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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended September 30, 2000.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
COMMISSION FILE NUMBER 001-13950
CENTRAL PARKING CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
TENNESSEE 62-1052916
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2401 21ST AVENUE SOUTH,
SUITE 200, NASHVILLE, TENNESSEE 37212
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (615) 297-4255
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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Common Stock $0.01 par Value New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the Common Stock held by non-affiliates of the
registrant, based on the closing price of the Common Stock on the New York Stock
Exchange on December 19, 2000 was $212,500,895. For purposes of this response,
the registrant has assumed that its directors, executive officers, and
beneficial owners of 5% or more of its Common Stock are the affiliates of the
registrant.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of the latest practicable date.
CLASS OUTSTANDING AT DECEMBER 19, 2000
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Common Stock, $0.01 par value 36,154,375
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive proxy statement for the Annual
Meeting of Shareholders to be held on February 15, 2001 are incorporated by
reference into Part III, items 10, 11, 12 and 13 of this Form 10-K.
CONTENTS:
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Item 1. Business 3
Item 2. Properties 10
Item 3. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security-Holders 12
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters 13
Item 6. Selected Consolidated Financial Data 13
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 15
Item 7.A Quantitative and Qualitative Disclosure About Market Risk 27
Item 8. Financial Statements and Supplementary Data 28
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 57
Item 10. Directors and Executive Officers 57
Item 11. Executive Compensation 57
Item 12. Security Ownership of Certain Beneficial Owners and Management 57
Item 13. Certain Relationships and Related Transactions 57
Item 14. Exhibits and Reports on Form 8-K 57
Signatures 58
Accountants' Consent
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PART I
ITEM 1. BUSINESS
GENERAL
Central Parking Corporation ("Central Parking" or the "Company") is a
leading provider of parking services. As of September 30, 2000 Central Parking
operated 4,454 parking facilities containing approximately 1,592,360 spaces in
39 states, the District of Columbia, Puerto Rico, Canada, the United Kingdom,
the Republic of Ireland, Spain, Germany, Poland, Mexico, and Chile.
Central Parking operates multi-level parking facilities and surface
lots. It also provides parking consulting, shuttle, valet, parking meter
enforcement, and billing and collection services. Central Parking operates
parking facilities under three general types of arrangements: management
contracts, leases, and fee ownership. As of September 30, 2000, Central Parking
operated 2,025 parking facilities under management contracts and 2,190 parking
facilities under leases. In addition, the Company owned 239 parking facilities
either independently or through joint ventures.
PARKING INDUSTRY
The commercial parking services business is very fragmented, consisting
of a few national companies and approximately 1,000 small privately held local
and regional operators. Central Parking believes that it has the opportunity to
consolidate portions of this fragmented, localized industry by using its
competitive advantage with regard to scale, financial strength, technology,
controls, and professionalism. For the same reasons, Central Parking believes
that it is well positioned to be selected by municipal and other governmental
entities to operate their parking facilities and provide parking-related
services as such entities consider outsourcing and privatization.
During the 1980's, the high level of construction activity in the
United States resulted in a significant increase in the number of parking
facilities. Since that time, as construction activity has slowed, much of the
growth of certain parking service companies, including Central Parking, has been
as a result of take-aways from other parking companies. New construction and
acquisition of additional facilities are essential to growth for parking service
companies because of the limitations on growth in revenues of existing
operations. Although some growth in revenues from existing operations is
possible through redesign, increased operational efficiency, or increased
facility use and prices, such growth is ultimately limited by the size of a
facility and market conditions.
Management believes that most commercial real estate developers and
property owners view services such as parking as potential profit centers rather
than cost centers. These parties outsource parking operations to parking
management companies in an effort to maximize profits or leverage the original
rental value to a third-party lender. Parking management companies can increase
profits by using managerial skills and experience, operating systems, and
operating controls unique to the parking industry.
Privatization of government operations and facilities could provide new
opportunities for the parking industry. Cities and municipal authorities may
consider retaining private firms to operate facilities and parking-related
services in an effort to reduce operating budgets and increase efficiency.
Privatization in the United Kingdom already has provided significant expansion
opportunities for private parking companies. In the United States, several
cities have awarded or are considering awarding on-street parking enforcement
and parking meter service contracts to for-profit parking companies such as
Central Parking. For example, Central Parking has been awarded contracts for
parking meter collection and enforcement in Charlotte, Richmond, and Fort Myers.
GROWTH STRATEGY
Central Parking plans to continue to add facilities to its operations
by focusing its marketing efforts on adding facilities at the local level,
targeting real estate managers and developers with a national presence, pursuing
strategic acquisitions of other parking service operators, and expanding its
international operations. Set forth below are the key elements of Central
Parking's growth strategy.
INCREASE MARKET PRESENCE
Central Parking continually seeks to establish and increase its
operations in new and existing markets through take-aways of competitors'
contracts, obtaining new management and lease contracts, entering into joint
venture arrangements, and selective purchases of parking facilities. Management
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believes that Central Parking's relative size, financial strength and systems,
and automation capabilities give it a competitive advantage in winning new
business and make it an attractive partner for joint venture and other
opportunities. In addition, Central Parking believes that its 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 Central Parking's growth.
PURSUE STRATEGIC ACQUISITIONS
Central Parking intends to continue to pursue acquisition
opportunities. Central Parking's acquisition strategy is to focus on
opportunities that enable Central Parking to (i) become a stronger, more
efficient provider in selected markets, (ii) generate significant economies of
scale and cost savings, and (iii) increase cash flow. Cost savings typically
result from the elimination of duplicative management functions as well as from
efficiencies resulting from implementing Central Parking's systems and
professional management techniques.
EXPAND INTERNATIONAL OPERATIONS
Management believes that there are significant international growth
opportunities, particularly for well-capitalized companies that are interested
in making significant investments in equipment and construction, either
independently or with foreign partners. Central Parking typically enters foreign
markets either through consulting projects or by forming joint ventures with
established local entities, both of which allow Central Parking to enter foreign
markets with reduced operating and investment risk. Central Parking currently
has operations in the United Kingdom, Germany, Poland, Canada, Mexico, Spain,
Chile, and the Republic of Ireland. Central Parking believes there are
significant expansion opportunities in these countries as well as other
countries.
OPERATING STRATEGY
Central Parking's primary objective is to increase the revenues and
profitability of its parking facilities through a variety of operating
strategies, including the following:
MAINTAIN STRICT COST MANAGEMENT AND CASH CONTROL
In order to provide competitively priced services, the Company must
contain costs. Managers are trained to analyze staffing and cost control issues,
and each facility is carefully tracked on a monthly basis to determine whether
financial results are within budgeted ranges. Because of the substantial
performance-based components of their compensation, managers are continuously
motivated to contain the costs of their operations. Strict cash control also is
critical to Central Parking and its clients. Central Parking's cash control
procedures are based on a ticketing system supervised by high level managers and
include on-site spot checks, multiple daily cash deposits, local audit functions
and managerial oversight and review. It is Central Parking policy that all
tickets and gate counts are reconciled daily against cash collected.
EMPHASIZE SALES AND MARKETING EFFORTS
Central Parking's management is actively involved in developing and
maintaining business relationships and in exploring opportunities for growth. A
cornerstone of Central Parking's culture is its incentive compensation system,
which rewards managers who are able to develop new business. Central Parking's
marketing efforts are designed to expand its operations by developing lasting
relationships with major real estate developers and asset managers, business and
government leaders, and other clients. Central Parking encourages its managers
to pursue new opportunities at the local level while simultaneously selectively
targeting key clients and projects at a national level.
LEVERAGE ESTABLISHED MARKET PRESENCE AND CORPORATE INFRASTRUCTURE
Central Parking has an established presence in multiple markets,
representing platforms from which it can build. Because of the relatively fixed
nature of corporate overhead and the resources that can be shared in specific
markets, Central Parking has the opportunity to increase its profit margins as
it grows its presence in established markets. General and administrative
expenses were 10.6%, 10.6%, and 9.8% of total revenues in fiscal 1998, 1999, and
2000, respectively.
EMPOWER LOCAL MANAGERS; PROVIDE CORPORATE SUPPORT
Central Parking has achieved what management believes is a successful
balance between centralized and decentralized management. Because its business
is dependent, to some extent, on personal relationships, Central Parking
provides its managers with a significant degree of autonomy in order to
encourage prompt and effective responses to local market demands. In conjunction
with this local operational authority, the Company provides, through its
corporate office, services that typically are not readily available to
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independent operators such as management support, marketing and business
expertise, training, and financial and information systems. Central Parking
retains centralized control over those functions necessary to monitor service
quality and cash control integrity and to maximize operational efficiency.
Services performed at the corporate level include billing, quality improvement
oversight, financial and accounting functions, legal services, policy and
procedure development, systems design, and corporate acquisitions and
development.
The Company is managed based on segments administered by senior vice
presidents. These segments are generally organized geographically, with
exceptions depending on the needs of specific regions. See Note 18 to
Consolidated Financial Statements for financial information regarding the
Company's business segments.
UTILIZE PERFORMANCE-BASED COMPENSATION
Central Parking's performance-based compensation system rewards
managers at the general manager level and above for the profitability of their
respective areas of responsibility. Each person participating in the incentive
program generally receives a substantial portion of his or her compensation from
this performance-based compensation system.
MAINTAIN WELL-DEFINED PROFESSIONAL MANAGEMENT ORGANIZATION
In order to ensure professionalism and consistency in Central Parking's
operations, to provide a career path opportunity for its managers, and to
achieve a balance between autonomy and accountability, Central Parking has
established a highly structured management organization. Organized into six
levels, Central Parking has approximately 780 managers at September 30, 2000.
Central Parking recruits primarily college graduates or people with
previous parking services or hospitality industry experience, and requires that
they complete a formal training program. Management believes that Central
Parking's training program is a significant factor in Central Parking's success.
New managers are assigned to a particular facility where they are supervised as
they manage one to five employees. The management trainee program lasts
approximately one year and teaches a wide variety of skills, including
organizational skills, basic management techniques, and basic accounting. Upon
successful completion of this stage of the program, management trainees are
promoted to facility manager in charge of a particular parking facility. As
facility managers, they report up through the hierarchical structure of
managers. As managers develop and gain experience, they have the opportunity to
assume expanded responsibility, to be promoted to higher management levels and
to increase the performance-based component of their compensation. This
well-defined structure provides a career path that is designed to be an
attractive opportunity for prospective new hires. In addition, management
believes the training and advancement program has enabled Central Parking to
instill a high level of professionalism in its employees. A final important
benefit of Central Parking's organizational structure is that it has allowed
Central Parking to balance localized autonomy with accountability and
centralized support and control.
AUTOMATE FACILITIES
Management believes that the Company's application of technology to its
operations represents a competitive advantage over smaller operators with more
limited resources. Central Parking has implemented computerized card tracking
and accounting systems in certain of its facilities and is experimenting with a
variety of automated settlement systems.
STRATEGICALLY EXPAND SERVICE OFFERINGS
Central Parking provides services that are complementary to parking
facility management, with a particular emphasis on consulting services. Other
ancillary services include parking meter enforcement services, on-street parking
services, car pooling coordination, shuttle van services, and transportation
management. These ancillary services do not constitute a significant portion of
Central Parking's revenues, but management believes that the provision of
ancillary services can be important in obtaining new business and preparing the
Company for future changes in the parking industry.
FOCUS ON RETENTION OF PATRONS
In order for the Company to succeed, its parking patrons must have a
positive experience at Company facilities. Accordingly, the Company stresses the
importance of having well lit, 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 location's potential demand based on
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traffic patterns and counts, area demographics, and potential competitors. Pro
forma financial statements are then developed and a Company representative will
meet with the property owner to discuss the terms and structure of the
agreement.
The Company seeks to distinguish itself from its competitors by
combining a reputation for professional integrity and quality management with
operating strategies designed to increase the revenues of parking operations for
its clients. The Company's clients include some of the nation's largest owners
and developers of mixed-use projects, major office building complexes, sports
stadiums, hotels, and toll roads. Parking facilities operated by the Company
include, among others, certain terminals operated by BAA Heathrow International
Airport (London), the Prudential Center (Boston), Cinergy Field (Cincinnati),
Turner Field (Atlanta), Coors Field (Denver), and various parking facilities
owned by the Hyatt and Westin hotel chains, the Rouse Company, Faison
Associates, May Department Stores, Equity Office Properties, TrizechHahn, Jones
Lang LaSalle, Simon Property Group, and Crescent Real Estate. None of these
clients accounted for more than 5% of the Company's total revenues for fiscal
year 2000.
ACQUISITIONS
The Company's acquisition strategy focuses primarily on acquisitions
that will enable Central Parking to become a more efficient and cost-effective
provider in selected markets. Central Parking believes it can recognize
economies of scale by making acquisitions in markets where the Company already
has a presence, which allows Central Parking to reduce the overhead cost of the
acquired company by consolidating its management with that of Central Parking.
In addition, Central Parking seeks acquisitions in attractive new markets.
Management believes acquisitions are an effective means of entering new markets,
thereby quickly obtaining both operating presence and management personnel.
Central Parking also believes it generally can improve acquired operations by
applying its operating strategies and professional management techniques. The
Company's acquisitions over the last three years, all of which were accounted
for under the purchase method of accounting, are as follows: Diplomat Parking
Corporation ("Diplomat") in October 1997; National Garages, Inc. ("National") in
December 1997; Kinney System Holding Corp. ("Kinney") in February 1998; Central
Parking System of Louisiana, Inc. ("CPS - Louisiana") in March 1998; Turner
Parking System, Inc. ("Turner") in April 1998; Sterling Parking, Inc.
("Sterling") in July 1998; Allied Parking ("Allied") in October 1998, November
1998 and April 1999; Sacramento Parking Group in July 1999; and Arizona Stadium
LLC in October 1999. For additional information regarding recent acquisitions,
please see Note 2 of the Consolidated Financial Statements and Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".
MERGER WITH ALLRIGHT
On March 19, 1999, the Company completed a merger with Allright
Holdings, Inc. ("Allright"), one of the largest parking services companies in
the United States with revenues of approximately $217.2 million for the fiscal
year ended June 30, 1998. As of September 30, 1998, Allright operated
approximately 2,315 facilities containing approximately 550,000 parking spaces,
including 72 facilities in Canada containing approximately 30,000 parking
spaces. As of September 30, 1998, Allright, directly or indirectly, owned 195
facilities, leased 1,473 facilities, and operated 647 facilities through
management contracts. The merger added new market presence in 25 cities and
expanded market presence in approximately 70 cities.
Under the merger, approximately 7.0 million shares of Company common
stock, and approximately 0.5 million options and warrants to purchase such
Company common stock were exchanged for all of the outstanding shares of common
stock and options and warrants to purchase common stock of Allright. The
transaction constituted a tax-free reorganization and has been accounted for as
a pooling-of-interests under Accounting Principles Board ("APB") Opinion No. 16,
"Business Combinations." Accordingly, prior period financial statements
presented have been restated to include the combined results of operations,
financial position and cash flows of Allright as if it had been part of Central
Parking from the date of Allright's inception, October 31, 1996. See Note 2 to
the Consolidated Financial Statements and Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" for additional
information regarding the merger with Allright.
In connection with the Allright merger, the Antitrust Division of the
United States Department of Justice (the "Antitrust Division") filed a complaint
in U.S. District Court for the District of Columbia seeking to enjoin the merger
on antitrust grounds. Central Parking and Allright entered into a settlement
agreement with the Antitrust Division on March 16, 1999, under which Central and
Allright agreed to divest a total of 74 parking facilities in 18 cities,
representing approximately 18,000 parking spaces. See "Legal Proceedings" for
additional information regarding the settlement agreement entered into with the
Antitrust Division.
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SALES AND MARKETING
Central Parking's sales and marketing efforts are designed to expand
its operations by developing and maintaining relationships with major real
estate developers and asset managers, business and government leaders, and other
clients. Central Parking encourages its managers to pursue new opportunities at
the local level while simultaneously selectively targeting key clients and
projects at a national level.
LOCAL
At the local level, Central Parking's sales and marketing efforts are
decentralized and directed towards identifying new expansion opportunities
within a particular city or region. Managers are trained to develop the business
contacts necessary to generate new opportunities and to monitor their local
markets for take-away and outsourcing opportunities. Central Parking provides
its managers with a significant degree of autonomy in order to encourage prompt
and effective responses to local market demands, which is complemented by
management support and marketing training through Central Parking's corporate
offices. In addition, a manager's compensation is dependent, in part, upon his
or her success in developing new business. By developing business contacts
locally, Central Parking's managers often get the opportunity to bid on projects
when asset managers and property owners are dissatisfied with current operations
and also learn in advance of possible new projects.
NATIONAL
At the national level, Central Parking's marketing efforts are
undertaken primarily by upper-level management, which targets developers,
governmental entities, the hospitality industry, mixed-use projects, and medical
facilities. These efforts are directed at operations that generally have
national name recognition, substantial demand for parking related services, and
the potential for nationwide growth. For example, Central Parking's current
clients include, among other national real estate companies and hotel chains,
the Rouse Company, Faison Associates, Equity Office Properties, May Department
Stores, Crescent Real Estate, TrizecHahn, Jones Lang LaSalle, Westin Hotels, and
Hyatt Hotels. Management believes that providing high-quality, efficient
services to such companies will lead to additional opportunities as those
clients continue to expand their operations. Management believes outsourcing by
parking facility owners will continue to be a source for additional facilities,
and management believes the Company's global presence, experience and reputation
with large real estate asset managers give it a competitive advantage in this
area.
INTERNATIONAL EXPANSION
Central Parking's international operations began in the early 1990's
with the formation of an international division. The Company typically enters
foreign markets either through consulting projects or by forming joint ventures
with established local entities. Consulting projects allow Central Parking to
establish a presence and evaluate the prospects for growth of a given market
without investing a significant amount of capital. Likewise, forming joint
ventures with local partners allows Central Parking to enter new foreign markets
with reduced operating and investment risks.
Operations in London began in 1991 with a single consulting agreement
and, as of September 30, 2000, have grown to 224 facilities in the United
Kingdom including two terminals at Heathrow International Airport and parking
meter enforcement and ticketing services for eight local governments that have
privatized these services. Central Parking began expansion into Mexico in July
1994 by forming a joint venture with Fondo Opcion, an established Mexican
developer, and as of September 30, 2000, operates 92 facilities in Mexico.
Central Parking also operates 89 facilities in Canada, three facilities in
Spain, one in Poland (opened November 1999) and two in Chile. The Company also
operates on-street parking services in the United Kingdom, Germany and the
Republic of Ireland. In 1996, Central Parking acquired a 50% equity interest in
a joint venture, which presently operates twelve facilities in Germany. In order
to manage its international expansion, the Company has allocated
responsibilities for international operations to an executive vice president.
OPERATING ARRANGEMENTS
Central Parking operates parking facilities under three general types
of arrangements: management contracts, leases, and fee ownership. The following
table sets forth certain information regarding the number of managed, leased, or
owned facilities as of the specified dates:
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SEPTEMBER 30,
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1998 1999 2000
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Managed 1,937 2,096 2,025
Leased 2,565 2,455 2,190
Owned 261 259 239
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Total 4,763 4,810 4,454
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The general terms and benefits of these types of arrangements are
discussed below. Financial information regarding these types of agreements is
set forth in Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
MANAGEMENT CONTRACTS
Management contract revenues consist of management fees (both fixed and
performance based) and fees for ancillary services such as insurance,
accounting, equipment leasing, and consulting. The cost of management contracts
includes insurance premiums and claims and other indirect overhead. The
Company's responsibilities under a management contract as a facility manager
include hiring, training, and staffing parking personnel, and providing
collections, accounting, record keeping, insurance, and facility marketing
services. In general, Central Parking is not responsible under its management
contracts for structural, mechanical, or electrical maintenance or repairs, or
for providing security or guard services or for paying property taxes. In
general, management contracts are for terms of one to three years and are
renewable for successive one-year terms, but are cancelable by the property
owner on short notice. With respect to insurance, the Company's clients have the
option of obtaining insurance on their own or having Central Parking provide
insurance as part of the services provided under the management contract.
Because of the Company's size and claims experience, management believes it can
purchase such insurance at lower rates than the Company's clients can generally
obtain on their own. Accordingly, Central Parking historically has generated
profits on the insurance provided under its management contracts.
LEASES
The Company's rent under leases is generally a fixed annual amount, a
percentage of gross revenues, or a combination. Leased facilities generally
require a longer commitment and a larger capital investment by Central Parking
than managed facilities but generally provide a more stable source of revenue
and a greater opportunity for long-term revenue growth. The cost of parking
includes rent, payroll and related benefits, depreciation, maintenance,
insurance, and general operating expenses. Under its leases, the Company is
typically responsible for all facets of the parking operations, including
pricing, utilities, and ordinary and routine maintenance, but is generally not
responsible for structural, mechanical, or electrical maintenance or repairs, or
property taxes. Lease arrangements are typically for terms of three to ten
years, with a renewal term, and provide for a contractually established payment
to the facility owner regardless of the operating earnings of the parking
facility.
FEE OWNERSHIP
Ownership of parking facilities, either independently or through joint
ventures, typically requires a larger capital investment than managed or leased
facilities but provides maximum control over the operation of the parking
facility and the greatest profit potential of the three types of operating
arrangements. All changes in owned facility revenue flow directly to the
Company, and the Company has the potential to realize benefits of appreciation
in the value of the underlying real estate if the property is sold. The
ownership of a parking facility brings the Company complete responsibility for
all aspects of the property, including all structural, mechanical, or electrical
maintenance or repairs.
JOINT VENTURES
The Company seeks joint venture partners who are established local or
regional developers pursuing financing alternatives for development projects.
Joint ventures typically involve a development where the parking facility is a
part of a larger multi-use project, allowing the Company's joint venture
partners to benefit from a capital infusion to the project. Joint ventures offer
the revenue growth potential of ownership with a partial reduction in capital
requirements. The Company has interests in joint ventures that own or operate
parking facilities located throughout the United States as well as Mexico,
Germany, Poland and Chile.
DBE PARTNERSHIPS
Central Parking is a party to a number of disadvantaged business
enterprise partnerships. These are generally partnerships formed by Central
Parking and a disadvantaged businessperson to manage a facility. Central Parking
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generally owns 60% to 70% of the partnership interests in each partnership and
typically receives management fees before partnership distributions are made to
the partners.
COMPETITION
The parking industry is fragmented and highly competitive. The Company
faces direct competition for additional facilities to manage, lease, or own and
the facilities currently operated by the Company face competition for employees
and customers. The Company competes with a variety of other companies to add new
operations. Although there are relatively few large, national parking companies
that compete with the Company, developers, hotel companies, and national
financial services companies have the potential to compete with parking
companies. Municipalities and other governmental entities also operate parking
facilities which compete with Central Parking. The Company also faces
competition from regional and local parking companies and from owner-operators
of facilities who are potential clients for the Company's management services.
Construction of new parking facilities near the Company's existing leased or
managed facilities could adversely affect the Company's business.
Management believes that it competes for clients based on rates charged
for services; ability to generate revenues and control expenses for clients;
ability to anticipate and respond to industry changes; range and quality of
services; and ability to expand operations. The Company believes it has a
reputation as a leader in the industry and as a provider of high quality
services. The Company also is one of the largest companies in the parking
industry and is not limited to a single geographic region. The Company has the
financial strength to make capital investments as an owner or joint venture
partner that smaller or more leveraged companies cannot make. The Company's size
also has allowed it to centralize administrative functions that give the
decentralized managerial operations cost-efficient support. Moreover, the
Company has obtained broad experience in managing and operating a wide variety
of facilities over the past 30 years. Additionally, the Company is able to
attract and retain quality managers through its incentive compensation system
that directly rewards successful sales and marketing efforts and places a
premium on profitable growth.
SEASONALITY
The Company's business is subject to a modest amount of seasonality.
Historically, the Company's results have been strongest during the quarters that
end on December 31, and June 30. The Company attributes the relative weakness of
the quarters that end on March 31, and September 30 to, amongst other factors,
winter weather and summer vacations. There can be no assurance that this trend
will continue in future years. For further discussion of this issue see
Management's Discussion and Analysis--Quarterly Results.
