operating and investment risks.
Operations in London began in 1991 with a single consulting agreement and since
then have grown to 159 facilities in the United Kingdom including two terminals
at Heathrow International Airport and parking meter enforcement and ticketing
services for three local governments that have privatized these services.
Central Parking began expansion into Mexico in July 1994 by forming a joint
venture with Fondo Opcion, an established Mexican developer, and now operates
61 facilities in Mexico. Central Parking also operates 4 facilities in Canada,
one facility in Spain and has entered into a management contract in Kuala
Lumpur, Malaysia related to the operation of a 5,400 space parking facility
servicing one of the largest development projects in the world. The Company
also operates on-street parking services in the United Kingdom, Germany and the
Republic of Ireland. Central Parking established a business development office
in the Netherlands in 1995 to pursue expansion into other European countries.
In 1996, Central Parking acquired a 50% equity interest in a joint venture,
which operates five facilities in Germany. In order to manage its international
expansion, the Company has allocated responsibilities for international
operations to an executive vice president.
OPERATING ARRANGEMENTS
Central Parking operates parking facilities under three general types of
arrangements: management contracts, leases, and fee ownership. As of September
30, 1998, Central Parking operated 1,302 parking facilities through management
contracts, leased 1,071 parking facilities, and owned 67 parking facilities,
either independently or in joint venture with third parties. The following
table sets forth certain information regarding the number of managed, leased,
or owned facilities as of the specified dates:
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
----------------
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Managed Facilities................................................. 770 877 1,302
Leased Facilities.................................................. 552 709 1,071
Owned Facilities................................................... 37 58 67
----- ----- -----
Total...................................................... 1,359 1,644 2,440
===== ===== =====
</TABLE>
The general terms and benefits of these types of arrangements are discussed as
follows:
Management Contracts. Management contract revenues consist of
management fees (both fixed and percentage of revenues) and fees for
ancillary services such as insurance, accounting, equipment leasing, and
consulting. The cost of management contracts includes insurance premiums
and claims and other indirect overhead. The Company's responsibilities
under a management contract as a facility manager include hiring,
training, and staffing parking personnel, and providing collections,
accounting, record keeping, insurance, and facility marketing services. In
general, Central Parking is not responsible under its management contracts
for structural, mechanical, or electrical maintenance or repairs, or for
providing security or guard services or for paying property taxes. In
general management contracts are for terms of one to three years and are
renewable for successive one-year terms, but are cancelable by the
property owner on short notice. Although management contracts typically
are for relatively short terms, the Company's renewal rates for each of
the past five fiscal years were in excess of 91%. With respect to
insurance, the Company's clients have the option of obtaining insurance on
their own or having Central Parking provide insurance as part of the
services provided under the management contract. Because of its size and
claims experience, the Company can purchase such insurance at discounts to
comparable market rates and, management believes, at lower rates than the
Company's clients can generally obtain on their own. Accordingly, Central
Parking generates profits on the insurance provided under its management
contracts. See "--Insurance"
Leases. The Company's rent under leases is generally a fixed annual
amount, a percentage of gross revenues, or a combination thereof. Leased
facilities generally require a longer commitment and a larger capital
investment by Central Parking than managed facilities but generally
provide a more stable source of revenue and a greater
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opportunity for long-term revenue growth. The cost of parking includes
rent, payroll and related benefits, depreciation, maintenance, insurance,
and general operating expenses. Under its leases, the Company is typically
responsible for all facets of the parking operations, including pricing,
utilities, and ordinary and routine maintenance, but is generally not
responsible for structural, mechanical, or electrical maintenance or
repairs, or property taxes. Lease arrangements are typically for terms of
three to ten years, with a renewal term, and provide for a contractually
established payment to the facility owner regardless of the operating
earnings of the parking facility.
Fee Ownership. Ownership of parking facilities, either independently
or through joint ventures, typically requires a larger capital investment
than managed or leased facilities but provides maximum control over the
operation of the parking facility and the greatest profit potential of the
three types of operating arrangements. All changes in owned facility
revenue flow directly to the Company, and the Company has the potential to
realize benefits of appreciation in the value of the underlying real
estate if the property is sold. The ownership of a parking facility brings
the Company complete responsibility for all aspects of the property,
including all structural, mechanical, or electrical maintenance or
repairs.
Joint Ventures. The Company seeks joint venture partners who are
established local or regional developers pursuing financing alternatives
for development projects. Joint ventures typically involve a development
where the parking facility is a part of a larger multi-use project,
allowing the Company's joint venture partners to benefit from a capital
infusion to the project. Joint ventures offer the revenue growth potential
of ownership with a partial reduction in capital requirements. The Company
has interests in joint ventures that own or operate parking facilities
located in Nashville, Denver, Tulsa, St. Louis, Mexico City, Berlin,
Dresden, and Frankfort.
MBE Partnerships. Central Parking is currently a party to eleven
separate minority business enterprise partnerships. These are generally
partnerships formed by Central Parking and a minority businessperson to
manage a facility. Central Parking generally owns 60% to 70% of the
partnership interests in each partnership and typically receives
management fees before partnership distributions are made to the partners.
COMPETITION
The parking industry is fragmented and highly competitive. The Company faces
direct competition for additional facilities to manage, lease, or own and the
facilities currently operated by the Company face competition for employees and
customers. The Company competes with a variety of other companies to add new
operations. Although there are relatively few large, national parking companies
that compete with the Company, developers, hotel companies, and national
financial services companies have the potential to compete with parking
companies. Municipalities and other governmental entities also operate parking
facilities which compete with Central Parking. The Company also faces
competition from regional and local parking companies and from owner-operators
of facilities who are potential clients for the Company's management services.
Construction of new parking facilities near the Company's existing leased or
managed facilities could adversely affect the Company's business.
Management believes that it competes for clients based on rates charged for
services; ability to generate revenues and control expenses for clients;
ability to anticipate and respond to industry changes; range and quality of
services; and ability to expand operations. The Company believes it has a
reputation as a leader in the industry and as a provider of high quality
services. The Company also is one of the largest companies in the parking
industry and is not limited to a single geographic region. The Company has the
financial strength to make capital investments as an owner or joint venture
partner that smaller or more leveraged companies cannot make. The Company's
size also has allowed it to centralize administrative functions that give the
decentralized managerial operations cost-efficient support. Moreover, the
Company has obtained broad experience in managing and operating a wide variety
of facilities over the past 30 years. Additionally, the Company is able to
attract and retain quality managers through its incentive compensation system
that directly rewards successful sales and marketing efforts and places a
premium on profitable growth.
INSURANCE
The Company purchases comprehensive liability insurance covering parking
facilities it owns, leases or manages. The primary amount of such coverage is
$1 million per occurrence and $1 million in the aggregate per facility. In
addition, the Company purchases group insurance with respect to all full-time
Company employees, whether such persons are employed at owned, leased, or
managed facilities. Because of the size of the operations covered, the Company
purchases these policies at prices that, management believes, represent a
discount to the prices that would be charged to parking facility owners on a
stand-alone basis. Pursuant to its management contracts, the Company charges
its customers for insurance at rates it believes approximate market rates based
upon its review of the applicable market. In each case, the Company's clients
have the option of purchasing their own policies, provided the Company is named
as an additional insured; however, because the Company's fees for insurance are
generally competitive with market rates, many of the Company's
8
<PAGE> 9
clients have chosen historically to purchase such insurance through the
Company. A reduction in the number of clients that purchase insurance through
the Company, however, could have a material adverse effect on the operating
earnings of the Company. In addition, although the Company's cost of insurance
has not fluctuated significantly in recent years, a material increase in
insurance costs due to increased claims experienced by the Company could
adversely affect the profit associated with insurance charges pursuant to
management contracts and could have a material adverse effect on the operating
earnings of the Company.
REGULATION
The Company's business is not substantially affected by direct governmental
regulation, although both municipal and state authorities sometimes directly
regulate parking facilities. The facilities in New York City are, for example,
subject to certain governmental restrictions concerning numbers of cars,
pricing, and certain prohibited practices. The Company is also affected by laws
and regulations (such as zoning ordinances) that are common to any business
that owns real estate and by regulations (such as labor and tax laws) that
affect companies with a large number of employees. In addition, several state
and local laws have been passed in recent years that encourage car-pooling and
the use of mass transit, including, for example, a Los Angeles, California law
prohibiting employers from reimbursing employee-parking expenses. Laws and
regulations that reduce the number of cars and vehicles being driven could
adversely impact the Company's business.
Under various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real property may be
liable for the costs of removal or remediation of hazardous or toxic substances
on, under or in such property. Such laws typically impose liability without
regard to whether the owner or operator knew of, or was responsible for, the
presence of such hazardous or toxic substances. In connection with the
ownership or operation of parking facilities, the Company may be potentially
liable for any such costs. Although Central Parking is currently not aware of
any material environmental claims pending or threatened against it or any of
its owned or operated parking facilities, there can be no assurance that a
material environmental claim will not be asserted against the Company or
against its owned or operated parking facilities. The cost of defending against
claims of liability, or of remediating a contaminated property, could have a
material adverse effect on the Company's financial condition or results of
operations.
Various other governmental regulations affect the Company's operation of
parking facilities, both directly and indirectly, including the Americans with
Disabilities Act ("ADA"). Under the ADA, all public accommodations, including
parking facilities, are required to meet certain federal requirements related
to access and use by disabled persons. For example, the ADA requires parking
facilities to include handicapped spaces, headroom for wheelchair vans,
attendants' booths that accommodate wheelchairs, and elevators that are
operable by disabled persons. Management believes that the parking facilities
the Company owns and operates are in substantial compliance with these
requirements.
EMPLOYEES
As of September 30, 1998, the Company employed approximately 12,000
individuals, including 6,300 full-time and 5,700 part-time employees.
Approximately 3,900 U.S. employees are represented by labor unions. Various
union locals, including Teamsters Local No. 272, represent parking attendants
and cashiers at the New York City facilities. Other cities in which some of the
Company's employees are represented by labor unions are Washington, D.C.;
Miami; Philadelphia; San Francisco; Des Moines, Iowa; Jersey City, Newark, and
Atlantic City, New Jersey; Pittsburgh; White Plains, N.Y.; San Juan, Puerto
Rico; and Chicago. The Company frequently is engaged in collective bargaining
negotiations with various union locals but has not experienced any labor
strikes. Management believes that the Company's employee relations are good.
SERVICE MARKS AND TRADEMARKS
The Company has registered its logo with the United States Patent Office. The
Company has applied for registration of the name "Central Parking System,"
which application was initially opposed by two parties. Both parties have
withdrawn their opposition but continue to use the name "Central Parking"
exclusively in the Chicago and Atlantic City areas. The Company also owns
registered trademarks for Square Industries and Kinney System and operates
various parking locations under those names. The Company has applied for
registration for the names, "CPC" and "Central Parking Corporation." The
Company uses the name "Chicago Parking System" in Chicago and "CPS Parking" in
Seattle and Milwaukee. The Company has registered the name "Control Plus" and
its symbol in London and intends to use and register that name and symbol in
association with its on street parking activities in Richmond, Virginia . The
Company has registered, or intends to register, its name and logo in various
international locations where it does business.
9
<PAGE> 10
FOREIGN AND DOMESTIC OPERATIONS
Information about the Company's foreign and domestic operations is incorporated
by reference to Note 17 to the Company's 1998 Consolidated Financial Statements.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
This document, and documents that have been incorporated herein by reference,
include various forward-looking statements regarding the Company that are
subject to risks and uncertainties, including, without limitation, the factors
set forth under the caption "Risk Factors" in the Company's Registration
Statement on Form S-4 filed on October 23, 1998, as amended (the "Allright
Registration Statement"). Forward-looking statements include, but are not
limited to, discussions regarding the Company's operating strategy, growth
strategy, acquisition strategy, cost savings initiatives, industry, economic
conditions, financial condition, liquidity and capital resources and results of
operations. Such statements include, but are not limited to, statements preceded
by, followed by or that otherwise include the words "believes," "expects,"
"anticipates," "intends," "estimates" or similar expressions. For those
statements, the Company claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995.
The following important factors, in addition to those discussed elsewhere in
this document, the Allright Registration Statement and the documents which are
incorporated herein by reference, could affect the future financial results of
the Company and the combined company and could cause actual results to differ
materially from those expressed in forward-looking statements contained or
incorporated by reference in this document:
- successfully integrating Allright and Kinney Systems, as well as past and
future acquisitions in light of challenges in retaining key employees,
synchronizing business processes and efficiently integrating facilities,
marketing, and operations;
- successful implementation of the Company's operating and growth
strategy, including possible strategic acquisitions;
- the National Basketball Association strike;
- fluctuations in quarterly operating results caused by a variety of
factors including the timing of gains on sales of owned facilities,
preopening costs, the effect of weather on travel and transportation
patterns, and local, national and international economic conditions;
- the ability of the Company to form and maintain its strategic
relationships with certain large real estate owners and operators;
- global and/or regional economic factors and potential changes in laws and
regulations, including, without limitation, changes in federal, state and
international laws regulating the environment; and
- a significant delay in the expected closing of the proposed merger with
Allright.
10
<PAGE> 11
ITEM 2. PARKING FACILITY PROPERTIES
The Company's facilities are currently organized into 12 regions, 11 in North
America (10 in the United States, one in Mexico) and one which is comprised of
the United Kingdom and Continental Europe. Each region is supervised by a
regional manager who reports directly to one of the senior vice presidents.
Regional managers oversee four to six general managers who each supervise the
Company's operations in a particular city. The following table summarizes
certain information regarding the Company's facilities as of September 30,
1998.
<TABLE>
<CAPTION>
NUMBER OF TOTAL PERCENTAGE OF
REGIONS CITIES LOCATIONS MANAGED LEASED OWNED SPACES TOTAL SPACES
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Atlanta.......... Atlanta, Birmingham, Charleston 146 90 56 -- 82,659 8.1%
(SC),Charlotte, Columbia (SC),
Jackson (MS), Mobile
Denver........... Denver/Colorado Springs 160 92 58 10 72,291 7.1
Des Moines, Kansas City
Minneapolis, Oklahoma City,
St. Louis
International.... United Kingdom - Birmingham 165 80 85 -- 62,805 6.1
London, Oxford, Newcastle
Germany--Berlin, Dresden,
Frankfurt, Spain and Malaysia
Florida.......... Jacksonville, Miami/Ft. Lauderdale, 222 125 97 -- 89,946 8.8
Orlando, Puerto Rico, Tampa/St.
Petersburg
Los Angeles...... Los Angeles, Orange County (CA), 94 72 22 -- 51,340 5.0
Phoenix
Mid-Atlantic..... Baltimore, Norfolk 352 201 142 9 142,798 14.0
Philadelphia, Pittsburgh,
Richmond, Washington, D.C.
Mexico........... Cuernavaca, Mexico City, Monterrey 61 34 27 -- 31,796 3.1
Midwestern....... Charleston, (WV) 120 79 40 1 72,914 7.1
Cincinnati, Cleveland
Columbus, Indianapolis
Milwaukee, Ottawa, Toronto
Nashville........ Chattanooga, Knoxville, 263 112 129 22 56,141 5.5
Lexington/Frankfort, Louisville,
Memphis, Nashville(1)
New York......... Hartford, Jersey City, 379 139 225 15 142,655 14.0
New York, Providence, Stamford
San Francisco.... Oakland, Salt Lake City, 63 37 26 -- 20,674 2.0
San Francisco, Seattle
Texas............ Albuquerque, Austin 279 180 89 10 134,402 13.1
Corpus Christi, Dallas
El Paso, Houston, New
Orleans, San Antonio, Tulsa
Other............ Boston, Chicago, Nashua 136 61 75 -- 62,141 6.1
------------------------------------------------------
Total 2,440 1,302 1,071 67 1,022,562 100.0%
======================================================
</TABLE>
The Company's facilities include both surface lots and structured parking
facilities (garages). Approximately 74% of the Company's owned parking
properties are in structured parking facilities, with the remainder in surface
lots. Management believes the Company's owned facilities generally are in good
condition and adequate for its present needs.
- ---------------------------------
(1) Includes Central Parking Corporate headquarters in owned facilities.
11
<PAGE> 12
ITEM 3. LEGAL PROCEEDINGS
The ownership of property and provision of services to the public entails an
inherent risk of liability. Although the Company is engaged in routine
litigation incidental to its business, there is no legal proceeding to which
the Company is a party, which, in the opinion of management, will have a
material adverse effect upon the Company's financial condition, results of
operations, or liquidity. The Company takes steps to attempt to disclaim its
liability for personal injury and property damage claims by printing
disclaimers on its ticket stubs and by placing warning signs in the facilities
it owns or operates. The Company also carries liability insurance that
management believes meets industry standards; however, there can be no
assurance that any future legal proceedings (including any related judgments,
settlements or costs) will not have a material adverse effect on the Company's
financial condition, liquidity, or results of operations.
12
<PAGE> 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
No matter was submitted to a vote of the Company's security-holders
during the fourth quarter of the fiscal year ended September 30, 1998.
13
<PAGE> 14
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) The Registrant's Common Stock is listed on the NYSE under the symbol "CPC."
The following table sets forth, for the periods indicated, the high and low
sales prices for the Company Common Stock as reported by the NYSE.
Such amounts reflect the three-for-two stock split in December 1997.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
FISCAL 1997
First Quarter......................................................... $ 24.58 $ 21.08
Second Quarter........................................................ 22.75 16.33
Third Quarter......................................................... 23.25 15.92
Fourth Quarter........................................................ 32.92 22.17
Twelve months......................................................... 32.92 15.92
FISCAL 1998
First Quarter......................................................... $ 46.81 $ 31.42
Second Quarter........................................................ 49.38 38.44
Third Quarter......................................................... 48.44 40.31
Fourth Quarter........................................................ 52.63 41.31
Twelve months......................................................... 52.63 31.42
</TABLE>
(b) There were, as of September 30, 1998, approximately 8,100 holders of the
Registrant's Common Stock, as evidenced by security position listings.
(c) Since April 1997, Central Parking has distributed a quarterly cash dividend
of $0.015 per share of Central Parking common stock. The Company had previously
declared a dividend of $0.0125 per share of Central Parking common stock
following the end of each quarter since its initial public offering in October
1995. The Company Board currently intends to declare a cash dividend each
quarter depending on Central Parking's profitability and capital necessary to
finance operations and expansion. Central Parking reserves the right, however,
to retain all or a substantial portion of its earnings to finance the operation
and expansion of Central Parking's business. As a result, the future payment of
dividends will depend upon, among other things, the Company's profitability,
capital requirements, financial condition, growth, business opportunities, and
other factors that the Central Parking Board may deem relevant, including
restrictions in any then-existing credit agreement. The Company's existing
credit facility contains certain covenants including those that require the
Company to maintain certain financial ratios, restrict further indebtedness,
and limit the amount of dividends payable; however, the Company does not
believe these restrictions limit its ability to pay currently anticipated cash
dividends. In addition, Central Parking Finance Trust (the "Trust"), a Delaware
statutory business trust, of which all of the common stock is owned by the
Company, issued preferred securities (the "Trust Issued Preferred Securities")
which prohibit the payment of dividends on the Central Parking common stock if
the quarterly distributions on the Trust Issued Preferred Securities are not
made for any reason.
14
<PAGE> 15
During fiscal 1998, the Company sold unregistered securities as indicated below:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Description Names or Number/Title Date of Consideration/ Exemption from
of Class of of Shares Transaction Terms of Registration Claimed
Transaction Recipients of Transferred Conversion
Unregistered
Securities
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Acquisition Eddie W. 8,589 April 1, 1998 Substantially all of the Shares were issued under
of Turner 8,253 assets of Turner Parking, Section 4(2) of the
Turner Greg Martin Common System Inc. Securities Act to the
Stock Purchase price: $ 3.8 million owner(s) of the business
purchased by the Company.
- -----------------------------------------------------------------------------------------------------------------------------
Acquisition Continental 52,631 March 30, The remaining 50% of the Shares were issued under
of Group, Inc. Common 1998 common stock of CPS of Section 4(2) of the
CPS of Stock Louisiana. This company was Securities Act to the
Louisiana previously operated as a joint owner(s) of the business
venture, of which Central purchased by the Company.
Parking owned 50%. Purchase
price: $2.5 million.
- -----------------------------------------------------------------------------------------------------------------------------
Acquisition M. John 54,358 July 1, 1998 Substantially all of the Shares were issued under
of Knippel Common assets of Sterling Parking, Section 4(2) of the
Sterling Stock Inc. Purchase price: $4.3 Securities Act to the
Parking million. owner(s) of the business
purchased by the Company.
- -----------------------------------------------------------------------------------------------------------------------------
Convertible Institutional 4,400,000 March 18, 5 1/4% Convertible Trust Issued Shares were issued under
Trust Issued Investors Convertible 1998 Preferred Securities ("TIPS") Section 4(2)/144 A
Preferred Trust Issued convertible into shares of of the Securities Act
Securities Preferred Company Common stock at the to the following
Securities rate of 0.4545 shares of Underwriters:
Company Common Stock per share Bear, Sterns & Co, Inc.
of TIPS J.C. Bradford & Co.
Aggregate offering paid: William Blair & Company
$110 million Nationsbanc Montgomery
Aggregate underwriting Securities LLC
discounts and expenses: Sun Trust Equitable
$3.5 million Securities
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 16
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The information set forth under the caption "Five Year Selected Consolidated
Financial Data " in the Company's Annual Report to Shareholders for the fiscal
year ended September 30, 1998 is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information set forth under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Company's
Annual Report to Shareholders for the fiscal year ended September 30, 1998 is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information set forth under the captions "Independent Auditors' Report",
"Consolidated Balance Sheets", "Consolidated Statements of Earnings",
"Consolidated Statements of Shareholders' Equity", "Consolidated Statements of
Cash Flows", and "Notes to Consolidated Financial Statements" in the Company's
Annual Report to Shareholders for the fiscal year ended September 30, 1998 is
incorporated herein by reference.
The Company's unaudited operating results for each fiscal quarter within the two
most recent fiscal years, as set forth under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Company's Annual Report to Shareholders for the fiscal year ended September 30,
1998, is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
16
<PAGE> 17
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
Information concerning this Item is incorporated by reference to the Company's
definitive proxy materials for the Company's 1999 Annual Meeting of
Shareholders.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning this Item is incorporated by reference to the Company's
definitive proxy materials for the Company's 1999 Annual Meeting of
Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning this Item is incorporated by reference to the Company's
definitive proxy materials for the Company's 1999 Annual Meeting of
Shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning this Item is incorporated by reference to the Company's
definitive proxy materials for the Company's 1999 Annual Meeting of
Shareholders.
17
<PAGE> 18
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
<S> <C>
(a)(1) Financial Statements
The following financial statements and related notes of the Company contained in the Company's
Annual Report to Shareholders for the fiscal year ended September 30, 1998 are incorporated
herein by reference and are included in Exhibit 13.
Independent Auditors' Report......................................................................
Consolidated Balance Sheets -- September 30, 1997 and 1998.........................................
Consolidated Statements of Earnings -- Fiscal Years Ended September 30, 1996,
1997, and 1998....................................................................................
Consolidated Statement of Shareholders' Equity -- Fiscal Years Ended September 30, 1996, 1997,
and 1998..........................................................................................
Consolidated Statements of Cash Flows -- Fiscal Years Ended September 30, 1996, 1997, and 1998....
Notes to Consolidated Financial Statements........................................................
(a)(2) Financial Statement Schedules
None
Financial statement schedules have been omitted because they are not applicable or because the
required information is otherwise furnished.
(a)(3) Exhibits
Financial Data Schedule (EDGAR Filing Only)
27. Financial Data Schedule (EDGAR Filing Only)
The exhibits listed in the Index to Exhibits, which appears on pages E-__ through E-___ of this
Form 10-K, are incorporated herein by reference or filed as part of this Form 10-K.
(b) Reports on Form 8-K
- In relation to the announcement of the Allright Merger, the Company filed a current report
on form 8-K, dated September 21, 1998, incorporating the text of the press release.
</TABLE>
18
<PAGE> 19
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: December 23, 1998 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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
/s/ Monroe J. Carell, Jr. December 23, 1998
- --------------------------------- Chairman of the Board, -------------------------------
Monroe J. Carell, Jr. Chief Executive Officer
and Director
/s/ James H. Bond December 23, 1998
- --------------------------------- President & Chief -------------------------------
James H. Bond Operating Officer
and Director
/s/ Stephen A. Tisdell December 23, 1998
- --------------------------------- Chief Financial Officer -------------------------------
Stephen A. Tisdell (Principal Financial and
Accounting Officer)
/s/ John W. Eakin December 23, 1998
- --------------------------------- Director -------------------------------
John W. Eakin
/s/ Edward G. Nelson December 23, 1998
- --------------------------------- Director -------------------------------
Edward G. Nelson
/s/ William C. O'Neil, Jr. December 23, 1998
- --------------------------------- Director -------------------------------
William C. O'Neil, Jr.
