SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended December 31, 1996
Commission file number 001-13950
Exact Name of Registrant as Specified in Its Charter:
CENTRAL PARKING CORPORATION
State or Other Jurisdiction of Incorporation or Organization:
Tennessee
I.R.S. Employer Identification No.:
62-1052916
Address of Principal Executive Offices:
2401 21st Avenue South, Suite 200, Nashville, Tennessee
Zip Code:
37212
Former name, address and fiscal year, if changed since last report:
Not Applicable
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. YES X NO
Indicate the number of shares outstanding of each of the
registrant's classes of common stock as of the latest practicable
date.
Class: Common Stoc, $0.01 par value
Outstanding at February 10, 1997: 17,492,000
INDEX
CENTRAL PARKING CORPORATION
PART 1. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets
---December 31, 1996, September 30, 1996 and
December 31, 1995 3
Condensed consolidated statements of earnings
--- three months ended December 31, 1996 and 1995 4
Condensed consolidated statements of cash flows
--- three months ended December 31, 1996 and 1995 5
Notes to condensed consolidated financial statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-9
PART 2. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 6. Exhibits and Reports on Form 8-K 9-10
SIGNATURES 11
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
Amounts in thousands
Unaudited Unaudited
December 31 September 30 December 31
1996 1996 1995
ASSETS
Current assets:
Cash and cash equivalents $ 5,850 $ 28,605 $ 22,983
Management accounts receivable 8,594 8,982 7,928
Accounts and current portion
of notes receivable - other 3,356 3,016 5,564
Prepaid expenses 6,203 4,549 3,976
Deferred income taxes 8 270 -
Total current assets 24,011 45,422 40,451
Investments, at amortized cost 4,551 4,483 4,308
Notes receivable, less
current portion 8,027 8,248 4,331
Property, equipment, and
leasehold improvements, net 131,073 38,188 35,036
Contract rights, net 5,601 5,815 6,498
Investment in limited partnerships 1,240 1,234 1,240
Investment in general partnerships 1,772 1,705 1,379
Other assets 2,525 2,117 1,903
$178,800 $107,212 $ 95,146
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 11,318 $ 11,275 $ 10,411
Accrued payroll and
related costs 4,586 5,059 3,852
Accrued expenses 1,437 900 3,272
Management accounts payable 6,387 7,788 4,908
Income taxes payable 3,099 693 2,728
Deferred income taxes - - 120
Total current liabilities 26,827 25,715 25,291
Long-term debt 67,200 - -
Deferred compensation 2,984 3,095 3,134
Deferred income taxes 1,386 1,609 608
Total liabilities 98,397 30,419 29,033
Shareholders' equity :
Common stock, $.01 par
value; 30,000,000 shares
authorized, 17,490,100,
17,477,088 and 17,417,481
issued and outstanding,
respectively 175 175 175
Additional paid-in capital 31,913 31,747 30,740
Foreign currency translation
adjustment (64) 59 (2)
Retained earnings 48,999 45,449 35,888
Deferred compensation on
restricted stock, net (620) (637) (688)
Total shareholders' equity 80,403 76,793 66,113
$178,800 $107,212 $ 95,146
See accompanying notes to condensed consolidated financial statements
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
Unaudited
Amounts in thousands, except per share data
Three Months Ended
December 31,
1996 1995
Revenues:
Parking $ 32,085 $ 25,163
Management contract 9,338 8,088
Total revenues 41,423 33,251
Costs and expenses:
Cost of parking 29,085 22,513
Cost of management contracts 2,501 2,524
General and administrative 4,708 4,079
Total costs and expenses 36,294 29,116
Operating earnings 5,129 4,135
Other income:
Interest income 625 589
Interest expense (7) -
Net gains on sales of property and equipment 3 41
Equity in partnership and joint venture
earnings 250 164
Other income, net 871 794
Earnings before income taxes 6,000 4,929
Income tax expense 2,101 1,701
Net earnings $ 3,899 $ 3,228
Weighted average shares and share equivalents 17,619,743 17,216,378
Net earnings per share $ 0.22 $ 0.19
Dividends per share $ 0.02 $ 0.02
See accompanying notes to condensed consolidated financial statements
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Unaudited
Amounts in thousands
Three Months Ended
December 31,
1996 1995
Cash flows from operating activities:
Net earnings $ 3,899 $ 3,228
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation 711 567
Amortization of contract rights 214 201
Amortization of deferred compensation cost 17 16
Equity in partnership and joint venture (earnings) (250) (164)
Net gains on sales of property and equipment (3) (41)
Deferred income taxes 39 (26)
Changes in operating assets and liabilities:
(Increase) decrease in management accounts
receivable 388 (1,157)
(Increase) decrease in notes and accounts
receivable - other (119) 218
(Increase) decrease in prepaid expenses (1,654) (176)
(Increase) decrease in other assets (293) 376
Increase (decrease) in accounts payable,
accrued expenses and deferred compensation (4) 1,066
Increase (decrease) in management accounts
payable (1,401) (724)
Increase (decrease) in income taxes payable 2,406 1,163
Net cash provided by operating activities 3,950 4,547
Cash flows from investing activities:
Investments in notes receivable - -
Purchase of property, equipment, and leasehold