INSURANCE
The Company purchases comprehensive liability insurance covering
certain claims that occur at parking facilities it owns, leases or manages. The
primary amount of such coverage is $1 million per occurrence and $2 million in
the aggregate per facility. In addition, the Company purchases umbrella/excess
liability coverage. The Company also purchases group health insurance with
respect to full-time Company employees, whether such persons are employed at
owned, leased, or managed facilities and purchases workers' compensation
insurance for all employees. The Company's various insurance policies have
deductibles that must be met before the insurance companies are required to
reimburse the Company for costs and liabilities relating to covered claims.
Because of the size of the operations covered, the Company purchases these
policies at prices that, management believes, represent a discount to the prices
that would be charged to parking facility owners on a stand-alone basis.
Pursuant to its management contracts, the Company charges its customers for
insurance at rates it believes approximate market rates based upon its review of
the applicable market. In each case, the Company's clients have the option of
purchasing their own policies, provided the Company is named as an additional
insured; however, because the Company's fees for insurance are generally
competitive with market rates, many of the Company's clients historically have
chosen to purchase such insurance through the Company. A reduction in the number
of clients that purchase insurance through the Company, however, could have a
material adverse effect on the operating earnings of the Company. In addition, 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 subject to various federal, state and local
laws and regulations, and both municipal and state authorities sometimes
directly regulate parking facilities. The facilities in New York City are, for
example, subject to certain governmental restrictions concerning numbers of
cars, pricing, and certain prohibited practices. The Company is also affected by
laws and regulations (such as zoning ordinances) that are common to any business
9
<PAGE> 10
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 vehicles being driven or that restrict
pricing could adversely impact the Company's business.
Under various federal, state and local environmental laws, ordinances
and regulations, a current or previous owner or operator of real property may be
liable for the costs of removal or remediation of hazardous or toxic substances
on, under or in such property. Such laws typically impose liability without
regard to whether the owner or operator knew of, or was responsible for, the
presence of such hazardous or toxic substances. In connection with the ownership
or operation of parking facilities, the Company may be potentially liable for
any such costs. Although Central Parking is currently not aware of any material
environmental claims pending or threatened against it, there can be no assurance
that a material environmental claim will not be asserted against the Company.
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.
The Company also is subject to various federal and state antitrust and
consumer laws and regulations including the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, which requires filings in connection with certain
mergers and acquisitions. In connection with the Allright merger, Central and
Allright entered into a settlement agreement with the Antitrust Division of the
U.S. Department of Justice which required, among other things, the divestiture
of certain parking facilities. See "Merger With Allright."
Various other governmental regulations affect the Company's operation
of parking facilities, both directly and indirectly, including the Americans
with Disabilities Act ("ADA"). Under the ADA, all public accommodations,
including parking facilities, are required to meet certain federal requirements
related to access and use by disabled persons. For example, the ADA requires
parking facilities to include handicapped spaces, headroom for wheelchair vans,
attendants' booths that accommodate wheelchairs, and elevators that are operable
by disabled persons. Management believes that the parking facilities the Company
owns and operates are in substantial compliance with these requirements.
EMPLOYEES
As of September 30, 2000, the Company employed approximately 19,500
individuals, including 16,500 full-time and 3,000 part-time employees.
Approximately 5,340 U.S. employees are represented by labor unions. Various
union locals represent parking attendants and cashiers at the New York City
facilities. Other cities in which some of the Company's employees are
represented by labor unions are Washington, D.C., Miami, Philadelphia, San
Francisco, Des Moines, Jersey City, Newark, Atlantic City, Pittsburgh, White
Plains, San Juan, Puerto Rico, and Chicago. The Company frequently is engaged in
collective bargaining negotiations with various union locals but has not
experienced any labor strikes. Management believes that the Company's employee
relations are good.
SERVICE MARKS AND TRADEMARKS
The Company has registered the names CPC, Central Parking System and
Central Parking Corporation, and its logo with the United States Patent Office
and has the right to use them throughout the United States except in the Chicago
and Atlantic City areas where two other companies have the exclusive right to
use the name "Central Parking." The Company also owns registered trademarks for
Square Industries, Kinney System, Allied Parking and Allright Parking and
operates various parking locations under those names. The Company uses the name
"Chicago Parking System" in Chicago and "CPS Parking" in Seattle and Milwaukee.
The Company has registered the name "Control Plus" and its symbol in London and
has registered that name and symbol in association with its on street parking
activities in Richmond, Virginia. The Company has registered, or intends to
register, its name and logo in various international locations where it does
business.
FOREIGN AND DOMESTIC OPERATIONS
For information about the Company's foreign and domestic operations
refer to Note 18 of the Consolidated Financial Statements.
ITEM 2. PROPERTIES
The Company's facilities, as of September 30, 2000, are organized into
7 segments which are subdivided into 17 regions. 16 regions are in North America
of which 15 are in the United States and Canada and 1 is in Mexico. One region
is comprised of the United Kingdom and Continental Europe. Each region is
10
<PAGE> 11
supervised by a regional manager who reports directly to one of the senior vice
presidents. Regional managers oversee four to six general managers who each
supervise the Company's operations in a particular city. The following table
summarizes certain information regarding the Company's facilities as of
September 30, 2000.
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF TOTAL OF
DIVISION CITIES LOCATIONS MANAGED LEASED OWNED SPACES TOTAL SPACES
-------- ------ --------- ------- ------ ----- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
DIVISION 1
South Texas, Louisiana Austin, Baton Rouge, Beaumont
Corpus Christi, El Paso, Houston,
Lake Charles, New Orleans, San
Antonio 374 131 209 34 133,811 8.4%
Western Las Vegas, Los Angeles, Orange
County, Phoenix, San Diego 203 95 104 4 82,629 5.2
Northwest Oakland, Reno, Sacramento, Salt
Lake City, San Francisco, Seattle 186 100 84 2 42,848 2.7
------ ------ ------ ----- ----------- -------
TOTAL DIVISION 1 763 326 397 40 259,288 16.3
------ ------ ------ ----- ----------- -------
DIVISION 2
New York, New Jersey New York City, Jersey City,
Stamford 444 214 219 11 172,468 10.8
New England Boston, Hartford, Manchester,
Providence 169 63 98 8 81,823 5.1
Eastern Pennsylvania Philadelphia 87 27 55 5 53,537 3.4
------ ------ ------ ----- ----------- -------
TOTAL DIVISION 2 700 304 372 24 307,828 19.3
------ ------ ------ ----- ----------- -------
DIVISION 3
Florida Jacksonville, Miami, Orlando,
Tampa, West Palm Beach 263 121 137 5 97,036 6.1
Southeast Atlanta, Charleston (SC),
Charlotte, Columbia, Savannah,
Wilmington, Winston-Salem 171 83 75 13 88,242 5.5
------ ------ ------ ----- ----------- -------
TOTAL DIVISION 3 434 204 212 18 185,278 11.6
------ ------ ------ ----- ----------- -------
DIVISION 4
Mid-Atlantic Baltimore, Newport News,
Richmond, Washington, D.C. 340 173 157 10 105,590 6.7
Indiana, Ohio, West Charleston (WV), Cincinnati,
Virginia, Virginia Columbus, Dayton, Indianapolis,
Roanoke 226 86 115 25 82,928 5.2
Upstate New York, Binghamton, Buffalo, Cleveland,
Holyoke, Montpelier, Rochester,
Scranton, Syracuse, Wilkes-Barre 180 74 92 14 62,477 3.9
Chicago, Pittsburgh Chicago, Pittsburgh 118 24 79 15 28,533 1.8
Cleveland ------ ------ ------ ----- ----------- -------
TOTAL DIVISION 4 864 357 443 64 279,528 17.6
------ ------ ------ ----- ----------- -------
DIVISION 5
North Texas, Memphis Dallas, Ft. Worth, Little Rock,
Memphis, Peoria, Shreveport,
Springfield 397 193 183 21 98,619 6.2
Arkansas, Illinois
Rockies, MO, OK, NM Albuquerque, Denver, Kansas
City, Oklahoma City, St. Louis,
Tulsa 320 147 142 31 99,142 6.2
Upper Midwest Ann Arbor, Birmingham (MI), Des
Moines, Detroit, Milwaukee,
Minneapolis, Omaha, Pontiac 176 100 69 7 72,480 4.6
------ ------ ------ ----- ----------- -------
TOTAL DIVISION 5 893 440 394 59 270,241 17.0
------ ------ ------ ----- ----------- -------
DIVISION 6
Mid-South Birmingham (AL), Chattanooga,
Jackson, Knoxville, Lexington,
Louisville, Nashville, Mobile 341 113 196 32 93,926 5.9
Puerto Rico San Juan 32 20 12 -- 13,949 0.9
------ ------ ------ ----- ----------- -------
TOTAL DIVISION 6 373 133 208 32 107,875 6.8
------ ------ ------ ----- ----------- -------
INTERNATIONAL Canada, Chile, Germany, Ireland,
Mexico, Poland, Spain, UK 427 261 164 2 182,322 11.4
------ ------ ------ ----- ----------- -------
TOTAL 4,454 2,025 2,190 239 1,592,360 100.0%
====== ====== ===== ===== =========== =======
</TABLE>
11
<PAGE> 12
The Company's facilities include both surface lots and structured
parking facilities (garages). Approximately 17% of the Company's owned parking
properties are in structured parking facilities, with the remainder in surface
lots. Management believes the Company's owned facilities generally are in good
condition and adequate for its present needs.
ITEM 3. LEGAL PROCEEDINGS
The ownership of property and provision of services to the public
entails an inherent risk of liability. Although the Company is engaged in
routine litigation incidental to its business, there is no legal proceeding to
which the Company is a party, which, in the opinion of management, will have a
material adverse effect upon the Company's financial condition, results of
operations, or liquidity. The Company carries liability insurance against
certain types of claims that management believes meets industry standards;
however, there can be no assurance that any future legal proceedings (including
any related judgments, settlements or costs) will not have a material adverse
effect on the Company's financial condition, liquidity, or results of
operations.
In connection with the merger of Allright Holdings, Inc. with a
subsidiary of the Company, the Antitrust Division of the United States
Department of Justice (the "Antitrust Division") filed a complaint in U.S.
District Court for the District of Columbia seeking to enjoin the merger on
antitrust grounds. In addition, the Company received notices from several
states, including Tennessee, Texas, Illinois, and Maryland, that the attorneys
general of those states were reviewing the merger from an antitrust perspective.
Several of these states also requested certain information relating to the
merger and the operations of Central and Allright in the form of civil
investigative demands.
Central and Allright entered into a settlement agreement with the
Antitrust Division on March 16, 1999, under which the two companies agreed to
divest a total of 74 parking facilities in 18 cities, representing approximately
18,000 parking spaces. None of the states that reviewed the transaction from an
antitrust perspective became a party to the settlement agreement with the
Antitrust Division, and the Company is aware that at least one of these states,
Tennessee, is still conducting a review of the operations of Central and
Allright. The Company has completed the divestiture of all of the facilities
required to be divested by the settlement agreement. The settlement agreement
provides that Central and Allright may not operate any of the divested
facilities for a period of two years following the divestiture of such facility.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
No matter was submitted to a vote of the Company's security-holders
during the fourth quarter of the fiscal year ended September 30, 2000.
12
<PAGE> 13
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) The Registrant's Common Stock is listed on the NYSE under the
symbol "CPC." The following table sets forth, for the periods indicated, the
high and low sales prices for the Company Common Stock as reported by the NYSE.
HIGH LOW
---- ---
FISCAL 1999
First Quarter......................................... $50.13 $25.44
Second Quarter........................................ 37.25 29.00
Third Quarter......................................... 36.25 27.00
Fourth Quarter........................................ 35.81 27.25
Twelve months......................................... 50.13 25.44
FISCAL 2000
First Quarter......................................... $29.81 $14.50
Second Quarter........................................ 20.50 14.38
Third Quarter......................................... 27.88 19.56
Fourth Quarter........................................ 25.00 17.63
Twelve months......................................... 29.81 14.38
(b) There were, as of September 30, 2000, approximately 7,300 holders
of the Registrant's Common Stock, based on the number of record holders of the
Company's common stock and an estimate of the number of individual participants
represented by security position listings.
(c) Since April 1997, Central Parking has distributed a quarterly cash
dividend of $0.015 per share of Central Parking common stock. The Company had
previously declared a dividend of $0.0125 per share of Central Parking common
stock following the end of each quarter since its initial public offering in
October 1995. The Company's Board currently intends to declare a cash dividend
each quarter depending on Central Parking's profitability and future capital
requirements. Central Parking reserves the right, however, to retain all or a
substantial portion of its earnings to finance the operation and expansion of
Central Parking's business. As a result, the future payment of dividends will
depend upon, among other things, the Company's profitability, capital
requirements, financial condition, growth, business opportunities, and other
factors that the Central Parking Board may deem relevant, including restrictions
in any then-existing credit agreement. The Company's existing credit facility
contains certain covenants including those that require the Company to maintain
certain financial ratios, restrict further indebtedness, and limit the amount of
dividends payable; however, the Company does not believe these restrictions
limit its ability to pay currently anticipated cash dividends. In addition,
Central Parking Finance Trust (the "Trust"), a Delaware statutory business
trust, of which all of the common stock is owned by the Company, issued
preferred securities (the "Trust Issued Preferred Securities") which prohibit
the payment of dividends on the Central Parking common stock if the quarterly
distributions on the Trust Issued Preferred Securities are not made for any
reason. See Note 10 of the Consolidated Financial Statements.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
On March 19, 1999, Central Parking completed a merger with Allright
Holdings, Inc. ("Allright"). The transaction constituted a tax-free
reorganization and has been accounted for as a pooling-of-interests under
Accounting Principles Board ("APB") Opinion No. 16, "Business Combinations".
Accordingly, Central Parking's consolidated financial statements have been
restated to reflect the combined results of operations, financial position and
cash flows of Central Parking and Allright as if Allright had been part of
Central Parking since Allright's inception date of October 31, 1996. Prior to
the consummation of the merger, Allright's fiscal year end was June 30. In
recording the business combination, Allright's consolidated financial statements
as of June 30, 1997 and for the eight months then ended, and as of June 30, 1998
and for the year then ended, have been combined with Central Parking's
13
<PAGE> 14
consolidated financial statements for the fiscal years ended September 30, 1997
and 1998, respectively. There were no material transactions between Central
Parking and Allright prior to the Merger. Certain reclassifications have been
made to Allright's historical financial statements to conform to Central
Parking's presentation.
Set forth below are selected consolidated financial data of the Company
for each of the periods indicated. The statement of earnings, per share, and
balance sheet data were derived from the audited consolidated financial
statements of the Company. All of the information set forth below should be read
in conjunction with the Company's Consolidated Financial Statements and the
Notes thereto and with Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Amounts in thousands, except per share data
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 5 YEAR
-------------------------------------------------------- 2000 VS. 1999 GROWTH
1996 1997 1998 1999 2000 INCREASE (DECREASE) RATE(3)
---- ---- ---- ---- ---- --------------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Revenues:
Parking $ 109,272 $ 295,692 $ 534,573 $ 639,086 $ 628,666 $ (10,420) (1.6) % 54.9%
Management contract 32,534 43,245 65,826 91,386 102,263 10,877 11.9 33.2
Total revenues 141,806 338,937 600,399 730,472 730,929 457 0.1 50.7
Costs and expense
before merger costs 124,874 298,511 528,747 651,827 649,020 (2,807) (0.4) 51.0
Merger costs -- -- -- 40,970 3,747 (37,223) (90.9) --
Property-related gains
(losses), net 1,192 3,118 (639) 3,006 935 (2,071) (68.9) --
Operating earnings 18,124 43,544 71,013 40,681 79,097 38,416 94.4 47.0
Percentage of total
revenues (3) 12.8% 12.8% 11.8% 5.6% 10.8% -- -- --
Interest income
(expense), net 2,303 (15,922) (24,555) (20,312) (20,100) (212) (1.0) --
Dividends on
company-obligated
mandatorily redeemable
convertible securities
of a subsidiary trust -- -- (3,247) (5,926) (6,012) 86 1.5 --
Equity in partnership and
joint venture earnings 641 4,238 5,246 5,233 10,260 5,027 96.1 --
Minority interest -- (163) (1,939) (2,612) (3,334) 722 27.6 --
Earnings before income taxes
and extraordinary item 21,068 31,697 46,518 17,064 59,911 42,847 251.1 29.9
Income taxes 7,232 13,011 20,373 12,380 23,277 10,897 88.0 33.9
Income tax percentage of
earnings before income
tax 34.3% 41.0% 43.8% 72.6% 38.9% -- -- --
Extraordinary items -- 1,032 -- 1,002 195 (807) (80.5) --
Net earnings 13,836 17,654 26,145 3,682 36,439 32,757 889.7 27.4
Percentage of total
revenues (3) 9.8% 5.2% 4.4% 0.5% 5.0% -- -- --
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------- 2000 VS 1999
1996 1997 1998 1999 2000 INCREASE (DECREASE)
---- ---- ---- ---- ---- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Earnings before
extraordinary item - basic $ 0.54 $ 0.62 $ 0.76 $ 0.13 $ 1.01 $ 0.88 676.9
Earnings before
extraordinary item - diluted $ 0.53 $ 0.61 $ 0.74 $ 0.13 $ 0.99 $ 0.86 661.5
Basic weighted average
common shares 25,762 30,070 34,618 36,349 36,365 16 0.0
Diluted weighted
average common shares 26,042 30,512 35,312 37,056 36,851 (205) (0.6)
Dividends per common
share(3) $ 0.05 $ 0.05 $ 0.05 $ 0.06 $ 0.06 $ -- --
Net book value per common
share outstanding at
September 30 (3) $ 2.93 $ 5.28 $ 9.36 $ 9.44 $ 10.19 $ 0.75 7.9
Merger cost per
diluted common share (3) $ -- $ -- $ -- $ 0.81 $ 0.07 $ (0.74) (91.4)
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------------------------------------------------- 2000 VS 1999
1996 1997 1998 1999 2000 INCREASE (DECREASE)
---- ---- ---- ---- ---- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents $ 28,605 $ 17,308 $ 39,495 $ 53,669 $ 43,214 $ (10,455) (19.5)%
Working capital (3) 19,707 (17,520) (30,897) (30,659) (89,252) (58,593) 191.1
Goodwill, net -- 65,428 288,170 277,800 264,756 (13,044) (4.7)
Total assets 107,212 598,693 954,022 1,064,577 1,022,305 (42,272) (4.0)
Long-term debt and capital
lease obligations, less
current portion -- 73,725 283,319 337,481 253,535 (83,946) (24.9)
Company-obligated mandatorily
redeemable convertible
securities of subsidiary
holding solely parent
debentures -- -- 110,000 110,000 110,000 -- --
Shareholders' equity 76,793 173,114 341,914 347,119 370,257 23,138 6.7
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------- 2000 VS 1999
1996 1997 1998 1999 2000 INCREASE (DECREASE)
---- ---- ---- ---- ---- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Depreciation and amortization $ 3,420 $13,547 $28,674 $43,131 $46,235 $ 3,104 7.2%
Employees (2) (3) 6,600 14,300 17,450 16,700 16,200 (500) (3.0)
Number of shareholders (2) (3) 5,500 7,000 8,100 10,325 7,300 (3,025) (29.3)
Market capitalization (in
millions) (1) (3) $ 568 $ 1,000 $ 1,840 $ 1,075 $ 720 (355) (33.0)
Return on equity (3) (4) 23.4% 14.1% 10.2% 1.1% 10.2%
</TABLE>
(1) Reflects the recapitalization, initial and subsequent public offering of
shares, and subsequent stock splits of the Company.
(2) Reflects information as of September 30 of the respective fiscal year.
(3) Unaudited information.
(4) Reflects return on equity calculated using fiscal year net earnings divided
by average shareholders' equity for the fiscal year.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The Company operates parking facilities under three types of
arrangements: leases, fee ownership, and management contracts. Parking revenues
consist of revenues from leased and owned facilities. Cost of parking relates to
both leased and owned facilities and includes rent, payroll and related
benefits, depreciation (if applicable), maintenance, insurance, and general
operating expenses. Parking revenues in fiscal 2000 decreased by $10.4 million,
to $628.7 million from $639.1 million in 1999. The Company experienced a net
decline in the number of leased and owned locations in 2000 of 285 (159
additional leased and owned locations offset by 444 lost or sold locations). Of
the locations lost, 28 properties were divested as a result of an agreement
entered into with the Antitrust Division of the U.S. Department of Justice, 188
locations were closed or sold because they were not sufficiently profitable and
228 locations were lost in the ordinary course of business.
Parking revenues from owned properties amounted to $62.1 million, $66.9
million and $73.2 million for the years ended September 30, 1998, 1999 and 2000,
respectively. Owned properties parking revenues, as a percentage of all parking
revenues, amounted to 11.6% in 1998, 10.5% in 1999, and 11.6% in 2000.
Parking revenues from leased facilities amounted to $472.5 million,
$572.2 million, and $555.5 million for the years ended September 30, 1998, 1999,
and 2000 respectively. Leased properties parking revenues, as a percentage of
all parking revenues, accounted for 88.4% in 1998, 89.5% in 1999, and 88.4% in
2000.
15
<PAGE> 16
Management contract revenues include revenues from managed facilities.
In fiscal year 2000, management contract revenues increased 11.9% to $102.2
million, primarily as a result of the addition of a number of large contracts.
The number of managed facilities actually declined during fiscal 2000 by 71
locations (198 added offset by 269 lost). Management contract revenues amounted
to $65.8 million, and $91.4 million for the years ended September 30, 1998 and
1999, respectively.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED SEPTEMBER 30,
-------------------------------------------------
HISTORICAL FINANCIAL SUMMARY ($ MILLIONS) 1996 1997 1998 1999 2000
----------------------------------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Parking revenues 109.3 295.7 534.6 639.1 628.7
% Growth over prior year 15.8% 170.6% 80.8% 19.6% (1.6%)
Management contract revenues 32.5 43.2 65.8 91.4 102.2
% Growth over prior year 6.2% 32.9% 52.2% 38.8% 11.9%
Total revenues 141.8 338.9 600.4 730.5 730.9
% Growth over prior year 13.4% 139.0% 77.1% 21.7% 0.1%
Cost of parking and management contracts 107.5 259.8 456.7 562.9 565.0
% of total revenues 75.8% 76.7% 76.1% 77.1% 77.3%
General and administrative expenses
excluding merger costs 17.4 37.0 63.7 77.3 71.9
% of total revenues 12.3% 10.9% 10.6% 10.6% 9.8%
Goodwill and non-compete amortization -- 1.7 8.3 11.6 12.1
% of total revenues -- 0.5% 1.4% 1.6% 1.7%
Depreciation and amortization - excluding goodwill and non-compete 3.4 11.9 20.4 31.5 34.1
Merger costs -- -- -- 41.0 3.7
% of total revenue -- -- -- 5.6% 0.5%
Property-related gains (losses), net 1.2 3.1 (0.6) 3.0 0.9
Operating earnings 18.1 43.5 71.0 40.7 79.1
% of total revenues 12.8% 12.8% 11.8% 5.6% 10.8%
Interest income (expense), net 2.3 (15.9) (24.6) (20.3) (20.1)
Dividends on company-obligated mandatorily
redeemable securities of subsidiary trust
holding solely parent debentures -- -- (3.2) (5.9) (6.0)
Equity in partnerships & joint venture earnings 0.6 4.2 5.2 5.2 10.3
Earnings before extraordinary items 13.8 18.7 26.1 4.7 36.6
% of total revenues 9.8% 5.5% 4.4% 0.6% 5.0%
</TABLE>
A summary of the facilities operated domestically and internationally
by Central Parking as of September 30, 2000 is as follows:
<TABLE>
<CAPTION>
PERCENT
MANAGED LEASED OWNED TOTAL OF TOTAL SPACES
------- ------ ----- ----- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Total U.S. and Puerto Rico 1,764 2,026 237 4,027 90.4% 1,410,038
United Kingdom 167 57 -- 224 5.0% 69,408
Mexico (1) 50 42 -- 92 2.1% 49,576
Germany (1) -- 12 -- 12 0.3% 6,494
Canada 43 44 2 89 2.0% 53,571
Ireland -- 4 -- 4 0.1% 500
Spain -- 3 -- 3 0.1% 1,693
Poland (1) -- 1 -- 1 0.0% 380
Chile (1) 1 1 -- 2 0.0% 700
----- ----- --- ----- ----- ---------
Total foreign 261 164 2 427 9.6% 182,322
----- ----- --- ----- ----- ---------
Total facilities 2,025 2,190 239 4,454 100.0% 1,592,360
===== ===== === ===== ===== =========
</TABLE>
(1) Operated through 50% owned joint ventures
16
<PAGE> 17
The table below sets forth certain information regarding the Company's
managed, leased and owned facilities in the periods indicated.