/s/ Cecil Conlee December 23, 1998
- --------------------------------- Director -------------------------------
Cecil Conlee
/s/ Lowell Harwood December 23, 1998
- --------------------------------- Director -------------------------------
Lowell Harwood
/s/ Lewis Katz December 23, 1998
- --------------------------------- Director -------------------------------
Lewis Katz
/s/ P.E. Sadler December 23, 1998
- --------------------------------- Director -------------------------------
P.E. Sadler
</TABLE>
19
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DOCUMENT NUMBER
- ------- -------- ------
<S> <C> <C>
2 Plan of Recapitalization, effective October 9, 1997
(Incorporated by reference to Exhibit 2 to the Company's
Registration Statement No. 33-95640 on Form S-1.)
2.1 (a) Agreement and Plan of Merger dated September 21, 1998, by and
among the Registrant, Central Merger Sub, Inc., Allright
Holdings, Inc., Apollo Real Estate Investment Fund II, L.P. and
AEW Partners, L.P. (Incorporated by reference to Exhibit 2.1 to
the Company's Registration Statement No. 333-66081 filed on
October 21, 1998).
(b) Acquisition Agreement and Plan of Merger dated as of November 7,
1997, by and between the Registrant and Kinney System Holding
Corp. and a subsidiary of the Registrant (Incorporated by
reference to the Company's Current Report on Form 8-K filed on
February 17, 1998).
3.1 Amended and Restated Charter of the Registrant (Incorporated by
reference to Exhibit 3.1 to the Company's Registration Statement
No. 33-95640 on Form S-1.)
3.2 Amended and Restated Bylaws of the Registrant (Incorporated by
reference to Exhibit 3.2 to the Company's Registration Statement
No. 33-95640 on Form S-1.)
4 Form of Common Stock Certificate (incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement No. 33-95640
on Form S-1.)
4.4 Registration Rights Agreement dated as of September 21, 1998 by
and between the Registrant, Apollo Real Estate Investment Fund
II, L.P., AEW Partners, L.P. and Monroe J. Carell, Jr., The
Monroe Carell Jr. Foundation, Monroe Carell Jr. 1995 Grantor
Retained Annuity Trust, Monroe Carell Jr. 1994 Grantor Retained
Annuity Trust, The Carell Children's Trust, The 1996 Carell
Grandchildren's Trust, The Carell Family Grandchildren 1990
Trust, The Kathryn Carell Brown Foundation, The Edith Carell
Johnson Foundation, The Julie Carell Stadler Foundation, 1997
Carell Elizabeth Brown Trust, 1997 Ann Scott Johnson Trust, 1997
Julia Claire Stadler Trust, 1997 William Carell Johnson Trust,
1997 David Nicholas Brown Trust and 1997 George Monroe Stadler
Trust. (Incorporated by reference to Exhibit 2.1 to the
Company's Registration Statement No. 333-66081 filed on October
21, 1998).
4.5 Indenture dated March 18, 1998 between the registrant and Chase
Bank of Texas, National Association, as Trustee regarding up to
$113,402,050 of 5 1/4% Convertible Subordinated Debentures due
2028. (incorporated by reference to Exhibit 4.5 to the
Registrant's Registration Statement No. 333-52497 on Form S-3).
4.6 Amended and Restated Declaration of Trust of Central Parking
Finance Trust dated as of March 18, 1998. (incorporated by
reference to Exhibit 4.5 to the Registrant's Registration
Statement No. 333-52497 on Form S-3).
4.7 Preferred Securities Guarantee Agreement dated as of March 18,
1998 by and between the Registrant and Chase Bank of Texas,
National Association as Trsutee (incorporated by reference to
Exhibit 4.7 to the Registrant's Registration Statement No.
333-52497 on Form S-3).
4.8 Common Securities Guarantee Agreement dated as of March 18, 1998
by the Registrant (incorporated by reference to Exhibit 4.9 to
the Registrant's Registration Statement No.
333-52497 on Form S-3).
10.1 Executive Compensation Plans and Arrangements
(a) 1997 Incentive and Nonqualified Stock Option Plan for Key
Personnel (Incorporated by reference to Exhibit 10.1 to
the Company's Registration Statement No. 33-95640 on Form
S-1.)
</TABLE>
20
<PAGE> 21
<TABLE>
<CAPTION>
Page
----
<S> <C>
(b) Form of Option Agreement under Key Personnel Plan
(Incorporated by reference to Exhibit 10.2 to the
Company's Registration Statement No. 33-95640 on Form
S-1.)
(c) 1997 Restricted Stock Plan (Incorporated by reference to
Exhibit 10.5.1 to the Company's Registration Statement No.
33-95640 on Form S-1.)
(d) Form of Restricted Stock Agreement (Incorporated by
reference to Exhibit 10.5.2 to the Company's Registration
Statement No. 33-95640 on Form S-1.)
(e) Form of Employment Agreements with Executive Officers
(Incorporated by reference to Exhibit 10.7 to the
Company's Registration Statement No. 33-95640 on Form
S-1.)
(f) 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.)
(g) Monroe J. Carell, Jr. Revised Deferred Compensation
Agreement, as amended (Incorporated by reference to Exhibit
10.9 to the Company's Registration Statement No. 33-95640
on Form S-1.)
(h) James H. Bond Employment Agreement (Incorporated by
reference to Exhibit 10.10 to the Company's Registration
Statement No. 33-95640 on Form S-1.)
(i) Performance Unit Agreement between Central Parking
Corporation and James H. Bond (Incorporated by reference to
Exhibit 10.11.1 to the Company's Registration Statement No.
33-95640 on Form S-1.)
(j) Modification of Performance Unit Agreement of James H.
Bond (Incorporated by reference to Exhibit 10.1(j) to the
Company's Annual Report on Form 10-K filed on December 27,
1997)
(k) James H. Bond Severance Agreement (Incorporated by
reference to Exhibit 10.17 to the Company's Registration
Statement No. 33-95640 on Form S-1.)
(l) Deferred Stock Unit Plan. E-1
10.2 1997 Nonqualified Stock Option Plan for Directors (Incorporated
by reference to Exhibit 10.3 to the Company's Registration
Statement No. 33-95640 on Form S-1.)
10.3 Form of Option Agreement under Directors Plan (Incorporated by
reference to Exhibit 10.4 to the Company's Registration Statement
No. 33-95640 on Form S-1.)
10.4 Central Parking System, Inc. Profit Sharing Plan, as amended
(Incorporated by reference to Exhibit 10.6 to the Company's
Registration Statement No. 33-95640 on Form S-1.)
10.5 Form of Indemnification Agreement for Directors (Incorporated by
reference to Exhibit 10.12 to the Company's Registration
Statement No. 33-95640 on Form S-1.)
10.6 Indemnification Agreement for Monroe J. Carell, Jr. (Incorporated
by reference to Exhibit 10.13 to the Company's Registration
Statement No. 33-95640 on Form S-1.)
10.7 Form of Management Contract (Incorporated by reference to Exhibit
10.14 to the Company's Registration Statement No. 33-95640 on
Form S-1.)
10.8 Form of Lease (Incorporated by reference to Exhibit 10.15 to the
Company's Registration Statement No. 33-95640 on Form S-1.)
</TABLE>
21
<PAGE> 22
10.9 1998 Employment Stock Purchase Plan (Incorporated by reference to
Exhibit 10.16 to the Company's Registration Statement No.
33-95640 on Form S-1.)
10.10 Exchange Agreement between the Company and Monroe J. Carell, Jr.
(Incorporated by reference to Exhibit 10.18 to the Company's
Registration Statement No. 33-95640 on Form S-1.)
10.11 Form of $300 million Senior Credit Facility dated February 11,
1998 by and among various banks with Nationsbank Montgomery
Securities, Inc., Charlotte, as Agent, and Central Parking
Corporation and affiliates (Incorporated by reference to Exhibit
2.1 to the Company's Quarterly Report on Form 10-Q for the
quarter ended on December 31, 1997)
10.13 Prospectus and offering document for 2,625,000 shares of Common
Stock dated February 17, 1998. (Incorporated by reference to the
Company's registration statement No. 333-23869 on Form S-3)
10.14 Transaction Support Agreement by Monroe J. Carell, Jr., the
Registrant, Kathryn Carell Brown, Julia Carell Stadler and Edith
Carell Johnson to Allright Holdings, Inc., Apollo Real Estate
Investment Fund II, L.P. and AEW Partners, L.P. dated September
21, 1998. (Incorporated by reference to Exhibit 2.1 to the
Company's Registration Statement No. 333-66081 filed on
October 23, 1998).
10.15 Form of Transaction Support Agreement by certain shareholders of
the Registrant to Allright Holdings, Inc., Apollo Real Estate
Investment Fund II, L.P. and AEW Partners, L.P. dated September
21, 1998. (Incorporated by reference to Exhibit 2.1 to the
Company's Registration Statement No. 333-66081 filed on October
23, 1998).
10.16 Form of Transaction Support Agreement by certain stockholders of
Allright Holdings, Inc. to the Registrant and Central Merger
Sub, Inc. dated September 21, 1998 (incorporated by reference to
Exhibit 2.1 to the Company's Registration Statement No.
333-66081 filed on October 23, 1998).
10.17 Best efforts commitment letter dated September 9, 1998 from
NationsBank Montgomery Securities LLC for a credit facility of
up to $400 million (Incorporated by reference to Exhibit 10.4 to
the Company's Registration Statement No. 333-66081 filed on
October 23, 1998).
22
<PAGE> 23
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DOCUMENT NUMBER
- ------- -------- ------
<S> <C> <C>
13 Portions of the Annual Report to Shareholders E-10
21 Subsidiaries of the Registrant E-44
23 Consent of KPMG Peat Marwick LLP E-54
27.1 Financial Data Schedule
27.2 Financial Data Schedule (Restated)
</TABLE>
23
<PAGE> 1
EXHIBIT 10.1(l)
CENTRAL PARKING CORPORATION
DEFERRED STOCK UNIT PLAN
1. PURPOSE
The purpose of the Central Parking Corporation (the "Company") Stock Unit
Plan (the "Plan") is to provide certain key employees with an opportunity to
defer compensation to be earned by them from the Company or any Affiliated
Company and to provide them with an incentive to acquire stock in the Company,
thereby aligning their interests with the shareholders of the Company.
2. EFFECTIVE DATE
The Plan shall be effective as of ______________, 199__.
3. PLAN ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") appointed
by the Board of Directors of the Company consisting of at least two or more
Directors who are not employees of the Company, each of whom is an "outside
director" for purposes of Section 162(m) of the Internal Revenue Code of 1986,
as amended (the "Code") and the U.S. Treasury Regulations (the "Regulations")
promulgated thereunder and a "non-employee" director as contemplated by Rule
16b-3 ("Rule 16b-3") under Section 16 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and any successor provisions. The Committee
shall have full and exclusive power to interpret the Plan and to adopt such
rules, regulations and guidelines for carrying out the Plan as it may deem
necessary or proper, all of which power shall be executed in the best interests
of the Company and in keeping with the objectives of the Plan. This power
includes, but is not limited to, selecting compensation eligible for deferral,
selecting eligible Participants, establishing all deferral terms and
conditions, and adopting modifications, amendments, forms and procedures as may
be necessary to comply with provisions of any applicable law or regulation.
4. ELIGIBILITY
The Committee shall have the authority to select among the management and
highly compensated employees of the Company or any Affiliated Company those
employees who shall be eligible to participate in the Plan (the "Participant"
or "Participants"). "Affiliated Company" means any entity that is directly or
indirectly controlled by the Company or any entity in which the Company has a
significant equity interest, as determined by the Committee.
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<PAGE> 2
5. AUTOMATIC DEFERRAL
Ten percent (10%) of each Participant's annual cash compensation (including
base salary, bonuses, any other incentive payments and amounts that otherwise
would have been paid in cash but for the deferral provided for in this Plan)
shall be credited to such Participant's Stock Unit Account pursuant to the
provisions of paragraph 8 hereof (the "Automatic Deferral"). Notwithstanding the
foregoing, a Participant may, by the dates specified in paragraph 7(a) hereof,
elect to receive in cash, at such time as would normally be payable, any portion
or all of the amount that would otherwise be his or her Automatic Deferral, and
if such election is to receive the entire amount in cash, such Participant shall
not participate in this Plan for the applicable period. To the extent the
provisions of this paragraph conflict with the provisions of the Company's
existing bonus or incentive plans, such plans are hereby modified.
6. ELECTIVE DEFERRAL
A Participant who does not elect to receive any portion of his or her
Automatic Deferral in cash pursuant to paragraph 5 may elect, pursuant to the
provisions of paragraph 7, to defer additional amounts of cash compensation
(such amounts, the "Elective Deferral"), provided, that no more than fifty
percent (50%) of the Participant's total cash compensation (as described in
paragraph 5) for any one year may be deferred under the Plan (whether as
Automatic or Elective Deferrals). The amount of such Participant's Elective
Deferral shall be credited to his or her Stock Unit Account pursuant to the
provisions of paragraph 8 hereof.
7. ELECTIONS TO DEFER
(a) For the fiscal year 1997, a Participant may make an election on or
before the date that is thirty (30) days after the Plan is adopted by the Board
of Directors to receive in cash all or any portion of his or her Automatic
Deferral for services to be performed subsequent to such election. For each
fiscal year after fiscal year 1997, a Participant may make an election by
September 30 of the preceding fiscal year to receive all or any portion of his
or her Automatic Deferral in cash.
(b) For the fiscal year 1997, a Participant who does not elect to receive
any portion of his or her Automatic Deferral in cash pursuant to paragraph (a)
above may make an election on or before the date that is thirty (30) days after
the Plan is adopted by the Board of Directors to defer up to forty percent (40%)
of his or her cash compensation as provided in paragraph 6 for services to be
performed subsequent to such election.
(c) For each fiscal year after fiscal 1997, a Participant who does not
elect to receive any portion of his or her Automatic Deferral in cash pursuant
to paragraph (a) above may make an election on or before September 30 of the
preceding fiscal year to defer up to forty percent (40%) of his or her cash
compensation as provided in paragraph 6.
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<PAGE> 3
(d) The period of deferral shall be for such number of years as the
Participant shall elect or until the occurrence of an event specified in
paragraph 10(a); provided, however, that the period of deferral for Elective
Deferrals must be at least four (4) years. All elections shall be irrevocable.
The period of time between the first crediting to the Participant's Stock Unit
Account and the final payment hereunder shall be known as the "Deferral Period."
8. ESTABLISHMENT OF STOCK UNIT ACCOUNT
(a) The Company shall establish an account (a "Stock Unit Account") for
each Participant, which Stock Unit Account shall be credited with such
Participant's Automatic Deferral and Elective Deferral. Deferred amounts shall
be maintained as stock units ("Stock Unit"). Each Stock Unit shall entitle the
Participant to receive one (1) share of common stock, par value $.01, of the
Company ("Share" or "Shares") in accordance with paragraph 10(c) below. The
balance of each account shall be expressed in the number of Stock Units
credited to such account.
(b) Automatic Deferrals shall be credited to the Participant's Stock Unit
Account as of the date on which the last cash compensation payment would have
been paid to the Participant absent the Automatic Deferral. Automatic Deferrals
will be converted to Stock Units by dividing the Automatic Deferral by the Fair
Market Value (as defined below) of a Share of the Company's common stock as of
such date.
(c) Elective Deferrals shall be credited to the Participant's Stock Unit
Account as of the date on which the last cash compensation payment would have
been paid to the Participant absent the Elective Deferral. Elective Deferrals
will be converted to Stock Units by dividing the Elective Deferral by the Fair
Market Value of a Share as of such date, and multiplying the quotient obtained
thereby by 1.25.
(d) All conversions into Stock Units will be calculated to two decimals.
(e) Each Participant shall be paid a cash bonus per Stock Unit (excluding
unvested Premium Units described below) equal in amount to any cash dividends
declared by the Company and payable on Shares. Each Stock Unit Account shall be
credited with Stock Units on a per Stock Unit basis (excluding unvested Premium
Units as defined below) equal in number to stock dividends declared by the
Company on its Shares. Such amounts shall be so credited or paid at such time
as such cash or stock dividends are paid by the Company to its shareholders.
9. PREMIUM UNITS
The Stock Units credited to the Participant's Stock Unit Account resulting
from the application of the .25 multiplier in paragraph 8(c) (the "Premium
Units") are subject to a vesting schedule over four (4) years, such that the
Participant shall vest in twenty-five percent (25%) of such Premium Units on
the annual anniversary of the crediting of such Premium Units to the
Participant's Stock Unit Account in each of the four years following the year
of their initial crediting. Upon the
E-3
<PAGE> 4
death or disability (as defined by then-current Company policy) of a
Participant, or upon a Change in Control (as defined below), the Participant
shall immediately vest in any and all unvested Premium Units. Further vesting
shall cease following a change in control or in the event a Participant's
employment with the Company is terminated for any reason other than death or
disability. Shares issued to a Participant in satisfaction of such
Participant's Premium Units shall be forfeited and returned to the Company in
the event a Participant's employment with the Company is terminated and, within
twelve (12) months thereafter he or she becomes employed by or a director or
consultant of, invests in (other than nominal investments in publicly traded
companies), or otherwise assists, a person who competes with the Company and
provides parking services within a fifty-mile radius of any location at which
the Company provides parking services. In the event a Participant violates such
noncompete provisions and fails to deliver the Shares representing his or her
Premium Units to the Company, the Company may, without liability to the
Participant or any third party, cancel such Shares on the stock records of the
Company.
10. PAYMENT OF DEFERRED COMPENSATION ACCOUNT
(a) Except as otherwise provided in Section 9 and subsections (d), (e)
and (f) below, the Participant's Stock Unit Account shall be paid or commence
to be paid to the Participant, as soon as practicable, after the earliest to
occur of the following:
(i) the Participant's death;
(ii) the Participant's retirement pursuant to the terms of the then
current retirement policy of the Company;
(iii) the Participant's termination from employment with the Company
and all Affiliated Companies for any reason other than death or retirement;
(iv) the commencement date selected by the Participant at the time
of the election to defer such amount; or
(v) a Change in Control of the Company.
(b) The Participant may elect to receive payment of the Stock Unit
Account either (i) in a lump sum, or (ii) in such number (not to exceed 10) of
approximately equal semi-annual installments and the Participant shall elect.
Such election shall be made at the time of the initial election to defer such
amount, or such later time as may be permitted by the Committee without such
election resulting, at the time it is made, in constructive receipt for federal
income tax purposes of the amount subject to the election. In the absence of an
election by the Participant, the Committee shall determine the manner and
number of payments.
(c) Amounts credited to the Participant's Stock Unit Account shall be
paid in Shares on a one (1) Stock Unit for one (1) Share basis, except that
fractional Shares shall be paid in cash. The
E-4
<PAGE> 5
Company shall reserve 250,000 Shares for issuance to Participants hereunder.
Shares shall be paid from the available Shares reserved hereunder, under the
Company's 1995 Restricted Stock Plan, 1995 Incentive and Nonqualified Stock
Option Plan for Key Personnel, or any other shareholder-approved stock plan
maintained by the Company, or open market purchases, as determined by the
Committee. In the absence of Shares available for issuance hereunder, the
Committee may unilaterally decide the form of payment or delay the timing of
payment in consideration of Securities and Exchange Commission and other
regulatory implications.
(d) The Committee shall have the unilateral right to delay the timing of
any payment under the Plan in the event such payment would not be tax
deductible by the Company as a result of the application of Code Section
162(m), or any successor section. In the event of such delay in payment,
payment shall be made at the first time when such payment would be tax
deductible by the Company, but no later than three years following the
Participant's termination of employment with the Company.
(e) Anything contained in this Section to the contrary notwithstanding,
in the event a Participant, or after the Participant's death, such
Participant's beneficiary designated in accordance with Section 13, incurs an
"Unforeseeable Emergency," which shall be an unanticipated emergency that is
caused by an event beyond the control of the Participant or, if applicable, the
Participant's beneficiary, and that would result in severe financial hardship
to the individual if early withdrawal of the Participant's Stock Unit Account
is not permitted, the Committee, in its sole discretion and upon written
application of such Participant or beneficiary, may direct immediate payment of
all or a portion of the then current value of such Participant's Stock Unit
Account; provided that such payment shall in no event exceed the amount
necessary to alleviate such financial hardship. The Committee may attach
conditions to such payments, including conditions prohibiting a Participant
from making further deferrals under the Plan for certain periods.
(f) In the event a Participant's employment with the Company and all
Affiliated Companies ends by reason of a Good Cause Event (or for a reason
which becomes a Good Cause Event as defined in subsection (h) below) which the
Committee determines involves, or may involve, a loss to the Company or an
Affiliated Company, notwithstanding any provision of this Plan to the contrary,
no payment shall be made under this Plan until the fact and the amount, if any,
of such loss have been determined to the satisfaction of the Committee, and
then payments shall be made hereunder only to the extent that the amounts
payable exceed the amount, if any, of the loss to the Company and all
Affiliated Companies which has not been restored by the Participant from other
sources. Pending the determination by the Committee of the fact and the amount,
if any, of any such loss, the Company and all Affiliated Companies shall have a
lien upon any amounts due to the Participant under this Plan.
(g) A "Change in Control" shall be deemed to have occurred if:
(i) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), other than a trustee or other fiduciary
holding securities under an
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<PAGE> 6
employee benefit plan of the Company or an Affiliated Company is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act or a
successor rule, except that a person shall be deemed to be the "beneficial
owner" of all shares that any such person has the right to acquire pursuant to
any agreement or arrangement or upon exercise of conversion rights, warrants,
options or otherwise, without regard to the sixty-day period referred to in such
rule), directly or indirectly, of securities of the Company representing 35% or
more of the combined voting power of the Company's then outstanding securities;
(ii) at any time during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board and any new
director (other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clauses (i) or
(iii) of this subsection (g)) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were Company
directors at the beginning of the period or whose election or nomination for
election was previously so approved cease for any reason to constitute a
majority thereof; or
(iii) the shareholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) at least 80% of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation (either alone or in combination with new or additional voting
securities held by management of the Company and its Subsidiaries and by any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company and its Subsidiaries) or the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets.
(h) The term "Good Cause Event" shall mean habitual drug use or
drunkenness, embezzlement of Company funds, conduct which is injurious to the
Company, or conviction of a felony, all as determined in good faith by the
Committee.
11. PARTICIPANT REPORTS
The Committee shall periodically make or cause to be made appropriate
reports to the Participant concerning the status of such Participant's Stock
Unit Account.
12. TRANSFERABILITY OF INTEREST
The rights to receive a payment under this Plan is not assignable or
transferable and shall not be subject to any encumbrances, liens, pledges or
charges of the Participant or to claims of such
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<PAGE> 7
Participant's creditors. Any attempt to assign, transfer, hypothecate or attach
any rights with respect to or derived from any payment shall be null and void
and of no force and effect whatsoever.
13. DESIGNATION OF BENEFICIARIES
A Participant may designate in writing a beneficiary or beneficiaries to
receive any distribution under the Plan which is made after the Participant's
death, provided, however, that if at the time any such distribution is due,
there is no designation of a beneficiary in force or if any person (other than
a trustee or trustees) as to whom a beneficiary designation was in force at the
time of the Participant's death shall have died before the payment became due
and the Participant has failed to provide in such beneficiary designation for
any person or persons to take in lieu of such deceased person, the person or
persons entitled to receive such distribution (or part thereof, as the case may
be) shall be the Participant's executor or administrator.
14. AMENDMENT, SUSPENSION AND TERMINATION
Except as otherwise provided in Section 3, the Plan may be amended only by
a majority of the non-employee Directors as they deem necessary or appropriate
to better achieve the purpose of the Plan.
15. FAIR MARKET VALUE
Fair Market Value of a Share for all purposes under the Plan shall mean
the closing price of a Share as reported on the New York Stock Exchange
Composite Tape and published in THE WALL STREET JOURNAL or similar readily
available public source for the date in question. If no sales of Shares were
made on such date, the closing price of a Share as reported for the next
preceding day on which sales of Shares were made shall be used.
