<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 17, 1998
REGISTRATION NO. 333-23869
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
CENTRAL PARKING CORPORATION
(Exact name of registrant as specified in its charter)
---------------------
<TABLE>
<S> <C>
TENNESSEE 62-1052916
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
2401 21ST AVENUE SOUTH, SUITE 200
NASHVILLE, TENNESSEE 37212
(615) 297-4255
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
---------------------
MONROE J. CARELL, JR.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
CENTRAL PARKING CORPORATION
2401 21ST AVENUE SOUTH, SUITE 200
NASHVILLE, TENNESSEE 37212
(615) 297-4255
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
---------------------
COPIES TO:
<TABLE>
<S> <C>
MARK MANNER J. GENTRY BARDEN
HARWELL HOWARD HYNE GABBERT & MANNER, P.C. BASS, BERRY & SIMS PLC
FIRST AMERICAN CENTER FIRST AMERICAN CENTER
NASHVILLE, TENNESSEE 37238 NASHVILLE, TENNESSEE 37238
(615) 256-0500 (615) 742-6200
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] 33-
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] 33-
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY 17, 1998
PROSPECTUS
2,625,000 SHARES
[CENTRAL PARKING LOGO]
COMMON STOCK
Of the 2,625,000 shares of Common Stock, par value $0.01 per share (the
"Common Stock"), of Central Parking Corporation (the "Company") offered hereby
(the "Offering"), 1,875,000 shares are being sold by the Company and up to
750,000 shares are being sold by certain shareholders of the Company (the
"Selling Shareholders"). See "Principal and Selling Shareholders." The Company
will not receive any of the proceeds from the sale of shares of Common Stock by
the Selling Shareholders. The Common Stock is traded on the New York Stock
Exchange (the "NYSE") under the symbol "PK." On February 12, 1998, the last
reported sale price of the Common Stock was $43.50 per share. See "Price Range
of Common Stock and Dividend Policy."
SEE "RISK FACTORS" BEGINNING ON PAGE 7 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
COMMON STOCK OFFERED HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=========================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) SHAREHOLDERS(2)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share................ $ $ $ $
- -------------------------------------------------------------------------------------------------------------------------
Total(3)................. $ $ $ $
=========================================================================================================================
</TABLE>
(1) The Company and the Selling Shareholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting estimated expenses of $500,000 payable by the Company and
$200,000 payable by the Selling Shareholders.
(3) The Company has granted the Underwriters an over-allotment option,
exercisable for 30 days from the date of this Prospectus, to purchase up to
262,500 additional shares of Common Stock on the same terms and conditions
as set forth above. If all such shares are purchased by the Underwriters,
the total Price to Public will be $ , the total Underwriting
Discount will be $ , and the total Proceeds to Company will be
$ . See "Underwriting."
---------------------
The shares of Common Stock are offered subject to receipt and acceptance by
the several Underwriters, to prior sale, and to the Underwriters' right to
reject any order in whole or in part and to withdraw, cancel, or modify the
offer without notice. It is expected that certificates for the shares of Common
Stock will be available for delivery on or about , 1998
---------------------
J.C. Bradford & Co.
Bear, Stearns & Co. Inc.
William Blair & Company
NationsBanc Montgomery Securities LLC
SunTrust Equitable Securities
,1998
<PAGE> 3
[Central Parking Corporation Map]
FOR UNITED KINGDOM PURCHASERS: This Prospectus has not been registered in
the United Kingdom and, accordingly, the shares of Common Stock offered hereby
may not be and are not being offered or sold in the United Kingdom other than to
persons whose ordinary activities involve them in acquiring, holding, managing,
or disposing of investments, whether as principal or agent (except in
circumstances that do not constitute an offer to the public within the meaning
of the Public Offers of Securities Regulations 1995 or the Financial Services
Act 1986), and this Prospectus may only be issued or passed on to any person in
the United Kingdom if that person is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or a person to whom this Prospectus may otherwise lawfully be passed on.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK
INCLUDING STABILIZATION AND SHORT-COVERING TRANSACTIONS. FOR A DESCRIPTION OF
THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE> 4
[CENTRAL PARKING CORPORATION MAP OF LOCATIONS]
REGIONS CITIES
- ------- ------
Los Angeles Los Angeles, Orange County (CA),
Phoenix
San Francisco Oakland, Salt Lake City, San
Francisco, Seattle
Denver Denver/Colorado Springs, Des
Moines, Kansas City, Minneapolis-
St. Paul, Oklahoma City, St. Louis
Mid Western Charleston (WV), Cincinnati,
Cleveland, Columbus, Indianapolis,
Milwaukee, Ottawa, Toronto
Nashville Chattanooga, Knoxville,
Lexington/Frankfort, Louisville,
Memphis, Nashville(1)
Texas Albuquerque, Austin, Dallas, El
Paso, Houston, New Orleans, San
Antonio, Tulsa
Mexico Cuernavaca, Mexico City
New York Hartford, Jersey City, New York,
Providence, Stamford
Mid-Atlantic Baltimore, Norfolk, Philadelphia,
Pittsburgh, Richmond, Washington
(D.C.)
Atlanta Atlanta, Birmingham, Charleston
(SC), Charlotte, Columbia (SC),
Jackson (MS), Mobile
Florida Jacksonville, Miami/Ft.
Lauderdale, Orlando, Puerto Rico,
Tampa/St. Petersburg
International United Kingdom -- Birmingham,
London, Oxford, Newcastle
Germany -- Berlin, Dresden, Frankfurt
Spain and Malaysia
Other Boston, Chicago
Kinney Acquisition New York, Philadelphia, Boston,
Washington, D.C. and others
- ---------------
(1) Includes the Company's corporate headquarters in owned facilities.
<PAGE> 5
OFFICE CENTERS
- ----------------------------------------
Picture of The Crescent(1)
Dallas, Texas
Picture of NationsBank Corporate Center(1)
Charlotte, North Carolina
Picture of One Utah Center(1)
Salt Lake City, Utah
Picture of San Felipe Plaza(1)
Houston, Texas
SPORTS/ENTERTAINMENT
- -----------------------------------------
Picture of Coco Walk(1)
Miami, Florida
Picture of Fleet Center(1)
Boston, Massachusetts
Picture of Madison Square Garden(1)
New York City, New York
Picture of Turner Field(1)
Atlanta, Georgia
MIXED USE
- ------------------------------------------
Bellvue Place(1)
Bellvue, Washington
The Gallery at Harborplace(1)
Baltimore, Maryland
Picture of Kuala Lumpur City Centre(1)
Picture of Rockefeller Center(2)
New York City, NY
OTHER
- ------------------------------------------
Picture of Commerce Street(3)
Nashville, Tennessee
Picture of Heathrow Airport(2)
London, England
- ------------------------------------------
Picture of Hyatt Regency Crown Center(1)
Kansas City, Missouri
Picture of Larimer Square(3)
Denver, Colorado
(1) Managed
(2) Leased
(3) Joint Venture
(4) Consulting/Managed upon Operating
<PAGE> 6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial data appearing elsewhere or incorporated by reference
in this Prospectus. Unless the context otherwise indicates, (i) all references
to the "Company" include Central Parking Corporation and its subsidiaries, and
(ii) the information contained in this Prospectus assumes no exercise of the
Underwriters' over-allotment option. References to the facilities operated by
the Company as of December 31, 1997 do not include facilities acquired in
February 1998 in the Kinney Acquisition (as defined below). See "-- Recent
Developments -- Acquisition of Kinney System Holding Corp." The Company's fiscal
year ends September 30. References to fiscal years by date refer to the fiscal
year ending September 30 of that year.
THE COMPANY
Central Parking Corporation (the "Company") is a leading provider of
parking services operating, as of December 31, 1997, 1,834 parking facilities
containing approximately 757,000 spaces in 34 states, the District of Columbia,
Puerto Rico, the United Kingdom, Germany, Canada, Mexico, Malaysia, and Spain.
The Company also has a business development office in the Netherlands. Including
the Kinney Acquisition in February 1998, the Company currently operates
approximately 2,237 parking facilities containing approximately 925,800 spaces.
In each of the last five years, the Company has increased the number of
facilities it operates by approximately 150 facilities, excluding acquisitions
and major property purchases. The Company's leadership position in the parking
industry is a result of applying professional management strategies to a
fragmented industry managed largely by small local operators; developing
relationships with key real estate managers and developers, including sports
arena operators; understanding the needs of the parking public; applying
technology to parking services; and retaining employees through formal training
programs and performance-based compensation.
The Company 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. The
Company operates parking facilities under three general types of arrangements:
management contracts, leases, and fee ownership. As of December 31, 1997, the
Company operated 995 parking facilities under management contracts, 781 parking
facilities under leases, and owned, either independently or through joint
ventures, 58 parking facilities. Including the Kinney Acquisition, the Company
currently operates approximately 1,165 parking facilities under management
contracts, 1,006 parking facilities under leases, and owns 66 parking
facilities.
The International Parking Institute (the "IPI") estimates that there are
35,000 parking facilities in the United States generating approximately $26.0
billion of annual revenues, which is divided evenly between commercial and
governmental operators. 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. The Company believes that it
has the opportunity to consolidate portions of this fragmented, localized
industry by using its competitive advantages 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,
the Company 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.
The Company distinguishes 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, and hotels, as well as several municipalities. Parking facilities
operated by the Company include, among others, certain terminals operated by BAA
Heathrow International Airport (London), the Prudential Center (Boston), One
Penn Plaza (New York), Ericsson Stadium (Charlotte), Busch Stadium (St. Louis),
Reunion Arena (Dallas), Coors Field (Denver), Cinergy Field (Cincinnati), Turner
Stadium (Atlanta), 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.
3
<PAGE> 7
The Company's growth strategy is to increase revenues and profitability by
(i) increasing its market share through take-aways of competitors' contracts,
winning new management and lease contracts, purchasing properties, and nurturing
relationships with large real estate developers and asset managers; (ii)
continuing to pursue strategic acquisitions of other parking service companies;
and (iii) expanding its international activity, principally through joint
venture arrangements and consulting engagements. In addition, the Company
intends to achieve operating efficiencies through economies of scale by
leveraging its corporate infrastructure and its established presence in local
markets. Management also believes that privatization of parking and parking-
related services will provide significant opportunities in the future.
Central Parking Corporation's principal executive offices are located at
2401 21st Avenue South, Suite 200, Nashville, Tennessee 37212, and its telephone
number at that address is (615) 297-4255.
RECENT DEVELOPMENTS
ACQUISITION OF DIPLOMAT PARKING CORPORATION
On October 1, 1997, subsequent to its fiscal year end, the Company acquired
the stock and certain assets of Diplomat Parking Corporation ("Diplomat") for
approximately $21.7 million in cash and notes (the "Diplomat Acquisition"). The
acquisition was financed through the Company's revolving credit facility. As of
September 30, 1997, Diplomat operated 164 parking facilities containing
approximately 37,000 parking spaces, located primarily in Washington, D.C. and
Baltimore, Maryland.
ACQUISITION OF KINNEY SYSTEM HOLDING CORP.
On February 12, 1998, the Company acquired Kinney System Holding Corp.
("Kinney"), a privately-held company headquartered in New York City, which the
Company believes is the largest operator of parking facilities in the New York
City metropolitan area and one of the largest parking companies in the
Northeastern United States (the "Kinney Acquisition" and, collectively with the
Diplomat Acquisition, the "Acquisitions"). Kinney has been in the parking
business for over 60 years. In addition to enhancing the Company's leading
market position in New York City, Kinney increases the Company's presence in a
number of other major markets such as Boston, Philadelphia, and Washington, D.C.
and broadens 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 currently operates 403 parking facilities containing approximately
168,800 spaces, including approximately 76,700 in the New York City metropolitan
area, 42,800 in Boston, 30,100 in Philadelphia, and 10,300 in Washington, D.C.
Kinney's facility mix is 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, and the Four Seasons Hotel of Washington, D.C.
Consideration for the Kinney Acquisition was approximately $225.0 million,
including $160.3 million in cash, $37.0 million in the Company's common stock,
and the refinancing of $27.7 million in existing Kinney debt. In addition, the
Company assumed $9.4 million in capitalized leases and paid approximately $2.6
million for certain assets purchased by Kinney after the definitive purchase
agreement was signed. The purchase price is subject to adjustment based on the
outcome of an audit of Kinney's February 12, 1998 balance sheet. The Company
financed the Kinney Acquisition with borrowings under the New Credit Facility
described below.
NEW $300 MILLION CREDIT FACILITY
On February 11, 1998, the Company established a new credit facility (the
"New 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 principal repayments of $25 million
per year beginning in year two. The New Credit Facility bears interest until
June 30, 1998 at a rate of LIBOR plus 1.25%. On June 30, 1998, the interest rate
on the New Credit Facility and the commitment fee on the unused portion will
revert to a grid pricing based upon the achievement of various financial ratios.
The New Credit Facility contains certain covenants including
4
<PAGE> 8
those that require the Company to maintain certain financial ratios, restrict
further indebtedness, and limit the amount of dividends payable. The Company
used borrowings under the New Credit Facility to replace the Company's prior
revolving credit facility and to finance the Kinney Acquisition. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
CONCURRENT PRIVATE PLACEMENT OF CONVERTIBLE PREFERRED SECURITIES
The Company is conducting a private placement (the "Private Placement") of
4,000,000 shares at $25.00 per share of % Convertible Trust Issued Preferred
Securities (the "Convertible Preferred Securities") concurrently with this
Offering pursuant to an exemption from registration under the Securities Act of
1933, as amended (the "Securities Act"). The Convertible 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 "Trust"). The Company will own all the common securities
of the Trust ("Common Securities" and, together with the Convertible Preferred
Securities, the "Trust Securities"). The Trust exists for the sole purpose of
issuing the Convertible Preferred Securities and investing the proceeds thereof
in an equivalent amount of % Convertible Subordinated Debentures due 2028 (the
"Convertible Debentures") of the Company. The net proceeds to the Company from
the Private Placement are estimated to be approximately $96.3 million. Each
Convertible Preferred Security is entitled to receive cumulative cash
distributions at an annual rate of % (or $ per share) and will be
convertible at the option of the holder thereof into shares of Common Stock at a
conversion rate of shares of Common Stock for each Convertible
Preferred Security (equivalent to $ per share of Common Stock), subject
to adjustment in certain circumstances. The Convertible Preferred Securities
will not have a stated maturity date but will be subject to mandatory redemption
upon the repayment of the Convertible Debentures at their stated maturity (March
, 2028) or upon acceleration or earlier repayment of the Convertible
Debentures.
The financial statements of the Trust will be reflected in the Company's
consolidated financial statements with the $100,000,000 Convertible Preferred
Securities shown as mandatorily redeemable convertible preferred securities of
trust subsidiary. The financial statement footnotes of the Company will reflect
that the sole assets of the Trust are $100,000,000 in principal amount of the
Convertible Debentures.
This Prospectus shall not constitute an offer to sell or the solicitation
of an offer to buy the Convertible Preferred Securities. The Convertible
Preferred Securities will be offered and sold in the Private Placement
exclusively to qualified institutional buyers in accordance with Rule 144A under
the Securities Act pursuant to a separate offering circular and the offering of
the Common Stock hereby is not conditioned upon the closing of the Private
Placement. No assurance can be given that the Private Placement will be
consummated or, if consummated, will be on the foregoing terms. See "Risk
Factors -- Private Placement of Convertible Preferred Securities" and
"Description of Convertible Preferred Securities."
THE OFFERING
Common Stock offered by the Company..... 1,875,000 shares
Common Stock offered by the Selling
Shareholders............................ 750,000 shares
Common Stock to be outstanding after the
Offering................................ 29,083,601 shares(1)
Use of proceeds by the Company.......... To repay a portion of the
indebtedness outstanding under the
New Credit Facility. See "Use of
Proceeds."
NYSE symbol............................. PK
- ---------------
(1) Does not include 807,948 shares of Common Stock issuable upon the exercise
of stock options granted under the Company's stock option plans or any
shares of Common Stock issuable upon the conversion of the Convertible
Preferred Securities.
5
<PAGE> 9
SUMMARY HISTORICAL AND PRO FORMA AS ADJUSTED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND OTHER DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED SEPTEMBER 30, DECEMBER 31,
-------------------------------------------- ---------------------------------
PRO FORMA PRO FORMA
AS ADJUSTED AS ADJUSTED
1995 1996 1997 1997(1) 1996 1997 1997(1)
-------- -------- -------- ----------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Total revenues......................... $126,155 $143,316 $222,976 $392,406 $ 41,423 $ 71,189 $105,099
Total costs and expenses............... 112,553 126,384 195,124 356,856 36,294 62,385 93,602
Operating earnings..................... 13,602 16,932 27,852 35,550 5,129 8,804 11,497
Interest expense....................... -- -- 4,582 8,925 7 1,411 1,852
Dividends on convertible preferred
securities........................... -- -- -- 6,000 -- -- 1,500
Net gains (losses) on sales of property
and equipment........................ 81 1,192 3,137 2,319 3 2 (48)
Earnings before income taxes........... 15,507 21,068 32,412 30,835 6,000 9,099 10,528
Net earnings........................... 9,944 13,836 20,205 15,942 3,899 5,642 5,824
PER SHARE DATA:
Net earnings per common share (2)(3):
Basic................................ $ 0.43 $ 0.54 $ 0.78 $ 0.55 $ 0.15 $ 0.22 $ 0.20
Diluted.............................. $ 0.43 $ 0.53 $ 0.77 $ 0.55 $ 0.15 $ 0.21 $ 0.20
Weighted average common shares (2)(3):
Basic................................ 23,058 25,793 25,991 28,749 25,965 26,042 28,800
Diluted.............................. 23,058 26,078 26,330 29,087 26,272 26,482 29,239
Dividends per common share (2)......... -- $ 0.05 $ 0.06 $ 0.05 $ 0.01 $ 0.02 $ 0.01
Ratio of earnings to fixed charges
(4).................................. 1.9x 2.1x 1.9x 1.4x 1.9x 1.8x 1.6x
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
-----------------------
AS OF SEPTEMBER 30, PRO FORMA
------------------------------ AS
1995 1996 1997 ACTUAL ADJUSTED(1)
-------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents...................... $ 10,218 $ 28,605 $ 9,979 $ 13,288 $ 17,741
Working capital................................ 2,676 19,707 (9,231) (12,001) (19,367)
Total assets................................... 70,440 107,212 234,014 256,744 554,998
Long-term debt and capital lease obligations,
less current portion......................... -- -- 73,252 86,899 136,466
Mandatorily redeemable convertible preferred
securities of trust subsidiary............... -- -- -- -- 100,000
Shareholders' equity........................... $ 41,360 $ 76,793 $ 96,851 $102,203 $216,595
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, AS OF DECEMBER 31,
-------------------------------------------- ---------------------------------
PRO FORMA PRO FORMA
AS ADJUSTED AS ADJUSTED
1995 1996 1997 1997(1) 1996 1997 1997(1)
-------- -------- -------- ----------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Depreciation and amortization(5)....... $ 2,882 $ 3,420 $ 5,875 $ 18,570 $ 942 $ 1,847 $ 4,358
Number of managed facilities........... 715 770 877 1,165 780 995 1,165
Number of leased facilities............ 485 552 709 1,006 574 781 1,006
Number of owned facilities............. 31 37 58 66 46 58 66
-------- -------- -------- -------- -------- -------- --------
Total number of facilities........... 1,231 1,359 1,644 2,237 1,400 1,834 2,237
Total number of parking spaces......... 475,000 546,000 699,000 925,800 581,000 757,000 925,800
</TABLE>
- ---------------
(1) The pro forma as adjusted consolidated financial information reflects (i)
the Acquisitions, (ii) the sale of 1,875,000 shares of Common Stock offered
by the Company hereby at an assumed public offering price of $43.50 per
share and the receipt of $77.4 million in estimated net proceeds therefrom,
(iii) the sale of 4,000,000 shares of Convertible Preferred Securities by
the Company in the Private Placement, at an assumed annual dividend rate of
6.0%, and the receipt of $96.3 million in estimated net proceeds therefrom,
and (iv) the application of the estimated net proceeds received from (ii)
and (iii) above to reduce indebtedness under the New Credit Facility as if
such transactions had been consummated on October 1, 1996 for purposes of
the pro forma as adjusted consolidated statement of earnings data and on
December 31, 1997 for the pro forma as adjusted consolidated balance sheet
data. See "Unaudited Pro Forma Consolidated Financial Information."
(2) Reflects the recapitalization of the Company on September 29, 1995 and a
three-for-two stock split in each of March 1996 and December 1997.
(3) All earnings per share data for fiscal 1995, 1996, and 1997 have been
restated to reflect the Company's adoption in the first quarter of fiscal
1998 of Statement of Financial Accounting Standards No. 128, "Earnings per
Share."
(4) For purposes of this computation, fixed charges consist of interest expense
and amortization of deferred financing fees, capitalized interest and
one-third of rental expenses, representative of that portion of rental
expenses attributable to interest and preferred stock dividends. Earnings
consist of income before income taxes plus fixed charges (other than
capitalized interest, but including the amortization thereof).
(5) Depreciation and amortization is for the period then ended.
6
<PAGE> 10
RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective investors should carefully consider the following risk factors in
evaluating an investment in the Common Stock offered hereby.
INTEGRATION OF ACQUISITIONS
The Company completed three acquisitions in fiscal 1997 and the Diplomat
and Kinney acquisitions in the first two quarters of fiscal 1998. These
acquisitions have substantially increased the number of persons employed by the
Company, the number of facilities operated by the Company, and the geographic
markets serviced by the Company. Although the Company believes that it can
successfully integrate and manage acquired operations and achieve certain
economies of scale, there can be no assurance that acquisitions will be
integrated successfully into the Company's operations, that cost savings or
operating synergies will be realized to the extent anticipated by the Company,
or that the acquired operations will achieve levels of profitability that
justify the Company's investments therein. Furthermore, there can be no
assurance that the Company will be able to consummate parking facility or
company acquisitions in the future at the rate currently expected, if at all,
or, if completed, that any acquired facility or company will be successfully
integrated into the Company's operations. Moreover, because of the price paid by
the Company or because of the performance of acquired operations after such
acquisitions, there can be no assurance that the results of the acquired
operations will not be dilutive to the Company's per share earnings. Any
acquisition contemplated or completed by the Company may result in adverse
short-term effects on the Company's reported operating results, divert
management's attention, introduce difficulties in retaining, hiring and training
key personnel, and introduce risks associated with unanticipated problems or
legal liabilities, some or all of which could have a material adverse effect on
the Company's financial condition and results of operations. See "Business --
Acquisitions." The Company receives information regarding potential acquisitions
from time to time; however, there are currently no material acquisitions which
the Company believes are more likely than not to occur.
ABILITY TO MANAGE GROWTH
The Company intends to continue to expand its business by adding management
contracts and leases and by acquiring additional parking facilities and
operators. The Company's growth will be affected by the results of operations of
added parking facilities which will depend upon contract terms, government
licenses and approvals, and local competitive environments. The nature of
licenses and approvals, and the timing and likelihood of obtaining them, vary
widely from state to state and country to country. The Company's growth will
also be directly affected by the Company's ability to obtain suitable financing
and by the competitive environment for acquisitions. Some of the acquired
operations may be located in geographic markets in which the Company has little
or no presence. Successful integration and management of additional facilities
will depend on a number of factors, many of which are beyond the Company's
control. The Company's growth plans will also place significant demands on the
Company's management and operating personnel and will require the Company to
improve its operational, financial, and management information systems. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources," and "Business -- Growth
Strategy," and "-- Operating Strategy."
DEPENDENCE ON MANAGEMENT CONTRACTS AND LEASES
The principal sources of the Company's revenues are management contracts
and leases relating to parking facilities owned by unaffiliated property owners.
For fiscal 1995, 1996, and 1997, revenues from management contracts accounted
for 25.2%, 23.8%, and 18.9%, respectively, and revenues from leased facilities
accounted for 70.6%, 71.8%, and 74.7%, respectively, of the Company's total
revenues. For the three month periods ended December 31, 1996 and 1997, revenues
from management contracts accounted for 22.5% and 17.1%, respectively, and
revenues from leased facilities accounted for 73.2% and 77.5%, respectively, of
the Company's total revenues. Management contracts, in general, are for terms of
one to three years, but are cancelable by the property owner on short notice.
Leases generally are for three to ten year terms. There can be no assurance that
the Company will be able to maintain or renew its management
7
<PAGE> 11
contracts and leases on favorable terms. The loss, or renewal on less favorable
terms, of a substantial number of management contracts or leases could have a
material adverse effect on the Company's financial condition and results of
operations. Under its management contracts, the Company provides ancillary
services such as insurance, accounting, equipment leasing, and consulting. A
material reduction in the profit margins associated with these ancillary
services provided under its management contracts, caused by, among other things,
increases in costs or claims associated with, or reductions in the number of
clients purchasing, insurance provided by the Company could have a material
adverse effect on the Company's financial condition and results of operations.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business -- Litigation and Insurance."
DEPENDENCE ON PROPERTY PERFORMANCE
The Company's revenues and profitability are dependent on the performance
of the parking facilities it owns, leases, and manages. The Company's revenues
from leased and owned parking facilities consist of parking fees collected by
such facilities. For fiscal 1995, 1996, and 1997, revenues from leased and owned
facilities accounted for 74.8%, 76.2%, and 81.1%, respectively, of the Company's
total revenues. For the three month periods ended December 31, 1996 and 1997,
revenues from leased and owned facilities accounted for 77.5% and 82.9%,
respectively, of the Company's total revenues. The Company's leases generally
require the Company to make a fixed monthly lease payment regardless of the
parking fees collected. Some management contracts provide for payment to the
Company based on a percentage of gross revenues generated by the parking
facility. Accordingly, performance of the Company's parking facilities depends,
in part, on the Company's ability to negotiate favorable contract terms, the
Company's ability to control operating expenses, financial conditions prevailing
generally and in areas where parking facilities are located, the nature and
extent of competitive parking facilities in the area, and the real estate market
generally. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
VARIATIONS IN QUARTERLY OPERATING RESULTS
The Company has experienced fluctuations in its quarterly revenues and
profitability. These fluctuations are 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 and national
economic conditions. There can be no assurance that fluctuations in revenues and
net earnings will not cause the market price of the Common Stock to fluctuate
substantially. Results for any particular quarter may not be indicative of
future results or results for the full fiscal year. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Quarterly
Results."
CONTROL BY MR. CARELL AND FAMILY
Upon completion of the Offering, Monroe J. Carell, Jr., Chairman and Chief
Executive Officer of the Company, trusts established for the benefit of his
family, and foundations controlled by Mr. Carell and his family, will
beneficially own an aggregate of approximately 65.0% of the outstanding shares
of Common Stock (64.4% if the Underwriters' over-allotment option is exercised
in full). Accordingly, such persons will have majority control of the Company
and the ability to elect all members of the Board of Directors; to effect or
prevent a merger or a sale of assets; to adopt, amend, or repeal the Company's
Amended and Restated Charter and Bylaws; and to take certain other actions
requiring the vote or consent of the Company's shareholders. See "Principal and
Selling Shareholders."
VOLATILITY OF MARKET PRICE
From time to time, there may be significant volatility in the market price
of the Common Stock. The Company believes that the current market price of the
Common Stock reflects expectations that the Company will be able to continue to
operate its facilities profitably, add management contracts and leases and
acquire new facilities at a significant rate, and operate them profitably. If
the Company is unable to operate its facilities profitably or add new facilities
at a pace that reflects the expectations of the market, investors could sell
shares of the Common Stock at or after the time that it becomes apparent that
the expectations may not
8
<PAGE> 12
be realized, resulting in a decrease in the market price of the Common Stock. In
addition to quarterly operating results of the Company, changes in earnings
estimates by analysts, general conditions in the economy, the financial markets,
or the parking industry, or other developments affecting the Company could cause
the market price of the Common Stock to fluctuate substantially. The stock
market may experience extreme price and volume fluctuations and such volatility
may have a significant effect on the market price of the Common Stock for
reasons unrelated to the Company's operating performance. See "Price Range of
Common Stock and Dividend Policy."