<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------------------------
1998 1999 2000
------ ------ ------
<S> <C> <C> <C>
Managed Facilities (1):
Beginning of year 1,241 1,937 2,096
------ ------ ------
Acquired or merged during year 543 18 --
Added during year 294 354 198
Deleted during year (141) (213) (269)
------ ------ ------
End of year 1,937 2,096 2,025
------ ------ ------
Renewal Rate (3) 93.2% 90.8% 88.3%
Leased Facilities (1):
Beginning of year 2,024 2,565 2,455
------ ------ ------
Acquired or merged during year 380 1 --
Added during year 368 225 159
Deleted during year (207) (336) (424)
------ ------ ------
End of year 2,565 2,455 2,190
------ ------ ------
Owned Facilities (1)(2):
Beginning of year 237 261 259
------ ------ ------
Acquired or merged during year 11 -- --
Purchased during year 20 7 --
Closed or sold during year (7) (9) (20)
------ ------ ------
End of year 261 259 239
------ ------ ------
Total facilities (end of year) 4,763 4,810 4,454
====== ====== ======
Percentage net growth including
acquisitions in number of facilities:
Managed 56.1% 8.2% (3.4%)
Leased 26.7% (4.3%) (10.8%)
Owned 10.1% (3.3%) (7.7%)
------ ------ ------
Total facilities 36.0% 1.0% (7.4%)
====== ====== ======
</TABLE>
(1) Includes 97 managed, 64 leased and 6 owned properties operated under joint
venture agreements at September 30, 2000.
(2) Includes the Company's corporate headquarters in Nashville, Tennessee.
(3) The renewal rate calculation is 100% minus lost locations divided by the
sum of the beginning of the year, acquired and added during the year for
management locations.
MERGER WITH ALLRIGHT
On March 19, 1999, Central Parking completed a merger with Allright
Holdings, Inc. ("Allright"), pursuant to which approximately 7.0 million shares
of Central Parking stock, and approximately 0.5 million options and warrants to
purchase such common stock of Central Parking were exchanged for all of the
outstanding shares of common stock and options and warrants to purchase common
stock of Allright. The transaction constituted a tax-free reorganization and has
been accounted for as a pooling-of-interests under Accounting Principles Board
("APB") Opinion No. 16, "Business Combinations." Accordingly, prior period
financial statements presented have been restated to include the combined
results of operations, financial position and cash flows of Allright as if it
had been part of Central Parking from the date of Allright's inception, October
31, 1996. See Notes 1 and 2 of the Consolidated Financial Statements.
17
<PAGE> 18
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, information
derived from the Company's consolidated financial statements expressed as a
percentage of total revenues.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------------------
1998 1999 2000
------ ------ ------
<S> <C> <C> <C>
Parking revenues 89.0% 87.5% 86.0%
Management contract revenues 11.0 12.5 14.0
------ ------ ------
Total revenues 100.0 100.0 100.0
Cost of parking and management contracts 76.1 77.1 77.3
General and administrative expenses
excluding merger costs 10.6 10.6 9.8
Goodwill and non-compete amortization 1.4 1.6 1.7
Merger costs -- 5.6 0.5
Property-related gains (losses), net (0.1) 0.5 0.1
------ ------ ------
Operating earnings 11.8 5.6 10.8
Interest income (expense), net (4.1) (2.8) (2.7)
Dividends on company-obligated mandatorily
redeemable securities of subsidiary
trust holding solely parent debentures (0.5) (0.8) (0.8)
Minority interest (0.3) (0.4) (0.5)
Equity in partnership and joint venture earnings 0.9 0.7 1.4
------ ------ ------
Earnings before income taxes and extraordinary item 7.8 2.3 8.2
Income taxes 3.4 1.7 3.2
------ ------ ------
Earnings before extraordinary item 4.4% 0.6% 5.0%
====== ====== ======
</TABLE>
YEAR ENDED SEPTEMBER 30, 2000 COMPARED TO YEAR ENDED SEPTEMBER 30, 1999
Parking revenues are comprised of revenue from leased and owned
facilities. Parking revenues in fiscal 2000 decreased to $628.7 million from
$639.1 million in fiscal 1999, a decrease of $10.4 million, or 1.6%. The
decrease is primarily attributable to the fact that the Company operated 285
fewer leased and owned facilities at the end of fiscal 2000 as compared to the
end of fiscal 1999. Despite the net decrease in managed facilities, management
contract revenues increased in fiscal 2000 to $102.3 million from $91.4 million
in fiscal 1999, an increase of $10.9 million, or 11.9%. The increase in
management contract revenues is due to the high-volume nature of the managed
facilities added during fiscal 2000 and the timing of additions and deletions
during fiscal 2000 and 1999. Revenues from foreign operations remained the same
for fiscal 2000 and fiscal 1999, at $33.5 million.
Cost of parking in fiscal 2000 decreased to $528.7 million from $535.2
million in fiscal 1999, a decrease of $6.5 million, or 1.2%. Net rent expense
decreased in fiscal 2000 to $307.4 million from $311.4 million in fiscal 1999, a
decrease of $4.0 million, or 1.3%. Payroll expenses decreased during fiscal 2000
to $117.7 million from $119.2 million during fiscal 1999, a decrease of $1.5
million, or 1.3%. The decrease in both rent and payroll expense can be
attributed to the fewer number of leased locations in operation during fiscal
2000. Cost of parking as a percentage of parking revenues increased to 84.1% in
fiscal 2000 from 83.7% in fiscal 1999. The increase is due to the inability of
the Company to adjust the fixed expense component of its cost structure to match
its lower parking revenues.
Cost of management contracts in fiscal 2000 increased to $36.3 million
from $27.7 million in fiscal 1999, an increase of $8.6 million, or 30.7%. The
cost of management contracts, as a percentage of management contract revenues,
increased to 35.5% in fiscal 2000 from 30.4% in fiscal 1999. The increases are
primarily a result of higher costs associated with the Company's healthcare
insurance programs as well as an increase in the cost of administering certain
payroll related activities on behalf of management contract clients.
General and administrative expenses decreased to $71.9 million in 2000,
from $77.3 million in 1999, a decrease of $5.4 million, or 6.9%. The decrease
was primarily a result of reduced payroll expenses resulting from the closure of
18
<PAGE> 19
Allright's corporate headquarters and the elimination of duplicative positions
created by the Allright merger at the Company's regional and city offices.
General and administrative expenses decreased as a percentage of total revenue
to 9.8% in 2000, from 10.6% in 1999 due to the lower payroll costs.
Amortization expense of goodwill and non-compete agreements increased
to $12.1 million in fiscal 2000 from $11.6 million in fiscal 1999, an increase
of $0.5 million. This increase was primarily attributable to a non-compete
agreement with an executive from one of the entities acquired by the Company.
The Company incurred $3.7 million of Allright-related merger costs
during the first and second quarters of fiscal 2000. Included in these costs are
approximately $1.3 million in professional fees, $1.1 million in severance and
employment-related payments, and $1.3 million in various other miscellaneous
expenses. The Company recorded $41.0 million of Allright-related merger costs
during the last three quarters of fiscal 1999. Included in these costs are
approximately $20.7 million of professional fees, comprised of investment
banking, legal, accounting, and consulting fees; $11.3 million of
employment-related expenses; $7.0 million related to the restructuring agreement
with the limited partner of Edison Parking Management, L.P.; and $2.0 million in
travel, supplies, printing, and other out of pocket costs.
Net property-related gains decreased in fiscal 2000 to $0.9 million
from $3.0 million in fiscal 1999. The decrease of $2.1 million was due primarily
to an increase in impairment charges recognized during fiscal 2000.
Interest income in fiscal 2000 increased slightly to $6.9 million from
$6.6 million in fiscal 1999. Though the Company reduced its outstanding debt by
approximately $59.9 million during fiscal 2000, interest expense remained
unchanged from the prior year at $27.0 million. The Company's variable rate debt
was negatively impacted during fiscal 2000 by a general rise in interest rates.
The weighted-average balance of debt outstanding during fiscal 2000 was $348.3
million at a weighted average rate of 7.4%, compared to a weighted average
balance of $334.3 million at a weighted average rate of 8.1% during fiscal 1999.
The Company's fiscal 2000 results do not reflect the full benefit of the
aforementioned $59.9 million reduction in outstanding debt since $39.3 million
of the reduction occurred during the Company's fourth quarter.
Dividends on Company-obligated mandatorily redeemable convertible
securities of a subsidiary trust increased to $6.0 million in fiscal 2000 from
$5.9 million in fiscal 1999.
Equity in partnership and joint venture earnings increased to $10.3
million in fiscal 2000 from $5.2 million in fiscal 1999. The increase is due to
a $5.0 million gain on the sale of a property recognized by a partnership in
which the Company was a limited partner. Such transaction resulted from the
general partner's decision to sell the property as allowed by the partnership
agreement.
The Company's effective income tax rate before extraordinary items was
38.9% in fiscal 2000 as compared to 72.6% in fiscal 1999. The decrease in the
rate is primarily attributable to nondeductible Allright-related merger costs
incurred during the prior year. The Company recorded a one-time benefit of
approximately $1.5 million during fiscal 2000 relating to the reduction of
certain federal and state net operating loss valuation allowances that had been
established by Allright. Management believes that it will be able to utilize
these net-operating losses to offset future income before their statutory
expiration dates as a result of various tax planning strategies that the Company
implemented during the year. The Company's effective tax rate is expected to be
approximately 40% for fiscal year 2001.
YEAR ENDED SEPTEMBER 30, 1999 COMPARED TO YEAR ENDED SEPTEMBER 30, 1998
Parking revenues in fiscal 1999 increased to $639.1 million from $534.6
million in fiscal 1998, an increase of $104.5 million, or 19.6%. Of the $104.5
million increase, $53.4 million, or 51.1%, resulted from the following
acquisitions of leased and owned locations: Kinney, $38.5 million; Turner, $1.3
million; Sterling, $2.1 million; and Allied Parking $11.5 million. The remaining
increase of $51.1 million, or 48.9%, is from a combination of increased rates
and higher utilization of parking spaces at existing facilities and the addition
of 233 new locations which, on average, generate more revenue than the 345 lost
locations.
Management contract revenues in fiscal 1999 increased to $91.4 million
from $65.8 million in fiscal 1998, an increase of $25.6 million, or 38.8%. Of
the $25.6 million increase, $3.1 million, or 12.1%, resulted from the
acquisitions of Kinney ($0.3 million); Turner ($0.1 million); Sterling ($0.2
million) and National ($2.5 million). The remaining increase resulted primarily
from the net addition of 159 new locations.
19
<PAGE> 20
Cost of parking in fiscal 1999 increased to $535.2 million from $441.7
million in fiscal 1998, an increase of $93.5 million, or 21.2%. Net rent
expense increased $55.1 million, principally as a result of new locations from
merger and acquisition activity and additional rent on existing locations. Of
the remaining $38.4 million increase in cost of parking, payroll expense
accounted for $19.5 million. The payroll expense increase was attributable to a
combination of acquisitions, new locations and increases in existing payroll.
Cost of parking, as a percentage of parking revenues, increased to 83.7% in
fiscal 1999 from 82.6% in fiscal 1998. This increase was attributable to higher
auto damage and insurance claims.
Cost of management contracts in fiscal 1999 increased to $27.7 million
from $15.0 million in the comparable period in 1998, an increase of $12.7
million, or 84.9%. This increase was attributable to an increase in the number
of managed locations and higher costs incurred at existing locations. Cost of
management contracts, as a percentage of management contract revenues, increased
to 30.4% in fiscal 1999 from 22.8% in fiscal 1998. The increase in the cost of
management contracts as a percentage of management contract revenue is primarily
a result of higher group insurance expense related to medical claims.
General and administrative expenses increased to $77.3 million in 1999
from $63.7 million in fiscal 1998, an increase of $13.6 million, or 21.3%. This
increase was primarily a result of an increase in payroll expense of $4.6
million associated with the additional general and administrative expenses of
acquired and merged operations, as well as the opening of additional managed,
leased, and owned locations and additional incentive compensation payments as a
result of increased profits. General and administrative expenses remained
constant as a percentage of total revenue in both years at 10.6%.
Amortization expense of goodwill and non-compete agreements increased
significantly to $11.6 million in fiscal 1999 from $8.3 million in fiscal 1998,
an increase of $3.3 million. This increase was a result of recording
amortization expense for the entire year for goodwill and non-compete assets
recorded in connection with the acquisitions of National, Kinney, the remaining
50% of CPS-Louisiana, Turner, and Sterling.
The Company incurred merger costs related to the merger of Allright of
approximately $41.0 million during fiscal 1999. Included in these costs are
approximately $20.7 million for professional fees, comprised of investment
banking, legal, accounting, and consulting fees; $11.3 million related to
employment agreements; $7.0 million related to the restructuring agreement with
the limited partner of Edison Parking Management, L.P.; and the balance of $2.0
million in travel, supplies, printing, and other out of pocket costs. There were
no merger related costs incurred in prior years.
Net property-related gains increased in fiscal 1999 to $3.0 million
from net losses of $0.6 million in fiscal 1998. The increase of $3.6 million was
primarily due to the gain of $2.8 million recognized on the sale of a property
in Philadelphia, PA, in fiscal 1999.
Interest income in fiscal 1999 increased to $6.6 million from $5.7
million in fiscal 1998. This increase of $0.9 million was primarily attributable
to increased investment in notes receivable from $47.9 million at September 30,
1998 to $60.4 million at the end of fiscal 1999.
Interest expense decreased to $27.0 million in 1999 compared to $30.2
million in 1998. The decrease in interest expense of $3.2 million was primarily
attributable to the lower average interest rates achieved by repaying the
Allright indebtedness, which carried a higher rate, with the lower interest rate
on the New Credit Facility described in Note 9 to the Company's Consolidated
Financial Statements. The weighted average balance of debt outstanding was
$334.3 million during 1999, at a weighted average interest rate of 8.1% compared
to $310.5 million during 1998, at a weighted average interest rate of 9.7%.
Dividends on Company-obligated mandatorily redeemable convertible
securities of a subsidiary trust increased to $5.9 million in the fiscal year
ended September 30, 1999 from $3.2 million in the prior year as a result of
having the balance outstanding for the entire fiscal year 1999 compared to
approximately 6 months of the prior year.
Equity in partnership and joint venture earnings for fiscal 1999
remained constant at approximately $5.2 million in fiscal 1998 and 1999.
The Company's effective income tax rate related to earnings before
extraordinary items was 72.6% for fiscal 1999 compared to 43.8% for fiscal 1998.
The rate increase was attributable to nondeductible merger related costs in
20
<PAGE> 21
1999, increased nondeductible goodwill amortization expenses primarily due to
amortizing goodwill from Kinney for the entire year, and decreased earnings.
QUARTERLY RESULTS
The Company experienced fluctuations in its quarterly net earnings
during fiscal 2000 due to merger costs incurred in the first and second quarters
and the recognition of intermittent property-related gains or losses. The
Company also experienced fluctuations in quarterly net earnings as a result of
merger costs during the last three quarters of fiscal 1999. Additionally, the
Company has and may continue to experience fluctuations in revenues and related
expenses due to acquisitions, pre-opening costs, travel and transportation
patterns affected by weather and calendar related events, and local and national
economic conditions. The Company's concentration of parking facilities in the
northeastern and mid-Atlantic part of the United States, primarily a result of
the Edison Parking Management, L.P. ("Edison"), Kinney, Square and Diplomat
acquisitions, exposes the Company to the risk of negative financial fluctuations
that may result from severe winter weather. Additionally, the Company services
the parking for a number of sports stadiums and arenas and can be impacted by
the relative degree of success of various sports teams. The following table sets
forth certain quarterly statements of earnings data for the eight fiscal
quarters preceding the end of the fiscal year 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.
Amounts in thousands, except per share data
<TABLE>
<CAPTION>
1999 FISCAL YEAR
------------------------------------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
------------ --------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $ 178,923 100.0% $ 181,508 100.0% $188,917 100.0% $ 181,124 100.0%
Property-related
gains (losses), net (85) -- 2,893 1.6 379 0.2 (181) (0.1)
Operating earnings (1) 23,305 13.0 (12,332) (6.8) 19,724 10.4 9,984 5.5
Earnings (loss) before income
taxes and extraordinary item 16,576 9.3 (19,379) (10.7) 14,843 7.9 5,024 2.8
Earnings (loss) before
extraordinary items 10,139 5.7 (16,577) (9.1) 8,674 4.6 2,448 1.4
Earnings (loss) before extraordinary
items per share - basic $ 0.28 $ (0.46) $ 0.24 $ 0.07
Earnings (loss) before extraordinary
items per share - diluted $ 0.27 $ (0.45) $ 0.23 $ 0.07
</TABLE>
(1) Includes a deduction for merger costs of $34.4 million, $2.9 million and
$3.8 million, for the quarters ended March 31, June 30, and September 30,
1999, respectively.
<TABLE>
<CAPTION>
2000 FISCAL YEAR
----------------------------------------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
------------ --------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $185,333 100.0% $182,651 100.0% $ 186,366 100.0% $ 176,579 100.0%
Property-related
gains (losses), net 1,758 0.9 1,331 0.7 (918) (0.5) (1,236) (0.7)
Operating earnings (1) 20,170 10.9 18,183 10.0 23,804 12.8 16,940 9.6
Earnings before income taxes
and extraordinary item 14,670 7.9 11,714 6.4 23,101 12.4 10,426 5.9
Earnings before
extraordinary items 8,446 4.6 7,380 4.0 14,781 7.9 6,027 3.4
Earnings before extraordinary
items per share - basic $ 0.23 $ 0.20 $ 0.41 $ 0.17
Earnings before extraordinary
items per share - diluted $ 0.23 $ 0.20 $ 0.40 $ 0.16
</TABLE>
(1) Includes a deduction for merger costs of $2.3 million and $1.4 million for
the quarters ended December 31, 1999 and March 31, 2000 respectively.
21
<PAGE> 22
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for fiscal 2000 was $100.4
million, an increase of $65.6 million from net cash provided by operating
activities of $34.8 million during the same period in fiscal 1999. The primary
factors which contributed to this change were increased net earnings of $32.8
million, primarily as a result of decreased merger costs of $27.9 million after
income tax effect, and decreases in management accounts receivable of $14.7
million, other assets of $13.6 million, other accounts receivable of $9.6
million and prepaid and refundable income taxes of $9.5 million, offset by a
decrease in accounts payable, accrued expenses, and deferred compensation of
$16.5 million during fiscal 2000.
Net cash used in investing activities was $17.0 million for fiscal
2000, a decrease of $73.7 million from net cash of $90.7 million used in
investing activities during fiscal 1999. The decrease primarily resulted from a
reduction in investments in notes receivable, contract and lease rights, and
unconsolidated subsidiaries of $83.7 million, offset by an increase in purchases
of property, equipment and leasehold improvements of $14.2 million during fiscal
2000.
Net cash used by financing activities for fiscal 2000 was $93.8
million, a net decrease of $152.4 million from net cash of $58.6 million
provided by financing activities for fiscal 1999. The Company had net borrowings
of $98.7 million under its revolving credit agreement, partially offset by net
repayments of notes payable of $38.8 million in fiscal 1999, compared to net
revolving credit agreement repayments of $60.9 million, repurchases of common
stock of $14.6 million, and net repayments of notes payable of $15.4 million in
fiscal 2000.
On March 19, 1999, the Company established a new credit facility (the
"New Credit Facility") providing for an aggregate availability of up to $400
million consisting of a five-year $200 million revolving credit facility
including a sub-limit of $25 million for standby letters of credit, and a $200
million five-year term loan. The principal amount of the term loan shall be
repaid in quarterly payments of $12.5 million commencing June 30, 2000 and
continuing until the loan is repaid. Interest is payable on borrowings under the
New Credit Facility, at the election of the Company, at either a "Base Rate" or
a "Eurodollar Rate" (each as defined in the New Credit Facility agreement), plus
a grid based margin based upon the Company achieving certain financial ratios
(prior to and including June 30, 1999, borrowings under the New Credit Facility
were fixed at either the prime rate plus 0.5% or LIBOR plus a margin of 1.125%).
The Company used the New Credit Facility to replace the Company's previous
credit facility and to refinance the existing debt of Allright. The amount
outstanding under the Company's New Credit Facility as of September 30, 2000 is
$265.4 million with a weighted average interest rate of 7.72% as of September
30, 2000. Borrowings under the New Credit Facility are unsecured.
The New Credit Facility contains covenants including those that require
the Company to maintain certain financial ratios, restrict further indebtedness
and limit the amount of dividends paid. On December 28, 1999, the Company
entered into an amendment and waiver to the New Credit Facility agreement
relating to the waiver of non-compliance with certain loan covenants at
September 30, 1999. This amendment and waiver contains, among other things,
provisions for up-front fees of $700 thousand, which is being amortized over the
life of the New Credit Facility. The grid based interest rate margin was not
affected by the amendment and continues to be based upon the Company achieving
certain revised financial ratios.
On February 14, 2000, the Company entered into an amendment and
restatement to the New Credit Facility agreement primarily to allow the Company
to repurchase up to $50 million in outstanding shares of its common stock. This
amendment and restatement also contains provisions for up front fees of $681
thousand, which are being amortized over the life of the New Credit Facility.
Interest rates were not affected by this amendment.
On May 10, 1999 Central Parking announced that it had signed a
definitive agreement to purchase a parking facility that was being developed in
Chicago by a wholly owned subsidiary of Prime Group Realty Trust. The agreement
was valued at approximately $37.3 million. On December 12, 2000, this agreement
was terminated.
Depending on the timing and magnitude of the Company's future
investments (either in the form of leased or purchased properties, joint
ventures, or acquisitions), the working capital necessary to satisfy current
obligations is anticipated to be generated from operations and Central Parking's
credit facility over the next twelve months. In the ordinary course of business,
Central Parking is required to maintain and, in some cases, make capital
improvements to the parking facilities it operates. The Company's capital
expenditure budget for fiscal 2001, excluding potential acquisitions, is
approximately $20 million. However, as of September 30, 2000, Central Parking
had no material outstanding commitments for capital
22
<PAGE> 23
expenditures. If Central Parking identifies investment opportunities requiring
cash in excess of Central Parking's cash flows and the existing credit
facility, Central Parking may seek additional sources of capital, including
seeking to amend the credit facility to obtain additional indebtedness. The
Allright Registration Rights Agreement, as noted in "Risk Factors", provides
certain limitations and restrictions upon Central Parking's ability to issue
new shares of Central Parking common stock. Until certain shareholders of
Central Parking have received at least $350 million from the sale of Central
Parking common stock in either registered offerings or otherwise, Central
Parking cannot sell any shares of its common stock on its own behalf, subject
to certain exceptions. While Central Parking does not expect this limitation to
affect its working capital needs, it could have an impact on Central Parking's
ability to complete significant acquisitions. The current market value of
Central Parking common stock also could have an impact on Central Parking's
ability to complete significant acquisitions or raise additional capital.
Central Parking believes that it has the ability to increase its credit
facility if needed for significant acquisitions, although no assurances can be
given that such increases would be available at the time needed to complete any
such acquisition.
INTERNATIONAL FOREIGN CURRENCY EXPOSURE
The Company operates wholly owned subsidiaries in the United Kingdom,
Canada and Spain. Total revenues from wholly owned foreign operations amounted
to 5.7%, 4.6% and 4.6% of total revenues for the years ended September 30, 1998,
1999 and 2000, respectively. Additionally, the Company operates through joint
ventures in Germany, Poland, Chile, and Mexico. The Company intends to invest in
foreign leased or owned facilities, usually through joint ventures, and may
become increasingly exposed to foreign currency fluctuations. The Company, in
limited circumstances, has denominated contracts in U.S. dollars to limit
currency exposure. Presently, the Company has limited exposure to foreign
currency risk and has no hedge programs related to such risk. The Company
anticipates implementing a hedge program if such risk materially increases. For
the year ended September 30, 2000, revenues from the United Kingdom and Canada
operations represented 70.0% and 29.7%, respectively, of total revenues
generated by foreign operations, excluding earnings from joint ventures.