16. ADJUSTMENTS AND REORGANIZATIONS
In the event of any stock dividend, stock split, combination or exchange
of Shares, merger, consolidation, spin-off, recapitalization or other
distribution (other than normal cash dividends) of Company assets to
stockholders, or any other change affecting Shares or the price of Shares, such
proportionate adjustments, if any, as the Committee in its discretion may deem
appropriate to reflect such change shall be made with respect to each Stock
Unit held in Stock Unit Accounts. The adjustment described in the preceding
sentence shall be calculated to two decimal places.
17. TAX WITHHOLDING
The Company shall deduct from any payment made to the Participant under the
Plan or otherwise, including the delivery of Shares, a sufficient amount to
cover withholding of any federal, state or local taxes required by law, or to
take such other action as may be necessary to satisfy any such withholding
obligations. The Committee may permit Shares to be used to satisfy required tax
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<PAGE> 8
withholding and such Shares shall be valued at the Fair Market Value as of the
date on which payment is made from which the withholding requirement is being
satisfied.
18. UNFUNDED PLAN
During the Deferral Period, all Stock Unit Accounts shall be considered as
general assets of the Company for use as it deems necessary or appropriate, and
will be subject to the claims of the Company's creditors.
The Plan shall be unfunded, shall not create (or be construed to create) a
trust or a separate fund or funds, and constitutes a mere promise by the
Company to make benefit payments in the future. The Plan shall not establish
any fiduciary relationship between the Company and any Participant or other
person. To the extent any person, including a Participant, holds any rights
under the Plan, such rights shall be no greater than the rights of an unsecured
general creditor of the Company.
19. OTHER EMPLOYEE BENEFITS
Any compensation deferred and any benefits paid under this Plan shall not
be included in creditable compensation in computing benefits under any other
employee benefit plans of the Company, except to the extent expressly provided
for thereunder.
20. NO RIGHT TO EMPLOYMENT
Nothing contained herein shall be construed as conferring upon any
Participant the right to continue in the employ of the Company or any
Affiliated Company.
21. CLAIMS FOR BENEFITS
A Participant or beneficiary may claim any benefits to which he or she is
entitled under this Plan by a written notice to the Committee. If a claim is
denied, it must be denied within a reasonable period of time, and be contained
in a written notice stating the following:
(a) The specific reason for the denial.
(b) Specific reference to the Plan provision on which the denial is
based.
(c) Description of additional information necessary for the claimant
to present the claim, if any, and an explanation of why such material is
necessary.
(d) An explanation of the Plan's claims review procedure.
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<PAGE> 9
The claimant will have sixty (60) days to request a review of the denial
by the Committee, which will provide a full and fair review. The request for
review must be in writing delivered to the Committee. The claimant may review
pertinent documents, and he or she may submit issues and comments in writing.
The decision by the Committee with respect to the review must be given within
sixty (60) days after receipt of the request, unless special circumstances
require an extension (such as for a hearing). In no event shall the decision be
delayed beyond one hundred and twenty (120) days after receipt of the request
for review. The decision shall be written in a manner calculated to be
understood by the claimant, and it shall include specific reasons and refer to
specific Plan provisions as to its effect.
22. GOVERNING LAW
The validity, construction and effect of the Plan and any actions taken or
relating to the Plan shall be determined in accordance with the laws of the
State of Tennessee and applicable federal law.
23. SUCCESSORS AND ASSIGNS
The Plan shall be binding on all successors and assigns of a Participant,
including, without limitation, the estate of such Participant and the executor,
administrator or trustee of such estate, or any receiver or trustee in
bankruptcy or representative of the Participant's creditors.
24. RIGHT AS A SHAREHOLDER
A Participant shall have no voting or other rights as a shareholder with
regard to Stock Units in his or her Stock Unit Account until such time as
Shares are distributed to the Participant.
25. FORMS
Elections, beneficiary designations, and claims permitted under the Plan
shall be submitted on forms approved and provided by the Committee.
26. SECURITIES LAW COMPLIANCE
Notwithstanding anything else herein to the contrary, the Company shall
not be obligated to make any distribution of Shares hereunder unless such
distribution shall comply with applicable securities laws.
CENTRAL PARKING CORPORATION
By: Monroe Carell, Jr.
----------------------------
Title: Chairman
-------------------------
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<PAGE> 1
EXHIBIT 13
CENTRAL PARKING CORPORATION 1998
ANNUAL REPORT TO SHAREHOLDERS
SELECTED CONSOLIDATED FINANCIAL DATA
Set forth below are selected consolidated financial data of the Company for each
of the periods indicated. The statement of earnings, per share, and balance
sheet data were derived from the audited consolidated financial statements of
the Company. All of the information set forth below should be read in
conjunction with the Company's Consolidated Financial Statements and the Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
Amounts in thousands, except per share data
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------ 1998 vs 1997 Five Year
1994 1995 1996 1997 1998 Increase (Decrease) Growth Rate
- ----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF EARNINGS DATA: $ % %
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Parking $ 82,890 $ 94,383 $ 109,272 $ 180,886 $ 328,285 $ 147,399 81.5% 41.1%
Management contract 28,438 30,630 32,534 39,568 54,890 15,322 38.7 17.9
Total revenues 111,328 125,013 141,806 220,454 383,175 162,721 73.8 36.2
Total costs and expenses 100,120 111,411 124,874 192,602 336,294 143,692 74.6 35.4
Operating earnings 11,208 13,602 16,932 27,852 46,881 19,029 68.3 43.0
Percentage of total revenues 10.1% 10.9% 11.9% 12.6% 12.2% -- -- --
Interest income (expense), net 691 1,462 2,303 (2,740) (4,654) (1,914) (69.9) --
Dividends on company-obligated mandatorily
redeemable convertible securities of a
subsidiary trust -- -- -- -- 3,160 3,160 N/A --
Net gains on sales of
property and equipment 2,214 81 1,192 3,137 71 (3,066) (97.7) --
Equity in partnership and
joint venture earnings 30 362 641 4,163 5,086 923 22.2 --
Earnings before income tax 14,143 15,507 21,068 32,412 44,224 11,812 36.4 33.0
Income taxes 5,179 5,563 7,232 12,207 17,614 5,407 44.3 35.7
Income tax percentage of
earnings before income tax 36.6% 35.9% 34.3% 37.7% 39.8% -- -- --
Net earnings 8,964 9,944 13,836 20,205 26,610 6,405 31.7 31.3
Percentage of total revenues 8.1% 8.0% 9.8% 9.2% 6.9% -- -- --
PER SHARE DATA:
Net earnings - basic $ 0.39 $ 0.43 $ 0.54 $ 0.78 $ 0.96 $ 0.18 23.1
Net earnings - diluted $ 0.39 $ 0.43 $ 0.53 $ 0.77 $ 0.94 $ 0.17 22.1
Basic weighted average common shares 23,058 23,058 25,762 25,991 27,857 1,866 7.2
Diluted weighted average common shares 23,058 23,058 26,042 26,330 28,326 1,996 7.6
Net book value per common share
outstanding at September 30 $ 1.38 $ 1.79 $ 2.93 $ 3.68 $ 8.65 $ 4.97 135.1
<CAPTION>
September 30,
------------- 1998 vs 1997
1994 1995 1996 1997 1998 Increase (Decrease)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents $ 12,026 $ 10,218 $ 28,605 $ 9,979 $ 19,840 $ 9,861 98.8%
Working capital 1,987 2,676 19,707 (9,231) (24,124) (14,893) (161.3)
Goodwill -- -- -- 31,863 254,997 $ 223,134 700.3
Total assets 60,029 70,440 107,212 234,014 544,873 310,859 132.8
Long-term debt and capital lease
obligations, less current portion -- -- -- 73,252 60,704 (12,548) (17.1)
Company-obligated mandatorily redeemable
convertible securities of subsidiary
holding solely parent debentures -- -- -- -- 110,000 110,000 N/A
Shareholders' equity 31,861 41,360 76,793 96,851 255,704 158,853 164.0
<CAPTION>
Year Ended September 30,
------------------------ 1998 vs 1997
1994 1995 1996 1997 1998 Increase (Decrease)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Depreciation and amortization $ 2,594 $ 2,882 $ 3,420 $ 6,499 $ 15,283 $ 8,784 135.2%
Employees (2) (3) 5,400 6,000 6,600 9,300 12,000 2,700 29.0%
Number of shareholders (2) (3) N/A 3,000 5,500 7,000 8,100 1,100 15.7%
Market capitalization in millions (1) (2) (3) N/A N/A $ 568 $ 802 $ 1,490 $ 644 80.3%
Price earnings ratio (1) (2) (3) N/A N/A 40.9 39.6 53.6 N/A N/A
Return on equity (3) (4) 32.5% 27.2% 23.4% 23.3% 15.1% N/A N/A
</TABLE>
(1) Reflects the recapitalization, initial and subsequent public offering of
shares, and subsequent stock splits of the Company described in Note 10 to
the Company's 1998 Consolidated Financial Statements.
(2) Reflects information as of September 30 of the respective fiscal year,
rounded to the nearest thousand, except ratio data.
(3) Unaudited information.
(4) Reflects return on equity calculated using net earnings divided by average
shareholders' equity.
E-10
<PAGE> 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion of the results of operations should be read in
conjunction with the Consolidated Financial Statements and Notes thereto.
OVERVIEW
The Company operates parking facilities under three types of arrangements:
leases, fee ownership, and management contracts.
Parking revenues consist of Central Parking Corporation and Subsidiaries
("Central Parking" or the "Company") revenues from leased and owned facilities.
Cost of parking relates to both leased and owned facilities and includes rent,
payroll and related benefits, depreciation (if applicable), maintenance,
insurance, and general operating expenses. Parking revenues in fiscal 1998
increased to $328.3 million from $180.9 million in fiscal 1997, an increase of
$147.4 million, or 81.5%. Of the $147.4 million increase, $102.6 million, or
69.6% of the increase, resulted from the acquisition of Diplomat Parking
Corporation ("Diplomat"), Kinney System Holding Corp ("Kinney"), Turner Parking
("Turner"), and Sterling Parking ("Sterling") leased and owned locations. The
remaining increase of $44.8 million, or 30.4%, is from a combination of the
addition of 46 net locations, increased rates and higher utilization of parking
spaces at existing facilities.
Parking revenues from owned properties amounted to $6.2 million, $13.6
million, and $17.7 million for the years ended September 30, 1996, 1997 and
1998, respectively. Owned properties parking revenues, as a percentage of
parking revenues, accounted for 5.7% in 1996, 7.5% in 1997, and 5.4% in 1998.
Ownership of parking facilities, either independently or through joint ventures,
typically requires a larger capital investment than managed or leased facilities
but provides maximum control over the operation of the parking facility and the
greatest profit potential of the three types of operating arrangements. As the
owner, all changes in owned facility revenue and expense flow directly to the
Company. Additionally, the Company has the potential to realize benefits of
appreciation in the value of the underlying real estate if the property is sold.
Central Parking assumes complete responsibility for all aspects of the property,
including all structural, mechanical, or electrical maintenance or repairs and
property taxes.
Parking revenues from leased facilities amounted to $103.1 million, $167.3
million, and $310.6 million for the years ended September 30, 1996, 1997, and
1998, respectively. Leased properties parking revenues, as a percentage of
parking revenues, accounted for 94.3% in 1996, 92.5% in 1997, and 94.6% in 1998.
Leases generally provide for a contractually established payment to the facility
owner which is either a fixed annual amount, a percentage of gross revenues, or
a combination thereof. As a result, Central Parking's revenues and profits in
its lease arrangements are dependent upon the performance of the facility.
Leased facilities require a longer commitment and a larger capital investment by
Central Parking than managed facilities but generally provide a more stable
source of revenue and a greater opportunity for long-term revenue growth. Under
its leases, the Company is typically responsible for all facets of the parking
operations, except for structural, mechanical, or electrical maintenance or
repairs, or property taxes. Lease arrangements are typically for terms of three
to ten years, with renewal options.
Management contract revenues include revenues from managed facilities. In
fiscal year 1998, management contract revenues increased 38.7% to $54.9 million,
primarily as a result of the addition of 330 managed facilities acquired in the
transactions with Diplomat, Kinney, Turner, and Sterling, and from the net
addition of 95 additional management locations. Management contract revenues
amounted to $32.5 million, $39.6 million, and $54.9 million for the years ended
September 30, 1996, 1997, and 1998, respectively. Management contract revenues
consist of management fees (both fixed and percentage of revenues) and fees for
ancillary services such as insurance, accounting, equipment leasing, and
consulting. The cost of management contracts includes insurance premiums and
claims and other indirect overhead. The Company's responsibilities under a
management contract as a facility manager include hiring, training, and staffing
parking personnel, and providing collections, accounting, record keeping,
insurance, and facility marketing services. In general, Central Parking is not
responsible under its management contracts for structural, mechanical, or
electrical maintenance or repairs, or for providing security or guard services
or for paying property taxes. The typical management contract is for a term of
one to three years and generally is renewable for successive one-year terms, but
is cancelable by the property owner on short notice. The Company's renewal rates
for each of the past five fiscal years were in excess of 91%.
The Company's clients have the option of obtaining insurance on their own
or having Central Parking provide insurance as part of the services provided
under the management contract. Because of its size and claims experience, the
Company can purchase such insurance at significant discounts to comparable
market rates and, management believes, at lower rates than the Company's clients
can generally obtain on their own. Accordingly, Central Parking generates
profits on the insurance provided under its management contracts.
E-11
<PAGE> 3
As of September 30, 1998, Central Parking operated 1,302 parking facilities
through management contracts, leased 1,071 parking facilities, and owned 67
parking facilities, either independently or in joint venture with third parties.
The following table sets forth certain information regarding the number of
managed, leased, or owned facilities as of the specified dates:
<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Managed................................................................ 770 877 1,302
Leased................................................................. 552 709 1,071
Owned.................................................................. 37 58 67
----- ----- -----
Total.......................................................... 1,359 1,644 2,440
===== ===== =====
</TABLE>
A summary of the facilities operated by Central Parking as of September 30, 1998
is as follows:
<TABLE>
<CAPTION>
Percent
Managed Leased Owned Total of Total Spaces
------- ------ ----- ----- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Total U.S. and Puerto
Rico........................... 1,185 958 67 2,210 90.6% 919,111
---------------------------------------------------------------------------
United Kingdom................... 79 80 -- 159 6.5% 55,527
Mexico (1)....................... 34 27 -- 61 2.5% 31,796
Germany (1)...................... -- 4 -- 4 0.1% 1,336
Canada........................... 3 1 -- 4 0.1% 8,850
Spain (1)........................ -- 1 -- 1 0.1% 542
Malaysia......................... 1 -- -- 1 0.1% 5,400
---------------------------------------------------------------------------
Total foreign 117 113 -- 230 9.4% 103,451
---------------------------------------------------------------------------
Total facilities 1,302 1,071 67 2,440 100.0% 1,022,562
===========================================================================
</TABLE>
(1) Operated through 50% owned joint ventures
<TABLE>
<CAPTION>
Fiscal Years Ended September 30,
Historical Financial Summary ($ Millions) 1995 1996 1997 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Parking revenues 94.4 109.3 180.9 328.3
% Growth over prior year 13.9% 15.8% 65.5% 81.5%
Management contract revenues 30.6 32.5 39.6 54.9
% Growth over prior year 7.7% 6.2% 21.6% 38.7%
Total revenues 125.0 141.8 220.5 383.2
% Growth over prior year 12.3% 13.4% 55.5% 73.8%
Cost of parking and management contracts 95.7 107.5 169.2 295.3
% of total revenues 76.6% 75.8% 76.7% 77.1%
General and administrative expenses 15.7 17.4 22.5 33.9
% of total revenues 12.6% 12.3% 10.2% 8.8%
Goodwill and non-compete amortization -- -- 0.9 7.1
% of total revenues -- -- 0.4% 1.9%
Operating earnings 13.6 16.9 27.9 46.9
% of total revenues 10.9% 11.9% 12.6% 12.2%
Depreciation & amortization 2.9 3.4 6.5 15.3
Interest income (expense), net 1.5 2.3 (2.7) (4.7)
Dividends on company-obligated mandatorily redeemable securities
of subsidiary trust holding solely parent debentures -- -- -- (3.2)
Equity in partnerships &
joint venture earnings 0.4 0.6 4.2 5.1
Net gains on sales of
property & equipment -- 1.2 3.1 0.1
Net earnings 9.9 13.8 20.2 26.6
% of total revenues 8.0% 9.8% 9.2% 6.9%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
E-12
<PAGE> 4
The table below sets forth certain information regarding the Company's managed,
leased and owned facilities in the periods indicated.
<TABLE>
<CAPTION>
Year Ended September 30,
1996 1997 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Managed Facilities (1):
Beginning of year 715 770 877
- ----------------------------------------------------------------------------------------------------------------------------------
Acquired during year -- 36 330
Added during year 114 164 196
Deleted during year (2)(3)(4) (59) (93) (101)
- ----------------------------------------------------------------------------------------------------------------------------------
End of year 770 877 1,302
- ----------------------------------------------------------------------------------------------------------------------------------
Renewal Rate 92.4% 91.1% 91.8%
Leased Facilities (1):
Beginning of year 485 552 709
- ----------------------------------------------------------------------------------------------------------------------------------
Acquired during year -- 82 317
Added during year (3) 94 99 99
Deleted during year (4) (27) (24) (54)
- ----------------------------------------------------------------------------------------------------------------------------------
End of year 552 709 1,071
- ----------------------------------------------------------------------------------------------------------------------------------
Owned Facilities (1)(5):
Beginning of year 31 37 58
- ----------------------------------------------------------------------------------------------------------------------------------
Acquired during year (2) -- 20 8
Purchased during year 6 5 1
Sold during year -- (4) --
- ----------------------------------------------------------------------------------------------------------------------------------
End of year 37 58 67
- ----------------------------------------------------------------------------------------------------------------------------------
Total facilities (end of year) 1,359 1,644 2,440
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage net growth including acquisitions in number of facilities:
Managed 7.7% 13.9% 48.5%
Leased 13.8% 28.4% 51.1%
Owned 19.4% 56.8% 15.5%
----- ----- -----
Total facilities 10.4% 21.0% 48.4%
----- ----- -----
</TABLE>
(1) Includes 38 managed, 39 leased and 15 owned properties operated under joint
venture agreements at September 30, 1998.
(2) Fiscal 1996 and 1997 include four facilities that were previously managed
and subsequently purchased.
(3) Includes Central Parking's lease in fiscal 1996, 1997 and 1998 of one
facility, 11 facilities, and two facilities, respectively, that were
previously managed.
(4) Excluded from the renewal rate calculation in the above table at September
30, 1997 are six managed on-street locations and two leased on-street
locations which are reflected as current year deletions.
(5) Includes the Company's corporate headquarters in Nashville, Tennessee.
Net gains derived from sales of property and equipment were $1.2 million, $3.1
million, and $71 thousand for fiscal 1996, 1997, and 1998, respectively.
E-13
<PAGE> 5
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, information derived
from the Company's consolidated financial statements expressed as a percentage
of total revenues.
<TABLE>
<CAPTION>
Year Ended September 30,
1996 1997 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Parking revenues 77.1% 82.1% 85.7%
Management contract revenues 22.9 17.9 14.3
- ----------------------------------------------------------------------------------------------------------------------------------
Total revenues 100.0 100.0 100.0
Cost of parking and management contracts 75.8 76.7 77.1
General and administrative expenses 12.3 10.6 10.7
- ----------------------------------------------------------------------------------------------------------------------------------
Operating earnings 11.9 12.6 12.2
Interest income (expense), net 1.6 (1.2) (1.2)
Dividends on company-obligated mandatorily redeemable securities
of subsidiary trust holding solely parent debentures -- -- (0.8)
Net gains on sales of property
and equipment 0.8 1.4 0.0
Equity in partnership and joint venture earnings 0.5 1.9 1.3
- ----------------------------------------------------------------------------------------------------------------------------------
Earnings before income taxes 14.8 14.7 11.5
Income taxes 5.0 5.5 4.6
- ----------------------------------------------------------------------------------------------------------------------------------
Net earnings 9.8% 9.2% 6.9%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
YEAR ENDED SEPTEMBER 30, 1998 COMPARED TO YEAR ENDED SEPTEMBER 30, 1997
Parking revenues include revenue from leased and owned facilities. Parking
revenues in fiscal 1998 increased to $328.3 million from $180.9 million in
fiscal 1997, an increase of $147.4 million, or 81.5%. Of the $147.4 million
increase, $102.6 million, or 69.6% of the increase, resulted from the following
acquisition of leased and owned locations: Diplomat, $19.6 million; Kinney,
$81.7 million; Turner, $1.1 million; and Sterling, $0.2 million. With respect to
the Kinney acquisition, Central Parking achieved lower than expected increases
in revenues, particularly in the fourth quarter of fiscal 1998. Kinney was
acquired on February 12, 1998 and its partial year parking revenues of $81.7
million represent 24.9% of total fiscal year parking revenues. The Company's
operating results may be significantly impacted by the results derived from the
Kinney acquired locations. The remaining increase of $44.8 million, or 30.4%, is
from a combination of the addition of 46 net locations, increased rates and
higher utilization of parking spaces at existing facilities.
Management contract revenues in fiscal 1998 increased to $54.9 million from
$39.6 million in fiscal 1997, an increase of $15.3 million, or 38.7%. Of the
$15.3 million increase, $7.6 million, or 49.9%, resulted from the acquisitions
of Diplomat, $2.1 million; Kinney, $4.9 million; Turner, $0.5 million; and
Sterling, $0.1 million. The remaining 50.1% increase resulted primarily from the
addition of 95 net new locations.
Revenues from foreign operations increased to $23.0 million in 1998 from $18.1
million in 1997. The increase of 26.8% in revenues from foreign operations
resulted primarily from the net addition of 51 locations in the United Kingdom
and increased revenues on existing locations.
Cost of parking in fiscal 1998 increased to $280.3 million from $157.4 million
in fiscal 1997, an increase of $122.9 million, or 78.1%. Rent expense increased
$74.7 million, principally as a result of new locations from acquisitions and
additional percentage rent on existing locations. Of the remaining $48.2 million
increase in cost of parking, payroll expense accounted for $26.6 million. The
payroll expense increase was attributable to a combination of acquisitions, new
locations and increases in existing payroll. Cost of parking, as a percentage of
parking revenues, decreased to 85.4% in fiscal 1998 from 87.0% in fiscal 1997.
This decrease was attributable predominantly to the spreading of a number of
fixed costs, primarily rent and property costs, over a larger revenue base.
Cost of management contracts in fiscal 1998 increased to $15.0 million from
$11.8 million in the comparable period in 1997, an increase of $3.2 million, or
27.2%. This increase was attributable to an increase in the number of managed
locations and higher costs incurred at existing locations associated with
increased revenues. Cost of management contracts, as a percentage of management
contract revenues, decreased to 27.3% in fiscal 1998 from 29.8% in fiscal 1997.
The decrease in the percentage of management contract cost as a percentage of
management contract revenue is a result of increased management fees from a
combination of new and existing locations. The renewal rates for management
contracts of 91.8% in 1998, and 91.1% in 1997, are consistent with the Company's
5 year average renewal rates.
General and administrative expenses, excluding goodwill and non-compete
amortization, increased to $33.9 million from $22.5 million in fiscal 1997, an
increase of $11.4 million, or 50.5%. This increase was primarily a result of an
increase in payroll expense of $7.7 million associated with the additional
general and administrative expenses of acquired operations, as well as opening
of additional managed, leased, and owned locations and additional incentive
compensation payments as a result of increased profits. General and
administrative expenses decreased as a percentage of total revenue from 10.2% in
1997 to 8.8% in 1998. This is a result of spreading of general and
administrative expenses over a broader revenue base.
Amortization expense of goodwill and non-compete agreements increased
significantly from $920,000 in fiscal 1997 to $7.1 million in fiscal 1998, an
increase of $6.2 million. This increase was a result of $232.8 million in
goodwill and non-compete assets recorded in connection with the acquisitions of
Diplomat, Kinney, the remaining 50% of CPS-Louisiana, Turner, and Sterling.
E-14
<PAGE> 6
Goodwill and non-compete agreements are amortized over periods ranging from 5
to 30 years.
Interest income in fiscal 1998 increased to $2.7 million from $1.8 million in
fiscal 1997. This increase of $877 thousand was primarily attributable to
increased investment in notes receivable. Interest expense totaled $7.4 million
in 1998 compared to $4.6 in 1997. The increased interest expense was a result of
borrowing to fund additional asset purchases and acquisitions during the year.
With respect to the Company's two credit facilities which represent
substantially all of the Company's indebtedness, the weighted average balance
outstanding for fiscal 1998 was approximately $83.0 million at a weighted
average interest rate of 6.75%.