COMPETITION
The parking industry is highly competitive. The Company's competitors range
from small single-lot operators to large regional and national multi-facility
operators, and include municipal and other governmental entities. Some of the
Company's present and potential competitors have or may obtain greater financial
and marketing resources than those of the Company. Furthermore, the Company
competes for qualified management personnel with other parking facility
operators, with property management companies, and with property owners. There
can be no assurance that the Company will not encounter increased competition in
the future, due to, among other things, increased construction of parking
facilities, which could limit its ability to attract customers, expand its
business, or maintain profitable pricing levels, and which could have a material
adverse effect on the Company's financial condition or results of operations or
decrease its market share. The Company competes for acquisitions with other
parking facility operators, real estate developers and real estate investment
trusts. There can be no assurance that the Company will not encounter increased
competition for acquisitions in the future and that such competition will not
have an adverse effect on the Company's ability to complete acquisitions or on
prices paid for acquisitions. See "Business -- Competition."
FOREIGN CURRENCY EXCHANGE RATES
The Company operates in the United Kingdom, Germany, Mexico, Malaysia,
Canada, and Spain, maintains a business development office in the Netherlands,
and intends to expand its business in these and other international locations.
For the quarter ended December 31, 1997, revenues from United Kingdom operations
represented 95.9% of the revenues generated by foreign operations, excluding
earnings from joint ventures. The Company receives revenues and incurs expenses
in various foreign currencies in connection with its foreign operations and, as
a result, the Company is subject to currency exchange rate fluctuations. The
Company intends to continue to invest in foreign leased or owned parking
facilities, either independently or through joint ventures, where appropriate,
and may become increasingly exposed to foreign currency fluctuations. Presently,
the Company has limited exposure to foreign currency risk and anticipates
implementing a hedge program if such risk materially increases. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
DEPENDENCE ON KEY MANAGEMENT
The success of the Company is highly dependent on the continued services of
the Company's management team. The loss of services of one or more members of
the Company's senior management team could have a material adverse effect on the
Company's financial condition and results of operations. Although the Company
has entered into employment agreements with, and historically has been
successful in retaining the services of, its senior management, there can be no
assurance that the Company will be able to retain such personnel in the future.
The Company is a beneficiary of certain life insurance policies on certain key
executives ranging from $100,000 to approximately $1.1 million.
ENVIRONMENTAL AND OTHER REGULATIONS
Under various federal, state, and local environmental laws, ordinances, and
regulations, a current or previous owner or operator of real property may be
liable for the cost of removal or remediation of hazardous or toxic substances
on, under, or in such property. Such laws typically impose liability without
regard to whether the owner or operator knew of, or was responsible for, the
presence of such hazardous or toxic substances. In connection with the ownership
or operation of parking facilities, the Company may be potentially liable for
such costs. Although the Company is currently not aware of any material
environmental
9
<PAGE> 13
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 air quality laws,
licensing laws, and the Americans with Disabilities Act of 1990 (the "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. Although management believes that the parking facilities it
owns and operates are in substantial compliance with these requirements, a
determination that the Company or the facility owner is not in compliance with
the ADA could result in the imposition of fines or damage awards against the
Company.
BENEFITS OF OFFERING TO MR. CARELL AND FAMILY
The consummation of the Offering will cause substantial benefits to accrue
to Mr. Carell and certain members of his family. Of the 2,625,000 shares being
offered hereby, 750,000 shares are being offered by the Selling Shareholders
which will result in the Selling Shareholders receiving estimated net proceeds
from the Offering, after deduction of the underwriting discounts and estimated
offering expenses payable by the Selling Shareholders, of approximately $31.0
million. The remaining shares held by the Selling Shareholders will have a
market value of approximately $828.4 million. See "Principal and Selling
Shareholders."
PRIVATE PLACEMENT OF THE CONVERTIBLE PREFERRED SECURITIES
In addition to the Common Stock offered hereby, the Company is concurrently
offering $100,000,000 of Convertible Preferred Securities only to certain
qualified institutional buyers in the Private Placement. No assurance can be
given that the Private Placement will be consummated or that such securities can
be sold at prices or upon terms currently contemplated by, or acceptable to, the
Company. Moreover, failure to consummate this Offering and the Private Placement
on the terms contemplated in this Prospectus could have an adverse effect on the
Company's liquidity as it relates to the Company's ability to pursue strategic
acquisitions. If the Private Placement is consummated, dividends with respect to
the Common Stock will be effectively subordinated to dividends payable with
respect to the Convertible Preferred Securities. See "Price Range of Common
Stock and Dividend Policy." In addition, the holders of the Common Stock may
experience substantial future dilution if holders of the Convertible Preferred
Securities exercise their right to convert their securities into shares of the
Common Stock. See "Description of Convertible Preferred Securities."
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which are intended to be
covered by the safe harbors created thereby. Those statements include, but may
not be limited to, the discussions of the Company's expectations concerning its
future profitability, the discussion of the Company's strategic relationships,
the Company's operating and growth strategy, including possible strategic
acquisitions, and the Company's assumptions regarding certain matters, including
anticipated cost savings, in preparation of the unaudited pro forma financial
information. Investors are cautioned that all forward-looking statements involve
risks and uncertainties including, without limitation, the factors set forth
under the caption "Risk Factors" in this Prospectus. Although the Company
believes that the assumptions underlying the forward-looking statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore, there can be no assurance that the forward-looking statements
included in this Prospectus will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking statements included
herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and plans
of the Company will be achieved.
10
<PAGE> 14
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 1,875,000 shares of
Common Stock offered by the Company hereby are estimated to be approximately
$77.4 million (approximately $88.3 million if the Underwriters' over-allotment
option is exercised in full) after deduction of the underwriting discount and
estimated offering expenses payable by the Company. The Company will not receive
any proceeds from the sale of Common Stock by the Selling Shareholders. The net
proceeds to the Company from the sale of the Convertible Preferred Securities in
the Private Placement are estimated to be approximately $96.3 million.
The Company intends to use its net proceeds from this Offering and the
Private Placement to reduce the $285 million of outstanding indebtedness under
the New Credit Facility as of February 12, 1998. The New Credit Facility is
unsecured and consists of a $200 million revolving credit facility, including
$25 million for standby letters of credit, and a $100 million term loan with
scheduled repayments of $25 million per year, beginning in year two. All amounts
outstanding under the New Credit Facility must be repaid on or before December
31, 2002. The New Credit Facility bears interest until June 30, 1998 at a rate
of LIBOR plus 1.25%. As of February 12, 1998 the interest rate on the New Credit
Facility was 6.88%. On June 30, 1998, the interest rate on the New Credit
Facility and the commitment fee on the unused portion will revert to a grid
pricing based upon the achievement of various financial ratios. The New 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 paid. The Company used the New Credit Facility to replace
the Company's prior revolving credit facility and to finance the Kinney
Acquisition. Following the Offering and the Private Placement and the
application of the net proceeds as set forth herein, the Company anticipates
that approximately $188.7 million will be available for borrowing under the New
Credit Facility. The Company believes that its net proceeds from the Offering
and the Private Placement, together with cash flows from operations and
borrowings under the New Credit Facility, will be sufficient to finance the
Company's operations for the foreseeable future.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Company's Common Stock is listed on the NYSE under the symbol "PK." The
following table sets forth, for the periods indicated, the high and low sales
prices for the Common Stock as reported by the NYSE.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
FISCAL 1996
First Quarter (since the Company's initial public offering
on October 10, 1995)...................................... $13.11 $ 8.00
Second Quarter.............................................. 18.17 12.00
Third Quarter............................................... 22.75 15.83
Fourth Quarter.............................................. 22.17 15.75
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
FISCAL 1998
First Quarter............................................... $46.81 $31.42
Second Quarter (through February 12, 1998).................. 45.88 38.44
</TABLE>
On February 12, 1998, the last reported sale price of the Common Stock on
the NYSE was $43.50 per share. At February 12, 1998, there were approximately
7,000 holders of the Common Stock, based on the number of record holders and the
number of individual participants represented by security position listings.
Since April 1997, the Company has distributed a quarterly cash dividend of
$0.015 per share. The Company had previously declared a dividend of $0.013 per
share following the end of each quarter since its initial public offering in
October 1995. The Board of Directors currently intends to declare a cash
dividend
11
<PAGE> 15
each quarter depending on the Company's profitability and capital necessary to
finance operations and expansion. The Company reserves the right, however, to
retain all or a substantial portion of its earnings to finance the operation and
expansion of the Company'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 Board of Directors may deem relevant, including
restrictions in any then-existing credit agreement. The New Credit Facility
contains certain restrictions on the Company's ability to pay dividends;
however, the Company does not believe these restrictions limit its ability to
pay currently anticipated cash dividends. In addition, the Convertible Preferred
Securities to be issued in the Private Placement will prohibit the payment of
dividends on the Common Stock if the quarterly dividends on the Convertible
Preferred Securities are not made for any reason. See "Description of
Convertible Preferred Securities."
12
<PAGE> 16
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
December 31, 1997 (i) on an actual basis, (ii) on a pro forma basis as if the
Kinney Acquisition had occurred on such date, and (iii) on a pro forma as
adjusted basis to reflect (A) the Kinney Acquisition as if it had occurred on
such date, (B) the issuance and sale of the 1,875,000 shares of Common Stock
offered by the Company hereby, at an assumed public offering price of $43.50 per
share, and the receipt of $77.4 million in estimated net proceeds therefrom, (C)
the sale of 4,000,000 shares of Convertible Preferred Securities and the receipt
by the Company of $96.3 million in estimated net proceeds therefrom, and (D) the
application of the estimated net proceeds from (B) and (C) above to reduce
borrowings under the New Credit Facility as described under "Use of Proceeds."
This table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Unaudited Pro
Forma Consolidated Financial Information" included elsewhere in this Prospectus
and the Consolidated Financial Statements and Notes thereto incorporated herein
by reference.
<TABLE>
<CAPTION>
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt and capital lease obligations, less current
portion................................................... $ 86,899 $310,158 $136,466
Mandatorily redeemable convertible preferred securities of
trust subsidiary.......................................... -- -- 100,000
Shareholders' equity:
Preferred Stock, $0.01 par value, 1,000,000 shares
authorized, no shares outstanding...................... -- -- --
Common Stock, $0.01 par value, 50,000,000 shares
authorized; 26,316,054(1) shares issued and
outstanding, actual; 27,198,477 (1) shares issued and
outstanding, pro forma; and 29,073,477 (1) shares
issued and outstanding, pro forma as adjusted.......... 263 272 291
Additional paid-in capital................................ 33,050 70,041 147,414
Foreign currency translation adjustment................... 271 271 271
Retained earnings......................................... 69,172 69,172 69,172
Deferred compensation on restricted stock, net............ (553) (553) (553)
-------- -------- --------
Total shareholders' equity........................ 102,203 139,203 216,595
-------- -------- --------
Total capitalization.............................. $189,102 $449,361 $453,061
======== ======== ========
</TABLE>
- ---------------
(1) Does not include 816,573 shares of Common Stock issuable upon the exercise
of stock options granted under the Company's stock option plans at December
31, 1997 or any shares of Common Stock issuable upon the conversion of the
Convertible Preferred Securities offered in the Private Placement.
13
<PAGE> 17
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial information of the
Company is based on (a) the historical consolidated financial results of the
Company, (b) the historical financial statements of Civic Parking, LLC
("Civic"), (c) the historical consolidated financial statements of Square
Industries, Inc. ("Square"), (d) the historical financial statements of Car Park
Corporation ("Car Park"), (e) the historical consolidated financial statements
of Diplomat, and (f) the historical consolidated financial statements of Kinney.
The historical consolidated balance sheet of the Company as of December 31,
1997 presents the consolidated financial position of the Company on such date.
The historical consolidated balance sheet of Kinney represents the consolidated
financial position of Kinney as of September 30, 1997. The unaudited pro forma
consolidated balance sheet as of December 31, 1997 assumes that the Kinney
Acquisition had occurred on December 31, 1997.
The historical statement of earnings information for the year ended
September 30, 1997 reflects (a) the historical results of operations of the
Company for its fiscal year then ended, (b) the historical results of operations
of Civic for the three month period ended December 31, 1996, (c) the historical
results of operations of Square for the three month period ended December 31,
1996 and the period January 1 through January 17, 1997, (d) the historical
results of operations of Car Park for the period October 1, 1996 through May 29,
1997, (e) the historical results of operations of Diplomat for the twelve month
period ending September 30, 1997, and (f) the historical results of operations
of Kinney for the twelve month period ending September 30, 1997. The historical
statement of earnings for the quarter ended December 31, 1997 reflects the
historical results of operations of the Company for the first quarter of fiscal
1998 and the historical results of operations of Kinney for the quarter ended
September 30, 1997. The unaudited pro forma statement of earnings was prepared
assuming that the acquisitions were consummated on October 1, 1996.
The unaudited pro forma consolidated financial information has been
prepared based on the historical financial statements of the Company and the
acquired entities, reclassified as necessary to conform with the presentation
used in the consolidated financial statements of the Company, and gives effect
to (a) the acquisitions under the purchase method of accounting, based on
preliminary allocations of the respective purchase prices with respect to the
Diplomat and Kinney acquisitions, (b) the financing of the acquisitions, (c)
certain estimated operational and financial combination benefits which are a
direct result of the Square and Kinney acquisitions, and (d) the assumptions and
adjustments which are deemed appropriate by management of the Company and which
are described in the accompanying notes to the pro forma consolidated financial
information.
The pro forma as adjusted consolidated information reflects (i) the
acquisitions and related financings, (ii) the sale of 1,875,000 shares of Common
Stock offered by the Company hereby at an assumed offering price of $43.50 per
share and the receipt by the Company of $77.4 million in estimated net proceeds
therefrom, (iii) the sale of 4,000,000 shares of Convertible Preferred
Securities by the Company in the Private Placement and the receipt by the
Company of $96.3 million in estimated net proceeds therefrom, and (iv) the
application of the estimated net proceeds received from (ii) and (iii) above to
reduce indebtedness under the New Credit Facility, as if such transactions had
been consummated on October 1, 1996 for the pro forma as adjusted consolidated
statement of earnings data and on December 31, 1997 for the pro forma as
adjusted consolidated balance sheet data.
This pro forma and pro forma as adjusted consolidated financial information
may not be indicative of the results that would have occurred if the
acquisitions had been in effect on the dates indicated or which may be obtained
in the future. Such pro forma and pro forma as adjusted consolidated financial
information should be read in conjunction with historical financial statements
and notes thereto, which are incorporated by reference herein. See "Information
Incorporated by Reference."
14
<PAGE> 18
CENTRAL PARKING CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(ALL DOLLAR AMOUNTS ARE EXPRESSED IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
EFFECTS OF
KINNEY
HISTORICAL ACQUISITION AND PRO FORMA
------------------ RELATED CONSOLIDATED PRO FORMA PRO FORMA
COMPANY KINNEY FINANCING TOTALS ADJUSTMENTS AS ADJUSTED
-------- ------- --------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................... $13,288 $ 4,453 $ -- $ 17,741 $ -- $ 17,741
Management accounts receivable................ 11,164 3,717 -- 14,881 -- 14,881
Accounts and current portion of notes
receivable -- other......................... 4,790 3,212 -- 8,002 -- 8,002
Prepaid expenses.............................. 11,314 1,483 -- 12,797 -- 12,797
Deferred income taxes......................... 981 1,185 -- 2,166 -- 2,166
Due from stockholder.......................... -- 2,861 (2,861)(A) -- -- --
-------- ------- -------- -------- --------- --------
Total current assets.................... 41,537 16,911 (2,861) 55,587 -- 55,587
Investments, at amortized cost.................. 4,825 -- -- 4,825 -- 4,825
Notes receivable, less current portion:......... 16,402 -- -- 16,402 -- 16,402
Due from New York City........................ -- 10,619 2,100(B) 12,719 -- 12,719
Other......................................... -- 298 -- 298 -- 298
Property, equipment, and leasehold improvements,
net........................................... 80,177 27,408 7,676(B) 115,261 -- 115,261
Contract rights, net............................ 4,807 -- -- 4,807 -- 4,807
Goodwill, net................................... 51,584 -- 207,724(B) 259,308 -- 259,308
Investment in partnerships and joint ventures... 50,189 10,254 (5,181)(A) 61,684 -- 61,684
6,422(B)
Deferred income taxes........................... -- 5,169 -- 5,169 -- 5,169
Other assets.................................... 7,223 6,706 1,309(D) 15,238 3,700 18,938
-------- ------- -------- -------- --------- --------
$256,744 $77,365 $217,189 $551,298 $ 3,700 $554,998
======== ======= ======== ======== ========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt............. $ 1,292 $ 2,309 $ (978)(D) $ 2,623 $ -- $ 2,623
Current portion of capital lease
obligations................................. -- 831 -- 831 -- 831
Accounts payable.............................. 26,586 3,497 -- 30,083 -- 30,083
Accrued expenses.............................. 12,042 12,304 (140)(D) 27,206 -- 27,206
3,000(B)
Management accounts payable................... 9,928 -- -- 9,928 -- 9,928
Income taxes payable.......................... 3,690 -- -- 3,690 -- 3,690
Other current liabilities..................... -- 593 -- 593 -- 593
-------- ------- -------- -------- --------- --------
Total current liabilities............... 53,538 19,534 1,882 74,954 -- 74,954
Long-term debt, less current portion............ 86,899 21,667 193,023(D) 301,589 (173,692) 127,897
Capital lease obligations, less current
portion....................................... -- 8,569 -- 8,569 -- 8,569
Other liabilities............................... 5,293 461 -- 5,754 -- 5,754
Deferred income taxes........................... 5,693 -- 5,441(C) 11,134 -- 11,134
Deferred compensation........................... 3,118 -- -- 3,118 -- 3,118
Deferred rent................................... -- 6,977 -- 6,977 -- 6,977
-------- ------- -------- -------- --------- --------
Total liabilities....................... 154,541 57,208 200,346 412,095 (173,692) 238,403
Company-obligated mandatorily redeemable
convertible preferred securities of a
subsidiary trust whose sole assets are the
convertible subordinated debentures of the
Company due 2028.............................. -- -- -- -- 100,000 100,000
Shareholders' equity:
Common Stock.................................. 263 -- 9(B) 272 19 291
Additional paid-in capital.................... 33,050 6,304 30,687(B) 70,041 77,373 147,414
Foreign currency translation adjustment....... 271 -- -- 271 -- 271
Retained earnings............................. 69,172 13,853 (13,853)(B) 69,172 -- 69,172
Deferred compensation on restricted stock,
net......................................... (553) -- -- (553) -- (553)
-------- ------- -------- -------- --------- --------
Total shareholders' equity.............. 102,203 20,157 16,843 139,203 77,392 216,595
-------- ------- -------- -------- --------- --------
$256,744 $77,365 $217,189 $551,298 $ 3,700 $554,998
======== ======= ======== ======== ========= ========
</TABLE>
See accompanying notes to pro forma consolidated financial information.
15
<PAGE> 19
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS
YEAR ENDED SEPTEMBER 30, 1997
(ALL DOLLAR AMOUNTS ARE EXPRESSED IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
COMBINED COMBINED
COMPANY ACQUISITIONS PRO FORMA PRO FORMA KINNEY PRO FORMA
HISTORICAL HISTORICAL(A) ADJUSTMENTS(B) CONSOLIDATED HISTORICAL ADJUSTMENTS
---------- ------------- -------------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Parking.......................... $180,885 $43,980 $ (2,448) $222,417 $120,909 $ --
Management contracts............. 42,091 1,234 -- 43,325 5,755 --
-------- ------- -------- -------- -------- --------
Total revenues............. 222,976 45,214 (2,448) 265,742 126,664 --
Costs and expenses:
Cost of parking.................. 159,904 37,243 (1,336) 195,811 98,334 167(C)
Cost of management contracts..... 11,793 131 -- 11,924 3,976 --
Amortization of goodwill and
noncompete agreements.......... 920 -- 1,249 2,169 -- 6,924(D)
Acquisition costs................ -- 2,864 (2,864) -- -- --
General and administrative....... 22,506 9,991 (6,403) 26,094 16,305 (5,588)(E)
320(F)
297(G)
-------- ------- -------- -------- -------- --------
Total costs and expenses... 195,123 50,229 (9,354) 235,998 118,615 2,120
-------- ------- -------- -------- -------- --------
Operating earnings (loss)........ 27,853 (5,015) 6,906 29,744 8,049 (2,120)
Other income (expenses):
Interest income.................. 1,842 20 (283) 1,579 1,519 (210)(H)
Interest expense................. (4,582) (805) (1,769) (7,156) (3,373) (10,337)(I)
Dividends on convertible
preferred securities of a
subsidiary trust............... -- -- -- -- -- --
Net gains (losses) on sales of
property and equipment......... 3,137 -- -- 3,137 (818) --
Equity in partnership and joint
venture earnings............... 4,163 -- 513 4,676 1,003 (119)(J)
Write-off of assets.............. -- (1,169) 612 (557) -- --
-------- ------- -------- -------- -------- --------
Earnings (loss) before
income taxes............. 32,413 (6,969) 5,979 31,423 6,380 (12,786)
Income tax expense............... 12,207 301 (209) 12,299 2,802 (2,535)(K)
-------- ------- -------- -------- -------- --------
Net earnings (loss)........ $ 20,206 $(7,270) $ 6,188 $ 19,124 $ 3,578 $(10,251)
======== ======= ======== ======== ======== ========
Basic earnings per common share.... $ 0.78
========
Diluted earnings per common
share............................ $ 0.77
========
Weighted average shares-basic...... 25,991
========
Weighted average shares-diluted.... 26,330
========
<CAPTION>
PRO FORMA PRO FORMA PRO FORMA
CONSOLIDATED ADJUSTMENTS AS ADJUSTED
------------ ----------- -----------
<S> <C> <C> <C>
Revenues:
Parking.......................... $343,326 $ -- $343,326
Management contracts............. 49,080 -- 49,080
-------- -------- --------
Total revenues............. 392,406 -- 392,406
Costs and expenses:
Cost of parking.................. 294,312 -- 294,312
Cost of management contracts..... 15,900 -- 15,900
Amortization of goodwill and
noncompete agreements.......... 9,093 -- 9,093
Acquisition costs................ -- -- --
General and administrative....... 37,428 123 37,551
-------- -------- --------
Total costs and expenses... 356,733 123 356,856
-------- -------- --------
Operating earnings (loss)........ 35,673 (123) 35,550
Other income (expenses):
Interest income.................. 2,888 -- 2,888
Interest expense................. (20,866) 11,941 (8,925)
Dividends on convertible
preferred securities of a
subsidiary trust............... -- (6,000) (6,000)
Net gains (losses) on sales of
property and equipment......... 2,319 -- 2,319
Equity in partnership and joint
venture earnings............... 5,560 -- 5,560
Write-off of assets.............. (557) -- (557)
-------- -------- --------
Earnings (loss) before
income taxes............. 25,017 5,818 30,835
Income tax expense............... 12,566 2,327 14,893
-------- -------- --------
Net earnings (loss)........ $ 12,451 $ 3,491 $ 15,942
======== ======== ========
Basic earnings per common share.... $ 0.46 $ 0.55
======== ========
Diluted earnings per common
share............................ $ 0.46 $ 0.55
======== ========
Weighted average shares-basic...... 26,874 28,749
======== ========
Weighted average shares-diluted.... 27,212 29,087
======== ========
</TABLE>
See accompanying notes to pro forma consolidated financial information
16
<PAGE> 20
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS
THREE MONTHS ENDED DECEMBER 31, 1997
(ALL DOLLAR AMOUNTS ARE EXPRESSED IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
COMPANY KINNEY PRO FORMA PRO FORMA PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS CONSOLIDATED ADJUSTMENTS AS ADJUSTED
---------- ---------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Parking................................ $59,005 $32,472 $ -- $ 91,477 $ -- $ 91,477
Management contracts................... 12,184 1,438 -- 13,622 -- 13,622
------- ------- ------- -------- ------- --------
Total revenues.................. 71,189 33,910 -- 105,099 105,099
Costs and expenses:
Cost of parking........................ 51,895 27,108 42(A) 79,045 -- 79,045
Cost of management contracts........... 3,252 1,001 -- 4,253 -- 4,253
Amortization of goodwill and noncompete
agreements........................... 562 -- 1,731(B) 2,293 -- 2,293
General and administrative............. 6,676 3,489 (2,334)(C) 7,980 31 8,011
69(D)
80(E)
------- ------- ------- -------- ------- --------
Total costs and expenses........ 62,385 31,598 (412) 93,571 31 93,602
------- ------- ------- -------- ------- --------
Operating earnings (loss).............. 8,804 2,312 412 11,528 (31) 11,497
Other income (expenses):
Interest income........................ 497 382 (53)(F) 826 -- 826
Interest expense....................... (1,411) (915) (2,512)(G) (4,838) 2,986 (1,852)
Dividends on convertible preferred
securities of subsidiary trust....... -- -- -- -- (1,500) (1,500)
Net gains (losses) on sales of property
and equipment........................ 2 (50) -- (48) -- (48)
Equity in partnership and joint venture
earnings............................. 1,207 424 (26)(H) 1,605 -- 1,605
------- ------- ------- -------- ------- --------
Earnings (loss) before income
taxes......................... 9,099 2,153 (2,179) 9,073 1,455 10,528
Income tax expense....................... 3,457 859 (194)(I) 4,122 582 4,704
------- ------- ------- -------- ------- --------
Net earnings (loss)............. $ 5,642 $ 1,294 $(1,985) $ 4,951 $ 873 $ 5,824
======= ======= ======= ======== ======= ========
Basic earnings per common share.......... $ 0.22 $ 0.18 $ 0.20
======= ======== ========
Diluted earnings per common share........ $ 0.21 $ 0.18 $ 0.20
======= ======== ========
Weighted average shares-basic............ 26,042 26,925 28,800
======= ======== ========
Weighted average shares-diluted.......... 26,482 27,364 29,239
======= ======== ========
</TABLE>
See accompanying notes to pro forma consolidated financial information
17
<PAGE> 21
CENTRAL PARKING CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION
The accompanying unaudited pro forma financial information presents the pro
forma consolidated financial condition of Central Parking Corporation as of
December 31, 1997 and the pro forma consolidated results of operations for the
three months ended December 31, 1997 and the fiscal year ended September 30,
1997.
On December 31, 1996, the Company acquired for cash 100% of the ownership
units in Civic Parking, LLC, a Missouri limited liability company ("Civic"). In
April, 1997, the Company sold 50% of its investment in Civic. On January 18,
1997, the Company completed the acquisition of Square Industries, Inc., a New
York corporation ("Square"), through a cash tender offer for all the outstanding
shares of common stock of Square. On May 29, 1997, the Company acquired the
assets and related leases of Car Park Corporation ("Car Park"). On October 1,
1997, the Company purchased the common stock of Diplomat Parking Corporation
("Diplomat"). The Company's historical consolidated balance sheet at December
31, 1997 reflects the acquired net assets and effects of financing of Civic,
Square, Car Park, and Diplomat. On February 12, 1998, the Company completed its
acquisition of Kinney System Holding Corp. ("Kinney"). The Company's
accompanying pro forma consolidated balance sheet includes the acquired net
assets and effects of the related financing, as if Kinney had been acquired on
December 31, 1997. The accompanying pro forma consolidated statements of
earnings reflect the pro forma results of operations of the Company, as
adjusted, as if each of the acquisitions had occurred on October 1, 1996.