improvements (93,611) (14,843)
Purchase of contract rights - (332)
Investment in or return on general and limited
partnerships 62 (88)
Purchase of investments (68) (62)
Proceeds from sale of partnership - -
Net cash used by investing activities (93,599) (11,765)
Cash flows from financing activities:
Dividends paid (349) -
Proceeds from note payable 67,200 -
Proceeds from issuance of common stock, net 166 20,036
Net cash provided by financing activities 67,017 20,036
Foreign currency translation (123) (53)
Net increase (decrease) in cash and cash
equivalents (22,755) 12,765
Cash and cash equivalents at beginning of period 28,605 10,218
Cash and cash equivalents at end of period $ 5,850 $ 22,983
Non-cash transactions:
Exchange of properties, net $ - $ 2,804
Conversion of deferred compensation
payable to restricted stock $ - $ 1,874
See accompanying notes to consolidated financial statements
CENTRAL PARKING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. All
significant inter-company transactions have been eliminated in
consolidation. Operating results for the three months ended
December 31, 1996 are not necessarily indicative of the results
that may be expected for the fiscal year ending September 30, 1997.
For further information, refer to the consolidated financial
statements and footnotes thereto for the year ended September 30,
1996 (included in the Company's Annual Report on Form 10-K).
INITIAL PUBLIC OFFERING
On October 10, 1995, the Company completed an initial public
offering of common stock in which 1,864,500 shares (adjusted for
the 3 for 2 split in March 1996) were sold by the Company for net
proceeds of $20.0 million. In addition, 2,755,500 shares of common
stock (adjusted for the 3 for 2 split in March 1996) were sold by
certain shareholders of the Company.
THREE FOR TWO STOCK SPLIT
On February 21, 1996, the Board of Directors approved a
three-for-two stock split payable to shareholders of record as of
March 4, 1996. The stock split was distributed on March 19, 1996
resulting in the net issuance of 5,805,816 new shares. Actual
shares outstanding after the split were 17,417,481.
All shares and per share amounts in this report have been
adjusted to reflect the stock split, unless otherwise noted.
INCOME PER SHARE
Income per share has been computed by dividing net earnings
for each period by the weighted average number of shares and share
equivalents outstanding during the applicable period.
Fully diluted per share data is not presented since the
effect would dilute earnings per share by less than three percent
(3%).
ACQUISITION
On December 31, 1996, the Company purchased for cash Civic
Parking, LLC, a limited liability company, which owns four parking
garages in St. Louis: Kiener East, Kiener West, Stadium East and
Stadium West. The four garages, which are presently operated by
the Company under management agreements, have a total of 7,464
parking spaces. The acquisition will be accounted for as a
purchase. The purchase price was approximately $91.0 million. The
transaction was financed through working capital and a draw of
$67.2 million on the Company's $150 million credit facility (see
Long Term Debt). Due to the timing of the acquisition, the Company
has not completed its purchase price allocations for purchase
accounting purposes. Management has allocated the majority of the
purchase price to property and equipment.
The unaudited consolidated pro forma results of all current,
continuing operations, assuming the acquisition of Civic Parking,
LLC had been consummated on October 1, 1995, are as follows (in
thousands except for earnings per share):
Three Months Ended December 31,
1996 1995
Total revenues $43,867 $35,490
Earnings before income taxes 6,299 5,050
Net earnings 4,093 3,246
Earnings per share .23 .19
Weighted average shares and
share equivalents 17,620 17,216
SUBSEQUENT EVENT
On January 17, 1997, the Company completed a cash tender to
acquire all of the outstanding shares of Square Industries, Inc.
("Square Industries") at $28.50 net to the seller in cash at
closing, with an additional $2.50 per share deposited by Central
Parking in escrow as contingent consideration for distribution to
either the shareholders of Square Industries or Central Parking
based upon the resolution of two specific matters, subject to
adjustment as provided in the escrow agreement. The Tender Offer
expired at midnight on Friday, January 17, 1997, at which time,
based on a preliminary count from the Depositary, SunTrust Bank,
Atlanta, approximately 1,438,000 shares, or 97%, of Square
Industries common stock had been tendered and not withdrawn
pursuant to the Offer. The shares validly tendered and not
withdrawn at that time were accepted for payment. Central Parking
now intends to complete a short-form merger of Square Industries
into a wholly-owned subsidiary of Central Parking with each
untendered share of Square Industries to be converted into the
right to receive $28.50 in cash, with an additional $2.50 per share
to be deposited by Central Parking in escrow as contingent
consideration for distribution to either the shareholders of Square
Industries or Central Parking based upon the resolution of two
specific matters, subject to adjustment as provided in the escrow
agreement.