Dividends on company-obligated mandatorily redeemable convertible securities of
a subsidiary holding solely parent debentures ("Preferred Securities") amounted
to $3.2 million for fiscal year 1998. Such Preferred Securities in the amount of
$110 million were issued on March 18, 1998 and bear a dividend rate of 5.25%
(See Note 9 to the Company's 1998 consolidated financial statements).
Equity in partnership and joint venture earnings for fiscal 1998 increased to
$5.1 million from $4.2 million in fiscal 1997. The increase of $923,000 resulted
primarily from increases in domestic partnerships and joint ventures of
$692,000, due largely to partnership interests acquired in connection with
Kinney, and an increase in equity in joint venture earnings of the German joint
venture of $296,000 over balances in the prior year.
The Company's effective income tax rate was 39.8% for fiscal 1998 compared to
37.7% for fiscal 1997. The rate increase was attributable to the increase in the
Company's federal income tax rate, the comparative decrease in the amount of tax
exempt income, and the addition of nondeductible goodwill amortization (see Note
12 to the Company's Consolidated Financial Statements).
YEAR ENDED SEPTEMBER 30, 1997 COMPARED TO YEAR ENDED SEPTEMBER 30, 1996
Parking revenues in fiscal 1997 increased to $180.9 million from $109.3 million
in fiscal 1996, an increase of $71.6 million, or 65.5%. Of the $71.6 million
increase, $41.0 million, or 57.3% of the increase, resulted from the acquisition
of Square and Car Park leased and owned locations. The remaining increase of
$30.6 million, or 42.7%, is from a combination of the net addition of 76
locations, increased rates and higher utilization of parking spaces at existing
facilities.
Management contract revenues in fiscal 1997 increased to $39.6 million from
$32.5 million in fiscal 1996, an increase of $7.1 million, or 21.6%. Of the $7.1
million increase, $2.8 million or 34.6% of the increase resulted from the Square
and Car Park acquisitions. The remaining increase of $4.3 million, or 60.6%, is
attributable to the net addition of 71 locations and increased management fees
on existing locations.
Revenues from foreign operations increased to $18.1 million in 1997 from $13.2
million in 1996. The increase of 37.4% in revenues from foreign operations
resulted primarily from the net addition of 20 locations in the United Kingdom
and increased revenues on existing locations.
Cost of parking in fiscal 1997 increased to $157.4 million from $97.7 million in
fiscal 1996, an increase of $59.7 million, or 61.1%. Rent expense increased
$30.9 million, principally as a result of new locations from acquisitions and
additional percentage rent on existing locations. Of the remaining $28.8 million
increase in cost of parking, payroll expense accounted for $12.5 million. The
payroll expense increase was attributable to a combination of acquisitions, new
locations and increases on existing payroll. Cost of parking, as a percentage of
parking revenues, decreased to 87.0% in fiscal 1997 from 89.4% in fiscal 1996.
This decrease was attributable predominantly to the spreading of a number of
fixed costs, primarily rent and property costs, over a larger revenue base.
Cost of management contracts in fiscal 1997 increased to $11.8 million from $9.8
million in the comparable period in 1996, an increase of $2.0 million, or 20.7%.
This increase was attributable to an increase in the number of managed locations
and higher costs incurred at existing locations associated with increased
revenues. Cost of management contracts, as a percentage of management contract
revenues, decreased to 29.8% in fiscal 1997 from 30.0% in fiscal 1996. The
decrease in the percentage of management contract cost as a percentage of
management contract revenue is a result of increased management fees from a
combination of new and existing locations. The decrease in renewal rates for
management contracts to 91.1% in 1997, from 92.4% in 1996, is primarily
attributable to the loss of one large contract which included 9 management
locations. This trend is not expected to continue.
General and administrative expenses excluding goodwill amortization in fiscal
1997 increased to $22.5 million from $17.4 million in fiscal 1996, an increase
of $5.1 million, or 21.2%. This increase was primarily a result of an increase
in payroll expense of $4.2 million, associated with the additional general and
administrative expenses of acquired operations, as well as the opening of
additional managed, leased, and owned locations and additional incentive
compensation payments as a result of increased profits. General and
administrative expenses excluding goodwill decreased as a percentage of total
revenues from 12.3% in 1996 to 10.2% in 1997. This is a result of spreading
general and administrative expenses over a broader revenue base.
Amortization of goodwill and non-compete agreements in fiscal 1997 amounted to
$920,000. The Company had no expenses from amortization of goodwill in fiscal
1996. Amortization expense of goodwill was a result of $32.7 million in goodwill
and non-compete assets, recorded in connection with the acquisitions of Square
and Car Park.
Interest income in fiscal 1997 decreased to $1.8 million from $2.3 million in
fiscal 1996. This decrease of $461,000 was primarily attributable to decreased
cash and cash equivalents during the year. Interest expense totaled $4.6 million
in 1997 compared to zero in 1996. The increased interest expense was a result of
borrowing to fund additional asset purchases and acquisitions during the
E-15
<PAGE> 7
year. The weighted average balance outstanding for the period during which the
Company had debt outstanding, beginning December 31, 1996, was approximately
$88.7 million at a weighted average interest rate of 7.1%.
Equity in partnership and joint venture earnings for fiscal 1997 increased to
$4.2 million from $641,000 in fiscal 1996. The increase of $3.5 million resulted
primarily from Civic Parking, LLC ($2.9 million) and increases in joint venture
earnings of the Mexican joint venture ($514,000 in 1997 versus $152,000 in
1996).
The Company's effective income tax rate was 37.7% for fiscal 1997 compared to
34.3% for fiscal 1996. The rate increase was attributable to the increase in the
Company's federal income tax rate, the comparative decrease in the amount of tax
exempt income, the addition of nondeductible goodwill amortization and the
increase in the effective state income tax (see Note 12 to the Company's
Consolidated Financial Statements).
QUARTERLY RESULTS
The Company experiences fluctuations in its quarterly net earnings as a result,
in part, of recognition of intermittent gains on sales of properties.
Additionally, the Company has and may continue to experience fluctuations in
revenues and related expenses due to acquisitions, pre-opening costs, travel and
transportation patterns affected by weather and calendar related events, and
local and national economic conditions. The Company's increased concentration of
parking facilities in the northeastern and mid-atlantic part of the United
States, primarily a result of the Kinney, Square and Diplomat acquisitions, has
increased the risk of weather related fluctuations such as severe winter snow
storms. Additionally, the Company services the parking for a number of sports
stadiums and arenas and can be impacted by strikes and the success of various
sports teams in playoff and championship series. The following table sets forth
certain quarterly statement of earnings data for each of the Company's last
eight fiscal quarters and the percentage of net revenues represented by the line
items presented (except in the case of per share amounts). The quarterly
statements were impacted by the acquisition of Square (January 1997), Car Park
(May 1997), Diplomat (October 1997), Kinney (February 1998), CPS - Louisiana
(March 1998), Turner (April 1998), Sterling (July 1998) and net gains on sales
of property and equipment of $3.1 million in the quarter ended September 30,
1997. The quarterly statement of earnings data set forth below was derived from
unaudited financial statements of the Company and includes all adjustments,
consisting only of normal recurring adjustments, which the Company considers
necessary for a fair presentation thereof. The per share numbers have been
restated to reflect the three for two stock splits (see Note 10(d) to the
Company's Consolidated Financial Statements).
Amounts in thousands, except per share data
<TABLE>
<CAPTION>
1997 Fiscal Year
December 31 March 31 June 30 September 30
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $ 40,997 100.0% $ 55,297 100.0% $ 59,399 100.0% $ 64,761 100.0%
Operating earnings 5,129 12.5 7,109 12.9 7,706 13.0 7,908 12.2
Net gains on sales of
property & equipment 3 0.0 2 0.0 3 0.0 3,129 4.8
Earnings before
income taxes 6,000 14.6 6,993 12.6 8,242 13.9 11,177 17.3
Net earnings $ 3,899 9.5% $ 4,416 8.0% $ 5,275 8.9% $ 6,615 10.2%
Earnings per common share - basic $ 0.15 $ 0.17 $ 0.21 $ 0.25
Earnings per common share - diluted $ 0.15 $ 0.17 $ 0.20 $ 0.25
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1998 Fiscal Year
December 31 March 31 June 30 September 30
- ----------------------------------------------------------------------------------------------------------------------------------
Total revenues $ 70,269 100.0% $ 90,088 100.0% $ 110,770 100.0% $ 112,048 100.0%
Operating earnings 8,804 12.5 12,034 13.4 13,855 12.5 12,188 10.9
Net gains on sales of
property & equipment 3 0.0 15 0.0 (17) 0.0 70 0.1
Earnings before
income taxes 9,099 12.9 10,316 11.5 12,923 11.7 11,886 10.6
Net earnings $ 5,642 8.0% $ 6,328 7.0% $ 7,948 7.2% $ 6,692 6.0%
Earnings per common share - basic $ 0.22 $ 0.24 $ 0.27 $ 0.23
Earnings per common share - diluted $ 0.21 $ 0.23 $ 0.27 $ 0.23
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for fiscal 1998 was $50.1
million, an increase of $27.7 million from net cash of $22.4 million provided by
operating activities during the same period in fiscal 1997. The primary factors
which contributed to this change were increased net earnings, increased
depreciation and amortization, and increases in accounts payable and accrued
expenses during fiscal 1998.
Net cash used in investing activities was $239.2 million for fiscal 1998,
an increase of $147.1 from net cash of $92.1 million used in investing
activities during fiscal 1997. The acquisitions of Diplomat, Kinney, Turner, and
Sterling utilized cash of $213.6 million, net of cash acquired and property and
equipment purchases represented $25.6 million.
Net cash provided by financing activities for fiscal 1998 was $198.7
million, and increase of $147.7 million over the $51.0 million provided during
fiscal 1997. Primary factors which contributed to this increase are net proceeds
from issuance of the Preferred Securities of $106.5 million, net proceeds from
issuance of notes payable of $99.7
E-16
<PAGE> 8
million, proceeds from issuance of common stock and exercise of options of $91.4
million, less repayment of notes payable of $102.9 million.
Depending on the timing and magnitude of the Company's future investments
(either in the form of leased or purchased properties, joint ventures, or
acquisitions), the working capital necessary to satisfy current obligations is
anticipated to be generated from operations and Central Parking's credit
facility over the next twelve months. In the ordinary course of business,
Central Parking is required to maintain and, in some cases, make capital
improvements to the parking facilities it operates; however, as of September 30,
1998, Central Parking had no material outstanding commitments for capital
expenditures. If Central Parking identifies investment opportunities requiring
cash in excess of Central Parking's cash flows and the existing credit facility,
Central Parking may seek additional sources of capital, including the sale or
issuance of Central Parking common stock or convertible securities, or amending
the credit facility to obtain additional indebtedness. Central Parking's ability
to raise additional capital by issuing additional shares of common stock is
expected to be limited over the next several years as a result of the
registration rights agreement pursuant to the pending merger with Allright
Holdings, Inc. ("Allright"), when consummated. While Central Parking does not
expect this limitation to affect its working capital needs, it could have an
impact on Central Parking's ability to complete significant acquisitions. The
recent decrease in the market value of Central Parking common stock also could
have an impact on Central Parking's ability to complete significant acquisitions
or raise additional capital. Central Parking believes that it has the ability to
increase its credit facility if needed for significant acquisitions, although no
assurances can be given that such increases would be available at the time
needed to complete any such acquisition.
On February 11, 1998, Central Parking established a credit facility
providing for an aggregate availability of up to $300 million consisting of a
five-year $200 million revolving credit facility, including a sublimit of $25
million for standby letters of credit, and a $100 million five-year term loan
with scheduled repayments of $25 million per year, beginning in year two (the
"Credit Facility"). On March 18, 1998, the Company completed offerings of equity
and convertible trust issued preferred securities, from which the Company
obtained $195.6 million in net proceeds. The Company repaid and terminated the
$100 million term loan with proceeds from these offerings. The remaining $95.6
million in proceeds was applied to reduce the outstanding balance under the $200
million revolving credit facility. The Credit Facility bore interest until June
30, 1998 at a rate of LIBOR plus 1.25% On June 30, 1998, the interest rate on
the Credit Facility and the commitment fee on the unused portion reverted to a
grid pricing based on the achievement of various financial ratios. The Credit
Facility contains certain covenants including those that require Central Parking
to maintain certain financial ratios, restrict further indebtedness and limit
the amount of dividends payable. Central Parking used the Credit Facility to
replace the Company's prior revolving credit facility and to finance the Kinney
acquisition. At September 30, 1998, the amount outstanding under this Credit
Facility was $48.2 million and the interest rate was 6.5.% (LIBOR plus 75 basis
points). At September 30, 1998, Central Parking had available $147.1 million
under the Credit Facility.
In March 1998, Civic Parking, LLC ("Civic") obtained financing with
a financial institution for $60 million. Civic distributed the loan proceeds to
its shareholders. Central Parking owns a 50% interest in Civic, a limited
liability company, and as a result, received net proceeds of $30.3 million from
this transaction which reduced Central Parking's carrying value of its
investment in partnerships and joint ventures. The proceeds from the refinancing
were used by Central Parking to pay down the Credit Facility.
On September 21, 1998, the Company entered into a definitive agreement
pursuant to which the Company has agreed to merge with Allright. Allright (dba
Allright Parking) is headquartered in Houston and is one of the largest parking
services companies in the United States with 2,323 locations at June 30, 1998
and revenues of $217.4 million for the fiscal year ended June 30, 1998. The
transaction, which is expected to be accounted for as a pooling-of-interests
(See Note 18 to the Company's 1998 Consolidated Financial Statements). The
merger remains subject to certain closing conditions, including the expiration
of the waiting period under the Hart-Scott-Rodino Act. The transaction is
subject to approval by the shareholders of both Central Parking and Allright at
separate meetings to be scheduled. Under terms of the agreement, Central Parking
expects to issue approximately 7.6 million shares of its common stock to the
shareholders of Allright.
On September 2, 1998, Central Parking received a "best efforts" commitment,
which expires March 31, 1999, to establish a new credit facility providing for
an aggregate of up to $400 million (the "New Credit Commitment") consisting of a
five-year $200 million revolving credit facility including a sublimit of $25
million for standby letters of credit, and a $200 million five-year term loan
with scheduled repayment consisting of $50 million per year, beginning in year
two. The New Credit Commitment will bear interest at either prime rate plus 0.5%
or LIBOR plus a margin of 1.12% and after three months revert to a grid pricing
at a margin of 0.25% to 1.25% based upon Central Parking achieving a number of
financial ratios. The New Credit Commitment will contain certain covenants
including those that require Central Parking to maintain certain financial
ratios, restrict further indebtedness and limit the amount of dividends paid.
Central Parking intends to use the New Credit Commitment to replace Central
Parking's Credit Facility and to refinance the existing debt of Allright.
ACQUISITIONS
The Company's acquisition strategy focuses primarily on acquisitions that
will enable Central Parking to become a more efficient and cost-effective
provider in selected markets. Central Parking believes it can recognize
economies of scale by making acquisitions in markets where the Company already
has a presence, which allows Central Parking to reduce the overhead cost of
E-17
<PAGE> 9
the acquired company by consolidating its management with that of Central
Parking. In addition, Central Parking seeks acquisitions in attractive new
markets. Management believes acquisitions are an effective means of entering new
markets, thereby quickly obtaining both operating presence and management
personnel. Central Parking also believes it generally can improve acquired
operations by applying its operating strategies and professional management
techniques. The Company's acquisitions over the last two years, all of which
were accounted for under the purchase method of accounting, are as follows:
Civic Parking, LLC. On December 31, 1996, Central Parking purchased for
cash, Civic, 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 Central Parking 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 $67.2 million of borrowings under the
credit facility. Of the $91.0 million, $46.0 million was held for resale to a
joint venture partner and $45.0 million was recorded as an investment in joint
ventures. On April 16, 1997, Central Parking consummated the sale of 50% of
Civic to its joint venture partner, an affiliate of Equity Capital Holdings,
LLC, for $46.0 million in cash. Central Parking continues to operate these
garages pursuant to a lease and operating agreement with Civic.
Square Industries, Inc. On January 18, 1997, Central Parking completed a
cash tender to acquire all of the outstanding shares of Square for $54.8
million, including transaction fees and other related expenses. In addition,
Central Parking assumed $23.2 million of existing Square debt. The purchase
price was financed through borrowings under the credit facility. Through
September 30, 1997, the Company refinanced $18.9 million of the debt assumed
from Square through a draw on the credit facility. At the time of the
acquisition, Square operated 116 parking facilities containing over 61,000
parking spaces, located primarily in the Northeastern United States.
Car Park Corporation. On May 29, 1997, Central Parking acquired the assets
and related leases of Car Park for $3.5 million; consisting of 18 parking
facilities with approximately 2,600 parking spaces located in the San Francisco
metropolitan region. The purchase price was financed through $1.7 million of
borrowings under the Company's then-existing credit facility, and $1.8 million
payable to the seller, which has been repaid in full.
Diplomat Parking Corporation. On October 1, 1997, Central Parking acquired
the stock and certain assets of Diplomat for approximately $22.2 million in cash
and notes payable. The acquisition was financed through borrowings under the
credit facility. At the time of the acquisition, Diplomat operated 164 parking
facilities containing over 37,000 parking spaces, located primarily in
Washington, D.C. and Baltimore, Maryland.
Kinney System Holding Corp. On February 12, 1998, Central Parking acquired
Kinney, a privately held company headquartered in New York City. Kinney has been
in the parking business for over 60 years. In addition to enhancing the
Company's presence in New York City, Kinney increased Central Parking's presence
in a number of other major metropolitan areas such as Boston, Philadelphia and
Washington, D.C. and broadened its geographic coverage in the following nine
states: Connecticut, Florida, Kentucky, Maryland, Massachusetts, New Hampshire,
New York, Pennsylvania, and Virginia. Kinney provides both self-parking and
valet parking services, and provides parking related services such as facility
design and development and consulting services.
Kinney operated 403 parking facilities containing approximately 168,800
spaces, including approximately 76,700 in the New York City metropolitan area,
42,800 in Boston, 31,100 in Philadelphia and 10,300 in Washington, D.C. At the
time of the acquisition, Kinney's facility mix was comprised of 225 leased
sites, 170 managed sites and 8 owned sites. The parking facilities operated by
Kinney include Yankee Stadium, the Waldorf-Astoria, Port Authority Bus Terminal,
World Financial Center, and the General Motors Building in New York City, The
Ritz-Carlton-Boston, Government Center in Boston, Spectrum-Philadelphia, and the
Four Seasons Hotel of Washington, D.C.
Consideration for the Kinney acquisition was approximately $208.8 million,
including $171.8 million in cash, including transaction fees and other related
expenses, and $37.0 million (882,422 shares) in Central Parking common stock. In
connection with this transaction, Central Parking assumed $10.3 million in
capital leases, refinanced $24.2 million in existing Kinney debt and assumed
$4.6 million of Kinney debt. Central Parking financed the Kinney acquisition
through borrowings under the Credit Facility, and ultimately from the issuance
of Central Parking common stock and Central Parking obligations pursuant to the
Preferred Securities. In connection with the Kinney acquisition, the remaining
50% interest in Spectrum Parking Associates ("Spectrum") was acquired for $3.6
million.
Central Parking System of Louisiana, Inc. Central Parking has historically
owned 50% of CPS-Louisiana and on March 30, 1998, purchased the remaining 50%
from Property Service Corporation for $2.5 million in Central Parking common
stock (52,631 shares). CPS-Louisiana manages and operates leased parking
facilities, manages and operates parking facilities owned or leased by other
parties, and provides financial and other advisory services.
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<PAGE> 10
Turner Parking System, Inc. On April 1, 1998, Central Parking purchased
substantially all of the assets of Turner, a privately-held parking company
headquartered in Dallas, Texas, for $3.8 million, including $3.0 million in cash
and $800,000 (16,842 shares) in Central Parking common stock. Central Parking
financed the cash portion of the Turner purchase with borrowings under the
Credit Facility.
Sterling Parking, Inc. On July 1, 1998, Central Parking purchased
substantially all of the assets of Sterling, a privately-held parking company
headquartered in Atlanta, Georgia for $4.3 million, including $2.1 million in
cash, including transaction fees and other related costs, and $2.2 million in
Central Parking common stock (54,358 shares). Central Parking financed the cash
portion of the Sterling purchase with borrowings under the Credit Facility. At
the time of the acquisition, Sterling operated 31 parking facilities in Georgia,
Florida, Virginia, California, and Kentucky.
INTERNATIONAL FOREIGN CURRENCY EXPOSURE
The Company operates wholly owned subsidiaries in the United Kingdom,
Malaysia, Canada and the Netherlands. Total revenues from wholly owned foreign
operations amounted to 9.3%, 8.2%, and 6.0% for the years ended September 30,
1996, 1997, and 1998, respectively. Additionally, the Company operates through
joint ventures in Germany, Spain, and Mexico. The Company intends to invest in
foreign leased or owned facilities, usually through joint ventures, and may
become increasingly exposed to foreign currency fluctuations. The Company, in
limited circumstances, has denominated contracts in U.S. dollars to limit
currency exposure. Presently, the Company has limited exposure to foreign
currency risk and has no hedge programs. The Company anticipates implementing a
hedge program if such risk materially increases. For the year ended September
30, 1998, revenues from the United Kingdom operations represented 96.3% of total
revenues generated by foreign operations, excluding earnings from joint
ventures.
ECONOMIC AND MONETARY UNION
On January 1,1999, eleven of the fifteen members countries of the European
Union are scheduled to establish fixed conversion rates between their existing
sovereign currencies and a new currency called the "euro." These countries have
agreed to adopt the euro as their common legal currency on that date. The euro
will then trade on currency exchanges and be available for non-cash
transactions. Thereafter and until January 1, 2002, the euro is scheduled to
replace the sovereign legal currencies of these countries. While the vast
majority of Central Parking's operations within the European Union are currently
in the United Kingdom, a European Member which is not scheduled to participate
in the euro conversion, the Company has operations in countries which are
scheduled to adopt the euro. The Company is in the process of assessing the
impact of the euro conversion to its operations in the participating countries,
including the need to adopt new information technology, parking related
equipment and other systems to accommodate euro-denominated transactions, as
well as the impact to currency risk and contractual relationships. Based on
management's assessment of the impact of the euro conversion, Central Parking
does not believe that the euro conversion will have a material impact on its
operations or financial condition.
IMPACT OF INFLATION AND CHANGING PRICES
The primary sources of revenues to the Company are parking revenues from
owned and leased locations and management contract revenue (net of expense
reimbursements) on managed parking facilities. The Company believes that
inflation has had a limited impact on its overall operations for fiscal years
ended September 30, 1996, 1997 and 1998.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income". This pronouncement is effective for fiscal
years beginning after December 15, 1997 and requires the reporting of
comprehensive income within the financial statements. The Company will adopt
SFAS 130 in fiscal year 1999. Management does not anticipate that the
pronouncement will significantly impact the presentation of the Company's
consolidated financial statements.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information", which
supersedes SFAS No. 14. This pronouncement is effective for fiscal years
beginning after December 15, 1997. The Company will adopt SFAS 131 in fiscal
year 1999. Management does not anticipate that the pronouncement will
significantly impact the presentation of the Company's consolidated financial
statements.
In February 1998, the Financial Accounting Standards Board issued SFAS No.
132, "Employers' Disclosures about Pensions and Other Postretirement Benefits,"
which amends SFAS Nos. 87, 88, and 106. This pronouncement is effective for
fiscal years beginning after December 15, 1997. The Company will adopt SFAS 132
in fiscal year 1999. Management does not anticipate that the pronouncement will
significantly impact the presentation of Central Parking's consolidated
financial statements.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which supercedes
SFAS Nos. 80, 105, and 119. This Statement is effective for all fiscal quarters
of fiscal years beginning after June 15, 1999. Management is evaluating the
impact of SFAS 133 to Central Parking's consolidated financial statements.
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<PAGE> 11
IMPAIRMENT OF LONG-LIVED ASSETS
The Company adopted the provisions of SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", on
October 1, 1996. 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 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.
The Company periodically reviews the carrying value of long-lived intangible
assets such as goodwill, contract rights, and non-compete agreements to
determine if the net book values of such assets continue to be recoverable over
the remainder of the original estimated useful life. In performing this review
for recoverability, the Company estimates the future cash flows expected to
result from the use of the asset and its eventual disposition. If the sum of the
expected future cash flows (undiscounted and without interest charges) is less
than the carrying amount of the asset, an impairment loss is recognized. Since
the assets involved are held and used in the operations of the Company,
consideration is also given to actions or remediations the Company might take in
order to achieve the original estimates of cash flows. Adoption of this
Statement did not have a material impact on the Company's financial position,
results of operations, or liquidity.