PRO FORMA CONSOLIDATED BALANCE SHEET
The acquisition of Kinney has been accounted for as a purchase. The
aggregate purchase price and the allocation of such purchase price to the
acquired net assets, based upon preliminary purchase price allocations, are as
follows (in $000s):
<TABLE>
<S> <C>
Purchase price for common stock of Kinney................... $225,000
Purchase price for acquisition by Kinney of partnership
interest.................................................. 2,596
Transaction costs........................................... 2,000
--------
Total acquisition cost............................ $229,596
Assets not acquired......................................... 8,042
Elimination of stockholders' equity acquired................ (20,157)
Property, plant and equipment write-up to estimated fair
values.................................................... (3,971)
Investment in limited liability corporation write-up to
estimated fair value...................................... (3,826)
Recognize favorable lease rights............................ (3,705)
Note receivable write-up to fair value...................... (2,100)
Fair value of partnership interest acquired by Kinney
between September 30, 1997 and acquisition date........... (2,596)
Recognize estimated severance costs......................... 1,000
Recognize net deferred tax liabilities related to write-up
of assets to fair value................................... 5,441
--------
Excess of cost over net assets acquired
(goodwill)...................................... $207,724
========
</TABLE>
The goodwill will be amortized on a straight-line basis over 30 years. The
estimated life of 30 years was selected by management after consideration of
various factors, including the nature of the assets acquired, the terms of the
acquired management contracts and garage leases, the expected renewal rate of
such contracts and the historical renewal rate (93%) of the Company's contracts,
the relatively stable operating history of the acquired owned parking
facilities, the competitive environment and the relative stable nature of the
industry in which the acquired business operates.
18
<PAGE> 22
CENTRAL PARKING CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION -- (CONTINUED)
The adjustments reflected in the pro forma consolidated balance sheet are
as follows:
(A) To eliminate assets not acquired in connection with the purchase.
The assets not acquired include the due from stockholder of $2,861,000 and
certain limited partnership interests of $5,181,000.
(B) To record the purchase of Kinney based on the preliminary
allocation of the purchase price based upon estimates of fair value of the
assets and liabilities acquired as set forth above, including (i) the
write-up of property, plant and equipment of $3,971,000, (ii) the write-up
of certain limited partnership interests to recognize the fair value of the
underlying property, plant and equipment of $3,826,000, (iii) the
recognition of favorable lease rights of $3,705,000, (iv) the write-up of
notes receivable of $2,100,000, (v) the recognition of partnership
interests acquired of $2,596,000 during the period after the historical
balance sheet and before the acquisition date, (vi) the recording of
transaction costs of $2,000,000, (vii) the recording of severance costs of
$1,000,000, (viii) the elimination of Kinney's equity, (ix) the issuance of
$37,000,000 of the Company's common stock as part of the purchase price
consideration, and (x) the recording of the resultant $207,724,000 in
goodwill.
(C) To record deferred tax liabilities resulting from the write-up of
assets for financial reporting purposes.
(D) To record the net increase in debt incurred to finance the
acquisition and the related impact to deferred financing costs. Accrued
interest of $140,000 was also written off in connection with the retirement
of the Kinney debt.
PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS
Year ended September 30, 1997
(A) The historical financial results of the combined acquisitions presented
in the unaudited pro forma consolidated statement of earnings for the year ended
September 30, 1997 include the historical statements of earnings for Square for
the period October 1, 1996 to January 17, 1997; Civic for the period October 1,
1996 to December 31, 1996; CarPark for the period October 1, 1996 to May 29,
1997; and Diplomat for the period October 1, 1996 to September 30, 1997.
(B) The amounts reflected in the Combined Pro Forma Adjustments column for
the year ended September 30, 1997 reflect the combined pro forma adjustments
attributable to the following:
(i) Square pro forma adjustments reflect: the impact to depreciation
expense related to changes in depreciable lives and to the write-up of
fixed assets to estimated fair values; the amortization of goodwill and
non-compete agreements using 25 year and 5 year lives, respectively; the
elimination of historical expenses incurred by Square in anticipation of
the acquisition; the elimination of amortization of deferred expenses and
financing costs; estimated cost savings related to general and
administrative expenses, including excess personnel; interest on related
acquisition financing at an average rate of 6.75%; and estimated federal
and state income taxes at a combined statutory rate of 37.7%;
(ii) Civic pro forma adjustments reflect: the elimination of 100%
ownership of Civic as a result of the sale of a 50% interest and to record
the 50% joint venture interest retained by the Company as equity in
partnership and joint venture earnings; the elimination of historical
results of operations for assets not acquired by the Company in the
transaction; adjustment to depreciation for changes in depreciable lives
and the write-up of fixed assets to estimated fair values; decreased
interest income related to the use of cash investments in the purchase of
Civic; interest expense on the related acquisition financing at an average
rate of 6.75%; and estimated federal and state income taxes at a combined
statutory rate of 37.7%;
19
<PAGE> 23
CENTRAL PARKING CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION -- (CONTINUED)
(iii) CarPark pro forma adjustments reflect: the amortization of
goodwill and non-compete agreements using 25 year and 5 year lives,
respectively; interest on related acquisition financing at an average rate
of 6.75%; and estimated federal and state income taxes at a combined
statutory rate of 37.7%; and
(iv) Diplomat pro forma adjustments reflect: the amortization of
goodwill using a 25 year life; the elimination of expense related to
compensatory stock options granted to a Diplomat stockholder in conjunction
with and directly related to the acquisition of Diplomat by the Company;
interest on related acquisition financing; and estimated federal and state
income taxes at a combined statutory rate of 37.7%.
The adjustments attributable to the Kinney acquisition reflected in the pro
forma consolidated statement of earnings for the year ended September 30, 1997,
are as follows:
(C) To reflect the net change in depreciation resulting from the fair
value adjustments.
(D) To reflect amortization of goodwill over 30 years.
(E) To record the effect of estimated cost savings relating to general
and administrative expenses, including excess personnel, to be eliminated
in connection with the Kinney acquisition.
(F) To reflect expense associated with the five-year consulting
contracts with the former shareholders of Kinney.
(G) To reflect amortization of the deferred financing fees over the
five year term of the related acquisition debt. Amortization of deferred
financing fees related to debt that was repaid at closing is removed.
(H) To reflect amortization of the adjustment to fair value on note
receivable due from New York City over remaining ten year term of the note.
(I) To reflect interest expense on acquisition-related borrowings.
Interest is calculated at a rate of 6.875%. Interest expense on debt repaid
at closing is removed.
(J) To eliminate the effect of losses from equity in partnership
earnings for partnerships that were not transferred in the acquisition of
Kinney and to record goodwill amortization over a 30 year period relating
to the $3,826,000 purchase accounting write-up on the investment in
unconsolidated subsidiary acquired.
(K) To record estimated federal and state income taxes at Kinney's
statutory rate of 43.25%.
Quarter ended December 31, 1997
(A) To reflect the net change in depreciation resulting from the fair
value adjustments.
(B) To record amortization of the intangible assets. The goodwill is
being amortized over 30 years.
(C) To record the effect of estimated cost savings relating to general
and administrative expenses, including excess personnel, to be eliminated
in connection with the Kinney acquisition.
(D) To reflect amortization of the deferred financing fees over the
five year term of the related acquisition debt. Amortization of deferred
financing fees related to debt that was repaid at closing is removed.
(E) To reflect expense associated with the five-year consulting
contracts with the former shareholders of Kinney.
20
<PAGE> 24
CENTRAL PARKING CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION -- (CONTINUED)
(F) To reflect amortization of the adjustment to fair value on note
receivable due from New York City over remaining ten year term of the note.
(G) To reflect interest expense on acquisition related borrowings.
Interest is calculated at an average rate of 6.875%.
(H) To eliminate the effect of losses from equity in partnership
earnings for partnerships that were not transferred in the acquisition of
Kinney and to record goodwill amortization over a 30 year period relating
to the $3,826,000 purchase accounting write-up on the investment in
unconsolidated subsidiary acquired.
(I) To record estimated federal and state income taxes at a combined
statutory rate of 43.25%.
For a detailed presentation of the components of historical results of
operations of the combined acquisitions and the related combined pro forma
adjustments, refer to the Form 8-K dated February 17, 1998 incorporated herein
by reference.
PRO FORMA AS ADJUSTED CONSOLIDATED FINANCIAL INFORMATION
The pro forma as adjusted consolidated financial information was prepared
assuming (i) the acquisitions and related financings, (ii) the sale of 1,875,000
shares of Common Stock offered by the Company at $43.50 per share, (iii) the
sale of 4,000,000 shares of Convertible Preferred Securities offered by the
Trust in a Private Placement at $25.00 per share, and (iv) the application of
the estimated net proceeds received from (ii) and (iii) above to reduce
indebtedness under the New Credit Facility (see "Use of Proceeds" included
elsewhere in this Prospectus), were consummated on October 1, 1996 for the pro
forma as adjusted consolidated statement of earnings data and on December 31,
1997 for the pro forma as adjusted consolidated balance sheet data.
The Offering adjustments to derive the as adjusted consolidated balance
sheet reflect (i) the estimated net proceeds of $77,392,000 from the sale of
Common Stock offered by the Company, (ii) the sale of 4,000,000 shares of
Convertible Preferred Securities offered by the Trust in a Private Placement at
$25.00 per share, (iii) the estimated $3,700,000 in offering costs associated
with the Convertible Preferred Securities, and (iv) the application of the net
proceeds of $173,692,000 from (i) and (ii) above to reduce indebtedness under
the New Credit Facility.
The Offering adjustments to derive the as adjusted consolidated statement
of earnings for the year ended September 30, 1997 reflect (i) the estimated
dividends on the Convertible Preferred Securities of $6,000,000, assuming a 6%
dividend rate, (ii) amortization of $123,333 of estimated offering costs, (iii)
the elimination of interest expense of $11,941,000 on New Credit Facility debt
repayments using an assumed interest rate of 6.875%, and (iv) the tax effect of
the above adjustments.
The Offering adjustments to derive the as adjusted consolidated statement
of earnings for the three months ended December 31, 1997 reflect (i) the
estimated dividends on the Convertible Preferred Securities of $1,500,000,
assuming a 6% dividend rate, (ii) amortization of $30,833 of estimated offering
costs, (iii) the elimination of interest expense of $2,985,250 on New Credit
Facility debt repayment using an assumed interest rate of 6.875%, and (iv) the
tax effect of the above adjustments.
The pro forma as adjusted consolidated diluted earnings per share
calculations exclude the effect of conversion of the Convertible Preferred
Securities as such assumed conversion would be anti-dilutive.
21
<PAGE> 25
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
Set forth below is selected historical and unaudited pro forma consolidated
financial data of the Company for each of the periods indicated. The historical
statement of earnings, per share data, the balance sheet data, and other data as
of and for the years ended September 30, 1995, 1996, and 1997 were derived from
the audited consolidated financial statements of the Company. The historical
statement of earnings data, per share data, and other data for the three month
periods ended December 31, 1996 and 1997, and the balance sheet data as of
December 31, 1997 were derived from the unaudited consolidated financial
statements of the Company. The historical results of operations for the three
months ended December 31, 1997 are not necessarily indicative of the actual
results that may be experienced for fiscal 1998. The selected unaudited pro
forma financial information is not necessarily representative of what the
Company's results of operations or financial position would have been had the
Acquisitions in fact occurred on the respective dates set forth in the
footnotes, and is not intended to project the Company's results of operations or
financial position for any future period or date. The information set forth
below should be read in conjunction with the Company's historical Consolidated
Financial Statements and the Notes thereto incorporated by reference herein and
the "Unaudited Pro Forma Consolidated Financial Information" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED SEPTEMBER 30, DECEMBER 31,
------------------------------------------------------- -------------------------------------------
PRO FORMA PRO FORMA
PRO FORMA AS ADJUSTED PRO FORMA AS ADJUSTED
1995 1996 1997 1997(1) 1997(1)(2) 1996 1997 1997(1) 1997(1)(2)
------- -------- -------- --------- ----------- ------- ------- --------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Revenues:
Parking............ $94,383 $109,272 $180,886 $343,326 $343,326 $32,085 $59,005 $91,477 $91,477
Management
contract......... 31,772 34,044 42,090 49,080 49,080 9,338 12,184 13,622 13,622
------- -------- -------- -------- -------- ------- ------- ------- -------
Total
revenues..... 126,155 143,316 222,976 392,406 392,406 41,423 71,189 105,099 105,099
Cost and expenses:
Cost of parking.... 87,192 99,196 159,904 294,312 294,312 29,085 51,895 79,045 79,045
Cost of management
contracts........ 9,650 9,769 11,793 15,900 15,900 2,501 3,252 4,253 4,253
General and
administrative... 15,711 17,419 23,427 46,521 46,644 4,708 7,238 10,273 10,304
------- -------- -------- -------- -------- ------- ------- ------- -------
Total costs and
expenses..... 112,553 126,384 195,124 356,733 356,856 36,294 62,385 93,571 93,602
------- -------- -------- -------- -------- ------- ------- ------- -------
Operating
earnings..... 13,602 16,932 27,852 35,673 35,550 5,129 8,804 11,528 11,497
------- -------- -------- -------- -------- ------- ------- ------- -------
Interest expense... -- -- 4,582 20,866 8,925 7 1,411 4,838 1,852
Dividends on
Convertible
Preferred
Securities....... -- -- -- -- 6,000 -- -- -- 1,500
Net gains (losses) on
sales of property
and equipment...... 81 1,192 3,137 2,319 2,319 3 2 (48) (48)
Earnings before
income taxes....... 15,507 21,068 32,412 25,017 30,835 6,000 9,099 9,073 10,528
Income taxes......... 5,563 7,232 12,207 12,566 14,893 2,101 3,457 4,122 4,704
------- -------- -------- -------- -------- ------- ------- ------- -------
Net earnings......... $ 9,944 $ 13,836 $ 20,205 $ 12,451 $ 15,942 $ 3,899 $ 5,642 $ 4,951 $ 5,824
======= ======== ======== ======== ======== ======= ======= ======= =======
</TABLE>
22
<PAGE> 26
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED SEPTEMBER 30, DECEMBER 31,
------------------------------------------------------- -------------------------------------------
PRO FORMA PRO FORMA
PRO FORMA AS ADJUSTED PRO FORMA AS ADJUSTED
1995 1996 1997 1997(1) 1997(1)(2) 1996 1997 1997(1) 1997(1)(2)
------- -------- -------- --------- ----------- ------- ------- --------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net earnings per
common share(3)(4):
Basic.............. $ 0.43 $ 0.54 $ 0.78 $ 0.46 $ 0.55 $ 0.15 $ 0.22 $ 0.18 $ 0.20
Diluted............ $ 0.43 $ 0.53 $ 0.77 $ 0.46 $ 0.55 $ 0.15 $ 0.21 $ 0.18 $ 0.20
Weighted average
common
shares(3)(4):
Basic................ 23,058 25,793 25,991 26,874 28,749 25,965 26,042 26,925 28,800
Diluted.............. 23,058 26,078 26,330 27,212 29,087 26,272 26,482 27,364 29,239
Dividends per common
share(3)........... -- $ 0.05 $ 0.06 $ 0.06 $ 0.05 $ 0.01 $ 0.02 $ 0.01 $ 0.01
Ratio of earnings to
fixed charges(5)... 1.9x 2.1x 1.9x 1.3x 1.4x 1.9x 1.8x 1.4x 1.6x
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
AS OF SEPTEMBER 30, ---------------------------
----------------------------- PRO FORMA
1995 1996 1997 ACTUAL AS ADJUSTED(6)
------- -------- -------- -------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents..................... $10,218 $ 28,605 $ 9,979 $ 13,288 $ 17,741
Working capital............................... 2,676 19,707 (9,231) (12,001) (19,367)
Total assets.................................. 70,440 107,212 234,014 256,744 554,998
Long-term debt and capital lease obligations,
less current portion........................ -- -- 73,252 86,899 136,466
Mandatorily redeemable convertible preferred
securities of trust subsidiary.............. -- -- -- -- 100,000
Shareholders' equity.......................... 41,360 76,793 96,851 102,203 216,595
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED SEPTEMBER 30, DECEMBER 31,
-------------------------------------- ---------------------------
PRO FORMA PRO FORMA
AS ADJUSTED AS ADJUSTED
1995 1996 1997 1997(1) 1996 1997 1997(1)
------ ------ ------ ----------- ---- ------ -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Depreciation and amortization...... $2,882 $3,420 $5,875 $18,570 $942 $1,847 $4,358
</TABLE>
- ---------------
(1) Gives effect to the Acquisitions, including the incurrence of related
indebtedness, as if they had occurred on October 1, 1996. See "Unaudited Pro
Forma Consolidated Financial Information."
(2) Adjusted to reflect the sale of 1,875,000 shares of Common Stock offered by
the Company hereby at an assumed public offering price of $43.50 per share
and the receipt of $77.4 million in estimated net proceeds therefrom, the
sale of 4,000,000 shares of the Convertible Preferred Securities in the
Private Placement, at an assumed annual dividend rate of 6.0%, and the
receipt by the Company of $96.3 million in estimated net proceeds received
therefrom, and the application of the estimated net proceeds received from
the Offering and the Private Placement to reduce indebtedness related to the
Acquisitions as described under "Use of Proceeds" and "Unaudited Pro Forma
Consolidated Financial Information."
(3) Reflects the recapitalization of the Company on September 29, 1995, and a
three-for-two stock split effective on each of March 19, 1996 and December
12, 1997.
(4) All earnings per share data for fiscal years 1995, 1996 and 1997 has been
restated to reflect the Company's adoption in the first quarter of fiscal
1998 of Statement of Financial Accounting Standards No. 128, "Earnings per
Share."
(5) For purposes of this computation, fixed charges consist of interest expense
and amortization of deferred financing fees, capitalized interest and
one-third of rental expenses, representative of that portion of rental
expenses attributable to interest, and preferred stock dividends. Earnings
consist of income before income taxes plus fixed charges (other than
capitalized interest, but including the amortization thereof).
(6) Gives effect to the Acquisitions, including the incurrence of related
indebtedness, as if each had occurred on December 31, 1997. See "Unaudited
Pro Forma Consolidated Financial Information."
23
<PAGE> 27
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the Company's results of operations and
financial condition should be read in conjunction with the Consolidated
Financial Statements and Notes thereto, which are incorporated by reference
herein.
OVERVIEW
The Company operates parking facilities under three types of arrangements:
leases, fee ownership and management contracts.
Parking revenues consist of the Company's 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 from leased facilities were $89.0 million, $103.0 million
and $166.6 million for fiscal 1995, 1996, and 1997, respectively. For the three
months ended December 31, 1996 and 1997, parking revenues from leased facilities
were $30.3 million and $55.2 million, respectively. 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, the Company'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 the Company than managed
facilities but generally provide a longer-term source of revenue and a greater
opportunity for revenue and earnings growth. Under its leases, the Company is
typically responsible for all facets of the parking operations, except for
structural, mechanical, electrical maintenance or repairs, or property taxes.
Lease arrangements are typically for terms of three to ten years, with renewal
options.
Parking revenues from owned facilities were $5.4 million, $6.3 million and
$14.3 million for fiscal 1995, 1996, and 1997, respectively. For the three
months ended December 31, 1996 and 1997, parking revenues from owned facilities
were $1.8 million and $3.8 million, respectively. 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 facility revenue and expenses flow directly to the Company.
Additionally, the Company has the potential to realize appreciation in the value
of the underlying real estate if the property is sold. The Company assumes
complete responsibility for all aspects of each owned property, including all
structural, mechanical, and electrical maintenance, repairs and property taxes.
Joint venture operations are accounted for under the equity method and are
reflected through equity in partnership and joint venture earnings.
Management contract revenues were $31.8 million, $34.0 million, and $42.1
million for fiscal 1995, 1996, and 1997, respectively. For the three months
ended December 31, 1996 and 1997, management contract revenues were $9.3 million
and $12.2 million, 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 such management contracts includes insurance premiums and claims and
other indirect overhead. The Company's responsibilities under a management
contract include hiring, training, and staffing parking personnel and providing
collections, accounting, recordkeeping, insurance, and facility marketing
services. In general, the Company is not responsible under its management
contracts for structural, mechanical, or electrical maintenance or repairs, 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. The Company's renewal rates for each of
the last five fiscal years were in excess of 91%. The Company's management
contract clients have the option of obtaining insurance independently or
purchasing insurance from the Company 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
24
<PAGE> 28
obtain on their own. Accordingly, the Company generates profits on the insurance
provided under its management contracts. See "Business -- Litigation and
Insurance."
A summary of the facilities operated by the Company as of December 31, 1997
and including the Kinney Acquisition is as follows:
<TABLE>
<CAPTION>
PERCENT
OF TOTAL
MANAGED LEASED OWNED TOTAL FACILITIES SPACES
------- ------ ----- ----- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Total U.S. and Puerto Rico..................... 939 684 58 1,681 91.7% 678,400
----- ----- -- ----- ----- -------
United Kingdom................................. 34 79 -- 113 6.2 47,300
Mexico(1)...................................... 19 13 -- 32 1.7 21,000
Germany(1)..................................... -- 4 -- 4 0.2 1,300
Canada......................................... 3 1 -- 4 0.2 9,000
----- ----- -- ----- ----- -------
Total foreign(2)............................... 56 97 -- 153 8.3 78,600
----- ----- -- ----- ----- -------
Total facilities..................... 995 781 58 1,834 100% 757,000
===== ===== == ===== ===== =======
Kinney......................................... 170 225 8 403 168,800
----- ----- -- ----- -------
Total including Kinney Acquisition... 1,165 1,006 66 2,237 925,800
===== ===== == ===== =======
</TABLE>
- ---------------
(1) Operated through 50% owned joint ventures.
(2) The parking facility in Kuala Lumpur, Malaysia, for which the Company has a
management contract, is not yet in operation and is not included in the
summary of facilities table. The Company's operations in Spain commenced
after December 31, 1997.
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, THREE MONTHS
------------------------ ENDED
1995 1996 1997 DECEMBER 31, 1997
------ ------ ------ -----------------
<S> <C> <C> <C> <C>
MANAGED FACILITIES:(1)
Beginning of period.................................. 626 715 770 877
Acquired during period............................... -- -- 36 100
Added during period.................................. 120 114 164 28
Deleted during period(2)(3)(4)....................... 31 59 93 10
----- ----- ----- -----
End of period........................................ 715 770 877 995
----- ----- ----- -----
Renewal rate(4)(5)................................... 95.0% 92.4% 91.1% 95.9%
LEASED FACILITIES:(1)
Beginning of period.................................. 436 485 552 709
Acquired during period............................... -- -- 82 64
Added during period(3)............................... 65 94 99 21
Deleted during period(4)............................. 16 27 24 13
----- ----- ----- -----
End of period........................................ 485 552 709 781
----- ----- ----- -----
OWNED FACILITIES:(1)(6)
Beginning of period.................................. 26 31 37 58
Acquired during period(2)............................ -- -- 20 --
Purchased during period.............................. 5 6 5 --
Sold during period................................... -- -- 4 --
----- ----- ----- -----
End of period........................................ 31 37 58 58
----- ----- ----- -----
Total facilities (end of period)............. 1,231 1,359 1,644 1,834
===== ===== ===== =====
</TABLE>
25
<PAGE> 29
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, THREE MONTHS
------------------------ ENDED
1995 1996 1997 DECEMBER 31, 1997
------ ------ ------ -----------------
<S> <C> <C> <C> <C>
PERCENTAGE GROWTH IN NUMBER OF FACILITIES:
Managed(5)........................................... 14.2% 7.7% 13.9% 53.8%
Leased(5)............................................ 11.2 13.8 28.4 40.6
Owned(5)............................................. 19.2 19.4 56.8 --
Total facilities(5).................................. 13.1 10.4 21.0 46.2
</TABLE>
- ---------------
(1) Includes 34 managed, 29 leased and 14 owned facilities operated under joint
venture agreements.
(2) Fiscal 1996 and 1997 include four facilities that the Company previously
managed and subsequently purchased.
(3) Includes the Company's lease in 1996 and 1997 of one facility and 11
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) Quarterly percentage computations for the quarter ended December 31, 1997
have been annualized.
(6) Includes the Company's corporate headquarters in Nashville, Tennessee.
Net gains derived from sales of property and equipment were $81,000, $1.2
million and $3.1 million for fiscal years 1995, 1996, and 1997, respectively.
For the three months ended December 31, 1996 and 1997 net gains from sales of
property, plant and equipment were $4,000 and $3,000, respectively.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, information
derived from the Company's consolidated financial statements expressed (except
as indicated) as a percentage of total revenues.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED SEPTEMBER 30, DECEMBER 31,
-------------------------- ------------------
1995 1996 1997 1996 1997
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Parking revenues................................. 74.8% 76.2% 81.1% 77.5% 82.9%
Management contract revenues..................... 25.2 23.8 18.9 22.5 17.1
----- ----- ----- ----- -----
Total revenues......................... 100.0 100.0 100.0 100.0 100.0
Cost of parking as a percentage of parking
revenues....................................... 92.4 90.8 88.4 90.6 88.0
Cost of management contracts as a percentage of
management contract revenues................... 30.4 28.7 28.0 26.8 26.7
General and administrative expenses.............. 12.5 12.2 10.5 11.4 10.2
----- ----- ----- ----- -----
Operating earnings............................... 10.8 11.8 12.5 12.4 12.4
Interest income(expense), net.................... 1.2 1.6 (1.3) 1.5 (1.3)
Net gains on sales of property and equipment..... -- 0.8 1.4 -- --
Other............................................ 0.3 0.5 1.9 0.6 1.7
----- ----- ----- ----- -----
Earnings before income taxes..................... 12.3 14.7 14.5 14.5 12.8
Income taxes..................................... 4.4 5.0 5.5 5.1 4.9
----- ----- ----- ----- -----
Net earnings........................... 7.9% 9.7% 9.0% 9.4% 7.9%
===== ===== ===== ===== =====
</TABLE>
Three Months Ended December 31, 1997 Compared to Three Months Ended December
31, 1996
Parking revenues for the first quarter of fiscal 1998 increased to $59.0
million from $32.1 million in the first quarter of fiscal 1997, an increase of
$26.9 million, or 83.9%. Of the $26.9 million increase, $19.4 million, or 72.1%
of the increase, resulted from the addition of 162 leased and owned locations of
Square, Car Park and Diplomat. The remaining increase of $7.5 million, or 27.9%,
is a result of the net addition of 57 leased and owned locations over the same
quarter in fiscal 1997 as well as a combination of rate increases and higher
utilization of parking spaces at existing facilities. Revenues from foreign
operations increased to $5.6 million
26
<PAGE> 30
from $4.0 million, an increase of $1.6 million or 42.3%. The increase in foreign
revenues was a result of the addition of 8 leased locations as well as rate
increases and higher utilization of parking spaces at existing facilities.
Management contract revenues for the first quarter of fiscal 1998 increased
to $12.2 million from $9.3 million in the first quarter of fiscal 1997, an
increase of $2.9 million or 30.5%. Of the $2.9 million increase, $1.3 million,
or 46.4%, resulted from the addition of 136 management locations through the
acquisitions of Square, Car Park and Diplomat. The remaining increase of $1.6
million, or 53.6%, is attributed to the net addition of 79 management contracts
and increased management fees on existing locations.
Cost of parking in the first quarter of fiscal 1998 increased to $51.9
million from $29.1 million in the first quarter of fiscal 1997, an increase of
$22.8 million or 78.4%. Rent expense increased $12.2 million and payroll
increased $5.0 million, principally as a result of new locations from
acquisitions and increases in existing locations. Cost of parking as a
percentage of parking revenues decreased to 88.0% in the first quarter of fiscal
1998 from 90.6% in the first quarter of fiscal 1997. This decrease was
attributable predominately to the spreading of a number of fixed costs,
primarily rent and property costs, over a larger revenue base.
Cost of management contracts in the first quarter of fiscal 1998 increased
to $3.3 million from $2.5 million in the comparable period in 1997, an increase
of $800,000 or 30.0%. The increase was attributable to an increase in the number
of managed locations and higher costs incurred at existing locations associated
with increased revenues.