As provided in the Merger Agreement on January 21, 1997,
Central Parking deposited with the Depositary $48,290,062 for
payment of the shares and share equivalents outstanding. The
Depositary will proceed with the payment of all tendered shares.
Additionally on January 21, 1997, $4,390,640 was deposited as
contingent consideration with the escrow agent, First American
National Bank of Nashville, Tennessee, on the 1,756,256 outstanding
shares and share equivalents.
LONG TERM DEBT
The total funds required by the Company to consummate the two
acquisitions noted above is estimated at approximately $170
million, including fees and expenses and retirement of
approximately $22 million of existing Square Industries debt. The
Company financed such transactions from current working capital and
the revolving credit provisions of a $150 million loan agreement
(the "Acquisition Facility") with a commercial bank and certain
other lenders (the "Lenders") dated December 12, 1996.
The Acquisition Facility, which is unsecured, expires January
31, 2000, provided that the Lenders may extend the term until
January 31, 2001, upon the request of the Company. Revolving loans
under the Acquisition Facility bear interest at one of two rates,
at the Company's option, either (i) the bank's base rate plus .5%
or (ii) the LIBOR plus a margin ranging from .25% to 1.50%
depending on the occurrence of certain dates or events, achievement
of certain financial ratios and the Company's senior unsecured debt
rating from Standard and Poor's or Moody's. The Company must
permanently reduce the amount available for borrowing under the
Acquisition Facility to $120 million by February 28, 1997, provided
that the Lenders may extend such date to April 30, 1997 upon the
payment of a commitment fee by the Company. The Company must also
permanently reduce the amount available for borrowing under the
Acquisition Facility to $85 million by September 30, 1997, or
earlier upon the occurrence of certain events, provided that the
Lenders may extend the September 30 date to December 31, 1997 and
again to March 31, 1998, in each case upon the payment of an
extension fee by the Company. The Company anticipates that the
borrowings under the Acquisition Facility will be repaid out of
cash flow, a refinancing, or the proceeds of a debt or equity
offering. The Acquisition Facility contains customary
representations, warranties and covenants of the Company and its
subsidiaries, including financial covenants relating to maintenance
of ratios and restrictions on further indebtedness. The amount
outstanding at December 31, 1996 was $67,200,000 with a 7.4%
weighted average interest rate.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Parking revenues for the first quarter of fiscal 1997
increased to $32.1 million from $25.2 million in the first quarter
of fiscal 1996, an increase of $6.9 million or 27.5%. The increase
resulted primarily from the net addition of 89 leased and owned
locations over the same quarter last year as well as a combination
of rate increases and higher utilization of parking spaces at
existing facilities. Revenues from foreign operations increased to
$3.9 million from $2.9 million. The increase in foreign revenues
was a result of the addition of three leased locations.
Management contract revenue for the first quarter of fiscal
1997 increased to $9.3 million from $8.1 million in the first
quarter of fiscal 1996, an increase of $1.3 million or 15.5%. The
increase resulted from a net increase in the number of management
contracts from 736 to 780.
Cost of parking in fiscal first quarter 1997 increased to
$29.1 million from $22.5 million in fiscal first quarter 1996, an
increase of $6.6 million or 29.2%. Of the increase of $6.6
million, $4.3 million was attributable to rent and $1.5 million was
attributable to payroll expense. The rent and payroll expense
increase was attributed primarily to an increase in the number of
owned and leased locations from 531 to 620.
Cost of management contracts in fiscal first quarter 1997 and
1996 remained the same at $2.5 million. The increase in management
account revenues in 1997 did not cause any increase in management
account costs. The number of management fee locations increased
from 736 to 780.
General and administrative expenses increased to $4.7 million
for the first quarter of fiscal 1997 from $4.1 million in fiscal
first quarter 1996, an increase of $629 thousand or 15.4%. The
increase is primarily attributable to increased incentive
compensation resulting from increased profits and start-up costs
associated with the opening of new locations and joint ventures.
General and administrative expenses, as a percentage of revenues,
were 11.4% for the first quarter of fiscal 1997 compared to 12.3%
for the first quarter of fiscal 1996, a decrease of 0.9%. The
decrease was attributable to spreading fixed expenses over a
broader base and the implementation of bonus limits on certain key
executives.
Interest income increased to $625 thousand for the first
quarter of fiscal 1997, from $589 thousand in the first quarter of
fiscal 1996, an increase of $36 thousand or 6.1%. The increase in
interest income is a result of increased investment balances
outstanding during the quarter.