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, 1998, 1999 and 2000.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
133 established reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts. Under SFAS No. 133,
the Company would recognize all derivatives as either assets or liabilities,
measured at fair value, in the statement of financial position. In July 1999,
SFAS No. 137 "Accounting for Derivative Instruments and Hedging Activities -
Deferral of Effective Date of FASB No. 133, An Amendment of FASB Statement No.
133" was issued deferring the effective date of SFAS 133 to fiscal years
beginning after June 15, 2000.
The Company must adopt the provisions of SFAS No. 133 and SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities,
an Amendment of FASB Statement No. 133," on October 1, 2000. Upon adoption, the
provisions of SFAS No. 133 and SFAS No. 138 must be applied prospectively. The
adoption of SFAS No. 133 and SFAS No. 138 will result in the Company recording a
net transition loss of $402 thousand, net of related income tax of $268
thousand, in accumulated other comprehensive income at October 1, 2000. Further,
the adoption of SFAS No. 133 and SFAS 138 will result in the Company reducing
derivative instrument assets by $282 thousand and recording $387 thousand of
derivative instrument liabilities.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," effective for fiscal years
beginning after December 16, 1998. SOP 98-1 defines which costs incurred to
develop or purchase internal use software should be capitalized and which should
be expensed. The Company adopted this SOP in fiscal 2000. Such adoption did not
have a material impact on the consolidated financial statements.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements" ("SAB
101"). SAB 101 establishes specific criterion for revenue recognition. The
Company must adopt the provisions of SAB 101 no later than the fourth quarter of
fiscal 2001. The Company is in the process of evaluating whether this SAB will
have a material impact on the Company's revenue recognition and presentation
policies.
23
<PAGE> 24
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
This document, and documents that have been incorporated herein by
reference, include various forward-looking statements regarding the Company that
are subject to risks and uncertainties, including, without limitation, the
factors set forth under the caption "Risk Factors." Forward-looking statements
include, but are not limited to, discussions regarding the Company's operating
strategy, growth strategy, acquisition strategy, cost savings initiatives,
industry, economic conditions, financial condition, liquidity and capital
resources and results of operations. Such statements include, but are not
limited to, statements preceded by, followed by or that otherwise include the
words "believes," "expects," "anticipates," "intends," "estimates" or similar
expressions. For those statements, the Company claims the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
The following important factors, in addition to those discussed
elsewhere in this document, and the documents which are incorporated herein by
reference, could affect the future financial results of the Company and could
cause actual results to differ materially from those expressed in
forward-looking statements contained or incorporated by reference in this
document:
- successfully integrating Allright, as well as past and future
acquisitions, in light of challenges in retaining key employees,
synchronizing business processes and efficiently integrating
facilities, marketing, and operations;
- successful implementation of the Company's operating and growth
strategy, including possible strategic acquisitions;
- fluctuations in quarterly operating results caused by a variety of
factors including the timing of property-related gains and losses,
preopening costs, the effect of weather on travel and transportation
patterns, player strikes or other events affecting major league sports
and local, national and international economic conditions;
- the ability of the Company to form and maintain its strategic
relationships with certain large real estate owners and operators;
- global and/or regional economic factors and potential changes in laws
and regulations, including, without limitation, changes in federal,
state and international laws regulating the environment.
RISK FACTORS
IF WE ARE UNABLE TO SUCCESSFULLY COMPLETE THE INTEGRATION OF ALLRIGHT,
WE COULD LOSE KEY EMPLOYEES, LOCATIONS AND CUSTOMERS AND FAIL TO REALIZE THE
EXPECTED BENEFITS OF THE MERGER.
The Allright merger involves the integration of two companies that have
previously operated independently. Although Central Parking has acquired and
integrated various companies into its organizational and financial structure in
the past, Allright is a larger company than any of the companies Central Parking
has acquired previously. As a result of the merger, Central Parking has
substantially increased the number of persons it employs, the number of
facilities it operates, and the geographic markets it services. There can be no
assurance that Allright will be successfully integrated into Central Parking's
operations, that cost savings or operating efficiencies will be realized to the
extent anticipated by Central Parking, or that the acquired operations will
achieve levels of profitability that justify Central Parking's investments.
THE FAILURE TO SUCCESSFULLY INTEGRATE PAST AND FUTURE ACQUISITIONS
COULD HAVE A NEGATIVE IMPACT ON CENTRAL PARKING'S BUSINESS AND THE MARKET PRICE
OF ITS COMMON STOCK.
Central Parking completed the merger with Allright Holdings, Inc. in
fiscal 1999. In addition, Central Parking completed three acquisitions in fiscal
1997 and four acquisitions in fiscal 1998, including the Kinney System Holding
Corp. acquisition in February 1998, and plans to pursue additional acquisitions
in the future. Central Parking can give no assurance that any acquired facility
or company will be successfully integrated into its operations. Also, because of
the price paid by Central Parking 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 Central Parking's per share
earnings. Any acquisition contemplated or completed by Central Parking may
result in adverse short-term effects on Central Parking'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
negative effect on Central Parking's business and financial results.
IF CENTRAL PARKING IS UNABLE TO MAINTAIN ITS HISTORICAL PERCENTAGE
GROWTH RATE, THE MARKET PRICE OF ITS STOCK MAY BE ADVERSELY AFFECTED.
24
<PAGE> 25
As Central Parking has expanded its operations, its ability to maintain
its historical percentage growth rate has become increasingly difficult. The
merger with Allright significantly increased the size of the company, which is
likely to reduce the impact of future acquisitions on the results of operations
of Central Parking. Central Parking's growth rate also will be directly affected
by the increasingly competitive environment for acquisitions of other operators
and Central Parking's ability to obtain suitable financing for acquisitions. In
addition, the growth rate has been and is expected to be affected by the results
of operations of added parking facilities, which will depend largely upon
Central Parking's ability to integrate acquired operations. There can be no
assurance that Central Parking's failure to retain locations or to maintain its
historical percentage growth rate will not negatively affect the market price of
its stock.
IF SIGNIFICANT SHAREHOLDERS OF CENTRAL PARKING SELL A SUBSTANTIAL
AMOUNT OF THEIR STOCK AT THE SAME TIME, THESE SALES COULD HAVE AN ADVERSE IMPACT
ON THE MARKET PRICE OF CENTRAL PARKING COMMON STOCK.
There are several shareholders who own significant blocks of Central
Parking common stock. If each of these significant shareholders sold a
substantial amount of Central Parking common stock as allowed under the
Securities Act at the same time, such sales could have a significant negative
impact on the market price of Central Parking common stock. In order to provide
a mechanism for these significant shareholders to dispose of their shares of
Central Parking common stock with a minimized impact on Central Parking's
trading market, Central Parking agreed to allow certain shareholders to require
Central Parking to register such shares under the federal securities laws. In
connection with the acquisition of Allright, Central Parking entered into a
registration rights agreement (the "Allright Registration Rights Agreement"),
which requires Central Parking to register up to $350 million worth of Central
Parking common stock. In addition, Central Parking entered into a registration
rights agreement in connection with the acquisition of Kinney System Holding
Corp. (the "Kinney Registration Rights Agreement"), which requires Central
Parking to register up to 882,422 shares of Central Parking common stock upon
certain terms and conditions. The exercise of such registration rights under the
Allright Registration Rights Agreement or the Kinney Registration Rights
Agreement could result in a large number of shares of Central Parking common
stock being sold in the market which, in turn, could result in a reduction in
the market price of Central Parking common stock.
THE SALE OF A SUBSTANTIAL NUMBER OF SHARES OF CENTRAL PARKING COMMON
STOCK BY MONROE CARELL, CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF CENTRAL PARKING,
THE CARELL CHILDREN'S TRUST AND VARIOUS OTHER CARELL FAMILY TRUSTS AND
FOUNDATIONS UNDER THE ALLRIGHT REGISTRATION RIGHTS AGREEMENT, COULD NEGATIVELY
AFFECT THE MARKET PRICE OF CENTRAL PARKING COMMON STOCK.
The Allright Registration Rights Agreement grants Monroe Carell, Jr.,
The Carell Children's Trust and various other Carell family trusts and
foundations rights to sell up to $100 million of Central Parking common stock in
an initial underwritten offering and up to $150 million in subsequent offerings.
Although Monroe Carell and the other entities described above will remain
significant shareholders following such sales, the sale of substantial amounts
of stock by insiders, such as Monroe Carell, could be perceived negatively by
the securities market. As a result, these sales could adversely affect the
market price of Central Parking common stock.
CENTRAL PARKING WILL BE UNABLE TO RAISE MONEY THROUGH COMMON STOCK
OFFERINGS UNTIL IT COMPLETES ITS OBLIGATIONS UNDER THE ALLRIGHT REGISTRATION
RIGHTS AGREEMENT.
The Allright Registration Rights Agreement provides certain limitations
and restrictions upon Central Parking's ability to issue new shares of Central
Parking common stock. Until certain shareholders of Central Parking have
received at least $350 million from the sale of Central Parking common stock in
either registered offerings or otherwise, Central Parking cannot sell any shares
of its common stock on its own behalf, subject to certain exceptions. As a
result, Central Parking may not have access to the capital markets for a
significant period of time. There can be no assurance or guarantee that the
restrictions upon Central Parking's ability to raise funds through common stock
offerings will not have a negative effect on Central Parking.
INCREASED INDEBTEDNESS COULD ADVERSELY AFFECT CENTRAL PARKING'S ABILITY
TO BORROW ADDITIONAL FUNDS IN THE FUTURE.
Central Parking's indebtedness decreased from approximately $369.2
million, as of September 30, 1999, to approximately $309.3 million at September
30, 2000. Central Parking's existing credit facility provides for an unused
aggregate availability of $84.8 million at September 30, 2000. The Company may
have limited sources to raise additional funds if needed in its operations or
for additional acquisitions. There can be no assurance that Central Parking's
increased debt level will not have a negative effect on Central Parking.
THE INCREASED NUMBER OF LEASED AND OWNED FACILITIES RESULTING FROM THE
ALLRIGHT MERGER WILL INCREASE THE RISK THAT THE COMPANY MAY NOT BE ABLE TO COVER
THE FIXED COSTS OF ITS LEASED AND OWNED FACILITIES.
The Company leases and owns significantly more facilities than it did
prior to the Allright merger. Although there is more potential for income from
leased and owned facilities than from management contracts, they also carry more
risk if there is a downturn in property performance or commercial real estate
25
<PAGE> 26
occupancy rates because a significant part of the costs to operate such
facilities typically is fixed. For example, in the case of leases, there are
typically minimum lease payments, and in the case of owned facilities, there are
the normal risks of ownership and costs of capital. In addition, maintenance and
operating expenses for both leased and owned facilities are borne by Central
Parking and are not passed through to the owner, as is the case with management
contracts. Generally, performance of Central Parking's parking facilities
depend, in part, on its ability to negotiate favorable contract terms, its
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, weather conditions in areas where
parking facilities are located and the real estate market generally.
WE HAVE FOREIGN OPERATIONS THAT MAY BE ADVERSELY AFFECTED BY FOREIGN
CURRENCY EXCHANGE RATE FLUCTUATIONS.
Central Parking operates in the United Kingdom, Germany, Mexico, the
Republic of Ireland, Chile, Poland, Canada, and Spain, and intends to expand its
business in these and other international locations. For the year ended
September 30, 2000, revenues from foreign operations represented 4.6% of Central
Parking's total revenues. Of these foreign revenues, revenues from United
Kingdom operations represented 70.0% of such revenues, excluding earnings from
joint ventures. Central Parking receives revenues and incurs expenses in various
foreign currencies in connection with its foreign operations and, as a result,
Central Parking is subject to currency exchange rate fluctuations. Central
Parking 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,
Central Parking has limited exposure to foreign currency risk and anticipates
implementing a hedging program if such risk materially increases.
IF WE INCREASE OPERATIONS IN EUROPE, THE EURO CONVERSION MAY ADVERSELY
AFFECT OUR BUSINESS.
On January 1, 1999, eleven of the fifteen member countries of the
European Union established fixed conversion rates between their existing
sovereign currencies and a new currency called the "Euro." These countries
adopted the Euro as their common legal currency on that date. The Euro trades on
currency exchanges and is available for non-cash transactions. Until January 1,
2002, the existing sovereign currencies will remain legal tender in these
countries. On January 1, 2002, the Euro is scheduled to replace the sovereign
legal currencies of these countries. While the vast majority of Central
Parking's operations within the European Union are currently in the United
Kingdom, a European Member which is not scheduled to participate in the Euro
conversion, Central Parking has operations in countries which have adopted the
Euro. Central Parking is in the process of assessing the impact of the Euro
conversion on its operations in the participating countries, including the need
to adopt new information technology, parking related equipment and other systems
to accommodate Euro-denominated transactions, as well as the impact to currency
risk and contractual relationships. Based on management's assessment of the
impact of the Euro conversion, Central Parking does not believe that the Euro
conversion will have a material impact on its operations or financial condition.
IN CONNECTION WITH THE OWNERSHIP OR OPERATION OF PARKING FACILITIES,
CENTRAL PARKING MAY BE POTENTIALLY LIABLE FOR ENVIRONMENTAL PROBLEMS.
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. There can
be no assurance that a material environmental claim will not be asserted against
Central Parking 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 negative effect on Central Parking's business and
financial results.
IF WE CANNOT MAINTAIN POSITIVE RELATIONSHIPS WITH LABOR UNIONS
REPRESENTING OUR EMPLOYEES, A WORK STOPPAGE MAY ADVERSELY AFFECT OUR BUSINESS.
Approximately 5,340 employees of Central Parking are represented by
labor unions. There can be no assurance that Central Parking will be able to
renew existing labor union contracts on acceptable terms. Employees could
exercise their rights under the labor union contract, which could include a
strike or walk-out. In such cases, there are no assurances that Central Parking
would be able to staff sufficient employees for its short-term needs. Any such
labor strike or the inability of Central Parking to negotiate a satisfactory
contract upon expiration of the current agreements could have a negative effect
on Central Parking's business and financial results.
26
<PAGE> 27
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
INTEREST RATES
The Company's primary exposure to market risk consists of changes in
interest rates on variable rate borrowings. As of September 30, 2000, the
Company had $265.4 million of variable rate debt outstanding under the New
Credit Facility, priced at LIBOR plus 112.5 basis points. The Company is
required under the New Credit Facility to enter into interest rate protection
agreements designed to limit the Company's exposure to increases in interest
rates. As of September 30, 2000, interest rate protection agreements had been
purchased to hedge $100 million of the Company's variable rate debt. See Note 9
to the Consolidated Financial Statements for a description of the hedge
transactions entered into by the Company. $175 million of the New Credit
Facility is payable in quarterly installments of $12.5 million and $90.4 million
in revolving credit loans is due in March 2004. The Company anticipates paying
the scheduled quarterly payments out of operating cash flow and, if necessary,
will attempt to renew the revolving credit facility.
In March 2000, a limited liability company of which the Company is the
sole shareholder, purchased a parking structure for $19.6 million and financed
$13.3 million with a five-year note bearing interest at one-month floating LIBOR
plus 162.5 basis points. To fix the interest rate, the Company entered into a
five-year LIBOR swap, yielding an effective interest cost of 8.91% for the
five-year period.
FOREIGN CURRENCY EXPOSURE
The Company derived $33.5 million or 4.6% of total revenues from
foreign sources in fiscal 2000. Of the $33.5 million, 70.0% is derived from the
United Kingdom and 29.7% is derived from Canada. The Company does not employ any
foreign currency hedge programs because management does not believe the risk to
be material. See Note 18 of the Consolidated Financial Statements.
27
<PAGE> 28
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CENTRAL PARKING CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AUDITED CONSOLIDATED FINANCIAL STATEMENTS:
Independent Auditors' Report .................................................................. 29
Consolidated Balance Sheets as of September 30, 1999 and 2000 ................................. 30
Consolidated Statements of Earnings for the Years Ended September 30,
1998, 1999, and 2000...................................................................... 31
Consolidated Statements of Changes in Shareholders' Equity and
Comprehensive Income for the Years Ended September 30, 1998, 1999, and 2000 .............. 32
Consolidated Statements of Cash Flows for the Years Ended September 30,
1998, 1999, and 2000...................................................................... 33
Notes to Consolidated Financial Statements .................................................... 35
</TABLE>
28
<PAGE> 29
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS
CENTRAL PARKING CORPORATION AND SUBSIDIARIES:
We have audited the accompanying consolidated balance sheets of Central
Parking Corporation and subsidiaries as of September 30, 1999 and 2000, and the
related consolidated statements of earnings, shareholders' equity and
comprehensive income, and cash flows for each of the years in the three-year
period ended September 30, 2000. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits. Separate
financial statements of Allright Holdings, Inc. also included in the 1998
restated consolidated financial statements were audited by other auditors whose
report dated October 9, 1998, expressed an unqualified opinion on those
statements and referred to a business combination effective October 31, 1996
which resulted in new basis of accounting for the assets and liabilities of
Allright Holdings, Inc., the successor company. Our opinion, insofar as it
relates to the amounts included for Allright Holdings, Inc., is based solely on
the report of the other auditors.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other
auditors, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Central Parking
Corporation and subsidiaries as of September 30, 1999 and 2000, and the results
of their operations and their cash flows for each of the years in the three-year
period ended September 30, 2000, in conformity with accounting principles
generally accepted in the United States of America.
KPMG LLP
Nashville, Tennessee
November 27, 2000
29
<PAGE> 30
CENTRAL PARKING CORPORATION
CONSOLIDATED BALANCE SHEETS
Amounts in thousands, except share data
<TABLE>
<CAPTION>
SEPTEMBER 30,
-----------------------------
1999 2000
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 53,669 $ 43,214
Management accounts receivable 33,288 32,052
Accounts receivable - other 18,966 14,995
Current portion of notes receivable (including amounts due
from related parties of $509 in 1999 and $763 in 2000) 12,503 4,090
Prepaid rent 14,222 8,307
Prepaid other expenses 7,438 4,953
Deferred income taxes 247 612
Prepaid and refundable income taxes 5,374 --
----------- -----------
Total current assets 145,707 108,223
Investments, at amortized cost (fair value
$5,480 in 1999 and $5,775 in 2000) 5,488 5,778
Notes receivable, less current portion 47,870 46,153
Property, equipment, and leasehold improvements, net 421,090 432,833
Contracts and lease rights, net 97,158 96,607
Goodwill, net 277,800 264,756
Investment in and advances to partnerships and joint ventures 32,218 30,306
Other assets 37,246 37,649
----------- -----------
$ 1,064,577 $ 1,022,305
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and capital lease
obligations $ 31,682 $ 55,760
Accounts payable 74,778 73,461
Accrued payroll and related costs 12,268 14,287
Accrued expenses 20,051 12,236
Management accounts payable 33,416 33,452
Income taxes payable 4,171 8,279
----------- -----------
Total current liabilities 176,366 197,475
Long-term debt and capital lease obligations, less current portion 337,481 253,535
Deferred rent 17,681 18,794
Deferred compensation 12,058 11,732
Deferred income taxes 27,702 24,801
Minority interest 31,112 31,108
Other liabilities 5,058 4,603
----------- -----------
Total liabilities 607,458 542,048
----------- -----------
Company-obligated mandatorily redeemable convertible securities of
Subsidiary holding solely parent debentures 110,000 110,000
Shareholders' equity
Common stock, $0.01 par value; 50,000,000 shares
authorized, 36,753,977 and 36,330,275 shares issued and
outstanding in 1999 and 2000, respectively 368 363
Additional paid-in capital 259,853 248,817
Foreign currency translation adjustment (20) (144)
Retained earnings 87,364 121,612
Deferred compensation on restricted stock (446) (391)
----------- -----------
Total shareholders' equity 347,119 370,257
----------- -----------
$ 1,064,577 $ 1,022,305
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
30
<PAGE> 31
CENTRAL PARKING CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
Amounts in thousands, except per share data
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------------------
1998 1999 2000
--------- --------- ---------
<S> <C> <C> <C>
Revenues:
Parking $ 534,573 $ 639,086 $ 628,666
Management contract 65,826 91,386 102,263
--------- --------- ---------
Total revenues 600,399 730,472 730,929
--------- --------- ---------
Costs and expenses:
Cost of parking 441,704 535,168 528,684
Cost of management contracts 15,000 27,740 36,270
General and administrative 63,726 77,312 71,946
Goodwill and non-compete amortization 8,317 11,607 12,120
Merger costs -- 40,970 3,747
--------- --------- ---------
Total costs and expenses 528,747 692,797 652,767
Property-related gains (losses), net (639) 3,006 935
--------- --------- ---------
Operating earnings 71,013 40,681 79,097
--------- --------- ---------
Other income (expenses):
Interest income 5,677 6,639 6,904
Interest expense (30,232) (26,951) (27,004)
Dividends on company-obligated mandatorily redeemable
convertible securities of a subsidiary trust (3,247) (5,926) (6,012)
Minority interest (1,939) (2,612) (3,334)
Equity in partnership and joint venture earnings 5,246 5,233 10,260
--------- --------- ---------
Earnings before income taxes and extraordinary item 46,518 17,064 59,911
Income tax expense:
Current 17,596 15,423 25,843
Deferred 2,777 (3,043) (2,566)
--------- --------- ---------
Total income taxes 20,373 12,380 23,277
Earnings before extraordinary item 26,145 4,684 36,634
Extraordinary item, net of tax -- (1,002) (195)
--------- --------- ---------
Net earnings $ 26,145 $ 3,682 $ 36,439
========= ========= =========
Basic earnings per share:
Earnings before extraordinary item $ 0.76 $ 0.13 $ 1.01
Extraordinary item, net of tax $ -- $ (0.03) $ (0.01)
Net earnings $ 0.76 $ 0.10 $ 1.00
Diluted earnings per share:
Earnings before extraordinary item $ 0.74 $ 0.13 $ 0.99
Extraordinary item, net of tax $ -- $ (0.03) --
Net earnings $ 0.74 $ 0.10 $ 0.99
</TABLE>
See accompanying notes to consolidated financial statements.
31
<PAGE> 32
CENTRAL PARKING CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
Amounts in thousands
<TABLE>
<CAPTION>
FOREIGN DEFERRED
ADDITIONAL CURRENCY COMPENSATION
NUMBER OF COMMON PAID-IN TRANSLATION RETAINED ON RESTRICTED
SHARES STOCK CAPITAL ADJUSTMENT EARNINGS STOCK TOTAL
---------- ------- ---------- ----------- --------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1997 32,782 $ 328 $ 111,728 $ 57 $ 61,571 $(570) $ 173,114
------- ----- --------- ----- --------- ----- ---------
Issuance of common stock for acquisitions 1,006 10 42,528 -- -- -- 42,538
Issuance of common stock, net of
offering and issuance costs 2,612 26 99,854 -- -- -- 99,880
Issuance under restricted stock
plan and employment agreements 3 -- 129 -- -- -- 129
Issuance under Employee Stock
Ownership Plan 67 1 926 -- -- -- 927
Common stock dividends -- -- -- -- (1,921) -- (1,921)
Exercise of stock options and
related tax benefits 52 1 1,240 -- -- -- 1,241
Amortization of deferred compensation -- -- -- -- -- 68 68
Comprehensive income:
Net earnings 26,145 26,145
Foreign currency translation adjustment -- -- -- (207) -- -- (207)
---------
Total comprehensive income 25,938
------- ----- --------- ----- --------- ----- ---------
Balance at September 30, 1998 36,522 $ 366 $ 256,405 $(150) $ 85,795 $(502) $ 341,914
------- ----- --------- ----- --------- ----- ---------
Allright equity adjustment to
conform fiscal years -- -- -- -- (20) -- (20)
Issuance under restricted stock
plan and employment agreements 1 -- 74 -- -- -- 74
Issuance under Employee Stock
Ownership Plan 48 -- 1,401 -- -- -- 1,401
Common stock dividends -- -- -- -- (2,093) -- (2,093)
Exercise of stock options and
related tax benefits 183 2 1,973 -- -- -- 1,975
Amortization of deferred compensation -- -- -- -- -- 56 56
Comprehensive income:
Net earnings -- -- -- -- 3,682 -- 3,682
Foreign currency translation adjustment -- -- -- 130 -- -- 130
---------
Total comprehensive income 3,812
------- ----- --------- ----- --------- ----- ---------
Balance at September 30, 1999 36,754 $ 368 $ 259,853 $ (20) $ 87,364 $(446) $ 347,119
------- ----- --------- ----- --------- ----- ---------
Issuance under restricted stock
plan and employment agreements 3 -- 48 -- -- -- 48
Issuance under Employee Stock
Ownership Plan 72 1 1,231 -- -- -- 1,232
Common stock dividends -- -- -- -- (2,191) -- (2,191)
Exercise of stock options and warrants and
related tax benefits 352 3 2,299 -- -- -- 2,302
Amortization of deferred compensation -- -- -- -- -- 55 55
Repurchase of common stock (851) (9) (14,614) -- -- -- (14,623)
Comprehensive income:
Net earnings -- -- -- -- 36,439 -- 36,439
Foreign currency translation adjustment -- -- -- (124) -- -- (124)
---------
Total comprehensive income 36,315
------- ----- --------- ----- --------- ----- ---------
Balance at September 30, 2000 36,330 $ 363 $ 248,817 $(144) $ 121,612 $(391) $ 370,257
======= ===== ========= ===== ========= ===== =========
</TABLE>
See accompanying notes to consolidated financial statements.