General and administrative expenses increased to $7.2 million for the first
quarter of fiscal 1998 from $4.7 million in the first quarter of fiscal 1997, an
increase of $2.5 million or 53.7%. The increase is primarily attributable to
increased incentive compensation resulting from increased profits and start-up
costs associated with the opening of new locations and joint ventures. Goodwill
and non-compete amortization for the Square, Car Park and Diplomat acquisitions
accounts for $562,000, or 22.2% of the $2.5 million increase. General and
administrative expenses as a percentage of revenues were 10.2% for the first
quarter of fiscal 1998 compared to 11.4% for the first quarter of fiscal 1997.
The decrease was attributable to spreading fixed expenses over a broader revenue
base and the implementation of bonus limits on certain key executives.
Interest income decreased to $497,000 for the first quarter of fiscal 1998,
from $625,000 in the first quarter of fiscal 1997, a decrease of $128,000 or
20.5%. The decrease in interest income is a result of decreased investment
balances outstanding during the quarter.
Interest expense increased to $1.4 million for the first quarter of fiscal
1998 from $7,000 in the first quarter of fiscal 1997. The increase in interest
expense was attributable to the increase in indebtedness under the Company's
revolving credit facility. The weighted average balance outstanding was $78.5
million during the quarter ended December 31, 1997 at a weighted average
interest rate of 6.6%. During the first quarter of fiscal 1997, $67.2 million of
indebtedness under the revolving credit facility was outstanding for one day,
with minimal interest expense.
Income taxes increased to $3.5 million for the first quarter of fiscal 1998
from $2.1 million in the first quarter of fiscal 1997, an increase of $1.4
million or 64.6%. The effective tax rate for the first quarter of fiscal 1998
was 38.0% compared to 35.0% for the 1997 quarter. The increase in the effective
tax rate is attributable to a combination of decreasing interest income on tax
exempt investments in 1997, an increase in non-tax deductible goodwill
amortization and an increase in effective state income tax rates. The increased
effective tax rate is expected to continue for the remainder of the year.
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
addition of leased and owned locations of Square and Car Park. 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.
27
<PAGE> 31
Management contract revenues in fiscal 1997 increased to $42.1 million from
$34.0 million in fiscal 1996, an increase of $8.1 million, or 23.6%. Of the $8.1
million increase, $2.8 million, or 34.6% of the increase, resulted from the
Square and Car Park acquisitions. The remaining increase of $5.3 million, or
65.4%, 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 $159.9 million from $99.2
million in fiscal 1996, an increase of $60.7 million, or 61.2%. Rent expense
increased $31.9 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 88.4% in
fiscal 1997 from 90.8% 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 28.0% in fiscal 1997 from 28.7% 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 rate 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 in fiscal 1997 increased to $23.4
million from $17.4 million in fiscal 1996, an increase of $6.0 million, or
34.5%. 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 opening of additional managed, leased, and
owned locations and additional incentive compensation payments as a result of
increased profits.
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 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 ($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.
Year Ended September 30, 1996 Compared to Year Ended September 30, 1995
Parking revenues in fiscal 1996 increased to $109.3 million from $94.4
million in fiscal 1995, an increase of $14.9 million, or 15.8%. This increase
resulted primarily from the net addition of 73 leased and owned locations as
well as from a combination of rate increases and higher utilization of parking
spaces at existing facilities.
28
<PAGE> 32
Management contract revenues in fiscal 1996 increased to $34.0 million from
$31.8 million in fiscal 1995, an increase of $2.2 million, or 7.2%. This
increase resulted from a net increase in the number of management contracts from
715 to 770, a net increase of 7.7%.
Revenues from foreign operations decreased to $13.2 million from $16.1
million in 1995. The decrease in revenues from foreign operations resulted
primarily from the termination of a lease in the United Kingdom.
Cost of parking in fiscal 1996 increased to $99.2 million from $87.2
million in fiscal 1995, an increase of $12.0 million, or 13.8%. Rent expense
increased $7.1 million, principally as a result of the new locations and
additional percentage rent on existing locations. Of the remaining $4.9 million
increase in cost of parking, payroll expense accounted for $3.8 million. The
payroll expense increase was attributable to a combination of new locations and
increases on existing payroll. Costs of parking, as a percentage of parking
revenues, decreased to 90.8% in fiscal 1996 from 92.4% in fiscal 1995. 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 1996 increased to $9.8 million from
$9.7 million in the comparable period in 1995, an increase of $120,000, or 1.2%.
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 28.7% in fiscal 1996 from 30.4% in fiscal 1995. The
decrease in the percentage of management contract cost as a percentage of
management contract revenue is a result of increased management fees. The
decrease in renewal rate for management contracts to 92.4% in 1996, from 95.0%
in 1995, is primarily attributable to the discontinuance of low margin
management contracts.
General and administrative expenses in fiscal 1996 increased to $17.4
million from $15.7 million in fiscal 1995, an increase of $1.7 million, or
10.9%. This increase was primarily a result of an increase in payroll expense of
$1.2 million associated with the opening of additional managed, leased, and
owned locations and additional incentive compensation payments as a result of
increased profits.
Interest income in fiscal 1996 increased to $2.3 million from $1.5 million
in fiscal 1995. This increase of $800,000 was primarily attributable to an
increase in additional investments added from the proceeds of the October 1995
initial public offering of $20.0 million and the net cash flow generated from
operations.
Equity in partnership and joint venture earnings for fiscal 1996 increased
to $641,000 from $362,000 in fiscal 1995. The increase of $279,000 resulted
primarily from improvements in joint venture earnings as a result of the Mexican
joint venture having net earnings of $152,000 in 1996 versus a loss in 1995 of
$145,000.
The Company's effective income tax rate was 34.3% for fiscal 1996 compared
to 35.9% for fiscal 1995. The rate decrease was attributable to an increase in
tax exempt interest income and an overall reduction in the effective state
income tax rates, offset by the elimination of targeted jobs tax credits in
1996.
29
<PAGE> 33
QUARTERLY RESULTS
The Company experiences fluctuations in its quarterly revenues and
profitability. These fluctuations are caused by a variety of factors, including
the timing of gains on sales of owned properties; preopening costs; the effect
of weather on travel and transportation patterns; and local and national
economic conditions. The following table sets forth certain quarterly statement
of earnings data for each of the Company's last nine fiscal quarters and the
percentage of net revenues represented by the line items presented (except in
the case of per share amounts). 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.
<TABLE>
<CAPTION>
FISCAL
FISCAL 1996 FISCAL 1997 1998
------------------------------------- ------------------------------------- -----------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH FIRST
QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER
------- ------- ------- ------- ------- ------- ------- ------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues...................... $33,251 $35,680 $37,504 $36,881 $41,423 $55,925 $60,030 $65,598 $71,189
Operating earnings.................. 4,135 3,595 4,870 4,332 5,129 7,109 7,706 7,908 8,804
Earnings before income taxes........ 4,929 5,332 5,668 5,139 6,000 6,993 8,242 11,177 9,099
Net earnings........................ $ 3,228 $ 3,465 $ 3,707 $ 3,436 $ 3,899 $ 4,416 $ 5,275 $ 6,615 $ 5,642
Basic earnings per common share..... $ 0.14 $ 0.13 $ 0.14 $ 0.13 $ 0.15 $ 0.17 $ 0.20 $ 0.25 $ 0.22
Diluted earnings per common share... $ 0.13 $ 0.13 $ 0.14 $ 0.13 $ 0.15 $ 0.17 $ 0.20 $ 0.25 $ 0.21
AS A PERCENTAGE OF TOTAL REVENUES:
Operating earnings................ 12.4% 10.1% 13.0% 11.7% 12.4% 12.7% 12.8% 12.1% 12.4%
Earnings before income taxes...... 14.8 14.9 15.1 13.9 14.5 12.5 13.7 17.0 12.8
Net earnings...................... 9.7 9.7 9.9 9.3 9.4 7.9 8.8 10.1 7.9
</TABLE>
The quarterly statements for fiscal 1997 and 1998 were affected by the
acquisition of Civic, Square, and Car Park, and net gains on sales of property
and equipment of $1.1 million in the second quarter of fiscal 1996 and $3.1
million in the fourth quarter of fiscal 1997. The quarterly statement for fiscal
1998 was affected by the acquisition of Diplomat.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for fiscal 1997 was $21.9
million, an increase of $2.4 million from the net cash of $19.5 million provided
by operating activities during the same period in fiscal 1996. The primary
factor which contributed to this increase was increased net earnings.
Net cash used in investing activities was $92.0 million for fiscal 1997.
The acquisitions of Square and Car Park utilized cash of $50.0 million, net of
cash acquired; investments in partnerships, primarily Civic, were $46.3 million;
and property and equipment purchases represented $6.3 million. These investment
activities were partially offset by the sale of a property for $9.3 million that
was acquired in the Square transaction and the sale of a free-standing parking
garage for approximately $13.2 million, of which $3.0 million of proceeds were
cash. No gain or loss was recognized on the sale of the Square property and a
gain of $3.1 million was recognized on the sale of the free-standing parking
garage. During the three months ended December 31, 1996, and 1997, the Company
generated cash flow from operating activities of $4.1 million and $11.6 million,
respectively. The increase was primarily attributable to increased net earnings.
Net cash provided by financing activities for fiscal 1997 was $51.3
million. Net borrowing from the Company's revolving credit facility represented
$70.8 million which was used to fund, in part, the acquisitions of Square, Civic
and Car Park and to refinance $18.9 million of debt assumed in the acquisition
of Square.
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 the New Credit Facility. If the
Company identifies investment opportunities requiring cash in excess of the
Company's cash flows and the existing credit facility, the Company may seek
additional sources of capital, including the sale or issuance of common stock.
30
<PAGE> 34
On February 11, 1998, the Company established the New 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
New Credit Facility bears interest during the first six months at a rate of
LIBOR plus 1.25%. On June 30, 1998, the interest rate on the New Credit Facility
and the commitment fee on the unused portion will revert to a grid pricing based
upon the achievement of various financial ratios. The New 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. The Company used the New Credit Facility to replace the
Company's prior revolving credit facility and finance the Kinney Acquisition.
International Foreign Currency Exposure
The Company operates wholly owned subsidiaries in the United Kingdom,
Malaysia, Canada and the Netherlands. Additionally, the Company operates through
joint ventures in Germany and Mexico and subsequent to September 30, 1997 has
formed a joint venture to operate in Spain. 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 a foreign
currency risk and has no hedge programs. The Company anticipates implementing a
hedge program if such risk materially increases.
Private Placement of Convertible Preferred Securities
The Company and the Trust are conducting the Private Placement of 4,000,000
shares of the Convertible Preferred Securities at a price of $25.00 per share.
The Trust, the sole purpose of which is to issue the Convertible Preferred
Securities, will invest the proceeds from the Private Placement in an equivalent
amount of Convertible Debentures of the Company, which will bear interest at
% per annum, payable quarterly. The Convertible Preferred Securities will
not have a stated maturity date but will be subject to mandatory redemption upon
the repayment of the Convertible Debentures at their stated maturity (March ,
2028) or upon acceleration or earlier repayment of the Convertible Debentures.
The Company will use the net proceeds from the Private Placement to repay
borrowings under the New Credit Facility. The offering of the Common Stock
hereby is not conditioned upon the closing of the Private Placement.
Civic Parking LLC Loan
Additionally, the Company expects Civic to borrow $60 million pursuant to a
real estate secured, non-recourse, six year loan bearing interest at 7.05% per
annum (the "Civic Loan"). The Company will receive $30 million of proceeds from
the Civic Loan which will be used to reduce outstanding indebtedness under the
New Credit Facility. Until the Civic Loan closes, the Company has an additional
$15 million unsecured line of credit which will terminate upon the closing of
the Civic Loan.
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, 1995, 1996, and 1997.
NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Account Standards (SFAS) No. 128, "Earnings per Share," which
replaces APB Opinion No. 15. SFAS 128 calls for disclosure of basic and diluted
earnings per share. The Company adopted SFAS 128 in the first quarter of fiscal
1998. Earnings per share amounts have been restated for all periods presented to
reflect such adoption.
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<PAGE> 35
In February 1997, the Financial Accounting Standards Board issued SFAS No.
129, "Disclosure of Information about Capital Structure." This pronouncement is
effective for fiscal years beginning after December 15, 1997 and requires the
reporting of comprehensive income within the financial statements. 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. Management is evaluating the impact of
reporting information about operating segments in the Company's consolidated
financial statements.
YEAR 2000
The Company has considered the impact of year 2000 issues on its computer
systems and applications and has developed a remediation plan. The Company's
general ledger system is year 2000 compliant. Compliance activities are in
process with respect to field office systems and facilities' systems. Equipment
upgrades and revisions are expected to remedy field issues by the year 2000. The
Company believes the impact of the year 2000 will not have a significant impact
on its operations or liquidity.
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<PAGE> 36
BUSINESS
GENERAL
Central Parking Corporation is a leading provider of parking services
operating, as of December 31, 1997, 1,834 parking facilities containing
approximately 757,000 spaces in 34 states, the District of Columbia, Puerto
Rico, the United Kingdom, Germany, Canada, Mexico, Malaysia, and Spain. The
Company also has a business development office in the Netherlands. Including the
Kinney Acquisition in February 1998, the Company currently operates
approximately 2,237 parking facilities containing approximately 925,800 spaces.
In each of the last five years, the Company has increased the number of
facilities it operates by approximately 150 facilities, excluding acquisitions
and major property purchases. The Company's leadership position in the parking
industry is a result of applying professional management strategies to a
fragmented industry managed largely by small local operators; developing
relationships with key real estate managers and developers, including sports
arena operators; understanding the needs of the parking public; applying
technology to parking services; and retaining employees through formal training
programs and performance-based compensation.
The Company 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. The
Company operates parking facilities under three general types of arrangements:
management contracts, leases, and fee ownership. As of December 31, 1997, the
Company operated 995 parking facilities under management contracts and 781
parking facilities under leases, and owned, either independently or through
joint ventures, 58 parking facilities. Including the Kinney Acquisition, the
Company currently operates approximately 1,165 parking facilities under
management contracts, 1,006 parking facilities under leases, and owns 66 parking
facilities.
INDUSTRY
The IPI estimates that there are 35,000 parking facilities in the United
States, which generate approximately $26.0 billion of annual revenue, which is
divided evenly between commercial and governmental operators. 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. The Company believes that it has the opportunity to consolidate
portions of this fragmented, localized industry by using its competitive
advantages 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, the Company 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.
Expansion of the number of parking facilities results from new
construction. 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 the Company, has been a result of
take-aways from other parking companies. New construction and market share gains
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 and cash flow. Parking
management companies can increase profits, benefitting both the owners and
themselves by using managerial skills and experience, operating systems, and
operating controls unique to the parking industry.
Privatization of government parking operations and facilities provides new
opportunities for the parking industry. Industry estimates suggest that as much
as 50% of the revenues generated by the United States parking industry is
generated by facilities operated by municipalities and other governmental
entities. Cities
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<PAGE> 37
and municipal authorities are beginning to retain private firms to operate
facilities and provide parking-related services in an effort to reduce operating
budgets and increase efficiency. Privatization in the United Kingdom has already
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 the Company. For example, the Company has recently
been awarded contracts for collection of parking meter revenues in Miami Beach,
Florida and parking meter enforcement in Charlotte, North Carolina.
GROWTH STRATEGY
The Company plans to continue to add facilities to its operations by
focusing its marketing efforts on increasing market share at the local level,
targeting real estate asset 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
the Company's growth strategy.
Increase Market Share. The Company continually seeks to establish and
increase market share in new and existing markets through take-aways of
competitors' contracts, obtaining new management and lease contracts, 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, the Company expects to continue to
expand its base of operations and gain market share. Management believes that
the Company'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,
the Company believes that its unique performance-based compensation system,
which is designed to reward managers for increasing the profitability of their
respective areas of responsibility, has been a key contributor to the Company's
growth.
Pursue Strategic Acquisitions. The Company intends to continue to
capitalize on the highly fragmented nature of the parking management industry by
acquiring other independent operators. Many of the Company's competitors have
limited access to capital or do not have the systems or economies of scale to
compete effectively. The Company's acquisition strategy is to focus on
opportunities that enable the Company to become a leading provider in selected
markets, generate significant economies of scale and cost savings and increase
cash flow. Cost savings typically result from the elimination of duplicative
management functions as well as from efficiencies resulting from implementing
the Company's systems and professional management techniques. The Company has a
Senior Vice President dedicated exclusively to acquisitions and development.
During 1997, the Company acquired Square (January 1997) in New York, Car Park
(May 1997) in San Francisco, and Diplomat (October 1997) in Washington, D.C. In
addition, in February 1998 the Company acquired Kinney, which operates 403
parking facilities primarily in New York, Boston, Philadelphia, and Washington,
D.C.
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 parking equipment and construction, either independently or with foreign
partners. The Company typically enters foreign markets either through consulting
projects or by forming joint ventures with established local entities, both of
which allow the Company to enter foreign markets with reduced operating and
investment risk. Since 1991, the Company has established operations in the
United Kingdom, Germany, Mexico, Malaysia, Canada and Spain. The Company
believes there are significant expansion opportunities in these countries as
well as other countries.
OPERATING STRATEGY
The Company'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
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<PAGE> 38
within budgeted ranges. Because of the substantial performance-based
component of their compensation, managers are continuously motivated to
contain the costs of their operations. Strict cash control is also critical
to the Company and its clients. The Company'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
Company 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. The Company's management is
actively involved in developing and maintaining business relationships and
in exploring opportunities for growth. A cornerstone of the Company's
culture is its incentive compensation system which rewards managers who are
able to develop new business. The Company's 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. The Company 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. The Company 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, the Company has the opportunity to expand its
profit margins as it grows its presence in established markets. The Company
has consistently reduced general and administrative expenses as a
percentage of total revenues. General and administrative expenses as a
percentage of total revenues were 12.5%, 12.2%, and 10.5% in fiscal 1995,
1996, and 1997 respectively. The Company anticipates this trend to continue
as general and administrative costs are spread over a larger revenue base.
Empower Local Managers; Provide Corporate Support. The Company 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, the Company 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. The Company
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, policy
and procedure development, systems design, and corporate acquisitions and
development.
Utilize Performance-Based Compensation. The Company'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 the Company's operations, to
provide a career path opportunity for its managers, and to achieve a
balance between autonomy and accountability, the Company has established a
highly structured management organization. Organized in six levels, the
Company has a total of 400 managers and hires approximately 50 per year.
The Company 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 the Company's
management training program is a significant factor in the Company's
success. New managers in the Company's management trainee program 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
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<PAGE> 39
successful completion of the program, management trainees are promoted to
facility manager in charge of a particular parking facility. As facility
managers, they report up through a 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 an attractive
opportunity for prospective new hires. In addition, the well-planned
training and advancement program has enabled the Company to instill a high
level of professionalism in its employees. A final important benefit of the
Company's organizational structure is that it has allowed the Company to
balance localized autonomy with accountability and centralized support and
control.
Automate Facilities. The Company's application of sophisticated
technology to its operations represents a competitive advantage over
smaller operators with more limited resources. The Company has implemented
computerized card tracking and accounting systems in certain of its
facilities and is experimenting with a variety of automated settlement
systems. The Company 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.
Enhance Management Information Systems. In the last five years, the
Company has re-engineered and replaced its accounting and operations
software. Central to this effort has been the development of
industry-specific software models, such as the Parker Accounts Receivable
System, a proprietary software system used to generate a range of reports
related to receivables and to audit access control systems for the
Company's parking facilities. The Company's distributed systems, which
include payroll, revenue collection, and monthly line-item budgeting, allow
local management access to data pertinent to their operations, while
allowing corporate review of all data. The Company also provides accounting
services through a division that maintains separate financial statements
for large or complex facilities. The Company's management believes
continued improvement in its management information system services will
increase the Company's competitive advantage over smaller and less
automated competitors.
Strategically Expand Service Offerings. The Company provides services
that are complementary to parking facility management, with a particular
emphasis on consulting services. Other ancillary services include parking
meter enforcement, on-street parking services, car pooling coordination,
shuttle van operation, and transportation management. Recent new ancillary
services include contracts for collection of parking meter revenues in
Miami Beach, Florida and parking meter installation and enforcement in
Charlotte, North Carolina. These ancillary services do not constitute a
significant portion of the Company'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. For example, the Company's operations in the United Kingdom grew
out of a single consulting arrangement.
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.
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 facility'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.
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<PAGE> 40
ACQUISITIONS
The Company's acquisition strategy focuses primarily on acquisitions that
will enable the Company to become a leading provider in selected current
markets. The Company believes it can recognize economies of scale by making
acquisitions in markets where the Company already has a significant presence,
which allows the Company to reduce the overhead cost of the acquired company by
consolidating its management with that of the Company. In addition, the Company
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. The Company also believes it can
improve acquired operations by applying its sophisticated operating systems and
professional management techniques. The Company's acquisitions over the last two
years are as follows:
Civic Parking LLC. On December 31, 1996, the Company 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 the Company under management agreements, have a
total of 7,464 parking spaces. The purchase price was approximately $91.0
million which was financed through working capital and $67.2 million of
borrowings under the Company's revolving credit facility. On April 16,
1997, the Company sold 50% of the ownership units of Civic Parking to an
affiliate of Equity Capital Holdings, LLC for $46.0 million in cash. The
Company continues to operate these garages pursuant to a lease and
operating agreement with Civic Parking.
Square Industries, Inc. On January 18, 1997, the Company 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, the Company assumed $23.2 million of existing Square debt. The
purchase price was financed through borrowings under the Company's
revolving 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, the Company 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 revolving credit facility,
and $1.8 million payable to the seller in monthly installments over a four
year term, subject to early repayment at a reduced rate at the seller's
request.
Diplomat Parking Corporation. On October 1, 1997, the Company
acquired the stock and certain assets of Diplomat for approximately $21.7
million in cash and notes payable. The acquisition was financed through
borrowings under the Company's revolving 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,
which the Company believes is the largest operator of parking facilities in
the New York City metropolitan area and one of the largest parking
companies in the Northeastern United States. Kinney has been in the parking
business for over 60 years. In addition to enhancing the Company's leading
market position in New York City, Kinney increases the Company's presence
in a number of other major markets such as Boston, Philadelphia and
Washington, D.C. and broadens 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, 30,100 in Philadelphia and 10,300 in
Washington, D.C. Kinney's facility mix is comprised of 225 leased sites,
170 managed sites and 8 owned sites. The parking facilities operated by
Kinney include Yankee Stadium, the Waldorf-Astoria,
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<PAGE> 41
Port Authority Bus Terminal, World Financial Center and the General Motors
Building in New York City, The Ritz-Carlton -- Boston, Government Center in
Boston, and the Four Seasons Hotel of Washington, D.C.
Consideration for the Kinney Acquisition was approximately $225.0
million, including $160.3 million in cash, $37.0 million in the Company's
common stock, and the refinancing of $27.7 million in existing Kinney debt.
In addition, the Company assumed $8.5 million in capitalized leases and
paid approximately $2.6 million for certain assets purchased by Kinney
after the definitive acquisition agreement was signed. The purchase price
is subject to adjustment based on the outcome of an audit of Kinney's
February 12, 1998 balance sheet. The Company financed the Kinney
Acquisition through the New Credit Facility.
SALES AND MARKETING
The Company'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. The Company 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, the Company'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. The Company 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 the Company'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, the
Company'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, the Company'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, the Company'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.
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.
INTERNATIONAL EXPANSION
The Company'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 the Company. The Company typically enters foreign markets either
through consulting projects or by forming joint ventures with established local
entities. Consulting projects allow the Company 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 the Company 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 113 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. The Company began expansion into Mexico in July 1994 by forming a
joint venture with Fondo Opcion, an established Mexican developer, and now
operates 32 facilities in Mexico. The Company also operates 20 facilities in
Puerto Rico, 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
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the largest development projects in the world. The Company established a
business development office in the Netherlands in 1995 to pursue expansion into
other European countries. In 1996, the Company 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 a Senior Vice President.
PARKING FACILITY PROPERTIES
The Company's operations are currently organized into 12 regions, 11 in
North America (10 in the United States, one in Mexico) and one which is
comprised primarily 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 December
31, 1997 and including the Kinney Acquisition:
<TABLE>
<CAPTION>
NUMBER PERCENTAGE
OF TOTAL OF TOTAL
REGIONS CITIES LOCATIONS MANAGED LEASED OWNED SPACES SPACES
- ------- ------ --------- ------- ------ ----- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Atlanta Atlanta, Birmingham, Charleston 116 67 49 -- 64,526 8.5%
(SC), Charlotte, Columbia (SC),
Jackson (MS), Mobile
Denver Denver/Colorado Springs, Des 161 98 53 10 75,567 10.0
Moines, Kansas City, Minneapolis-
St. Paul, Oklahoma City , St.
Louis
International United Kingdom -- Birmingham, 117 34 83 -- 48,595 6.4
London, Oxford, Newcastle
Germany -- Berlin, Dresden,
Frankfurt Spain and Malaysia
Florida Jacksonville, Miami/Ft. 189 95 94 -- 73,108 9.7
Lauderdale, Orlando, Puerto Rico,
Tampa/St. Petersburg
Los Angeles Los Angeles, Orange County (CA), 84 64 20 -- 48,131 6.4
Phoenix
Mid-Atlantic Baltimore, Norfolk, Philadelphia, 308 194 107 7 100,968 13.3
Pittsburgh, Richmond, Washington
(D.C.)
Mexico Cuernavaca, Mexico City 32 19 13 -- 21,051 2.8
Mid Western Charleston (WV), Cincinnati, 114 72 41 1 68,349 9.0
Cleveland, Columbus, Indianapolis,
Milwaukee, Ottawa, Toronto
Nashville Chattanooga, Knoxville, 246 103 121 22 50,841 6.7
Lexington/Frankfort, Louisville,
Memphis, Nashville(1)
New York Hartford, Jersey City, New York, 151 54 89 8 69,333 9.2
Providence, Stamford
San Francisco Oakland, Salt Lake City, San 55 30 25 -- 16,936 2.2
Francisco, Seattle
Texas Albuquerque, Austin, Dallas, El 237 149 78 10 109,110 14.4
Paso, Houston, New Orleans, San
Antonio, Tulsa
Other Boston, Chicago 24 16 8 0 10,485 1.4
----- ----- ----- -- ------- -----
Total 1,834 995 781 58 757,000 100.0%
===== ===== ===== == ======= =====
Kinney Acquisition New York, Philadelphia, Boston, 403 170 225 8 168,800
Washington, D.C. and others
----- ----- ----- -- -------
Total including Kinney Acquisition 2,237 1,165 1,006 66 925,800
===== ===== ===== == =======
</TABLE>
- ---------------
(1) Includes the Company's corporate headquarters in owned facilities.
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OPERATING ARRANGEMENTS
The Company operates parking facilities under three general types of
arrangements: management contracts, leases, and fee ownership. As of December
31, 1997, the Company operated 995 parking facilities through management
contracts, leased 781 parking facilities, and owned 58 parking facilities,
either independently or in joint ventures 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, AT DECEMBER 31,
----------------------- ---------------
1995 1996 1997 1997
----- ----- ----- ---------------
<S> <C> <C> <C> <C>
Managed facilities..................................... 715 770 877 995
Leased facilities...................................... 485 552 709 781
Owned facilities ...................................... 31 37 58 58
----- ----- ----- -----
Total................................................ 1,231 1,359 1,644 1,834
===== ===== ===== =====
</TABLE>
The general terms and benefits of these types of arrangements are described
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, the
Company 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. 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 the Company 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, the Company
generates profits on the insurance provided under its management contracts.
See "Business -- Litigation and Insurance."
Leases. The Company's rent under leases is generally either 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 the Company than managed facilities but generally
provide a more stable source of revenue and a greater 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.
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<PAGE> 44
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, New Orleans, St. Louis, Mexico City,
Berlin, Dresden, and Frankfort.
MBE Partnerships. The Company is currently a party to eleven separate
minority business enterprise partnerships. These are generally partnerships
formed by the Company and a minority businessperson to manage a facility.
The Company 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, with limited
barriers to entry. 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 the
Company. The Company also faces competition from local owner-operators of
facilities who are potential clients for the Company's management services.