YEAR 2000
Central Parking has considered the impact of Year 2000 issues on its
computer systems and applications and has developed remediation plans. These
plans are part of Central Parking's ongoing business strategies to incorporate
advanced technologies in its information systems, and were contemplated in
advance of Year 2000 issues. The expenditures for system upgrades will be
accounted for as regular capital expenditures and will be depreciated over their
estimated useful lives of 3 - 5 years. The ongoing expenses of training and
testing will be expensed as they are incurred. It is estimated that Central
Parking will spend in excess of $2 million upgrading its computer information
systems in accordance with its plans for technological enhancement, and that
such expenditures will not be material to Central Parking's operations or
liquidity. Central Parking believes that the upgraded information systems will
be Year 2000 compliant. System hardware and software that in management's
estimation are not Year 2000 compliant have been fully depreciated. Central
Parking estimates that its information systems will be Year 2000 compliant by
April 1999. This should allow Central Parking adequate time to continue to test
and determine the compliance of such systems. Management believes that this is
enough time to fully test and foresee all significant remaining Year 2000 issues
on its information systems and, therefore, does not have any other contingency
plan in place for its information systems.
Central Parking uses some fee calculation devices that compute parking fees
and statistical data, and also automate the ingress and egress control
mechanisms at certain parking facilities. Based on contacts with the vendors of
such equipment, Central Parking expects them to make available reasonably priced
upgrades to address Year 2000 issues. Central Parking believes that less than
20% of its operations have equipment with any Year 2000 issues with regard to
carrying out its parking business. In the event remediation is not complete at
any of these sites prior to the Year 2000, and a failure of such equipment were
to occur due to processing incompatibilities in the Year 2000, manual override
systems are in place at all locations. Given the limited technology required to
operate such facilities, management believes all material operations could
adequately be performed manually. Such contingency plans are currently deployed
in the events of power failures or other business interruptions at locations
where these devices are located.
Central Parking is communicating, by means of Year 2000 questionnaires,
with each of its major vendors to determine third party compliance with Year
2000 issues. Although Central Parking cannot require its vendors to respond,
follow-up with each party will be conducted to try and determine and resolve any
Year 2000 issues. Central Parking is also requiring all vendors to warrant that
all software and hardware purchased by Central Parking is fully Year 2000
compliant. While Central Parking does not expect to be materially affected by
any third party's Year 2000 issues, no assurance can be given that a third
party's failure to adequately address their Year 2000 issues could not
materially effect Central Parking's business or financial results.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
This Annual Report includes various forward-looking statements that are subject
to risks and uncertainties. Forward-looking statements include discussions
concerning future results of operations of the Company including, without
limitation, statements preceded by, followed by or that otherwise include the
words "believes," "expects," "anticipates," "intends," "estimates" or similar
expressions. For those statements, Central Parking claims the protection of the
safe harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
The following important factors, in addition to those discussed elsewhere in
this Annual Report, could affect the future financial results of the Company
and could cause actual results to differ materially from those expressed in
forward-looking statements contained in this document:
- successfully integrating Allright and Kinney Systems, as well as past
and future acquisitions in light of challenges in retaining key
employees, synchronizing business processes and efficiently
integrating facilities, marketing, and operations;
- successful implementation of the Company's operating and growth
strategy, including possible strategic acquisitions;
- the National Basketball Association strike;
- fluctuations in quarterly operating results caused by a variety of
factors including the timing of gains on sales of owned facilities,
preopening costs, the effect of weather on travel and transportation
patterns, and local, national and international economic conditions;
- the ability of the Company to form and maintain its strategic
relationships with certain large real estate owners and operators;
- global and/or regional economic factors and potential changes in laws
and regulations, including, without limitation, changes in federal,
state and international laws regulating the environment; and
- a significant delay in the expected closing of the proposed merger
with Allright.
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<PAGE> 12
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS
CENTRAL PARKING CORPORATION AND SUBSIDIARIES:
We have audited the accompanying consolidated balance sheets of Central Parking
Corporation and Subsidiaries as of September 30, 1997 and 1998, and the related
consolidated statements of earnings, shareholders' equity, and cash flows for
each of the years in the three-year period ended September 30, 1998. 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 audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Central Parking
Corporation and Subsidiaries as of September 30, 1997 and 1998, and the results
of their operations and their cash flows for each of the years in the three-year
period ended September 30, 1998 in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Nashville, Tennessee
December 3, 1998
E-21
<PAGE> 13
Consolidated Balance Sheets
Amounts in thousands, except share data
<TABLE>
<CAPTION>
September 30,
1997 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 9,979 $ 19,840
Management accounts receivable 11,004 17,387
Accounts and current portion of notes
receivable - other (including amounts due
from related parties of $544 in 1997 and
$238 in 1998) (Note 3) 6,158 11,347
Prepaid rent and other expenses 9,394 18,167
Deferred income taxes (Note 12) 911 545
Prepaid and refundable income taxes 2,154 1,266
- ----------------------------------------------------------------------------------------------------------------------------------
Total current assets 39,600 68,552
Investments, at amortized cost (fair value
$4,962 in 1997 and $5,355 in 1998) (Note 4) 4,754 5,087
Notes receivable, less current portion (Note 3) 10,961 25,110
Property, equipment, and leasehold improvements, net (Note 5) 79,057 118,176
Contracts and lease rights, net (Note 6) 5,021 17,773
Goodwill, net (Note 2 and 6) 31,863 254,997
Investment in and advances to partnerships and joint ventures (Note 7) 56,306 37,344
Other assets (Note 6) 6,452 17,834
- ----------------------------------------------------------------------------------------------------------------------------------
$ 234,014 $ 544,873
==================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and capital lease obligations (Note 8) $ 206 $ 2,225
Accounts payable 25,097 51,638
Accrued payroll and related costs 8,256 10,351
Accrued expenses 4,020 10,102
Management accounts payable 10,381 17,415
Income taxes payable 871 945
- ----------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 48,831 92,676
Long-term debt and capital lease obligations, less current portion (Note 8) 73,252 60,704
Deferred rent 186 12,938
Deferred compensation (Note 13) 3,048 3,797
Deferred income taxes (Note 12) 6,871 2,162
Other liabilities 4,975 6,892
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 137,163 179,169
Company-obligated mandatorily redeemable convertible securities of
subsidiary holding solely parent debentures (Note 9) -- 110,000
Shareholders' equity (Notes 10, 13 and 18):
Common stock, $0.01 par value; 50,000,000
shares authorized, 26,303,592 and 29,569,767
shares issued and outstanding
in 1997 and 1998, respectively 263 296
Additional paid-in capital 32,843 166,740
Foreign currency translation adjustment 193 359
Retained earnings 64,122 88,811
Deferred compensation on restricted stock (570) (502)
- ----------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 96,851 255,704
Commitments and contingencies (Notes 7, 10, 11, 12, 13, 15 & 18)
$ 234,014 $ 544,873
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
E-22
<PAGE> 14
CONSOLIDATED STATEMENTS OF EARNINGS
Amounts in thousands, except per share data
<TABLE>
<CAPTION>
Year Ended September 30,
1996 1997 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Parking $ 109,272 $ 180,886 $ 328,285
Management contract 32,534 39,568 54,890
- ----------------------------------------------------------------------------------------------------------------------------------
Total revenues 141,806 220,454 383,175
- ----------------------------------------------------------------------------------------------------------------------------------
Costs and expenses:
Cost of parking 97,686 157,382 280,288
Cost of management contracts 9,769 11,793 15,000
General and administrative 17,419 22,507 33,866
Goodwill and non-compete amortization -- 920 7,140
- ----------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 124,874 192,602 336,294
- ----------------------------------------------------------------------------------------------------------------------------------
Operating earnings 16,932 27,852 46,881
- ----------------------------------------------------------------------------------------------------------------------------------
Other income (expenses):
Interest income 2,303 1,842 2,719
Interest expense -- (4,582) (7,373)
Dividends on company-obligated mandatorily redeemable
convertible securities of a subsidiary trust (Note 9) -- -- (3,160)
Net gains on sales of property and equipment 1,192 3,137 71
Equity in partnership and joint venture earnings (Note 7) 641 4,163 5,086
- ----------------------------------------------------------------------------------------------------------------------------------
Earnings before income taxes 21,068 32,412 44,224
Income tax expense (Note 12):
Current 6,647 11,842 15,491
Deferred 585 365 2,123
- ----------------------------------------------------------------------------------------------------------------------------------
Total income taxes 7,232 12,207 17,614
- ----------------------------------------------------------------------------------------------------------------------------------
Net earnings $ 13,836 $ 20,205 $ 26,610
==================================================================================================================================
Basic earnings per common share (Note 10) $ 0.54 $ 0.78 $ 0.96
Diluted earnings per common share (Note 10) $ 0.53 $ 0.77 $ 0.94
</TABLE>
See accompanying notes to consolidated financial statements.
E-23
<PAGE> 15
Consolidated Statements of Shareholders' Equity
Amounts in thousands, except per share data
<TABLE>
<CAPTION>
Foreign Deferred
Additional Currency Compensation
Number of Common Paid-In Translation Retained on Restricted
Shares Stock Capital Adjustment Earnings Stock Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1995 23,058 $ 231 $ 8,069 $ 51 $ 33,009 $ -- $ 41,360
Net earnings -- -- -- -- 13,836 -- 13,836
Issuance of common stock net
of offering costs 2,798 28 19,986 -- -- -- 20,014
Issuance under restricted
stock plan 272 3 2,582 -- -- (705) 1,880
Common stock dividends
$.05 per share -- -- -- -- (1,396) -- (1,396)
Exercise of stock options and
related tax benefits 88 -- 1,023 -- -- -- 1,023
Amortization of deferred
compensation -- -- -- -- -- 68 68
Foreign currency translation
adjustment -- -- -- 8 -- -- 8
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1996 26,216 $ 262 $ 31,660 $ 59 $ 45,449 $ (637) $ 76,793
- ----------------------------------------------------------------------------------------------------------------------------------
Net earnings -- -- -- -- 20,205 -- 20,205
Issuance under restricted
stock plan -- -- 46 -- -- -- 46
Common stock dividends
$.06 per share -- -- -- -- (1,532) -- (1,532)
Exercise of stock options and
related tax benefits 88 1 1,137 -- -- -- 1,138
Amortization of deferred
compensation -- -- -- -- -- 67 67
Foreign currency translation
adjustment -- -- -- 134 -- -- 134
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1997 26,304 $ 263 $ 32,843 $ 193 $ 64,122 $ (570) $ 96,851
==================================================================================================================================
Net earnings -- -- -- -- 26,610 -- 26,610
Issuance of common stock
for acquisitions 1,006 10 42,528 -- -- -- 42,538
Issuance of common stock net
of offering and issuance costs 2,138 21 89,074 -- -- -- 89,095
Issuance under restricted
stock plan 3 -- 129 -- -- -- 129
Issuance under Employee Stock
Ownership Plan 67 1 926 -- -- -- 927
Common stock dividends
$.06 per share -- -- -- -- (1,921) -- (1,921)
Exercise of stock options and
related tax benefits 52 1 1,240 -- -- -- 1,241
Amortization of deferred
compensation -- -- -- -- -- 68 68
Foreign currency translation
adjustment -- -- -- 166 -- -- 166
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1998 29,570 $ 296 $166,740 $ 359 $ 88,811 $ (502) $255,704
==================================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 16
Consolidated Statements of Cash Flows
Amounts in thousands
<TABLE>
<CAPTION>
Year Ended September 30,
1996 1997 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 13,836 $ 20,205 $ 26,610
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation 2,500 4,049 5,430
Amortization of goodwill and non-compete agreements -- 920 7,140
Amortization of contract and lease rights, straight-line rent,
deferred financing fees and other 920 1,530 2,713
Equity in partnership and joint venture earnings (641) (4,163) (5,086)
Distributions from partnerships and joint ventures 1,023 2,920 4,314
Net gains on sales of property and equipment (1,192) (3,137) (71)
Deferred income taxes 585 365 2,123
Changes in operating assets and liabilities, excluding effects of acquisitions:
Management accounts receivable (2,211) (2,117) (538)
Notes and accounts receivable -- other 5,179 (1,820) (467)
Prepaid expenses (749) (3,266) (6,753)
Prepaid and refundable income taxes -- (533) 888
Other assets (3,277) 1,429 908
Accounts payable, accrued expenses,
and deferred compensation 730 5,867 9,887
Management accounts payable 2,156 (68) 6,017
Income taxes payable (872) 178 (2,970)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 17,987 22,359 50,145
- -----------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sales of property and equipment 1,467 12,529 596
Purchase of property, equipment, and leasehold improvements (16,684) (6,261) (25,593)
Investments in notes receivable, net (2,283) (345) --
Purchase of assets held for resale -- (45,962) --
Proceeds from sale of assets held for resale -- 45,962 --
Purchase of contract rights (300) (45) (4)
Investments in and advances to partnerships, joint ventures
and unconsolidated subsidiaries (1,562) (47,715) (224)
Acquisitions of companies, net of cash acquired -- (49,963) (213,612)
Proceeds from maturities and calls of investments 151 330 374
Purchase of investments (388) (601) (707)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (19,599) (92,071) (239,170)
- -----------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Dividends paid (1,046) (1,488) (1,871)
Net borrowings under revolving credit agreement, net of issuance costs -- 70,352 (24,360)
Proceeds from issuance of company-obligated mandatorily redeemable
securities, net of issuance costs -- -- 106,477
Proceeds from issuance of notes payable, net of issuance costs -- -- 99,700
Principal repayments on notes payable -- (19,096) (102,903)
Distribution of debt proceeds from partnerships and joint ventures -- -- 30,285
Proceeds from issuance of common stock and exercise of stock options, net 21,037 1,184 91,392
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 19,991 50,952 198,720
- -----------------------------------------------------------------------------------------------------------------------------------
Foreign currency translation 8 134 166
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 18,387 (18,626) 9,861
Cash and cash equivalents at beginning of period 10,218 28,605 9,979
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 28,605 $ 9,979 $ 19,840
- -----------------------------------------------------------------------------------------------------------------------------------
Non-cash transactions:
Exchange of properties, net of cash $ 2,644 $ -- $ --
Note receivable on property sale $ -- $ 10,225 $ --
Issuance of stock in acquisitions $ -- $ -- $ 42,538
Issuance of restricted stock $ 1,880 $ -- $ 130
- -----------------------------------------------------------------------------------------------------------------------------------
Effects of acquisitions:
Estimated fair value of assets acquired $ 72,950 $ 93,281
Purchase price in excess of the net assets acquired (goodwill) 32,713 231,134
Estimated fair values of liabilities assumed (49,144) (61,793)
Common stock issued -- (42,538)
- -----------------------------------------------------------------------------------------------------------------------------------
Cash paid $ 56,519 $ 220,084
Less cash acquired (6,556) (6,472)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash paid for acquisitions $ 49,963 $ 213,612
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements
E-25
<PAGE> 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of
the accompanying consolidated financial statements follows:
(a) Organization
Central Parking Corporation ("CPC") is a United States company chartered in the
State of Tennessee. The consolidated financial statements include accounts of
Central Parking Corporation and its subsidiaries (the "Company" or "Central
Parking") including Central Parking System, Inc. ("CPS") and its wholly-owned
U.S. subsidiaries; Kinney System Holdings, Inc. and its wholly owned
subsidiaries; Central Parking System of the United Kingdom, Ltd. and its
wholly-owned subsidiary ("CPS-UK"); and Central Parking System Realty, Inc. and
its wholly-owned subsidiaries ("Realty"). Central Parking Finance Trust was
established during the year ended September 30, 1998. All significant
inter-company transactions have been eliminated.
The Company provides parking consulting services and manages parking facilities
throughout the world, principally in the United States and United Kingdom. The
Company manages and operates owned or leased parking facilities, manages and
operates parking facilities owned or leased by third parties, and provides
financial and other advisory services to clients.
(b) Revenues
Parking revenues include the parking revenues from leased and owned locations.
Management contract revenues represent revenues (both fixed fees and additional
payments based upon parking revenues) from facilities managed for other
parties, and miscellaneous management fees for accounting, insurance and other
ancillary services such as consulting and transportation management services.
Parking and management contract revenues are recognized when earned.
Total managed, leased and owned parking revenues, representing gross revenues
processed by the Company, including the revenues of facilities managed by the
Company for other parties, was $457 million, $583 million, and $846 million for
the years ended September 30, 1996, 1997 and 1998, respectively.
Management accounts payable reflected on the accompanying consolidated balance
sheets is reflected net of cash of $5,348,000 and $6,510,000 at September 30,
1997 and 1998, respectively. Such cash balances belong to the owners of the
various managed facilities, but they are held by the Company and are used to
pay expenses of the managed facilities and ultimately to settle the balance due
to the owners of the managed facilities.
(c) Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers cash and
cash equivalents to include cash on hand, in banks, and short-term, highly
liquid investments which include investments with original maturities of three
months or less.
(d) Investments
Investment securities consist of debt obligations of states and political
subdivisions and are classified into one of three categories, as follows: (i)
held-to-maturity debt securities, (ii) trading securities, and (iii) securities
available-for-sale. Classification of a debt security as held-to-maturity is
based on the Company's positive intent and ability to hold such security to
maturity. Such securities are stated at amortized cost adjusted for
amortization of premiums and accretion of discounts, unless there is a decline
in value which is considered to be other than temporary, in which case the cost
basis of such security is written down to fair value and the amount of the
write-down is reflected in earnings. Securities that are bought and held
principally for the purpose of selling them in the near term are classified as
trading account securities, which are valued at fair value with the unrealized
gains and losses included in earnings. Securities classified as
available-for-sale are reported at fair value with the unrealized gains and
losses excluded from earnings and reported, net of tax, in shareholders'
equity. At September 30, 1997 and 1998, all of the Company's investment
securities were classified as held-to-maturity.
(e) Property, Equipment, and Leasehold Improvements
Property, equipment, computer software, computer hardware, and leasehold
improvements are recorded at cost. Depreciation is provided principally on a
straight-line basis over a period of five to ten years for furniture, fixtures,
and equipment, over three years for computer software, over five years for
computer hardware, over the remaining lives of the corresponding leases for
leasehold improvements, and over thirty years for buildings. Accelerated
depreciation is used for income tax purposes.
(f) Investment in Partnerships and Joint Ventures
Investment in general and limited partnerships and joint ventures are
accounted for using the equity method of accounting. The Company has a number
of joint ventures to operate and develop parking garages through either
corporate joint ventures, general partnerships, limited liability companies, or
limited partnerships. The financial results of the Company's joint ventures are
accounted for under the equity method and are included in equity in partnership
and joint venture earnings in the accompanying consolidated statements of
earnings.
E-26
<PAGE> 18
(g) Contract Rights
Contract rights consist of capitalized payments made to third-party parking
service companies pursuant to agreements which provide the Company the
opportunity to manage or lease facilities owned, leased or previously managed
by such companies. Contract rights are allocated among respective locations and
are amortized on a straight-line basis over the terms of related agreements
which range from five to ten years.
(h) Goodwill
Goodwill, which represents the excess of purchase price over fair value of net
assets acquired, is amortized on a straight-line basis over the expected
periods to be benefited, ranging from 5 - 30 years. The Company assesses the
recoverability of this intangible asset by determining whether the amortization
of the goodwill balance over its remaining life can be recovered through
undiscounted future operating cash flows of the acquired operation. The amount
of goodwill impairment, if any, is measured based on projected discounted
future operating cash flows using a discount rate reflecting the Company's
average cost of funds. The assessment of the recoverability of goodwill will be
impacted if estimated future operating cash flows are not achieved.
(i) Other assets
Other assets is comprised of a combination of the cash surrender value of key
man life insurance policies, security deposits, key money deposits with clients,
deferred issuance costs related to the sale of Preferred Securities discussed in
Note 9, deferred debt issuance costs related to the Company's credit facilities,
and non-compete agreements. Key money represents deposits and prepayments
tendered to clients at the inception of long-term relationships, and is
amortized over the life of the applicable lease. Non-compete agreements are
amortized over the life of the agreement, or economic useful life whichever is
shorter. Deferred issuance costs related to the Preferred Securities are
amortized over the 30 year life of the underlying subordinated debentures.
Deferred debt issuance costs are amortized over the life of the related debt.
(j) 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 rent and other expenses. The difference between actual lease payments
and straight-line lease expenses over the lease term is included in accrued
expense or deferred rent, as appropriate.
In connection with its acquisitions, the Company revalued certain leases to
estimated fair market value at the time of the respective acquisition.
Favorable operating leases of entities acquired represent the present value of
the excess of the current market rental over the contractual lease payments.
Unfavorable operating leases of entities acquired represent the present value
of the excess of the contractual lease payments over the current market rental.
Such write-ups and write-downs are amortized on a straight-line basis over the
remaining life of the underlying lease, or 30 years, whichever is shorter.
Favorable and unfavorable lease rights are reflected on the accompanying
consolidated balance sheets in contract and lease rights and other liabilities,
respectively.
(k) Impairment of Long-Lived Assets
The Company accounts for long-lived assets in accordance with the provisions of
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of", on October 1, 1996. 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 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.
The Company periodically reviews the carrying value of long-lived assets,
including goodwill, contract and lease rights, and non-compete agreements, to
determine if the net book values of such assets continue to be recoverable over
the remainder of the original estimated useful life. In performing this review
for recoverability, the Company estimates the future cash flows expected to
result from the use of the asset and its eventual disposition. If the sum of
the expected future cash flows (undiscounted and without interest charges) is
less than the carrying amount of the asset, an impairment loss is recognized
based on the estimated diminution of value. Since the assets involved are held
and used in the operations of the Company, consideration is also given to
actions or remediations the Company might take in order to achieve the original
estimates of cash flows. Adoption of this Statement did not have a material
impact on the Company's financial position, results of operations, or
liquidity.
(l) Income Taxes
The Company files a consolidated federal income tax return. The Company uses
the asset and liability method to account for income taxes. Under this method,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. 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
E-27
<PAGE> 19
tax rates is recognized in income in the period that includes the enactment
date. Work opportunity tax credits are accounted for by the flow-through
method, which recognizes the credits as reductions of income tax expense in the
year utilized. The Company does not provide for federal income taxes on the
accumulated earnings considered permanently reinvested in foreign subsidiaries.
(m) Preopening Expenses
The direct and incremental costs of hiring and training personnel associated
with the opening of new parking facilities and the associated internal
development costs are expensed as incurred.
(n) Per Share and Share Data
Effective October 1, 1997, the Company adopted the provisions of the Financial
Accounting Standards Board Statement No. 128, ("SFAS No. 128"), "Earnings Per
Share." Statement 128 replaced the previously reported primary and fully
diluted earning per share. Basic earnings per share excludes dilution and is
computed by dividing income available to common shareholders by the
weighted-average number of common shares outstanding for the period. Diluted
earnings per share reflect the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity. Earnings per share for all periods presented
have been calculated in accordance with SFAS No. 128. All share and earnings
per share data included herein have been adjusted for a recapitalization of
shares in October 1995, the three-for-two stock split completed in March 1996
and the three-for-two stock split completed in December 1997.
(o) Foreign Currency Translation
The financial position and results of operations of the Company's foreign
subsidiaries and equity method joint ventures are measured using local currency
as the functional currency. Translation adjustments arising from the
differences in exchange rates from period to period are included in the
currency translation adjustment in shareholders' equity.
(p) Fair Value of Financial Instruments
The Company discloses the fair values of most on-and-off balance sheet
financial instruments for which it is practicable to estimate the value. Fair
value disclosures exclude certain financial instruments such as trade
receivables and payables when carrying values approximate the fair value. Fair
value disclosures are not required for employee benefit obligations, lease
contracts, and all non-financial instruments such as land, buildings and
equipment. The fair values of the financial instruments are estimates based
upon current market conditions and quoted market prices for the same or similar
instruments as of September 30, 1998. Book value approximates fair value for
substantially all of the Company's assets and liabilities that fall under the
fair value disclosure requirements.
(q) Stock Option Plan
The Company applies the intrinsic value based method of accounting prescribed
by Accounting Principles Board opinion No. 25 ("APB No. 25") Accounting for
Stock Issued to Employees, and related interpretations in accounting for its
stock options. As such, compensation expense would be recorded on the date of
grant only if the current market price of the underlying stock exceeded the
exercise price.
(r) Business Concentration
Approximately 34% of the Company's total parking spaces managed, owned or leased
at September 30, 1998 and approximately 67% of total Company revenues for the
year then ended were attributable to parking and management contract operations
geographically located in the Northeastern and Mid-Atlantic areas of the United
States.