32
<PAGE> 33
CENTRAL PARKING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts in thousands
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------------
1998 1999 2000
--------- -------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Earnings before extraordinary item $ 26,145 $ 4,684 $ 36,634
Extraordinary item, net of tax -- (1,002) (195)
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization of property 15,063 22,872 23,192
Amortization of goodwill and non-compete agreements 8,317 11,607 12,120
Amortization of contract and lease rights,
straight-line rent, deferred financing fees and other 5,294 8,652 10,923
Equity in partnership and joint venture earnings (5,246) (5,233) (10,260)
Distributions from partnerships and joint ventures 4,369 5,149 10,039
Net (gains) losses on property-related activities 639 (3,006) (935)
Deferred income taxes 2,777 (3,043) (2,566)
Minority interest 1,939 2,612 3,334
Charge for Edison minority interest write-up -- 7,000 --
Tax benefit nonqualifying stock options 413 635 850
Changes in operating assets and liabilities, excluding effects of acquisitions:
Management accounts receivable (1,955) (13,441) 1,236
Accounts receivable - other 1,870 (5,432) 4,193
Prepaid rent (6,767) 1,708 5,923
Prepaid expenses - other 735 (1,673) 2,485
Prepaid and refundable income taxes 888 (4,108) 5,374
Other assets (321) (10,864) 2,728
Accounts payable, accrued expenses,
and deferred compensation 13,114 7,653 (8,810)
Management accounts payable 12,269 6,805 36
Income taxes payable (2,970) 3,226 4,108
--------- -------- ---------
Net cash provided by operating activities 76,573 34,801 100,409
--------- -------- ---------
Cash flows from investing activities:
Proceeds from disposition of property and equipment 6,975 25,252 28,881
Investments in (repayments of) notes receivable, net (395) (12,377) 10,130
Purchase of property, equipment,
and leasehold improvements (72,222) (38,000) (52,242)
Purchase of contract and lease rights (1,573) (43,338) (980)
Investments in and advances to partnerships,
joint ventures and unconsolidated subsidiaries (223) (219) (2,224)
Purchase of remaining interest in unconsolidated subsidiary -- (20,789) --
Acquisitions of companies, net of cash acquired (216,454) (785) (257)
Proceeds from maturities and calls of investments 374 712 537
Purchase of investments (707) (1,113) (827)
--------- -------- ---------
Net cash used by investing activities (284,225) (90,657) (16,982)
--------- -------- ---------
</TABLE>
33
<PAGE> 34
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------- --------
1998 1999 2000
--------- --------- --------
<S> <C> <C> <C>
Cash flows from financing activities:
Dividends paid (1,871) (1,986) (2,197)
Net borrowings (repayments) under revolving credit agreement (24,360) 98,677 (60,914)
Proceeds from issuance of company-obligated mandatorily
redeemable securities, net of issuance costs 106,477 -- --
Proceeds from issuance of notes payable,
net of issuance costs 125,137 263,615 13,300
Payment to minority interest partner -- (2,103) (3,338)
Principal repayments on notes payable (107,759) (302,413) (28,718)
Distribution of debt proceeds from partnerships and
joint ventures 30,285 -- --
Repurchase of common stock -- -- (14,623)
Proceeds from issuance of common stock and exercise
of stock options 101,764 2,813 2,732
--------- --------- --------
Net cash provided (used) by financing activities 229,673 58,603 (93,758)
--------- --------- --------
Foreign currency translation 166 178 (124)
--------- --------- --------
Net increase (decrease) in cash and cash equivalents 22,187 2,925 (10,455)
Cash and cash equivalents at beginning of period 17,308 39,495 53,669
Cash and cash equivalents derived from Allright merger -- 11,249 --
--------- --------- --------
Cash and cash equivalents at end of period $ 39,495 $ 53,669 $ 43,214
========= ========= ========
Non-cash transactions:
Purchase of property and equipment in exchange
for liabilities $ 1,314 $ -- $ --
Issuance of stock in acquisitions $ 42,538 $ -- $ --
Issuance of restricted stock $ 129 $ 74 $ 48
Purchase of lease rights and contract rights with notes payable $ -- $ -- $ 14,250
Effects of acquisitions:
Estimated fair value of assets acquired $ 94,718 $ 285 $ 365
Purchase price in excess of the net assets
acquired (goodwill) 233,333 500 355
Estimated fair values of liabilities assumed (62,587) -- (412)
Common stock issued (42,538) -- --
--------- --------- --------
Cash paid 222,926 785 308
Less cash acquired (6,472) -- (51)
--------- --------- --------
Net cash paid for acquisitions $ 216,454 $ 785 $ 257
========= ========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
34
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the
preparation of the accompanying consolidated financial statements follows:
(A) ORGANIZATION AND BASIS OF PRESENTATION
Central Parking Corporation ("CPC") is a United States company
chartered in the State of Tennessee. The consolidated financial statements
include accounts of Central Parking Corporation and its subsidiaries (the
"Company" or "Central Parking") including Central Parking System, Inc. ("CPS")
and its wholly-owned U.S. subsidiaries; Kinney System Holdings, Inc. and its
wholly-owned subsidiaries ("Kinney"); Central Parking System of the United
Kingdom, Ltd. and its wholly-owned subsidiary ("CPS-UK"); Central Parking System
Realty, Inc. and its wholly-owned subsidiaries ("Realty"); Allright Holdings,
Inc. and its wholly-owned subsidiaries ("Allright"), including Edison Parking
Management, L.P. ("Edison"), a 50% owned partnership under Allright control. The
results of operations of the remaining 50% of Edison are eliminated as a
minority interest. Central Parking Finance Trust was established during the year
ended September 30, 1998. All significant inter-company transactions have been
eliminated.
The accompanying consolidated financial statements have been restated
to reflect the impact of the merger between Central Parking and Allright, which
was consummated on March 19, 1999. The transaction constituted a tax-free
reorganization and has been accounted for as a pooling-of-interests under
Accounting Principles Board ("APB") Opinion No. 16. "Business Combinations."
Accordingly, Central Parking's financial statements have been restated to
reflect the combined results of operations, financial position and cash flows of
Central Parking and Allright as if Allright had been part of Central Parking
since Allright's inception date of October 31, 1996. Prior to the consummation
of the merger, Allright's fiscal year end was June 30. In recording the merger,
Allright's historical consolidated financial statements as of and for the year
ended June 30, 1998, have been combined with the Company's consolidated
financial statements as of and for the Company's fiscal years ended 1998. As a
result of conforming Allright's fiscal year with that of the Company's, the
historical results of operations of Allright for the three-month period ended
September 30, 1998 have been recorded directly to the Company's consolidated
shareholders' equity. In addition, the consolidated income tax provision has
been restated on a combined basis. The impact of the restatement was to decrease
net earnings by $533 thousand in 1998. There were no material transactions
between Central Parking and Allright prior to the Merger.
The Company provides parking consulting services and manages parking
facilities throughout the world, principally in the United States and United
Kingdom. The Company manages and operates owned or leased parking facilities,
manages and operates parking facilities owned or leased by third parties, and
provides financial and other advisory services to clients.
(B) REVENUES
Parking revenues include the parking revenues from leased and owned
locations. Management contract revenues represent revenues (both fixed and
performance based fees) from facilities managed for other parties, and
miscellaneous management fees for accounting, insurance and other ancillary
services such as consulting and transportation management services. Parking
revenues, fixed fee management contract revenues and miscellaneous management
fees are recognized when earned. Management contract revenues related to
performance based arrangements are accrued when it is deemed probable that such
amounts will be received.
Management accounts payable reflected on the accompanying consolidated
balance sheets is reflected net of cash. Such cash balances belong to the owners
of the various managed facilities, but they are held by the Company and are used
to pay expenses of the managed facilities and ultimately to settle the balance
due to the owners of the managed facilities.
(C) CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows, the Company considers
cash and cash equivalents to include cash on hand, in banks, and short-term,
highly liquid investments with original maturities of three months or less.
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<PAGE> 36
(D) INVESTMENTS
Investment securities consist of debt obligations of states and
political subdivisions and are classified into one of three categories, as
follows: (i) held-to-maturity debt securities, (ii) trading securities, and
(iii) securities available-for-sale. Classification of a debt security as
held-to-maturity is based on the Company's positive intent and ability to hold
such security to maturity. At September 30, 1999 and 2000, all of the Company's
investment securities were classified as held-to-maturity. Such securities are
stated at amortized cost adjusted for amortization of premiums and accretion of
discounts, unless there is a decline in value which is considered to be other
than temporary, in which case the cost basis of such security is written down to
fair value and the amount of the write-down is reflected in earnings.
(E) PROPERTY, EQUIPMENT, AND LEASEHOLD IMPROVEMENTS
Property, equipment, computer software, computer hardware, and
leasehold improvements are recorded at cost. Depreciation is provided
principally on a straight-line basis over a period of one to fifteen years for
furniture, fixtures, and equipment, over three years for computer software, over
five years for computer hardware, and over thirty to forty years for buildings.
Leasehold improvements are amortized over the remaining base lease term or the
estimated useful life of the asset, whichever is shorter.
(F) INVESTMENT IN PARTNERSHIPS AND JOINT VENTURES
The Company has a number of joint ventures to operate and develop
parking garages through either corporate joint ventures, general partnerships,
limited liability companies, or limited partnerships. The financial results of
the Company's joint ventures are generally accounted for under the equity method
and are included in equity in partnership and joint venture earnings in the
accompanying consolidated statements of earnings with the exception of Edison,
which is consolidated into the Company's financial statements, with the
remaining 50% eliminated through minority interest.
(G) INVESTMENT IN EDISON PARKING MANAGEMENT, L.P.
On June 1, 1997, Allright acquired a 50 percent controlling interest in
Edison. Edison's assets include management contracts contributed by the limited
partner, Park Fast Parking Management, L.P. ("Park Fast"), a third party. These
management contracts were recorded at their estimated fair market value and are
being amortized on a straight-line basis over their estimated lives, which
average 12 years.
In conjunction with the Company's merger with Allright, Allright
entered into a restructuring agreement whereby Allright loaned an additional
$9.9 million to the limited partner and amended certain other related
agreements. In addition, the parties agreed that the limited partner's capital
account would be increased to $29.4 million as of the effective date of the
restructuring, which coincided with the consummation date of the merger with
Allright. As a result of this increase in the limited partner's capital account,
the Company recorded a $7.0 million charge to operations concurrent with the
merger. Such charge is reflected in merger costs in the accompanying
consolidated statement of earnings for fiscal 1999.
(H) CONTRACT AND LEASE RIGHTS
Contract and lease rights consist of capitalized payments made to third
parties which provide the Company the opportunity to manage or lease facilities.
Contract and lease rights are allocated among respective locations and are
amortized principally on a straight-line basis over the terms of related
agreements which range from five to thirty years, or an estimated term
considering anticipated terminations and renewals.
(I) GOODWILL
Goodwill, which represents the excess of purchase price over fair value
of net assets acquired, is amortized on a straight-line basis over the expected
periods to be benefited, ranging from five to thirty years. The Company assesses
the recoverability of this intangible asset by determining whether the
amortization of the goodwill balance over its remaining life can be recovered
through undiscounted future operating cash flows of the acquired operation. The
amount of goodwill impairment, if any, is measured based on projected discounted
future operating cash flows using a discount rate reflecting the Company's
average cost of funds. The assessment of the recoverability of goodwill will be
impacted if estimated future operating cash flows are not achieved.
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<PAGE> 37
(J) OTHER ASSETS
Other assets is comprised of a combination of the cash surrender value
of key man life insurance policies, security deposits, key money deposits with
clients, deferred issuance costs related to the sale of Preferred Securities
discussed in Note 10, deferred debt issuance costs related to the Company's
credit facilities, and non-compete agreements. Key money represents deposits and
prepayments tendered to clients at the inception of long-term relationships, and
is amortized over the life of the applicable lease. Non-compete agreements are
amortized over the life of the agreement, or the economic useful life whichever
is shorter. Deferred issuance costs related to the Preferred Securities are
amortized over the 30-year life of the underlying subordinated debentures.
Deferred debt issuance costs are amortized over the life of the related debt.
(K) LEASE TRANSACTIONS AND RELATED BALANCES
The Company accounts for operating lease obligations and sublease
income on a straight-line basis. Contingent or percentage payments and receipts
are recognized when operations indicate such amounts will be paid or received.
Lease obligations paid in advance are included in prepaid rent. The difference
between actual lease payments and straight-line lease expenses over the lease
term is included in accrued expense or deferred rent, as appropriate. Rent
expense for all operating leases and rental income from subleases are reflected
in cost of parking, or general and administrative expenses.
In connection with its acquisitions, the Company revalued certain
leases to estimated fair market value at the time of the respective acquisition.
Favorable operating leases of entities acquired represent the present value of
the excess of the current market rental over the contractual lease payments.
Unfavorable operating leases of entities acquired represent the present value of
the excess of the contractual lease payments over the current market rental.
Such write-ups and write-downs are amortized on a straight-line basis over the
remaining life of the underlying lease, or 30 years, whichever is shorter.
Favorable and unfavorable lease rights are reflected on the accompanying
consolidated balance sheets in contract and lease rights and other liabilities,
respectively.
(L) PROPERTY-RELATED GAINS (LOSSES), NET
Property-related gains (losses), net reflected on the accompanying
consolidated statements of earnings include (i) realized gains and losses on the
sale of owned parking facilities assets, (ii) impairment of long-lived assets,
and (iii) costs incurred to terminate an existing parking facility lease prior
to its contractual termination date.
(M) IMPAIRMENT OF LONG-LIVED ASSETS
The Company accounts for long-lived assets in accordance with the
provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of." This Statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is the amount by
which the carrying amount of the assets exceeds the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying amount or the
fair value less the costs to sell.
The Company periodically reviews the carrying value of long-lived
assets to determine if the net book values of such assets continue to be
recoverable over the remainder of the original estimated useful life. In
performing this review for recoverability, the Company estimates the future cash
flows expected to result from the use of the asset and its eventual disposition.
If the sum of the expected net future cash flows (undiscounted and without
interest charges) is less than the carrying amount of the asset, an impairment
loss is recognized based on the estimated diminution of value. If the assets
involved are to be held and used in the operations of the Company, consideration
is also given to actions or remediations the Company might take in order to
achieve the original estimates of cash flows.
(N) INCOME TAXES
The Company files a consolidated federal income tax return. The Company
uses the asset and liability method to account for income taxes. Under this
method, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. Work opportunity tax credits are
accounted for by the flow-through method, which recognizes the credits as
reductions of income tax expense in the year utilized. The Company does not
provide for federal income taxes on the accumulated earnings considered
permanently reinvested in foreign subsidiaries.
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<PAGE> 38
(O) PRE-OPENING EXPENSES
The direct and incremental costs of hiring and training personnel
associated with the opening of new parking facilities and the associated
internal development costs are expensed as incurred.
(P) PER SHARE AND SHARE DATA
Basic earnings per share excludes dilution and is computed by dividing
income available to common shareholders by the weighted-average number of common
shares outstanding for the period. Diluted earnings per share reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the entity.
(Q) FOREIGN CURRENCY TRANSLATION
The financial position and results of operations of the Company's
foreign subsidiaries and equity method joint ventures are measured using local
currency as the functional currency. Translation adjustments arising from the
differences in exchange rates from period to period are generally included in
the currency translation adjustment in shareholders' equity.
(R) FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company discloses the fair values of on- and off-balance sheet
financial instruments for which it is practicable to estimate the value. Fair
value disclosures exclude certain financial instruments such as trade
receivables and payables when carrying values approximate the fair value. Fair
value disclosures are not required for employee benefit obligations, lease
contracts, and all non-financial instruments such as land, buildings and
equipment. The fair values of the financial instruments are estimates based upon
current market conditions and quoted market prices for the same or similar
instruments as of September 30, 2000. Book value approximates fair value for
substantially all of the Company's assets, liabilities and off-balance sheet
derivatives that fall under the fair value disclosure requirements.
(S) STOCK OPTION PLAN
The Company applies the intrinsic value based method of accounting
prescribed by Accounting Principles Board opinion No. 25 ("APB No. 25"),
"Accounting for Stock Issued to Employees," and related interpretations in
accounting for its stock options. As such, compensation expense would be
recorded on the date of grant only if the current market price of the underlying
stock exceeded the exercise price.
(T) BUSINESS CONCENTRATION
Approximately 41% of the Company's total revenues for fiscal year 2000
were attributable to parking and management contract operations geographically
located in the Northeastern area of the United States. See also Note 18.
(U) RISK MANAGEMENT
The Company utilizes a combination of indemnity and self insurance
coverages up to certain maximum losses for liability, health and workers'
compensation claims. The accompanying consolidated balance sheets reflect the
estimated losses related to such risks. These policies have deductibles which
must be met before the insurance companies are required to reimburse the Company
for costs and liabilities related to covered claims.
(V) USE OF ESTIMATES
Management of the Company has made certain estimates and assumptions
relating to the reporting of assets and liabilities to prepare these
consolidated financial statements in conformity with generally accepted
accounting principles. Actual results could differ from these estimates.
(W) RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
133 established reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts. Under SFAS No. 133,
the Company would recognize all derivatives as either assets or liabilities,
measured at fair value, in the statement of financial position. In July 1999,
SFAS No. 137 "Accounting for Derivative Instruments and Hedging Activities -
Deferral of Effective Date of FASB No. 133, An Amendment of FASB Statement No.
133" was issued deferring the effective date of SFAS 133 to fiscal years
beginning after June 15, 2000.
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<PAGE> 39
The Company must adopt the provisions of SFAS No. 133 and SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities,
an Amendment of FASB Statement No. 133," on October 1, 2000. On adoption, the
provisions of SFAS No. 133 and SFAS No. 138 must be applied prospectively. It is
estimated that adoption of SFAS No. 133 and SFAS No. 138 will result in the
Company recording a net transition loss of $402 thousand, net of related income
tax of $268 thousand, in accumulated other comprehensive income at October 1,
2000. Further, the adoption of SFAS No. 133 and SFAS 138 will result in the
Company reducing derivative instrument assets by $282 thousand and recording
$387 thousand of derivative instrument liabilities.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," effective for fiscal years
beginning after December 16, 1998. SOP 98-1 defines which costs incurred to
develop or purchase internal use software should be capitalized and which should
be expensed. The Company adopted this SOP in fiscal 2000. Such adoption did not
have a material impact on the consolidated financial statements.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements" ("SAB
101"). SAB 101 establishes specific criteria for revenue recognition. The
Company must adopt the provisions of SAB 101 no later than the fourth quarter of
fiscal 2001. The Company is in the process of evaluating whether this SAB will
have a material impact on the Company's revenue recognition and presentation
policies.
(X) RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the
current year presentation. Certain reclassifications have been made to
Allright's historical financial statements to conform to the Company's
presentation.
(2) BUSINESS COMBINATIONS
ALLRIGHT MERGER
On March 19, 1999, Central Parking completed a merger with Allright,
pursuant to which approximately 7.0 million shares of Central Parking common
stock and approximately 0.5 million options and warrants to purchase common
stock of Central Parking, were exchanged for all of the outstanding shares of
common stock and options and warrants to purchase common stock of Allright. The
transaction has been accounted for as a pooling-of-interests under APB Opinion
No. 16. Accordingly, Central Parking's consolidated financial statements have
been restated to reflect the combined results of operations, financial position
and cash flows of Central Parking and Allright as if Allright had been part of
Central Parking since October 31, 1996, the date of Allright's inception.
The Company incurred merger costs of approximately $41.0 million and
$3.7 million in fiscal 1999 and 2000, respectively, in connection with the
merger with Allright. These costs, which are directly attributable to the merger
and incremental to the combining companies, are recognized when incurred and are
reflected in the accompanying statement of earnings as merger costs. Included in
these costs are approximately $22.0 million for professional fees; comprised of
investment banking, legal, accounting, and consulting fees; $12.4 million
related to employment agreements and severance contracts; $7.0 million related
to the restructuring agreement with the limited partner of Edison (See Note
1(g)); and the balance of $3.3 million in travel, supplies, printing, and other
out of pocket costs. In connection with the merger, Allright entered into
certain employment and management continuity agreements with certain employees.
See Note 14.
Following are the results of operations for the separate companies
prior to the merger and the combined amounts presented in the consolidated
financial statements (in thousands):
YEAR ENDED SEPTEMBER 30,
1998
------------------------
Total revenue:
Central Parking $383,175
Allright 217,224
--------
$600,399
========
Earnings (loss) before income taxes and
extraordinary item:
Central Parking $ 44,224
Allright 2,294
--------
$ 46,518
========
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PURCHASE ACQUISITIONS
NATIONAL GARAGES, INC.
On December 1, 1997, Allright purchased substantially all of the assets
of National Garages, Inc. ("National"), a privately owned parking company based
in Detroit, which operated facilities located primarily in the Midwestern United
States. The purchase price of approximately $3.7 million was paid in cash and
financed through working capital and $2.2 million in debt under Allright's
previous revolving line of credit.
KINNEY SYSTEM HOLDING CORP.
On February 12, 1998, Central Parking acquired Kinney System Holding
Corp ("Kinney"), a privately held parking company headquartered in New York
City, for approximately $208.8 million, including $171.8 million in cash and
$37.0 million (882,422 shares) in Central Parking common stock. In connection
with this transaction, Central Parking assumed $10.3 million in capital leases,
refinanced $24.2 million in existing Kinney debt and assumed $4.6 million of
Kinney debt. Central Parking financed the Kinney acquisition through borrowings
under the Company's credit facility, and ultimately from the issuance of Central
Parking common stock and Central Parking obligations pursuant to the Trust
Issued Preferred Securities. Kinney operated parking facilities' in the New York
City metropolitan area, Boston, Philadelphia and Washington, D.C. The
acquisition was accounted for as a purchase and the results of operations are
included in the Company's consolidated financial statements from February 12,
1998. The excess of purchase price over the fair value of net assets acquired of
$197.6 million is being amortized on a straight-line basis over 30 years.
In connection with the Kinney acquisition, the remaining 50% interest
in Spectrum Parking Associates ("Spectrum") was acquired for $3.6 million. The
acquisition was accounted for as a purchase and the results of operations are
included in the Company's consolidated financial statements from February 13,
1998. The excess of purchase price over the fair value of net assets acquired of
$2.2 million is being amortized on a straight-line basis over 18 years.
CENTRAL PARKING SYSTEM OF LOUISIANA, INC.
Central Parking had historically owned 50% of Central Parking System of
Louisiana ("CPS-Louisiana") and on March 30, 1998, purchased the remaining 50%
from Property Service Corporation for $2.5 million in Central Parking common
stock (52,631 shares). The acquisition was accounted for as a purchase and,
accordingly, the purchase price has been allocated to CPS-Louisiana assets and
liabilities. The excess of purchase price over fair value of net assets acquired
of $2.5 million is being amortized on a straight-line basis over 5 years.
TURNER PARKING SYSTEM, INC.
On April 1, 1998, Central Parking purchased substantially all of the
assets of Turner Parking System, Inc. ("Turner"), a privately-held parking
company headquartered in Dallas, Texas, for $3.8 million, including $3.0 million
in cash and $800 thousand (16,842 shares) in Central Parking common stock.
Turner operated parking facilities in Texas, Florida, California, Georgia, and
Washington, D.C. The results of operations are included in the Company's
consolidated financial statements from April 1, 1998. The acquisition was
accounted for as a purchase and, accordingly, the purchase price has been
allocated to Turner's assets and liabilities. The excess of purchase price over
fair value of net assets acquired of $3.7 million is being amortized on a
straight-line basis over 10 years.