Construction of new parking facilities near the Company's existing 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 for clients; ability to anticipate and
respond to industry changes; range of services; and ability to expand
operations. The Company has a reputation as a leader in the industry and as a
provider of high quality services. The Company is one of the largest companies
in the parking industry and is not limited to a single geographic region. The
Company also has the financial strength to make capital investments as an owner
or joint venture partner that smaller or more leveraged companies do not have.
The Company's size has also 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.
LITIGATION AND INSURANCE
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 and results of operations.
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 and results of operations.
The Company purchases comprehensive liability insurance covering parking
facilities owned, leased, and managed by the Company. Such comprehensive
liability insurance coverage is in the amount of $1.0 million per occurrence and
$1.0 million in the aggregate per facility. In addition, the Company purchases
group insurance with respect to all 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
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<PAGE> 45
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, the Company's clients have historically chosen to pay the Company's
insurance fees. 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 parking facilities are sometimes directly regulated by both
municipal and state authorities. 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 cost of removal or remediation of hazardous or toxic substances
on, under, or in such property. Such laws typically impose liability without
regard to whether the owner or operator knew of, or was responsible for, the
presence of such hazardous or toxic substances. In connection with the ownership
or operation of parking facilities, the Company may be potentially liable for
such costs. Although the Company 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 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.
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<PAGE> 46
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
directors and executive officers of the Company as of the date of this
Prospectus.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
<S> <C> <C>
Monroe J. Carell, Jr...................... 66 Chairman of the Board, Chief Executive Officer
James H. Bond............................. 55 President, Chief Operating Officer, Director
Stephen A. Tisdell........................ 46 Chief Financial Officer
Emanual J. Eads........................... 46 Senior Vice President
Jeff L. Wolfe............................. 38 Senior Vice President
Alan J. Kahn.............................. 37 Senior Vice President -- European Operations
Greg Susick............................... 38 Senior Vice President
William R. Porter......................... 43 Senior Vice President
Mark Pratt................................ 36 Senior Vice President
Henry J. Abbott........................... 47 Vice President -- General Counsel, Secretary
Alfonso N. Cornish........................ 45 Vice President -- Human Resources
John W. Eakin(1)(2)....................... 43 Director
Edward G. Nelson(1)....................... 66 Director
William C. O'Neil, Jr.(2)................. 63 Director
P.E. Sadler(1)............................ 61 Director
Cecil Conlee(2)........................... 61 Director
Lowell Harwood............................ 68 Director
</TABLE>
- ---------------
(1) Member of Audit Committee
(2) Member of Compensation Committee
All directors hold office until the next annual meeting of shareholders or
until their successors are duly elected and qualified. Executive officers serve
at the discretion of the Board of Directors.
Monroe J. Carell, Jr. has served as Chief Executive Officer and Chairman of
the Board of Directors of the Company for over 18 years. Mr. Carell has also
served as a trustee of Vanderbilt University in Nashville, Tennessee, since 1991
and is a member of the Board of Trust of the Urban Land Institute. Mr. Carell is
also a member of the Board of Directors of Prison Realty Trust, a publicly held
real estate investment trust, and Vanderbilt University Medical Center.
James H. Bond has been employed by the Company since 1971 in various
positions including general manager and regional manager. He has served as
President, Chief Operating Officer, and a member of the Board of Directors of
the Company since October 1990.
Stephen A. Tisdell has served as Chief Financial Officer of the Company
since February 1993. From May 1992 to February 1993 he was President and owner
of Tisdell Consulting, an independent financial consulting company. Mr. Tisdell
served as Executive Vice President, Treasurer, and Secretary of Maison Blanche,
Inc., a retail clothing company from June 1991 until May 1992. From February
1987 until June 1991, he served as Group Vice President -- Finance and Chief
Accounting Officer of Service Merchandise Corporation, a nationwide retail goods
company.
Emanuel J. Eads has served as a Senior Vice President of the Company since
1985 and served in various other positions with the Company, including general
manager and regional manager, since 1974.
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<PAGE> 47
Jeff L. Wolfe has served as a Senior Vice President of the Company since
May 1994 and has served in various other positions with the Company, including
general manager and regional manager, since 1988.
Alan J. Kahn has served as Senior Vice President -- European Operations
since April 1996 and has served in various other positions with the Company,
including general manager and regional manager, since 1988.
Greg Susick has served as Senior Vice President since 1996 and has served
in various other positions with the Company, including general manager and
regional manager, since 1989.
William R. Porter has served as Senior Vice President -- Acquisitions since
November 1996. From 1991 to 1996, Mr. Porter served as Executive Vice
President -- Marketing for Ace Parking, a parking management company.
Mark Pratt has served as Senior Vice President since May 1997 and has
served in various other positions with the Company, including general and
regional manager, since 1984.
Henry J. Abbott has served as Vice President -- General Counsel of the
Company since 1986 and as Secretary since 1980. Mr. Abbott has been an employee
of the Company since 1977.
Al Cornish has served as Vice President of Human Resources since December
1996. From 1994 to 1996, Mr. Cornish served as Director of Human Resource
Development for Roy Rogers Restaurants, a division of Hardee's Food Systems,
Inc. From 1993 to 1994, he served as the Director of Human Resources -- Mid
Atlantic Region for Automatic Data Processing, Inc., a payroll service and
processing company. From 1982 to 1992, he served as Director of Operations for
Southland Corporation, a convenience store operation company.
John W. Eakin has served as a director of the Company since August 1993.
Mr. Eakin has been President of Eakin-Smith, Inc., a real estate development and
management company, since September 1987. In April 1996, Mr. Eakin merged his
company with Highwoods Properties, Inc., an office and industrial real estate
investment trust. Mr. Eakin serves as a director of Highwoods Properties, Inc.
and has served on the advisory board of First American Bank since 1994. Mr.
Eakins is also a member of the Board of Directors of Prison Realty Trust.
Edward G. Nelson has served as a director of the Company since August 1993.
Mr. Nelson formed Nelson Capital Corp., a merchant banking firm, in 1985, and
has served as the President and Chairman of the Board of such firm since its
organization. Mr. Nelson serves as a director of each of Advocat Inc., a
long-term care facility owner and operator; ClinTrials Research Inc., a clinical
research organization; and Berlitz International, Inc., a language services
company. Mr. Nelson also serves as a trustee of Vanderbilt University.
William C. O'Neil, Jr. has served as a director of the Company since August
1993. Mr. O'Neil has served as Chairman of the Board, President, and Chief
Executive Officer of ClinTrials Research Inc., a clinical research organization,
since September 1989. Mr. O'Neil serves as a director of each of Advocat Inc., a
long-term care facility owner and operator; ATRIX Laboratories, Inc., a drug
delivery company; Sigma Aldrich Chemical Company, a manufacturer of research
chemicals; and American HealthCorp., Inc., a specialty healthcare service
company.
P.E. Sadler has served as a director of the Company since 1996. Mr. Sadler
is the Chairman of the Board of ActaMed Corporation, a healthcare technology
company that he founded in 1992. In 1979, Mr. Sadler founded MicroBilt
Corporation and served as its Chairman and Chief Executive Officer. After
MicroBilt was acquired by First Financial Management Corporation in 1989, Mr.
Sadler remained as Chairman and Chief Executive Officer until 1991.
Cecil Conlee has served as a director of the Company since 1996. Mr. Conlee
has served as Chairman of the Board and Chief Executive Officer of CGR
Investors, a real estate investment and portfolio management services company,
since 1989. Mr. Conlee serves on the Board of Directors of Oxford Industries,
Inc., a clothing manufacturer, and Rodamco, N.V., a real estate investment
company. Mr. Conlee also serves as a trustee of Cornerstone Properties, Inc.,
International Council of Shopping Centers and Vanderbilt University.
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<PAGE> 48
Mr. Conlee is a member and past trustee of the Urban Land Institute, a director
of Central Atlanta Progress, and The Southern Center for International Studies.
Lowell Harwood has served as a director of the Company since June 1997. Mr.
Harwood served as Chairman of the Board and Chief Executive Officer of Square
from 1968 until its acquisition by the Company in January 1997. Mr. Harwood is
past President of the Metropolitan Parking Association of New York and a former
Treasurer of the National Parking Association. Mr. Harwood also serves as a
Trustee of Kean University and a member of the Foundation Board of Trustees of
Christ Hospital.
FUTURE BOARD EXPANSION
In connection with the Kinney Acquisition, the Company has agreed to use
its best efforts to cause Lewis Katz, the former chief executive officer of
Kinney, to be elected to the Company's Board of Directors. The Company
anticipates that the Company's Board will vote to increase the number of
directors by one and elect Mr. Katz as a director.
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<PAGE> 49
PRINCIPAL AND SELLING SHAREHOLDERS
The table below sets forth certain information regarding the beneficial
ownership of the Common Stock, as of the date hereof, and as adjusted to reflect
the sale of shares offered hereby of (i) each Selling Shareholder, (ii) each
person known to the Company to beneficially own more than 5% of the Common
Stock, (iii) each director of the Company, (iv) the Company's Chief Executive
Officer and the four other most highly compensated executive officers, and (v)
all directors and executive officers of the Company as a group. Unless otherwise
indicated, the persons listed below have sole voting and investment power over
the shares of Common Stock shown as beneficially owned by them.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED SHARES TO SHARES BENEFICIALLY
PRIOR TO THE OFFERING(1) BE SOLD OWNED AFTER THE OFFERING
------------------------- IN THE -------------------------
NUMBER PERCENT OFFERING NUMBER PERCENT
------------ --------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Monroe J. Carell, Jr.(2)(3)............ 11,191,164 41.1% 275,000 10,916,164 37.5%
The Carell Children's Trust(4)......... 8,267,595 30.4 300,000 7,967,595 27.4
Monroe Carell, Jr. Foundation(5)....... 200,000 * 100,000 100,000 *
Monroe Carell, Jr. 1994 Grantor
Retained Annuity Trust(2)(6)......... 1,720,877 6.3 -- 1,720,877 5.9
Kathryn Carell Brown Foundation(7)..... 45,000 * 25,000 20,000 *
Edith Carell Johnson Foundation(8)..... 45,000 * 25,000 20,000 *
Julia Carell Stadler Foundation(9)..... 45,000 * 25,000 20,000 *
James H. Bond(10)...................... 317,529 1.2 -- 317,529 1.1
Emanuel J. Eads(11).................... 25,155 * -- 25,155 *
Jeff L. Wolfe(12)...................... 23,580 * -- 23,580 *
Alan J. Kahn(13)....................... 14,985 * -- 14,985 *
Cecil Conlee(14)....................... 17,148 * -- 17,148 *
John W. Eakin(15)...................... 21,402 * -- 21,402 *
Edward G. Nelson(16)................... 24,777 * -- 24,777 *
William C. O'Neil, Jr.(15)............. 27,027 * -- 27,027 *
P.E. Sadler(17)........................ 19,871 * -- 19,871 *
Lowell Harwood(18)..................... 18,777 * -- 18,777 *
-------
Total........................ 750,000
=======
All directors and executive officers
as a group (18 persons)(19)....... 11,777,117 42.9% 11,402,117 38.9%
========== ==========
</TABLE>
- ---------------
* Indicates less than 1%
(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares as of the date of the Offering that
such person or group has the right to acquire within 60 days after such
date, or with respect to which such person otherwise has or shares voting
or investment power. For purposes of computing beneficial ownership and the
percentages of outstanding shares held by each person or group of persons
on a given date, shares which such person or group has the right to acquire
within 60 days after such date are shares for which such person has
beneficial ownership and are deemed to be outstanding for purposes of
computing the percentage for such person, but are not deemed to be
outstanding for the purpose of computing the percentage of any other
person.
(2) Address: 2401 21st Avenue South, Suite 200, Nashville, Tennessee 37212.
(3) Includes 13,241 shares held in the Company's Deferred Unit Plan, which Plan
contains a power of attorney pursuant to which Mr. Carell votes such
shares, options to purchase 9,413 shares granted pursuant to the Key
Personnel Plan, 1,853,540 shares held by two trusts with respect to which
Mr. Carell is trustee and is entitled to an annuity and 200,000 shares held
by the Monroe Carell, Jr. Foundation. See footnotes 5 and 6. Excludes
8,267,595 shares held by The Carell Children's Trust and 29,510 shares held
by trusts benefitting Mr. Carell's grandchildren, with respect to which Mr.
Carell disclaims beneficial ownership.
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<PAGE> 50
(4) The Carell Children's Trust is a trust created by Mr. Carell in 1987 for
the benefit of his children, the trustee of which is Equitable Trust
Company, 800 Nashville City Center, 511 Union, Nashville, Tennessee 37219.
(5) The Monroe Carell, Jr. Foundation is a charitable private foundation of
which Mr. Carell is president and a director.
(6) The Monroe Carell, Jr. 1995 Grantor Retained Annuity Trust and The Monroe
Carell, Jr. 1994 Grantor Retained Annuity Trust are trusts created in 1995
and 1994 respectively, of which Mr. Carell is trustee and from which Mr.
Carell is entitled to an annuity until September 1999 with the remainder
passing to his children.
(7) The Kathryn Carell Brown Foundation is a private foundation established by
Mrs. Brown in 1996. Mrs. Brown serves as the Foundation's trustee. Address:
c/o Equitable Trust Company, 800 Nashville City Center, 511 Union Street,
Nashville, Tennessee 37219.
(8) The Edith Carell Johnson Foundation is a private foundation established by
Mrs. Johnson in 1996. Mrs. Johnson serves as the Foundation's trustee.
Address: c/o Equitable Trust Company, 800 Nashville City Center, 511 Union
Street, Nashville, Tennessee 37219.
(9) The Julia Carell Stadler Foundation is a private foundation established by
Mrs. Stadler in 1996. Mrs. Stadler serves as the Foundation's trustee.
Address: c/o Equitable Trust Company, 800 Nashville City Center, 511 Union
Street, Nashville, Tennessee 37219.
(10) Includes 267,750 shares of restricted stock granted in connection with Mr.
Bond's Performance Agreement, 2,250 shares held by his spouse, 1,125 shares
held by the Emily Bond Trust of which Mrs. Bond is trustee, and options to
purchase 22,500 shares of Common Stock.
(11) Includes options to purchase 16,875 shares of Common Stock.
(12) Includes options to purchase 16,875 shares of Common Stock, 2,250 shares
held by Mr. Wolfe's spouse, and 2,250 shares held by the Patricia Wolfe
Children's Trust of which Mr. Wolfe is trustee, and for which Mr. Wolfe
disclaims beneficial ownership.
(13) Includes options to purchase 12,375 shares of Common Stock.
(14) Includes 1,397 shares of restricted stock granted in lieu of director
compensation pursuant to the Company's Restricted Stock Plan and options to
purchase 15,750 shares of Common Stock.
(15) Includes options to purchase 15,750 shares of Common Stock.
(16) Includes 4,500 shares held by Mr. Nelson's spouse, of which Mr. Nelson
disclaims beneficial ownership, and options to purchase 15,750 shares of
Common Stock.
(17) Includes 1,120 shares of restricted stock granted in lieu of director
compensation pursuant to the Company's Restricted Stock Plan and options to
purchase 15,750 shares of Common Stock granted pursuant to the Director
Stock Option Plan.
(18) Includes options to purchase 11,250 shares of Common Stock.
(19) Includes options to purchase 168,038 shares of the Company's Common Stock,
271,873 shares of restricted stock and 13,241 shares held in the Company's
Deferred Unit Plan.
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<PAGE> 51
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock currently consists of 50,000,000
shares of Common Stock, $.01 par value per share, and 1,000,000 shares of serial
Preferred Stock, par value $.01 per share (the "Preferred Stock"). As of
February 12, 1998, there were (i) 27,208,601 shares of Common Stock issued and
outstanding, including 271,873 shares subject to further vesting pursuant to
restricted stock agreements, (ii) 807,948 shares of Common Stock reserved for
issuance upon exercise of outstanding options, and (iii) no shares of Preferred
Stock outstanding.
COMMON STOCK
Each holder of Common Stock is entitled to one vote per share on all
matters to be voted on by the shareholders. The Charter does not provide for
cumulative voting and, accordingly, the holders of a majority of the outstanding
shares have the power to elect all directors and to control the resolution of
all issues put to a vote of the shareholders. There are no preemptive or other
subscription rights, conversion rights, or redemption or sinking fund provisions
with respect to shares of the Common Stock. All shares of the Common Stock
outstanding upon consummation of the Offering will be validly issued, fully
paid, and nonassessable. The shares of Common Stock have the following rights,
subject, in each case, to the rights of the holders of any outstanding Preferred
Stock: (i) to receive dividends, if any, as may be declared and paid from time
to time by the Board of Directors, in its discretion, from funds legally
available therefore; and (ii) upon liquidation, dissolution, or winding up of
the Company, to receive pro rata all assets remaining available for
distribution.
PREFERRED STOCK
The Company's Board of Directors may authorize, without further action by
the Company's shareholders, the issuance of up to 1,000,000 shares of Preferred
Stock in one or more series, and may fix by resolution, to the extent permitted
by the Tennessee Business Corporation Act, the terms and rights of each such
series, including the voting powers, full or limited, if any, of the shares of
such series and the designations, preferences, and relative, participating,
optional, or other special rights, and qualifications, limitations, or
restrictions thereof. The issuance of Preferred Stock by action of the Board of
Directors could adversely affect the voting power, dividend rights and other
rights of holders of the Common Stock. Issuance of a series of Preferred Stock
could also, depending on the terms of such series, either impede or facilitate
the completion of a merger, tender offer, or other takeover attempt. Although
the Board of Directors is required to make a determination as to the best
interests of the shareholders of the Company when issuing Preferred Stock, the
Board of Directors could act in a manner that would discourage an acquisition
attempt or other transaction that some, or a majority, of the shareholders might
believe to be in the best interests of the Company or in which shareholders
might receive a premium for their stock over the then prevailing market price.
DESCRIPTION OF CONVERTIBLE PREFERRED SECURITIES
The descriptions under this caption of the Convertible Preferred
Securities, the Convertible Debentures, and other instruments are being provided
for informational purposes only. Nothing herein should be understood to
constitute an offer to sell or the solicitation of an offer to buy Convertible
Preferred Securities. Such securities will be offered and sold in reliance on an
exemption from registration under the Securities Act exclusively to qualified
institutional buyers in accordance with Rule 144A under the Securities Act.
Upon the completion of the Private Placement, it is currently contemplated
that there will be 4,000,000 shares of Convertible Preferred Securities
outstanding. Each Convertible Preferred Security is convertible, at the option
of the holder thereof, into shares of the Company's Common Stock at a conversion
rate of
shares of Common Stock (equivalent to $ per share of Common Stock), subject
to adjustment in certain circumstances. The Trust will use the proceeds from the
Private Placement to purchase the Convertible Debentures of the Company.
Holders of the Convertible Preferred Securities will be entitled to receive
cumulative cash distributions at an annual rate of % of the liquidation
amount of $25 per share, accruing from the date of original issuance and payable
quarterly in arrears on each , , and , commencing
, 1998. The distribution rate and the distribution payment dates
and other payment dates for the Convertible Preferred Securities correspond to
the interest rate and interest payment dates and other payment dates for the
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<PAGE> 52
Convertible Debentures, which are the sole assets of the Trust. The payment of
distributions out of moneys held by the Trust and payments on liquidation of the
Trust or the redemption of Convertible Preferred Securities, as described below,
are guaranteed (the "Guarantee") by the Company to the extent the Trust has
funds available therefor. The Guarantee, when taken together with the Company's
obligations under the indenture pursuant to which the Convertible Debentures are
issued and its obligations under the Trust Agreement, including its obligations
to pay costs, expenses, debts, and liabilities of the Trust, provide a full and
unconditional guarantee of amounts due on the Convertible Preferred Securities.
The Company's obligations under the Guarantee rank (i) subordinate and junior to
all other liabilities of the Company except any liabilities that may be pari
passu by their terms, (ii) pari passu with the most senior preferred stock
issued from time to time by the Company and with any guarantee now or hereafter
entered into by the Company in respect of any preferred or preference stock or
any preferred securities of any affiliate of the Company, and (iii) senior to
the Common Stock.
The Company has the right to defer payments of interest on the Convertible
Debentures at any time for up to 20 consecutive quarters (as so deferred, an
"Extension Period") but not beyond the maturity of the Convertible Debentures.
If interest payments are so deferred, distributions on the Convertible Preferred
Securities also will be deferred and no dividends can be paid during any
Extension Period by the Company with respect to the Common Stock. During any
Extension Period, distributions will accrue with interest (to the extent
permitted by applicable law) at a rate of % per annum compounded quarterly.
If a holder of Convertible Preferred Securities converts into Common Stock
during any Extension Period, the holder will not receive any cash related to the
deferred distributions. There could be multiple Extension Periods of varying
lengths throughout the term of the Convertible Debentures (but distributions
would continue to accumulate quarterly and accrue interest until the end of any
such Extension Period).
The Convertible Debentures are redeemable by the Company, in whole or in
part, from time to time, on or after , 2001 at the redemption
prices set forth in the indenture. If the Company redeems Convertible
Debentures, the Trust must redeem the outstanding Trust Securities on a pro rata
basis having an aggregate liquidation amount equal to the aggregate principal
amount of the Convertible Debentures so redeemed at a redemption price
corresponding to the redemption price of the Convertible Debentures plus accrued
and unpaid distributions thereon to the date fixed for redemption. The
Convertible Preferred Securities will be redeemed upon maturity of the
Convertible Debentures. In addition, the Trust will be dissolved upon the
occurrence of certain events arising from a change in law or a change in legal
interpretation regarding tax or investment company matters, unless the
Convertible Debentures are redeemed. Upon dissolution of the Trust, the
Convertible Debentures, if not redeemed, will be distributed to the holders of
the Convertible Preferred Securities, on a pro rata basis, in lieu of any cash
distribution. In the event of the liquidation, winding up or termination of the
Trust, the holders of the Convertible Preferred Securities will be entitled to
receive for each Convertible Preferred Security a liquidation amount of $25 plus
accrued and unpaid distributions thereon (including interest thereon) to the
date of payment, unless, in connection with such dissolution, Convertible
Debentures are distributed to the holders of the Convertible Preferred
Securities.
Except under limited circumstances, holders of the Convertible Preferred
Securities will have no voting rights.
The Company and the Trust will enter into a registration rights agreement
(the "Registration Rights Agreement") for the benefit of the holders of the
Convertible Preferred Securities pursuant to which the Company and the Trust
will, at the Company's expense, (i) file with the Securities and Exchange
Commission (the "Commission") within 60 days after closing the Private Placement
a registration statement covering resales of, among other securities, the
Convertible Preferred Securities and the Common Stock issuable upon conversion
of the Convertible Preferred Securities, (ii) use their best efforts to cause
the registration statements to be declared effective by the Commission within
120 days after closing the Private Placement, and (iii) use their best efforts
to keep the registration statement effective until, except in certain
circumstances, two years after the date it is declared effective. A failure by
the Company and the Trust to comply with the provisions of the Registration
Rights Agreement would cause additional interest of .25% to .50% to accrue with
respect to the Convertible Debentures and an equivalent increase in the
distribution rate with respect to the Convertible Preferred Securities.
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<PAGE> 53
UNDERWRITING
Pursuant to the Underwriting Agreement, and subject to the terms and
conditions thereof, the Underwriters named below, acting through J.C. Bradford &
Co., Bear, Stearns & Co. Inc., William Blair & Company, L.L.C., NationsBanc
Montgomery Securities LLC and SunTrust Equitable Securities, as representatives
of the several Underwriters (the "Representatives"), have agreed, severally, to
purchase from the Company and the Selling Shareholders the number of shares of
Common Stock set forth below opposite their respective names:
<TABLE>
<CAPTION>
NUMBER
OF
NAME OF UNDERWRITER SHARES
- ------------------- -------
<S> <C>
J.C. Bradford & Co. ........................................
Bear, Stearns & Co. Inc. ...................................
William Blair & Company, L.L.C. ............................
NationsBanc Montgomery Securities LLC.......................
SunTrust Equitable Securities...............................
-------
Total.............................................
=======
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions therein set forth, to purchase all shares of Common Stock
offered hereby if any of such shares are purchased.
The Company and the Selling Shareholders have been advised by the
Representatives that the Underwriters propose initially to offer the shares of
Common Stock to the public at the public offering price set forth on the cover
page of this Prospectus and to certain dealers at such price less a concession
not in excess of $ per share. The Underwriters may allow, and such
dealers may reallow, a concession not in excess of $ per share to
certain other dealers. After the Offering, the public offering price and such
concessions may be changed. The Representatives have informed the Company that
the Underwriters do not intend to confirm sales to accounts over which they
exercise discretionary authority.
The offering of the shares of Common Stock is made for delivery when, as,
and if accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation, or modification of the offer without notice. The Underwriters
reserve the right to reject any order for the purchase of the shares.
The Company has granted to the Underwriters an option, exercisable not
later than 30 days after the date of the effectiveness of the Offering, to
purchase up to 262,500 shares of Common Stock to cover over-allotments, if any.
To the extent the Underwriters exercise this option, each of the Underwriters
will have a firm commitment to purchase approximately the same percentage
thereof that the number of shares of Common Stock to be purchased by it shown in
the table above bears to the total number of shares in such table, and the
Company will be obligated, pursuant to the option, to sell such shares to the
Underwriters. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of the shares of Common Stock
offered hereby. If purchased, the Underwriters will sell these additional shares
on the same terms as those on which the shares are being offered.
Subject to applicable limitations, the Underwriters, in connection with the
Offering, may place bids for or make purchases of the Common Stock in the open
market or otherwise, for long or short account, or cover short positions
incurred, to stabilize, maintain, or otherwise affect the price of the Common
Stock, which might be higher than the price that otherwise might prevail in the
open market. There can be no assurance that the price of the Common Stock will
be stabilized, or that stabilizing, if commenced, will not be discontinued at
any time. Subject to applicable limitations, the Underwriters may also place
bids or make purchases on behalf of the underwriting syndicate to reduce a short
position created in connection with the Offering.
The Company, its executive officers and directors, and the Selling
Shareholders have agreed that they will not, without the prior written consent
of J.C. Bradford & Co., issue, sell, transfer, assign, or otherwise
50
<PAGE> 54
dispose of any of the Common Stock or options, warrants, or rights to acquire
Common Stock owned by them prior to the expiration of 180 days from the date of
this Prospectus.
The Underwriting Agreement provides that the Company and the Selling
Shareholders will indemnify the Underwriters and controlling persons, if any,
against certain liabilities, including liabilities under the Securities Act, or
will contribute to payments that the Underwriters or any such controlling
persons may be required to make in respect thereof.
J.C. Bradford has from time to time provided investment banking and
financial advisory services to the Company. Affiliates of NationsBanc Montgomery
Securities LLC and SunTrust Equitable Securities are lenders under the New
Credit Facility.
Each of the Underwriters is also acting as an initial purchaser and
placement agent in the Private Placement.
EXPERTS
The consolidated financial statements of Central Parking Corporation and
Subsidiaries as of September 30, 1997 and 1996, and for each of the years in the
three-year period ended September 30, 1997 have been incorporated by reference
herein and in the registration statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The consolidated financial statements of Kinney System Holding Corp. and
its subsidiaries as of September 30, 1997 and for the nine month period then
ended, have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Kinney System Holding Corp. and
its subsidiaries as of December 31, 1996 and 1995, and for each of the years in
the three year period ended December 31, 1996, have been incorporated by
reference herein and in the registration statement in reliance upon the report
of David Berdon & Co. LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Harwell Howard Hyne Gabbert & Manner, P.C., Nashville,
Tennessee. Certain legal matters related to the Offering will be passed upon for
the Underwriters by Bass, Berry & Sims PLC, Nashville, Tennessee.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act, with respect to the Common Stock offered hereby.