Income taxes increased to $2.1 million for the first quarter
of fiscal 1997 from $1.7 million in the first fiscal quarter in
1996, an increase of $400 thousand or 23.5%. The tax rate for the
fiscal 1997 quarter was 35.0% compared to 34.5% for the 1996
quarter. The increase in the tax rate is attributable primarily to
decreasing interest income on tax exempt investments in 1996. The
increased trend of this tax rate is expected to continue for the
remainder of the year.
LIQUIDITY AND CAPITAL RESOURCES
During the first three months ended December 31, 1996 and
1995, the Company generated cash flow from operating activities of
$4.0 million and $4.5 million respectively.
The Company purchased properties during the three months
ended December 31, 1996 and 1995 in the amounts of $93.6 million
and $14.8 million respectively. Included in the $93.6 million in
property purchased for fiscal 1996 is the Civic Parking LLC
acquisition of four parking garages totalling approximately 7,500
parking spaces which was closed on December 31, 1996. The purchase
was funded partially through available cash and the drawing under a
revolving credit facility in the amount of $67.2 million (see
Acquisition Facility).
On January 20, 1997, the Company completed its offer to
acquire all the outstanding shares of Square Industries, Inc. The
total purchase price, including assumed debt and transaction costs,
will total approximately
$80 million. The funds required for this acquisition were drawn
under a revolving credit facility (see Acquisition Facility).
ACQUISITION FACILITY
The Acquisition Facility is a $150 million revolving credit
facility, which is unsecured, and expires January 31, 2000,
provided that the Lenders may extend the term until January 31,
2001, upon the request of the Company. Revolving loans under the
Acquisition Facility bear interest at one of two rates, at the
Company's option, either (i) the bank's base rate plus .5% or (ii)
the LIBOR plus a margin ranging from .25% to 1.50% depending on the
occurrence of certain dates or events, achievement of certain
financial ratios and the Company's senior unsecured debt rating
from Standard and Poor's or Moody's. The Company must permanently
reduce the amount available for borrowing under the Acquisition
Facility to $120 million by February 28, 1997, provided that the
Lenders may extend such date to April 30, 1997 upon the payment of
a commitment fee by the Company. The Company must also permanently
reduce the amount available for borrowing under the Acquisition
Facility to $85 million by September 30, 1997, or earlier upon the
occurrence of certain events, provided that the Lenders may extend
the September 30 date to December 31, 1997 and again to March 31,
1998, in each case upon the payment of an extension fee by the
Company, The Company anticipates that the borrowings under the
Acquisition Facility will be repaid out of cash flow, a
refinancing, or the proceeds of a debt or equity offering. The
Acquisition Facility contains customary representations, warranties
and covenants of the Company and its subsidiaries, including
financial covenants relating to maintenance of ratios and
restrictions on further indebtedness.
Depending on the timing and magnitude of the Company's future
investments (either in the form of lease or purchase of parking
properties, joint ventures, or acquisitions), the working capital
necessary to satisfy current obligations is anticipated to be
generated from operations and the new revolving credit facility.
If the Company identifies investment opportunities requiring cash
in excess of the Company's cash flows and the existing credit
facility, the Company may seek additional sources of capital,
including the sale or issuance of Common Stock.
PART II -- OTHER INFORMATION
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 three months ended December 31, 1996.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
2.1 Form of $150,000,000 Credit Agreement dated December 12,
1996 by and among various banks with SunTrust Bank,
Nashville, N.A. as Agent, and Central Parking
Corporation and certain of its subsidiaries (incorporated
by reference to Item 11(b)(1) to the Company's Tender
Offer Statement on Schedule 14D-1 as filed on
December 13, 1996).
2.2 Agreement for Sale and Purchase of Membership Interests,
dated as of November 22, 1996, by Central Parking System
Realty, Inc. and Central Parking System Realty of
Missouri, Inc. (direct and indirect subsidiaries,
respectively, of Central Parking Corporation) and Gateway
Groups, Inc., and SLC Holdings, LLC (incorporated by
reference to Exhibit 2.2 to the Company's current report
on Form 8-K as originally filed on January 14, 1997.)
2.3 Agreement and Plan of Merger dated as of December 6, 1996,
among Central Parking Corporation, Central Parking System
-- Empire State, Inc. and Square Industries, Inc.
(incorporated by reference to Exhibit (c)(1) to the Tender
Offer Statement on Schedule 14D-1 filed by Central Parking
Corporation on December 13, 1996, relating to Square
Industries, Inc.)
27. Financial Data Schedule (EDGAR Filing Only)
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during
the three months ended December 31, 1996.
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: February 14, 1997 By:/s/ Stephen A. Tisdell
Stephen A. Tisdell
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Stephen A. Tisdell Chief Financial Officer February 14, 1997
Stephen A. Tisdell (Princiapal Financial and
Accounting Officer)