STERLING PARKING, INC.
On July 1, 1998, Central Parking purchased substantially all of the
assets of Sterling Parking, Inc. ("Sterling"), a privately-held parking company
headquartered in Atlanta, Georgia for $4.3 million, including $2.1 million in
cash and $2.2 million (54,358 shares) in Central Parking common stock. Sterling
operated parking facilities in Georgia, Florida, Virginia, California, and
Kentucky. The results of operations are included in the Company's consolidated
financial statements from July 1, 1998. The acquisition was accounted for as a
purchase and, accordingly, the purchase price has been allocated to Sterling's
assets and liabilities. The excess of purchase price over fair value of net
assets acquired of $4.5 million is being amortized on a straight-line basis over
10 years.
ALLIED PARKING
On October 1, 1998, Allright purchased from Allied Parking, Inc.
("Allied") four leases relating to parking facilities in New York City, with
maturities ranging from 2006 to 2029 for approximately $14.2 million. Allied
agreed to lease to Allright two more lots for 19 years, each in exchange for a
note receivable of $4.9 million, secured by an assignment of rents. Allright
also purchased the right to use the "Allied Parking" name associated with these
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leases for $835 thousand. On November 8, 1998, Allright purchased six additional
leases from Allied Parking with maturities ranging from 1999 to 2008 for $5.1
million. Allright also purchased the right to use the "Allied Parking" name
associated with these leases for $300 thousand. During April 1999, the Company
purchased an additional lease from Allied Parking which matures in 2020 for $3.0
million, and also purchased the right to use the "Allied Parking" name
associated with it as part of the purchase price.
NEW YORK PARTNERSHIP
On May 28, 1999 the Company purchased the remaining 60% interest in a
partnership, a limited liability company, which operates a parking facility in
New York City for $20.5 million in cash. The Company previously owned 40% of the
partnership. The previous partner will continue to manage the garage through
June 2006.
ARIZONA STADIUM PARKING GARAGE, LLC
In October 1999, the Company purchased the remaining 50% interest in
Arizona Stadium Parking Garage LLC, a limited liability company that manages the
parking activities for the Arizona stadium, for approximately $1.5 million in
cash. The Company previously owned 50% of the LLC. In accordance with the
partnership agreement, the Company was required to repay the outstanding note
payable and incurred approximately $195 thousand of expenses, net of tax,
related to early extinguishments of debt. This expense has been accounted for as
an extraordinary loss.
BLACK ANGUS GARAGE
On March 15, 2000, a LLC of which the Company is the sole shareholder
purchased the Black Angus Garage, a multi-level structure with 300 parking
stalls, located in New York City for $19.6 million in cash. $13.3 million of the
purchase was financed with a five-year note. The remainder was financed from
borrowings under the new credit facility.
CONTRACT AND LEASE RIGHTS
The Company entered into an agreement effective June 1, 2000 to acquire
certain lease and contract rights for approximately $14.3 million. The
transaction was financed by the seller with a two-year obligation due in 2002.
The lease rights are being amortized over 17 years, the remaining term of the
lease, and the contract rights are being amortized over 3.5 years.
Pro forma results of acquisitions for fiscal 1999 and 2000 are not
presented because the impact of acquisitions to reported results is not
significant.
(3) NOTES RECEIVABLE
In connection with the Kinney acquisition, the Company acquired a note
receivable from the City of New York (the "City") related to two parking garages
which were built on behalf of the City. The Company also has a long-term
management agreement to operate the parking garages. Amounts advanced for the
construction of the garages were recorded as a note receivable and are being
repaid by the City in monthly installments of $156 thousand including interest
at 8.0% through December 2007. In connection with the purchase, the note
receivable was recorded at estimated fair value. At September 30, 2000, the book
value of the note receivable was $10.6 million.
In June 1997, Allright loaned the limited partner of Edison $16.5
million in connection with Allright's acquisition of its general partnership
interest in Edison. In conjunction with the merger of Allright and Central
Parking, the partnership agreement was restructured and an additional $9.9
million was advanced to the limited partner. The amended note receivable totals
$26.4 million and bears interest at 10%. The note matures June 1, 2006 and is
secured by a pledge of, and security interest in, the limited partner's
partnership interest in Edison.
In connection with the Allright merger, the Company acquired a mortgage
note of $2.5 million, bearing interest at 7.7%, from a partnership which is
secured by a parking garage and rental assignments. The loan is a balloon note
which matures in August 2010. In connection with the acquisition of Allied, the
Company obtained notes receivables totaling $4.9 million, secured by an
assignment of rents from the properties being leased. The notes are payable
monthly and bear interest at the rate of 7.0%.
The remainder of the notes receivable consist of notes ranging from $10
thousand to $1.5 million at the end of fiscal 1999, and notes ranging from $10
thousand to $1.1 million at the end of fiscal 2000. The notes bear interest at
rates ranging from 7.2% to 12.0% at the end of fiscal 2000.
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(4) INVESTMENTS
The amortized cost, gross unrealized gains, gross unrealized losses,
and approximate fair values for such securities are presented as follows (in
thousands):
SEPTEMBER 30,
------------------------
1999 2000
------- -------
Amortized cost $ 5,488 $ 5,778
Unrealized gains 67 96
Unrealized losses (75) (99)
------- -------
Fair value $ 5,480 $ 5,775
======= =======
The amortized cost and approximate fair value of debt securities at
September 30, 2000 by average estimated maturity are shown below (in thousands):
AMORTIZED COST FAIR VALUE
-------------- ----------
Due in one year or less $ 571 $ 576
Due after one year through five years 1,493 1,509
Due after five years through ten years 2,055 2,065
Due after ten years 1,659 1,625
------ ------
Total securities $5,778 $5,775
====== ======
(5) PROPERTY, EQUIPMENT, AND LEASEHOLD IMPROVEMENTS
A summary of property, equipment, and leasehold improvements and
related accumulated depreciation and amortization is as follows (in thousands):
SEPTEMBER 30,
------------------------
1999 2000
-------- --------
Leasehold improvements $ 38,579 $ 41,328
Buildings and garages 72,302 73,296
Operating equipment 52,907 59,470
Furniture and fixtures 5,101 5,603
Capital leases 5,096 4,359
Aircraft 4,250 4,250
-------- --------
$178,235 $188,306
Less accumulated depreciation and amortization 46,667 63,817
-------- --------
131,568 124,489
Land 289,522 308,344
-------- --------
Property, equipment and
leasehold improvements, net $421,090 $432,833
======== ========
(6) INTANGIBLE AND OTHER ASSETS
Contract and lease rights consist of (in thousands):
SEPTEMBER 30,
----------------------------
1999 2000
-------- --------
Contract and lease rights $115,535 $121,047
Less accumulated amortization 18,377 24,440
-------- --------
Contract and lease rights, net $ 97,158 $ 96,607
======== ========
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Goodwill at September 30, 1999 and 2000 consists of (in thousands):
SEPTEMBER 30,
----------------------
1999 2000
-------- --------
Excess of purchase price over net assets acquired $298,831 $297,252
Less accumulated amortization 21,031 32,496
-------- --------
Goodwill, net $277,800 $264,756
======== ========
Amortization of goodwill amounted to $8.0 million, $11.1 million, and $11.4
million for the years ended September 30, 1998, 1999, and 2000, respectively.
Included in other assets are unamortized balances related to non-competition
agreements of $1.9 million at September 30, 1999 and $1.3 million at September
30, 2000.
(7) PROPERTY-RELATED GAINS (LOSSES), NET
The Company routinely disposes of owned properties due to various
factors, including economic considerations, unsolicited offers from third
parties and condemnation proceedings initiated by local government authorities.
Leased properties are also periodically evaluated and determinations may be made
to sell or exit a lease obligation. Additionally, during the years ended
September 30, 1999 and 2000, the Company divested certain owned and leased
parking facilities pursuant to a settlement agreement with the Antitrust
Division of the United States Department of Justice (the "DOJ") in connection
with the merger with Allright.
A summary of property-related gains and losses for the years ended
September 30, 1998, 1999 and 2000 is as follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
---------------------------------
1998 1999 2000
----- ------- -------
<S> <C> <C> <C>
Net gains (losses) on sale of property $(639) $ 4,222 $ 6,129
Impairment charges for property, plant and equipment -- (1,216) (729)
Impairment charges for contract rights and lease rights -- -- (4,080)
Lease termination costs -- -- (385)
----- ------- -------
Total property-related gains (losses), net $(639) $ 3,006 $ 935
===== ======= =======
</TABLE>
In fiscal 1999, the Company recognized an impairment charge of
approximately $1.2 million related to a parking facility the Company was in the
process of selling. The impairment charge was based on a sales contract entered
into in fiscal 1999. The transaction closed in early fiscal 2000. Impairment
charges recognized in fiscal 2000 include $3.3 million attributable to assets
subsequently disposed of during the year. These impairment charges were derived
using estimates of net realizable values. The remaining $1.5 million impairment
charge was attributable to assets held for use, and was based on estimated fair
value using estimated cash flows of the applicable parking facility discounted
at the Company's average cost of funds.
(8) INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS AND JOINT VENTURES
The following tables reflect the financial position and results of
operations for the partnerships and joint ventures as of September 30, 1999 and
2000, and for the three years ended September 30, 2000 (in thousands):
<TABLE>
<CAPTION>
INVESTMENT IN AND ADVANCES
ACCUMULATED LOSSES IN TO PARTNERSHIPS
PARTNERSHIPS AND AND JOINT
JOINT VENTURES VENTURES
----------------------- ------------------
1999 2000 1999 2000
-------- -------- ------ ------
<S> <C> <C> <C> <C>
Civic Parking, LLC $ 14,439 $ 14,607 $ -- $ --
Commerce Street Joint Venture (898) (944) 688 668
Larimer Square Parking Associates 1,003 1,030 2,022 1,781
Lodo Parking Garage 1,200 1,164 -- --
Arizona Stadium Parking Garage, LLC 1,540 -- -- --
CPS Mexico 1,615 2,608 3,222 4,402
157166 Canada, Inc. (46) (49) 1,150 1,143
Walnut-12 932 -- -- --
Capital Commons 557 -- -- --
Other 3,438 3,438 1,356 458
-------- -------- ------ ------
$ 23,780 $ 21,854 $8,438 $8,452
======== ======== ====== ======
</TABLE>
43
<PAGE> 44
<TABLE>
<CAPTION>
EQUITY IN PARTNERSHIPS AND JOINT VENTURES
JOINT VENTURES EARNINGS DEBT
---------------------------------- --------------------
1998 1999 2000 1999 2000
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Civic Parking, LLC $ 2,383 $ 1,844 $ 2,068 $59,060 $58,370
Commerce Street Joint Venture 602 584 658 7,058 6,759
Larimer Square Parking Associates 103 164 239 3,137 3,027
12 West 48th Street, LLC 548 510 -- -- --
Lodo Parking Garage 145 203 269 -- --
Arizona Stadium Parking Garage, LLC 230 20 -- 1,969 --
CPS Mexico 505 638 991 -- --
157166 Canada, Inc. (4) 5 5 -- --
Walnut-12 164 158 -- -- --
Capital Commons 227 425 5,417 -- --
Other 343 682 613 4,343 --
------- ------- ------- ------- -------
$ 5,246 $ 5,233 $10,260 $75,567 $68,156
======= ======= ======= ======= =======
</TABLE>
(A) CIVIC PARKING, LLC
The Company has a 50% joint venture ownership in Civic Parking LLC
("Civic") which owns four parking garages and retail space in St.
Louis, Missouri. The Company's results of operations include 50% of the
net earnings of Civic for the periods presented.
In March 1998, Civic obtained financing with a financial
institution for approximately $60 million. Civic distributed the loan
proceeds to its shareholders, and as a result, Central Parking received
in 1998 net proceeds of $30.3 million from this transaction, which
reduced the Company's carrying value of its investment in partnerships
and joint ventures. Unaudited summary information for Civic Parking is
as follows (in thousands):
SEPTEMBER 30,
-----------------------
1999 2000
-------- --------
Financial position:
Land, property and equipment, net $ 88,304 $ 87,709
Cash 1,121 1,132
Other assets 344 493
Liabilities (60,567) (59,499)
-------- --------
Net assets $ 29,202 $ 29,835
======== ========
YEAR ENDED SEPTEMBER 30,
-----------------------
1999 2000
-------- --------
Results of operations:
Revenue $ 10,038 $ 10,889
Cost of operations 6,704 6,603
-------- --------
Net earnings $ 3,334 $ 4,286
======== ========
Distributions to Central Parking $ 2,313 $ 1,900
======== ========
(B) COMMERCE STREET JOINT VENTURE REALTY
Commerce Street Joint Venture Realty, a subsidiary of Central
Parking Corporation, has a 50% interest in a joint venture that owns a
parking complex in Nashville, Tennessee. The complex consists of the
original parking garage and retail space (the "Original Facility") and
an addition to the parking garage (the "Addition") constructed several
years after the completion of the Original Facility.
44
<PAGE> 45
The joint venture financed the Original Facility with industrial
development bonds in the original principal amount of $8.6 million (the
"Series A Bonds") issued by The Industrial Development Board of the
Metropolitan Government of Nashville and Davidson County (the "Metro
IDB"). The Metro IDB holds title to the Original Facility, which it
leases to the joint venture under a lease expiring in 2016. The lease
of the Original Facility obligates the venture to make lease payments
corresponding to principal and interest payable on Series A Bonds and
provides the venture with an option to purchase the Original Facility
at any time by paying the amount due under the Series A Bonds and
making a nominal purchase payment to the Metro IDB.
Also included in investments in and advances to partnerships and
joint ventures are the Series B Bonds purchased in April 1994 relating
to the Commerce Street Joint Venture in the amounts of $688 thousand
and $668 thousand at September 30, 1999 and 2000, respectively. The
Bonds require monthly interest and principal payments at the index rate
(prime) plus 250 basis points (12% at September 30, 2000) through 2009.
The minimum interest rate is 9.5% and the maximum interest rate is 12%.
The Bonds are secured by a mortgage on the project which is subordinate
to the industrial development bonds. The remainder of the Series B
Bonds are owned by the other joint venture partner.
(C) LARIMER SQUARE PARKING ASSOCIATES
The Company owns a 50% interest in a joint venture that owns a
parking complex in Denver, Colorado. The complex, which was completed
in February 1996, was constructed and financed by the joint venture
partners. The Company invested $991 thousand in the joint venture and
loaned the joint venture $1.1 million in the form of a construction
note, bearing interest at 9.5%, which was converted to a term note in
August 1996, following completion of the project. An additional $1.4
million was loaned by the Company which will be repaid through sales
tax and property tax revenues by the Denver Urban Renewal Authority at
an interest rate of 10%. The Company manages the parking facility for
the venture.
(D) 12 WEST 48TH STREET, LLC
In connection with the Kinney acquisition, the Company acquired a
40% interest in a limited liability company which owns and operates a
garage and two adjacent buildings in New York City. During 1999, the
Company purchased the remaining 60% interest in the limited liability
company for $20.5 million in cash. The previous partner will continue
to manage the garage through June 2006.
(E) LODO PARKING GARAGE, LLC
In March 1995, the Company acquired a 50% interest in a joint
venture which holds a parking complex in Denver, Colorado. The Company
invested $1.4 million in the joint venture and manages the parking
facility for the joint venture.
(F) ARIZONA STADIUM PARKING GARAGE, LLC
The Company owned a 50% interest in a joint venture which
constructed the Arizona Diamondback Stadium Parking Garage. The Company
operated this parking facility for the joint venture. The Company
purchased the remaining interest in this partnership in October 1999
for $1.5 million.
(G) CPS MEXICO, INC.
The Company holds a 50% interest in a Mexican joint venture which
manages and leases various parking structures in Mexico. The Company
also has advanced $3.2 million and $4.4 million at September 30, 1999
and 2000, respectively, to the affiliate. These loans bear interest
between 10% and 15% and require principal payments over various terms
through 2008.
(H) 157166 CANADA, INC.
In September 1998, the Company acquired a 50% interest in a
Canadian joint venture which holds a parking facility in Montreal,
Quebec. The Company operates this parking facility for the joint
venture.
(I) CAPITAL COMMONS
The Company held a 50% limited partnership interest in this
partnership. In fiscal 2000, the Company recorded to equity in
partnership and joint venture earnings a $5 million gain due to the
sale of a property by Capital Commons. The partnership was terminated
subsequent to this transaction.
45
<PAGE> 46
(9) LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
Long-term debt and capital lease obligations consisted of the following
(in thousands):
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
-------------------------
1999 2000
--------- ---------
<S> <C> <C>
New Credit Facility
Term note payable $ 200,000 $ 175,000
Revolving credit facility 149,100 90,400
Other notes payable 6,715 33,472
Capital lease obligations 13,348 10,423
--------- ---------
Total 369,163 309,295
Less: current maturities of long-term obligations (31,682) (55,760)
--------- ---------
Total long-term obligations $ 337,481 $ 253,535
========= =========
</TABLE>
On March 19, 1999, the Company established a new credit facility (the
"New Credit Facility") providing for an aggregate availability of up to $400
million consisting of a five-year $200 million revolving credit facility
including a sub-limit of $25 million for standby letters of credit, and a $200
million five-year term loan. The principal amount of the term loan shall be
repaid in quarterly payments of $12.5 million commencing June 30, 2000 and
continuing until the loan is repaid. Interest is payable on borrowings under the
New Credit Facility, at the election of the Company, at either a "Base Rate" or
a "Eurodollar Rate" (each as defined in the New Credit Facility agreement), plus
a grid based margin based upon the Company achieving certain financial ratios
(prior to and including June 30, 1999, borrowings under the New Credit Facility
were fixed at either prime rate plus 0.5% or LIBOR plus 1.125%). The Company
used the New Credit Facility to replace the Company's previous credit facility
and to refinance the existing debt of Allright. The amount outstanding under the
Company's New Credit Facility as of September 30, 2000 is $265.4 million with a
weighted average interest rate of 7.72%. Borrowings under the New Credit
Facility are unsecured.
The New Credit Facility contains covenants including those that require
the Company to maintain certain financial ratios, restrict further indebtedness
and limit the amount of dividends paid. On December 28, 1999 the Company entered
into an amendment and waiver to the New Credit Facility agreement relating to
the waiver of non-compliance with certain loan covenants at September 30, 1999.
This amendment and waiver contains, among other things, provisions for up-front
fees of $700 thousand, which are being amortized over the life of the New Credit
Facility. The grid based interest rate margin was not affected by the amendment
and continues to be based upon the Company achieving certain revised financial
ratios.
On February 14, 2000, the Company entered into an amendment and
restatement to the New Credit Facility agreement primarily to allow the Company
to repurchase up to $50 million in outstanding shares of its common stock. This
amendment and restatement also contains provisions for up front fees of $681
thousand, which are being amortized over the life of the New Credit Facility.
Interest rates were not affected by this amendment.
The Company is required under the New Credit Facility to enter into
certain interest rate protection agreements designed to fix interest rates on
variable rate debt and reduce exposure to fluctuations in interest rates. On
October 27, 1999, the Company entered into a $25 million interest rate swap for
a term of four years, cancelable after two years at the option of the
counterparty, under which the Company will pay to the counterparty a fixed rate
of 6.16%, and the counterparty will pay to the Company a variable rate equal to
LIBOR. The transaction involved an exchange of fixed rate payments for variable
rate payments and does not involve the exchange of the underlying nominal value.
On March 31, 2000, June 29, 2000, and again on September 29, 2000, the Company
entered into $25 million interest rate cap agreements. The rate is 8.0% for the
first two cap agreements and 8.5% for the last cap agreement and each has a term
consistent with the New Credit Facilities. The Company paid a total of $646
thousand for the three $25 million cap agreements. The cost of the instruments
is being amortized over the terms of the agreements.
On March 15, 2000, a limited liability company ("LLC") of which the
Company is the sole shareholder purchased the Black Angus Garage, a multi-level
structure with 300 parking stalls, located in New York City, for $19.6 million.
$13.3 million of the purchase was financed through a five-year note bearing
interest at one month floating LIBOR plus 162.5 basis points. Under terms of the
note payable, the Company's monthly principal and interest payments approximate
46
<PAGE> 47
$210 thousand. The $12.7 million principal balance remaining at the end of the
five-year loan term will be due in full. To fix the interest rate, the Company
entered into a five-year LIBOR swap, yielding an effective interest cost of
8.91% for the five-year period. The parent company has guaranteed $1 million of
the debt, which otherwise would have no recourse except to the LLC. The
remainder of the purchase price was financed from borrowings from the New Credit
Facility.
On May 12, 2000, the Company entered into an agreement effective June
1, 2000, to acquire certain contract and lease rights for approximately $14.3
million. The transaction was financed by the seller with a two-year obligation
due June 2002 at an interest rate of 7.32% and is backed by a letter of credit
in the amount of $15 million. Interest is payable monthly.
The Company also has several notes payable outstanding totaling $6.7
million at September 30, 2000. These notes are secured by real estate and
equipment and bear interest at rates ranging from 6.1% to 10.0%.
The Company had previously established a credit facility (the "Previous
Credit Facility") providing for an aggregate availability of up to $300 million,
consisting of a five-year $200 million revolving credit facility, including a
sub-limit of $25 million for standby letters of credit, and a $100 million term
loan. The $100 million term loan was repaid with proceeds from securities
offerings completed in March 1998, and the remaining balance of the revolving
credit facility was repaid with proceeds from the New Credit Facility.
In October 1996, Allright entered into a credit agreement for the
purpose of financing the purchase of Allright Corporation ("CFSB Term Loan").
Additionally, in October 1996, Allright defeased all of its Industrial
Development Revenue Bonds (IRBs) in the amount of $17.9 million and recorded an
extraordinary loss of $1.0 million, net of tax. At September 30, 2000,
approximately $10.2 million of the IRB's remain outstanding in a trust secured
by U.S. Treasury Bills which were used to defease these instruments. The CFSB
Term Loan was repaid upon consummation of the merger of Allright and the Company
from proceeds of the New Credit Facility, described above. In connection with
the repayment of such amounts, the Company recognized an extraordinary loss of
$1.0 million, net of tax in fiscal 1999.
Allright had a revolving line of credit (Permitted Acquisition Loan)
with a maximum borrowing capacity of $75 million, maturing October 30, 1999.
Allright also had a revolving line of credit and letter of credit agreement
("revolver") with a maximum borrowing capacity of $5.1 million, maturing October
1, 1999. The revolver and permitted acquisition facilities were terminated in
conjunction with the merger.
Future maturities under long-term debt arrangements are as follows (in
thousands):
YEAR ENDED
SEPTEMBER 30,
-------------
2001 $ 52,670
2002 50,450
2003 50,470
2004 64,760
2005 50,484
Thereafter 30,038
-----------
$ 298,872
===========
In connection with the Kinney acquisition, the Company assumed an
agreement whereby a parking structure and the corresponding land upon which it
sits are leased under a long-term arrangement. The parking structure is
accounted for as a capital lease, and the underlying land is accounted for as an
operating lease. The original agreement called for lease payments over a
twenty-year term at a 17.4% interest rate. In connection with purchase
accounting, the carrying value of the related obligation was recorded at fair
value. The carrying amount of the capital lease obligation at September 30, 2000
was $6.2 million, bearing interest at a rate of 8.0% per annum and requiring
monthly payments of approximately $177,000 per month. The operating lease
requires a payment of approximately $183,000 per month. The lease agreements run
through December 2003.