This Prospectus constitutes a part of the Registration Statement and does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules thereto, certain portions of which have been omitted in
accordance with the rules and regulations of the Commission. Statements
contained in the Prospectus as to any contracts, agreements, or other documents
filed as an exhibit to, or incorporated by reference in, the Registration
Statement are qualified in all respects to the copy of such contract, agreement,
or other document filed as an exhibit or incorporated by reference in the
Registration Statement. For further information with respect to the Company and
the Common Stock offered hereby, reference is hereby made to the Registration
Statement, including the exhibits and schedules thereto.
The Company is subject to the informational requirements of the Exchange
Act, and, in accordance therewith, files reports, proxy statements, and other
information with the Commission. Copies of the
51
<PAGE> 55
Registration Statement (with exhibits), as well as such reports, proxy
statements, and other information filed by the Company with the Commission may
be inspected and copied at the public reference facilities maintained by the
Commission located at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the Commission:
Chicago Regional Office, Citicorp Center, Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661; and New York Regional Office, Seven World Trade Center,
Suite 1300, New York, New York 10048. Copies of such material may be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission also maintains a web
site (http://www.sec.gov) that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the Commission. The Common Stock is listed on the NYSE and reports, proxy
material, and other information concerning the Company may be inspected at the
offices of the NYSE, Operations, 20 Broad Street, New York, New York 10005.
INFORMATION INCORPORATED BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act are incorporated and made a part of this Prospectus
by reference, except as superseded or modified herein:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1997;
(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1997;
(3) The Company's Current Report on Form 8-K filed February 17, 1998
relating to the Kinney Acquisition; and
(4) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed on September 15, 1995.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the termination of the Offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the documents
which have been or may be incorporated by reference herein, other than exhibits
to such documents (unless such exhibits are specifically incorporated by
reference therein). Requests for such copies should be directed to the Company's
principal executive offices, Attention: Investor Relations Department, Central
Parking Corporation, 2401 21st Avenue South, Suite 200, Nashville, Tennessee
37212, telephone number 615-297-4255.
52
<PAGE> 56
======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING SHAREHOLDERS OR ANY OF THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY THE SHARES OF COMMON STOCK OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Use of Proceeds....................... 11
Price Range of Common Stock and
Dividend Policy..................... 11
Capitalization........................ 13
Unaudited Pro Forma Consolidated
Financial Information............... 14
Selected Historical and Pro Forma
Financial Data...................... 22
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 24
Business.............................. 33
Management............................ 43
Principal and Selling Shareholders.... 46
Description of Capital Stock.......... 48
Description of Convertible Preferred
Securities.......................... 48
Underwriting.......................... 50
Experts............................... 51
Legal Matters......................... 51
Available Information................. 51
Information Incorporated by
Reference........................... 52
</TABLE>
======================================================
======================================================
2,625,000 SHARES
[CENTRAL PARKING LOGO]
COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
J.C. BRADFORD & CO.
BEAR, STEARNS & CO. INC.
WILLIAM BLAIR & COMPANY
NATIONSBANC MONTGOMERY
SECURITIES LLC
SUNTRUST EQUITABLE SECURITIES
, 1998
======================================================
<PAGE> 57
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated costs and expenses (all of
which will be shared by the Company and the Selling Shareholders in proportion
to the proceeds received by the Company and each Selling Shareholder) in
connection with the Offering described in the Registration Statement:
<TABLE>
<S> <C>
Commission Registration Fee................................. $ 37,584
New York Stock Exchange Listing Fee......................... 10,500
NASD Fee.................................................... 10,203
Blue Sky Fees and Expenses*................................. 5,000
Printing and Engraving Expenses*............................ 150,000
Legal Fees and Expenses*.................................... 225,000
Auditors' Fees and Expenses*................................ 200,000
Miscellaneous*.............................................. 61,713
--------
Total*............................................ $700,000
========
</TABLE>
- ---------------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) The Tennessee Business Corporation Act (the "TBCA") provides that a
corporation may indemnify any of its directors against liability incurred in
connection with a proceeding if (i) the director acted in good faith, (ii) in
the case of conduct in his or her official capacity with the corporation, the
director reasonably believed such conduct was in the corporation's best
interest, (iii) in all other cases, the director reasonably believed that his or
her conduct was not opposed to the best interest of the corporation, and (iv) in
connection with any criminal proceeding, the director had no reasonable cause to
believe that his or her conduct was unlawful. In actions brought by or in the
right of the corporation, however, the TBCA provides that no indemnification may
be made if the director was adjudged to be liable to the corporation. In cases
where the director is wholly successful, on the merits or otherwise, in the
defense of any proceeding instigated because of his or her status as a director
of a corporation, the TBCA mandates that the corporation indemnify the director
against reasonable expenses incurred in the proceeding. The TBCA also provides
that in connection with any proceeding charging improper benefit to a director,
no indemnification may be made if such director is adjudged liable on the basis
that personal benefit was improperly received. Notwithstanding the foregoing,
the TBCA provides that a court of competent jurisdiction, upon application, may
order that a director be indemnified for reasonable expense if, in consideration
of all relevant circumstances, the court determines that such individual is
fairly and reasonably entitled to indemnification, whether or not the standard
of conduct set forth above was met.
(b) Article Eleven of the Amended and Restated Charter of the Registrant
sets forth the extent to which officers or directors of the Registrant may be
insured or indemnified against any liabilities which they may incur. The general
effect of such provision is that any person made a party to any action, suit or
proceeding by reason of the fact that he or she is or was a director or officer
of the Registrant will be indemnified by the Registrant against expenses
(including attorney's fees), judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding, to the fullest extent permitted under the laws of the State
of Tennessee. In addition, such provision provides that, in the Registrant's
sole discretion, the Registrant may indemnify employees or agents against such
expenses, judgments, fines, and amounts paid in settlement.
(c) The Company maintains a policy of directors' and officers' insurance
that would in certain instances provide the funds necessary for the Registrant
to meet its obligations under its Amended and Restated Charter.
II-1
<PAGE> 58
(d) Reference is also made to Section 8 of the Underwriting Agreement filed
as Exhibit 1 hereto, which provides for indemnification by the Underwriters of
the Company and certain officers, directors, and controlling persons against
certain liabilities.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <S> <C>
1 -- Form of Underwriting Agreement
2.1 -- Agreement and Plan of Merger, dated December 6, 1996, by and
among Central Parking Corporation, Central Parking
System -- Empire State, Inc., and Square Industries, Inc.
(incorporated by reference to Exhibit (c)(1) to the
Company's Tender Offer Statement on Schedule 14D-1 filed
December 13, 1996)
2.2 -- Agreement for Sale and Purchase of Membership Interests,
dated November 22,1996, by and among Central Parking
System Realty, Inc. Central Parking System Realty of
Missouri, Inc., Gateway Grove, Inc., and SLC Holdings,
L.L.C. (incorporated by reference to Exhibit 2.2 to the
Company's Current Report on Form 8-K filed January 14,
1997)
2.3 -- Acquisition Agreement and Plan of Merger dated November 7,
1997, by and among Kinney System Holding Corp., the
Registrant and KSHC Parallel Parking, Inc. (incorporated
by reference to Exhibit 2.1 to the Company's Current
Report on Form 8-K filed February 17, 1998)
*4.1 -- Amended and Restated Charter of the Registrant, as amended
4.2 -- 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)
4.3 -- 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)
5 -- Opinion of Harwell Howard Hyne Gabbert & Manner, P.C.
23.1 -- Consents of KPMG Peat Marwick LLP
23.2 -- Consent of David Berdon & Co. LLP
23.3 -- Consent of Harwell Howard Hyne Gabbert & Manner, P.C.
(included in Exhibit 5)
24 -- Power of Attorney (included on page II-4)
99 -- Consent of Lewis Katz
</TABLE>
- ---------------
* Filed with initial Registration Statement
(b) Financial Statement Schedules
The schedules for which provision is made in the applicable accounting
regulations of the Commission are not required under the related instructions or
are inapplicable and, therefore, have been omitted.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
1. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, that the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any
action, suit, or proceeding) is asserted against the Registrant by such
director, officer, or
II-2
<PAGE> 59
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
2. For purposes of determining any liability under the Securities Act,
that each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
3. For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
4. For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 60
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Nashville, State of Tennessee, on February 17,
1998.
CENTRAL PARKING CORPORATION
By: /s/ MONROE J. CARELL, JR.
------------------------------------
Monroe J. Carell, Jr.,
Chairman
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed on behalf of the following persons (other than Lowell
Harwood) in the capacities and on the dates indicated by Stephen A. Tisdell
pursuant to a Power of Attorney granted in the initial Registration Statement.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ MONROE J. CARELL, JR. Chief Executive Officer February 17, 1998
- ------------------------------------------------ (Principal Executive
Monroe J. Carell, Jr. Officer), Chairman of
the Board
/s/ JAMES H. BOND President and Chief February 17, 1998
- ------------------------------------------------ Operating Officer,
James H. Bond Director
/s/ STEPHEN A. TISDELL Chief Financial Officer February 17, 1998
- ------------------------------------------------ (Principal Financial
Stephen A. Tisdell and Accounting
Officer)
/s/ JOHN W. EAKIN Director February 17, 1998
- ------------------------------------------------
John W. Eakin
/s/ EDWARD G. NELSON Director February 17, 1998
- ------------------------------------------------
Edward G. Nelson
/s/ WILLIAM C. O'NEIL, JR. Director February 17, 1998
- ------------------------------------------------
William C. O'Neil, Jr.
/s/ P.E. SADLER Director February 17, 1998
- ------------------------------------------------
P.E. Sadler
/s/ CECIL CONLEE Director February 17, 1998
- ------------------------------------------------
Cecil Conlee
Director February 17, 1998
- ------------------------------------------------
Lowell Harwood*
</TABLE>
- ---------------
* Mr. Harwood did not sign the original Registration Statement or its Power of
Attorney
II-4
<PAGE> 61
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <C> <S>
1 -- Form of Underwriting Agreement
2.1 -- Agreement and Plan of Merger, dated December 6, 1996, by and
among Central Parking Corporation, Central Parking
System -- Empire State, Inc., and Square Industries, Inc.
(incorporated by reference to Exhibit(c)(1) to the Company's
Tender Offer Statement on Schedule 14D-1 filed December 13,
1996)
2.2 -- Agreement for Sale and Purchase of Membership Interests,
dated November 22, 1996, by and among Central Parking System
Realty, Inc. Central Parking System Realty of Missouri,
Inc., Gateway Grove, Inc., and SLC Holdings, L.L.C.
(incorporated by reference to Exhibit 2.2 to the Company's
Current Report on Form 8-K filed January 14, 1997)
2.3 -- Acquisition Agreement and Plan of Merger dated November 7,
1997, by and among Kinney System Holding Corp., the
Registrant and KSHC Parallel Parking, Inc. (incorporated by
reference to Exhibit 2.1 to the Company's Current Report on
Form 8-K filed February 17, 1998)
*4.1 -- Amended and Restated Charter of the Registrant, as amended
4.2 -- Amended and Restated Bylaws of the Registrant (incorporated
by reference to Exhibit 3.2 of the Company's Registration
Statement No. 33-95640 on Form S-1)
4.3 -- 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)
5 -- Opinion of Harwell Howard Hyne Gabbert & Manner, P.C.
23.1 -- Consents of KPMG Peat Marwick LLP
23.2 -- Consent of David Berdon & Co. LLP
23.3 -- Consent of Harwell Howard Hyne Gabbert & Manner, P.C.
(included in Exhibit 5)
*24 -- Power of Attorney
99 -- Consent of Lewis Katz
</TABLE>
- ---------------
* Filed with initial Registration Statement.
<PAGE> 1
Exhibit 1
CENTRAL PARKING CORPORATION
2,625,000 SHARES
OF
COMMON STOCK
UNDERWRITING AGREEMENT
March , 1998
J.C. BRADFORD & CO., LLC
BEAR, STEARNS & CO. INC.
WILLIAM BLAIR & COMPANY, L.L.C.
NATIONSBANC MONTGOMERY SECURITIES LLC
SUNTRUST EQUITABLE SECURITIES CORPORATION
As Representatives of the Several Underwriters
c/o J.C. Bradford & Co.
J.C. Bradford Financial Center
330 Commerce Street
Nashville, Tennessee 37201
Ladies and Gentlemen:
Central Parking Corporation, a Tennessee corporation (the "Company"),
and certain shareholders of the Company identified on Schedule I hereto (the
"Selling Shareholders") propose to sell to the several underwriters named in
Schedule II hereto (the "Underwriters"), for whom you are acting as the
representatives (the "Representatives"), 1,875,000 and 750,000 shares,
respectively, 2,625,000 of common stock, par value $.01 per share ("Common
Stock"), of the Company. The 2,625,000 shares of Common Stock are referred to
herein as the "Firm Shares." The Company proposes to grant to the Underwriters
an option to purchase up to 262,500 additional shares of Common Stock (the
"Option Shares"), as provided for in Section 3 of this Agreement, for the
purpose of covering over-allotments. The Underwriters, severally and not
jointly, are willing to purchase the Firm Shares set forth opposite their
respective names on Schedule II hereto and their pro rata share of the Option
Shares in the event the Representatives elect to exercise the over-allotment
option in whole or in part. The Firm Shares and the Option Shares purchasable
pursuant to this Agreement are collectively referred to herein as the "Shares."
<PAGE> 2
1. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, each of the Underwriters that:
(a) The Company meets the requirements for use of, and has filed with
the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"), a registration
statement on Form S-3 (Registration No. 333-23869) including the related
preliminary prospectus relating to the Shares, and has filed one or more
amendments thereto. Copies of such registration statement and any
amendments, including any post-effective amendments, and all forms of the
related prospectuses contained therein and any supplements thereto, have
been delivered to you. Such registration statement, including the
prospectus, Part II, the information incorporated by reference, all
financial schedules and exhibits thereto, and all information deemed to be
a part of such Registration Statement pursuant to Rule 430A and Rule 434
under the Securities Act, as amended at the time when it shall become
effective, together with any registration statement filed by the Company
pursuant to Rule 462(b) of the Securities Act, is herein referred to as the
"Registration Statement," and the prospectus included as part of the
Registration Statement on file with the Commission that discloses all the
information that was omitted from the prospectus on the effective date
pursuant to Rule 430A or Rule 434 of the Rules and Regulations (as defined
below) and in the form filed pursuant to Rule 424(b) under the Securities
Act is herein referred to as the "Final Prospectus." The prospectus
included as part of the Registration Statement on the date when the
Registration Statement became effective is referred to herein as the
"Effective Prospectus." Any prospectus included in the Registration
Statement and in any amendment thereto prior to the effective date of the
Registration Statement is referred to herein as a "Preliminary Prospectus."
For purposes of this Agreement, "Rules and Regulations" mean the rules and
regulations promulgated by the Commission under either the Securities Act
or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
applicable.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus, at
the time of filing thereof, complied with the requirements of the
Securities Act and the Rules and Regulations, and did not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; except that the foregoing does not apply to statements or
omissions made in reliance upon and in conformity with written information
furnished to the Company by any Underwriter specifically for use therein
(it being understood that the only information so provided is the
information included in the last paragraph on the cover page and in the
first, third, and fourth paragraphs under the caption "Underwriting" in the
Final Prospectus). When the Registration Statement becomes effective and at
all times subsequent thereto up to and including the First Closing Date (as
hereinafter defined), (i) the Registration Statement, the Effective
Prospectus, and the Final Prospectus, and any amendments or supplements
thereto will contain all statements which are required to be stated therein
in accordance with the Securities Act, the Exchange Act, and the Rules
2
<PAGE> 3
and Regulations and will comply with the requirements of the Securities
Act, the Exchange Act and the Rules and Regulations, and (ii) neither the
Registration Statement, the Effective Prospectus, nor the Final Prospectus
nor any amendment or supplement thereto will include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading; except that the
foregoing does not apply to statements or omissions made in reliance upon
and in conformity with written information furnished to the Company by any
Underwriter specifically for use therein (it being understood that the only
information so provided is the information included in the last paragraph
on the cover page and in the first, third, and fourth paragraphs under the
caption "Underwriting" in the Final Prospectus).
(c) The documents that are incorporated by reference in any
Preliminary, Effective and Final Prospectus or from which information is so
incorporated by reference, when they become effective or were filed with
the Commission, as the case may be, complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as applicable,
and the Rules and Regulations, and any documents so filed prior to the
termination of this offering and incorporated by reference subsequent to
the effective date of the Registration Statement shall, when they are filed
with the Commission, conform in all material respects with the requirements
of the Securities Act and the Exchange Act, as applicable, and the Rules
and Regulations.
(d) The Company and each subsidiary of the Company (as used herein,
the term "subsidiary" includes Central Parking System Realty, Inc., Square
Industries, Inc., Diplomat Parking Corporation, Civic Parking, LLC and
Kinney System Holding Corp. ("Kinney")) and any other corporation, joint
venture, or partnership in which the Company or any subsidiary of the
Company has 50% or greater ownership interest) is duly organized and
validly existing and in good standing under the laws of its jurisdiction of
incorporation, with full power and authority (corporate and other, as the
case may be) to own its properties and conduct its business as now
conducted, except where the failure to be in good standing would not have a
material adverse effect on the Company and its subsidiaries taken as a
whole, and is duly qualified or authorized to do business and is in good
standing in all jurisdictions wherein the nature of its business or the
character of property owned or leased may require it to be qualified or
authorized to do business, except for jurisdictions in which the failure to
so qualify would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole. The Company and its subsidiaries hold all
licenses, consents, and approvals, and have satisfied all eligibility and
other similar requirements imposed by federal and state regulatory bodies,
administrative agencies, or other governmental bodies, agencies, or
officials, in each case as material to the conduct of the business in which
it is engaged as described in the Effective Prospectus and the Final
Prospectus.
(e) The capitalization of the Company as of December 31, 1997 is as
set forth under the caption "Capitalization" in the Effective Prospectus
and the Final Prospectus, and
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<PAGE> 4
the Company's capital stock conforms to the description thereof contained
or incorporated by reference in the Effective Prospectus and the Final
Prospectus. All the issued shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and nonassessable.
None of the issued shares of capital stock of the Company have been issued
in violation of any preemptive or similar rights. The Shares have been duly
and validly authorized and, upon issuance and delivery and payment therefor
in the manner herein described, will be validly issued, fully paid, and
nonassessable. Upon the effective date of the offering of the Shares, there
will be no preemptive rights or other rights to subscribe for or to
purchase, or any restriction upon the transfer of, any shares of Common
Stock pursuant to the Company's Amended and Restated Charter, bylaws, or
other governing documents or any agreement or other instrument to which the
Company is a party or by which it may be bound, except as described in the
Effective Prospectus and the Final Prospectus, and except for restrictions
on transfer imposed under applicable securities laws. Neither the filing of
the Registration Statement nor the offer or sale of the Shares as
contemplated by this Agreement gives rise to any rights for or relating to
the registration of any shares of Common Stock or any other securities of
the Company. The Underwriters will receive good and marketable title to the
Shares to be issued and delivered hereunder by the Company, free and clear
of all liens, encumbrances, claims, security interests, restrictions,
shareholders' agreements and voting trusts whatsoever.
(f) As of the date hereof, except as set forth on Exhibit 1(f) hereto,
all of the outstanding shares of capital stock or equity interests of the
Company's subsidiaries are owned by the Company directly or indirectly
through another subsidiary, free and clear of all liens, claims,
encumbrances, security interests, restrictions, shareholder agreements,
voting trusts or other claims of third parties. There are no preemptive
rights or other rights to subscribe for or purchase, or any restriction
upon the transfer of any shares of capital stock of the Company's
subsidiaries pursuant to any subsidiary's charter, bylaws, or other
governing documents or any agreement or other instruments to which such
subsidiary is a party.
(g) All offers and sales of the Company's securities prior to the date
hereof were at all relevant times duly registered or the subject of an
available exemption from the registration requirements of the Securities
Act and the applicable state securities or Blue Sky laws.
(h) The Company has full legal right, power, and authority to enter
into this Agreement and to sell and deliver the Shares to the Underwriters
as provided herein, and this Agreement has been duly authorized, executed,
and delivered by the Company and constitutes a valid and binding agreement
of the Company enforceable against the Company in accordance with its
terms. No consent, approval, authorization, or order of any court or
governmental agency or body or third party is required for the performance
of this Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby, except such as have been obtained and
such as may be required by the National
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<PAGE> 5
Association of Securities Dealers, Inc. ("NASD") or under the Securities
Act, or state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters. The issue and sale of
the Shares by the Company, the Company's performance of this Agreement, and
the consummation of the transactions contemplated hereby will not result in
a breach or violation of, or conflict with, any of the terms and provisions
of, or constitute a default by the Company under, any indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument to
which the Company or any of its subsidiaries is a party or to which any of
their properties is subject, the Amended and Restated Charter or bylaws of
the Company, or any statute or any judgment, decree, order, rule, or
regulation of any court or governmental agency or body applicable to the
Company or any of its subsidiaries or any of their properties. The Company
is not in violation of its Amended and Restated Charter or bylaws or any
law, administrative rule, or regulation or arbitrator's or administrative
or court decree, judgment or order or in violation or default (there being
no existing state of facts which with notice or lapse of time or both would
constitute a default) in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, deed
of trust, mortgage, loan agreement, note, lease, agreement or other
instrument or permit to which it is a party or by which it or any of its
properties is or may be bound, other than violations and defaults which
could not reasonably be expected to have a material adverse effect on the
business condition (financial or otherwise), prospects, net worth, or
results of operations of the Company and its subsidiaries, taken as a
whole.
(i) The consolidated financial statements and the related notes of the
Company included or incorporated by reference in the Registration
Statement, the Effective Prospectus and the Final Prospectus present fairly
the financial position, results of operations, and changes in financial
position and cash flow of the Company at the dates and for the periods to
which they relate and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated. The unaudited pro forma financial statements included or
incorporated by reference in the Registration Statement, the Effective
Prospectus, and the Final Prospectus comply in all material respects with
the applicable accounting requirements of Article 11 of Regulation S-X
promulgated by the Commission, and the pro forma adjustments have been
applied properly to the historical financial statements. The other
financial and statistical data included or incorporated by reference in the
Effective Prospectus and the Final Prospectus fairly presents the
information set forth therein on the basis stated in the Effective
Prospectus and the Final Prospectus. KPMG Peat Marwick LLP, whose report
appears in the Effective Prospectus and the Final Prospectus, are
independent accountants as required by the Securities Act and the Rules and
Regulations.
(j) Subsequent to September 30, 1997, neither the Company nor any of
its subsidiaries has sustained any material loss or interference with its
or their business or properties from fire, flood, hurricane, earthquake,
accident, or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or
5
<PAGE> 6
decree, which is not disclosed in the Effective Prospectus and the Final
Prospectus; and subsequent to the respective dates as of which information
is given in the Registration Statement, the Effective Prospectus and the
Final Prospectus, (i) neither the Company nor any of its subsidiaries has
incurred any material liabilities or obligations, direct or contingent, or
entered into any material transactions not in the ordinary course of
business, and (ii) there has not been any change in the capital stock,
partnership interests, joint venture interests, long-term debt, obligations
under capital leases or short-term borrowings of the Company, other than in
the ordinary course of business, or any issuance of options, warrants or
rights to purchase the capital stock of the Company, or any adverse change,
or any development involving a prospective adverse change, in the general
affairs, management, business, prospects, financial position, net worth, or
results of operations of the Company, except in each case as described in
or contemplated by the Effective Prospectus and the Final Prospectus.
(k) There is not pending, or to the knowledge of the Company
threatened, any action, suit, proceeding, inquiry, or investigation, to
which the Company or any of its subsidiaries or any of the Company's
officers or directors is a party, or to which the property of the Company
or any of its subsidiaries is subject, before or brought by any court or
governmental agency or body, wherein an unfavorable decision, ruling, or
finding could prevent or materially hinder the consummation of this
Agreement or could have a material adverse effect on the business condition
(financial or otherwise), prospects, net worth, or results of operations of
the Company and its subsidiaries, taken as a whole.
(l) There are no contracts or other documents required by the
Securities Act or by the Rules and Regulations to be described in the
Registration Statement, the Effective Prospectus or the Final Prospectus or
to be filed as exhibits to the Registration Statement which have not been
described, incorporated by reference, or filed as required.
(m) Except as described in the Effective Prospectus and the Final
Prospectus, the Company and its subsidiaries have good and marketable title
to all real and material personal property owned by them, free and clear of
all liens, charges, encumbrances, or defects except those reflected in the
financial statements hereinabove described. The real and personal property
and buildings referred to in the Effective Prospectus and the Final
Prospectus which are leased from others by the Company or its subsidiaries
are held under valid, subsisting and enforceable leases. The Company and
its subsidiaries own or lease all such properties as are necessary to their
operations as now conducted.
(n) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv)
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<PAGE> 7
the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(o) The Company and each of its subsidiaries have filed all federal,
state, and local income, excise, and franchise tax returns required to be
filed through the date hereof and have paid all taxes shown as due
therefrom; and there is no tax deficiency that has been, nor does the
Company or any of its subsidiaries have knowledge of any tax deficiency
which is likely to be asserted against the Company or any of its
subsidiaries, which if determined adversely could materially and adversely
affect the earnings, assets, affairs, business prospects, or condition
(financial or otherwise) of the Company and its subsidiaries, taken as a
whole.
(p) The Company and each of its subsidiaries operate their businesses
in conformity in all material respects with all applicable statutes, common
laws, ordinances, decrees, orders, rules, and regulations of governmental
bodies. The Company and each of its subsidiaries have all material
licenses, approvals, or consents to operate their businesses in all
locations in which such businesses are currently being operated, and
neither the Company nor any of its subsidiaries is aware of any existing or
imminent matter that may materially adversely impact any of their
operations or business prospects other than as specifically disclosed in
the Effective Prospectus and the Final Prospectus. No director, officer, or
to the Company's knowledge, agent or employee of the Company or any of its
subsidiaries, any other person associated with or acting for or on behalf
of the Company or any of its subsidiaries, has directly or indirectly made
any contribution, gift, bribe, rebate, payoff, influence payment, kickback,
or other payment to any person, private or public, regardless of form,
whether in money, property, or services (x) to obtain favorable treatment
in securing business, (y) to pay for favorable treatment for business
obtained, or (z) to obtain special concessions or for special concessions
already obtained for or in respect of the Company.
(q) Neither the Company nor any of its subsidiaries has failed to file
with the applicable regulatory authorities any statement, report,
information, or form required by any applicable law, regulation, or order
where the failure to file the same would have a material adverse effect on
the Company and its subsidiaries, taken as a whole, or on their respective
abilities to conduct business in any state; all such filings or submissions
were in material compliance with applicable laws when filed and no
deficiencies have been asserted by any regulatory commission, agency or
authority with respect to such filings or submissions. Neither the Company
nor any of its subsidiaries has failed to maintain in full force and effect
any material license or permit necessary or proper for the conduct of their
respective businesses, or received any notification that any revocation or
limitation thereof is threatened or pending, and, except as disclosed in
the Effective Prospectus and the Final Prospectus, there is not pending any
change under any law, regulation, license or permit which could materially
adversely affect any of their respective businesses, operations, properties
or business prospects. Neither the Company nor any of its subsidiaries has
received any notice
7
<PAGE> 8
of violation of or been threatened with a charge of violating and are not,
to the best of their knowledge, under investigation with respect to a
possible violation of any provision of any law, regulation, or order.
(r) No labor dispute exists with the Company's or any of its
subsidiaries' employees or is imminent which could materially adversely
affect the Company. Neither the Company nor any of its subsidiaries is
aware of any existing or imminent labor disturbance by any of their
employees which could be expected to materially adversely affect the
condition (financial or otherwise), results of operations, properties,
affairs, management, business affairs, or business prospects of the Company
and its subsidiaries, taken as a whole.
(s) The Company owns or possesses, or can acquire on reasonable terms,
the patents, licenses, copyrights, trademarks, service marks and trade
names presently employed by it in connection with the businesses now
operated by it, and neither the Company nor any of its subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing which, alone or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs, or business prospects of
the Company and its subsidiaries, taken as a whole.