(s) Risk Management
The Company is self insured up to certain maximum losses for liability, health
and workers' compensation claims. The accompanying consolidated balance sheets
reflect the estimated losses related to such risks.
(t) Use of Estimates
Management of the Company has made certain estimates and assumptions relating
to the reporting of assets and liabilities to prepare these consolidated
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from these estimates.
(u) New Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income". This pronouncement is effective for fiscal
years beginning after December 15, 1997 and requires the reporting of
comprehensive income within the financial statements. The Company will adopt
SFAS 130 in fiscal 1999. Management does not anticipate that the pronouncement
will significantly impact the presentation of the Company's consolidated
financial statements.
E-28
<PAGE> 20
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information", which
supersedes SFAS No. 14. This pronouncement is effective for fiscal years
beginning after December 15, 1997. The Company will adopt SFAS No. 131 in
fiscal 1999. Management does not anticipate that the pronouncement will
significantly impact the presentation of the Company's consolidated financial
statements.
In February 1998, the Financial Accounting Standards Board issued SFAS No. 132,
"Employers' Disclosures about Pensions and Other Postretirement Benefits,"
which amends SFAS Nos. 87, 88, and 106. This pronouncement is effective for
fiscal years beginning after December 15, 1997. The Company will adopt SFAS No.
132 in fiscal 1999. Management does not anticipate that the pronouncement will
significantly impact the presentation of Central Parking's consolidated
financial statements.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which
supercedes SFAS Nos. 80, 105, and 119. This Statement is effective for all
fiscal quarters of fiscal years beginning after June 15, 1999. Management is
evaluating the impact Central Parking's consolidated financial statements.
(v) Reclassifications
Certain prior year amounts have been reclassified to conform to the current
year presentation.
(2) ACQUISITIONS
The Company's acquisitions over the last two years, all of which were accounted
for under the purchase method of accounting, are as follows:
Civic Parking LLC. On December 31, 1996, the Company purchased for cash,
Civic Parking LLC ("Civic"), which owns four parking garages in St. Louis:
Kiener East, Kiener West, Stadium East and Stadium West. The four garages
had previously been operated by Central Parking under management
agreements. The purchase price was approximately $91.0 million, which was
financed through working capital and $67.2 million of borrowings under the
Company's credit facilities. Of the $91.0 million, $46.0 million was held
for resale to a joint venture partner and $45.0 was recorded as an
investment in joint ventures. The transaction was accounted for using the
purchase method. The estimated fair value of the garages at the date of
the acquisition approximated the purchase price and, accordingly,
management has allocated the purchase price to the land and buildings
acquired.
On April 16, 1997 the Company consummated the sale of 50% of Civic to its
joint venture partner, an affiliate of Equity Capital Holdings, LLC, for
$46.0 million in cash. No gain or loss was recognized on the sale of the
50% interest. The Company accounts for the remaining interest in Civic
under the equity method. Such results are included in the accompanying
consolidated financial statements from December 31, 1996. Central Parking
continues to operate these garages pursuant to a lease and operating
agreement with Civic.
Square Industries, Inc. On January 18, 1997, Central Parking 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, Central Parking assumed $23.2 million of
existing Square debt. As of September 30, 1997, the Company refinanced
$18.9 million of the debt assumed from Square through a draw on the
Company's credit facilities.
Square operated facilities primarily in the northeast. The Square
acquisition was accounted for using 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. The purchase
price has been allocated to Square's assets and liabilities based on their
estimated fair values at the date of acquisition. The excess of the
purchase price over the fair value of the net assets acquired of $29.3
million is being amortized on a straight-line basis over 25 years.
Car Park Corporation. On May 29, 1997, the Company acquired for cash
certain assets and leases of Car Park Corporation ("Car Park") for $3.5
million; consisting of parking facilities in the San Francisco
metropolitan area. The acquisition was accounted for as a purchase, and,
accordingly, the results of operations of Car Park have been included in
the Company's consolidated financial statements from the date of
acquisition. The excess of purchase price over the fair value of the net
assets acquired of $3.3 million is being amortized on a straight-line
basis over 25 years.
Diplomat Parking Corporation. On October 1, 1997, Central Parking acquired
the stock and certain assets of Diplomat Parking Corporation ("Diplomat")
for approximately $22.2 million in cash and notes payable. Diplomat
operated parking facilities located primarily in Washington, D.C. and
Baltimore, Maryland. The acquisition was accounted for as a purchase, and
accordingly, the results of operations of Diplomat have been included in
the Company's consolidated financial statements from the date of
acquisition. The excess of purchase price over the fair value of the net
assets acquired of $20.7 million is being amortized on a straightline basis
over 25 years.
Kinney System Holding Corp. On February 12, 1998, Central Parking acquired
Kinney System Holding Corp ("Kinney"), a privately held company
headquartered in New York City. In addition to facilities in New York
City, Kinney increased Central
E-29
<PAGE> 21
Parking's presence in a number of other major metropolitan areas such as
Boston, Philadelphia and Washington, D.C. and broadened the Company's
geographic coverage in the following nine states: Connecticut, Florida,
Kentucky, Maryland, Massachusetts, New Hampshire, New York, Pennsylvania,
and Virginia.
Consideration for the Kinney acquisition was approximately $208.8 million,
including $171.8 million in cash, including transaction fees and related
expenses, and $37.0 million (882,422 shares) in Central Parking common
stock. In connection with this transaction, Central Parking assumed $10.3
million in capital leases, refinanced $24.2 million in existing Kinney debt
and assumed $4.6 million of Kinney debt.
The Kinney acquisition was accounted for using the purchase method, and
accordingly, the results of operations of Kinney have been included in the
Company's consolidated financial statements from February 12, 1998. The
excess of purchase price over the fair value of the net assets acquired of
$197.6 million is being amortized on a straight-line basis over 30 years.
In connection with the Kinney acquisition, the remaining 50% interest in
Spectrum Parking Associates ("Spectrum") was acquired for $3.6 million.
The acquisition was accounted for as a purchase and the results of
operations are included from February 13, 1998. The excess of purchase
price over the fair value of net assets acquired of $2.2 million is being
amortized on a straight-line basis over 18 years.
Central Parking System of Louisiana, Inc. Central Parking has historically
owned 50% of Central Parking System of Louisiana, Inc ("CPS-Louisiana") and
on March 30, 1998 purchased the remaining 50% from Property Service
Corporation for $2.5 million in Central Parking common stock (52,631
shares). The acquisition was accounted for as a purchase and, accordingly,
the purchase price has been allocated to CPS-Louisiana's assets and
liabilities. The excess of purchase price over fair value of net assets
acquired of $2.5 million is being amortized on a straight-line basis over 5
years.
Turner Parking System, Inc. On April 1, 1998, Central Parking purchased
substantially all of the assets of Turner Parking System, Inc.("Turner"), a
privately-held parking company headquartered in Dallas, Texas, for $3.8
million, including $3.0 million in cash and $800,000 (16,842 shares) in
Central Parking common stock. Turner operated parking facilities in Texas,
Florida, California, Georgia and Washington, D.C. The results of operations
are included in the Company's consolidated financial statements from April
1, 1998. The acquisition was accounted for as a purchase and, accordingly,
the purchase price has been allocated to Turner's assets and liabilities.
The excess of purchase price over fair value of net assets acquired of $3.7
million is being amortized on a straight-line basis over 10 years.
Sterling Parking, Inc. On July 1, 1998, Central Parking purchased
substantially all of the assets of Sterling Parking, Inc. ("Sterling"), a
privately-held parking company headquartered in Atlanta, Georgia for $4.3
million, including $2.1 million in cash, including transaction fees and
other related expenses, and $2.2 million (54,358 shares) in Central Parking
common stock. Sterling operated parking facilities in Georgia, Florida,
Virginia, California, and Kentucky. The results of operations are included
in the Company's consolidated financial statements from July 1, 1998. The
acquisition was accounted for as a purchase and, accordingly, the purchase
price has been allocated to Sterling's assets and liabilities. The excess
of purchase price over fair value of net assets acquired of $4.5 million is
being amortized on a straight-line basis over 10 years.
The following unaudited pro forma condensed results of operations give effect
to the acquisition of Square, Civic Parking, Car Park, Diplomat, Kinney,
CPS-Louisiana, Turner and Sterling as if such transactions had occurred at the
beginning of each period presented (in thousands except for earnings per
share):
<TABLE>
<CAPTION>
Twelve Months Ended September 30,
1997 1998
----------- -----------
<S> <C> <C>
Total revenues $ 403,657 $ 435,898
Earnings before income taxes 17,045 39,938
Net earnings 7,637 22,926
Basic earnings per share $ 0.28 $ 0.81
Basic weighted average common shares outstanding 26,943 28,216
Diluted earnings per share $ 0.28 $ 0.80
Diluted weighted average common shares outstanding 27,282 28,685
</TABLE>
The foregoing unaudited proforma amounts are based upon certain assumptions and
estimates, including, but not limited to, the recognition of interest expense on
debt incurred to finance the acquisitions and amortization of goodwill over 5 to
30 years. The unaudited proforma amounts do not necessarily represent results
which would have occurred if the acquisitions had taken place on the basis
assumed above, nor are they indicative of the results of future combined
operations. The pro forma results of operations for the year ended September 30,
1997 and 1998 do not reflect certain operational and financial combination
benefits which, in management' opinion, are the direct result of the Square and
Kinney acquisitions. Such estimated amounts total $1.2 million for Square and
$5.6 million for Kinney for the year ended September 30, 1997 and $2.1 million
for Kinney for the year ended September 30, 1998. Had such amounts been
reflected in the pro forma results of operations for the years ended September
30, 1997 and 1998, respectively, the pro forma net earnings would have been
$11.5 million and $24.1 million. Pro forma basic
E-30
<PAGE> 22
earnings per common share would have been $0.43 and $0.85, respectively, and pro
forma diluted earnings per common share would have been $0.42 and $0.84, for the
years ended September 30, 1997 and 1998, respectively.
(3) NOTES RECEIVABLE
The Company sold a parking garage in July 1997. As part of the sale, the
Company received $3 million in cash and a note for $10.2 million secured by a
mortgage. The note is a balloon note, with principal due in full on or before
July 7, 2000. The note requires quarterly interest payments at 8.25%. The
Company recognized a gain of $3.1 million on this sale, which is included in
net gains on sales of property and equipment in the accompanying consolidated
statement of earnings.
In connection with the Kinney acquisition, the Company acquired a note
receivable from the City of New York (the "City") related to two parking
garages which were built on behalf of the City. The Company also has a
long-term management agreement to operate the parking garages. Amounts advanced
for the construction of the garages were recorded as a note receivable and are
being repaid by the City in monthly installments of $156,000 including interest
at 8.0% through December 2007. In connection with the purchase, the note
receivable was recorded at estimated fair value. At September 30, 1998, the
carrying value of the note was $12.3 million.
The remainder of notes receivable consist of miscellaneous amounts at both
September 30, 1997 and 1998.
(4) INVESTMENTS
The amortized cost, gross unrealized gains, gross unrealized losses, and
approximate fair values for such securities are presented as follows (in
thousands):
<TABLE>
<CAPTION>
September 30,
1997 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
Amortized cost $ 4,754 $ 5,087
Unrealized gains 213 276
Unrealized losses 5 8
- ------------------------------------------------------------------------------
Fair value $ 4,962 $ 5,355
- ------------------------------------------------------------------------------
</TABLE>
The amortized cost and approximate fair value of debt securities at September
30, 1998 by average estimated maturity are shown below (in thousands):
<TABLE>
<CAPTION>
Amortized Cost Fair Value
- ------------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 614 $ 663
Due after one year through five years 1,372 1,419
Due after five years through ten years 1,803 1,909
Due after ten years 1,298 1,364
- ------------------------------------------------------------------------------
Total securities $ 5,087 $ 5,355
- ------------------------------------------------------------------------------
</TABLE>
(5) PROPERTY, EQUIPMENT, AND LEASEHOLD IMPROVEMENTS
A summary of property, equipment, and leasehold improvements and related
accumulated depreciation and amortization is as follows (in thousands):
<TABLE>
<CAPTION>
September 30,
1997 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
Leasehold improvements $ 10,537 $ 15,005
Buildings 13,573 17,114
Garage and other operating equipment 10,805 19,734
Furniture and fixtures 3,519 3,657
Capital leases -- 3,027
Aircraft 3,955 4,250
- ------------------------------------------------------------------------------
$ 42,389 $ 62,787
Less accumulated depreciation and amortization 15,722 19,394
- ------------------------------------------------------------------------------
26,667 43,393
Land 52,390 74,783
- ------------------------------------------------------------------------------
Property, equipment and
leasehold improvements, net $ 79,057 $118,176
- ------------------------------------------------------------------------------
</TABLE>
E-31
<PAGE> 23
(6) INTANGIBLE AND OTHER ASSETS
(a) Contract and Lease Rights
The Company and its subsidiaries manage certain parking facilities which are
owned, leased or managed by an unrelated parking services company. Pursuant to
these arrangements, the Company made an initial payment and guarantees
additional annual payments through the term of the respective agreement. Such
additional payments are included in the future minimum payments discussed (Note
11). Such additional payments may increase in the event parking revenues exceed
certain thresholds over the term of the agreement. In the event of a location
termination, the guaranteed additional annual payments referred to above are to
be reduced on a predetermined basis.
Contract and lease rights and accumulated amortization are as follows (in
thousands):
<TABLE>
<CAPTION>
September 30,
1997 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Contract rights $ 9,026 $ 8,984
Lease rights -- 14,284
Less accumulated amortization 4,005 5,495
- ---------------------------------------------------------------------------------------------
Contract and lease rights, net $ 5,021 $ 17,773
- ---------------------------------------------------------------------------------------------
</TABLE>
(b) Goodwill
Goodwill at September 30, 1997 and 1998 consists of (in thousands):
<TABLE>
<CAPTION>
September 30,
1997 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Excess of purchase price over net assets acquired $32,713 $ 262,705
Less accumulated amortization 850 7,708
- ---------------------------------------------------------------------------------------------
Goodwill, net $31,863 $ 254,997
- ---------------------------------------------------------------------------------------------
</TABLE>
(c) Other assets
Included in other assets are unamortized balances related to non-competition
agreements of $875,000 at September 30, 1997 and $1.8 million at September 30,
1998.
(7) INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS AND JOINT VENTURES
The following tables reflect the financial position and results of operations
for the partnerships and joint ventures as of September 30, 1997 and 1998, and
for the three years ended September 30, 1998 (in thousands):
<TABLE>
<CAPTION>
Investment in and
Accumulated Losses Advances to
In Partnerships and Partnerships and
Joint Ventures Joint Ventures
1997 1998 1997 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Civic Parking, LLC $ 45,421 $ 14,907 $ -- $ --
Commerce Street Joint Venture (868) (872) 743 721
Larimer Square Parking Associates 1,015 1,007 2,394 2,212
12 West 48th Street, LLC -- 8,585 -- --
Lodo Parking Garage 1,270 1,230 -- --
Arizona Stadium Parking Garage LLC 1,500 1,505 -- --
CPS Mexico 472 976 2,103 2,313
Other 1,919 4,760 337 --
- ----------------------------------------------------------------------------------------------------
$ 50,729 $ 32,098 $ 5,577 $ 5,246
- ----------------------------------------------------------------------------------------------------
</TABLE>
E-32
<PAGE> 24
<TABLE>
<CAPTION>
Equity in
Partnerships and Joint Venture
Joint Ventures Earnings Debt
1996 1997 1998 1997 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Civic Parking, LLC $ -- $ 2,877 $ 2,383 $ -- $59,709
Commerce Street Joint Venture 400 504 602 7,606 7,346
Larimer Square Parking Associates 22 59 103 3,554 3,334
12 West 48th Street, LLC -- -- 548 -- --
Lodo Parking Garage 77 126 145 -- --
Arizona Stadium Parking Garage LLC -- -- 230 1,800 1,976
CPS Mexico 153 514 505 -- --
Other (11) 83 570 4,524 4,481
- --------------------------------------------------------------------------------------------------------------
$ 641 $ 4,163 $ 5,086 $17,484 $76,846
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Civic Parking, LLC
As explained in Note 2, the Company acquired its 50% joint venture
ownership in Civic Parking during the fiscal year ended September 30,
1997. The Company's results of operations include 50% of Civic
Parking's net earnings from January 1, 1997 to September 30, 1997, and
the net earnings from October 1, 1997 to September 30, 1998. The four
parking garages are located in St. Louis, Missouri and contain retail
spaces.
In March 1998, Civic obtained financing with a financial institution
for $60 million. Civic distributed the loan proceeds to its
shareholders, and as a result, Central Parking received net proceeds of
$30.3 million from this transaction, which reduced the Company's
carrying value of its investment in partnerships and joint ventures.
Unaudited summary information for Civic Parking is as follows (in
thousands):
<TABLE>
<CAPTION>
September 30,
1997 1998
- --------------------------------------------------------------------
<S> <C> <C>
Financial position:
Land, property and equipment, net $90,925 $89,124
Cash 1,669 1,662
Other assets 175 108
Liabilities (768) (60,932)
- --------------------------------------------------------------------
Net assets $92,001 $29,962
- --------------------------------------------------------------------
<CAPTION>
January 1, Year ended
to September 30, September 30,
1997 1998
- ------------------------------------------------------------------------
<S> <C> <C>
Results of operations:
Revenue $ 7,668 $ 9,241
Cost of operations 2,458 4,649
- --------------------------------------------------------------------
Net earnings $ 5,210 $ 4,592
Distributions to Central Parking $ 3,680 $32,910
- --------------------------------------------------------------------
</TABLE>
(b) Commerce Street Joint Venture
Realty has a 50% interest in a joint venture that owns a parking
complex in Nashville, Tennessee. The complex consists of the original
parking garage and retail space (the "Original Facility") and an
addition to the parking garage (the "Addition") constructed several
years after the completion of the Original Facility.
The joint venture financed the Original Facility with industrial
development bonds in the original principal amount of $8,600,000 (the
"Series A Bonds") issued by The Industrial Development Board of the
Metropolitan Government of Nashville and Davidson County (the "Metro
IDB"). The Metro IDB holds title to the Original Facility, which it
leases to the joint venture under a lease expiring in 2016. The lease
of the Original Facility obligates the venture to make lease payments
corresponding to principal and interest payable on Series A Bonds and
provides the venture with an option to purchase the Original Facility
at any time by paying the amount due under the Series A Bonds and
making a nominal purchase payment to the Metro IDB. The joint venture
refinanced the Series A Bonds in 1994 to achieve more favorable
interest rate terms. The outstanding principal amount of Series A
Bonds is reflected in the above table at September 30, 1997 and 1998.
E-33
<PAGE> 25
Also included in investments in and advances to partnerships and joint
ventures are the Series B Bonds purchased in April 1994 relating to
the Commerce Street Joint Venture in the amounts of $760,000 and
$743,000 at September 30, 1997 and 1998, respectively. The Bonds
require monthly interest and principal payments at the index rate
(prime) plus 250 basis points (11% at September 30, 1998) through
2009. The minimum interest rate is 9.5% and the maximum interest rate
is 12%. The Bonds are secured by a mortgage on the project which is
subordinate to the industrial development bonds. The remainder of the
Series B Bonds are owned by the other joint venture partner.
(c) Larimer Square Parking Associates
In October 1994, the Company acquired a 50% interest in a joint
venture to construct a parking complex in Denver, Colorado. The
complex, which was completed in February 1996, was constructed and
financed by the joint venture partners. The Company invested $991,000
in the joint venture and loaned the joint venture $1,100,000 in the
form of a construction note, bearing interest at 9.5%, which was
converted to a term note in August 1996, following completion of the
project. An additional $1,430,000 was loaned by the Company which will
be repaid through sales tax and property tax revenues by the Denver
Urban Renewal Authority at an interest rate of 10%. The Company
manages the parking facility for the venture.
(d) 12 West 48th Street, LLC
In connection with the Kinney acquisition, the Company acquired a 40%
interest in a limited liability company which owns and operates a
garage and two adjacent buildings in New York City. Kinney's carrying
value of $4.4 million was adjusted to reflect the estimated fair value
of the partnership's underlying net assets by $3.8 million.
(e) Lodo Parking Garage, LLC
In March 1995, the Company acquired a 50% interest in a joint venture
which holds a parking complex in Denver, Colorado. The Company invested
$1.4 million in the joint venture and manages the parking facility for
the joint venture.
(f) Arizona Stadium Parking Garage, LLC
The Company owns a 50% interest in a joint venture which constructed
the Arizona Diamondback Stadium Parking Garage. The Company operates
this parking facility for the joint venture.
(g) CPS Mexico, Inc.
The Company holds 50% interest in a Mexican joint venture which
manages and leases various parking structures in Mexico. The Company
also has advanced $2.1 and $2.3 million at September 30, 1997 and 1998,
respectively, to the affiliate. These loans bear interest between 10%
and 15% and require principal payments over various terms through
2001.
(8) LONG TERM DEBT AND CAPITAL LEASE OBLIGATIONS
Long-term debt includes an unsecured credit facility ("Credit Facility") which
expires February 11, 2003. The Credit Facility originally provided for an
aggregate availability of up to $300 million, consisting of a five-year $200
million revolving credit facility, including a sub-limit of $25 million for
standby letters of credit, and a $100 million term loan. The Credit Facility
bore interest until June 30, 1998 at a rate of LIBOR plus 1.25%. On June 30,
1998 the interest rate on the Credit Facility and the commitment fee on the
unused portion reverted to a grid pricing based upon the achievement of various
financial ratios. The Credit Facility contains certain covenants including
those that require the Company to maintain certain financial ratios, restrict
further indebtedness, and limit the amount of dividends payable. On March 18,
1998, the Company completed offerings of equity and convertible trust issued
preferred securities, from which the Company obtained $195.6 million in net
proceeds. The Company repaid and terminated the $100 million term loan with
proceeds from these offerings. The amount outstanding under the Company's
Credit Facility as of September 30, 1998 is $48.2 million, with an interest
rate of 6.5% (LIBOR plus 75 basis points). The weighted average interest rate
was 6.88% for the period the Credit Facility was outstanding. At September 30,
1998, the Company had $147.1 million available on the Credit Facility. The
amount available is adjusted to reflect letters of credit outstanding of $4.8
million. In addition, certain contractual obligations are collateralized by
irrevocable letters of credit in the amount of $3.5 million at September 30,
1998.
The Company's previous credit facility, which was unsecured, was scheduled to
expire January 31, 2000. Credit available under the prior facility amounted to
$120 million. As of September 30, 1997 the Company had $70.8 million
outstanding, and $48.0
E-34
<PAGE> 26
million available for borrowing, under the credit facility. The average
interest rate for the period during which the Company had debt outstanding,
beginning December 31, 1996, was 7.1% and the interest rate at September 30,
1997 was 6.7%. Commitment fees for the unused portion of the credit facility
approximated 0.25% of the unused balance.
In addition to the Credit Facility, the Company also has several notes payable
outstanding totaling $4.9 million, which are secured by related real estate and
equipment and bear interest at rates ranging from 6.1% to 10.0%. These balances
mature from dates in 1998 to 2006. Future maturities under notes payable are as
follows (in thousands):
<TABLE>
<CAPTION>
Year ended
September 30,
- ---------------------------------------------------------------------------
<S> <C> <C>
1999 $ 667
2000 660
2001 649
2002 597
2003 48,632
thereafter 1,801
- ---------------------------------------------------------------------------
$ 53,006
- ---------------------------------------------------------------------------
</TABLE>
In connection with the Kinney acquisition, the Company assumed an agreement
whereby a parking structure and the corresponding land upon which it sits are
leased under a long-term arrangement. The parking structure is accounted for as
a capital lease, and the underlying land is accounted for as an operating lease.
The original agreement called for lease payments over a twenty-year term at a
17.4% interest rate. In connection with purchase accounting, the carrying value
of the related obligation was recorded at fair value. The carrying amount of the
capital lease obligation at September 30, 1998 was $9.2 million, bearing
interest at a rate of 8.0% per annum and requiring monthly payments of
approximately $167,000 per month. The operating lease requires a payment of
approximately $183,000 per month. The lease agreements run through December
2003.