47
<PAGE> 48
The future minimum lease payments under all capital lease obligations
are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
-------------
<S> <C>
2001 $ 3,952
2002 3,528
2003 2,891
2004 1,083
2005 421
Thereafter 818
-----------
$ 12,693
Less interest portion at rates ranging from 6.3% to 12.9% (2,270)
Less current portion (3,090)
-----------
$ 7,333
===========
</TABLE>
(10) CONVERTIBLE TRUST ISSUED PREFERRED SECURITIES OFFERINGS
On March 18, 1998, the Company created Central Parking Finance Trust
("Trust") which completed a private placement of 4,400,000 shares at $25.00 per
share of 5.25% convertible trust issued preferred securities ("Preferred
Securities") pursuant to an exemption from registration under the Securities Act
of 1933, as amended. The Preferred Securities represent preferred undivided
beneficial interests in the assets of Central Parking Finance Trust, a statutory
business trust formed under the laws of the State of Delaware. The Company owns
all of the common securities of the Trust. The Trust exists for the sole purpose
of issuing the Preferred Securities and investing the proceeds thereof in an
equivalent amount of 5.25% Convertible Subordinated Debentures ("Convertible
Debentures") of the Company due 2028. The net proceeds to the Company from the
Preferred Securities private placement were $106.5 million. Each Preferred
Security is entitled to receive cumulative cash distributions at an annual rate
of 5.25% (or $1.312 per share) and will be convertible at the option of the
holder thereof into shares of Company common stock at a conversion rate of
0.4545 shares of Company common stock for each Preferred Security (equivalent to
$55.00 per share of Company common stock), subject to adjustment in certain
circumstances. The Preferred Securities do not have a stated maturity date but
are subject to mandatory redemption upon the repayment of the Convertible
Debentures at their stated maturity (April 1, 2028) or upon acceleration or
earlier repayment of the Convertible Debentures.
The Company's consolidated balance sheets reflect the Preferred
Securities of the Trust as company-obligated mandatorily redeemable convertible
securities of subsidiary holding solely parent debentures.
(11) SHAREHOLDERS' EQUITY
In connection with Allright's acquisition of Allright Corporation in
October 1996, warrants to purchase 1,177 shares of Allright common stock at
$0.01 exercise price were issued. The fair value of the warrants on the date of
grant, estimated at $1,177,000, was recorded as additional purchase
consideration in the formation of Allright. As a result of the Company's merger
with Allright, such warrants represent rights to acquire 103,148 shares of
Central Parking common stock. Such warrants were exercised in fiscal 2000.
The following tables set forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1999 SEPTEMBER 30, 2000
----------------------------- ------------------------------ ------------------------------
INCOME COMMON INCOME COMMON INCOME COMMON
AVAILABLE SHARES PER-SHARE AVAILABLE SHARES PER-SHARE AVAILABLE SHARES PER-SHARE
($000'S) (000'S) AMOUNT ($000'S) (000'S) AMOUNT ($000'S) (000'S) AMOUNT
--------- ------ --------- --------- ------ --------- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Basic earnings per
share before
extraordinary item $26,145 34,618 $0.76 $4,684 36,349 $0.13 $36,634 36,365 $1.01
Effects of dilutive stock
and options:
Stock option plan
and warrants -- 474 (0.02) -- 466 -- -- 186 (0.01)
Restricted stock plan -- 172 -- -- 173 -- -- 184 (0.01)
Deferred stock unit plan -- 9 -- -- 30 -- -- 71 --
Employee stock
purchase plan -- 39 -- -- 38 -- -- 45 --
------- ------ ----- ------ ------ ----- ------- ------ -----
Diluted earnings per
share before
extraordinary item $26,145 35,312 $0.74 $4,684 37,056 $0.13 $36,634 36,851 $0.99
======= ====== ===== ====== ====== ===== ======= ====== =====
</TABLE>
48
<PAGE> 49
Weighted average common shares used for the computation of basic
earnings per share excludes certain common shares issued pursuant to the
Company's restricted stock plan and deferred compensation agreement, because
under the related agreements the holders of restricted stock will forfeit such
shares if certain employment or service requirements are not met. The effect of
the conversion of the company-obligated mandatorily redeemable securities of the
subsidiary trust has not been included in the diluted earnings per share
calculation since such securities were anti-dilutive for all periods. At
September 30, 2000, such securities were convertible into 2,000,000 shares of
common stock. Options to acquire 60,585, 481,573 and 992,352 shares of common
stock were excluded from the 1998, 1999 and 2000 diluted earnings per share
calculations, respectively, because they were antidilutive.
(12) OPERATING LEASE COMMITMENTS
The Company and its subsidiaries conduct a portion of their operations
on leased premises under operating leases expiring at various dates through
2101. Lease agreements provide for minimum payments or contingent payments based
upon a percentage of revenue or, in some cases, a combination of both types of
arrangements. Certain locations additionally require the Company and its
subsidiaries to pay real estate taxes and other occupancy expenses.
Future minimum rental commitments under operating leases and subleases are as
follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------
FIXED SUB-RENTAL NET
RENT INCOME RENT
--------------- ---------------- ---------------
<S> <C> <C> <C>
2001 $ 186,298 $ 5,548 $ 180,750
2002 151,892 4,725 147,167
2003 123,471 4,139 119,332
2004 106,082 3,273 102,809
2005 93,725 2,937 90,788
Thereafter 541,926 9,851 532,075
--------------- ---------------- ---------------
Total future operating lease commitments $ 1,203,394 $ 30,473 $ 1,172,921
=============== ================ ===============
</TABLE>
Rental expense for all operating leases and rental income from subleases were as
follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------------
1998 1999 2000
--------------- ----------- -----------
<S> <C> <C> <C>
Rentals:
Minimum $ 206,241 $ 256,751 $ 249,859
Contingent 60,989 74,771 74,547
--------------- ----------- -----------
Total rent expense 267,230 331,522 324,406
Less sub-lease income 8,433 12,648 13,289
--------------- ----------- -----------
Total rent expense, net $ 258,797 $ 318,874 $ 311,117
=============== =========== ===========
</TABLE>
49
<PAGE> 50
(13) INCOME TAXES
Income tax expense consists of the following (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------------
1998 1999 2000
--------------- ----------- -----------
<S> <C> <C> <C>
Current:
Federal $ 13,593 $ 12,781 $ 22,309
Jobs credit, net of federal tax benefit (247) (325) (325)
--------------- ----------- -----------
Net federal current tax expense 13,346 12,456 21,984
State 3,251 1,355 2,428
Non-U.S 999 1,612 1,431
--------------- ----------- -----------
17,596 15,423 25,843
--------------- ----------- -----------
Deferred:
Federal and state 2,780 (3,043) (2,566)
Non-U.S. (3) -- --
--------------- ----------- -----------
2,777 (3,043) (2,566)
--------------- ------------ -----------
Total income tax expense from continuing operations $ 20,373 $ 12,380 $ 23,277
=============== =========== ===========
</TABLE>
Total income taxes are allocated as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------------
1998 1999 2000
--------------- ----------- -----------
<S> <C> <C> <C>
Income tax expense from continuing operations $ 20,373 $ 12,380 $ 23,277
Acquisition related expenses for tax purposes
in excess of amounts recognized for financial
reporting purposes (1,467) (707) --
Shareholders' equity, for compensation expense for
tax purposes in excess of amounts recognized for
financial reporting purposes (568) (635) (850)
Extraordinary item -- (587) (130)
--------------- ----------- -----------
Total income taxes $ 18,338 $ 10,451 $ 22,297
=============== =========== ===========
</TABLE>
Provision has not been made for U.S. or additional foreign taxes on
approximately $12.1 million, $14.8 million and $19.7 million at September 30,
1998, 1999, and 2000, respectively, of undistributed earnings of foreign
subsidiaries, as those earnings are intended to be permanently reinvested.
A reconciliation between actual income taxes and amounts computed by
applying the federal statutory rate to earnings before income taxes and
extraordinary item is summarized as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------
1998 1999 2000
-------------------- -------------------- --------------------
$ % $ % $ %
-------- ------ -------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C>
U.S. Federal statutory rate on earnings
before income taxes and extraordinary loss $ 16,281 35.0% $ 5,972 35.0% $ 20,969 35.0%
State and city income taxes, net of federal
income tax benefits 2,113 4.5 881 5.2 1,578 2.6
Jobs credits, net of federal tax benefit (247) (0.5) (325) (1.9) (325) (0.5)
Non-deductible goodwill amortization 2,598 5.6 3,438 20.1 3,507 5.9
Non-deductible merger costs -- -- 3,820 22.4 -- --
Reduction of valuation allowance -- -- (359) (2.1) (1,527) (2.5)
Other (372) (0.8) (1,047) (6.1) (925) (1.6)
-------- ------ -------- ------ -------- ------
Income tax expense from continuing operations $ 20,373 43.8% $ 12,380 72.6% $ 23,277 38.9%
======== ====== ======== ====== ======== ======
</TABLE>
50
<PAGE> 51
Sources of deferred tax assets and deferred tax liabilities are as follows (in
thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------
1999 2000
-------- --------
<S> <C> <C>
Deferred tax assets:
Deferred compensation expense $ 6,105 $ 5,278
Net operating loss carry forwards 21,200 18,637
Capitalized leases 2,396 1,809
Tax credit carry forwards 849 528
Temporary differences related to Edison and its management contracts 4,030 4,760
Deferred and capitalized expenses 5,518 8,061
Other 1,406 1,538
-------- --------
Total gross deferred tax assets 41,504 40,611
Deferred tax liabilities:
Deferred tax gain on sales of properties (1,367) (2,908)
Deferred installment gain on sale of property (2,019) (252)
Timing differences in recognition of partnership earnings (590) (482)
Property, plant and equipment, due to differences in
depreciation and purchase business combinations (46,402) (45,562)
Other (1,217) (317)
-------- --------
Total gross deferred tax liabilities (51,595) (49,521)
Valuation allowance on net operating loss carry forwards (17,364) (15,279)
-------- --------
Net deferred tax liabilities $(27,455) $(24,189)
======== ========
</TABLE>
As of September 30, 2000, the Company has federal net operating loss
carry forwards of approximately $42.1 million, state and city net operating loss
carry forwards of approximately $56.1 million, and foreign net operating loss
carry forwards of approximately $0.5 million which expire between 2002 and 2014.
The ability of the Company to fully utilize these net operating losses is
limited due to changes in ownership of the companies which generated these
losses. These limitations have been considered in determining the deferred tax
asset valuation allowance shown above. Management believes that it is more
likely than not that the Company will generate sufficient taxable income to
realize deferred tax assets after giving consideration to the valuation
allowance. The valuation allowance has been provided for loss carry forwards for
which recoverability is deemed to be uncertain. The valuation allowance
decreased $2.1 million in fiscal 2000, of which $558 thousand was credited to
goodwill as that amount related to net operating losses acquired in purchase
acquisitions.
(14) EMPLOYEE BENEFIT PROGRAMS
(A) STOCK PLANS
In August 1995, the Board of Directors and shareholders approved a
stock plan for key personnel, which included a stock option plan and a
restricted stock plan. Under this plan, incentive stock options, as well as
nonqualified options and other stock-based awards, may be granted to officers,
employees and directors. A total of 3,817,500 common shares have been reserved
for issuance under these two plans combined. Options representing 1,521,154
shares are outstanding under the stock option plan at September 30, 2000.
Options are granted with an exercise price equal to the fair market value at the
date of grant and generally expire ten years after the date of grant. At
September 30, 2000, 281,958 shares had been issued through the restricted stock
plan. Expense related to the vesting of restricted stock is recognized by the
Company over the vesting period.
In August 1995, the Board of Directors and shareholders also approved a
stock plan for directors. This plan provides for the grant, upon each director's
initial election, of options to purchase 11,250 shares to each non-employee
director. In addition, each non-employee director who has served for a minimum
of six months on the last day of each fiscal year will receive additional
options to purchase 4,500 shares on that date. A total of 475,000 shares have
been reserved for issuance under the plan. Options to purchase 204,750 shares
are outstanding under this plan at September 30, 2000.
The Company also has an Employee Stock Purchase Plan which began April
1, 1996, under which 450,000 shares of common stock have been reserved for
issuance. The plan allows participants to contribute up to 10% of their normal
pay (as defined in the Plan) to a custodial account for purchase of the
Company's common stock. Participants may enroll or make changes to their
enrollment annually, and they may withdraw from the plan at any time by giving
the Company written notice. Employees purchase stock annually following the end
of the plan year at a price per share equal to the lesser of 85% of the closing
market price of the common stock on the first or the last trading day of the
plan year. At September 30, 2000, 247,900 shares had been issued under this
plan.
51
<PAGE> 52
The following table summarizes the transactions pursuant to the
Company's stock option plans for the last three fiscal years:
NUMBER WEIGHTED AVERAGE
OF SHARES EXERCISE PRICE
--------- --------------
Outstanding at September 30, 1997 793,509 $15.97
Granted 587,155 $31.23
Exercised 52,370 $12.87
Canceled 53,250 $30.65
-----------
Outstanding at September 30, 1998 1,275,044 $21.81
Granted 330,370 $45.12
Exercised 174,836 $16.84
Canceled 73,532 $37.87
-----------
Outstanding at September 30, 1999 1,357,046 $27.03
Granted 843,708 $21.26
Exercised 248,924 $12.51
Canceled 225,926 $33.08
-----------
Outstanding at September 30, 2000 1,725,904 $25.52
===========
At September 30, 1998, 1999 and 2000, options to purchase 582,609,
853,601 and 739,499 shares of common stock, respectively, were exercisable at
weighted average exercise prices of $17.11, $20.32 and $25.32, respectively.
At September 30, 2000, information for outstanding options and options
currently exercisable is as follows:
<TABLE>
<CAPTION>
OPTION PRICE RANGE PER SHARE
$8.00 $12.33-$14.81 $19.40-$27.75 $29.25-$42.81 $44.81-$51.06
----- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Options outstanding
Number of options 116,725 494,594 267,649 637,748 209,188
Weighted-average exercise price $ 8.00 $ 14.38 $ 21.96 $ 30.92 $ 49.69
Weighted-average contractual lives 5.0 years 8.8 years 7.5 years 8.1 years 8.0 years
Options exercisable
Number of options 116,725 92,386 174,524 269,738 86,126
Weighted-average exercise price $ 8.00 $ 12.52 $ 21.39 $ 32.18 $ 49.01
</TABLE>
The Company accounts for these plans under Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees", and accordingly, no
compensation cost has been recognized. If compensation cost for these plans had
been determined consistent with SFAS No. 123, "Accounting for
Stock-Based-Compensation", the Company's net earnings and earnings per share
would have been reduced to the following pro forma amounts:
YEAR ENDED SEPTEMBER 30,
----------------------------------------
1998 1999 2000
---------- ---------- ----------
As reported:
Net earnings (in thousands) $ 26,145 $ 3,682 $ 36,439
Basic earnings per share 0.76 0.10 1.00
Diluted earnings per share 0.74 0.10 0.99
Pro Forma - SFAS 123
Net earnings (in thousands) $ 23,114 $ 1,807 $ 33,800
Basic earnings per share 0.67 0.05 0.93
Diluted earnings per share 0.65 0.05 0.92
52
<PAGE> 53
The estimated weighted average fair value of the options granted were
$12.00 for 1998 option grants, $16.02 for 1999 option grants, and $12.03 for
2000 option grants using the Black-Scholes option pricing model with the
following assumptions: dividend yield based on historic dividend rates at the
date of grant, volatility of 37% for fiscal 1998, 66% for fiscal 1999, and 70%
for fiscal 2000, risk free interest based on the treasury bill rate of 10 year
instruments at the date of grant, and an expected life of ten years for all
grants.
(B) PROFIT-SHARING AND 401(K) PLAN
The Company has the Profit-Sharing and 401(k) Savings Plan that allows
eligible participants to make pretax contributions, receive Company 401(k) match
contributions and to participate in Company profit-sharing contributions. An
employee 18 years or older may become a participant in the Plan after one year
of continuous service, if the employee was employed prior to reaching age 65.
Participants' contributions, Company 401(k) contributions, and
investment earnings thereon immediately vest. Company profit-sharing
contributions vest after two years of continuous service at a rate of 20% per
year so that the participant is fully vested at the end of seven years.
Employer expense associated with this plan was $2.8 million, $2.3
million, and $2.5 million in years 1998, 1999 and 2000, respectively.
(C) INCENTIVE COMPENSATION AGREEMENTS
The Company has incentive compensation agreements with certain key
employees. Participating employees receive an annual bonus based on the
profitability of the operations for which they are responsible. Incentive
compensation expense is accrued during the year based upon management's estimate
of amounts earned under the related agreements. Incentive compensation under all
such agreements was approximately $5.8 million, $5.0 million, and $6.4 million
in years 1998, 1999 and 2000, respectively.
(D) DEFERRED COMPENSATION AGREEMENTS
The Company has a deferred compensation agreement with the President
and Chief Operating Officer of the Company in which the officer is entitled to
receive upon retirement, payments in an aggregate amount equal to 5% of the
increase in the Company's cumulative after tax profits since September 30, 1983.
Upon the closing of the Company's initial public offering, the Company and the
officer modified the existing agreement by issuing to the officer 267,750 shares
of restricted common stock under the Company's restricted stock plan. Further,
the officer may be entitled to receive additional shares of restricted common
stock until his normal retirement or, if earlier, the date of termination of his
employment, in an amount determined by a formula based upon the Company's
performance over such period. If the officer voluntarily terminates his
employment with the Company before his normal retirement, or if the Company
terminates his employment for cause, all shares of stock received and to be
received under the restricted stock plan are to be forfeited. The market value
of the restricted stock at the date of issuance was $670,000 greater than the
Company's deferred compensation liability. Accordingly, the Company recorded
deferred compensation expense in its shareholders' equity, which is being
amortized ratably over the remaining expected term of the officer's employment.
If it is determined that additional shares are to be issued under the agreement,
the Company will recognize compensation expense, spread ratably over the
remaining expected term of the officer's employment, equivalent to the market
value of such shares, subject to future market fluctuations prior to the
issuance of such shares.
The Company has a deferred compensation agreement that entitles the
Chairman and Chief Executive Officer to annual payments of $500 thousand for a
period of ten years following his termination, for any reason other than death,
in exchange for a covenant not to compete. Thereafter, the officer is entitled
to annual payments of $300 thousand until his death and, in the event his wife
survives him, she is entitled to annual payments of $300 thousand until her
death. The Company recognizes annual compensation expense pursuant to this
agreement equivalent to the increase in the actuarially determined future
obligation under the agreement.
Compensation expense associated with these agreements was approximately
$330 thousand, $370 thousand and $255 thousand in fiscal years 1998, 1999 and
2000, respectively.
Agreements with certain former key executives of Allright provide for
aggregate annual payments ranging from $20 thousand to $144 thousand per year
for periods ranging from 10 years to life, beginning when the executive retires
or upon death or disability. Under certain conditions, the amount of deferred
benefits can be reduced. Life insurance contracts with a face value of
approximately $9.2 million have been purchased to fund, as necessary, the
53
<PAGE> 54
benefits under these agreements. The cash surrender value of the life insurance
contracts is approximately $1.5 million and $1.8 million at September 30, 1999
and September 30, 2000, respectively, and is included in other non-current
assets. The plan is a nonqualified plan and is not subject to ERISA funding
requirements. Deferred compensation costs for 1998, 1999 and 2000 were $494
thousand, $557 thousand and $159 thousand, respectively. At September 30, 2000,
the Company had recorded a liability of $6.7 million for accrued pension costs
associated with this plan. The weighted average discount rate and rate of
increase in future compensation levels used in determining the actuarial present
value of the projected benefit obligations was 8%.
(E) DEFERRED UNIT PLAN
On December 19, 1996, the Board of Directors approved the adoption of
the Company's Deferred Stock Unit Plan. Under the plan, certain key employees
have the opportunity to defer the receipt of certain portions of their cash
compensation, instead receiving shares of common stock following certain periods
of deferral. The plan is administered by a committee, appointed by the board of
directors of the Company consisting of at least two non-employee "outside"
directors of the Company.
The Company reserved 375,000 shares of common stock for issuance under the 1996
Deferred Stock Unit Plan. Participants may defer up to 50% of their salary. As
of September 30, 2000 $1.4 million of compensation has been deferred under this
plan.
(F) EMPLOYMENT AGREEMENTS
In connection with the Allright merger, Allright and the Company
entered into various employment agreements with employees of Allright. These
agreements included (a) retention payments to be made at the closing date of the
merger if the individuals were still employees at such date, (b) two-year
employment agreements, 50% of each employee's benefit thereunder to be paid at
the closing date of the merger and the other 50% to be paid two years after such
date, assuming the individuals were still employed with the Company, and (c)
continuity benefits which were to be paid six months after the closing date of
the merger, assuming the individuals were still employed at such date. As of
September 30, 2000, payments made under these agreements total $9.3 million.
Accrued and unpaid amounts related to the second installment of the two-year
employment agreements totaled $929 thousand at September 30, 2000. Expenses
associated with the two-year agreements have been recognized in fiscal 1999 and
2000 in the amounts of $317 thousand and $612 thousand, respectively.
(15) RELATED PARTIES
The Company leases two properties from an entity 50% owned by the
Company's chairman for $290 thousand per year for a 10-year term and pays
percentage rent to the entity. Total rent expense, including percentage rent,
was $442 thousand, $531 thousand, and $434 thousand in 1998, 1999 and 2000,
respectively. The Company will receive 25% of the gain in the event of a sale of
these properties during the term of the lease pursuant to the lease agreements.
Management believes that such transactions have been on terms no less favorable
to the Company than those that could have been obtained from unaffiliated
persons.
In connection with the acquisition of Kinney, the Company entered into
a consulting agreement with a director of the Company. The Company paid $200
thousand to the director pursuant to this agreement during fiscal 2000.
Additionally, the Company has entered into a limited partnership agreement with
the same director whereby the director has agreed to seek new business
opportunities in the form of leases and management contracts and renewals of
existing leases and contracts as requested by the Company. During the fiscal
years ended September 30, 1999 and 2000, the Company recognized expense of $418
thousand and $220 thousand, respectively, in connection with this agreement.
During fiscal 2000, a former director of the Company exercised a
purchase option on a property owned by the Company. The purchase price was $8.3
million. The Company recognized a gain of $2.7 million in connection with the
sale of the property.
(16) CONTINGENCIES
The Company is subject to various legal proceedings and claims, which
arise in the ordinary course of its business. In the opinion of management, the
ultimate liability with respect to those proceedings and claims will not
materially affect the financial position, operations, or liquidity of the
Company. The Company maintains liability insurance coverage for individual
claims in excess of various dollar amounts, subject to annual aggregate limits.
In connection with the initial formation of Allright and its
acquisition of Allright Corporation (predecessor company), Nedinco Delaware
Incorporated ("Nedinco") and Hang Lung Development Company Ltd. agreed to
indemnify Allright for certain costs and liabilities incurred in connection with
54
<PAGE> 55
or arising out of Allright's Corporation's operations prior to October 31, 1996.
A $21.9 million letter of credit supports this indemnification.
(17) SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments made for interest and income taxes were as follows (in
thousands):
YEAR ENDED SEPTEMBER 30,
-------------------------------
1998 1999 2000
------- ------- -------
Interest $27,516 $32,971 $28,635
Income tax 17,901 12,181 15,594
(18) BUSINESS SEGMENTS
The Company's business activities consist of domestic and foreign
operations. Foreign operations are conducted in the United Kingdom, Canada,
Spain and Ireland. The Company also conducts business through joint ventures in
Mexico, Germany, Poland and Chile. Revenues attributable to foreign operations
were less than 10% of consolidated revenues for each of fiscal years 1998, 1999
and 2000. In 2000, the United Kingdom and Canada account for 70.0% and 29.7% of
total foreign revenues, respectively. Therefore, the Company includes all
foreign operations in a single reporting segment.
A summary of information about the Company's operations by segment is as follows
(in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------
1998 1999 2000
-------- ---------- ----------
<S> <C> <C> <C>
Total revenues:
Domestic $566,472 $ 696,953 $ 697,388
Foreign 33,927 33,519 33,541
-------- ---------- ----------
Consolidated $600,399 $ 730,472 $ 730,929
======== ========== ==========
Operating earnings:
Domestic $ 67,501 $ 34,941 $ 73,725
Foreign 3,512 5,740 5,372
-------- ---------- ----------
Consolidated $ 71,013 $ 40,681 $ 79,097
======== ========== ==========
Earnings before income taxes and extraordinary item:
Domestic $ 42,801 $ 10,547 $ 53,404
Foreign 3,717 6,517 6,507
-------- ---------- ----------
Consolidated $ 46,518 $ 17,064 $ 59,911
======== ========== ==========
Identifiable assets:
Domestic $935,210 $1,040,969 $ 998,396
Foreign 18,812 23,608 23,909
-------- ---------- ----------
Consolidated $954,022 $1,064,577 $1,022,305
======== ========== ==========
</TABLE>
The Company is managed based on segments administered by senior vice
presidents. These segments are generally organized geographically, with
exceptions depending on the needs of specific regions. The following is a
summary of revenues, costs, and other expenses by segment for the years ended
September 30, 1999 and 2000 (in thousands). It is impractical for the Company to
report such segment information for fiscal 1998 due to the numerous acquisitions
in that period, the Allright merger, and the Company's computer conversions in
1999. During fiscal year 2000, the Company realigned certain locations among
segments. All prior years segment data has been reclassified to conform to the
new segment alignment.