(t) Neither the Company nor any of the directors, officers, or to the
Company's knowledge, employees or agents of the Company, have taken and
will not take, directly or indirectly, any action designed to cause or
result in, or which has constituted or which might be expected to
constitute, stabilization or manipulation of the price of the Common Stock.
(u) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of hazardous substances
by the Company or any of its subsidiaries (or, to the knowledge of the
Company, any of its or their predecessors in interest) at, upon or from any
of the property now or previously owned or leased by the Company or any of
its subsidiaries in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which could reasonably be
expected to require remedial action under any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit, except for any
violation or remedial action which could not be reasonably likely to have,
singularly or in the aggregate with all such violations and remedial
actions, a material adverse effect on the business, condition (financial or
otherwise), prospects, properties, net worth or results of operations of
the Company and its subsidiaries, taken as a whole; there has been no
material spill, discharge, leak, emission, injection, escape, dumping or
release of any kind onto such property or of any hazardous substances due
to or caused by the Company or any of its subsidiaries or with respect to
which the Company or any of its subsidiaries had knowledge, except for any
such spill, discharge, leak, emission, injection, escapes, dumpings or
releases which would not be reasonably likely to have, singularly or in the
aggregate with all such spills, discharges, leaks, emissions, injections,
escapes, dumpings or releases, a material adverse effect on the business,
condition (financial or
8
<PAGE> 9
otherwise), prospects, properties, net worth or results of operations of
the Company and its subsidiaries, taken as a whole; and the term "hazardous
substances" shall have the meaning specified in any applicable local,
state, federal and foreign laws or regulations with respect to
environmental protection.
(v) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as management believes is appropriate to the business of the
Company and its subsidiaries; all such policies of insurance insuring the
Company and its subsidiaries or their respective businesses, assets,
employees, officers and directors are in full force and effect; the Company
and its subsidiaries are in compliance with the terms of such policies and
instruments in all material respects; and there are no claims by the
Company or any of its subsidiaries under any such policy or instrument as
to which any insurance company is denying liability or defending under a
reservation of rights clause.
(w) The Company has not, directly or indirectly, solicited any offer
to buy or offer to sell, and will not, directly or indirectly, solicit any
offer to buy or offer to sell, in the United States or to any United States
citizen or resident, any security which is or would be integrated with the
offer and proposed sale of the convertible preferred securities to be
issued by a trust subsidiary of the Company and the convertible debentures
and guarantee related thereto to be issued by the Company (collectively,
the "Preferred Securities") in a manner that would require the offer or
sale of any of the Preferred Securities to be registered under the
Securities Act.
(x) Neither the Company nor any of its affiliates, as such term is
defined in Rule 405 under the Securities Act ("Affiliates"), nor any person
acting on their behalf (other than the Underwriters, as to whom the Company
makes no representation), has engaged or will engage, in connection with
the offering of the Preferred Securities, in any form of general
solicitation or general advertising within the meaning of the Securities
Act and the Rules and Regulations thereunder.
(y) The Company is not, will not become as a result of the
transactions contemplated hereby and does not intend to conduct its
business in a manner that would cause it to become, an "investment company"
or a company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940.
(z) The Shares have been listed for trading on The New York Stock
Exchange, upon official notice of issuance.
2. Representations and Warranties of the Selling Shareholders. Each of the
Selling Shareholders, severally and not jointly, represents and warrants to each
Underwriter and agrees as follows that:
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<PAGE> 10
(a) Such Selling Shareholder at the First Closing Date (as defined
herein) will have valid and marketable title to the Shares set forth in
Schedule I to be sold by such Selling Shareholder, free and clear of any
liens, encumbrances, equities, and claims (other than as imposed by the
Securities Act or this Agreement), and full right, power, and authority to
effect the sale and delivery of such Shares; and upon the delivery of and
payment for the Shares to be sold by such Selling Shareholder pursuant to
this Agreement, valid and marketable title thereto, free and clear of any
liens, encumbrances, equities, and claims, will be transferred to the
Underwriters.
(b) Such Selling Shareholder has duly executed and delivered the
Custody Agreement and Power of Attorney in the form previously delivered to
the Representatives, appointing Monroe J. Carell, Jr. as each Selling
Shareholder's attorney-in-fact (the "Attorney-in-Fact") and appointing the
Company as custodian (the "Custodian"). The Attorney-in-Fact is authorized
to execute, deliver, and perform this Agreement on behalf of such Selling
Shareholder, to deliver the Shares to be sold by such Selling Shareholder
hereunder, to accept payment therefor, and otherwise to act on behalf of
such Selling Shareholder in connection with this Agreement. Certificates,
in suitable form for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank, representing the Shares to
be sold by such Selling Shareholder hereunder have been deposited with the
Custodian pursuant to the Custody Agreement for the purpose of delivery
pursuant to this Agreement. Such Selling Shareholder agrees that the shares
of Common Stock represented by the certificates on deposit with the
Custodian are subject to the interest of the Underwriters hereunder, that
the arrangements made for such custody and the appointment of the
Attorney-in-Fact are to that extent irrevocable, and that the obligations
of such Selling Shareholder hereunder shall not be terminated except as
provided in this Agreement and the Custody Agreement. If such Selling
Shareholder should die or become incapacitated or if any other event should
occur, before the delivery of the Shares of such Selling Shareholder
hereunder, the certificates for such Shares deposited with the Custodian
shall be delivered by the Custodian in accordance with the terms and
conditions of this Agreement as if such death, incapacity, or other event
had not occurred, regardless whether the Custodian or the Attorney-in-Fact
shall have received notice thereof.
(c) Such Selling Shareholder, acting through his duly authorized
Attorney-in-Fact, has duly executed and delivered this Agreement and the
Custody Agreement and Power of Attorney; this Agreement constitutes a
legal, valid, and binding obligation of such Selling Shareholder, all
authorizations and consents necessary for the execution and delivery of
this Agreement and the Custody Agreement and Power of Attorney on behalf of
such Selling Shareholder and for the sale and delivery of the Shares to be
sold by such Selling Shareholder hereunder have been given, except as may
be required by the Securities Act or state securities laws; and such
Selling Shareholder has the legal capacity and full right, power, and
authority to execute this Agreement and the Custody Agreement and Power of
Attorney.
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<PAGE> 11
(d) The performance of this Agreement and the Custody Agreement and
Power of Attorney and the consummation of the transactions contemplated
hereby and thereby by such Selling Shareholder will not result in a breach
or violation of, or conflict with, any of the terms of provisions of, or
constitute a default by such Selling Shareholder under, any indenture,
mortgage, deed of trust, trust (constructive or other), loan agreement,
lease, franchise, license, or other agreement or instrument to which such
Selling Shareholder or any of his or its properties is bound, or any
statute, judgment, decree, order, rule, or regulation of any court or
governmental agency or body applicable to such Selling Shareholder or any
of his or its properties.
(e) Such Selling Shareholder has not distributed nor, other than as
permitted by the Securities Act and the Rules and Regulations, will
distribute any prospectus or other offering material in connection with the
offer and sale of the Shares other than any Preliminary Prospectus filed
with the Commission or the Final Prospectus or other material permitted by
the Securities Act.
(f) For a period of 180 days from the effective date of the
Registration Statement, such Selling Shareholder will not, directly or
indirectly, sell, offer to sell, grant any option for the sale of, or
otherwise dispose of any shares of Common Stock, other than to the
Underwriters pursuant to this Agreement, without the prior written consent
of the Representatives.
(g) To the knowledge of such Selling Shareholder, the representations
and warranties of the Company contained in Section 1 of this Agreement are
true and correct; such Selling Shareholder has reviewed and is familiar
with the Registration Statement as originally filed with the Commission and
the Preliminary Prospectus contained therein. The Preliminary Prospectus
does not include an untrue statement of a material fact regarding each
Selling Shareholder or omit to state a material fact regarding each Selling
Shareholder necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; such
Selling Shareholder is not prompted to sell the Shares to be sold by such
Selling Shareholder's knowledge of any material non-public information
concerning the Company or any of its subsidiaries.
(h) At the time the Registration Statement becomes effective (i) such
parts of the Registration Statement and any amendments and supplements
thereto as specifically refer to such Selling Shareholder will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and (ii) such parts of the Effective Prospectus and Final
Prospectus as specifically refer to such Selling Shareholder will not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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<PAGE> 12
(i) No approval, consent, order, authorization, designation,
declaration, or filing by or with any regulatory body, administrative or
other governmental body is necessary in connection with the execution and
delivery of this Agreement by such Selling Shareholder, and the
consummation by him of the transactions herein contemplated (other than as
required by the Securities Act, state securities laws and the NASD).
(j) Any certificates signed by or on behalf of such Selling
Shareholder as such and delivered to the Representatives or to counsel for
the Representatives shall be deemed a representation and warranty by such
Selling Shareholder to each Underwriter as to the matters covered thereby.
(k) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Shareholder agrees to deliver to you prior to or
at the First Closing Date (as hereinafter defined) a properly completed and
executed United States Treasury Department Form W-9 (or other applicable
form or statement specified by Treasury Department regulations in lieu
thereof).
(l) Such Selling Shareholder will not take, directly or indirectly,
any action designed to cause or result in, or which might constitute or be
expected to constitute, stabilization or manipulation of the price of the
Common Stock.
(m) Such Selling Shareholder has not, directly or indirectly,
solicited any offer to buy or offer to sell, and will not, directly or
indirectly, solicit any offer to buy or offer to sell, in the United States
or to any United States citizen or resident, any security which is or would
be integrated with the offer and proposed sale of the Preferred Securities
to be issued by a trust subsidiary of the Company in a manner that would
require the offer or sale of any of the Preferred Securities to be
registered under the Securities Act.
(n) Neither such Selling Shareholder nor any of such Selling
Shareholder's affiliates, as such term is defined in Rule 405 under the
Securities Act ("Affiliates"), nor any person acting on their behalf (other
than the Underwriters, as to whom such Selling Shareholder makes no
representation), has engaged or will engage, in connection with the
offering of the Preferred Securities, in any form of general solicitation
or general advertising within the meaning of the Securities Act and the
Rules and Regulations thereunder.
3. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein
set forth, the Company and the Selling Shareholders agree, as provided in
the introductory paragraph, to sell to each of
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<PAGE> 13
the Underwriters, and each of the Underwriters, severally and not jointly,
agrees to purchase at a purchase price of $___________ per share, the
number of Firm Shares set forth opposite such Underwriter's name in
Schedule II hereto, plus such additional number of Firm Shares which such
Underwriter may become obligated to purchase pursuant to Section 9 hereof.
Each of the Underwriters agrees that the "Price to Public" set forth on the
cover page of the Final Prospectus will be $___________ per share.
(b) The Company also grants to the Underwriters an option to purchase,
solely for the purpose of covering over-allotments in the sale of Firm
Shares, all or any portion of the Option Shares at the purchase price per
share set forth above. The option granted hereby may be exercised as to all
or any part of the Option Shares at any time (but only once) within 30 days
after the date the Registration Statement becomes effective. The
Underwriters shall not be under any obligation to purchase any Option
Shares prior to the exercise of such option. The option granted hereby may
be exercised by the Underwriters by the Representatives giving written
notice to the Company setting forth the number of Option Shares to be
purchased and the date and time for delivery of and payment for such Option
Shares and stating that the Option Shares referred to therein are to be
used for the purpose of covering over-allotments in connection with the
distribution and sale of the Firm Shares. If such notice is given prior to
the First Closing Date (as defined herein), the date set forth therein for
such delivery and payment shall not be earlier than two full business days
thereafter or the First Closing Date, whichever occurs later. If such
notice is given on or after the First Closing Date, the date set forth
therein for such delivery and payment shall not be earlier than three full
business days thereafter. In either event, the date so set forth shall not
be more than 15 full business days after the date of such notice. The date
and time set forth in such notice is herein called the "Option Closing
Date." Upon exercise of the option, the Company shall become obligated to
sell to the Underwriters, and, subject to the terms and conditions herein
set forth, the Underwriters shall become obligated to purchase, for the
account of each Underwriter, from the Company, severally and not jointly,
the number of Option Shares specified in such notice. Option Shares shall
be purchased for the accounts of the Underwriters in proportion to the
number of Firm Shares set forth opposite such Underwriter's name in
Schedule II hereto, except that the respective purchase obligations of each
Underwriter shall be adjusted so that no Underwriter shall be obligated to
purchase fractional Option Shares.
(c) Certificates in definitive form for the Firm Shares which each
Underwriter has agreed to purchase hereunder shall be delivered by or on
behalf of the Company and the Selling Shareholders to the Underwriters for
the account of such Underwriter against payment by such Underwriter or on
its behalf of the purchase price therefor by certified, official bank or
New York Clearing House funds check payable in next day funds to the order
of the Company and the custodian for the Selling Shareholders at the
offices of J.C. Bradford & Co. ("Bradford"), 330 Commerce Street,
Nashville, Tennessee 37201, or at such other place as may be agreed upon by
Bradford and the Company, at 10:00 A.M., Nashville time, on the third full
business day after this Agreement becomes effective, or at such other
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<PAGE> 14
time not later than the seventh full business day thereafter as the
Representatives and the Company may determine, such time of delivery
against payment being herein referred to as the "First Closing Date." The
First Closing Date and the Option Closing Date are herein individually
referred to as the "Closing Date" and collectively referred to as the
"Closing Dates." Certificates in definitive form for the Option Shares
which each Underwriter shall have agreed to purchase hereunder shall be
similarly delivered by or on behalf of the Company and the custodian for
the Selling Shareholders on the Option Closing Date. The certificates in
definitive form for the Shares to be delivered will be in good delivery
form and in such denominations and registered in such names as Bradford may
request not less than 48 hours prior to the First Closing Date or the
Option Closing Date, as the case may be. Such certificates will be made
available for checking and packaging at a location in New York, New York as
may be designated by the Representatives, at least 24 hours prior to the
First Closing Date or the Option Closing Date, as the case may be. It is
understood that the Representatives may (but shall not be obligated to)
make payment on behalf of any Underwriter or Underwriters for the Shares to
be purchased by such Underwriter or Underwriters. No such payment shall
relieve such Underwriter or Underwriters from any of its or their
obligations hereunder.
4. Offering by the Underwriters. After the Registration Statement becomes
effective, the several Underwriters propose to offer for sale to the public the
Firm Shares and any Option Shares that may be sold at the price and upon the
terms set forth in the Final Prospectus.
5. Covenants of the Company. The Company covenants and agrees with each of
the Underwriters that:
(a) The Company shall comply with the provisions of and make all
requisite filings with the Commission pursuant to Rules 424, 430A, and 434
of the Rules and Regulations and to notify you promptly (in writing, if
requested) of all such filings. The Company shall notify you promptly of
any request by the Commission for any amendment of or supplement to the
Registration Statement, the Effective Prospectus, or the Final Prospectus
or for additional information; the Company shall prepare and file with the
Commission, promptly upon your request, any amendments of or supplements to
the Registration Statement, the Effective Prospectus, or the Final
Prospectus which, in your opinion, based on the advice of your legal
counsel, may be necessary or advisable in connection with the distribution
of the Shares; and the Company shall not file any amendment of or
supplement to the Registration Statement, the Effective Prospectus or the
Final Prospectus which is not approved by you after reasonable notice
thereof. The Company shall advise you promptly of the issuance by the
Commission or any jurisdiction or other regulatory body of any stop order
or other order suspending the effectiveness of the Registration Statement,
suspending or preventing the use of any Preliminary Prospectus, the
Effective Prospectus, or the Final Prospectus or suspending the
qualification of the Shares for offering or sale in any jurisdiction, or of
the institution of any proceedings for any such purpose; and the Company
shall use its best efforts to prevent the issuance of any stop order
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<PAGE> 15
or other such order and, should a stop order or other such order be issued,
to obtain as soon as possible the lifting thereof.
(b) The Company will take or cause to be taken, in cooperation with
the Representatives and counsel to the Underwriters, all necessary action
and furnish to whomever you direct such information as may be reasonably
required in qualifying the Shares for offer and sale under the securities
or Blue Sky laws of such jurisdictions as the Underwriters may designate
and will continue such qualifications in effect for as long as may be
reasonably necessary to complete the distribution of the Shares. The
foregoing notwithstanding, the Company shall not be required to qualify as
a foreign corporation or to take any action which would subject it to
general service of process in any jurisdiction where it is not presently
qualified or where it would be subject to taxation as a foreign
corporation.
(c) Within the time during which a Final Prospectus relating to the
Shares is required to be delivered under the Securities Act, the Company
shall comply with all requirements imposed upon it by the Securities Act,
as now and hereafter amended, and by the Rules and Regulations, as from
time to time in force, so far as is necessary to permit the continuance of
sales of or dealings in the Shares as contemplated by the provisions hereof
and the Final Prospectus. If during such period any event occurs as a
result of which the Final Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances then existing, not misleading, or if during such period it is
necessary to amend the Registration Statement or supplement the Final
Prospectus to comply with the Securities Act, the Company shall promptly
notify you and shall amend the Registration Statement or supplement the
Final Prospectus (at the expense of the Company) so as to correct such
statement or omission or effect such compliance.
(d) The Company will furnish without charge to the Representatives and
make available to the Underwriters copies of the Registration Statement
(four of which shall be signed and shall be accompanied by all exhibits,
including any that are incorporated by reference, which have not previously
been furnished), each Preliminary Prospectus, the Effective Prospectus and
the Final Prospectus, and all amendments and supplements thereto, including
any prospectus or supplement prepared after the effective date of the
Registration Statement, in each case as soon as available and in such
quantities as the Underwriters may reasonably request.
(e) The Company will (i) deliver to you at such office or offices as
you may designate as many copies of the Preliminary Prospectus and Final
Prospectus as you may reasonably request, and (ii) for a period of not more
than nine months after the Registration Statement becomes effective, send
to the Underwriters as many additional copies of the Final Prospectus and
any supplement thereto as you may reasonably request.
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<PAGE> 16
(f) The Company shall make generally available to its security
holders, in the manner contemplated by Rule 158(b) under the Securities
Act, as promptly as practicable and in any event no later than 45 days
after the end of its fiscal quarter in which the first anniversary of the
effective date of the Registration Statement occurs, an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act covering a
period of at least 12 consecutive months beginning after the effective date
of the Registration Statement.
(g) The Company will apply the net proceeds from the sale of the
Shares as set forth under the caption "Use of Proceeds" in the Final
Prospectus.
(h) During a period of five years from the effective date of the
Registration Statement, the Company will furnish to the Representatives
copies of all reports and other communications (financial or other)
furnished by the Company to its shareholders and, as soon as available,
copies of any reports or financial statements furnished or filed by the
Company to or with the Commission or any national securities exchange on
which any class of securities of the Company may be listed.
(i) The Company will, from time to time, after the effective date of
the Registration Statement file with the Commission such reports as are
required by the Securities Act, the Exchange Act, and the Rules and
Regulations, and shall also file with state securities commissions in
states where the Shares have been sold by you (as you shall have advised us
in writing) such reports as are required to be filed by the securities acts
and the regulations of those states.
(j) Except pursuant to this Agreement or with the prior written
consent of the Representatives, for a period of 180 days from the effective
date of the Registration Statement, the Company will not, and the Company
has provided agreements executed by each of its executive officers and
directors and all other beneficial owners of 10% or more of the Company's
outstanding Common Stock providing that for a period of 180 days from the
effective date of the Registration Statement, such person or entity will
not, directly or indirectly, offer for sale, sell, grant any options (other
than pursuant to existing employee benefit plans and agreements, other
existing compensation agreements, and existing stock options), rights or
warrants with respect to any shares of Common Stock, securities convertible
into Common Stock or any other capital stock of the Company, or otherwise
dispose of any shares of Common Stock or such other securities or capital
stock.
(k) The Company will not take, directly or indirectly, any action
designed to cause or result in, or which might constitute or be expected to
constitute, stabilization or manipulation of the price of the Common Stock.
6. Expenses. The Company and each of the Selling Shareholders agree with
the Underwriters that (a) whether or not the transactions contemplated by this
Agreement are consummated or this Agreement becomes effective or is terminated,
the Company and the Selling
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<PAGE> 17
Shareholders will pay all fees and expenses incident to the performance of the
obligations of the Company and the Selling Shareholders hereunder, including,
but not limited to, (i) the Commission's registration fee, (ii) the expenses of
printing (or reproduction) and distributing the Registration Statement
(including the financial statements therein and all amendments and exhibits
thereto), each Preliminary Prospectus, the Effective Prospectus, the Final
Prospectus, any amendments or supplements thereto, and this Agreement and other
underwriting documents, including Underwriters' Questionnaires, Underwriters'
Powers of Attorney, Blue Sky Memoranda and Agreements Among Underwriters, (iii)
fees and expenses of accountants and counsel for the Company and the Selling
Shareholders, (iv) expenses of registration or qualification of the Shares under
state Blue Sky and securities laws, including the fees and disbursements of
counsel to the Underwriters in connection therewith, (v) filing fees paid or
incurred by the Underwriters and related fees and expenses of counsel to the
Underwriters in connection with filings with the NASD, (vi) expenses of
including the Shares for listing on The New York Stock Exchange, (vii) all
travel, lodging and reasonable living expenses incurred by the Company in
connection with marketing, dealer and other meetings attended by the Company and
the Underwriters in marketing the Shares, (viii) the costs and charges of the
Company's transfer agent and registrar and the cost of preparing the
certificates for the Shares, and (ix) all other costs and expenses incident to
the performance of their obligations hereunder not otherwise provided for in
this Section; and (b) [UP TO $75,000 OF THE] out-of-pocket expenses, including
counsel fees, disbursements and expenses, incurred by the Underwriters in
connection with investigating, preparing to market and marketing the Shares and
proposing to purchase and purchasing the Shares under this Agreement, will be
borne and paid by the Company and the Selling Shareholders if the sale of the
Shares provided for herein is not consummated for any reason. The provisions of
this Section shall not affect any agreement that the Company and the Selling
Shareholders may have for the sharing of such costs and expenses; provided,
however, the Underwriters may deem the Company to be the primary obligor with
respect to all costs, fees, and expenses to be paid hereunder by the Company and
the Selling Shareholders. Neither the Company nor the Selling Shareholders shall
in any event be liable to any of the Underwriters for the loss of anticipated
profits from the transactions covered by this Agreement.
7. Conditions of the Underwriters' Obligations. The respective obligations
of the Underwriters to purchase and pay for the Firm Shares and Option Shares,
shall be subject, in their reasonable discretion, to the accuracy of the
representations and warranties of the Company and the Selling Shareholders
herein as of the date hereof and as of the Closing Date as if made on and as of
the Closing Date, to the accuracy of the statements of the Company's officers
made pursuant to the provisions hereof, to the performance by the Company and
the Selling Shareholders of all of their covenants and agreements hereunder, and
to the following additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective not later than 5:30 P.M., Washington,
D.C. time, on the day following the date of this Agreement, or such later
time and date as shall have been consented to by the Representatives and
all filings required by Rules 424, 430A, and 434 of the Rules and
Regulations shall have been made; no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have
17
<PAGE> 18
been instituted or threatened or, to the knowledge of the Company or the
Underwriters, shall be contemplated by the Commission; any request of the
Commission for additional information (to be included in the Registration
Statement or the Final Prospectus or otherwise) shall have been complied
with to your satisfaction; and the NASD, upon review of the terms of the
public offering of the Shares, shall not have objected to such offering,
such terms or the Underwriters' participation in the same.
(b) No Underwriter shall have advised the Company that the
Registration Statement, Preliminary Prospectus, the Effective Prospectus,
or the Final Prospectus, or any amendment or any supplement thereto,
contains an untrue statement of fact which, in your judgment, is material,
or omits to state a fact which, in your judgment, is material and is
required to be stated therein or necessary to make the statements therein
not misleading and the Company shall not have cured such untrue statement
of fact or stated a statement of fact required to be stated therein.
(c) The Representatives shall have received an opinion, dated the
Closing Date, from:
(i) Harwell Howard Hyne Gabbert & Manner, P.C., counsel for the
Company and the Selling Shareholders, to the effect that:
(A) The Company has been duly organized and is validly existing
in good standing as a corporation under the laws of the State of
Tennessee, with corporate power and authority to own its properties
and conduct its business as now conducted.
(B) Each of the Company's subsidiaries that are "significant" as
such term is defined in Regulation S-X promulgated by the Commission
has been duly organized and is validly existing under the laws of its
jurisdiction of incorporation or organization, as applicable, with the
corporate or partnership power and authority to own its properties and
conduct its business as now conducted. The issued and outstanding
shares of capital stock of the Company's corporate subsidiaries have
been duly and validly authorized and issued, are fully paid and
nonassessable, and are owned beneficially and of record by the Company
in the amounts set forth on Exhibit 1(f) hereto and to such counsel's
knowledge are owned free and clear of liens, claims, encumbrances,
security interests, voting trusts or other defects of title
whatsoever. All interests in partnership subsidiaries of the Company
are owned beneficially and of record in the percentages set forth on
Exhibit 1(f) hereto and, to such counsel's knowledge, are owned free
and clear of liens, claims, encumbrances, security interests, or other
defects of title whatsoever.
(C) As of the dates specified therein, the Company had authorized
and issued capital stock as set forth under the caption
"Capitalization" in the Final
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<PAGE> 19
Prospectus. All of the outstanding shares of the capital stock of the
Company have been duly authorized and are validly issued, fully paid and
nonassessable, and the Shares have been duly authorized, and upon issuance
thereof and payment therefor as provided herein, will be validly issued,
fully paid and nonassessable; none of the issued shares have been issued in
violation of or subject to any preemptive rights provided for by law or by
the Company's Amended and Restated Charter. There are no preemptive rights
or other rights to subscribe for or to purchase, or any restriction upon
the transfer of, the Shares pursuant to the Company's Amended and Restated
Charter, bylaws or other governing documents or, to such counsel's
knowledge, any agreement or other instrument to which the Company is a
party or by which it may be bound except as described in the Effective
Prospectus and Final Prospectus and except for restrictions on transfer
imposed under applicable securities laws. To such counsel's knowledge,
neither the filing of the Registration Statement nor the offer or sale of
the Shares as contemplated by this Agreement gives rise to any rights for
or relating to the registration of any shares of Common Stock or any other
securities of the Company. The Underwriters will receive good and
marketable title to the Shares to be issued and delivered by the Company
pursuant to this Agreement, free and clear of all liens, encumbrances,
claims, security interests, restrictions, shareholders agreements and
voting trusts whatsoever. The capital stock of the Company and the Shares
conform to the description thereof contained in the Final Prospectus.
(D) No consent, approval, authorization, or order of any court or
governmental agency or body or, to such counsel's knowledge, any third
party is required for the performance of this Agreement by the Company or
the consummation by the Company of the transactions contemplated hereby,
except such as have been obtained under the Securities Act and such as may
be required by the NASD and under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the several
Underwriters. The performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby will
not conflict with or result in a breach or violation by the Company of any
of the terms or provisions of, or constitute a default by the Company
under, any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument known to such counsel to which the Company is
a party or to which the Company or its properties is subject and which is
material to the Company, the Amended and Restated Charter or bylaws of the
Company, any statute, or any judgment, decree, order, rule or regulation
known to such counsel of any court or governmental agency or body
applicable to the Company or its properties.
(E) The Company has full legal right, power and authority to enter
into this Agreement and to issue, sell and deliver the Shares to be sold by
it to the Underwriters as provided herein, and this Agreement has been duly
authorized, executed, and delivered by the Company and constitutes the
valid and legally binding
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<PAGE> 20
obligation of the Company enforceable against the Company in accordance
with its terms, except as enforceability may be limited by general
equitable principles, bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer, fraudulent conveyance or other laws affecting
creditors' rights generally, and except as rights to indemnify may be
limited by federal or state securities laws or the public policy underlying
such laws.