E-35
<PAGE> 27
The future minimum lease payments under these capital lease obligations include
the following are as follows (in thousands):
<TABLE>
<S> <C>
Year ended
September 30,
- ----------------------------------------------------------------------------------------------------------------------------------
1999 $ 4,670
2000 4,628
2001 4,687
2002 4,504
2003 4,482
Thereafter 1,125
- ----------------------------------------------------------------------------------------------------------------------------------
24,096
Less interest portion at rates ranging from 6.1% to 10% (14,173)
Less current portion (1,558)
- ----------------------------------------------------------------------------------------------------------------------------------
$ 8,365
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(9) CONVERTIBLE TRUST ISSUED PREFERRED SECURITIES OFFERINGS
On March 18, 1998, the Company created Central Parking Finance Trust ("Trust")
which completed a private placement of 4,400,000 shares at $25.00 per share of
5.25% convertible trust issued preferred securities ("Preferred Securities")
pursuant to an exemption from registration under the Securities Act of 1933, as
amended. The Preferred Securities represent preferred undivided beneficial
interests in the assets of Central Parking Finance Trust, a statutory business
trust formed under the laws of the State of Delaware. The Company owns all of
the common securities of the Trust. The Trust exists for the sole purpose of
issuing the Preferred Securities and investing the proceeds thereof in an
equivalent amount of 5.25% Convertible Subordinated Debentures ("Convertible
Debentures") of the Company due 2028. The net proceeds to the Company from the
Preferred Securities private placement were $106.5 million. Each Preferred
Security is entitled to receive cumulative cash distributions at an annual rate
of 5.25% (or $1.312 per share) and will be convertible at the option of the
holder thereof into shares of Company common stock at a conversion rate of
0.4545 shares of Company common stock for each Preferred Security (equivalent to
$55.00 per share of Company common stock), subject to adjustment in certain
circumstances. The Preferred Securities do not have a stated maturity date but
are subject to mandatory redemption upon the repayment of the Convertible
Debentures at their stated maturity (April 1, 2028) or upon acceleration or
earlier repayment of the Convertible Debentures.
The Company's consolidated balance sheets reflect the Preferred Securities of
the Trust as company-obligated mandatorily redeemable convertible securities of
subsidiary holding solely parent debentures.
(10) SHAREHOLDERS' EQUITY
(a) Recapitalization
As of September 29, 1995, the Board of Directors and shareholders of the Company
approved a plan of recapitalization which was effective immediately prior to the
effectiveness of the Company's initial public offering of common stock on
October 10, 1995. Under the plan of recapitalization, the Company authorized the
issue of 1,000,000 shares of preferred stock and 30,000,000 shares of common
stock. At the February 28,1997 Annual Meeting, shareholders approved an increase
in the authorized common stock to 50,000,000 shares. The Class A Preferred,
nonvoting common and voting common shares issued and outstanding as of the
effective date of the plan of recapitalization, were canceled and exchanged for
common stock (split adjusted) as follows:
<TABLE>
<CAPTION>
Number of Number of
Canceled Shares
Class Shares Issued
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
A-1 Preferred 3,100 65,200
A-2 Preferred 5,200 125,775
A-3 Preferred 5,000 121,764
A-4 Preferred 2,650 62,316
Nonvoting Common 1,040,223 11,449,463
Voting Common 850,500 11,233,482
- ----------------------------------------------------------------------------------------------------------------------------------
1,906,673 23,058,000
==================================================================================================================================
</TABLE>
For purposes of calculating the exchange ratio for recapitalization, the Company
utilized $10.00 (adjusted for the stock splits) as the price per share of the
Company's common stock. Weighted average common shares and net earnings per
common share for all years presented have been adjusted to reflect the
recapitalization and subsequent stock splits.
(b) Initial Public Offering
E-36
<PAGE> 28
On October 10, 1995, the Company completed an initial public offering of common
stock in which 2,796,750 shares were sold by the Company for net proceeds of
$20.0 million.
(c) Secondary stock offering
On March 13, 1998, the Company completed a secondary public offering of common
stock in which 2,137,500 shares were sold which generated net proceeds to the
Company of $89.1 million.
(d) Stock Splits
On November 21, 1997 the Company's Board of Directors approved a three-for-two
stock split which was effected on December 12, 1997. On March 19, 1996 the
Company effected a three-for-two stock split. All share and per share amounts
have been adjusted to reflect both stock splits.
(e) Earnings Per Share
Effective October 1, 1997, the Company adopted the provisions of SFAS No. 128.
Statement 128 replaced the previously reported primary and fully diluted
earnings per share with basic and diluted earnings per share. Basic earnings per
share excludes dilution and is computed by dividing income available to common
shareholders by the weighted-average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilution that could
occur if securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the entity. Earnings per share for all periods
presented have been calculated and presented in accordance with SFAS No.
128.
The following tables set forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
September 30, 1996 September 30, 1997 September 30, 1998
Income Common Income Common Income Common
Available Shares Per-share Available Shares Per-share Available Shares Per-share
($000's) (000's) Amount (000's) (000's) Amount (000's) (000's) Amount
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Basic earnings
per share $13,836 25,762 $ 0.54 $20,205 25,991 $ 0.78 $26,610 27,857 $ 0.96
Stock option plan -- 112 -- -- 120 -- -- 244 (0.01)
Restricted stock plan -- 127 (0.01) -- 172 (0.01) -- 172 (0.01)
Deferred stock unit plan -- -- -- -- -- -- -- 9 --
Employee stock
purchase plan -- 41 -- -- 47 -- -- 44 --
- ------------------------------------------------------------------------------------------------------------------------------------
Diluted earnings
per share $13,836 26,042 $ 0.53 $20,205 26,330 $ 0.77 $26,610 28,326 $ 0.94
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Weighted average common shares used for the computation of basic earnings per
share excludes certain common shares issued pursuant to the Company's restricted
stock plan because under the related deferred compensation agreement the officer
forfeits such shares if he voluntarily terminates his employment with the
Company (see note 13). The effect of the conversion of the company-obligated
mandatorily redeemable securities of the subsidiary trust has not been included
in the diluted earnings per share calculation since such securities were
anti-dilutive. At September 30, 1998, such securities were convertible into
2,000,000 shares of common stock.
(11) OPERATING LEASE COMMITMENTS
The Company and its subsidiaries conduct a portion of their operations on leased
premises under operating leases expiring at various dates through 2101. Lease
agreements provide for minimum payments and contingent payments based upon a
percentage of revenue or a combination of both. Certain locations additionally
require the Company and its subsidiaries to pay real estate taxes and other
occupancy expenses.
E-37
<PAGE> 29
Future minimum rental commitments under operating leases are as follows (in
thousands):
<TABLE>
<CAPTION>
Year Ended
September 30,
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1999 $ 124,369
2000 106,764
2001 95,784
2002 83,530
2003 74,530
Thereafter 396,226
- ----------------------------------------------------------------------------------------------------------------------------------
Total future operating lease commitments $ 881,203
==================================================================================================================================
</TABLE>
Included in the future minimum rental commitments under operating leases are
aggregate payments of $74.9 million resulting from commitments incurred under
the agreement described in Note 6(a).
Rental expense for all operating leases was as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended September 30,
1996 1997 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rentals:
Minimum $ 38,882 $ 66,177 $ 132,582
Contingent 19,330 23,952 40,092
- ----------------------------------------------------------------------------------------------------------------------------------
Total rentals $ 58,212 $ 90,129 $ 172,674
==================================================================================================================================
</TABLE>
(12) INCOME TAXES
Income tax expense consists of the following (in thousands):
<TABLE>
<CAPTION>
Year Ended September 30,
1996 1997 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal and state $5,585 $9,940 $13,116
Jobs credit, net of federal tax benefit -- (98) (247)
- ----------------------------------------------------------------------------------------------------------------------------------
Net federal current tax expense 5,585 9,842 12,869
State 639 1,312 1,684
Non-U.S 423 688 938
- ----------------------------------------------------------------------------------------------------------------------------------
6,647 11,842 15,491
Deferred:
Federal and state 585 378 2,123
Non-U.S. -- (13) --
- ----------------------------------------------------------------------------------------------------------------------------------
585 365 2,123
- ----------------------------------------------------------------------------------------------------------------------------------
Total income tax expense from earnings $7,232 $12,207 $17,614
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Total income taxes are allocated as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended September 30,
1996 1997 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income tax expense from continuing operations $7,232 $12,207 $17,614
Acquisition related expenses for tax purposes in excess of amounts
recognized for financial reporting purposes -- (1,423) (1,467)
Shareholders' equity, for compensation expense for tax
purposes in excess of amounts recognized for financial
reporting purposes (310) (213) (568)
- ----------------------------------------------------------------------------------------------------------------------------------
Total income taxes $6,922 $10,571 $15,579
==================================================================================================================================
</TABLE>
Provision has not been made for U.S. or additional foreign taxes on
approximately $2,863,000, $2,878,000 and $3,578,000 at September 30, 1996, 1997,
and 1998, respectively, of undistributed earnings of foreign subsidiaries, as
those earnings are intended to be permanently reinvested.
E-38
<PAGE> 30
A reconciliation between actual income taxes and amounts computed by applying
the federal statutory rate to earnings before income taxes is summarized as
follows (in thousands):
<TABLE>
<CAPTION>
Year Ended September 30,
1996 1997 1998
$ % $ % $ %
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Federal statutory rate on earnings before income taxes $ 7,164 34.0% $ 11,344 35.0% $15,478 35.0%
State and city income taxes, net of federal income tax benefit 422 2.0 853 2.6 1,095 2.5
Jobs credits, net of federal tax benefit -- -- (98) (0.3) (247) (0.6)
Tax-exempt interest income (312) (1.5) (88) (0.3) (100) (0.2)
Nondeductible goodwill amortization -- -- 282 0.9 2,158 4.9
Other (42) (0.2) (86) (0.2) (770) (1.8)
- ----------------------------------------------------------------------------------------------------------------------------------
Income tax expense $ 7,232 34.3% $ 12,207 37.7% $17,614 39.8%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Sources of deferred tax assets and deferred tax liabilities are as follows
(in thousands):
<TABLE>
<CAPTION>
September 30,
1997 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Deferred compensation expense $ 1,620 $ 1,936
Accrued expenses and reserves 439 79
Prepaid expenses 197 333
Charitable contribution of property 3,080 1,922
Net operating loss carry forwards 1,151 2,569
Capitalized leases -- 2,570
Tax credit carry forwards -- 587
Deferred and capitalized expenses 380 3,866
Other 172 462
- ----------------------------------------------------------------------------------------------------------------------------------
Total gross deferred tax assets 7,039 14,324
Deferred tax liabilities:
Deferred tax gain on sales of properties (1,230) (1,367)
Deferred installment gain on sale of property (2,062) (2,019)
Timing differences in recognition of partnership earnings (482) (702)
Property, plant and equipment, due to differences in depreciation and
purchase business combinations (8,324) (11,532)
Other (11) (49)
- ----------------------------------------------------------------------------------------------------------------------------------
Total gross deferred tax liabilities (12,109) (15,669)
Valuation allowance on net operating loss carry forwards (890) (272)
- ----------------------------------------------------------------------------------------------------------------------------------
Net deferred tax liabilities $ (5,960) $ (1,617)
==================================================================================================================================
</TABLE>
Net operating losses and contribution carry forwards expire between 2002 and
2013. Management believes that it is more likely than not that the results of
operations will generate sufficient taxable income to realize deferred tax
assets after giving consideration to the valuation allowance. The valuation
allowance has been provided for loss carry forwards for which recoverability is
not deemed to be more likely than not.
(13) EMPLOYEE BENEFIT PROGRAMS
(a) Stock Plans
In August 1995, the Board of Directors and shareholders approved a stock plan
for key personnel, which included a stock option plan and a restricted stock
plan. Under this plan, incentive stock options, as well as nonqualified options
and other stock-based awards, may be granted to officers, employees and
directors. A total of 1,417,500 common shares have been reserved for issuance
under these two plans combined. Options representing 678,403 shares are
outstanding under this plan at September 30, 1998. Options are granted with an
exercise price equal to the fair market value at the date of grant and generally
expire ten years after the date of grant. At September 30, 1998, 276,863 shares
had been issued through the restricted stock plan. Expense related to the
vesting of restricted stock is recognized by the Company over the vesting
period.
In August 1995, the Board of Directors and shareholders also approved a stock
plan for directors. This plan provides for the grant, upon each director's
initial election, of options to purchase 11,250 shares to each non-employee
director. In addition, each non-employee director who has served for a minimum
of six months on the last day of each fiscal year will receive additional
options to purchase 4,500 shares on that date. A total of 225,000 shares have
been reserved for issuance under the plan. Options to purchase 135,500 shares
are outstanding under this plan at September 30, 1998.
E-39
<PAGE> 31
The following table summarizes the transactions pursuant to the Company's stock
option plans for the last three fiscal years:
<TABLE>
<CAPTION>
Number Option Price
of Shares Range Per Share
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at September 30, 1995 -- --
Granted 449,250 $ 8.00 to $21.67
Exercised 89,175 $ 8.00
Canceled 40,650 $ 8.00
- ---------------------------------------------------------------------------------------------------------------------------------
Outstanding at September 30, 1996 319,425 $ 8.00 to $21.67
- ---------------------------------------------------------------------------------------------------------------------------------
Granted 281,975 $21.25 to $30.50
Exercised 45,525 $ 8.00
Canceled 18,000 $ 21.25
- ---------------------------------------------------------------------------------------------------------------------------------
Outstanding at September 30, 1997 537,875 $ 8.00 to $30.50
- ---------------------------------------------------------------------------------------------------------------------------------
Granted 381,648 $32.54 to $51.06
Exercised 52,370 $ 8.00 to $22.50
Canceled 53,250 $21.25 to $43.44
- ---------------------------------------------------------------------------------------------------------------------------------
Outstanding at September 30, 1998 813,903 $ 8.00 to $51.06
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
At September 30, 1998, options to purchase 412,083 shares were exercisable.
The Company accounts for these plans under Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees, and accordingly, no
compensation cost has been recognized. If compensation cost for these plans had
been determined consistent with SFAS No. 123, "Accounting for
Stock-Based-Compensation", the Company's net earnings and earnings per share
would have been reduced to the following pro forma amounts:
<TABLE>
<CAPTION>
Year Ended September 30,
1996 1997 1998
----------------------------------
<S> <C> <C> <C>
As reported:
Net income (in thousands) $13,836 $20,205 $26,610
Basic earnings per share 0.54 0.78 0.96
Diluted earnings per share 0.53 0.77 0.94
Pro Forma - SFAS 123
Net income (in thousands) $12,840 $19,238 $24,029
Basic earnings per share 0.50 0.74 0.86
Diluted earnings per share 0.49 0.73 0.84
</TABLE>
The estimated weighted average fair value of the options granted were $3.60 for
1996 option grants, $11.90 for 1997 option grants and $11.57 for 1998 option
grants using the Black-Scholes option pricing model with the following
assumptions: dividend yield based on historic dividend rates at the date of
grant, volatility of 35%, risk free interest based on the treasury bill rate of
10 year instruments at the date of grant, and an expected life of ten years for
all grants.
The Company also has an Employee Stock Purchase Plan which began April 1, 1996,
under which 450,000 shares of common stock have been reserved for issuance. The
plan allows participants to contribute up to 10% of their normal pay (as defined
in the Plan) to a custodial account for purchase of the Company's common stock.
Participants may enroll or make changes to their enrollment annually, and they
may withdraw from the plan at any time by giving the Company written notice.
Employees purchase stock annually following the end of the plan year at a price
per share equal to the lesser of 85% of the closing market price of the common
stock on the first or the last trading day of the plan year. At September 30,
1998, 107,432 shares had been issued under this plan.
(b) Profit Sharing Plan
The Company has a profit-sharing plan for domestic employees to which employer
contributions are at the discretion of the Board of Directors. Voluntary
after-tax contributions not in excess of 10% of compensation may be made by
non-highly compensated employees.
Eligible employees, 20 years or older, may become a participant in the plan
after one year of continuous service, if the employee was employed prior to
reaching age 65. An employee's interest in the plan vests after two years at the
rate of 20% each year, so that the employee is fully vested at the end of seven
continuous years of service.
Employer expense associated with this plan was $971,000, $1,136,000 and
$1,400,000 in years 1996, 1997, and 1998, respectively.
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<PAGE> 32
(c) Incentive Compensation Agreements
The Company has incentive compensation agreements with certain key employees.
Participating employees receive an annual bonus based on profitability of the
operations for which they are responsible. Incentive compensation expense is
accrued during the year based upon management's estimate of amounts earned under
the related agreements. Incentive compensation under all such agreements was
approximately $4,371,000, $5,160,000, and $5,775,000 in years 1996, 1997 and
1998, respectively.
(d) Deferred Compensation Agreements
The Company has a deferred compensation agreement with the President and Chief
Operating Officer of the Company in which the officer is entitled to receive
upon retirement, payments in an aggregate amount equal to 5% of the increase in
the Company's cumulative after tax profits since September 30, 1983. Upon the
closing of the Company's initial public offering, the Company and the officer
modified the existing agreement by issuing to the officer 267,750 shares of
restricted common stock under the Company's restricted stock plan. Further, the
officer may be entitled to receive additional shares of restricted common stock
until his normal retirement or, if earlier, the date of termination of his
employment, in an amount determined by a formula based upon the Company's
performance over such period. If the officer voluntarily terminates his
employment with the Company before his normal retirement, or if the Company
terminates his employment for cause, all shares of stock received and to be
received under the restricted stock plan are to be forfeited. The market value
of the restricted stock at the date of issuance was $670,000 greater than the
Company's deferred compensation liability. Accordingly, the Company recorded
deferred compensation expense in its shareholders' equity, which is being
amortized ratably over the remaining expected term of the officer's employment.
If it is determined that additional shares are to be issued under the agreement,
the Company will recognize compensation expense, spread ratably over the
remaining expected term of the officer's employment, equivalent to the market
value of such shares, subject to future market fluctuations prior to the
issuance of such shares.
The Company has a deferred compensation agreement that entitles the Chairman and
Chief Executive Officer to annual payments of $500,000 for a period of ten years
following his termination, for any reason other than death, in exchange for a
covenant not to compete. Thereafter, the officer is entitled to annual payments
of $300,000 until his death and, in the event his wife survives him, she is
entitled to annual payments of $300,000 until her death. The Company recognizes
annual compensation expense pursuant to this agreement equivalent to the
increase in the actuarially determined future obligation under the agreement.
Compensation expense associated with these agreements was approximately
$412,000, $88,000, and $330,000 in fiscal years 1996, 1997 and 1998,
respectively.
(e) Deferred Unit Plan
On December 19, 1996, the Board of Directors approved the adoption of the
Company's Deferred Stock Unit Plan. Under the plan, certain key employees have
the opportunity to defer the receipt of certain portions of their cash
compensation, instead receiving shares of common stock following certain periods
of deferral. Approximately nine key employees will be eligible to participate in
the plan. The plan is administered by a committee, appointed by the board of
directors of the Company consisting of at least two non-employee "outside"
directors of the Company.
The Company reserved 375,000 shares of common stock for issuance under the 1996
Deferred Stock Unit Plan. Participants may defer up to 50% of their salary. As
of September 30, 1998 $490,207 of compensation has been deferred under this
plan.
(f) Severance Agreement
The Company entered into a severance agreement with the President and Chief
Operating Officer providing for a severance payment to him in cash or stock, at
the Company's election, in an amount currently equal to three weeks of his total
compensation for each year of employment with the Company, upon the termination
of his employment with the Company for any reason other than fraud or
malfeasance.
(14) RELATED PARTIES
The Company leases two properties from an entity 50% owned by the Company's
chairman for $290,000 per year for a 10-year term and pays percentage rent to
the entity. Total rent expense, including percentage rent, was $290,000,
$354,000, and $442,000 in 1996, 1997 and 1998, respectively. The Company will
receive 25% of the gain in the event of a sale of these properties during the
term of the lease pursuant to the lease agreements. Management believes that
such transactions have been on terms no less favorable to the Company than those
that could have been obtained from unaffiliated persons.
(15) CONTINGENCIES
The Company is subject to various legal proceedings and claims which arise in
the ordinary course of its business. In the opinion of management, the ultimate
liability with respect to those proceedings and claims will not materially
affect the financial position, operations, or liquidity of the Company. The
Company maintains liability insurance coverage for individual claims in excess
of $50,000, subject to annual aggregate limits.
E-41
<PAGE> 33
(16) SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments made for interest and income taxes were as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended September 30,
1996 1997 1998
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest $ -- $ 4,368 $ 7,029
Income taxes $7,209 $10,899 $15,829
</TABLE>
(17) BUSINESS SEGMENTS
The Company's business activities consist of domestic and foreign operations.
Foreign operations are conducted primarily in the United Kingdom, with segments
in Canada and Malaysia. The Company also conducts business through joint
ventures in Mexico, Germany, and Spain. Revenues attributable to foreign
operations were less than 10% of consolidated revenues for each of fiscal years
1996, 1997 and 1998. Further, with the exception of the United Kingdom, there
are no countries that account for 10% or greater of total foreign revenues.
Therefore, the Company includes all foreign operations in a single reporting
segment.
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<PAGE> 34
A summary of information about the Company's operations by segments is as
follows (in thousands):
<TABLE>
<CAPTION>
Year Ended September 30,
1996 1997 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total revenues:
Domestic $ 128,631 $ 202,346 $ 360,209
Foreign 13,175 18,108 22,966
- ---------------------------------------------------------------------------------------------------------------------------------
Consolidated $ 141,806 $ 220,454 $ 383,175
=================================================================================================================================
Operating earnings:
Domestic $ 15,873 $ 25,967 $ 43,983
Foreign 1,059 1,885 2,898
- ---------------------------------------------------------------------------------------------------------------------------------
Consolidated $ 16,932 $ 27,852 $ 46,881
=================================================================================================================================
Earnings before income taxes:
Domestic $ 19,748 $ 30,065 $ 40,562
Foreign 1,320 2,347 3,662
- ---------------------------------------------------------------------------------------------------------------------------------
Consolidated $ 21,068 $ 32,412 $ 44,224
=================================================================================================================================
<CAPTION>
September 30,
1997 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Identifiable assets:
Domestic $ 227,471 $ 533,770
Foreign 6,543 11,103
- ---------------------------------------------------------------------------------------------------------------------------------
Consolidated $ 234,014 $ 544,873
=================================================================================================================================
</TABLE>
(18) MERGER AGREEMENT
On September 21, 1998, the Company entered into a definitive agreement pursuant
to which the Company has agreed to merge with Allright Holdings, Inc.
("Allright"). Allright (dba Allright Parking) is headquartered in Houston and is
one of the largest parking services companies in the United States with revenues
of $217.4 million for the fiscal year ended June 30, 1998. The transaction,
which is expected to be accounted for as a pooling-of-interests, is valued using
a base purchase price of $564.4 million. The base purchase price of Allright
will be adjusted for certain items such as assumed long-term indebtedness,
certain expenses, asset acquisitions or dispositions, and material variations of
amounts estimated or represented by Allright Management prior to the closing
date. The equity purchase price of Allright is calculated in equivalent shares
of Central Parking common stock, based on a fixed share price of $46.00 per
share. Under terms of the agreement, Central Parking expects to issue
approximately 7.6 million shares of common stock to the shareholders of
Allright.
The merger remains subject to certain closing conditions, including the
expiration of the waiting period under the Hart-Scott-Rodino Act. The
transaction is subject to approval by the shareholders of both Central Parking
and Allright at separate meetings to be scheduled.
E-43
<PAGE> 1
EXHIBIT 21
CENTRAL PARKING CORPORATION & SUBSIDIARIES
FEIN 62-1052916
FOR YEAR ENDING 9/30/98
ALL CORPORATION HAVE THE FOLLOWING ADDRESS:
2401 21ST AVE SOUTH #200
NASHVILLE, TN 37212
<TABLE>
<CAPTION>
COMPANY
----------------------------------------------------------
<S> <C> <C>
UK CENTRAL PARKING SYSTEM OF UK, LTD.
GERMANY CENTRAL PARKING SYSTEM DEUTSCHLAND, GMBH 50%
CZECH CENTRAL PARKING SYSTEM OF THE CZECH REPUBLIC, S.R.O.
UK CONTROL PLUS PARKING SYSTEM OF UK, LTD
MEXICO SERVICIOS CORPORATIVOS PARA ESTACIONAMIENTOS, S.A. DE C.V. 50%
MEXICO CENTRAL PARKING SYSTEM OF MEXICO, S.A. DE C.V. 50%
CANADA 774201 ONTARIO, INC.
CANADA 811462 ONTARIO, INC.