55
<PAGE> 56
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1999
---------------------------------------------------------------------------------------------------
ALL OTHERS &
ONE TWO THREE FOUR FIVE SIX INT'L GENERAL CORP TOTAL
--- --- ----- ---- ---- --- ----- ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Parking revenue $ 90,733 $ 259,683 $ 41,227 $ 121,362 $ 61,238 $ 28,050 $ 27,472 $ 9,321 $ 639,086
Management contract 12,009 20,532 7,372 14,706 13,134 4,511 6,047 13,075 91,386
--------- --------- -------- --------- -------- -------- -------- --------- -----------
Total revenues 102,742 280,215 48,599 136,068 74,372 32,561 33,519 22,396 730,472
Cost of parking 78,929 220,721 38,071 110,872 53,990 22,393 24,155 (13,963) 535,168
Cost of management 4,024 6,023 3,162 4,581 3,466 1,854 3 4,627 27,740
General &
administrative 7,379 20,322 2,466 8,119 5,205 2,320 3,607 27,894 77,312
Goodwill 662 8,114 450 873 381 -- 2 1,125 11,607
Merger costs -- -- -- -- -- -- -- 40,970 40,970
--------- --------- -------- --------- -------- -------- -------- --------- -----------
Total Costs 90,994 255,180 44,149 124,445 63,042 26,567 27,767 60,653 692,797
Property-related
gains (losses), net 34 (1,254) 36 (16) (42) 70 (12) 4,190 3,006
--------- --------- -------- --------- -------- -------- -------- --------- -----------
Operating earnings 11,782 23,781 4,486 11,607 11,288 6,064 5,740 (34,067) 40,681
Other income
(expense):
Interest income (199) (18,640) (203) (2,227) (431) (91) 321 28,109 6,639
Interest expense 12 (1,891) (130) (226) (213) (82) (357) (24,064) (26,951)
Dividends -
convertible
preferred -- -- -- -- -- -- -- (5,926) (5,926)
Minority interest -- -- -- -- -- -- -- (2,612) (2,612)
Equity in partnerships
and joint
ventures -- 746 -- -- -- -- 813 3,674 5,233
--------- --------- -------- --------- -------- -------- -------- --------- -----------
Earnings before income
tax and extraordinary
items $ 11,595 $ 3,996 $ 4,153 $ 9,154 $ 10,644 $ 5,891 $ 6,517 $ (34,886) 17,064
Income tax ========= ========= ======== ========= ======== ======== ======== ========= 12,380
-----------
Earnings before
extraordinary items 4,684
Extraordinary items,
net of tax (1,002)
-----------
Net earnings $ 3,682
===========
Identifiable assets $ 54,104 $ 351,304 $ 35,848 $ 66,795 $ 42,107 $ 15,786 $ 23,608 $ 475,025 $ 1,064,577
========= ========= ======== ========= ======== ======== ======== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 2000
-------------------------------------------------------------------------------------------------
ALL OTHERS &
ONE TWO THREE FOUR FIVE SIX INT'L GENERAL CORP TOTAL
--- --- ----- ---- ---- --- ----- ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Parking revenue $ 77,659 $ 270,312 $ 34,954 $ 126,781 $ 53,095 $ 26,744 $ 27,807 $ 11,314 $ 628,666
Management contract 15,401 28,891 9,220 16,441 15,297 5,174 5,734 6,105 102,263
-------- --------- -------- --------- -------- -------- -------- --------- -----------
Total revenues 93,060 299,203 44,174 143,222 68,392 31,918 33,541 17,419 730,929
Cost of parking 70,047 229,860 33,399 115,698 45,349 22,557 23,660 (11,886) 528,684
Cost of management 6,342 9,009 3,636 6,365 6,058 2,404 41 2,415 36,270
General &
administrative 6,853 21,761 2,520 8,087 6,693 2,444 4,398 19,190 71,946
Goodwill 687 8,488 450 1,053 391 -- 70 981 12,120
Merger costs -- -- -- -- -- -- -- 3,747 3,747
-------- --------- -------- --------- -------- -------- -------- --------- -----------
Total Costs 83,929 269,118 40,005 131,203 58,491 27,405 28,169 14,447 652,767
Property-related
gains (losses), net (315) (366) (654) (810) (3,757) (928) -- 7,765 935
-------- --------- -------- --------- -------- -------- -------- --------- -----------
Operating earnings 8,816 29,719 3,515 11,209 6,144 3,585 5,372 10,737 79,097
Other income (expense):
Interest income (157) (18,393) (329) (2,132) (99) (6) 311 27,709 6,904
Interest expense (88) (1,589) (158) (194) (243) (443) (361) (23,928) (27,004)
Dividends -
convertible
preferred -- -- -- -- -- -- -- (6,012) (6,012)
Minority interest -- (208) (12) -- -- -- -- (3,114) (3,334)
Equity in partnerships
and joint ventures -- -- -- -- -- -- 1,185 9,075 10,260
-------- --------- -------- --------- -------- -------- -------- --------- -----------
Earnings before income
tax and extraordinary
items $ 8,571 $ 9,529 $ 3,016 $ 8,883 $ 5,802 $ 3,136 $ 6,507 $ 14,467 59,911
Income tax ======== ========= ======== ========= ======== ======== ======== ========= 23,277
-----------
Earnings before
extraordinary items 36,634
Extraordinary items,
net of tax (195)
-----------
Net earnings $ 36,439
===========
Identifiable assets $ 35,583 $ 331,307 $ 24,490 $ 52,032 $ 30,884 $ 29,473 $ 23,909 $ 494,627 $ 1,022,305
======== ========= ======== ========= ======== ======== ======== ========= ===========
</TABLE>
Segment One encompasses the western region of the United States, including West
Texas, and Louisiana.
Segment Two encompasses the northeastern region of the United States, including
New York, New Jersey, Eastern Pennsylvania, and New England.
Segment Three encompasses the southeastern region of the United States.
56
<PAGE> 57
Segment Four encompasses parts of the southern Mississippi and Alabama and
mid-western regions of the United States, and also includes Washington, D.C. and
upstate New York. The executive responsible for Segment Four administers parts
of Canada as well, which is included in the International segment.
Segment Five encompasses the inter-mountain region of the United States,
including Northern Texas and parts of the Mid-West.
Segment Six encompasses Tennessee, Kentucky and parts of Alabama and
Mississippi, as well as Puerto Rico.
International encompasses all non-U.S. locations (with the exception of Puerto
Rico).
All others and general corporate encompasses home office, eliminations, realty
and certain partnerships.
(19) SUBSEQUENT EVENTS
Subsequent to September 30, 2000, the Company sold certain owned
properties with a combined carrying value of approximately $7.0 million. The
Company received proceeds of $11.3 million for these sales. The gain of
approximately $4.3 million will be recognized in the first quarter of fiscal
2001.
In October 2000, the Company elected to terminate nine lease contracts
and two management agreements. The expected loss from the early termination of
the contracts is approximately $1.5 million, and will be recognized in the first
quarter of fiscal 2001.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
Information concerning this Item is incorporated by reference to the
Company's definitive proxy materials for the Company's 2001 Annual Meeting of
Shareholders.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning this Item is incorporated by reference to the
Company's definitive proxy materials for the Company's 2001 Annual Meeting of
Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information concerning this Item is incorporated by reference to the
Company's definitive proxy materials for the Company's 2001 Annual Meeting of
Shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning this Item is incorporated by reference to the
Company's definitive proxy materials for the Company's 2001 Annual Meeting of
Shareholders.
PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
(a) (1) and (2) Financial Statements and Financial Statement Schedules
Financial statements and schedules of the Company and its subsidiaries
required to be included in Part II, Item 8, are indexed on page 30.
(a) (3) Exhibits
The exhibits are listed in the Index to Exhibits which appears
immediately following the signature page.
57
<PAGE> 58
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the fiscal
year ended September 30, 2000
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CENTRAL PARKING CORPORATION
Date: December 22, 2000 By: /s/ JAMES J. HAGAN
---------------------------------
James J. Hagan
Senior Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ MONROE J. CARELL, JR. Chairman of the Board, Chief Executive
-------------------------------------------- Officer and Director
Monroe J. Carell, Jr.
/s/ JAMES H. BOND President & Chief Operating Officer
-------------------------------------------- Director
James H. Bond
/s/ JAMES J. HAGAN Senior Vice President &
-------------------------------------------- Chief Financial Officer (Principal Accounting Officer)
James J. Hagan
/s/ WILLIAM S. BENJAMIN Director
--------------------------------------------
William S. Benjamin
/s/ CECIL CONLEE Director
--------------------------------------------
Cecil Conlee
/s/ MARC L. DAVIDSON Director
--------------------------------------------
Marc L. Davidson
/s/ LEWIS KATZ Director
--------------------------------------------
Lewis Katz
/s/ EDWARD G. NELSON Director
--------------------------------------------
Edward G. Nelson
/s/ WILLIAM C. O'NEIL, JR. Director
--------------------------------------------
William C. O'Neil, Jr.
/s/ RICHARD H. SINKFIELD Director
--------------------------------------------
Richard H. Sinkfield
/s/ JULIA CARELL STADLER Director
--------------------------------------------
Julia Carell Stadler
</TABLE>
<PAGE> 59
EXHIBIT INDEX
EXHIBIT
NUMBER DOCUMENT
--------- --------
2 Plan of Recapitalization, effective October 9, 1997
(Incorporated by reference to Exhibit 2 to the Company's
Registration Statement No. 33-95640 on Form S-1).
2.1 Agreement and Plan of Merger dated September 21, 1998, by and
among the Registrant, Central Merger Sub, Inc., Allright
Holdings, Inc., Apollo Real Estate Investment Fund II, L.P. and
AEW Partners, L.P. (Incorporated by reference to Exhibit 2.1 to
the Company's Registration Statement No. 333-66081 on Form S-4
filed on October 21, 1998).
2.2 Amendment dated as of January 5, 1999, to the Agreement and Plan
of Merger dated September 21, 1998 by and among the Registrant,
Central Merger Sub, Inc., Allright Holdings, Inc., Apollo Real
Estate Investment Fund II, L.P. and AEW Partners, L.P.
(Incorporated by reference to Exhibit 2.1 to the Company's
Registration Statement No. 333-66081 on Form S-4 filed on
October 21, 1998, as amended).
2.3 Acquisition Agreement and Plan of Merger dated as of November 7,
1997, by and between the Registrant and Kinney System Holding
Corp and a subsidiary of the Registrant (Incorporated by
reference to the Company's Current Report on Form 8-K filed on
February 17, 1998).
3.1 (a) Amended and Restated Charter of the Registrant
(Incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement No. 333-23869 on Form S-3).
(b) Articles of Amendment to the Charter of Central
Parking Corporation increasing the authorized number of
shares of common stock, par value $0.01 per share, to one
hundred million (Incorporated by reference to Exhibit 2 to
the Company's 10-Q for the quarter ended March 31, 1999).
3.2 Amended and Restated Bylaws of the Registrant (Incorporated by
reference to Exhibit 4.1 to the Company's Registration Statement
No. 333-23869 on Form S-3).
4.1 Form of Common Stock Certificate (Incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement No. 33-95640
on Form S-1).
4.4 Registration Rights Agreement dated as of September 21, 1998 by
and between the Registrant, Apollo Real Estate Investment Fund
II, L.P., AEW Partners, L.P. and Monroe J. Carell, Jr., The
Monroe Carell Jr.Foundation, Monroe Carell Jr. 1995 Grantor
Retained Annuity Trust, Monroe Carell Jr. 1994 Grantor Retained
Annuity Trust, The Carell Children's Trust, The 1996 Carell
Grandchildren's Trust, The Carell Family Grandchildren 1990
Trust, The Kathryn Carell Brown Foundation, The Edith Carell
Johnson Foundation, The Julie Carell Stadler Foundation, 1997
<PAGE> 60
EXHIBIT
NUMBER DOCUMENT
--------- --------
Carell Elizabeth Brown Trust, 1997 Ann Scott Johnson Trust, 1997
Julia Claire Stadler Trust, 1997 William Carell Johnson Trust,
1997 David Nicholas Brown Trust and 1997 George Monroe Stadler
Trust (Incorporated by reference to Exhibit 4.4 to the Company's
Registration Statement No. 333-66081 filed on October 21, 1998).
4.4 Amendment dated January 5, 1999 to the Registration Rights
Agreement dated as of September 21, 1998, by and between the
Registrant, Apollo Real Estate Investment fund II, L.P., AEW
Partners, L.P. and Monroe J. Carell, Jr., The Monroe Carell Jr.
Foundation, Monroe Carell Jr. 1995 Grantor Retained Annuity
Trust, Monroe Carell Jr. 1994 Grantor Retained Annuity Trust,
The Carell Children's Trust, The 1996 Carell Grandchildren's
Trust, The Carell Family Grandchildren 1990 Trust, The Kathryn
Carell Brown Foundation, The Edith Carell Johnson Foundation,
The Julie Carell Stadler Foundation, 1997 Carell Elizabeth Brown
Trust, 1997 Ann Scott Johnson Trust, 1997 Julia Claire Stadler
Trust, 1997 William Carell Johnson Trust, 1997 David Nicholas
Brown rust and 1997 George Monroe Stadler Trust. (Incorporated
by reference to Exhibit 4.4.1 to the Company's Registration
Statement No. 333-66081 filed on October 21, 1998, as amended).
4.5 Indenture dated March 18, 1998 between the registrant and Chase
Bank of Texas, National Association, as Trustee regarding up to
$113,402,050 of 5-1/4 % Convertible Subordinated Debentures due
2028. (Incorporated by reference to Exhibit 4.5 to the
Registrant's Registration Statement No. 333-52497 on Form S-3).
4.6 Amended and Restated Declaration of Trust of Central Parking
Finance Trust dated as of March 18, 1998. (Incorporated by
reference to Exhibit 4.5 to the Registrant's Registration
Statement No. 333-52497 on Form S-3).
4.7 Preferred Securities Guarantee Agreement dated as of March 18,
1998 by and between the Registrant and Chase Bank of Texas,
national Association as Trustee (Incorporated by reference to
Exhibit 4.7 to the Registrant's Registration Statement No.
333-52497 on Form S-3).
4.8 Common Securities Guarantee Agreement dated March 18, 1998 by
the Registrant. (Incorporated by reference to Exhibit 4.9 to
333-52497 on Form S-3).
10.1 Executive Compensation Plans and Arrangements
(a) 1995 Incentive and Nonqualified Stock Option Plan for Key
Personnel (Incorporated by reference to Exhibit 10.1 to
the Company's Registration Statement No. 33-95640 on Form
S-1).
(b) Amendment to the 1995 Incentive and Nonqualified Stock
Option Plan for Key Personnel increasing the number of
shares licensed for issuance under the plan to 3,817,500
(filed herewith).*
(c) Form of Option Agreement under Key Personnel Plan
(Incorporated by reference to Exhibit 10.2 to the
Company's Registration Statement No. 33-95640 on Form
S-1).
(d) 1995 Restricted Stock Plan (Incorporated by reference to
Exhibit 10.5.1 to the Company's Registration Statement No.
33-95640 on Form S-1.)
(e) Form of Restricted Stock Agreement (Incorporated by
reference to Exhibit 10.5.2 to the Company's Registration
Statement No.33-95640 on Form S-1.)
(f) Form of Employment Agreements with Executive Officers
(Incorporated by reference to Exhibit 10.7 to the
Company's Registration Statement No. 33-95640 on Form
S-1.)
(g) Monroe J. Carell, Jr. Employment Agreement (Incorporated
by reference to Exhibit 10.8 to the Company's Registration
Statement No. 33-95640 on Form S-1.)
(h) Monroe J. Carell, Jr. Revised Deferred Compensation
Agreement, as amended (Incorporated by reference to
Exhibit 10.9 to the Company's Registration Statement
No.33-95640 on Form S-1.)
(i) James H. Bond Employment Agreement (Incorporated by
reference to Exhibit 10.10 to the Company's Registration
Statement No. 33-95640 on Form S-1.)
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(j) Performance Unit Agreement between Central Parking
Corporation and James H. Bond (Incorporated by reference
to Exhibit 10.11.1 to the Company's Registration Statement
No. 33-95640 on Form S-1.)
(k) Modification of Performance Unit Agreement of James H.
Bond (Incorporated by reference to Exhibit 10.1 (j) to the
Company's Annual Report on Form 10-K filed on December 27,
1997).
(l) James H. Bond Severance Agreement (Incorporated by
reference to Exhibit 10.17 to the Company's Registration
Statement No.33-95640 on Form S-1.)
(m) James J. Hagan Employment Agreement, dated June 12, 2000.
(filed herewith).*
(n) Deferred Stock Unit Plan (Incorporated by reference to
Exhibit 10.1 to the Company's Annual Report on Form 10-K
for the period ended September 30, 1998).
(o) EPS Compensation Program for Senior Executives.
(Incorporated by reference to Exhibit 10.1 (m) of the
Company's Report on Form 10-K for the period ended
September 30, 1999).
10.2 (a) 1995 Nonqualified Stock Option Plan for Directors
(Incorporated by reference to Exhibit 10.3 to the
Company's Registration Statement No. 33-95640 on Form
S-1.)
(b) Amendment to the 1995 Nonqualified Stock Option Plan for
Directors increasing the number of shares reserved for
issuance under the plan to 475,000 (filed herewith).*
10.3 Form of Option Agreement under Directors plan (Incorporated by
reference to Exhibit 10.4 to the Company's Registration
Statement No. 33-95640 on Form S-1.)
10.4 Form of Indemnification Agreement for Directors (Incorporated by
reference to Exhibit 10.12 to the Company's Registration
Statement No. 33-95640 on Form S-1.)
10.5 Indemnification Agreement for Monroe J. Carell, Jr.
(Incorporated by reference to Exhibit 10.13 to the Company's
Registration Statement No. 33-95640 on Form S-1.)
10.6 Form of Management Contract (Incorporated by eference to Exhibit
10.14 to the Company's Registration Statement No. 33-95640 on
Form S-1.)
10.7 Form of Lease (Incorporated by reference to Exhibit 10.15 to the
Company's Registration Statement No. 33-95640 on Form S-1.)
10.8 1998 Employee Stock Purchase Plan (Incorporated by reference to
Exhibit 10.16 to the Company's Registration Statement No.
33-95640 on Form S-1.)
10.9 Exchange Agreement between the Company and Monroe J. Carell, Jr.
(Incorporated by reference to Exhibit 10.18 to the Company's
Registration Statement No. 33-95640 on Form S-1.)
10.10 $400 Million Credit Agreement dated as of March 19, 1999 by and
among various banks with Bank of America, N.A., as Agent, and
Central Parking Corporation and certain affiliates.
(Incorporated by reference to Exhibit 10.11 of the Company's
Report on Form 10-K for the period ended September 30, 1999.)
10.11 Letter Amendment dated as of June 25, 1999 to Credit Agreement
dated as of March 19, 1999, by and among various banks with Bank
of America, N.A., as Agent, and Central Parking Corporation and
certain affiliates. (Incorporated by reference to Exhibit 10.11
of the Company's Report on Form 10-K for the period ended
September 30, 1999.)
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10.12 Letter Amendment dated as of October 27, 1999 to Credit
Agreement dated as of March 19, 1999, by and among various banks
with Bank of America, N.A., as Agent, and Central Parking
Corporation and certain affiliates. (Incorporated by reference
to Exhibit 10.11 of the Company's Report on Form 10-K for the
period ended September 30, 1999.)
10.13 Form of Amendment dated as of December 28, 1999 to $400 million
Credit Agreement dated as of March 19, 1999, by and among
various banks with Bank of America, N.A., as Agent, and Central
ParkingCorporation and certain affiliates. (Incorporated by
reference to Exhibit 10.11 of the Company's Report on Form 10-K
for the period ended September 30, 1999.)
10.14 Amended and Restricted Credit Agreement dated as of February 14,
2000, by and among various banks, with Bank of America, N.A., as
Agent and Central Parking Corporation and certain affiliates.
(Incorporated by reference to the Company's Report of Form 10-Q
for the quarter ended March 31, 2000.)
10.15 Amended and Restated Credit Agreement dated as of June 16, 2000,
by and among various banks, with Bank F America, N.A. as Agent
and Central Parking Corporation and certain affiliates (filed
herewith).*
10.16 Consultancy Agreement dated as of January 21, 1997 between
Central Parking System, Inc. and Lowell Harwood (Incorporated by
reference to Exhibit (c)(4) to the Company's Tender Offer
Statement on Schedule 14D-1 filed December 13, 1996).
10.17 Consulting Agreement dated as of February 12, 1998, by and
between Central Parking Corporation and Lewis Katz.
(Incorporated by reference to Exhibit 10.20 of the Company's
Report on Form 10-K for the period ended September 30, 1999.)
10.18 Limited Partnership Agreement dated as of August 11, 1999, by
and between CPS of the Northeast, Inc. and Arizin Ventures,
L.L.C. (Incorporated by reference to Exhibit 10.21 of the
Company's Report on Form 10-K for the period ended September 30,
1999.)
10.19 Registration Rights Agreement dated as of February 12, 1998, by
and among Central Parking Corporation, Lewis Katz and Saul
Schwartz. (Incorporated by reference to Exhibit 10.22 of the
Company's Report on Form 10-K for the period ended September 30,
1999.)
10.20 Shareholders' Agreement and Agreement Not to Compete by and
among Central Parking Corporation, Monroe J. Carell, Jr., Lewis
Katz and Saul Schwartz dated as of February 12, 1998.
(Incorporated by reference to Exhibit 10.23 of the Company's
Report on Form 10-K for the period ended September 30, 1999.)
10.21 Lease Agreement dated as of October 6, 1995, by and between The
Carell Family LLC and Central Parking System of Tennessee, Inc.
(Alloway Parking Lot). (Incorporated by reference to Exhibit
10.24 of the Company's Report on Form 10-K for the period ended
September 30, 1999.)
10.22 First Amendment to Lease Agreement dated as of July 29, 1997, by
and between The Carell Family LLC and Central Parking System of
Tennessee, Inc. (Alloway Parking Lot). (Incorporated by
reference to Exhibit 10.25 of the Company's Report on Form 10-K
for the period ended September 30, 1999.)
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10.23 Lease Agreement dated as of October 6, 1995 by and between The
Carell Family LLC and Central Parking System of Tennessee, Inc.
(Second and Church Parking Lot). (Incorporated by reference to
Exhibit 10.26 of the Company's Report on Form 10-K for the
period ended September 30, 1999.)
10.24 First Amendment to Lease Agreement dated as of October 6, 1995,
by and between The Carell Family LLC and Central Parking System
of Tennessee, Inc. (Second and Church Parking Lot).
(Incorporated by reference to Exhibit 10.27 of the Company's
Report on Form 10-K for the period ended September 30, 1999.)
10.25 Prospectus and offering document for 2,625,000 shares of Common
Stock dated February 17, 1998. (Incorporated by reference to the
Company's Registration Statement No. 233-23869 on Form S-3).
10.26 Transaction Support Agreement by Monroe J. Carell, Jr., the
Registrant, Kathryn Carell Brown, Julia Carell Stadler and Edith
Carell Johnson to Allright Holdings, Inc., Apollo Real Estate
Investment Fund II, L.P. and AEW Partners, L.P. dated September
21, 1998. (Incorporated by reference to Exhibit 2.1 to the
Company's Registration Statement No. 333-66081 filed on October
23, 1998).
10.30 Form of Transaction Support Agreement by certain shareholders of
the Registrant to Allright Holdings, Inc., Apollo Real Estate
Investment Fund II, L.P., and AEW Partners, L.P., dated
September 21, 1998. (Incorporated by reference to Exhibit 2.1 to
the Company's Registration Statement No. 333-66081 filed on
October 23, 1998).
10.31 Form of Transaction Support Agreement by certain shareholders of
Allright Holdings, Inc. to the Registrant and Central Merger
Sub, Inc. dated September 21, 1998. (Incorporated by reference
to Exhibit 2.1 to the Company's Registration Statement No.
333-66081 filed on October 23, 1998).
21 Subsidiaries of the Registrant*
23 Consent of KPMG LLP*
27 Financial Data Schedule*
* Filed herewith.