(F) The Registration Statement and all post-effective amendments
thereto have become effective under the Securities Act, and, to the best
knowledge of such counsel, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are threatened, pending, or contemplated by
the Commission. All filings required by Rules 424, 430A, and 434 of the
Rules and Regulations have been made; the Registration Statement, the
Effective Prospectus, and the Final Prospectus, and any amendments or
supplements thereto, and the documents incorporated by reference therein
(except for the financial statements and schedules included or incorporated
by reference therein as to which such counsel need express no opinion), as
of their respective effective or issue dates, complied as to form in all
material respects with the requirements of the Securities Act and the Rules
and Regulations; the descriptions in the Registration Statement, the
Effective Prospectus and the Final Prospectus of statutes, regulations,
legal and governmental proceedings, and contracts and other documents are
accurate in all material respects and present fairly the information
required to be stated; and there are no pending or (to the best knowledge
of such counsel) threatened legal or governmental proceedings, statutes or
regulations required to be described in the Final Prospectus which are not
described as required nor of any contracts or documents known to such
counsel of a character required to be described in the Registration
Statement or the Final Prospectus or to be filed as exhibits to the
Registration Statement which are not described and filed as required.
(G) The Company is not, and will not be as a result of the
consummation of the transactions contemplated by this Agreement, an
"investment company" within the meaning of the Investment Company Act of
1940.
(H) This Agreement and the Custody Agreement and Power of Attorney
have been duly executed and delivered by or on behalf of each of the
Selling Shareholders and constitute valid and binding agreements of such
Selling Shareholders in accordance with their terms, except as
enforceability may be limited by applicable equitable principles or by
bankruptcy, insolvency, moratorium, reorganization or similar laws from
time to time in effect affecting the enforcement of creditors' rights, and
except as rights to indemnify may be limited by federal or state securities
laws or the public policy underlying such laws.
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<PAGE> 21
(I) The sale of the Shares to be sold by each Selling Shareholder
hereunder and the compliance by such Selling Shareholder with all of the
provisions of this Agreement, the Custody Agreement and the Power of
Attorney and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of
any terms or provisions of, or constitute a default under any material
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which such Selling Shareholder is a
party or by which such Selling Shareholder is bound or to which any of the
property or assets of such Selling Shareholder is subject, or any statute,
order, rule or regulation of any court or governmental agency or body known
to such counsel to be applicable to such Selling Shareholder or the
property of such Selling Shareholder.
(J) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement in connection with the Shares
to be sold by each Selling Shareholder hereunder, except which have been
duly obtained and in full force and effect, such as have been obtained
under the Securities Act and such as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of such
Shares by the Underwriters, as to which such counsel need express no
opinion.
(K) Each of the Selling Shareholders has the full right, power and
authority to sell, transfer and deliver such Shares pursuant to this
Agreement. By delivery of a certificate or certificates therefor, the
Selling Shareholders will transfer to the Underwriters valid and marketable
title to such shares, free and clear of any pledge, lien, security
interest, charge, claim, equity, or encumbrance of any kind.
In addition to the matters set forth above, such opinion shall also include
a statement to the effect that such counsel has participated in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants of the Company, representatives of the
Underwriters and their counsel at which the contents of the Registration
Statement, the Effective Prospectus and the Final Prospectus and related matters
were discussed and, although such counsel is not passing on and does not assume
any responsibility for the accuracy, completeness or fairness contained in the
Registration Statement, the Effective Prospectus or the Final Prospectus, that
nothing has come to the attention of such counsel which leads them to believe
that the Registration Statement, the Effective Prospectus and the Final
Prospectus or any amendment or supplement thereto, or any document incorporated
by reference therein, contains an untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading (except that such counsel need express no view
as to financial statements, schedules and other financial information included
therein). In rendering such opinion, counsel may rely as to matters of fact, to
the extent counsel deems proper, on certificates of responsible officers of the
Company and public officials.
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<PAGE> 22
(ii) Henry J. Abbott, Vice President, General Counsel and Secretary of
the Company, to the effect that:
(A) The Company is duly qualified to do business as a foreign
corporation in good standing in all jurisdictions where the failure to
so qualify would have a material adverse effect upon the Company and
its subsidiaries, taken as a whole. The Company holds all licenses,
certificates, permits, franchises and authorizations from governmental
authorities that are material to the conduct of its business in all
locations in which such business is currently being conducted.
(B) Each of the Company's subsidiaries is duly qualified to do
business in all jurisdictions where the failure to so qualify would
have a material adverse effect upon the Company and its subsidiaries,
taken as a whole. Each subsidiary holds all licenses, certificates,
permits, franchises and authorizations from governmental authorities
that are material to the conduct of its business in all locations in
which such business is currently conducted.
(C) Except as described in the Final Prospectus, there is not
pending, or to the best knowledge of such counsel threatened, any
action, suit, proceeding, inquiry or investigation, to which the
Company is a party, or to which the property of the Company is
subject, before or brought by any court or governmental agency or
body, which, if determined adversely to the Company, could result in
any material adverse change in the business, financial position, net
worth or results of operations, or could materially adversely affect
the properties or assets, of the Company.
(D) To the best knowledge of such counsel, no default exists, and
no event has occurred which with notice or after the lapse of time to
cure or both, would constitute a default, in the due performance and
observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which the Company is a party or to which it or its
properties is subject and which is material to the Company, or of the
Amended and Restated Charter or bylaws of the Company.
(E) To the best knowledge of such counsel, the Company is not in
violation of any law, ordinance, administrative or governmental rule
or regulation applicable to the Company and material to the Company or
any decree of any court or governmental agency or body having
jurisdiction over the Company.
(F) All offers and sales of the Company's securities prior to the
date hereof were at all relevant times duly registered or exempt from
the registration requirements of the Securities Act and were duly
registered or the subject of an exemption from the registration
requirements of applicable state securities or Blue Sky laws.
22
<PAGE> 23
(d) The Underwriters shall have received an opinion or opinions,
dated the Closing Date, of Bass, Berry & Sims PLC, counsel for the
Underwriters, with respect to the Registration Statement and the Final
Prospectus, and such other related matters as the Underwriters may
require, and the Company shall have furnished to such counsel such
documents as they may reasonably request for the purpose of enabling
them to pass upon such matters.
(e) The Representatives shall have received from KPMG Peat
Marwick LLP, a letter dated the date hereof and, at the Closing Date,
a second letter dated the Closing Date, in form and substance
satisfactory to the Representatives, stating that they are independent
public accountants with respect to the Company within the meaning of
the Securities Act and the applicable Rules and Regulations, and to
the effect that:
(i) In their opinion, the financial statements audited by
them and incorporated by reference in the Registration Statement
(including the consolidated financial statements of Kinney)
comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the published
Rules and Regulations and are presented in accordance with
generally accepted accounting principles;
(ii) Based upon a review in accordance with standards
established by the American Institute of Certified Public
Accountants (including those described in Statement on Auditing
Standards No. 71) of the Company's interim financial statements
for the fiscal quarters ended December 31, 1997 and 1996 that are
incorporated by reference in the Registration Statement, nothing
has come to their attention that causes them to believe that the
unaudited interim financial statements of the Company do not
comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Rules and
Regulations, or are not presented in accordance with generally
accepted accounting principles on a basis substantially
consistent with that of the audited financial statements
incorporated by reference in the Registration Statement;
(iii) The selected financial information included in the
Effective Prospectus and the Final Prospectus under the captions
"PROSPECTUS SUMMARY" and "SELECTED HISTORICAL AND PRO FORMA
FINANCIAL DATA" for each of the fiscal years ended September 30,
1995, 1996, and 1997 agrees with the corresponding amounts in the
audited consolidated financial statements of the Company
incorporated by reference in the Registration Statement or
previously reported on by them;
(iv) On the basis of a reading of the latest available
interim consolidated financial statements (unaudited) of the
Company, a reading of the minute books of the Company, inquiries
of officials of the Company responsible for
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<PAGE> 24
financial and accounting matters and other specified procedures,
all of which have been agreed to by the Representatives, nothing
came to their attention that caused them to believe that:
(A) any unaudited financial statement data included or
incorporated by reference in the Effective Prospectus and
Final Prospectus does not agree with the corresponding items
in the unaudited financial statements from which such data
was derived and such unaudited data was not determined on a
basis substantially consistent with the basis for the
corresponding amounts in the audited financial statements
incorporated by reference in the Effective Prospectus and
the Final Prospectus;
(B) at a specified date not more than five days prior
to the date of delivery of such respective letter, there was
any change in the capital stock, decline in shareholders'
equity or increase in long-term debt and capital lease
obligations of the Company, in each case as compared with
amounts shown in the latest consolidated balance sheet
incorporated by reference in the Final Prospectus, except in
each case for changes, decreases, or increases which the
Final Prospectus discloses have occurred or may occur or
which are described in such letters; and
(C) for the period from the closing date of the latest
consolidated statements of earnings incorporated by
reference in the Effective Prospectus and the Final
Prospectus to a specified date not more than five days prior
to the date of delivery of such respective letter, there
were any decreases in total revenues or net earnings in each
case as compared with the corresponding period of the
preceding year, except in each case for decreases which the
Final Prospectus discloses have occurred or may occur or
which are described in such letter.
(v) They have reviewed the unaudited pro forma financial
statements included or incorporated by reference in the Effective
Prospectus and Final Prospectus and nothing has come to their
attention that causes them to believe that such unaudited pro forma
financial statements do not comply as to form in all material respects
with the applicable accounting requirements of Rule 11-02 of
Regulation S-X or that any pro forma adjustments have not been
properly applied to the historical amounts of the Company and Kinney.
(vi) They have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages,
and financial information specified by you which are derived from the
general accounting records of the Company, which appear in the
Effective Prospectus and the Final Prospectus, and have compared and
agreed such amounts, percentages, and financial information
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<PAGE> 25
with the accounting records of the Company or to analyses and
schedules prepared by the Company from its detailed accounting
records.
In the event that the letters to be delivered referred to above set forth
any such changes, decreases or increases, it shall be a further condition
to the obligations of the Underwriters that the Underwriters shall have
determined, after discussions with officers of the Company responsible for
financial and accounting matters and with KPMG Peat Marwick LLP, that such
changes, decreases or increases as are set forth in such letters do not
reflect a material adverse change in the shareholders' equity or long-term
debt of the Company as compared with the amounts shown in the latest
consolidated balance sheets of the Company included in the Final
Prospectus, or a material adverse change in total net revenues or net
earnings of the Company, in each case as compared with the corresponding
period of the prior year.
(f) There shall have been furnished to the Representatives a
certificate, dated the Closing Date and addressed to you, signed by the
Chief Executive Officer and by the Chief Financial Officer of the Company
to the effect that:
(i) the representations and warranties of the Company in Section
1 of this Agreement are true and correct, as if made at and as of the
Closing Date, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that
purpose have been initiated or are pending, or to their knowledge,
threatened under the Securities Act;
(iii) they have carefully examined the Registration Statement,
the Effective Prospectus and the Final Prospectus, and any amendments
or supplements thereto, and such documents do not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading; and
(iv) since the effective date of the Registration Statement,
there has occurred no event (other than with respect to the
information contained under the caption "Underwriting") required to be
set forth in an amendment or supplement to the Registration Statement,
the Effective Prospectus or the Final Prospectus which has not been so
set forth.
(g) The representations and warranties of each Selling Shareholder in
Section 2 of this Agreement shall be true and correct as of the Closing
Date and such Selling Shareholders shall deliver to the Representatives a
certificate to that effect, dated the Closing Date, signed by such Selling
Shareholder or his or its duly appointed attorney-in-fact.
25
<PAGE> 26
(h) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Final Prospectus, and except as
stated therein, the Company has not sustained any material loss or
interference with its business or properties from fire, flood, hurricane,
earthquake, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any court or governmental action,
order or decree, or become a party to or the subject of any litigation
which is material to the Company, nor shall there have been any material
adverse change, or any development involving a prospective material adverse
change, in the business, properties, key personnel, capitalization, net
worth, results of operations or condition (financial or other) of the
Company, which loss, interference, litigation or change, in your judgment
shall render it unadvisable to commence or continue the offering of the
Shares at the offering price to the public set forth on the cover page of
the Prospectus or to proceed with the delivery of the Shares.
(i) The Shares have been approved for listing on The New York Stock
Exchange, upon official notice of issuance.
All such opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory to the Representatives and their counsel. The Company
shall furnish to the Representatives such conformed copies of such opinions,
certificates, letters and documents in such quantities as the Representatives
shall reasonably request.
The respective obligations of the Underwriters to purchase and pay for the
Option Shares shall be subject, in their discretion, to each of the foregoing
conditions to purchase the Firm Shares, except that all references to the
"Closing Date" shall be deemed to refer to the Option Closing Date, if it shall
be a date other than the Closing Date.
8. Indemnification and Contribution.
(a) The Company and each of the Selling Shareholders, severally and
not jointly, agree to indemnify and hold harmless each Underwriter, and
each person, if any, who controls any Underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which such Underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based in whole or in part upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Effective Prospectus or Final
Prospectus, or any amendment or supplement thereto, or in any Blue Sky
application or other written information furnished by the Company filed in
any state or other jurisdiction in order to qualify any or all of the
Shares under the securities laws thereof (a "Blue Sky Application") or
arise out of or are based upon the omission or alleged omission to state in
the Registration Statement, any Preliminary Prospectus, the Effective
Prospectus or Final Prospectus or any amendment or supplement thereto or
any Blue Sky Application a material
26
<PAGE> 27
fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter and each such
controlling person for any legal or other expenses reasonably incurred by
such Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the Company
and the Selling Shareholders will not be liable in any such case to the
extent that any such loss, claim, damage, or liability arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, the Preliminary
Prospectus, the Effective Prospectus or Final Prospectus or such amendment
or such supplement or any Blue Sky Application in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter specifically for use therein (it being understood that the only
information so provided by the Underwriters is the information included in
the last paragraph on the cover page and in the first, third and fourth
paragraphs under the caption "Underwriting" in any Preliminary Prospectus
and the Final Prospectus and the Effective Prospectus).
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless each of the Selling Shareholders and the Company, each of its
directors, each of its officers who signed the Registration Statement and
each person, if any, who controls the Company within the meaning of the
Securities Act against any losses, claims, damages or liabilities to which
the Selling Shareholders or Company or any such director, officer or
controlling person may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Effective
Prospectus or Final Prospectus, or any amendment or supplement thereto, or
any Blue Sky Application, or arise out of or are based upon the omission or
the alleged omission to state in the Registration Statement, any
Preliminary Prospectus, the Effective Prospectus or Final Prospectus or any
amendment or supplement thereto or any Blue Sky Application a material fact
required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Company by any Underwriter specifically for
use therein (it being understood that the only information so provided is
the information included in the last paragraph on the cover page and in the
first, third and fourth paragraphs under the caption "Underwriting" in any
Preliminary Prospectus and in the Effective Prospectus and the Final
Prospectus);
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, including governmental
proceedings, such indemnified party will, if a claim in respect thereof is
to be made against the indemnifying party under this Section 8 notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which
it may have to
27
<PAGE> 28
any indemnified party otherwise than under this Section 8. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein, and to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party; and after notice from the indemnifying party to such indemnified
party of its election to so assume the defense thereof, the indemnifying
party will not be liable to such indemnified party under this Section 8 for
any legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation except that the indemnified party shall have the right to
employ separate counsel if, in its reasonable judgment, it is advisable for
the indemnified party and any other Underwriter to be represented by
separate counsel, and in that event the fees and expenses of separate
counsel shall be paid by the indemnifying party.
Neither the Company nor any of the Selling Shareholders will, without
prior written consent of each Representative, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding (or related cause of action or portion thereof)
in respect of which indemnification may be sought hereunder (whether or not
such Underwriter is a party to such claim, action, suit or proceeding),
unless such settlement, compromise or consent includes an unconditional
release of such Underwriter from all liability arising out of such claim,
action, suit or proceeding (or related cause of action or portion thereof).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the
preceding part of this Section 8 is for any reason held to be unavailable
to the Underwriters, the Company, or the Selling Shareholders or is
insufficient to hold harmless an indemnified party, then the Company and
the Selling Shareholders shall contribute to the damages paid by the
Underwriters, and the Underwriters shall contribute to the damages paid by
the Company and the Selling Shareholders provided, however, that no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. In determining the
amount of contribution to which the respective parties are entitled, there
shall be considered the relative benefits received by each party from the
offering of the Shares (taking into account the portion of the proceeds of
the offering realized by each), the parties' relative knowledge and access
to information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or omission,
and any other equitable considerations appropriate under the circumstances.
The Company, the Selling Shareholders and the Underwriters agree that it
would not be equitable if the amount of such contribution were determined
by pro rata or per capita allocation (even if the Underwriters were treated
as one entity for such purpose). No Underwriter or person controlling such
Underwriter shall be obligated to make contribution hereunder which in the
aggregate exceeds the underwriting discount applicable to the Shares
purchased by such Underwriter under this Agreement, less
28
<PAGE> 29
the aggregate amount of any damages which such Underwriter and its
controlling persons have otherwise been required to pay in respect of the
same or any similar claim. The Underwriters' obligations to contribute
hereunder are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Securities Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company
who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities
Act, shall have the same rights to contribution as the Company.
9. Default of Underwriters. If any Underwriter defaults in its obligation
to purchase Shares hereunder and if the total number of Shares which such
defaulting Underwriter agreed but failed to purchase is ten percent or less of
the total number of Shares to be sold hereunder, the non-defaulting Underwriters
shall be obligated severally to purchase (in the respective proportions which
the number of Shares set forth opposite the name of each non-defaulting
Underwriter in Schedule II hereto bears to the total number of Shares set forth
opposite the names of all the non-defaulting Underwriters), the Shares which
such defaulting Underwriter or Underwriters agreed but failed to purchase. If
any Underwriter so defaults and the total number of Shares with respect to which
such default or defaults occur is more than ten percent of the total number of
Shares to be sold hereunder, and arrangements satisfactory to the other
Underwriters and the Company for the purchase of such Shares by other persons
(who may include the non-defaulting Underwriters) are not made within 36 hours
after such default, this Agreement, insofar as it relates to the sale of the
Shares, will terminate without liability on the part of the non-defaulting
Underwriters or the Company except for (i) the provisions of Section 8 hereof,
and (ii) the expenses to be paid or reimbursed by the Company pursuant to
Section 6. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 9. Nothing herein shall
relieve a defaulting Underwriter from liability for its default.
10. Default by the Selling Shareholders. If the Selling Shareholders shall
fail to sell and deliver the number of Firm Shares or Option Shares, as the case
may be, that the Selling Shareholders are obligated to sell, the Representatives
may, at their option, by notice to the Company, either (a) require the Company
to sell and deliver such number of shares of Common Stock as to which the
Selling Shareholders have defaulted, or (b) elect to purchase the Firm Shares
and the Option Shares that the Company and the non-defaulting Selling
Shareholders have agreed to sell pursuant to this Agreement. In the event of a
default under this Section that does not result in the termination of this
Agreement, either the Representatives or the Company shall have the right to
postpone the First Closing Date or Option Closing Date for a period not
exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements. No action
taken pursuant to this Section shall relieve the Company or the Selling
Shareholder so defaulting from liability, if any, in respect of such default.
11. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Selling
Shareholders and the Company, its officers and the
29
<PAGE> 30
Underwriters set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement shall remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the Company, any of
its officers or directors, any Underwriter or any controlling person, and (ii)
delivery of and payment for the Shares. The respective agreements, covenants,
indemnities and other statements set forth in Section 6 and Section 8 hereof
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement.
12. Effective Date. This Agreement shall become effective at whichever of
the following times shall first occur: (i) at 11:30 A.M., Washington, D.C. time,
on the next full business day following the date on which the Registration
Statement becomes effective or (ii) at such time after the Registration
Statement has become effective as the Representatives shall release the Firm
Shares for sale to the public; provided, however, that the provisions of
Sections 6, 8, 10 and 11 hereof shall at all times be effective. For purposes of
this Section 12, the Firm Shares shall be deemed to have been so released upon
the release by the Representatives for publication, at any time after the
Registration Statement has become effective, of any newspaper advertisement
relating to the Firm Shares or upon the release by the Representatives of
telegrams offering the Firm Shares for sale to securities dealers, whichever may
occur first.
13. Termination.
(a) The Company's obligations under this Agreement may be terminated
by the Company by notice to the Representatives at any time before it
becomes effective in accordance with Section 12 hereof.
(b) This Agreement may be terminated by the Representatives by notice
to the Company (i) at any time before it becomes effective in accordance
with Section 12 hereof; (ii) in the event that at or prior to the First
Closing Date the Company or any Selling Shareholder shall have failed,
refused, or been unable to perform any agreement on the part of the Company
or such Selling Shareholder to be performed hereunder or any other
condition to the obligations of the Underwriters hereunder is not
fulfilled; (iii) if at or prior to the Closing Date trading in securities
on the New York Stock Exchange, the American Stock Exchange, or the
over-the-counter market shall have been suspended or materially limited or
minimum or maximum prices shall have been established on either of such
Exchanges or such market, or a banking moratorium shall have been declared
by Federal or state authorities; (iv) if at or prior to the Closing Date
trading in securities of the Company shall have been suspended; or (v) if
there shall have been such a material change in general economic, political
or financial conditions or if the effect of international conditions on the
financial markets in the United States shall be such as, in your reasonable
judgment, makes it inadvisable to commence or continue the offering of the
Shares at the offering price to the public set forth on the cover page of
the Prospectus or to proceed with the delivery of the Shares.
30
<PAGE> 31
(c) Termination of this Agreement pursuant to this Section 13 shall be
without liability of any party to any other party other than as provided in
Sections 6 and 8 hereof.
14. Notices. All communications hereunder shall be in writing and, if sent
to any of the Underwriters, shall be mailed or delivered or telegraphed and
confirmed in writing to the Representatives in care of J.C. Bradford & Co.,
J.C. Bradford Financial Center, 330 Commerce Street, Nashville, Tennessee 37201,
Attention: Robert S. Doolittle, or if sent to the Company or the Selling
Shareholders shall be mailed, delivered or telegraphed and confirmed in writing
to the Company at 2401 21st Avenue South, Suite 200, Nashville, Tennessee 37212,
Attention: Monroe J. Carell, Jr.
15. Miscellaneous. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters, the Company, the Selling Shareholders and
their respective successors and legal representatives. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Company, the Selling
Shareholders and the several Underwriters and for the benefit of no other person
except that (i) the representations and warranties of the Company and the
Selling Shareholders contained in this Agreement shall also be for the benefit
of any person or persons who control any Underwriter within the meaning of
Section 15 of the Securities Act, and (ii) the indemnities by the Underwriters
shall also be for the benefit of the directors of the Company, officers of the
Company who have signed the Registration Statement and any person or persons who
control the Company within the meaning of Section 15 of the Securities Act. No
purchaser of Shares from any Underwriter will be deemed a successor because of
such purchase. The validity and interpretation of this Agreement shall be
governed by the laws of the State of Tennessee. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. You hereby
represent and warrant to the Company and the Selling Shareholders that you have
authority to act hereunder on behalf of the several Underwriters, and any action
hereunder taken by you will be binding upon all the Underwriters.
31
<PAGE> 32
If the foregoing is in accordance with your understanding of our agreement,
please indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between the
Company, each of the Selling Shareholders and each of the several Underwriters.
Very truly yours,
CENTRAL PARKING CORPORATION
By:
---------------------------------------
Title:
----------------------------------
SELLING SHAREHOLDERS
By:
----------------------------------------
Attorney-in-Fact for each of the Selling
Shareholders listed in Schedule I hereto
Confirmed and accepted as of the
date first above written.
J.C. BRADFORD & CO., LLC
BEAR, STEARNS & CO. INC.
WILLIAM BLAIR & COMPANY, LLC
NATIONSBANC MONTGOMERY SECURITIES LLC
SUNTRUST EQUITABLE SECURITIES CORPORATION
For themselves and as Representatives
of the several Underwriters
J.C. BRADFORD & CO., LLC
By:
-------------------------------------
Title:
-------------------------------
BEAR, STEARNS & CO. INC.
By:
-------------------------------------
Title:
-------------------------------
WILLIAM BLAIR & COMPANY, L.L.C.
By:
-------------------------------------
Title:
-------------------------------
NATIONSBANC MONTGOMERY SECURITIES LLC
By:
-------------------------------------
Title:
-------------------------------
SUNTRUST EQUITABLE SECURITIES CORPORATION
By:
-------------------------------------
Title:
-------------------------------
32
<PAGE> 33
SCHEDULE I
SELLING SHAREHOLDERS
<TABLE>
<CAPTION>
Number of Firm
Name Shares to be Sold
- ------------------------------------------------------- ---------------------
<S> <C>
Monroe J. Carell, Jr.
The Carell Children's Trust
Monroe Carell, Jr. 1994 Grantor Retained Annuity Trust
Monroe Carell, Jr. Foundation
Kathryn Carell Brown Foundation
Edith Carell Johnson Foundation
Julia Carell Stadler Foundation
=====================
TOTAL 750,000
=====================
</TABLE>
33
<PAGE> 34
SCHEDULE II
UNDERWRITERS
<TABLE>
<CAPTION>
Number of Firm
Underwriter Shares to Be Purchased
- ------------------------------------------------- -----------------------------
<S> <C>
J.C. Bradford & Co., LLC
Bear, Stearns & Co. Inc.
William Blair & Company, L.L.C.
NationsBanc Montgomery Securities LLC
SunTrust Equitable Securities Corporation
--------------------------
2,625,000
==========================
</TABLE>
34
<PAGE> 1
Exhibit 5
February 17, 1998
Central Parking Corporation
2401 21st Avenue South, Suite 200
Nashville, Tennessee 37212
Ladies and Gentlemen:
We have acted as legal counsel to Central Parking Corporation (the
"Company") in connection with the preparation of a Registration Statement on
Form S-3 under the Securities Act of 1933, as amended ("Registration
Statement"), relating to up to 2,625,000 shares of the Company's common stock,
par value $.01 per share (the "Shares"), to be sold by the Company and certain
shareholders of the Company (the "Selling Shareholders").
We have examined and are familiar with the Amended and Restated Charter
and the Bylaws of the Company, and the various corporate records and proceedings
relating to the organization of the Company and the filing of the Registration
Statement. We have also examined such other documents and proceedings as we have
considered necessary for the purpose of this opinion.
Based on the foregoing, it is our opinion that the Shares to be sold by
the Selling Shareholders have been validly issued and are fully paid and
non-assessable, and the Shares to be sold by the Company will, when issued and
delivered in the manner and on the terms described in the Registration
Statement, be validly issued, fully paid, and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and with such state securities administrators as may
require such opinion of counsel for the registration of the Shares, and the
reference to this firm under the heading "Legal Matters" in the Prospectus.
Very truly yours,
Harwell Howard Hyne Gabbert & Manner, P.C.
<PAGE> 1
Exhibit 23.1
The Board of Directors
Central Parking Corporation and Subsidiaries:
We consent to the use of our report dated November 21, 1997 with respect to the
consolidated balance sheets of Central Parking Corporation and Subsidiaries as
of September 30, 1997 and 1996, 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, 1997 incorporated herein by reference and
to the reference to our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Nashville, Tennessee
February 12, 1998
<PAGE> 1
Exhibit 23.2
The Board of Directors
Central Parking Corporation
and Subsidiaries
We consent to the inclusion of our report dated June 17, 1997, except as to
Note 12(c), as to which the date is February 4, 1998, with respect to the
consolidated balance sheets of Kinney System Holding Corp. and subsidiaries as
of December 31, 1996 and 1995, and the related consolidated statements of
income and retained earnings, and cash flows for each of the years in the
three-year period ended December 31, 1996, which report appears in the Form S-3
of Central Parking Corporation and Subsidiaries.
/s/ David Berdon & Co. LLP
David Berdon & Co. LLP
New York, New York
February 13, 1998
<PAGE> 1
Exhibit 99
CONSENT OF LEWIS KATZ
The undersigned, Lewis Katz, hereby consents to being named as a person
about to become a director of Central Parking Corporation (the "Company") in
the Company's registration statement on Form S-3.
/s/ Lewis Katz
--------------
Lewis Katz