1 TN CENTRAL PARKING SYSTEM, INC
2 TN CENTRAL PARKING SYSTEM - AIRPORT SERVICES, INC.
3 TN CENTRAL PARKING SYSTEM OF ALABAMA, INC.
4 TN CENTRAL PARKING SYSTEM OF ASIA, INC.
5 TN CENTRAL PARKING SYSTEM OF CONNECTICUT, INC.
6 TN CENTRAL PARKING SYSTEM OF FLORIDA, INC.
7 TN CENTRAL PARKING SYSTEM OF GEORGIA, INC.
8 TN CENTRAL PARKING SYSTEM OF ILLINOIS, INC.
9 IN CENTRAL PARKING SYSTEM OF INDIANA, INC.
10 TN CENTRAL PARKING SYSTEM OF IOWA, INC.
11 TN CENTRAL PARKING SYSTEM OF KANSAS CITY, INC.
12 TN CENTRAL PARKING SYSTEM OF KENTUCKY, INC.
13 TN CENTRAL PARKING SYSTEM OF LOUISIANA, INC.
14 TN CENTRAL PARKING SYSTEM OF MARYLAND, INC.
15 TN CENTRAL PARKING SYSTEM OF MASSACHUSETTS, INC.
16 TN CENTRAL PARKING SYSTEM OF MISSISSIPPI, INC.
17 TN CENTRAL PARKING SYSTEM OF NEW ORLEANS, INC.
18 TN CENTRAL PARKING SYSTEM OF NEW YORK, INC.
19 TN CENTRAL PARKING SYSTEM OF NORTH CAROLINA, INC.
20 TN CENTRAL PARKING SYSTEM OF OHIO, INC.
21 TN CENTRAL PARKING SYSTEM OF OKLAHOMA, INC.
22 TN CENTRAL PARKING SYSTEM OF PENNSYLVANIA, INC.
</TABLE>
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<PAGE> 2
23 TN CENTRAL PARKING SYSTEM OF PUERTO RICO, INC.
24 TN CENTRAL PARKING SYSTEM OF RHODE ISLAND, INC.
25 TN CENTRAL PARKING SYSTEM OF SOUTH CAROLINA, INC.
26 TN CENTRAL PARKING SYSTEM OF ST. LOUIS, INC.
27 TN CENTRAL PARKING SYSTEM OF TENNESSEE, INC.
28 TN CENTRAL PARKING SYSTEM OF TEXAS, INC.
29 TN CENTRAL PARKING SYSTEM OF VIRGINIA, INC.
30 TN CENTRAL PARKING SYSTEM OF WASHINGTON, INC.
31 TN CENTRAL PARKING SYSTEM OF WISCONSIN, INC.
32 TN CPC FINANCE OF TENNESSEE, INC.
33 TN CENTRAL PARKING SYSTEM REALTY, INC
34 TN SHERIDAN HERITAGE DEVELOPMENT CORP.
35 TN LARIMER DEVELOPMENT CORP.
36 TN CENTRAL PARKING SYSTEM REALTY OF MISSOURI, INC
37 TN CENTRAL PARKING SYSTEM REALTY OF NEW YORK, INC
38 TN DENVER BASEBALL STADIUM GARAGE
39 DC DIPLOMAT PARKING CORPORATION
40 NY KINNEY SYSTEM HOLDING CORP.
41 NY KINNEY - WESTSIDE, INC.
42 DE KINNEY SYSTEM, INC.
43 CA KINCAL, INC.
44 CO KINNEY SYSTEM OF DENVER, INC.
45 CT KINNEY SYSTEM OF CONNECTICUT, INC.
46 CT KINNEY SYSTEM OF HARTFORD, INC.
47 DC KINNEY - VERMONT, INC.
48 DC KINNEY AT WATERGATE, INC.
49 DC KINNEY CAPITAL, INC.
50 DC KINNEY GARAGES OF WASHINGTON INC.
51 DC KINNEY GEORGETOWN, INC.
52 DC KINNEY HOTEL SYSTEM, INC.
53 DC KINNEY MEDICAL PARKING, INC.
54 DC KINNEY MIDLANTIC, INC.
55 DC KINNEY PARKING OF GEORGETOWN, INC.
56 DC KINNEY PARKING OF WASHINGTON, INC.
57 DC KINNEY SYSTEM OF COLUMBIA, INC.
58 DC KINNEY SYSTEM OF FIFTH ST., INC.
59 DC KINNEY SYSTEM OF GREATER WASHINGTON, INC.
60 DC KINNEY SYSTEM OF WASHINGTON SQUARE, INC.
61 DC KINNEY SYSTEM, D.C., INC.
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<PAGE> 3
62 DC SARBOV PARKING CORPORATION
63 DC THE KINNEY CORPORATION
64 DE KINNEY PARKING SYSTEM OF TEXAS, INC.
65 DE KINNEY PARKING, INC.
66 DE KINNEY SYSTEM OF D.C. INC.
67 DE KINNEY SYSTEM OF DELAWARE, INC.
68 FL KINNEY DUPONT PLAZA, INC.
69 FL KINNEY GARAGES OF MIAMI, INC.
70 FL KINNEY OF HOLLYWOOD BEACH, INC
71 FL KINNEY SYSTEM OF EDEN ROC, INC.
72 FL KINNEY SYSTEM OF FLORIDA, INC.
73 FL KINNEY SYSTEM OF MIAMI, INC.
74 KY KINNEY OF KENTUCKY, INC.
75 MA KINNEY BATTERY WHARF, INC.
76 MA KINNEY CUSTOM HOUSE, INC.
77 MA KINNEY METROPOLITAN OF BOSTON, INC.
78 MA KINNEY MYSTIC CENTER, INC.
79 MA KINNEY PARKING OF LOWELL, INC.
80 MA KINNEY PARKING OF MASSACHUSETTS, INC.
81 MA KINNEY PARKING OF SUFFOLK COUNTY, INC.
82 MA KINNEY SYSTEM - NAHANT, INC.
83 MA KINNEY SYSTEM OF BOSTON, INC.
84 MA KINNEY SYSTEM OF NEW ENGLAND, INC.
85 MA KINNEY SYSTEM OF PROVINCE STREET INC.
86 MA KINNEY SYSTEM OF SUDBURY ST., INC.
87 MA KINNEY SYSTEM OF WORCESTER INC.
88 MA KINNEY TRANSPORTATION, INC.
89 MA KINNEY VALET OF MASSACHUSETTS, INC.
90 MD KINNEY GARAGES OF MARYLAND INC.
91 MD KINNEY PARKING OF MARYLAND INC.
92 MD KINNEY SYSTEM OF BALTIMORE INC.
93 MD KINNEY SYSTEM OF BETHESDA INC.
94 MD KINNEY SYSTEM OF MARYLAND, INC.
95 MD KINNEY SYSTEM OF ROCKVILLE, INC.
96 NJ COLUMBUS-KINNEY, INC.
97 NJ KINNEY - ELIZABETH, INC.
98 NJ KINNEY - ESSEX COUNTY INC.
99 NJ KINNEY - MARINA, INC.
100 NJ KINNEY - PATH, INC.
101 NJ KINNEY - PAVONIA, INC.
102 NJ KINNEY AIRPORT PARKING, INC. (NJ)
103 NJ KINNEY BOARDWALK OF ATLANTIC CITY, INC.
104 NJ KINNEY CARPARK, INC.
105 NJ KINNEY EAST KINNEY, INC.
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<PAGE> 4
106 NJ KINNEY GARAGES OF ATLANTIC CITY, INC.
107 NJ KINNEY GARAGES, INC. (NJ)
108 NJ KINNEY GARDEN STATE, INC.
109 NJ KINNEY GREEN STREET, INC.
110 NJ KINNEY HACKENSACK, INC.
111 NJ KINNEY HALSEY STREET, INC.
112 NJ KINNEY HILL STREET, INC.
113 NJ KINNEY HOBOKEN AT OBSERVER HIGHWAY, INC.
114 NJ KINNEY INDUSTRIES INC.
115 NJ KINNEY INTERNATIONAL INC.
116 NJ KINNEY JEFFERSON, INC.
117 NJ KINNEY LOMBARDY STREET, INC.
118 NJ KINNEY LONG BRANCH, INC.
119 NJ KINNEY MAXWELL, INC.
120 NJ KINNEY MONROE, INC.
121 NJ KINNEY MONTGOMERY INC.
122 NJ KINNEY OF ATLANTIC CITY, INC.
123 NJ KINNEY OF BAYONNE, INC.
124 NJ KINNEY OF CAMDEN, INC.
125 NJ KINNEY OF EXCHANGE PLACE, INC.
126 NJ KINNEY OF JOURNAL SQUARE, INC.
127 NJ KINNEY OF NORTHERN NEW JERSEY, INC.
128 NJ KINNEY OF ORANGE, INC.
129 NJ KINNEY PARKING OF ATLANTIC CITY, INC.
130 NJ KINNEY PARKING OF NEW JERSEY, INC.
131 NJ KINNEY RAYMOND BOULEVARD, INC.
132 NJ KINNEY SERVICES, INC.
133 NJ KINNEY SOMERVILLE, INC.
134 NJ KINNEY SOUTH JERSEY, INC.
135 NJ KINNEY SYSTEM HOSPITAL MANAGEMENT, INC.
136 NJ KINNEY SYSTEM OF ATLANTIC CITY, INC
137 NJ KINNEY SYSTEM OF HOBOKEN, INC.
138 NJ KINNEY SYSTEM OF JERSEY CITY, INC.
139 NJ KINNEY SYSTEM OF NEW JERSEY, INC.
140 NJ KINNEY SYSTEM OF NEWARK, INC.
141 NJ KINNEY UNIVERSITY STREET, INC.
142 NJ LK 36 ENTERPRISES, INC.
143 NJ MULBERRY STREET PARKING, INC.
144 NJ NEW JERSEY - KINNEY, INC.
145 NJ UNITED KINNEY CORPORATION
146 NJ WASHINGTON KINNEY, INC.
147 NY 12 WEST 48TH STREET CORP.
148 NY 155 WEST 48TH STREET CORP.
149 NY 30 EAST 62ND ST. GARAGE CORP.
E-47
<PAGE> 5
150 NY 38 WEST PARKING CORP.
151 NY 47 WEST 63RD STREET ASSOCIATES, INC.
152 NY BRONX-KINNEY, INC.
153 NY DOWNTOWN KINNEY INC.
154 NY HARMUR ENTERPRISES, INC.
155 NY HSM MANAGEMENT, INC.
156 NY KINNEY - 40TH ST. INC
157 NY KINNEY - 9TH STREET, INC.
158 NY KINNEY - AVENUE OF THE AMERICAS, INC.
159 NY KINNEY - CARS, INC.
160 NY KINNEY - CENTRAL PARK SOUTH, INC.
161 NY KINNEY - CIVIC CENTER, INC.
162 NY KINNEY - CLARIDGE, INC.
163 NY KINNEY - FOREST HILLS, INC.
164 NY KINNEY - GRAND CENTRAL, INC.
165 NY KINNEY - GUNHILL, INC.
166 NY KINNEY - MADISON, INC.
167 NY KINNEY - MONARCH, INC.
168 NY KINNEY - MONTANA, INC
169 NY KINNEY - PARK AVENUE INC.
170 NY KINNEY - TRUMP VILLAGE, INC
171 NY KINNEY - WEST END AVENUE, INC.
172 NY KINNEY 1 CPW GARAGE, INC.
173 NY KINNEY 345 W. 58TH ST., INC.
174 NY KINNEY 360 E. 65TH ST., INC.
175 NY KINNEY 4055 TENTH AVE., INC.
176 NY KINNEY 42ND ST. INC
177 NY KINNEY 444 TENTH AVE., INC.
178 NY KINNEY 555 W. 57TH ST., INC.
179 NY KINNEY 73RD STREET CORP.
180 NY KINNEY ALPHA CORP.
181 NY KINNEY BETA CORP.
182 NY KINNEY CHARLTON, INC.
183 NY KINNEY COUNTY PARKING, INC.
184 NY KINNEY COVE CORP.
185 NY KINNEY DELTA CORP.
186 NY KINNEY EAST 26TH STREET, INC.
187 NY KINNEY EAST 46TH STREET, INC.
188 NY KINNEY EAST 60TH ST. PARKING CORP.
189 NY KINNEY EAST 75TH STREET, INC.
190 NY KINNEY EDGEWATER CORP.
191 NY KINNEY FIVE BOROUGH, INC.
192 NY KINNEY GAMMA CORP.
193 NY KINNEY GARAGES, INC. (NY)
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<PAGE> 6
194 NY KINNEY HOSPITAL PARKING, INC.
195 NY KINNEY HOTEL SERVICES, INC.
196 NY KINNEY JOHNSON AVENUE, INC.
197 NY KINNEY LONDON TERRACES, INC.
198 NY KINNEY METROPOLITAN TOWER, INC.
199 NY KINNEY MIDTOWN PARKING, INC.
200 NY KINNEY MORNINGSIDE, INC
201 NY KINNEY NORTH MOORE STREET, INC.
202 NY KINNEY NYC, INC.
203 NY KINNEY OF 18TH ST., INC.
204 NY KINNEY OF 22ND ST., INC.
205 NY KINNEY OF 89TH ST., INC.
206 NY KINNEY OF AMERICA, INC.
207 NY KINNEY OF ARCHER AVENUE, INC.
208 NY KINNEY OF BROOKLYN, INC.
209 NY KINNEY OF COLUMBIA, INC.
210 NY KINNEY OF JANE STREET, INC.
211 NY KINNEY OF LIVINGSTON STREET, INC.
212 NY KINNEY OF LONG ISLAND, INC.
213 NY KINNEY OF MANHATTAN, INC.
214 NY KINNEY OF MULBERRY ST., INC.
215 NY KINNEY OF ROOSEVELT, INC.
216 NY KINNEY ON 11TH STREET, INC.
217 NY KINNEY ON 50TH ST., INC.
218 NY KINNEY ON 58TH ST., INC.
219 NY KINNEY ON 66TH STREET, INC.
220 NY KINNEY ON THE CONCOURSE, INC.
221 NY KINNEY ON THE HUDSON, INC.
222 NY KINNEY ON WATER STREET, INC.
223 NY KINNEY PARKING OF 40TH ST., INC.
224 NY KINNEY PARKING OF THE BRONX, INC.
225 NY KINNEY PARKING SYSTEM OF NEW YORK, INC.
226 NY KINNEY PARKING SYSTEM, INC.
227 NY KINNEY PARK-IT, INC.
228 NY KINNEY PENN PLAZA, INC.
229 NY KINNEY PROFESSIONAL SERVICES, INC.
230 NY KINNEY PROMENADE, INC.
231 MA KINNEY ST. JAMES, INC.
232 NY KINNEY SYSTEM - 8TH AVENUE , INC.
233 NY KINNEY SYSTEM EASTSIDE PARKING, INC.
234 NY KINNEY SYSTEM MANAGEMENT, INC.
235 NY KINNEY SYSTEM OF 34TH STREET, INC.
236 NY KINNEY SYSTEM OF GREATER NEW YORK, INC.
237 NY KINNEY SYSTEM OF MANHATTAN, INC.
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<PAGE> 7
238 NY KINNEY SYSTEM OF NEW YORK, INC.
239 NY KINNEY SYSTEM ON 57TH STREET, INC.
240 NY KINNEY THIRD AVENUE INC.
241 NY KINNEY TOWER, INC.
242 NY KINNEY UPPER MANHATTAN, INC
243 NY KINNEY VALET 61 ST., INC.
244 NY KINNEY VALET PARKING, INC.
245 NY KINNEY VALET SYSTEM, INC.
246 NY KINNEY VARICK BROADWAY, INC.
247 NY KINNEY WEST 37TH ST., INC.
248 NY KINNEY WEST 41ST STREET, INC.
249 NY KINNEY WEST 55TH STREET PARKING, INC.
250 NY KINNEY WEST 58TH ST., INC.
251 NY KINNEY WEST 83RD ST., INC.
252 NY KINNEY WOODLAWN, INC.
253 NY KINNEY YORK AVENUE, INC.
254 NY LCB PARKING CORP.
255 NY MANHATTAN KINNEY PARKING, INC
256 NY METROPOLITAN KINNEY INC.
257 NY MUNICIPAL KINNEY, INC.
258 NY NEW YORK KINNEY INC.
259 NY QUEENS KINNEY, INC.
260 NY S&M ENTERPRISES, INC.
261 NY SAMPLE PARKING CORP.
262 NY SAS PARKING SERVICES, INC.
263 NY SLATE PARKING CORP.
264 NY SONAR PARKING CORP.
265 NY SPACE PARKING SERVICES, INC.
266 NY SPECIALIZED PARKING SYSTEM, INC.
267 NY SPS PARKING GROUP, INC.
268 NY SPS PARKING SERVICES, INC.
269 NY STOP - PARK GARAGE CORP.
270 NY SUTPHIN BLVD. PARKING CORP.
271 NY THE KATZ PARKING SYSTEM OF COLUMBUS CIRCLE, INC.
272 NY THE KATZ PARKING SYSTEM, INC.
273 NY THE KINNEY GROUP, INC.
274 NY TRIPLE S PARKING SERVICES, INC.,
275 NY VANDERBILT PARKING CORP.
276 NY WILKE PARKING ASSOCIATES, LTD.
277 OH KINNEY PARKING SYSTEM OF DAYTON, INC.
278 PA KINNEY - KENNEDY BOULEVARD, INC.
279 PA KINNEY AIRPORT PARKING, INC.
280 PA KINNEY DEVELOPMENT, INC.
281 PA KINNEY GARAGES DEVELOPMENT, INC.
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<PAGE> 8
282 PA KINNEY INDEPENDENCE MALL, INC.
283 PA KINNEY LUDLOW ST., INC.
284 PA KINNEY OF PENNSYLVANIA INC.
285 PA KINNEY OF PHILADELPHIA, INC.
286 PA KINNEY OF RACE STREET, INC
287 PA KINNEY ON MARKET ST., INC.
288 PA KINNEY SANSOM ST., INC.
289 PA KINNEY SYSTEM OF PHILADELPHIA, INC.
290 RI KINNEY SYSTEM OF PROVIDENCE ,INC.
291 VA KINNEY OF ARLINGTON, INC.
292 VA KINNEY OF NORTHERN VIRGINIA, INC.
293 VA KINNEY PARKING OF VIRGINIA INC.
294 DC KINNEY OF WASHINGTON, INC.
295 DC KINNEY SYSTEM OF WASHINGTON, INC.
296 NY SQUARE INDUSTRIES, INC.
297 GA SQUARE PEACH WEST CORPORATION
298 MD GEORGIAN SQUARE CORP.
299 NJ 125 HALSEY CORP.
300 NJ 4 WEST PARK STREET CORP.
301 NJ SQUARE KENTUCKY CORP.
302 NJ SQUARE LIBERTY CORP.
303 NJ SQUARE MALL CORP.
304 NY 112 W 25TH ST. SQUARE CORP.
305 NY LESLIE CRAIG CORP.
306 NY SQUARE 30TH ST. CORP.
307 NY SQUARE ALPHA CORP.
308 NY SQUARE LAFAYETTE GARAGE CORP.
309 NY SQUARE PARKING CANADA, INC.
310 NY SQUARE STEWART CORP.
311 PA 1111 WALNUT CORPORATION
312 PA 11TH & SANSOM PARKING CORP.
313 PA 12TH & SANSOM PARKING CORPORATION
314 PA 23RD & ARCH PARKING CORPORATION
315 PA 714 SMITHFIELD CORP.
316 PA 805 SQUARE CORP.
317 PA ARCH SQUARE CORP.
318 PA METRO AUTO PARKING, INC.
319 PA PENNSYLVANIA SQUARE CORP.
320 PA REBOY DEVELOPMENT CORP.
321 PA S.L. SCHWARTZ, INC.
322 PA SII CORPORATION
323 PA SQUARE 100 FORBES CORP.
324 PA SQUARE 224 CORP.
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<PAGE> 9
325 PA SQUARE 3RD & LOMBARD CORP.
326 PA SQUARE ACADEMY CORP.
327 PA SQUARE ARENA CORP.
328 PA SQUARE BOULEVARD CORP.
329 PA SQUARE CARLTON CORP.
330 PA SQUARE CENTER CITY CORP.
331 PA SQUARE CHESTNUT CORPORATION
332 PA SQUARE FORT DUQUESNE, INC.
333 PA SQUARE GREGG, INC.
334 PA SQUARE HISTORIC CORP.
335 PA SQUARE JUNIPER CORP.
336 PA SQUARE MDM CORP.
337 PA SQUARE PALACE CORP.
338 PA SQUARE PITTSBURGH CORP.
339 PA SQUARE PLAZA CORP.
340 PA SQUARE RODMAN CORP.
341 PA SQUARE SANSOM CORP.
342 PA SQUARE WALNUT CORP.
343 PA SQUARE WASH CORP.
344 PA SQUARE/JEFFERSON CORP.
345 PA STEEL PARKING CORP.
346 PA WILLOW PARKING CORP.
347 MA 275 WASHINGTON PARKING CORP
348 NY 331 WEST 43 CORP.
349 NJ 400 CARNEGIE AVE CORP.
350 NJ 6 & 8 WEST PARK STREET, INC.
351 NJ 643 BROAD ST. CORP.
352 NY 70 E. 10TH ST. SQUARE CORP.
353 NY 711 WEST END AVE GARAGE CORP.
354 NJ 808 SQUARE CORP.(NJ)
355 NY 808 SQUARE CORP.(NY)
356 NJ 810 SQUARE CORP.
357 NY 839 6TH CORP.
358 PA 955 PENN CORP.
359 NJ ATLANTIC SQUARE CORP.
360 NJ BROAD NEWARK CORP.
361 NJ CENTRAL PARKING SYSTEM OF NJ, INC
362 OH PUBLIC SQUARE PARKING CORP
363 NJ S.P. PARKING, INC.
364 NY SQUARE 575 LEX, INC.
365 NY SQUARE 804 CORP.
366 DE SQUARE 88 CORP
367 PA SQUARE ARCH CORP.
368 MA SQUARE BOSTON CORP
E-52
<PAGE> 10
<TABLE>
<S> <C> <C>
369 PA SQUARE BROAD CORP.
370 PA SQUARE FOURTH AVE CORP.
371 PA SQUARE FULTON CORP.
372 GA SQUARE INDUSTRIES OF ATLANTA
373 PA SQUARE KENNEDY CORP.
374 PA SQUARE LOCUST CORP.
375 PA SQUARE MARKET CORP.
376 GA SQUARE PEACH CORPORATION 80%
377 PA SQUARE PHILADELPHIA CORP
378 NY SQUARE PLUS OPERATING CORP
379 NJ SQUARE SHORE CORP.
380 PA SQUARE SOUTH CORP.
381 PA SQUARE THIRD AVE CORP.
382 DC SQUARE WASHINGTON CORP
383 DE SQUARE WILMINGTON CORP
</TABLE>
E-53
<PAGE> 1
EXHIBIT 23
The Board of Directors
Central Parking Corporation:
We consent to the use of our report incorporated herein by reference.
/s/ KPMG Peat Marwick LLP
- -------------------------
Nashville, Tennessee
December 29, 1998
E-54
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
SHARE AND PER SHARE AMOUNTS HAVE BEEN ADJUSTED TO REFLECT THE DECEMBER 12, 1997
THREE-FOR-TWO STOCK SPLIT.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<CASH> 19,840
<SECURITIES> 0
<RECEIVABLES> 28,734
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 68,552
<PP&E> 118,176
<DEPRECIATION> 4,373
<TOTAL-ASSETS> 544,873
<CURRENT-LIABILITIES> 92,676
<BONDS> 0
110,000
0
<COMMON> 296
<OTHER-SE> 255,408
<TOTAL-LIABILITY-AND-EQUITY> 544,873
<SALES> 383,175
<TOTAL-REVENUES> 391,051
<CGS> 295,288
<TOTAL-COSTS> 336,294
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,373
<INCOME-PRETAX> 44,224
<INCOME-TAX> 17,614
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,610
<EPS-PRIMARY> 0.96
<EPS-DILUTED> 0.94
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
SHARE AND PER SHARE AMOUNTS HAVE BEEN ADJUSTED TO REFLECT THE DECEMBER 12, 1997
THREE-FOR-TWO STOCK SPLIT.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<CASH> 9,979
<SECURITIES> 0
<RECEIVABLES> 17,162
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 39,600
<PP&E> 79,057
<DEPRECIATION> 2,935
<TOTAL-ASSETS> 234,014
<CURRENT-LIABILITIES> 48,831
<BONDS> 0
0
0
<COMMON> 263
<OTHER-SE> 96,588
<TOTAL-LIABILITY-AND-EQUITY> 234,014
<SALES> 220,454
<TOTAL-REVENUES> 229,596
<CGS> 169,175
<TOTAL-COSTS> 192,602
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,582
<INCOME-PRETAX> 32,412
<INCOME-TAX> 12,207
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,205
<EPS-PRIMARY> 0.78
<EPS-DILUTED> 0.77
</TABLE>
